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SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN A PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934 (Amendment No. )

Filed by the Registrant /X/
Filed by a party other than the Registrant / /

Check the appropriate box:
/X/ Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/ / Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Under Rule 14a-12

RYDEX SERIES FUNDS
RYDEX DYNAMIC FUNDS
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)

- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

/X/ No fee required.

/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.

(1) Title of each class of securities to which transaction applies:

------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:

------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):

------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:

------------------------------------------------------------------------
(5) Total fee paid:

------------------------------------------------------------------------

/ / Fee paid previously with preliminary materials.

/ / Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.

(1) Amount Previously Paid:

------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:

------------------------------------------------------------------------
(3) Filing Party:

------------------------------------------------------------------------
(4) Date Filed:

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RYDEX SERIES FUNDS
RYDEX DYNAMIC FUNDS

Dear Shareholder:

As most of you are already aware, Albert P. "Skip" Viragh, Jr. died of cancer in
December, 2003. Mr. Viragh was the founder and controlling shareholder of Rydex
Investments (the "Advisor"), the investment adviser to the Rydex family of
mutual funds. Upon Mr. Viragh's death, ownership of Mr. Viragh's interest in the
Advisor transferred to certain beneficiaries of his estate. This transaction
resulted in a change of control at the Advisor, which in turn caused the
termination of each of the investment advisory agreements between the Advisor
and each of the Rydex funds.

As a result, a Special Meeting of Shareholders (the "Meeting") of each of the
funds of the Rydex family of mutual funds, including the Rydex Series Funds and
Rydex Dynamic Funds (each a "Trust," and collectively, the "Trusts"), has been
scheduled for Friday, April 30, 2004. Since you are a shareholder of record of
one or more series of the Trusts (the "Funds") as of the close of business on
March 2, 2004 you are entitled to vote at the Shareholder Meeting.

At the Meeting, you are being asked to approve new advisory agreements with the
Advisor under substantially the same terms as the previous advisory agreements.
NO FEE INCREASE WILL RESULT FROM APPROVING THE NEW ADVISORY AGREEMENTS. In
addition, you are being asked to approve the election of trustees to the Board
of Trustees of each Trust, as well as several other items of business to certain
Funds of the Trusts as further described in the attached proxy statement.

I'm sure that you, like most people, lead a busy life and are tempted to put
this proxy aside for another day. Please don't. YOUR VOTE IS IMPORTANT TO US.
PLEASE TAKE A FEW MINUTES TO REVIEW THIS PROXY STATEMENT AND VOTE YOUR SHARES
TODAY. THE CURRENT BOARD OF TRUSTEES HAS UNANIMOUSLY APPROVED EACH OF THE
PROPOSALS AND RECOMMENDS A VOTE "FOR" EACH.

While you are, of course, welcome to join us at the meeting, it is not
necessary. As a convenience we have created several options by which to vote
your shares:

- THE INTERNET: Follow the instructions located on your proxy card and
make sure it is available at the time you plan to vote

- TOUCH-TONE PHONE: The phone number is located on your proxy card and be
sure you have your control number on the card at the time of the call.

- BY MAIL: Simply execute your card and enclose it in the postage paid
envelope found in this proxy package.

EVERY VOTE IS IMPORTANT NO MATTER HOW MANY SHARES YOU OWN

The Funds have engaged the services of Investor Connect(TM), a professional
proxy solicitation group, to assist shareholders through the voting process. As
the Meeting approaches and you have not yet voted, Investor Connect(TM) may
contact you to remind you to vote your shares in order to be represented at the
Meeting. If you should have any questions about the proxy statement or the
execution of your vote, please contact Investor Connect(TM) at 800-333-3333.
They will be happy to assist you.

We appreciate your time and consideration.

Sincerely,

Carl G. Verboncoeur
President, Rydex Series Funds and Rydex Dynamic
Funds

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VERY IMPORTANT NEWS FOR SHAREHOLDERS

We recommend that you read the complete Proxy Statement. For your convenience,
we have provided a brief overview of the proposals to be voted on at the
Meeting.

QUESTIONS AND ANSWERS

Q. WHY AM I RECEIVING THIS PROXY STATEMENT?

A. You are receiving these proxy materials - a booklet that includes the Proxy
Statement and a proxy card - because you have the right to vote on these
important proposals concerning your investment in the Funds. The majority
of these proposals relate to actions that need to be taken in response to
the recent death of Albert P. "Skip" Viragh, Jr., the founder and
controlling shareholder of Rydex Investments (the "Advisor") the investment
adviser to the Rydex Funds.

Q. WHY AM I BEING ASKED TO VOTE ON NEW ADVISORY AGREEMENTS?

A. The Investment Company Act of 1940 (the "1940 Act"), the law that regulates
mutual funds, requires an investment advisory agreement between an
investment adviser and a fund to terminate whenever there is a change in
control of the investment adviser. After an investment advisory agreement
terminates, shareholders are required to approve a new agreement between an
investment adviser and the fund.

The Advisor is owned entirely by the 2003 Dynamic Irrevocable Trust (the
"Viragh Family Trust"). Prior to his death on December 11, 2003, Mr. Viragh
controlled the Viragh Family Trust. Upon Mr. Viragh's death, there was a
change of control of the Viragh Family Trust. This change of control of the
Viragh Family Trust resulted in a change of control of the Advisor, which
in turn resulted in the termination of each of the investment advisory
agreements between the Advisor and the Trusts (each, an "Old Agreement").

On February 13, 2004, the Board approved a new advisory agreement for each
Trust (each, a "New Agreement") under which, subject to its approval by
each Fund's shareholders, the Advisor will continue serve as investment
adviser to each Fund. The Advisor's fee rates for its services to the Funds
under each New Agreement is the same as its fee rates under the
corresponding Old Agreement. The other terms of the New Agreements are
similar to those of the Old Agreements.

Q. HOW DOES THE CHANGE IN CONTROL OF THE ADVISOR AFFECT ME?

A. Other than the change in the ownership, the operations of the Advisor, the
fees payable to the Advisor and the persons responsible for the day-to-day
investment management of the Funds remain unchanged. The current management
of the Advisor has assured the Board that there will be no reduction or
other significant change in the nature or quality of the investment
advisory services to each Fund as a result of the change in ownership.

Q. WHO HAS BEEN MANAGING THE FUNDS SINCE THE TERMINATION OF THE OLD
AGREEMENTS?

A. During the period between the termination of the Old Agreements and the
approval of the New Agreements by shareholders (the "Interim Period"), the
Advisor has continued to provide investment advisory services to the Funds
pursuant to interim agreements between the Advisor and each Trust that were
approved by the Board at a special meeting it held shortly after Mr.
Viragh's death (each an "Interim Agreement" and collectively, the "Interim
Agreements"). Each Interim Agreement is identical in all respects -
including fees to be paid to the Advisor - to its corresponding Old
Agreement, except for the time periods covered by the agreements. With
respect to each Fund, the New Agreement will replace the Interim Agreement
upon approval by shareholders.

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Q. WHAT HAPPENS IF THE NEW AGREEMENTS ARE NOT APPROVED?

A. If the shareholders of one or more Funds do not approve a New Agreement
with the Advisor, the Board will take such further action as it deems in
the best interests of the shareholders of the Fund.

Q. WHAT IS HAPPENING TO THE TRUST'S BOARD OF TRUSTEES?

A. The Trust is seeking to add Carl G. Verboncoeur, Mr. Viragh's successor as
Chief Executive Officer of the Advisor, to the Board of Trustees (the
"Board") of each Trust to fill the vacancy created by Mr. Viragh's death.
Similar to Mr. Viragh's former status, Mr. Verboncoeur is considered an
"interested person" (as that term is defined in the 1940 Act) of the Trust
because of his employment by the Advisor. In addition to Mr. Verboncoeur,
the current members of the Board additionally have been proposed for
reelection to the Board (together with Mr. Verboncoeur, the "Proposed
Trustees"). With the exception of Mr. Verboncoeur, each of the Proposed
Trustees would be considered an "Independent Trustee" of the Trust.

Q. WHY AM I BEING ASKED TO VOTE ON THE ELECTION OF THE PROPOSED TRUSTEES?

A. Appointments to the Board generally are made by existing Trustees. However,
the 1940 Act provides that trustees may not fill vacancies unless
thereafter at least two-thirds of the trustees have been elected by
shareholders. Because two of the five current members of the Board have not
been elected by shareholders, the Board could not appoint Mr. Verboncoeur
to the Board. Since a shareholder vote is required to elect Mr.
Verboncoeur, the Board has proposed that shareholders elect all of the
Proposed Trustees. The Board believes that it is in shareholders' best
interests to provide the Board with the flexibility to appoint additional
trustees in the future, without the costs and delays associated with
holding a special shareholders' meeting to do so.

Q. WHAT ARE THE OTHER PROPOSALS?

A. The Board is recommending that shareholders approve proposals to change the
investment objective of certain series of the Funds from a fundamental
policy to a non-fundamental policy. Under the 1940 Act, "fundamental"
investment restrictions may be changed or eliminated only if shareholders
approve such action. Non-fundamental policies may be changed by a vote of
a majority of the Board, and do not require shareholder approval.
Currently, the investment objective of each of the Rydex Series Funds' Nova
Fund, Nova Master Fund, Ursa Fund, Ursa Master Fund, OTC Fund, Bond Fund,
Juno Fund and Juno Master Fund, including the benchmarks of the Nova Fund,
Nova Master Fund, Ursa Fund and Ursa Master Fund, are fundamental. The
Board believes that it is in shareholders' best interests to provide the
Board with the flexibility to change these Funds investment objectives (or
benchmarks) in the future, without the costs and delays associated with
holding a special shareholders' meeting to do so.

Q. HOW WILL THIS CHANGE REGARDING THE INVESTMENT OBJECTIVE AFFECT THESE FUNDS?

A. There is no current intention by the Board to change the investment
objective or benchmark of any of these Funds. Each Fund will continue to be
managed in accordance with the Trust's prospectus as filed with the
Securities and Exchange Commission and as amended from time to time.

Q. HOW DO THE CURRENT TRUSTEES SUGGEST THAT I VOTE?

A. After careful consideration, the Trustees unanimously recommended that you
vote "FOR" all of the proposals contained in the Proxy Statement. Please
see "Board Recommendations" with respect to each proposal for a discussion
of the Board's considerations in making such recommendations.

Q. WILL MY VOTE MAKE A DIFFERENCE?

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A. Yes. Your vote is needed to ensure that the proposals can be acted upon. We
encourage all shareholders to participate in the governance of their
Fund(s). Additionally, your immediate response on the enclosed proxy card
will help save the costs of any further solicitations.

Q. I'M A SMALL INVESTOR. WHY SHOULD I BOTHER TO VOTE?

A. Every vote is important. If numerous shareholders just like you fail to
vote, the Funds may not receive enough votes to go forward with the
meeting. If this happens, the Funds will need to solicit votes again.

Q. HOW DO I PLACE MY VOTE?

A. You may provide the Trust with your vote via mail, by Internet, by
telephone, or in person. You may use the enclosed postage-paid envelope to
mail your proxy card. Please follow the enclosed instructions to utilize
any of these voting methods. If you need more information on how to vote,
or if you have any questions, please call the Funds' information agent.

Q. WHOM DO I CALL IF I HAVE QUESTIONS?

A. We will be happy to answer your questions about this proxy solicitation.
Please call the Funds' information agent at 1-800-___-___ between 8:30 a.m.
and 5:00 p.m., Eastern Time, Monday through Friday.

PROMPT EXECUTION AND RETURN OF THE ENCLOSED PROXY CARD IS REQUESTED. A
SELF-ADDRESSED, POSTAGE-PAID ENVELOPE IS ENCLOSED FOR YOUR CONVENIENCE,
ALONG WITH INSTRUCTIONS ON HOW TO VOTE OVER THE INTERNET OR BY TELEPHONE
SHOULD YOU PREFER TO VOTE BY ONE OF THOSE METHODS.

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RYDEX SERIES FUNDS
RYDEX DYNAMIC FUNDS

9601 Blackwell Road, Suite 500
Rockville, MD 20850

NOTICE OF SPECIAL MEETING OF SHAREHOLDERS

TO BE HELD ON FRIDAY, APRIL 30, 2004

Notice is hereby given that a Special Meeting of Shareholders (the "Meeting") of
each of the Rydex Series Funds' Nova, Nova Master, Ursa, Ursa Master, OTC,
Arktos, Arktos Master, Medius, Mekros, U.S. Government Bond, Juno, Juno Master,
Large-Cap Europe, Large-Cap Japan, Banking, Basic Materials, Biotechnology,
Consumer Products, Electronics, Energy, Energy Services, Financial Services,
Health Care, Internet, Leisure, Precious Metals, Retailing, Technology,
Telecommunications, Transportation, Utilities, Sector Rotation, Core Equity and
U.S. Government Money Market Funds (each a "Series Fund" and collectively, the
"Series Funds") and the Rydex Dynamic Funds' Titan 500, Titan 500 Master,
Tempest 500, Tempest 500 Master, Velocity 100, Velocity 100 Master, Venture 100
and Venture 100 Master Funds (each a "Dynamic Fund" and collectively, the
"Dynamic Funds")(Rydex Series Funds and Rydex Dynamic Funds are each a "Trust,"
and collectively, the "Trusts")(the Series Funds and Dynamic Funds are
collectively the "Funds" or the "Rydex Funds") will be held at the offices of
Rydex Investments, 9601 Blackwell Road, Suite 500, Rockville, MD 20850 on
Friday, April 30, 2004 at 4:30 p.m. Eastern Time.

At the Meeting, shareholders of record (the "Shareholders") will be asked to
consider and act on the following proposals:

<Table>
<Caption>
DESCRIPTION OF PROPOSAL: TRUST/FUNDS SOLICITED:
- --------------------------------------------------------------------------------------------------------

1. TO CONSIDER AND VOTE ON THE ELECTION OF COREY A. RYDEX SERIES FUNDS:
COLEHOUR, J. KENNETH DALTON, JOHN O. DEMARET, PATRICK All Funds
T. McCARVILLE, ROGER SOMERS AND CARL G. VERBONCOEUR
AS TRUSTEES OF THE TRUST. RYDEX DYNAMIC FUNDS:
All Funds

2. THE APPROVAL OF A NEW INVESTMENT ADVISORY AGREEMENT RYDEX SERIES FUNDS:
BETWEEN RYDEX SERIES FUNDS AND PADCO ADVISORS, INC. All Funds

3. THE APPROVAL OF A NEW INVESTMENT ADVISORY AGREEMENT RYDEX DYNAMIC FUNDS:
BETWEEN RYDEX DYNAMIC FUNDS AND PADCO ADVISORS, INC. All Funds

4. THE APPROVAL OF THE CHANGE OF INVESTMENT OBJECTIVE RYDEX SERIES FUNDS:
FROM A FUNDAMENTAL TO A NON-FUNDAMENTAL POLICY Nova Fund, Nova Master Fund,
(INCLUDES SEPARATE SUB-PROPOSALS 4(a) - 4(j) RELATING Ursa Fund, Ursa Master
TO THE INVESTMENT OBJECTIVE OF EACH OF THE FUNDS IN Fund, OTC Fund, Bond Fund, Juno
THE OPPOSITE COLUMN). Fund and Juno Master Fund

5. ANY OTHER BUSINESS PROPERLY BROUGHT BEFORE THE
MEETING.
</Table>

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All Shareholders are cordially invited to attend the Meeting. However, if you
are unable to attend the Meeting, you are requested to mark, sign and date the
enclosed Proxy Card and return it promptly in the enclosed, postage-paid
envelope so that the Meeting may be held and a maximum number of shares may be
voted. In addition, you can vote easily and quickly by mail, by Internet, by
telephone or in person. Your vote is important no matter how many shares you
own. You may change your vote even though a proxy has already been returned by
written notice to the Trust, by submitting a subsequent proxy using the mail, by
Internet, by telephone or by voting in person at the Meeting.

Shareholders of record at the close of business on March 2, 2004 are entitled to
notice of and to vote at the Meeting or any adjournment thereof.

By Order of the Board of Trustees

Carl G. Verboncoeur
President, Rydex Series Funds and Rydex Dynamic
Funds

March [__], 2004

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RYDEX SERIES FUNDS
RYDEX DYNAMIC FUNDS

9601 Blackwell Road, Suite 500
Rockville, MD 20850

PROXY STATEMENT
SPECIAL MEETING OF SHAREHOLDERS

TO BE HELD ON FRIDAY, APRIL 30, 2004

This Proxy Statement is furnished in connection with the solicitation of proxies
by the Board of Trustees of Rydex Series Funds and Rydex Dynamic Funds (each a
"Trust," and collectively, the "Trusts") for use at the Special Meeting of
Shareholders to be held on April 30, 2004 at 4:30 p.m. Eastern Time at the
offices of Rydex Investments, 9601 Blackwell Road, Suite 500, Rockville, MD
20850, and at any adjourned session thereof (such Special Meeting and any
adjournment thereof are hereinafter referred to as the "Meeting"). Shareholders
of each of the Rydex Series Funds' Nova, Nova Master, Ursa, Ursa Master, OTC,
Arktos, Arktos Master, Medius, Mekros, U.S. Government Bond, Juno, Juno Master,
Large-Cap Europe, Large-Cap Japan, Banking, Basic Materials, Biotechnology,
Consumer Products, Electronics, Energy, Energy Services, Financial Services,
Health Care, Internet, Leisure, Precious Metals, Retailing, Technology,
Telecommunications, Transportation, Utilities, Sector Rotation, Core Equity and
U.S. Government Money Market Funds (each a "Series Fund" and collectively, the
"Series Funds"), and the Rydex Dynamic Funds' Titan 500, Titan 500 Master,
Tempest 500, Tempest 500 Master, Velocity 100, Velocity 100 Master, Venture 100
and Venture 100 Master Funds (each a "Dynamic Fund" and collectively, the
"Dynamic Funds")(the Series Funds and Dynamic Funds are collectively, the
"Funds" or the "Rydex Funds") of record at the close of business on March 2,
2004 ("Shareholders") are entitled to vote at the Meeting.

As of March 2, 2004, the Funds had the following units of beneficial interest
("shares") issued and outstanding:

<Table>
<Caption>
SHARES ISSUED AND OUTSTANDING
-----------------------------------
FUND SERIES FUNDS DYNAMIC FUNDS
- -----------------------------------------------------------------

Nova n/a
Nova Master n/a
Ursa n/a
Ursa Master n/a
OTC n/a
Arktos n/a
Arktos Master n/a
Medius n/a
Mekros n/a
U.S. Government Bond n/a
Juno n/a
Juno Master n/a
Large-Cap Europe n/a
Large-Cap Japan n/a
Banking n/a
Basic Materials n/a
Biotechnology n/a
Consumer Products n/a
Electronics n/a
Energy n/a
Energy Services n/a
</Table>

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<Table>
<Caption>
SHARES ISSUED AND OUTSTANDING
-----------------------------------
FUND SERIES FUNDS DYNAMIC FUNDS
- -----------------------------------------------------------------

Financial Services n/a
Health Care n/a
Internet n/a
Leisure n/a
Precious Metals n/a
Retailing n/a
Technology n/a
Telecommunications n/a
Transportation n/a
Utilities n/a
U.S. Government Money Market n/a
Titan 500 n/a
Titan 500 Master n/a
Tempest 500 n/a
Tempest 500 Master n/a
Velocity 100 n/a
Velocity 100 Master n/a
Venture 100 n/a
Venture 100 Master n/a
AGGREGATE SHARES
</Table>

INTRODUCTION AND GENERAL INFORMATION

GENERAL INFORMATION. As used in this proxy statement, the Trusts' Board of
Trustees is referred to as the "Board," and the term "Trustee" includes each
trustee of the Trusts. A Trustee that is an interested person of the Trusts is
referred to in this proxy statement as an "Interested Trustee." A Trustee may be
an interested person of the Trust because he or she is affiliated with the
Trusts' investment adviser, PADCO Advisors, Inc., the Trusts' principal
underwriter or any of their affiliates. PADCO Advisors, Inc., together with
PADCO Advisors II, Inc., operate as Rydex Investments (the "Advisor"). Trustees
that are not interested persons of the Trust are referred to in this proxy
statement as "Independent Trustees."

Each of the Trusts is organized as a Delaware statutory trust and, as such, is
not required to hold annual meetings of Shareholders. The Board has called the
Meeting in order to permit the Shareholders to consider and vote on the
Proposals set forth in the foregoing notice. If you wish to participate in the
Meeting you may submit the proxy card included with this proxy statement or
attend in person. Your vote is important no matter how many shares you own. You
can vote easily and quickly by mail, by Internet, by telephone or in person. At
any time before the Meeting, you may change your vote, even though a proxy has
already been returned, by written notice to the Trust at 9601 Blackwell Road,
Suite 500, Rockville, MD 20850 or by submitting a subsequent proxy, by mail, by
Internet, by telephone or by voting in person at the meeting. Should
Shareholders require additional information regarding any of the proposals
contained in the Proxy Statement, or replacement proxy cards, they may contact
the Funds' information agent at 1-800-[___-____].

In addition to the solicitation of proxies by mail, the Board and officers of
the Trusts, as well as employees of any proxy soliciting firm engaged by the
Trust, may solicit proxies in person or by telephone. Persons holding shares as
nominees will, upon request, be reimbursed for their reasonable expenses
incurred in sending soliciting materials to their principals. The Trusts will
bear the costs of the Shareholders' Meeting and proxy materials. The proxy card
and this Proxy Statement are being mailed to Shareholders on or about March
[__], 2004.

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Shares represented by duly executed proxies will be voted in accordance with the
instructions given. All proxy cards solicited that are properly executed and
received in time to be voted at the Meeting will be voted at the Meeting or any
adjournment thereof according to the instructions on the proxy card. If no
specification is made on a proxy card, it will be voted FOR the matters
specified on the proxy card.

QUORUM AND MEETING ADJOURNMENTS. Each whole share is entitled to one vote, and
each fractional share is entitled to a proportionate fractional vote on each
matter as to which such shares are to be voted at the Meeting. One-third
(33 1/3%) of a Trust's (or Fund's, as applicable) shares entitled to vote on a
proposal constitutes a quorum. For purposes of determining the presence of a
quorum, abstentions or broker non-votes will be counted as present; however,
they will have the effect of a vote against the proposal.

If a quorum is not present at the Meeting, or if a quorum is present at the
Meeting but sufficient votes to approve one or more Proposals are not received,
or if other matters arise requiring shareholder attention, the persons named as
proxy agents may propose one or more adjournments of the Meeting to permit
further solicitation of proxies. Any such adjournment will require the
affirmative vote of a majority of those shares present at the Meeting or
represented by proxy. The persons named as proxies will vote those proxies that
they are entitled to vote FOR such proposal in favor of such an adjournment, and
will vote those proxies required to be voted AGAINST such proposal, against such
an adjournment.

VOTE REQUIRED TO APPROVE PROPOSALS. If a quorum is present at the Meeting, the
following represents the votes required for the approval of the Proposals. With
respect to Proposal 1, a plurality of a Trust's shares voted shall elect a
Trustee with respect to that Trust. With respect to the remainder of the
Proposals (2, 3 and Sub-Proposals 4(a) - 4(j)), the approval of such Proposal
requires the affirmative vote of a "majority of the outstanding voting
securities" of each Fund to approve the Proposal with respect to that Fund.
Under the Investment Company Act of 1940, as amended, (the "1940 Act"), the vote
of a "majority of the outstanding voting securities" of a Fund means the
affirmative vote of the lesser of (a) 67% or more of the voting securities
present at the meeting or represented by proxy if the holders of more than 50%
of the outstanding voting securities are present or represented by proxy or (b)
more than 50% of the outstanding voting securities.

VOTING BY MASTER FUNDS. As described in their respective registration statements
on file with the U.S. Securities and Exchange Commission (the "Commission"),
each of the Nova, Ursa and Juno Fund of the Rydex Series Funds and each of the
Titan 500, Tempest 500, Velocity 100 and Venture 100 Fund of the Rydex Dynamic
Funds pursues its investment objective through a "master-feeder arrangement"
whereby each Fund acts as a "feeder fund" and invests all of its assets in a
corresponding "master fund," a separate series of the Trust with an identical
investment objective. Each of the above Funds is the only feeder fund investing
in its respective master fund. Each of the Nova Master, Ursa Master and Juno
Master Funds of the Rydex Series Funds and each of the Titan 500 Master, Tempest
500 Master, Velocity 100 Master and Venture 100 Master Funds of the Rydex
Dynamic Funds will "echo" vote its outstanding shares for each of the Proposals
in this Proxy Statement in the same proportionate percentage as the shares voted
by the Shareholders of each corresponding feeder Fund. By virtue of this
arrangement, any Proposal approved by a feeder Fund will be similarly approved
by its corresponding master Fund.

DISCUSSION OF PROPOSAL 1: ELECTION OF BOARD OF TRUSTEES

PROPOSAL 1. TO CONSIDER AND VOTE ON THE ELECTION OF COREY A. COLEHOUR, J.
KENNETH DALTON, JOHN O. DEMARET, PATRICK T. MCCARVILLE, ROGER
SOMERS AND CARL G. VERBONCOEUR AS TRUSTEES OF THE TRUST.

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TRUSTS/FUNDS VOTING ON PROPOSAL 1: RYDEX SERIES FUNDS:
All Funds

RYDEX DYNAMIC FUNDS:
All Funds

It is proposed that Corey A. Colehour, J. Kenneth Dalton, John O. Demaret,
Patrick T. McCarville, Roger Somers and Carl G. Verboncoeur (the "Proposed
Trustees") be elected at the Meeting to serve as Trustees of each Trust. With
the exception of Mr. Verboncoeur, each of the Proposed Trustees is currently on
the Board of each Trust. Each Trust is seeking to add Mr. Verboncoeur, Mr.
Viragh's successor as Chief Executive Officer of the Advisor, to its Board to
fill the vacancy created by Mr. Viragh's death.

Similar to Mr. Viragh's former status, Mr. Verboncoeur is considered an
"interested person" (as that term is defined in the 1940 Act) of the Trust
because of his employment with the Advisor. With the exception of Mr.
Verboncoeur, each of the other Proposed Trustees would be considered an
"Independent Trustee" of the Trust. Together, the Proposed Trustees will
comprise the entire Board of each Trust and serve until their successors have
been duly elected and qualified or until their earlier resignation or removal.
The names and ages of the Proposed Trustees, their principal occupations during
the past five years and certain of their other affiliations are provided below.
Mr. Verboncoeur currently serves as President of each Trust, and would continue
to serve in such capacity if elected at the Meeting. No other Proposed Trustee
will serve as an officer of any Trust. Each of the Proposed Trustees has agreed
to serve if elected at the Meeting. It is the intention of the persons
designated as proxies, unless otherwise directed therein, to vote at the Meeting
for the election of the Proposed Trustees named below. If any Proposed Trustee
is unable or unavailable to serve, the persons named as proxies will vote for
such other person(s) as the Board may recommend.

The Board has overall responsibility to manage and control the business affairs
of each Trust, including the complete and exclusive authority to oversee and to
establish policies regarding the management, conduct and operation of the
Trust's business. The Trustees serve on the Board for terms of indefinite
duration. A Trustee's position in that capacity will terminate if he or she is
removed, resigns or is subject to various disabling events such as death or
incapacity. In the event of any vacancy in the position of a Trustee, the
remaining Trustees may appoint an individual to serve as a Trustee, subject to
the provisions of the 1940 Act. A Trustee may be removed either by (a) the vote
or written consent of at least two-thirds of the Trustees not subject to the
removal vote or (b) the vote or written consent of Shareholders holding not less
than two-thirds of the Trust's outstanding shares.

The Board held four regular meetings, and one special meeting, during each
Trust's most recent fiscal year. Each Trustee then in office attended at least
75% of the aggregate of the total number of meetings of the Board and the total
number of meetings held by all committees of the Board on which the Trustee
served.

INFORMATION ABOUT THE PROPOSED TRUSTEES

Listed below, for each Proposed Trustee, are their names and ages, as well as
their positions and length of service with the Trusts, principal occupations
during the past five years, the number of portfolios in the Rydex fund complex
that they oversee, and any other directorships held by the Proposed Trustee. The
business address of each Proposed Trustee is 9601 Blackwell Road, Suite 500,
Rockville, Maryland 20850.

4
<Page>

INDEPENDENT PROPOSED TRUSTEES:

<Table>
<Caption>
NUMBER OF
FUNDS IN
RYDEX FUND
NAME AND PRINCIPAL OCCUPATION(S) COMPLEX OTHER
AGE POSITION LENGTH OF TIME SERVED DURING PAST 5 YEARS OVERSEEN* DIRECTORSHIPS
- -----------------------------------------------------------------------------------------------------------------------------------

Corey A. Trustee Rydex Series Funds (1993 to Senior Vice President of [80] Trustee, Rydex
Colehour (58) present); Rydex Dynamic Funds, Marketing of Schield Variable Trust (1998
(1999 to present) Management Company, a to present)+;
registered investment advisor Trustee, Rydex ETF
(1985 to present). Trust (2003 to
present)

J. Kenneth Trustee Rydex Series Funds (1995 to Mortgage Banking Consultant [80] Trustee, Rydex
Dalton (63) present); Rydex Dynamic Funds, and Investor, The Dalton Variable Trust (1998
(1999 to present) Group, a real estate company to present)+;
(1995 to present). Trustee, Rydex ETF
Trust (2003 to
present)

John O. Demaret Trustee Rydex Series Funds (1997 to Founder and Chief Executive [81] Trustee, Rydex
(64) present); Rydex Dynamic Funds, Officer, Health Cost Controls Variable Trust (1998
(1999 to present) America, Chicago, Illinois to present)+;
(1987 to 1996) sole Trustee, ; Rydex ETF
practitioner, Chicago, Trust (2003 to
Illinois (1984 to 1987); present); Trutee,
General Counsel for the Rydex Capital
Chicago Transit Authority Partners Sphinx Fund
(1981 to 1984); Senior
Partner, O'Halloran, LaVarre
& Demaret, Northbrook,
Illinois (1978 to 1981).

Patrick T. Trustee Rydex Series Funds (1997 to Founder and Chief Executive [80] Trustee, Rydex
McCarville present); Rydex Dynamic Funds, Officer, Par Industries, Variable Trust (1998
(61) (1999 to present) Inc., Northbrook, Illinois to present)+;
(1977 to present). Trustee, Rydex ETF
Trust (2003 to
present)

Roger Somers Trustee Rydex Series Funds (1997 to President, Arrow Limousine [80] Trustee, Rydex
(59) present); Rydex Dynamic Funds, (1963 to present). Variable Trust (1998
(1999 to present) to present)+;
Trustee, Rydex ETF
Trust (2003 to
present)
</Table>

5
<Page>

INTERESTED PROPOSED TRUSTEE:

<Table>
<Caption>
NUMBER OF
FUNDS IN
RYDEX FUND
NAME AND LENGTH OF TIME PRINCIPAL OCCUPATION(S) COMPLEX OTHER
AGE POSITION SERVED DURING PAST 5 YEARS OVERSEEN* DIRECTORSHIPS
- -----------------------------------------------------------------------------------------------------------------------------------

Carl G. President Rydex Series Funds (2003 to Chief Executive Officer of [80] None
Verboncoeur and present); Rydex Dynamic Funds, Rydex Fund Services, Inc.,
(51) ** Proposed (2003 to present) PADCO Advisors, Inc., PADCO
Trustee Advisors II, Inc., Rydex
Distributors, Inc. (2003 to
present); Executive Vice
President of Rydex Fund
Services, Inc. (2000 to
2003); Vice President of
Rydex Fund Services, Inc. and
Rydex Distributors, Inc.,
(1997 to 2003).
</Table>

+ Each Trustee had previously served on the board of the Rydex Advisor
Variable Annuity Account, the predecessor to the Rydex Variable Trust.

* The number of Funds is based on each currently operating series of the
registered investment companies within the Rydex fund complex that a
Trustee currently oversees, or that a Proposed Trustee would oversee if
elected. These Funds are all advised by the Advisor, and also share a
common principal underwriter.

** Mr. Verboncoeur would be considered an "interested person" (as that term is
defined in the 1940 Act) of the Trust because of his employment as Chief
Executive Officer of the Advisor and principal underwriter.

FUND SHARES OWNED BY PROPOSED TRUSTEES. The following table shows the dollar
amount range of each Trustee's "beneficial ownership" of shares by Fund and in
the aggregate across all Funds as of December 31, 2003. Dollar amount ranges
disclosed are set forth as established by the Commission. "Beneficial ownership"
is determined in accordance with Rule 16a-1(a)(2) under the Securities Exchange
Act of 1934 ("1934 Act").

INDEPENDENT PROPOSED TRUSTEES:

<Table>
<Caption>
AGGREGATE DOLLAR RANGE FOR ALL FUNDS
NAME DOLLAR RANGE BY FUND OVERSEEN BY PROPOSED TRUSTEE
- -------------------------------------------------------------------------------------------------------

Corey A. Colehour

J. Kenneth Dalton

John O. Demaret

Patrick T. McCarville

Roger Somers
</Table>

INTERESTED PROPOSED TRUSTEES:

Carl G. Verboncoeur
</Table>

BOARD COMPENSATION. The aggregate compensation paid by each Trust to each of its
Trustees serving during the most recently completed Trust fiscal year, is set
forth in the table below. No pension or retirement benefits are accrued as part
of Fund expenses. Interested Trustees receive no compensation from the Trusts
for service as a Trustee.

6
<Page>

INDEPENDENT PROPOSED TRUSTEES:

<Table>
<Caption>
AGGREGATE AGGREGATE TOTAL
COMPENSATION COMPENSATION COMPENSATION
RYDEX SERIES RYDEX DYNAMIC FROM FUND
NAME FUNDS* FUNDS** COMPLEX++
- -----------------------------------------------------------------------------------

Corey A. Colehour

J. Kenneth Dalton

Roger Somers

John O. Demaret

Patrick T. McCarville
</Table>

* Represents compensation for fiscal year ended March 31, 2003.

** Represents compensation for fiscal year ended December 31, 2003.

++ Represents total compensation from the Trusts and, with respect to Mr.
Demaret, compensation for service as Trustee of the Rydex Capital Partners
Sphinx Fund.

BOARD STANDING COMMITTEES

AUDIT COMMITTEE. The Board of each Trust has a standing Audit Committee that is
composed of each of the Independent Trustees of the Trust. Mr. Dalton currently
serves as chairman of the Audit Committee and Messrs. Colehour, Demaret,
McCarville, and Somers currently serve as members of the Audit Committee. The
Audit Committee operates under a written charter approved by the Board. The
Audit Committee is responsible for the selection of the Trusts' independent
auditors, including evaluating their independence and meeting with such auditors
to consider and review matters relating to the Trusts' financial reports and
internal accounting. The Audit Committee meets periodically, as necessary, and
met four times during the Trusts' most recently completed fiscal year.

NOMINATING COMMITTEE. The Board currently does not have a standing nominating
committee. The Board is generally responsible for the nomination of persons for
election to the Board, with the selection and nomination of the Trustees who are
not "interested persons" of the Trust committed to the discretion of the
Independent Trustees. The Board does not believe that is necessary to have a
separate nominating committee at this time, given the fact that all of the
current members of the Board are Independent Trustees. The Board will, however,
consider establishing a nominating committee in the future. If the Board
establishes a nominating committee, it would determine whether to, among other
things, prepare a written charter for the committee, identify the process to be
followed by the committee in identifying and evaluating nominees (including
those recommended by Shareholders), and specify minimum qualifications for any
committee-recommended nominees.

COMMUNICATIONS WITH THE BOARD

Shareholders wishing to submit written communications to the Board should send
their communications c/o Rydex Investments, 9601 Blackwell Road, Suite 500,
Rockville, MD 20850. Any such communications received will be reviewed by the
Board at its next regularly scheduled meeting.

BOARD RECOMMENDATION ON PROPOSAL 1

Each of the Proposed Trustees have had distinguished careers in accounting,
finance, marketing and other areas and have during their current tenure as
Trustees brought, and expect to continue to bring, a wide range of expertise to
the Board and the oversight of the Trusts. In its deliberations regarding the
nomination of Mr.

7
<Page>

Verboncoeur, the Board considered various matters related to the management and
long-term welfare of the Trusts. The Board considered, among other factors, the
benefits that a Board member who understand the operations of the Trusts and are
exposed to the wide variety of issues that arise from overseeing the Funds on a
day-to-day basis would bring to the Board. The Board gave considerable weight to
its expectation that the Trusts will benefit from Mr. Verboncoeur's experience.
At its meeting on December 16, 2003, based on its deliberations on and
evaluation of the Proposed Trustees, the Board, including all of the independent
Trustees, unanimously agreed to nominate Corey A. Colehour, J. Kenneth Dalton,
John O. Demaret, Patrick T. McCarville, Roger Somers and Carl G. Verboncoeur to
serve as Trustees of each Trust and to recommend the approval of each of the
Proposed Trustees to shareholders.

THE TRUSTEES UNANIMOUSLY RECOMMEND THAT SHAREHOLDERS VOTE "FOR" EACH OF THE
PROPOSED TRUSTEES SET FORTH IN PROPOSAL 1.

INTRODUCTION TO PROPOSALS 2-5: APPROVAL OF NEW INVESTMENT AGREEMENTS

Proposals 2 and 3 relate to the approval by Shareholders of new investment
advisory agreements for the Trusts. The 1940 Act, which regulates investment
companies such as the Trusts, requires an investment advisory agreement between
an investment adviser and an investment company to terminate whenever there is a
change in control of the investment company's investment adviser. After an
investment advisory agreement terminates, shareholders are required to approve a
new agreement between an investment adviser and the investment company. FOR THE
REASONS DISCUSSED BELOW, THE BOARD RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" THE
APPROVAL OF EACH OF THE NEW AGREEMENTS.

INFORMATION REGARDING THE CHANGE IN CONTROL OF THE ADVISOR

The Advisor is owned entirely by the 2003 Dynamic Irrevocable Trust (the "Viragh
Family Trust"). Prior to his death on December 11, 2003, Mr. Viragh controlled
the Viragh Family Trust. Upon Mr. Viragh's death, control of the Viragh Family
Trust transferred to its trustees, Mark S. Viragh, Katherine A. Viragh and Roger
E. Young. This change in control of the Viragh Family Trust resulted in a change
in control of the Advisor, which in turn resulted in the termination of each of
the investment advisory agreements between the Advisor and the Trusts (each, an
"Old Agreement").

THE INTERIM ADVISORY AGREEMENTS

During the period between the termination of the Old Agreements and the approval
of the New Agreements by shareholders (the "Interim Period"), the Advisor has
continued to provide investment advisory services to the Funds pursuant to
interim agreements between the Advisor and each Trust that were approved by the
Board at a special meeting it held shortly after Mr. Viragh's death (each an
"Interim Agreement" and collectively, the "Interim Agreements"). Each Interim
Agreement is identical in all respects - including fees to be paid to the
Advisor - to its corresponding Old Agreement, except for the time periods
covered by the agreements. Each interim agreement provides for a termination
date no greater that 150 days from the date of the termination of the Old
Agreement, or upon approval of a new advisory agreement by shareholders,
whichever is shorter.

THE NEW ADVISORY AGREEMENTS

On February 13, 2004, the Board approved a new advisory agreement for each Trust
(each, a "New Agreement"), under which, subject to its approval by each Fund's
shareholders, the Advisor will continue serve as investment adviser to each
Fund. The Advisor's fee rates for its services to the Funds under each New
Agreement is the same as its fee rates under the corresponding Old Agreement.
More detailed information regarding fee rates under each New Agreement is
contained in the discussion below with respect to each Proposal.

8
<Page>

BOARD CONSIDERATIONS IN APPROVING THE ADVISORY AGREEMENTS. The Old Agreements
had been in place between each Trust and the Advisor since the time of each
Trust's original creation and organization. Each Old Agreement had an initial
term of two years, after which the continuance of the Old Agreement must be
specifically approved at least annually: (i) by the vote of the Trustees or by a
vote of the shareholders; and (ii) by the vote of a majority of the Independent
Trustees, cast in person at a meeting called for the purpose of voting on such
approval. Since the expiration of the initial term, each year the Board has
called and held a meeting to decide whether to renew each Old Agreement for an
additional year. In preparation for its most recent renewal meeting on August
25, 2003, 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 the Funds 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's reputation,
expertise and resources in domestic financial markets; and (k) Fund 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 Old Agreements. In addition, Mr. Viragh discussed in
executive session the plans for the continuation of the Advisors' business and
operations following his death, including (i) the planned transfer of his
interest in the Viragh Family Trust and the impact of the resulting change in
control; (ii) information regarding the individuals who would be named as
trustees of the Viragh Family Trust and who would subsequently control the
Advisor; (iii) his intention to appoint Mr. Verboncoeur to succeed him as Chief
Executive Officer of the Advisor and its affiliates; and (iv) other related
matters of interest to the Board. 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 each Old Agreement in light of
this information. In its deliberations, the Board did not identify any single
piece of information that was all-important or controlling. 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 Old Agreements were fair and reasonable; (b) concluded that the Advisor's
fees were reasonable in light of the services that the Advisor provides to the
Fund; and (c) agreed to renew each Old Agreement for an additional one-year
term.

At its meeting on February 13, 2004, the Advisor affirmed that there were no
material changes to the information that was provided to the Board at its last
advisory contract renewal meeting, and provided updated additional information
regarding the Advisor's operations and services provided to the Funds. The Board
also requested and received information regarding the terms of the New
Agreements, and were satisfied that the terms of the New Agreements set forth
materially similar rights, duties and obligations on the Advisor with regard to
its services to the Trusts and provided at least the same level of protection to
Trust and shareholders as the Old Agreements. The Board also considered the fact
that the Advisor's fee rates for its services to the Funds under each New
Agreement would be the same as its fee rates under the corresponding Old
Agreement. 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 New Agreements 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 approve
the New Agreements for an initial term of two years, subject to the approval of
the New Agreements by shareholders, and to recommend the approval of the New
Agreements to shareholders.

DESCRIPTION OF THE TERMS OF THE NEW AGREEMENTS. A form of each New Agreement is
attached to this proxy statement as Exhibits A and B. Each New Agreement
provides that the Advisor's fee rate with respect to each Fund will remain
unchanged from the fee rate contained in its corresponding Old Agreement. With
respect to

9
<Page>

duration of each New Agreement, the New Agreement provides that unless
terminated as provided therein, the New Agreement shall continue for an initial
term of two years. Thereafter, the New Agreement shall continue in effect for
successive annual periods provided such continuance is specifically approved at
least annually (i) by the vote of the Trustees or by a vote of the shareholders;
and (ii) by the vote of a majority of the Independent Trustees, cast in person
at a meeting called for the purpose of voting on such approval. Each New
Agreement provides for automatic termination, without the payment of any
penalty, in the event of its assignment (as defined by the 1940 Act).

The New Agreements are substantially similar to each other, with the exception
of the parties to the agreement. Pursuant to each New Agreement, the Advisor
will act as investment adviser to each Fund. Each of the New Agreements require
the Advisor to:

- - provide the Funds with investment research, advice and supervision and
shall furnish continuously an investment program for the Funds, consistent
with the respective investment objectives and policies of each Fund;

- - determine, in its discretion and without prior consultation, what
securities shall be purchased for the Funds, what securities shall be held
or sold by the Funds and what portion of the Funds' assets shall be held
uninvested in cash, subject always to the provisions of the Trust's
Agreement and Declaration of Trust, By-Laws and its registration statement
on file with the Commission;

- - discharge its responsibilities subject to the control of the officers and
the Board, and in compliance with the objectives, policies and limitations
set forth in the Funds' prospectus and applicable laws and regulations;

- - vote any proxies for Fund securities;

- - provide the Trust, and any other agent designated by the Trust, with
records concerning the Advisor's activities which each Fund is required to
maintain; and

- - provide other reports reasonably requested by the Trust's officers and
Board concerning the Advisor's discharge of the foregoing responsibilities.

Each New Agreement also authorizes the Advisor to select the brokers or dealers
that will execute the purchases and sales of securities of each Fund and directs
the Advisor to use its best efforts to obtain the best available price and most
favorable execution. Subject to policies established by the Board, the Advisor
also may effect individual securities transactions at commission rates in excess
of the minimum commission rates available, if the Advisor determines in good
faith that such amount of commission is reasonable in relation to the value of
the brokerage or research services provided by such broker or dealer, viewed in
terms of either that particular transaction or the Advisor's overall
responsibilities with respect to each Fund.

Under the terms of each New Agreement, the Advisor agrees to render its services
and to provide, at its own expense, the office space, furnishings, equipment and
personnel required by it to perform the services on the terms and for the
compensation provided therein, as discussed in further detail below. Each New
Agreement provides that the Adviser shall indemnify and hold harmless the Trust
against losses by reason of or arising out of the Advisor being in material
violation of any applicable federal or state law, rule or regulation or any
investment policy or restriction set forth in the Funds' Registration Statement
or any written guidelines or instruction provided in writing by the Board, or
the Advisor's willful misfeasance, bad faith or gross negligence generally in
the performance of its duties under or its reckless disregard of its obligations
and duties.

DIFFERENCES BETWEEN THE OLD AGREEMENTS AND THE NEW AGREEMENTS. The Old
Agreements were created in 1993 at the time of the organization of the Rydex
Series Funds. The Old Agreement for the Rydex Dynamic Trust, created in 2000, is
identical in all material respects to that of the 1993 form of agreement. The
primary

10
<Page>

rationale for using the 1993 form of agreement was to have a consistent
agreement, with materially equivalent contractual obligations, across all of the
Trusts.

Since 1993, industry best practices and regulatory requirements have evolved, as
has the course of dealing between the Board, on behalf of the Trusts, and the
Advisor. The New Agreements are designed to memorialize these practices and
regulatory requirements. The following bullet points summarize the material
differences between the New Agreements and the Old Agreements:

- - Incorporation of a single comprehensive schedule that sets forth each Fund
covered by the agreement and the advisory fees payable for each under the
agreement.

- - Restatement and expansion of the Advisor's duties as investment adviser to
the Trusts, including specific requirements with respect to compliance,
proxy voting, recordkeeping and Board reporting.

- - Restatement and expansion of the Advisor's duties and obligations with
respect to fund portfolio transactions, best execution and affiliated
brokerage transactions.

- - Inclusion of specific representations and warranties made by the Advisor to
the Trusts, designed to contractually obligate the Advisor to do the things
it is required to do by law (however, none of these representations or
warranties represent a change in conduct or create additional duties on the
Adviser);

- - Inclusion of a license to the Trusts to use the name "Rydex" in any fund
name. The name "Rydex" is a protected mark registered to the PADCO
Advisors, Inc.

- - Change in jurisdiction of governing law from Maryland to Delaware. Because
the Trusts are organized as Delaware statutory trusts, interpreting the
agreements under Delaware law ensures that the key protections of the
Delaware statutory trust law (i.e., limitations on liability for the Board
and shareholders, treatment of each Fund as a separate entity with respect
to assets and liabilities) would be enforced in the event of litigation.

The Board, on behalf of the Trusts, determined after reasonable consideration
that the differences between the New Agreements and the Old Agreements do not
materially change the current arrangements between the Advisor and the Trusts.
Furthermore, the Board believes that the differences, particularly the change in
jurisdiction, may provide the Trusts and their shareholders with additional
protections.

INFORMATION ABOUT THE ADVISOR. PADCO Advisors, Inc. serves as the investment
adviser to the Rydex Series Funds and Rydex Dynamic Funds. PADCO Advisors, Inc.,
together with its affiliate PADCO Advisors II, Inc., operates as Rydex
Investments. PADCO Advisors, Inc. is organized as a Maryland corporations with
their principal place of business at 9601 Blackwell Road, Suite 500, Rockville,
Maryland 20850. The Viragh Family Trust owns a controlling interest as the sole
shareholder of PADCO Advisors, Inc.

The name, address and principal occupation of the principal executive officers
of PADCO Advisors, Inc. are listed below:

<Table>
<Caption>
NAME TITLE PRINCIPAL OCCUPATION
- ------------------------------------------------------------------------------------------------

Carl G. Verboncoeur Chief Executive Officer Chief Executive Officer, PADCO Advisors,
and Treasurer Inc.; PADCO Advisors II, Inc.; Rydex
Fund Services, Inc.; and Rydex
Distributors, Inc.

Michael P. Byrum Chief Operating Officer Chief Operating Officer, PADCO Advisors,
Inc.; PADCO Advisors II, Inc.; Rydex
Fund Services, Inc.; and Rydex
Distributors, Inc.

Robert M. Steele Executive Vice President Executive Vice President, PADCO
Advisors, Inc.; PADCO Advisors II, Inc.;
and Rydex Distributors, Inc.

Joanna M. Haigney Secretary and Assistant Chief Compliance Officer, PADCO
Advisors, Inc.; PADCO
</Table>

11
<Page>

<Table>
<Caption>
NAME TITLE PRINCIPAL OCCUPATION
- ------------------------------------------------------------------------------------------------

Treasurer Advisors II, Inc.; Rydex Fund Services,
Inc.; and Rydex Distributors, Inc.
</Table>

The address for each of the above individuals is c/o Rydex Investments, 9601
Blackwell Road, Suite 500, Rockville, Maryland 20850.

PROPOSAL 2. THE APPROVAL OF A NEW INVESTMENT ADVISORY AGREEMENT BETWEEN RYDEX
SERIES FUNDS AND PADCO ADVISORS, INC.

TRUSTS/FUNDS VOTING ON PROPOSAL 2: RYDEX SERIES FUNDS:
All Funds

The Old Agreement between the Advisor and the Trust was dated May 7, 1993 and
was approved by the sole shareholder of the Trust in conjunction with the
Trust's original creation and organization. The Old Agreement had been in effect
from that date through its termination upon the change in control of the Advisor
on December 11, 2003, subject to its annual renewal by the Board as discussed
above. The terms of the New Agreement, other than compensation, which is
discussed below, are described in the section above entitled "Description of the
Terms of the New Agreements." A form of the New Agreement is included as Exhibit
A to this Proxy Statement.

The table below provides, with respect to each of the Trust's Funds, (i) the
Advisor's annual rate of compensation under the New Agreement, stated as a
percentage of the Fund's assets; (ii) the amount of advisory fees paid to the
Advisor pursuant to the Old Agreement for the Trust's most recently completed
fiscal year ended March 31, 2003; (iii) amounts paid by the Funds to Rydex Fund
Services, Inc. (the "Servicer"), an affiliate of the Advisor, for administration
services for the Trust's most recently completed fiscal year ended March 31,
2003; (iv) amounts paid by the Funds to the Servicer for accounting services for
the Trust's most recently completed fiscal year ended March 31, 2003; and (v)
amounts paid by the Funds to Rydex Distributors, Inc. (the "Distributor"), an
affiliate of the Advisor, for services provided pursuant to the Funds'
distribution and shareholder services plans for the Trust's most recently
completed fiscal year ended March 31, 2003. There were no brokerage commissions
paid to the Distributor (or any other affiliate of the Advisor) during the
Trust's most recently completed fiscal year ended March 31, 2003. The Advisor
also serves as advisor to the Rydex Variable Trust's Funds, certain of which are
substantially similar to the Funds below. The Advisor's compensation for the
Rydex Variable Trust's Funds is described in this Proxy Statement under Proposal
3.

<Table>
<Caption>
FEES PAID TO FEES PAID TO
ADVISORY FEES PAID TO SERVICER SERVICER FEES PAID TO
FUND FEE RATE ADVISER (ADMINISTRATION) (ACCOUNTING) DISTRIBUTOR
- -------------------------------------------------------------------------------------------------------------------------

Nova 0.75%* $ 0 $ 479,921 $ 191,427 $ 272,455
Nova Master 0.75% $ 1,439,326 $ 0 $ 0 n/a
Ursa 0.90%* $ 0 $ 1,110,714 $ 383,247 $ 254,494
Ursa Master 0.90% $ 3,997,936 $ 0 $ 0 n/a
OTC 0.75% $ 4,004,889 $ 1,335,851 $ 447,781 $ 157,164
Arktos 0.90%* $ 1,367,917 $ 379,917 $ 151,916 $ 27,635
Arktos Master 0.90% $ 349,631 $ 0 $ 0 n/a
Medius 0.90% $ 0 $ 97,202 $ 38,848 $ 125,660
Mekros 0.90% $ 533,595 $ 148,344 $ 59,288 $ 222,884
U.S. Government Bond 0.50% $ 259,870 $ 103,996 $ 51,974 $ 14,139
Juno 0.90%* $ 0 $ 190,896 $ 76,345 $ 136,625
Juno Master 0.90% $ 686,240 $ 0 $ 0 n/a
Large-Cap Europe 0.90% $ 130,445 $ 36,248 $ 14,494 $ 39,073
Large-Cap Japan 0.90% $ 149,901 $ 41,678 $ 16,656 $ 42,360
Banking 0.85% $ 235,472 $ 69,322 $ 27,703 $ 53,036
</Table>

12
<Page>

Basic Materials 0.85% $ 174,818 $ 51,486 $ 20,567 $ 37,661
Biotechnology 0.85% $ 1,281,682 $ 377,194 $ 150,780 $ 93,797
Consumer Products 0.85% $ 264,410 $ 77,847 $ 31,107 $ 99,205
Electronics 0.85% $ 404,121 $ 118,950 $ 47,544 $ 38,570
Energy 0.85% $ 193,050 $ 56,823 $ 22,712 $ 60,475
Energy Services 0.85% $ 284,470 $ 83,751 $ 33,467 $ 69,587
Financial Services 0.85% $ 330,898 $ 97,398 $ 38,929 $ 115,578
Health Care 0.85% $ 381,970 $ 112,414 $ 44,938 $ 130,986
Internet 0.85% $ 95,955 $ 28,226 $ 11,289 $ 30,204
Leisure 0.85% $ 92,939 $ 27,374 $ 10,934 $ 18,482
Precious Metals 0.75% $ 592,246 $ 197,508 $ 78,966 $ 20,670
Retailing 0.85% $ 203,991 $ 60,069 $ 23,999 $ 62,937
Technology 0.85% $ 291,573 $ 85,797 $ 34,303 $ 101,131
Telecommunications 0.85% $ 170,536 $ 50,170 $ 20,063 $ 37,375
Transportation 0.85% $ 88,445 $ 26,066 $ 10,405 $ 14,527
Utilities 0.85% $ 145,230 $ 42,752 $ 17,086 $ 26,026
Sector Rotation 0.90% $ 631,572 $ 175,485 $ 70,175 $ 290,026
Core Equity 0.70%** $ 73,449 $ 20,403 $ 8,161 $ 33,587
U.S. Government Money Market 0.50% $ 8,267,843 $ 3,303,268 $ 830,951 $ 2,431,533
</Table>

* The Agreement provides that the fee shall be 0.00% for any period during
which the Fund invests through a master-feeder structure.

** The Agreement provides that the Core Equity Fund pays the Advisor a
management fee that is comprised of two components: the first component is
an annual basic fee (the "basic fee") equal to 0.70% of the Core Equity
Fund's average daily net assets, and the second component is a performance
fee adjustment. The Core Equity Fund's basic fee is subject to upward or
downward adjustment depending on whether, and to what extent, the
investment performance of the Fund for the relevant performance period
exceeds, or is exceeded by, the investment record (the "record") of the
index determined by the Fund to be appropriate over the same period. The
Trustees have designated the Russell 3000(R) Index (the "Index") for this
purpose. The Index measures the performance of the 3,000 largest U.S.
companies based on total market capitalization, which represents
approximately 98% of the investable U.S. equity market. The performance
period consists of a rolling 12-month period, and will be calculated and
applied at the end of each month. Each 0.0375% of difference will result in
a performance rate adjustment of 0.01%. The maximum annualized performance
rate adjustment is +/- 0.20%. A percentage of this rate (based on the
number of days in the current month) is then multiplied by the average
daily net assets of the Core Equity Fund over the entire performance
period, giving the dollar amount that will be added to (or subtracted from)
the basic fee. The monthly performance adjustment will be further adjusted
to the extent necessary to insure that the total of such adjustments to the
basic fee does not exceed +/- 0.20% of average daily net assets for that
year.

BOARD RECOMMENDATION ON PROPOSAL 2

At its meeting on February 13, 2004, based on its deliberations on and
evaluation of the information described above, the Board, including all of the
independent Trustees, unanimously: (a) concluded that terms of the New 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 Funds; and (c) agreed to
approve the New Agreement for an initial term of two years and to recommend the
approval of the New Agreement to shareholders.

THE TRUSTEES UNANIMOUSLY RECOMMEND THAT SHAREHOLDERS OF EACH FUND VOTE "FOR"
PROPOSAL 2.

13
<Page>

14
<Page>

PROPOSAL 3. THE APPROVAL OF A NEW INVESTMENT ADVISORY AGREEMENT BETWEEN RYDEX
DYNAMIC FUNDS AND PADCO ADVISORS, INC.

TRUSTS/FUNDS VOTING ON PROPOSAL 4: RYDEX DYNAMIC FUNDS:
All Funds

The Old Agreement between the Advisor and the Trust was dated May 1, 2000 and
was approved by the sole shareholder of the Trust in conjunction with the
Trust's original creation and organization. The Old Agreement had been in effect
from that date through its termination upon the change in control of the Advisor
on December 11, 2003, subject to its annual renewal by the Board as discussed
above. The terms of the New Agreement, other than compensation, which is
discussed below, are described in the section above entitled "Description of the
Terms of the New Agreements." A form of the New Agreement between the Trust and
the Advisor is included as Exhibit D to this Proxy Statement.

The table below provides, with respect to each of the Trust's Funds, (i) the
Advisor's annual rate of compensation under the New Agreement, stated as a
percentage of the Fund's assets; (ii) the amount of advisory fees paid to the
Advisor pursuant to the Old Agreement (and the Interim Agreement) for the
Trust's most recently completed fiscal year ended December 31, 2003; (iii)
amounts paid by the Funds to the Servicer for administration services for the
Trust's most recently completed fiscal year ended December 31, 2003; (iv)
amounts paid by the Funds to the Servicer for accounting services for the
Trust's most recently completed fiscal year ended December 31, 2003; and (v)
amounts paid by the Funds to the Distributor for services provided pursuant to
the Trust's investor services plan for the Trust's most recently completed
fiscal year ended December 31, 2003. There were no brokerage commissions paid to
the Distributor (or any other affiliate of the Advisor) during the Trust's most
recently completed fiscal year ended December 31, 2003. The Advisor also serves
as advisor to the Rydex Variable Trust's Funds, certain of which are
substantially similar to the Funds below. The Advisor's compensation for the
Rydex Variable Trust's Funds is described in this Proxy Statement under Proposal
3.

Titan 500* 0.90% $ 0
Titan 500 Master 0.90%
Tempest 500* 0.90% $ 0
Tempest 500 Master 0.90%
Velocity 100* 0.90% $ 0
Velocity 100 Master 0.90%
Venture 100* 0.90% $ 0
Venture 100 Master 0.90%
</Table>

* The Agreement provides that the fee shall be 0.00% for any period during
which the Fund invests through a master-feeder structure.

BOARD RECOMMENDATION ON PROPOSAL 3

15
<Page>

THE TRUSTEES UNANIMOUSLY RECOMMEND THAT SHAREHOLDERS OF EACH FUND VOTE "FOR"
PROPOSAL 3.

DISCUSSION OF PROPOSAL 4: CHANGE IN FUNDAMENTAL POLICIES

PROPOSAL 4. THE APPROVAL OF THE CHANGE OF INVESTMENT OBJECTIVE FROM A
FUNDAMENTAL TO A NON-FUNDAMENTAL POLICY (THIS PROPOSAL INVOLVES
SEPARATE VOTES ON SUB-PROPOSALS 4(a)-4(e)).

The Board is recommending that shareholders approve proposals to change the
investment objective of certain of the Rydex Series Funds from a fundamental
policy to a non-fundamental policy. Under the 1940 Act, "fundamental" investment
restrictions may be changed or eliminated only if shareholders approve such
action. Non-fundamental policies may be changed by a vote of a majority of the
Board, and do not require shareholder approval.

Currently, the investment objective of each of the Rydex Series Funds' Nova
Fund, Nova Master Fund, Ursa Fund, Ursa Master Fund, OTC Fund, U.S. Government
Bond Fund, Juno Fund and Juno Master Fund, including the benchmarks of the Nova
Fund, Nova Master Fund, Ursa Fund and Ursa Master Fund, are fundamental. With
the exception of the aforementioned Funds included in this Proposal, the
remainder of the Funds' investment objectives are non-fundamental policies. The
Board believes that it is in shareholders' best interests to provide the Board
with the flexibility to change these Funds investment objectives (or benchmarks)
in the future, without the costs and delays associated with holding a special
shareholders' meeting to do so. However, there is no current intention by the
Board to change the investment objective or benchmark of any of the Funds
included in this Proposal. Each Fund will continue to be managed in accordance
with the Trust's prospectus as filed with the Commission and as amended from
time to time.

Shareholders are requested to vote separately, as applicable, on each
Sub-Proposal in Proposal 4. Any Sub-Proposal that is approved by shareholders of
the Fund(s) will be effective for that Fund as of the date of the supplement to
the Fund's registration statement reflecting such shareholder approval to change
certain of the Fund's fundamental policy, which is anticipated to be shortly
after the date of shareholder approval. THE BOARD OF DIRECTORS UNANIMOUSLY
RECOMMENDS A VOTE "FOR" EACH SUB-PROPOSAL.

SUB-PROPOSAL 4(a). THE APPROVAL OF THE CHANGE OF RYDEX SERIES FUNDS' NOVA
FUND AND NOVA MASTER FUND INVESTMENT OBJECTIVE FROM A
FUNDAMENTAL TO A NON-FUNDAMENTAL POLICY.

The current investment objective of each of the Nova Fund and Nova Master
Fund is to seek to provide investment results that match the performance of
a specific benchmark on a daily basis. The Funds' current benchmark is 150%
of the performance of the S&P 500 Index. This investment objective and the
benchmark are fundamental policies of the Funds. The Board and the Advisor
believe that the Advisor's ability to manage Fund assets in a changing
investment environment will be enhanced because the Fund will have greater
investment management flexibility to respond to market, industry,
regulatory or technical changes by seeking Board approval only when
necessary to revise its investment objective or benchmark, without the
costs and delays associated with holding a special shareholders' meeting to
do so. If approved by Shareholders, each Fund's investment objective and
benchmark will be non-fundamental policies.

THE TRUSTEES UNANIMOUSLY RECOMMEND THAT FUND SHAREHOLDERS VOTE "FOR"
SUB-PROPOSAL 4(a).

16
<Page>

SUB-PROPOSAL 4(b). THE APPROVAL OF THE CHANGE OF RYDEX SERIES FUNDS'
URSA FUND AND URSA MASTER FUND INVESTMENT
OBJECTIVE FROM A FUNDAMENTAL TO A NON-FUNDAMENTAL
POLICY.

The current investment objective of each of the Ursa Fund and Ursa Master
Fund is to seek to provide investment results that will inversely correlate
to the performance of the S&P 500 Index. This investment objective and the
benchmark are fundamental policies of the Funds. The Board and the Advisor
believe that the Advisor's ability to manage Fund assets in a changing
investment environment will be enhanced because the Fund will have greater
investment management flexibility to respond to market, industry,
regulatory or technical changes by seeking Board approval only when
necessary to revise its investment objective or benchmark, without the
costs and delays associated with holding a special shareholders' meeting to
do so. If approved by Shareholders, each Fund's investment objective and
benchmark will be non-fundamental policies.

THE TRUSTEES UNANIMOUSLY RECOMMEND THAT FUND SHAREHOLDERS VOTE "FOR"
SUB-PROPOSAL 4(b).

SUB-PROPOSAL 4(c). THE APPROVAL OF THE CHANGE OF RYDEX SERIES FUNDS'
OTC FUND INVESTMENT OBJECTIVE FROM A FUNDAMENTAL
TO A NON-FUNDAMENTAL POLICY.

The current investment objective of the OTC Fund is to seek to provide
investment results that correspond to a benchmark for over-the-counter
securities. The Fund's current benchmark is the Nasdaq 100 Index. This
investment objective is a fundamental policy of the Fund. The Board and the
Advisor believe that the Advisor's ability to manage Fund assets in a
changing investment environment will be enhanced because the Fund will have
greater investment management flexibility to respond to market, industry,
regulatory or technical changes by seeking Board approval only when
necessary to revise its investment objective or benchmark, without the
costs and delays associated with holding a special shareholders' meeting to
do so. If approved by Shareholders, the Fund's investment objective will be
a non-fundamental policy.

THE TRUSTEES UNANIMOUSLY RECOMMEND THAT FUND SHAREHOLDERS VOTE "FOR"
SUB-PROPOSAL 4(c).

SUB-PROPOSAL 4(d). THE APPROVAL OF THE CHANGE OF RYDEX SERIES FUNDS'
U.S. GOVERNMENT BOND FUND INVESTMENT OBJECTIVE
FROM A FUNDAMENTAL TO A NON-FUNDAMENTAL POLICY.

The current investment objective of the U.S. Government Bond Fund is to
seek to provide investment results that correspond to a benchmark for U.S.
Government securities. The Fund's current benchmark is 120% of the price
movement of the current U.S. Treasury Bond with the longest maturity (the
"Long Treasury Bond"). This investment objective is a fundamental policy of
the Fund. The Board and the Advisor believe that the Advisor's ability to
manage Fund assets in a changing investment environment will be enhanced
because the Fund will have greater investment management flexibility to
respond to market, industry, regulatory or technical changes by seeking
Board approval only when necessary to revise its investment objective or
benchmark, without the costs and delays associated with holding a special
shareholders' meeting to do so. If approved by Shareholders, the Fund's
investment objective will be a non-fundamental policy.

THE TRUSTEES UNANIMOUSLY RECOMMEND THAT FUND SHAREHOLDERS VOTE "FOR"
SUB-PROPOSAL 4(d).

17
<Page>

SUB-PROPOSAL 4(e). THE APPROVAL OF THE CHANGE OF RYDEX SERIES FUNDS'
JUNO FUND AND JUNO MASTER FUND INVESTMENT
OBJECTIVE FROM A FUNDAMENTAL TO A NON-FUNDAMENTAL
POLICY.

The current investment objective of each of the Juno Fund and Juno Master
Fund is to seek to provide total returns that will inversely correlate to
the price movements of a benchmark for U.S. Treasury debt instruments or
futures contract on a debt instrument. The Funds' current benchmark is the
inverse of the daily price movement of the Long Treasury Bond. This
investment objective is a fundamental policy of the Funds. The Board and
the Advisor believe that the Advisor's ability to manage Fund assets in a
changing investment environment will be enhanced because the Fund will have
greater investment management flexibility to respond to market, industry,
regulatory or technical changes by seeking Board approval only when
necessary to revise its investment objective or benchmark, without the
costs and delays associated with holding a special shareholders' meeting to
do so. If approved by Shareholders, each Fund's investment objective and
benchmark will be non-fundamental policies.

THE TRUSTEES UNANIMOUSLY RECOMMEND THAT FUND SHAREHOLDERS VOTE "FOR"
SUB-PROPOSAL 4(e).

GENERAL INFORMATION ABOUT THE TRUSTS AND OTHER MATTERS

INFORMATION ABOUT TRUST OFFICERS AND SERVICE PROVIDERS

PRINCIPAL UNDERWRITER. Rydex Distributors, Inc., 9601 Blackwell Road, Suite 500,
Rockville, MD 20850, serves as distributor and principal underwriter to the
Trusts.

ADMINISTRATOR. Rydex Fund Services, Inc., 9601 Blackwell Road, Suite 500,
Rockville, MD 20850, serves as administrator to the Trusts.

TRUST OFFICERS. 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 officers of the
Trusts. The business address of each officer is 9601 Blackwell Road, Suite 500,
Rockville, Maryland 20850. None of the officers receive compensation from the
Trusts for their services.

<Table>
<Caption>
PRINCIPAL OCCUPATION(S)
NAME AND AGE POSITION LENGTH OF TIME SERVED DURING PAST 5 YEARS
- --------------------------------------------------------------------------------------------------------------------

Carl G. President Rydex Series Funds (2003 to Chief Executive Officer of Rydex Fund Services,
Verboncoeur (51) present); Rydex Dynamic Inc., PADCO Advisors, Inc., PADCO Advisors II, Inc.
Funds, (2003 to present); and Rydex Distributors, Inc. (2003 to present);
Executive Vice President of Rydex Fund Services,
Inc. (2000 to 2003); Vice President of Rydex Fund
Services, Inc. and Rydex Distributors, Inc., (1997
to 2003).

Nick Bonos (__) Vice Rydex Series Funds (2003 to Controller, Rydex Fund Services, Inc. (____ to
President and present); Rydex Dynamic present); [additional information to be provided]
Treasurer Funds, (2003 to present)

Robert M. Steele Vice Rydex Series Funds (1994 to Executive Vice President of PADCO Advisors, Inc. and
(45) President and present); Rydex Dynamic PADCO Advisors II, Inc., (2000 to present); Vice
Secretary Funds, (1999 to present) President of Rydex Distributors, Inc. (1996 to
present); Vice President of The Boston Company,
Inc., an institutional money management firm (1987
to 1994).
</Table>

18
<Page>

Michael P. Byrum Vice President Rydex Series Funds (1997 to Chief Operating Officer and Chief Investment Officer
(33) present) Rydex Dynamic Funds, of PADCO Advisors, Inc. and PADCO Advisors II, Inc.
(1999 to present) (2003 to present); Executive Vice President and
Senior Portfolio Manager of PADCO Advisors, Inc. and
PADCO Advisors II, Inc. (1993 to 2003); Secretary of
Rydex Distributors, Inc. (1996 to present).

Joanna M. Haigney Assistant Rydex Series Funds (2000 to Vice President of Compliance of Rydex Fund Services,
(37) Secretary present); Rydex Dynamic Inc. (2000 to present); Vice President Fund
Funds, (2000 to present) Administration, Chase Global Funds Services Co., a
division of Chase Manhattan Bank N.A. (1994 to 1999).
</Table>

INFORMATION ABOUT THE AUDIT COMMITTEE

AUDIT COMMITTEE RESPONSIBILITIES. 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
Audit Committee by the internal auditing department of the Trust's service
providers 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.

SELECTION OF INDEPENDENT AUDITORS. The Audit Committee and the Board selected
the firm of PricewaterhouseCoopers LLP ("PwC") as independent auditors of each
Trust for the current fiscal year. Representatives of PwC are not expected to be
present at the Meeting, but will have the opportunity to make a statement if
they wish, and will be available should any matter arise requiring their
presence. The firm of Deloitte & Touche LLP ("Deloitte") previously served as
independent auditors of Rydex Series Funds for its most recently completed
fiscal year ended March 31, 2003. The decision to engage PwC to replace Deloitte
as independent auditors of Rydex Series Funds was made by the Audit Committee,
based on its belief that consolidating the Trusts' audit services with one audit
firm may result in the achievement of certain efficiencies and cost savings to
the Trusts over time. Deloitte's report on the Rydex Series Funds financial
statements for each of the past two fiscal years did not contain any adverse
opinion or disclaimer of opinion, nor was it qualified or modified as to
uncertainty, audit scope or accounting principles. In addition, during the Rydex
Series Funds two most recent fiscal years, there were no disagreements with
Deloitte on any matter of accounting principles or practices, financial
statement disclosure or auditing scope of procedure.

AUDIT FEES. The aggregate fees paid to PwC for professional services rendered by
PwC for the audit of the Trust annual financial statements or for services that
are normally provided by PwC in connection with statutory and regulatory filings
or engagements were $[__________] and $[__________] for Rydex Dynamic Funds'
fiscal years ended December 31, 2003 and 2002, respectively. The aggregate fees
paid to Deloitte for professional services rendered by Deloitte for the audit of
the Trust annual financial statements or for services that are normally provided
by Deloitte in connection with statutory and regulatory filings or engagements
were

19
<Page>

$[__________] and $[__________] for Rydex Series Funds' fiscal years ended
March 31, 2003 and 2002, respectively.

AUDIT-RELATED FEES. The aggregate fees paid to PwC for assurance and related
services by PwC that are reasonably related to the performance of the audit or
review of Trust financial statements and are not reported under "Audit Fees"
above were $[__________] and $[__________] for Rydex Dynamic Funds' fiscal years
ended December 31, 2003 and 2002, respectively. The aggregate fees paid to
Deloitte for assurance and related services by Deloitte that are reasonably
related to the performance of the audit or review of Trust financial statements
and are not reported under "Audit Fees" above were $[__________] and
$[__________] for Rydex Series Funds' fiscal years ended March 31, 2003 and
2002, respectively. The services for which these fees were paid included [the
review of semi-annual reports to shareholders, internal control testing and
evaluation and services in connection with ___________________]. In addition,
the Audit Committee pre-approves PwC's engagement for audit-related services
with the Advisor and certain entities controlled by, or under common control
with the Advisor that provide ongoing services to the Trusts, which engagements
relate directly to the operations and financial reporting of the Funds. The fees
for these services were $[__________] and $[__________] for the fiscal years
ended December 31, 2003 and 2002, respectively.

TAX FEES. [PwC did not render any tax compliance, tax advice or tax planning
services to the Trusts for the two most recently completed fiscal years. PwC did
not render any such tax services to the Advisor and certain entities controlled
by, or under common control with the Advisor that provide ongoing services to
the Trusts, which engagements relate directly to the operations and financial
reporting of the Funds for the two most recently completed fiscal years.]

ALL OTHER FEES. [PwC did not bill for other products and services, other than
the services reported above, for the two most recently completed fiscal years.
PwC did not render other services to the Advisor and certain entities controlled
by, or under common control with the Advisor that provide ongoing services to
the Trusts, which engagements relate directly to the operations and financial
reporting of the Funds for the two most recently completed fiscal years.]

AUDIT COMMITTEE PRE-APPROVAL POLICIES AND PROCEDURES. As of the date of this
proxy statement, the Audit Committee has not adopted pre-approval policies and
procedures. As a result, all services provided by PwC must be directly
pre-approved by the Audit Committee.

AGGREGATE NON-AUDIT FEES. [The aggregate non-audit fees paid to PwC for
professional services rendered by PwC were $[__________] and $[__________] for
the fiscal years ended December 31, 2003 and 2002, respectively for Rydex
Dynamic Funds. The aggregate non-audit fees paid to PwC for professional
services rendered by PwC to the Advisor and certain entities controlled by, or
under common control with the Advisor that provide ongoing services to the
Trusts, which engagements relate directly to the operations and financial
reporting of the Funds, were $[__________] and $[__________] for the two most
recently completed fiscal years.].

SHAREHOLDERS SHARING THE SAME ADDRESS.

If two or more Shareholders share the same address, only one copy of this proxy
statement is being delivered to that address, unless the Trust has received
contrary instructions from one or more of the Shareholders at that shared
address. Upon written or oral request, the Trust will deliver promptly a
separate copy of this proxy statement to a shareholder at a shared address.
Please call 1-800-820-0888 or forward a written request to the Trust at 9601
Blackwell Road, Suite 500, Rockville, MD 20850 if you would like to (1) receive
a separate copy of this proxy statement; (2) receive your annual reports or
proxy statements separately in the future; or (3) request delivery of a single
copy of annual reports or proxy statements if you are currently receiving
multiple copies at a shared address.

BENEFICIAL OWNERSHIP INFORMATION

20
<Page>

As of March 2, 2004, the following persons were the only persons who were record
owners or, to the knowledge of the Trust, were beneficial owners of 5% or more
of the shares of a Fund.

<Table>
<Caption>
NAME AND ADDRESS NUMBER OF PERCENTAGE OF
FUND OF BENEFICIAL OWNER SHARES FUND SHARES
- ---------------------------------------------------------------------------------

[to be completed]

</Table>

SHAREHOLDER PROPOSALS

The Trust is not required to hold annual shareholder meetings. Shareholders
wishing to submit proposals for inclusion or presentation in a proxy statement
for a subsequent meeting should send their written proposals to the Secretary of
the Trust c/o Rydex Investments, 9601 Blackwell Road, Suite 500, Rockville, MD
20850.

OTHER MATTERS

The Trustees know of no other business to be brought before the Meeting.
However, if any other matters properly come before the Meeting, it is their
intention that proxies which do not contain specific restrictions to the
contrary will be voted on such matters in accordance with the judgment of the
persons named in the enclosed proxy.

ANNUAL AND SEMI-ANNUAL REPORTS TO SHAREHOLDERS

For a free copy of a Trust's most recent annual report (and most recent
semi-annual report succeeding the annual report, if any), Shareholders may call
1-800-820-0888 or write to the Funds at 9601 Blackwell Road, Suite 500,
Rockville, MD 20850.

OTHER BUSINESS

The Board does not intend to present any other business at the Meeting. If any
other matter may properly come before the Meeting, or any adjournment thereof,
the persons named in the accompanying proxy card(s) intend to vote, act, or
consent thereunder in accordance with their best judgment at that time on such
matters. No annual or other special meeting is currently scheduled for the
Trusts. Mere submission of a shareholder proposal does not guarantee the
inclusion of the proposal in the proxy statement or presentation of the proposal
at the Meeting because inclusion and presentation are subject to compliance with
certain federal regulations.

PROMPT EXECUTION AND RETURN OF THE ENCLOSED PROXY CARD IS REQUESTED. A
SELF-ADDRESSED, POSTAGE-PAID ENVELOPE IS ENCLOSED FOR YOUR CONVENIENCE, ALONG
WITH INSTRUCTIONS ON HOW TO VOTE OVER THE INTERNET OR BY TELEPHONE SHOULD YOU
PREFER TO VOTE BY ONE OF THOSE METHODS.

21
<Page>

RYDEX SERIES FUNDS
RYDEX DYNAMIC FUNDS

[NAME OF FUNDS]

SPECIAL MEETING OF THE SHAREHOLDERS

PROXY SOLICITED BY THE BOARD OF TRUSTEES FOR
THE SPECIAL MEETING OF SHAREHOLDERS, TO BE HELD ON

APRIL 30, 2004

The undersigned hereby appoints Joanna Haigney, Nick Bonos and Mike Byrum, and
each of them individually, with power to act without the other and with the
right of substitution in each, the proxies of the undersigned to vote all shares
of the above-referenced Funds (the "Funds") held by the undersigned on March 2,
2004, at the Meeting, to be held at the offices of Rydex Investments, 9601
Blackwell Road, Suite 500, Rockville, MD 20850 at 4:30 p.m. Eastern Time and at
any adjournment(s) or postponement(s) thereof, with all powers the undersigned
would possess if present in person. All previous proxies given with respect to
the Meeting are revoked. The undersigned acknowledges receipt of the Notice of
Special Meeting and Proxy Statement dated __________, 2004.

Please refer to the Proxy Statement for a discussion of each of these matters.
IF NO SPECIFICATION IS MADE, THE PROXY SHALL BE VOTED FOR THE PROPOSALS. As to
any other matter, the Proxies shall vote in accordance with their best judgment.
THE BOARD OF TRUSTEES RECOMMENDS A VOTE FOR EACH OF THE FOLLOWING PROPOSALS:

1. Consider and vote on the following as Trustees of the Trust: (1) Corey A.
Colehour; (2) J. Kenneth Dalton; (3) John O. Demaret; (4) Roger Somers; and
(5) Carl G. Verboncoeur:

____FOR ALL NOMINEES LISTED (EXCEPT AS MARKED TO THE CONTRARY BELOW)

____WITHHOLD AUTHORITY TO VOTE FOR ALL NOMINEES

WITHHOLD AUTHORITY TO VOTE FOR THE FOLLOWING NOMINEES:
_____________________________________________

2. Approve a new investment advisory agreement between Rydex Series Funds and
PADCO Advisors, Inc. (Series Funds Only):

____FOR ____AGAINST ____ABSTAIN

<Page>

3. Approve a new investment advisory agreement between Rydex Dynamic Funds and
PADCO Advisors, Inc. (Dynamic Funds Only):

____FOR ____AGAINST ____ABSTAIN

4. Approve the change of investment objective from a fundamental to a
non-fundamental policy for each of the following Funds:

4(a) Rydex Nova Fund ____FOR ____AGAINST ____ABSTAIN

4(b) Rydex Ursa Fund ____FOR ____AGAINST ____ABSTAIN

4(c) Rydex OTC Fund ____FOR ____AGAINST ____ABSTAIN

4(d) Rydex U.S. Government Bond Fund ____FOR ____AGAINST ____ABSTAIN

4(e) Rydex Juno Fund ____FOR ____AGAINST ____ABSTAIN

5. Any other business properly brought before the Meeting:

____FOR ____AGAINST ____ABSTAIN

THIS PROXY WILL, WHEN PROPERLY EXECUTED, BE VOTED AS DIRECTED HEREIN BY THE
SIGNING SHAREHOLDER. IF NO DIRECTION IS GIVEN WHEN THE DULY EXECUTED PROXY IS
RETURNED, THIS PROXY WILL BE VOTED FOR THE FOREGOING PROPOSALS AND WILL BE VOTED
IN THE APPOINTED PROXIES' DISCRETION UPON SUCH OTHER BUSINESS AS MAY PROPERLY
COME BEFORE THE MEETING.

The undersigned acknowledges receipt with this proxy of a copy of the Notice of
Special Meeting and the proxy statement. Your signature(s) on this proxy should
be exactly as your name(s) appear on this proxy. If the shares are held jointly,
each holder should sign this proxy. Attorneys-in-fact, executors,
administrators, trustees or guardians should indicate the full title and
capacity in which they are signing.

Dated: , 2004
-----------------

--------------------------------
Signature of Shareholder

--------------------------------
Signature (Joint owners)

2
<Page>
EXHIBIT A

ADVISORY AGREEMENT

ADVISORY AGREEMENT made as of this ____th day of ____________, 2004 by and
between RYDEX SERIES FUNDS (the "Trust"), a Delaware statutory trust registered
as an investment company under the Investment Company Act of 1940, as amended
(the "1940 Act"), and PADCO ADVISORS, INC., a Maryland corporation with its
principal place of business at 9601 Blackwell Road, Suite 500, Rockville,
Maryland 20850 (the "Adviser").

W I T N E S S E T H

WHEREAS, the Board of Trustees (the "Board") of the Trust has selected the
Adviser to act as investment adviser to the Trust on behalf of the series set
forth on Schedule A to this Agreement (each a "Fund" and, collectively, the
"Funds"), as such Schedule may be amended from time to time upon mutual
agreement of the parties, and to provide certain related services, as more fully
set forth below, and to perform such services under the terms and conditions
hereinafter set forth;

NOW, THEREFORE, in consideration of the mutual covenants and benefits set forth
herein, the Trust and the Adviser do hereby agree as follows:

1. THE ADVISER'S SERVICES.

(a) DISCRETIONARY INVESTMENT MANAGEMENT SERVICES. The Adviser shall
act as investment adviser with respect to the Funds. In such capacity, the
Adviser shall, subject to the supervision of the Board, regularly provide
the Funds with investment research, advice and supervision and shall
furnish continuously an investment program for the Funds, consistent with
the respective investment objectives and policies of each Fund. The Adviser
shall determine, from time to time, what securities shall be purchased for
the Funds, what securities shall be held or sold by the Funds and what
portion of the Funds' assets shall be held uninvested in cash, subject
always to the provisions of the Trust's Agreement and Declaration of Trust,
By-Laws and its registration statement on Form N-1A (the "Registration
Statement") under the 1940 Act, and under the Securities Act of 1933, as
amended (the "1933 Act"), covering Fund shares, as filed with the
Securities and Exchange Commission (the "Commission"), and to the
investment objectives, policies and restrictions of the Funds, as each of
the same shall be from time to time in effect. To carry out such
obligations, the Adviser shall exercise full discretion and act for the
Funds in the same manner and with the same force and effect as the Funds
themselves might or could do with respect to purchases, sales or other
transactions, as well as with respect to all other such things necessary or
incidental to the furtherance or conduct of such purchases, sales or other
transactions. No reference in this Agreement to the Adviser having full
discretionary authority over each Fund's investments shall in any way limit
the right of the Board, in its sole discretion, to establish or revise
policies in connection with the management of a Fund's assets or to
otherwise exercise its right to control the overall management of a Fund.

(b) COMPLIANCE. The Adviser agrees to comply with the requirements of
the 1940 Act, the Investment Advisers Act of 1940 (the "Advisers Act"), the
1933 Act, the Securities Exchange Act of 1934, as amended (the "1934 Act"),
the Commodity Exchange Act and the respective rules and regulations
thereunder, as applicable, as well as with all other applicable federal and
state laws, rules, regulations and case law that relate to the services and
relationships described hereunder and to the conduct of its business as a
registered investment adviser. The

A-1
<Page>

Adviser also agrees to comply with the objectives, policies and
restrictions set forth in the Registration Statement, as amended or
supplemented, of the Funds, and with any policies, guidelines, instructions
and procedures approved by the Board and provided to the Adviser. In
selecting each Fund's portfolio securities and performing the Adviser's
obligations hereunder, the Adviser shall cause the Fund to comply with the
diversification and source of income requirements of Subchapter M of the
Internal Revenue Code of 1986, as amended (the "Code"), for qualification
as a regulated investment company. The Adviser shall maintain compliance
procedures that it reasonably believes are adequate to ensure the its
compliance with the foregoing. No supervisory activity undertaken by the
Board shall limit the Adviser's full responsibility for any of the
foregoing.

(c) PROXY VOTING. The Board has the authority to determine how proxies
with respect to securities that are held by the Funds shall be voted, and
the Board has initially determined to delegate the authority and
responsibility to vote proxies for the Fund's securities to the Adviser. So
long as proxy voting authority for the Fund has been delegated to the
Adviser, the Adviser shall exercise its proxy voting responsibilities
Adviser shall carry out such responsibility in accordance with any
instructions that the Board shall provide from time to time, and at all
times in a manner consistent with Rule 206(4)-6 under the Advisers Act and
its fiduciary responsibilities to the Trust. The Adviser shall provide
periodic reports and keep records relating to proxy voting as the Board may
reasonably request or as may be necessary for the Funds to comply with the
1940 Act and other applicable law. Any such delegation of proxy voting
responsibility to the Adviser may be revoked or modified by the Board at
any time.

(d) RECORDKEEPING. The Adviser shall not be responsible for the
provision of administrative, bookkeeping or accounting services to the
Fund, except as otherwise provided herein or as may be necessary for the
Adviser to supply to the Trust or its Board the information required to be
supplied under this Agreement.

The Adviser shall maintain separate books and detailed records of all
matters pertaining to Fund assets advised by the Adviser required by Rule
31a-1 under the 1940 Act (other than those records being maintained by any
administrator, custodian or transfer agent appointed by the Funds) relating
to its responsibilities provided hereunder with respect to the Funds, and
shall preserve such records for the periods and in a manner prescribed
therefore by Rule 31a-2 under the 1940 Act (the "Fund Books and Records").
The Fund Books and Records shall be available to the Board at any time upon
request, shall be delivered to the Trust upon the termination of this
Agreement and shall be available without delay during any day the Trust is
open for business.

(e) HOLDINGS INFORMATION AND PRICING. The Adviser shall provide
regular reports regarding Fund holdings, and shall, on its own initiative,
furnish the Trust and its Board from time to time with whatever information
the Adviser believes is appropriate for this purpose. The Adviser agrees to
immediately notify the Trust if the Adviser reasonably believes that the
value of any security held by a Fund may not reflect fair value. The
Adviser agrees to provide any pricing information of which the Adviser is
aware to the Trust, its Board and/or any Fund pricing agent to assist in
the determination of the fair value of any Fund holdings for which market
quotations are not readily available or as otherwise required in accordance
with the 1940 Act or the Trust's valuation procedures for the purpose of
calculating the Fund net asset value in accordance with procedures and
methods established by the Board.

A-2
<Page>

(f) COOPERATION WITH AGENTS OF THE TRUST. The Adviser agrees to
cooperate with and provide reasonable assistance to the Trust, any Trust
custodian or foreign sub-custodians, any Trust pricing agents and all other
agents and representatives of the Trust, such information with respect to
the Funds as they may reasonably request from time to time in the
performance of their obligations, provide prompt responses to reasonable
requests made by such persons and establish appropriate interfaces with
each so as to promote the efficient exchange of information and compliance
with applicable laws and regulations.

2. CODE OF ETHICS. The Adviser has adopted a written code of ethics that it
reasonably believes complies with the requirements of Rule 17j-1 under the 1940
Act, which it will provide to the Trust. The Adviser shall ensure that its
Access Persons (as defined in the Adviser's Code of Ethics) comply in all
material respects with the Adviser's Code of Ethics, as in effect from time to
time. Upon request, the Adviser shall provide the Trust with a (i) a copy of the
Adviser's current Code of Ethics, as in effect from time to time, and (ii)
certification that it has adopted procedures reasonably necessary to prevent
Access Persons from engaging in any conduct prohibited by the Adviser's Code of
Ethics. Annually, the Adviser shall furnish a written report, which complies
with the requirements of Rule 17j-1, concerning the Adviser's Code of Ethics to
the Trust. The Adviser shall respond to requests for information from the Trust
as to violations of the Code by Access Persons and the sanctions imposed by the
Adviser. The Adviser shall immediately notify the Trust of any material
violation of the Code, whether or not such violation relates to an security held
by any Fund.

3. INFORMATION AND REPORTING. The Adviser shall provide the Trust and its
respective officers with such periodic reports concerning the obligations the
Adviser has assumed under this Agreement as the Trust may from time to time
reasonably request.

(a) NOTIFICATION OF BREACH / COMPLIANCE REPORTS. The Adviser shall
notify the Trust immediately upon detection of (i) any material failure to
manage any Fund in accordance with its investment objectives and policies
or any applicable law; or (ii) any material breach of any of the Funds' or
the Adviser's policies, guidelines or procedures. In addition, the Adviser
shall provide a quarterly report regarding each Fund's compliance with its
investment objectives and policies, applicable law, including, but not
limited to the 1940 Act and Subchapter M of the Code, and the Fund's
policies, guidelines or procedures as applicable to the Adviser's
obligations under this Agreement. The Adviser agrees to correct any such
failure promptly and to take any action that the Board may reasonably
request in connection with any such breach. Upon request, the Adviser shall
also provide the officers of the Trust with supporting certifications in
connection with such certifications of Fund financial statements and
disclosure controls pursuant to the Sarbanes-Oxley Act. The Adviser will
promptly notify the Trust in the event (i) the Adviser is served or
otherwise receives notice of any action, suit, proceeding, inquiry or
investigation, at law or in equity, before or by any court, public board,
or body, involving the affairs of the Trust (excluding class action suits
in which a Fund is a member of the plaintiff class by reason of the Fund's
ownership of shares in the defendant) or the compliance by the Adviser with
the federal or state securities laws or (ii) an actual change in control of
the Adviser resulting in an "assignment" (as defined in the 1940 Act) has
occurred or is otherwise proposed to occur.

(b) BOARD AND FILINGS INFORMATION. The Adviser will also provide the
Trust with any information reasonably requested regarding its management of
the Funds required for any meeting of the Board, or for any shareholder
report, amended registration statement, proxy statement, or prospectus
supplement to be filed by the Trust with the Commission. The Adviser

A-3
<Page>

will make its officers and employees available to meet with the Board from
time to time on due notice to review its investment management services to
the Funds in light of current and prospective economic and market
conditions and shall furnish to the Board such information as may
reasonably be necessary in order for the Board to evaluate this Agreement
or any proposed amendments thereto.

(c) TRANSACTION INFORMATION. The Adviser shall furnish to the Trust
such information concerning portfolio transactions as may be necessary to
enable the Trust or its designated agent to perform such compliance testing
on the Funds and the Adviser's services as the Trust may, in its sole
discretion, determine to be appropriate. The provision of such information
by the Adviser to the Trust or its designated agent in no way relieves the
Adviser of its own responsibilities under this Agreement.

4. BROKERAGE.

(a) PRINCIPAL TRANSACTIONS. In connection with purchases or sales of
securities for the account of a Fund, neither the Adviser nor any of its
directors, officers or employees will act as a principal or agent or
receive any commission except as permitted by the 1940 Act.

(b) PLACEMENT OF ORDERS. The Adviser shall arrange for the placing of
all orders for the purchase and sale of securities for a Fund's account
with brokers or dealers selected by the Adviser. In the selection of such
brokers or dealers and the placing of such orders, the Adviser is directed
at all times to seek for the Fund the most favorable execution and net
price available under the circumstances. It is also understood that it is
desirable for the Fund that the Adviser have access to brokerage and
research services provided by brokers who may execute brokerage
transactions at a higher cost to the Fund than may result when allocating
brokerage to other brokers, consistent with section 28(e) of the 1934 Act
and any Commission staff interpretations thereof. Therefore, the Adviser is
authorized to place orders for the purchase and sale of securities for a
Fund with such brokers, subject to review by the Board from time to time
with respect to the extent and continuation of this practice. It is
understood that the services provided by such brokers may be useful to the
Adviser in connection with its or its affiliates' services to other
clients.

(c) AGGREGATED TRANSACTIONS. On occasions when the Adviser deems the
purchase or sale of a security to be in the best interest of a Fund as well
as other clients of the Adviser, the Adviser may, to the extent permitted
by applicable law and regulations, aggregate the order for securities to be
sold or purchased. In such event, the Adviser will allocate securities or
futures contracts so purchased or sold, as well as the expenses incurred in
the transaction, in the manner the Adviser reasonably considers to be
equitable and consistent with its fiduciary obligations to the Fund and to
such other clients under the circumstances.

(d) AFFILIATED BROKERS. The Adviser or any of its affiliates may act
as broker in connection with the purchase or sale of securities or other
investments for a Fund, subject to: (a) the requirement that the Adviser
seek to obtain best execution and price within the policy guidelines
determined by the Board and set forth in the Fund's current prospectus and
SAI; (b) the provisions of the 1940 Act; (c) the provisions of the Advisers
Act; (d) the provisions of the 1934 Act; and (e) other provisions of
applicable law. These brokerage services are not within the scope of the
duties of the Adviser under this Agreement. Subject to the requirements of

A-4
<Page>

applicable law and any procedures adopted by the Board, the Adviser or its
affiliates may receive brokerage commissions, fees or other remuneration
from a Fund for these services in addition to the Adviser's fees for
services under this Agreement.

5. CUSTODY. Nothing in this Agreement shall permit the Adviser to take or
receive physical possession of cash, securities or other investments of a Fund.

6. ALLOCATION OF CHARGES AND EXPENSES. The Adviser will bear its own costs
of providing services hereunder. Other than as herein specifically indicated,
the Adviser shall not be responsible for a Fund's expenses, including brokerage
and other expenses incurred in placing orders for the purchase and sale of
securities and other investment instruments.

7. REPRESENTATIONS, WARRANTIES AND COVENANTS.

(a) PROPERLY REGISTERED. The Adviser is registered as an investment
adviser under the Advisers Act, and will remain so registered for the
duration of this Agreement. The Adviser is not prohibited by the Advisers
Act or the 1940 Act from performing the services contemplated by this
Agreement, and to the best knowledge of the Adviser, there is no proceeding
or investigation that is reasonably likely to result in the Adviser being
prohibited from performing the services contemplated by this Agreement. The
Adviser agrees to promptly notify the Trust of the occurrence of any event
that would disqualify the Adviser from serving as an investment adviser to
an investment company. The Adviser is in compliance in all material
respects with all applicable federal and state law in connection with its
investment management operations.

(b) ADV DISCLOSURE. The Adviser has provided the Trust with a copy of
its Form ADV as most recently filed with the SEC and will, promptly after
filing any amendment to its Form ADV with the SEC, furnish a copy of such
amendments to the Trust. The information contained in the Adviser's Form
ADV is accurate and complete in all material respects and does not omit to
state any material fact necessary in order to make the statements made, in
light of the circumstances under which they were made, not misleading.

(c) FUND DISCLOSURE DOCUMENTS. The Adviser has reviewed and will in
the future review, the Registration Statement, and any amendments or
supplements thereto, the annual or semi-annual reports to shareholders,
other reports filed with the Commission and any marketing material of a
Fund (collectively the "Disclosure Documents") and represents and warrants
that with respect to disclosure about the Adviser, the manner in which the
Adviser manages the Fund or information relating directly or indirectly to
the Adviser, such Disclosure Documents contain or will contain, as of the
date thereof, no untrue statement of any material fact and does not omit
any statement of material fact which was required to be stated therein or
necessary to make the statements contained therein not misleading.

(d) USE OF THE NAME "RYDEX". The Adviser has the right to use the name
"Rydex" in connection with its services to the Trust and that, subject to
the terms set forth in Section 8 of this Agreement, the Trust shall have
the right to use the name "Rydex" in connection with the management and
operation of the Funds. The Adviser is not aware of any threatened or
existing actions, claims, litigation or proceedings that would adversely
effect or prejudice the rights of the Adviser or the Trust to use the name
"Rydex".

A-5
<Page>

(e) INSURANCE. The Adviser maintains errors and omissions insurance
coverage in an appropriate amount and shall provide prior written notice to
the Trust (i) of any material changes in its insurance policies or
insurance coverage; or (ii) if any material claims will be made on its
insurance policies. Furthermore, the Adviser shall upon reasonable request
provide the Trust with any information it may reasonably require concerning
the amount of or scope of such insurance.

(f) NO DETRIMENTAL AGREEMENT. The Adviser represents and warrants that
it has no arrangement or understanding with any party, other than the
Trust, that would influence the decision of the Adviser with respect to its
selection of securities for a Fund, and that all selections shall be done
in accordance with what is in the best interest of the Fund.

(g) CONFLICTS. The Adviser shall act honestly, in good faith and in
the best interests of the Trust including requiring any of its personnel
with knowledge of Fund activities to place the interest of the Fund first,
ahead of their own interests, in all personal trading scenarios that may
involve a conflict of interest with the Funds, consistent with its
fiduciary duties under applicable law.

(h) REPRESENTATIONS. The representations and warranties in this
Section 7 shall be deemed to be made on the date this Agreement is executed
and at the time of delivery of the quarterly compliance report required by
Section 3(a), whether or not specifically referenced in such report.

8. THE NAME "RYDEX". The Adviser grants to the Trust a license to use the
name "Rydex" (the "Name") as part of the name of any Fund. The foregoing
authorization by the Adviser to the Trust to use the Name as part of the name of
any Fund is not exclusive of the right of the Adviser itself to use, or to
authorize others to use, the Name; the Trust acknowledges and agrees that, as
between the Trust and the Adviser, the Adviser has the right to use, or
authorize others to use, the Name. The Trust shall (1) only use the Name in a
manner consistent with uses approved by the Adviser; (2) use its best efforts to
maintain the quality of the services offered using the Name; (3) adhere to such
other specific quality control standards as the Adviser may from time to time
promulgate. At the request of the Adviser, the Trust will (a) submit to Adviser
representative samples of any promotional materials using the Name; and (b)
change the name of any Fund within three months of its receipt of the Adviser's
request, or such other shorter time period as may be required under the terms of
a settlement agreement or court order, so as to eliminate all reference to the
Name and will not thereafter transact any business using the Name in the name of
any Fund; provided, however, that the Trust may continue to use beyond such date
any supplies of prospectuses, marketing materials and similar documents that the
Trust had on had at the date of such name change in quantities not exceeding
those historically produced and used in connection with such Fund.

9. ADVISER'S COMPENSATION. The Funds shall pay to the Adviser, as
compensation for the Adviser's services hereunder, a fee, determined as
described in Schedule A that is attached hereto and made a part hereof. Such fee
shall be computed daily and paid not less than monthly in arrears by the Funds.

The method for determining net assets of a Fund for purposes hereof shall
be the same as the method for determining net assets for purposes of
establishing the offering and redemption prices of Fund shares as described in
the Fund's prospectus. In the event of termination of this Agreement, the fee
provided in this Section shall be computed on the basis of the period ending on
the last business day on

A-6
<Page>

which this Agreement is in effect subject to a pro rata adjustment based on the
number of days elapsed in the current month as a percentage of the total number
of days in such month.

10. INDEPENDENT CONTRACTOR. In the performance of its duties hereunder, the
Adviser is and shall be an independent contractor and, unless otherwise
expressly provided herein or otherwise authorized in writing, shall have no
authority to act for or represent the Trust or any Fund in any way or otherwise
be deemed to be an agent of the Trust or any Fund. If any occasion should arise
in which the Adviser gives any advice to its clients concerning the shares of a
Fund, the Adviser will act solely as investment counsel for such clients and not
in any way on behalf of the Fund.

11. ASSIGNMENT AND AMENDMENTS. This Agreement shall automatically
terminate, without the payment of any penalty, in the event of its assignment
(as defined in section 2(a)(4) of the 1940 Act); provided that such termination
shall not relieve the Adviser of any liability incurred hereunder.

This Agreement may not be added to or changed orally and may not be modified or
rescinded except by a writing signed by the parties hereto and in accordance
with the 1940 Act, when applicable.

12. DURATION AND TERMINATION.

(a) This Agreement shall become effective as of the date executed and
shall remain in full force and effect continually thereafter, subject to
renewal as provided in Section 12(d) and unless terminated automatically as
set forth in Section 11 hereof or until terminated as follows:

(b) The Trust may cause this Agreement to terminate either (i) by vote
of its Board or (ii) with respect to any Fund, upon the affirmative vote of
a majority of the outstanding voting securities of the Fund; or

(c) The Adviser may at any time terminate this Agreement by not more
than sixty (60) days' nor less than thirty (30) days' written notice
delivered or mailed by registered mail, postage prepaid, to the Trust; or

(d) This Agreement shall automatically terminate two years from the
date of its execution unless its renewal is specifically approved at least
annually thereafter by (i) a majority vote of the Trustees, including a
majority vote of such Trustees who are not interested persons of the Trust
or the Adviser, at a meeting called for the purpose of voting on such
approval; or (ii) the vote of a majority of the outstanding voting
securities of each Fund; provided, however, that if the continuance of this
Agreement is submitted to the shareholders of the Funds for their approval
and such shareholders fail to approve such continuance of this Agreement as
provided herein, the Adviser may continue to serve hereunder as to the
Funds in a manner consistent with the 1940 Act and the rules and
regulations thereunder; and

Termination of this Agreement pursuant to this Section shall be without
payment of any penalty.

In the event of termination of this Agreement for any reason, the Adviser
shall, immediately upon notice of termination or on such later date as may be
specified in such notice, cease all activity on behalf of the Fund and with
respect to any of its assets, except as otherwise required by any fiduciary
duties of the Adviser under applicable law. In addition, the Adviser shall
deliver the Fund Books and Records to the Trust by such means and in accordance
with such schedule as the Trust shall direct and shall

A-7
<Page>

otherwise cooperate, as reasonably directed by the Trust, in the transition of
portfolio asset management to any successor of the Adviser.

13. CERTAIN DEFINITIONS. For the purposes of this Agreement:

(a) "Affirmative vote of a majority of the outstanding voting
securities of the Fund" shall have the meaning as set forth in the 1940
Act, subject, however, to such exemptions as may be granted by the
Commission under the 1940 Act or any interpretations of the Commission
staff.

(b) "Interested persons" and "Assignment" shall have their respective
meanings as set forth in the 1940 Act, subject, however, to such exemptions
as may be granted by the Commission under the 1940 Act or any
interpretations of the Commission staff.

14. LIABILITY OF THE ADVISER. The Adviser shall indemnify and hold harmless
the Trust and all affiliated persons thereof (within the meaning of Section
2(a)(3) of the 1940 Act) and all controlling persons (as described in Section 15
of the 1933 Act) (collectively, the "Adviser Indemnitees") against any and all
losses, claims, damages, liabilities or litigation (including reasonable legal
and other expenses) by reason of or arising out of: (a) the Adviser being in
material violation of any applicable federal or state law, rule or regulation or
any investment policy or restriction set forth in the Funds' Registration
Statement or any written guidelines or instruction provided in writing by the
Board, (b) a Fund's failure to satisfy the diversification or source of income
requirements of Subchapter M of the Code, or (c) the Adviser's willful
misfeasance, bad faith or gross negligence generally in the performance of its
duties hereunder or its reckless disregard of its obligations and duties under
this Agreement.

15. ENFORCEABILITY. Any term or provision of this Agreement which is
invalid or unenforceable in any jurisdiction shall, as to such jurisdiction be
ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms or provisions of this
Agreement or affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdiction.

16. LIMITATION OF LIABILITY. The parties to this Agreement acknowledge and
agree that all litigation arising hereunder, whether direct or indirect, and of
any and every nature whatsoever shall be satisfied solely out of the assets of
the affected Fund and that no Trustee, officer or holder of shares of beneficial
interest of the Fund shall be personally liable for any of the foregoing
liabilities. The Trust's Certificate of Trust, as amended from time to time, is
on file in the Office of the Secretary of State of the State of Delaware. Such
Certificate of Trust and the Trust's Agreement and Declaration of Trust describe
in detail the respective responsibilities and limitations on liability of the
Trustees, officers, and holders of shares of beneficial interest.

17. JURISDICTION. This Agreement shall be governed by and construed in
accordance with the substantive laws of state of Delaware and the Adviser
consents to the jurisdiction of courts, both state or federal, in Delaware, with
respect to any dispute under this Agreement.

18. PARAGRAPH HEADINGS. The headings of paragraphs contained in this
Agreement are provided for convenience only, form no part of this Agreement and
shall not affect its construction.

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<Page>

19. COUNTERPARTS. This Agreement may be executed simultaneously in two or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.

IN WITNESS WHEREOF, the parties hereto have caused this instrument to be signed
on their behalf by their duly authorized officers as of the date first above
written.

RYDEX SERIES FUNDS, on behalf of each Fund listed on
Schedule A

By:
----------------------------------
Name: Carl G. Verboncoeur
Title: President

PADCO ADVISORS, INC.

By:
----------------------------------
Name: Carl G. Verboncoeur
Title: Chief Executive Officer

A-9
<Page>

EXHIBIT A

SCHEDULE A
TO THE
ADVISORY AGREEMENT
DATED ___________ __, 2004 BETWEEN
RYDEX SERIES FUNDS
AND
PADCO ADVISORS, INC.

The Trust will pay to the Adviser as compensation for the Adviser's services
rendered, a fee, computed daily at an annual rate based on the average daily net
assets of the respective Fund in accordance the following fee schedule:

<Table>
<Caption>
FUND RATE
- ---- ----

Nova* 0.75%
Nova Master 0.75%
Ursa* 0.90%
Ursa Master 0.90%
OTC* 0.75%
OTC Master 0.75%
Arktos* 0.90%
Arktos Master 0.90%
Medius* 0.90%
Medius Master 0.90%
Mekros 0.90%
U.S. Government Bond 0.50%
Juno* 0.90%
Juno Master 0.90%
Large-Cap Value 0.75%
Large-Cap Growth 0.75%
Mid-Cap Value 0.75%
Mid-Cap Growth 0.75%
Inverse Mid-Cap 0.90%
Small-Cap Value 0.75%
Small-Cap Growth 0.75%
Inverse Small-Cap 0.90%
Large-Cap Europe 0.90%
Large-Cap Japan 0.90%

U.S. Government Money Market 0.50%

Banking 0.85%
Basic Materials 0.85%
Biotechnology 0.85%
Consumer Products 0.85%
Electronics 0.85%
Energy 0.85%
Energy Services 0.85%
Financial Services 0.85%
Health Care 0.85%
Internet 0.85%
Leisure 0.85%
Precious Metals 0.75%
Real Estate 0.85%
Retailing 0.85%
Technology 0.85%
Telecommunications 0.85%
Transportation 0.85%
Utilities* 0.85%
Utilities Master 0.85%

Sector Rotation 0.90%
Core Equity** 0.70%
</Table>

A-i
<Page>

* The fee will be reduced to 0.00% for any period during which the Fund
invests through a master-feeder structure.

** The management fee with respect to the Core Equity Fund (the "Fund") is
comprised of a basic fee (the "Basic Fee") at the annual rate of 0.70% of the
Fund's average daily net assets and a performance adjustment (the "Performance
Adjustment") as discussed below.

A. CALCULATING THE PERFORMANCE ADJUSTMENT. The performance adjustment
shall be calculated monthly by:

(i) Determining the difference in performance (the "Performance
Difference") between the Fund and the Russell 3000 Index (the
"Index"), as described in paragraph C;

(ii) Using the Performance Difference calculated under paragraph B(ii)
to determine the performance adjustment ( the "Performance
Adjustment"), as illustrated in paragraph D; and

(iii)Adding the Performance Adjustment to the Basic Fee to determine
the management fee for the applicable month.

B. COMPUTING THE PERFORMANCE DIFFERENCE. The Performance Difference is
calculated monthly, and is determined by measuring the percentage difference
between the performance of one H-Class Share of the Fund and the performance of
the Index over the most recent 12-month period. The performance of one H-Class
Share of the Fund shall be measured by computing the percentage difference,
carried to five decimal places, between the net asset value as of the last
business day of the period selected for comparison and the net asset value of
such share as of the last business day of the prior period, adjusted for
dividends or capital gain distributions treated as reinvested immediately. The
performance of the Index will be established by measuring the percentage
difference, carried to five decimal places, between the beginning and ending
values of the Index for the comparison period, with dividends or capital gain
distributions on the securities that comprise the Index being treated as
reinvested immediately.

C. DETERMINING THE PERFORMANCE ADJUSTMENT. For every 0.0375% in
Performance Difference, the Adviser's fee will be adjusted upwards or downwards
by 0.01%. The maximum adjustment rate is 0.20% per year, resulting in a minimum
possible annual fee of 0.50% and a maximum possible annual fee of 0.90%.

D. PERFORMANCE ADJUSTMENT EXAMPLE. The following example illustrates the
application of the Performance Adjustment:

<Table>
<Caption>
FOR THE ROLLING 12-MONTH FUND'S INVESTMENT INDEX'S FUND'S PERFORMANCE
PERFORMANCE PERIOD PERFORMANCE CUMULATIVE CHANGE RELATIVE TO THE INDEX
------------------------------- ----------------------- ---------------------- ------------------------

January 1 $ 50.00 100.00
December 31 $ 55.25 110.20
Absolute change + $ 5.25 + $ 10.20
Actual change + 10.50% + 10.20% +0.30%
</Table>

Based on these assumptions, the Fund calculates the Adviser's management fee
rate for the month-ended December 31 as follows:

- - The portion of the annual basic fee rate of 0.70% applicable to that month
is multiplied by the Fund's average daily net assets for the month. This
results in the dollar amount of the basic fee.

- - The +0.30% difference between the performance of the Fund and the record of
the Index is divided by 3.75, producing a rate of 0.08%.

A-ii
<Page>

- - The 0.08% rate (adjusted for the number of days in the month) is multiplied
by the Fund's average daily net assets for the performance period. This
results in the dollar amount of the performance adjustment.

- - The dollar amount of the performance adjustment is added to the dollar
amount of the basic fee, producing the adjusted management fee.

PERFORMANCE PERIODS. For the period from July 1, 2003 through May 31, 2004, the
Adviser will be paid at the Base Rate, without regard to any Performance
Adjustment. For the month ending June 30, 2004, the Adviser will begin applying
the Performance Adjustment as described herein, based upon the performance of
the Fund relative to the performance of the Index during the 12-month period
from July 1, 2003 through June 30, 2004. The 12-month comparison period will
roll over with each succeeding month, so that it will always equal 12 months,
ending with the month for which the performance incentive adjustment is being
computed.

CHANGES TO THE "INDEX" OR THE "CLASS". The Trustees have initially designated
the Russell 3000 Index and the H-Class Shares as the index and class to be used
for purposes of determining the Performance Adjustment (referred to herein as
the "Index" and the "Class," respectively). From time to time, to the extent
permitted by the 1940 Act, the Trustees may, by a vote of the Trustees of the
Trust voting in person, including a majority of the Trustees who are not parties
to this Agreement or "interested persons" (as defined in the 1940 Act) of any
such parties, determine (i) that another securities index is a more appropriate
benchmark than the Index for purposes of evaluating the performance of the Fund;
and/or (ii) that a different class of shares of the Trust representing interests
in the Fund other than the Class is most appropriate for use in calculating the
Performance Adjustment. After ten days' written notice to the Adviser, a
different index (the "Successor Index") may be substituted for the Index in
prospectively calculating the Performance Adjustment, and/or a different class
of shares (the "Successor Class") may be substituted in calculating the
Performance Adjustment. However, the calculation of that portion of the
Performance Adjustment attributable to any portion of the performance period
prior to the adoption of the Successor Index will still be based upon the Fund's
performance compared to the Index. The use of a Successor Class of shares for
purposes of calculating the Performance Adjustment shall apply to the entire
performance period so long as such Successor Class was outstanding at the
beginning of such period. In the event that such Successor Class of shares was
not outstanding for all or a portion of the Performance Period, it may only be
used in calculating that portion of the Performance adjustment attributable to
the period during which such Successor Class was outstanding and any prior
portion of the Performance Period shall be calculated using the Class of shares
previously designated.

A-iii
<Page>

EXHIBIT B

ADVISORY AGREEMENT

ADVISORY AGREEMENT made as of this ____th day of ____________, 2004 by and
between RYDEX DYNAMIC FUNDS (the "Trust"), a Delaware statutory trust registered
as an investment company under the Investment Company Act of 1940, as amended
(the "1940 Act"), and PADCO ADVISORS, INC., a Maryland corporation with its
principal place of business at 9601 Blackwell Road, Suite 500, Rockville,
Maryland 20850 (the "Adviser").

W I T N E S S E T H

NOW, THEREFORE, in consideration of the mutual covenants and benefits set forth
herein, the Trust and the Adviser do hereby agree as follows:

1. THE ADVISER'S SERVICES.

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<Page>

B-2
<Page>

B-3
<Page>

4. BROKERAGE.

B-4
<Page>

5. CUSTODY. Nothing in this Agreement shall permit the Adviser to take or
receive physical possession of cash, securities or other investments of a Fund.

7. REPRESENTATIONS, WARRANTIES AND COVENANTS.

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<Page>

The method for determining net assets of a Fund for purposes hereof shall be the
same as the method for determining net assets for purposes of establishing the
offering and redemption prices of Fund shares as described in the Fund's
prospectus. In the event of termination of this Agreement, the fee provided in
this Section shall be computed on the basis of the period ending on the last
business day on which this

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<Page>

Agreement is in effect subject to a pro rata adjustment based on the number of
days elapsed in the current month as a percentage of the total number of days in
such month.

This Agreement may not be added to or changed orally and may not be modified or
rescinded except by a writing signed by the parties hereto and in accordance
with the 1940 Act, when applicable.

12. DURATION AND TERMINATION.

(d) This Agreement shall automatically terminate two years from the
date of its execution unless its renewal is specifically approved at least
annually thereafter by (i) a majority vote of the Trustees, including a majority
vote of such Trustees who are not interested persons of the Trust or the
Adviser, at a meeting called for the purpose of voting on such approval; or (ii)
the vote of a majority of the outstanding voting securities of each Fund;
provided, however, that if the continuance of this Agreement is submitted to the
shareholders of the Funds for their approval and such shareholders fail to
approve such continuance of this Agreement as provided herein, the Adviser may
continue to serve hereunder as to the Funds in a manner consistent with the 1940
Act and the rules and regulations thereunder; and

Termination of this Agreement pursuant to this Section shall be without
payment of any penalty.

B-7
<Page>

otherwise cooperate, as reasonably directed by the Trust, in the transition of
portfolio asset management to any successor of the Adviser.

13. CERTAIN DEFINITIONS. For the purposes of this Agreement:

18. PARAGRAPH HEADINGS. The headings of paragraphs contained in this
Agreement are provided for convenience only, form no part of this Agreement and
shall not affect its construction.

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<Page>

IN WITNESS WHEREOF, the parties hereto have caused this instrument to be signed
on their behalf by their duly authorized officers as of the date first above
written.

RYDEX DYNAMIC FUNDS, on behalf of each Fund
listed on Schedule A

By:
----------------------------------------
Name: Carl G. Verboncoeur
Title: President

PADCO ADVISORS, INC.

By:
----------------------------------------
Name: Carl G. Verboncoeur
Title: Chief Executive Officer

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<Page>

EXHIBIT E

SCHEDULE A
TO THE
ADVISORY AGREEMENT
DATED ___________ __, 2004 BETWEEN
RYDEX DYNAMIC FUNDS
AND
PADCO ADVISORS, INC.

<Table>
<Caption>
FUND RATE
- ---- ----

Titan 500* 0.90%

Titan 500 Master 0.90%

Tempest 500* 0.90%

Tempest 500 Master 0.90%

Velocity 100* 0.90%

Velocity 100 Master 0.90%

Venture 100* 0.90%

Venture 100 Master 0.90%

Long Dynamic Dow 30* 0.90%

Long Dynamic Dow 30 Master 0.90%

Inverse Dynamic Dow 30* 0.90%

Inverse Dynamic Dow 30 Master 0.90%
</Table>

* The fee will be reduced to 0.00% for any period during which the Fund
invests through a master-feeder structure.

B-i