A permanent magnet rotary dynamo electric machine such as a high speed three phase brushless motor has at least one stator and at least one rotor spaced apart from one another by a cylindrical gap therebetween. A plurality of permanent magnetic poles are provided by a plurality of rare earth magnets positioned side by side on the inside of a cup shaped rotor and oriented parallel to the rotor axis. The stator has a plurality of wound poles of shallow depth which are wound on or close to the surface of a substrate of low magnetic permeability (less than 20 times that of air). The wound poles are positioned adjacent the cylindrical gap so as to intersect the magnetic flux paths between adjacent permanent magnetic poles.