The Rotec Rally 2B was an unregistered ultralight vehicle that had been assembled from a kit. The pilots of two other ultralight vehicles stated that they were in a very loose formation with the one that had crashed. According to them, they were flying at about 600 ft AGL when they saw the Rally 2B enter a left turn, then go into a steep dive and crash. They observed the wings fold upward after the vehicle had lost 100 to 200 ft of altitude. An investigation revealed that the vehicle was within its authorized gross weight limitation. The fuel capacity was 3.5 gallons, but the pilot had strapped a 6-gallon auxiliary tank adjacent to his seat. It was found with approximately 4.5 gallons remaining. An exam of the wreckage revealed that the nose wire upper king post tang had failed from fatigue. The fatigue crack had initiated next to a hole and had progressed almost entirely through the tang. Also, the upper rudder clevis had failed where a crack from high stress fatigue had progressed through 20% of the part.