Best Performers in 2002, But What About 2003?

Investors have to be careful when investing in “bearish funds,” since they are often used as a tactical play, or hedge against the market, and have made poor long-term buy-and-hold investments. Although “bearish funds” gained 8.1% on average for the three-year period ended in August, they lost 3.9% for the five-year period, versus a 2.5% gain in the S&P 500, and a 5.3% gain for the average general equity fund.

2002 Return (%)2003 Return Through 8/29 (%) Three-Year Annualized Return Through 8/29 (%)Five-Year Annualized Return Through 8/29 (%)

• Prudent Bear Fund (BEARX) +62.9-11.5+28.9+0.8
• Rydex Dynamic Funds:Venture 100 Fund (RYVNX) +59.3-53.5+13.8N/A
• ProFunds:UltraShort OTC ProFund/Inv (USPIX) +48.6-53.2+11.4-46.8
• ProFunds:UltraBear ProFund/Inv (URPIX) +38.1-30.2+16.2-10.4
• Rydex Dynamic Funds:Tempest 500 Fund (RYTPX) +37.5-30.3+14.9N/A
• Rydex Srs Tr:Arktos Fund/Inv (RYAIX) +35.5-29.9+20.5N/A
• Potomac OTC/Short/Investor (POTSX) +32.6-31.6+14.4-21.4
• AXA Rosenberg:Value Long/Short Equity/Istl (BMNIX) +28.3-7.9+12.7+1.4
• Rydex Srs Tr:URSA Fund (RYURX) +22.2-15.4+12.2-0.9
• Potomac US/Short/Investor (PSPSX) +17.9-16.2+8.3-4.5
• Average General Equity Fund-22.3+20.1-9.4+5.3
• S&P 500 Index-22.1+15.9-11.4+2.5
• Average Bearish Fund+32.2-7.6+8.1-3.9

Source: Standard & Poor’s. Total Returns are in U.S. dollars and include reinvested dividends. Data as of 8/29/03