<PAGE>
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RYDEX VARIABLE TRUST
[RYDEX LOGO] SEMI-ANNUAL REPORT
June 30, 1999
6116 Executive Boulevard, Suite 400
Rockville, MD 20852
(301) 468-8520
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DEAR SHAREHOLDER:
As 1998 came to a close, the financial pundits were cautioning investors
about being too optimistic about the New Year. This, of course, has been the
refrain throughout the decade. But as evidenced by the first two quarters of
1999, there seems to be little that can halt the great Bull Run of the nineties.
The first quarter of 1999 saw domestic large-cap growth companies' corporate
earnings continue their robust trend, which set the stage for solid U.S. equity
market returns. The Dow Jones Industrial Average surpassed 10,000 and the
Standard & Poor's 500 Stock Index continued its advance. In foreign markets,
economic instability augmented investors' penchant for large, well-established
companies with consistent earnings growth. Heading into the second quarter the
word "inflation" began to be whispered as economic data suggested a stronger
than expected economy. As a result, investors lost their fervor for growth
stocks; thus cyclical stocks made an impressive run. Small-cap stocks
outperformed all of the other major market indices during the second quarter as
demonstrated by the Russell 2000 and S&P 600 indices.
ECONOMIC REVIEW
As the year began, the economy continued to expand. Federal Reserve Chief
Alan Greenspan, in testimony to the House banking committee, described the U.S.
economy as the "envy of the world." Financial prognosticators predicted that the
1999 budget surplus would be greater than the 70 billion-dollar surplus we
enjoyed in 1998. The last time the government posted a surplus in consecutive
years was in 1956 and 1957. With the Treasury flush with cash, the issuance of
government debt could be cut; all this news was good for financial assets.
Consumer spending continued at a vigorous pace. Low unemployment and rising
wages bolstered consumer confidence--which hit an all time high in February.
Productivity grew dramatically, thus keeping inflation at bay and signaling no
change in interest rates. In February, U.S. manufacturing expanded for the first
time in nine months, adding fuel to the economy. There was one wrinkle among all
this good news: Bond market participants thought that the economy was growing
too fast and that inflation may be right around the corner. Bond prices started
to decline as interest rates began to creep up. The first quarter GDP posted a
4.1% incremental growth, which was slower than the 6% pace of the last quarter
of 1998.
By early spring emerging economies in Asia and Latin America were showing
signs of stability. The war in Kosovo and OPEC production cuts sent crude oil
back up above $17 a barrel and other commodity prices began to rise. April
consumer prices shot upward by 0.7% over March, the fastest
<PAGE>
rise in 8 1/2 years, as gasoline prices leaped 15%, a record one-month gain. As
economists revised their growth forecasts, investors began to rotate out of the
growth sectors and into the cyclical metals, chemicals, and paper stocks.
In May, Chairman Greenspan said that potential labor shortages, compounded
by the runaway U.S. stock market, might lead to rising inflation and threaten
the economy now in its ninth year of growth. While praising the growth in U.S
labor productivity that has controlled inflation, he expressed concerns for its
sustainability given the 29-year-low unemployment rate. Those comments helped
send Treasury yields soaring to 19-month highs in June.
Concerned by the accelerating economy and apprehensive about inflation, the
Federal Reserve policy makers raised the federal funds rate a quarter of a point
to 5 percent on June 30. This was a widely anticipated move and well accepted by
financial markets. That day, the Standard & Poor's 500 stock index and the
NASDAQ Composite index both hit new highs. Bonds soared, pulling the yield of
the 30-year Treasury bond back below the 6% level. Nevertheless, despite
choosing to adopt a directive toward a neutral bias for now, the Fed, citing
tight labor markets, hinted towards caution.
For the six months ending June 30, 1999, the S&P 500 rose 12.38%. NASDAQ 100
fared even better climbing 25.15%. The price of the benchmark 30-year Treasury
bond declined as the yield rose from 5.09% to 6.16% for the period. As we look
toward the second half of the year, the economy continues to expand with few
signs of weakness and inflation under control. The benign inflation outlook and
the acceleration of U.S. corporate earnings growth bode well for the stock
market.
Your portfolio team at Rydex will continue to monitor the investment
activity within the capital markets arena.
/s/ Albert P. Viragh, Jr.
Albert P. (Skip) Viragh, Jr.
Chairman
2
<PAGE>
RYDEX VARIABLE TRUST
NOVA FUND
SCHEDULE OF INVESTMENTS (UNAUDITED)
- --------------------------------------------------------------------------------
June 30, 1999
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<TABLE>
<CAPTION>
MARKET
VALUE
CONTRACTS (NOTE 1)
---------- -------------
<S> <C> <C>
OPTIONS PURCHASED 13.6%
Call Options on:
S&P 500 September 1999 Futures
Contracts,
Expiring July 1999 with strike
900................................ 49 $ 5,900,825
Put Options on:
S&P 500 September 1999 Futures
Contracts,
Expiring July 1999 with strike
975................................ 60 --
-------------
Total Options Purchased (Cost
$5,416,768)....................... 5,900,825
-------------
</TABLE>
<TABLE>
<CAPTION>
FACE
AMOUNT
-----------
<S> <C> <C>
U.S. TREASURY & U.S. AGENCY OBLIGATIONS 43.8%
U.S. Treasury Bill 4.45% 08/19/99...... $ 4,000,000 $ 3,975,772
Fannie Mae 4.89% 07/06/99.............. 15,000,000 14,989,812
-----------
Total U. S. Treasury & U.S. Agency
Obligations (Cost $18,965,584).... 18,965,584
-----------
REPURCHASE AGREEMENTS 42.6%
Repurchase Agreements Collateralized by
U.S. Treasury Obligations:
4.70% 07/01/99 (Note 5).............. 8,673,417 8,673,417
4.80% 07/01/99 (Note 5).............. 9,744,628 9,744,628
-----------
Total Repurchase
Agreements
(Cost $18,418,045)............... 18,418,045
-----------
Total Investments 100%
(Cost $42,800,397)............... $43,284,454
-----------
-----------
</TABLE>
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<TABLE>
<CAPTION>
UNREALIZED
GAIN
CONTRACTS (NOTE 1)
--------- -------------
<S> <C> <C>
FUTURES CONTRACTS PURCHASED
S&P 500 Futures Contracts Expiring
September 1999
(Underlying Face Amount at Market
Value $48,609,750)................... 141 $ 1,535,593
-------------
-------------
</TABLE>
See Notes to Financial Statements. 3
<PAGE>
RYDEX VARIABLE TRUST
URSA FUND
SCHEDULE OF INVESTMENTS (UNAUDITED)
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June 30, 1999
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<TABLE>
<CAPTION>
MARKET
VALUE
CONTRACTS (NOTE 1)
---------- -----------
<S> <C> <C>
OPTIONS PURCHASED 3.0%
Put Options on:
S&P 500 September 1999 Futures
Contracts,
Expiring September 1999 with strike
160................................ 6 $ 327,450
-----------
Total Options Purchased (Cost
$383,667)........................ 327,450
-----------
<CAPTION>
FACE
AMOUNT
----------
<S> <C> <C>
REPURCHASE AGREEMENTS 97.0%
Repurchase Agreements Collateralized by
U.S. Treasury Obligations:
4.70% 07/01/99 (Note 5).............. $5,068,169 5,068,169
4.80% 07/01/99 (Note 5).............. 5,694,114 5,694,114
-----------
Total Repurchase Agreements (Cost
$10,762,283)..................... 10,762,283
-----------
Total Investments 100% (Cost
$11,145,950)..................... $11,089,733
-----------
-----------
</TABLE>
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<TABLE>
<CAPTION>
UNREALIZED
LOSS
CONTRACTS (NOTE 1)
--------- ------------
<S> <C> <C>
FUTURES CONTRACTS SOLD SHORT
S&P 500 Futures Contracts Expiring
September 1999
(Underlying Face Amount at Market
Value $11,928,350)................. 65 $ (250,270)
------------
------------
</TABLE>
See Notes to Financial Statements. 4
<PAGE>
RYDEX VARIABLE TRUST
U.S. GOVERNMENT MONEY MARKET FUND
SCHEDULE OF INVESTMENTS (UNAUDITED)
- --------------------------------------------------------------------------------
June 30, 1999
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<TABLE>
<CAPTION>
MARKET
FACE VALUE
AMOUNT (NOTE 1)
----------- -----------
<S> <C> <C>
U.S. TREASURY OBLIGATIONS 12.0%
U.S. Treasury Bill 4.20% 07/22/99...... $10,000,000 $ 9,975,500
-----------
Total U.S. Treasury Obligations
(Cost $9,975,500)................ 9,975,500
-----------
FEDERAL AGENCY DISCOUNT NOTES 59.6%
Federal Agricultural Mortgage Corp.
4.88% 07/23/99....................... 10,000,000 9,970,178
Federal Farm Credit Bank 4.71%
07/01/99............................. 10,000,000 10,000,000
Federal Home Loan Bank 4.84%
08/04/99............................. 10,000,000 9,954,289
Freddie Mac 4.93% 09/02/99............. 10,000,000 9,913,725
Fannie Mae 4.93% 09/22/99.............. 10,000,000 9,886,336
-----------
Total Federal Agency Discount Notes
(Cost $49,724,528)............... 49,724,528
-----------
REPURCHASE AGREEMENTS 28.4%
Repurchase Agreements Collateralized by
U.S. Treasury Obligations:
4.70% 07/01/99 (Note 5)................ 11,187,276 11,187,276
4.80% 07/01/99 (Note 5)................ 12,568,962 12,568,962
-----------
Total Repurchase Agreements (Cost
$23,756,238)..................... 23,756,238
-----------
Total Investments 100% (Cost
$83,456,266)..................... $83,456,266
-----------
-----------
</TABLE>
See Notes to Financial Statements. 5
<PAGE>
RYDEX VARIABLE TRUST
OTC FUND
SCHEDULE OF INVESTMENTS (UNAUDITED)
- --------------------------------------------------------------------------------
June 30, 1999
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<TABLE>
<CAPTION>
MARKET
VALUE
SHARES (NOTE 1)
-------- -----------
<S> <C> <C>
COMMON STOCKS 95.7%
Microsoft Corp.*....................... 151,342 $13,649,157
Cisco Systems, Inc.*................... 98,715 6,360,948
Intel Corp............................. 100,104 5,956,188
MCI WorldCom, Inc.*.................... 58,567 5,040,422
Dell Computer Corp.*................... 81,302 3,008,174
QUALCOMM, Inc.*........................ 15,842 2,273,327
Sun Microsystems, Inc.*................ 28,605 1,970,169
Oracle Corp.*.......................... 51,334 1,905,766
Yahoo! Inc.*........................... 9,394 1,618,116
Nextel Communications, Inc., Class
A*................................... 32,216 1,616,841
Level 3 Communications, Inc.*.......... 22,507 1,351,827
Tellabs, Inc.*......................... 19,285 1,302,943
Amgen, Inc.*........................... 20,582 1,252,929
Immunex Corp.*......................... 9,738 1,240,986
Applied Materials, Inc.*............... 16,646 1,229,723
At Home Corp., Series A*............... 22,713 1,225,082
Linear Technology Corp................. 17,708 1,190,863
Amazon.com, Inc.*...................... 9,492 1,187,687
Comcast Corp., Special Class A......... 29,978 1,152,279
Qwest Communications International,
Inc.*................................ 33,976 1,123,332
Maxim Integrated Products, Inc.*....... 16,319 1,085,214
CMGI, Inc.*............................ 9,248 1,054,850
Biogen, Inc.*.......................... 16,087 1,034,595
Xilinx, Inc.*.......................... 17,816 1,019,966
Novell, Inc.*.......................... 35,130 930,945
Altera Corp.*.......................... 24,061 885,746
BMC Software, Inc.*.................... 15,566 840,564
Chancellor Media Corp.*................ 15,060 830,183
Staples, Inc.*......................... 26,820 829,744
Starbucks Corp.*....................... 21,516 808,195
Costco Cos., Inc.*..................... 9,924 794,540
Cintas Corp............................ 11,462 770,103
<CAPTION>
MARKET
VALUE
SHARES (NOTE 1)
-------- -----------
<S> <C> <C>
Apple Computer, Inc.*.................. 16,400 $ 759,525
LM Ericsson Telephone Co., Class B,
Sponsored ADR........................ 21,646 712,965
Veritas Software Corp.*................ 7,312 694,183
JDS Uniphase Corp.*.................... 4,146 688,236
PanAmSat Corp.*........................ 17,488 680,939
ADC Telecommunications, Inc.*.......... 14,787 673,733
Paychex, Inc........................... 20,136 641,835
Compuware Corp.*....................... 20,001 636,282
Bed Bath & Beyond, Inc.*............... 16,118 620,543
Intuit, Inc.*.......................... 6,865 618,708
Siebel Systems, Inc.*.................. 9,243 612,926
KLA-Tencor Corp.*...................... 9,205 597,174
NTL, Inc.*............................. 6,847 590,126
Quintiles Transnational Corp.*......... 13,478 566,076
USA Networks, Inc.*.................... 13,764 552,281
Biomet, Inc............................ 13,714 545,132
Concord EFS, Inc.*..................... 12,416 525,352
VISX, Inc.*............................ 6,537 517,649
Citrix Systems, Inc.*.................. 9,001 508,557
Peoplesoft, Inc.*...................... 29,445 507,926
Vitesse Semiconductor Corp.*........... 7,239 488,180
Chiron Corp.*.......................... 22,617 469,303
American Power Conversion Corp.*....... 22,296 448,707
Fiserv, Inc.*.......................... 14,297 447,675
Parametric Technology Corp.*........... 32,009 444,125
Adobe Systems, Inc..................... 5,394 443,151
Genzyme Corp. - General Division*...... 9,066 439,701
3Com Corp.*............................ 15,916 424,758
Quantum Corp.*......................... 17,601 424,624
PACCAR, Inc............................ 7,543 402,608
Sanmina Corp.*......................... 5,293 401,606
Lycos, Inc.*........................... 4,318 396,716
Synopsys, Inc.*........................ 7,115 392,659
Smurfit-Stone Container Corp.*......... 18,480 379,995
</TABLE>
* NON-INCOME PRODUCING SECURITIES
See Notes to Financial Statements. 6
<PAGE>
RYDEX VARIABLE TRUST
OTC FUND
SCHEDULE OF INVESTMENTS (UNAUDITED) (CONCLUDED)
- --------------------------------------------------------------------------------
June 30, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MARKET
VALUE
SHARES (NOTE 1)
-------- -----------
<S> <C> <C>
CNET, Inc.*............................ 5,955 $ 343,157
Sigma-Aldrich Corp..................... 9,211 317,204
Electronic Arts, Inc.*................. 5,313 288,230
Centocor, Inc.*........................ 6,095 284,179
Adaptec, Inc.*......................... 7,737 273,213
PacifiCare Health Systems, Inc.*....... 3,585 257,896
Molex, Inc............................. 6,093 225,441
Dollar Tree Stores, Inc.*.............. 4,816 211,904
Northwest Airlines Corp.*.............. 6,098 198,185
Electronics for Imaging, Inc.*......... 3,827 196,612
Network Associates, Inc.*.............. 12,319 180,935
Reuters Group, Plc., Sponsored ADR..... 2,185 177,122
Atmel Corp.*........................... 6,525 170,873
Comverse Technology, Inc.*............. 2,222 167,761
Apollo Group, Inc., Class A*........... 6,262 166,334
Cambridge Technology Partners, Inc.*... 3,678 64,595
-----------
Total Common Stocks (Cost
$77,049,393)..................... 88,319,001
-----------
</TABLE>
<TABLE>
<CAPTION>
MARKET
FACE VALUE
AMOUNT (NOTE 1)
---------- -----------
<S> <C> <C>
REPURCHASE
AGREEMENTS 4.3%
Repurchase Agreements Collateralized by
U.S. Treasury Obligations:
4.70% 07/01/99
(Note 5)........................... $1,871,131 $ 1,871,131
4.80% 07/01/99
(Note 5)........................... 2,102,226 2,102,226
-----------
Total Repurchase Agreements (Cost
$3,973,357)...................... 3,973,357
-----------
Total Investments 100%
(Cost $81,022,750)............... $92,292,358
-----------
-----------
</TABLE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
UNREALIZED
GAIN
CONTRACTS (NOTE 1)
----------- ----------
<S> <C> <C>
FUTURES CONTRACTS PURCHASED
NASDAQ 100 Futures Contracts, Expiring September
1999
(Underlying Face Amount at Market Value
$3,486,000)..................................... 15 $ 301,395
----------
----------
</TABLE>
* NON-INCOME PRODUCING SECURITIES
See Notes to Financial Statements. 7
<PAGE>
RYDEX VARIABLE TRUST
PRECIOUS METALS FUND
SCHEDULE OF INVESTMENTS (UNAUDITED)
- --------------------------------------------------------------------------------
June 30, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MARKET
VALUE
SHARES (NOTE 1)
------- --------
<S> <C> <C>
COMMON STOCKS 100.0%
Mining and Precious Metals Stocks
Barrick Gold Corp.................... 15,415 $298,666
Placer Dome, Inc..................... 11,913 140,722
Newmont Mining Corp.................. 6,128 121,794
Freeport-McMoRan Copper & Gold, Inc.,
Class B*........................... 5,984 107,338
Homestake Mining Co.................. 9,524 77,978
Ashanti Goldfields Co., Ltd.,
Sponsored GDR...................... 4,944 34,299
Battle Mountain Gold Co.............. 8,414 20,509
Stillwater Mining Co.*............... 624 20,397
Hecla Mining Co.*.................... 2,027 4,181
Coeur d'Alene Mines Corp.*........... 801 3,704
Anglogold Ltd........................ 120 2,580
--------
Total Common Stocks (Cost
$753,381)........................ 832,168
--------
Total Investments 100% (Cost
$753,381)........................ $832,168
--------
--------
</TABLE>
* NON-INCOME PRODUCING SECURITIES
See Notes to Financial Statements. 8
<PAGE>
RYDEX VARIABLE TRUST
U.S. GOVERNMENT BOND FUND
SCHEDULE OF INVESTMENTS (UNAUDITED)
- --------------------------------------------------------------------------------
June 30, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MARKET
VALUE
CONTRACTS (NOTE 1)
---------- ----------
<S> <C> <C>
OPTIONS PURCHASED 4.9%
Call Options on:
September 1999 U.S. Treasury Bond
Futures Contracts, Expiring
September 1999, with strike 100.... 7 $ 111,344
----------
Total Options Purchased (Cost
$119,848)........................ 111,344
----------
<CAPTION>
FACE
AMOUNT
----------
<S> <C> <C>
U.S. TREASURY OBLIGATIONS 91.1%
U.S. Treasury Bond 5.25% 02/15/29...... $2,304,000 2,068,920
----------
Total U. S. Treasury Obligations
(Cost $2,164,329)................ 2,068,920
----------
REPURCHASE AGREEMENTS 4.0%
Repurchase Agreements Collateralized by
U.S. Treasury Obligations:
4.70% 07/01/99 (Note 5).............. 42,747 42,747
4.80% 07/01/99 (Note 5).............. 48,027 48,027
----------
Total Repurchase Agreements (Cost
$90,774)......................... 90,774
----------
Total Investments 100% (Cost
$2,374,951)...................... $2,271,038
----------
----------
</TABLE>
See Notes to Financial Statements. 9
<PAGE>
RYDEX VARIABLE TRUST
JUNO FUND
SCHEDULE OF INVESTMENTS (UNAUDITED)
- --------------------------------------------------------------------------------
June 30, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MARKET
VALUE
CONTRACTS (NOTE 1)
--------- --------
<S> <C> <C>
OPTIONS PURCHASED 1.7%
Put Options on:
September 1999 U.S. Treasury Bond Futures
Contracts, Expiring September 1999,
with strike 112........................ 1 $ 344
September 1999 U.S. Treasury Bond Futures
Contracts, Expiring September 1999,
with strike 118........................ 2 5,500
--------
Total Options Purchased (Cost
$6,716).............................. 5,844
--------
</TABLE>
<TABLE>
<CAPTION>
FACE AMOUNT
------------
<S> <C> <C>
REPURCHASE AGREEMENTS 98.3%
Repurchase Agreements Collateralized by
U.S. Treasury Obligations:
4.70% 07/01/99 (Note 5).............. $ 157,258 157,258
4.80% 07/01/99 (Note 5).............. 176,681 176,681
----------
Total Repurchase Agreements (Cost
$333,939)........................ 333,939
----------
Total Investments 100% (Cost
$340,655)........................ $ 339,783
----------
----------
</TABLE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
UNREALIZED
LOSS
CONTRACTS (NOTE 1)
-------- --------
<S> <C> <C>
FUTURES CONTRACTS SOLD SHORT
U. S. Treasury Bond Futures Contracts,
Expiring September 1999 (Underlying
Face Amount at Market Value
$231,813)............................ 2 $ (1,113)
--------
--------
</TABLE>
See Notes to Financial Statements. 10
<PAGE>
RYDEX VARIABLE TRUST
STATEMENT OF ASSETS AND LIABILITIES (UNAUDITED)
- --------------------------------------------------------------------------------
June 30, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
U.S.
GOVERNMENT
MONEY
NOVA URSA MARKET OTC
FUND FUND FUND FUND
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
ASSETS
Repurchase Agreements................ $18,418,045 $10,762,283 $23,756,238 $ 3,973,357
Investment Securities................ 24,866,409 327,450 59,700,028 88,319,001
----------- ----------- ----------- -----------
Securities at Value (Note 1)--See
Accompanying Schedules............. 43,284,454 11,089,733 83,456,266 92,292,358
Segregated Cash with Broker.......... -- 1,228,745 -- 186,750
Receivable for Securities Sold....... 239,485 -- -- 5,772
Receivable for Futures Contracts
Settlement......................... 786,075 -- -- 45,000
Investment Income Receivable......... 2,432 1,421 3,136 1,414
Receivable--Short Sales Open......... -- 900,885 -- --
Receivable from Adviser, Net (Note
6)................................. 27,910 181,206 27,740
Receivable for Shares Purchased...... -- 3,083,246 -- 6,854,452
Unamortized Organization Costs (Note
1)................................. 77,093 66,665 80,458 73,506
Other Assets......................... -- -- -- 7,735
----------- ----------- ----------- -----------
Total Assets....................... 44,389,539 16,398,605 83,721,066 99,494,727
----------- ----------- ----------- -----------
LIABILITIES
Payable for Securities Purchased..... 400 -- -- 5,883,283
Payable for Futures Contracts
Settlement......................... -- 146,419 -- --
Short Sale at Market Value........... -- 943,564 -- --
Payable for Shares Redeemed.......... 853,650 -- -- --
Dividends Payable.................... -- -- -- --
Organizational Expense Payable to
Advisor (Note 1)................... 79,894 67,936 86,004 77,963
Payable to Advisor, Net (Note 6)..... 79,324 -- -- --
Payable to Servicer, Net (Note 6).... 8,601 3,720 12,800 10,500
Other Liabilities.................... 3,444 99,860 337,676 5,446
----------- ----------- ----------- -----------
Total Liabilities.................. 1,025,313 1,261,499 436,480 5,977,192
----------- ----------- ----------- -----------
NET ASSETS............................. $43,364,226 $15,137,106 $83,284,586 $93,517,535
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
Shares Outstanding..................... 2,399,133 2,697,376 83,285,305 3,797,487
Net Asset Value Per Share.............. $18.07 $5.61 $1.00 $24.63
</TABLE>
See Notes to Financial Statements. 11
<PAGE>
RYDEX VARIABLE TRUST
STATEMENT OF ASSETS AND LIABILITIES (UNAUDITED) (CONCLUDED)
- --------------------------------------------------------------------------------
June 30, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRECIOUS U.S.
METALS GOVERNMENT JUNO
FUND BOND FUND FUND
-------- ---------- --------
<S> <C> <C> <C>
ASSETS
Repurchase Agreements................ $ -- $ 90,774 $333,939
Investment Securities................ 832,168 2,180,264 5,844
-------- ---------- --------
Securities at Value (Note 1)--See
Accompanying Schedules............. 832,168 2,271,038 339,783
Segregated Cash With Broker.......... -- -- 2,583
Receivable for Securities Sold....... 8 -- --
Receivable for Futures Contracts
Settlement......................... -- -- --
Investment Income Receivable......... -- 45,687 44
Receivable--Short Sales Open......... -- -- --
Receivable from Advisor, Net (Note
6)................................. 10,369 11,597 15,950
Receivable for Shares Purchased...... -- 408,072 --
Unamortized Organization Costs (Note
1)................................. 66,600 67,850 66,354
Other Assets......................... 1,203 1,192 --
-------- ---------- --------
Total Assets....................... 910,348 2,805,436 424,714
-------- ---------- --------
LIABILITIES
Payable for Securities Purchased..... -- 417,896 --
Payable for Futures Contracts
Settlement......................... -- -- 1,750
Short Sale at Market Value........... -- -- --
Payable for Shares Redeemed.......... -- -- 20,038
Dividends Payable.................... -- 655 --
Organizational Expense Payable to
Advisor (Note 1)................... 66,692 67,969 66,374
Payable to Advisor, Net (Note 6)..... -- -- --
Payable to Servicer, Net (Note 6).... 511 2,584 61
Other Liabilities.................... 6,872 5,099 15,207
-------- ---------- --------
Total Liabilities.................. 74,075 494,203 103,430
-------- ---------- --------
NET ASSETS............................. $836,273 $2,311,233 $321,284
-------- ---------- --------
-------- ---------- --------
Shares Outstanding..................... 145,735 206,518 34,185
Net Asset Value Per Share.............. $5.74 $11.19 $9.40
</TABLE>
See Notes to Financial Statements. 12
<PAGE>
RYDEX VARIABLE TRUST
STATEMENT OF OPERATIONS (UNAUDITED)
- --------------------------------------------------------------------------------
Six Months Ended June 30, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
U.S.
GOVERNMENT
MONEY
NOVA URSA MARKET OTC
FUND FUND FUND FUND
----------- ----------- ---------- ----------
<S> <C> <C> <C> <C>
INVESTMENT INCOME
Interest............................. $ 675,121 $ 262,403 $1,455,435 $ 64,733
Dividends, net of foreign tax
withheld........................... 2,917 -- -- 9,286
----------- ----------- ---------- ----------
Total Income....................... 678,038 262,403 1,455,435 74,019
----------- ----------- ---------- ----------
EXPENSES
Advisory Fees (Note 6)............... 140,393 60,786 201,759 118,635
Tactical Allocation Fees (Note 6).... 44,901 14,226 60,767 31,636
Organizational Expenses.............. 21,470 6,338 36,755 17,802
Servicing Fees (Note 6).............. 17,960 5,690 30,383 15,818
Custodian Fees....................... 4,228 1,915 6,956 69,301
Audit and Outside Services........... 5,644 278 8,778 2,528
Accounting Fees...................... 12,675 4,330 17,457 11,746
Legal................................ 2,693 615 4,584 1,843
Miscellaneous........................ 79,498 24,380 118,693 --
----------- ----------- ---------- ----------
Total Expenses..................... 329,462 118,558 486,132 269,309
----------- ----------- ---------- ----------
Net Investment Income (Loss)........... 348,576 143,845 969,303 (195,290)
----------- ----------- ---------- ----------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS
Net Realized Gain (Loss) on:
Investment Securities................ 1,290,513 (16,945) (719) 671,690
Written Options...................... -- -- -- --
Futures Contracts.................... 989,832 (587,637) -- 123,282
Securities Sold Short................ -- (220,582) -- --
----------- ----------- ---------- ----------
Total Net Realized Gain (Loss)..... 2,280,345 (825,164) (719) 794,972
----------- ----------- ---------- ----------
Net Change in Unrealized Appreciation
(Depreciation) on:
Investment Securities................ (1,102,710) (56,217) -- 5,968,060
Futures Contracts.................... 902,957 (250,186) -- 229,680
Securities Sold Short................ -- 42,343 -- --
----------- ----------- ---------- ----------
Net Change in Unrealized
Appreciation (Depreciation)...... (199,753) (264,060) -- 6,197,740
----------- ----------- ---------- ----------
Net Gain (Loss) on Investments..... 2,080,592 (1,089,224) (719) 6,992,712
----------- ----------- ---------- ----------
NET INCREASE (DECREASE) IN NET ASSETS
FROM OPERATIONS...................... $ 2,429,168 $ (945,379) $ 968,584 $6,797,422
----------- ----------- ---------- ----------
----------- ----------- ---------- ----------
</TABLE>
See Notes to Financial Statements. 13
<PAGE>
RYDEX VARIABLE TRUST
STATEMENT OF OPERATIONS (UNAUDITED) (CONCLUDED)
- --------------------------------------------------------------------------------
Six Months Ended June 30, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRECIOUS U.S.
METALS GOVERNMENT JUNO
FUND BOND FUND FUND
--------- ----------- --------
<S> <C> <C> <C>
INVESTMENT INCOME
Interest............................. $ 3,139 $ 93,127 $ 9,529
Dividends, net of foreign tax
withheld........................... 3,099 -- --
--------- ----------- --------
Total Income....................... 6,238 93,127 9,529
--------- ----------- --------
EXPENSES
Advisory Fees (Note 6)............... 7,755 9,693 2,777
Tactical Allocation Fees (Note 6).... 1,638 3,877 578
Organizational Expenses.............. 1,109 2,668 282
Servicing Fees (Note 6).............. 819 1,939 231
Custodian Fees....................... 3,618 2,319 836
Audit and Outside Services........... 106 180 121
Accounting Fees...................... 794 2,118 128
Legal................................ 148 365 39
Miscellaneous........................ -- 5,554 314
--------- ----------- --------
Total Expenses..................... 15,987 28,713 5,306
--------- ----------- --------
Net Investment Income (Loss)........... (9,749) 64,414 4,223
--------- ----------- --------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS
Net Realized Gain (Loss) on:
Investment Securities................ (574,099) (622,234) 17,761
Written Options...................... -- -- 37
Futures Contracts.................... -- -- 25,745
Securities Sold Short................ -- -- --
--------- ----------- --------
Total Net Realized Loss............ (574,099) (622,234) 43,543
--------- ----------- --------
Net Change in Unrealized Appreciation
(Depreciation) on:
Investment Securities................ 29,912 (83,200) (1,769)
Futures Contracts.................... -- -- (1,113)
Securities Sold Short................ -- -- --
--------- ----------- --------
Net Change in Unrealized
Appreciation (Depreciation)....... 29,912 (83,200) (2,882)
--------- ----------- --------
Net Loss on Investments............ (544,187) (705,434) 40,661
--------- ----------- --------
NET DECREASE IN NET ASSETS FROM
OPERATIONS........................... $(553,936) $ (641,020) $ 44,884
--------- ----------- --------
--------- ----------- --------
</TABLE>
See Notes to Financial Statements. 14
<PAGE>
RYDEX VARIABLE TRUST
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NOVA FUND URSA FUND
----------------------------------------- -----------------------------------------
SIX MONTHS ENDED SIX MONTHS ENDED
JUNE 30, 1999 YEAR ENDED JUNE 30, 1999 YEAR ENDED
(UNAUDITED) DECEMBER 31, 1998 (UNAUDITED) DECEMBER 31, 1998
----------------- --------------------- ----------------- ---------------------
<S> <C> <C> <C> <C>
FROM OPERATIONS
Net Investment Income................ $ 348,576 $ 44,655 $ 143,845 $ 50,423
Net Realized Gain (Loss) on
Investments........................ 2,280,345 1,400,415 (825,164) (1,659,085)
Net Change in Unrealized Appreciation
(Depreciation) on Investments...... (199,753) 2,020,484 (264,060) (8,651)
----------------- --------------------- ----------------- ---------------------
Net Increase (Decrease) in Net
Assets from Operations........... 2,429,168 3,465,554 (945,379) (1,617,313)
DISTRIBUTIONS TO SHAREHOLDERS
From Net Investment Income (Note
1)................................. -- -- -- --
NET INCREASE (DECREASE) IN NET ASSETS
FROM SHARE TRANSACTIONS (NOTE 9)..... 11,677,364 15,344,104 10,573,505 4,247,449
----------------- --------------------- ----------------- ---------------------
Net Increase (Decrease) in Net
Assets............................. 14,106,532 18,809,658 9,628,126 2,630,136
NET ASSETS--BEGINNING OF YEAR.......... 29,257,694 10,448,036 5,508,980 2,878,844
----------------- --------------------- ----------------- ---------------------
NET ASSETS--END OF PERIOD.............. $ 43,364,226 $ 29,257,694 $ 15,137,106 $ 5,508,980
----------------- --------------------- ----------------- ---------------------
----------------- --------------------- ----------------- ---------------------
</TABLE>
See Notes to Financial Statements. 15
<PAGE>
RYDEX VARIABLE TRUST
STATEMENT OF CHANGES IN NET ASSETS (CONTINUED)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
U.S. GOVERNMENT
MONEY MARKET FUND OTC FUND
----------------------------------------- -----------------------------------------
SIX MONTHS ENDED SIX MONTHS ENDED
JUNE 30, 1999 YEAR ENDED JUNE 30, 1999 YEAR ENDED
(UNAUDITED) DECEMBER 31, 1998 (UNAUDITED) DECEMBER 31, 1998
----------------- --------------------- ----------------- ---------------------
<S> <C> <C> <C> <C>
FROM OPERATIONS
Net Investment Income (Loss)......... $ 969,303 $ 739,817 $ (195,290) $ (357,606)
Net Realized Gain (Loss) on
Investments........................ (719) -- 794,972 2,999,243
Net Change in Unrealized Appreciation
on Investments..................... -- -- 6,197,740 5,479,062
----------------- --------------------- ----------------- ---------------------
Net Increase in Net Assets from
Operations....................... 968,584 739,817 6,797,422 8,120,699
DISTRIBUTIONS TO SHAREHOLDERS
From Net Investment Income (Note
1)................................. (971,273) (215,212) -- --
NET INCREASE IN NET ASSETS FROM SHARE
TRANSACTIONS (NOTE 9)................ 42,316,648 22,542,650 64,682,431 11,549,578
----------------- --------------------- ----------------- ---------------------
Net Increase in Net Assets......... 42,313,959 23,067,255 71,479,853 19,670,277
NET ASSETS--BEGINNING OF YEAR.......... 40,970,627 17,903,372 22,037,682 2,367,405
----------------- --------------------- ----------------- ---------------------
NET ASSETS--END OF PERIOD.............. $ 83,284,586 $ 40,970,627 $ 93,517,535 $ 22,037,682
----------------- --------------------- ----------------- ---------------------
----------------- --------------------- ----------------- ---------------------
</TABLE>
See Notes to Financial Statements. 16
<PAGE>
RYDEX VARIABLE TRUST
STATEMENT OF CHANGES IN NET ASSETS (CONTINUED)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRECIOUS METALS FUND U.S. GOVERNMENT BOND FUND
----------------------------------------- -----------------------------------------
SIX MONTHS ENDED SIX MONTHS ENDED
JUNE 30, 1999 SIX MONTHS ENDED JUNE 30, 1999 SIX MONTHS ENDED
(UNAUDITED) DECEMBER 31, 1998 (UNAUDITED) DECEMBER 31, 1998
----------------- --------------------- ----------------- ---------------------
<S> <C> <C> <C> <C>
FROM OPERATIONS
Net Investment Income (Loss)......... $ (9,749) $ (23,094) $ 64,414 $ 38,298
Net Realized Loss on Investments..... (574,099) (355,959) (622,234) (25,441)
Net Change in Unrealized Appreciation
(Depreciation) on Investments...... 29,912 8,971 (83,200) (37,336)
----------------- ----------- ----------------- -----------
Net Decrease in Net Assets from
Operations....................... (553,936) (370,082) (641,020) (24,479)
DISTRIBUTIONS TO SHAREHOLDERS
From Net Investment Income (Note
1)................................. -- -- (64,414) (18,864)
NET INCREASE (DECREASE) IN NET ASSETS
FROM SHARE TRANSACTIONS (NOTE 9)..... (1,304,821) 2,547,202 (1,956,049) 4,124,040
----------------- ----------- ----------------- -----------
Net Increase (Decrease) in Net
Assets........................... (1,858,757) 2,177,120 (2,661,483) 4,080,697
NET ASSETS--BEGINNING OF YEAR.......... 2,695,030 517,910 4,972,716 892,019
----------------- ----------- ----------------- -----------
NET ASSETS--END OF PERIOD.............. $ 836,273 $ 2,695,030 $ 2,311,233 $ 4,972,716
----------------- ----------- ----------------- -----------
----------------- ----------- ----------------- -----------
</TABLE>
See Notes to Financial Statements. 17
<PAGE>
RYDEX VARIABLE TRUST
STATEMENT OF CHANGES IN NET ASSETS (CONCLUDED)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
JUNO FUND
------------------------------------------
SIX MONTHS ENDED
JUNE 30, 1999 YEAR ENDED
(UNAUDITED) DECEMBER 31, 1998*
----------------- ----------------------
<S> <C> <C>
FROM OPERATIONS
Net Investment Income................ $ 4,223 $ 2,935
Net Realized Gain (Loss) on
Investments........................ 43,543 (19,931)
Net Change in Unrealized Appreciation
(Depreciation) on Investments...... (2,882) 897
----------------- --------
Net Increase (Decrease) in Net
Assets from Operations........... 44,884 (16,099)
DISTRIBUTIONS TO SHAREHOLDERS
From Net Investment Income (Note
1)................................. -- --
NET INCREASE IN NET ASSETS FROM SHARE
TRANSACTIONS (NOTE 9)................ 207,600 84,899
----------------- --------
Net Increase in Net Assets......... 252,484 68,800
NET ASSETS--BEGINNING OF PERIOD........ 68,800 --
----------------- --------
NET ASSETS--END OF PERIOD.............. $ 321,284 $ 68,800
----------------- --------
----------------- --------
</TABLE>
* COMMENCEMENT OF OPERATIONS: SEPTEMBER 3, 1998
See Notes to Financial Statements. 18
<PAGE>
RYDEX VARIABLE TRUST
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NOVA FUND
------------------------------------------------------------------
SIX MONTHS ENDED
JUNE 30, 1999 YEAR ENDED PERIOD ENDED
(UNAUDITED) DECEMBER 31, 1998 DECEMBER 31, 1997*
----------------- --------------------- ----------------------
<S> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
NET ASSET VALUE--BEGINNING OF PERIOD... $15.88 $12.21 $10.00
----------------- ---------- ----------
Net Investment Income++.............. .16 .04 .07
Net Realized and Unrealized Gains on
Securities......................... 2.03 3.63 2.14
----------------- ---------- ----------
Net Increase in Net Asset Value...... 2.19 3.67 2.21
----------------- ---------- ----------
NET ASSET VALUE--END OF PERIOD......... $18.07 $15.88 $12.21
----------------- ---------- ----------
----------------- ---------- ----------
TOTAL INVESTMENT RETURN................ 13.79% 30.06%
RATIOS TO AVERAGE NET ASSETS:
Gross Expenses....................... 1.83%** 3.26% 9.09%**
Net Expenses......................... 1.83%** 3.22% 2.80%**
Net Investment Income................ 1.94%** 0.27% 0.91%**
SUPPLEMENTARY DATA:
Portfolio Turnover Rate***........... 0% 0% 178%
Net Assets, End of Period (000's
omitted)........................... $43,364 $29,258 $10,448
</TABLE>
* COMMENCEMENT OF OPERATIONS: MAY 7, 1997
** ANNUALIZED
*** PORTFOLIO TURNOVER RATIO IS CALCULATED WITHOUT REGARD TO SHORT-TERM
SECURITIES HAVING A MATURITY OF LESS THAN ONE YEAR.
++ CALCULATED USING THE AVERAGE DAILY SHARES OUTSTANDING FOR THE PERIOD.
See Notes to Financial Statements.
19
<PAGE>
RYDEX VARIABLE TRUST
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
URSA FUND
-----------------------------------------------------------------------------
SIX MONTHS
ENDED JUNE 10, MAY 24, MAY 7,
JUNE 30, YEAR ENDED 1997 TO 1997 TO 1997 TO
1999 DECEMBER 31, DECEMBER 31, JUNE 3, MAY 21,
(UNAUDITED) 1998 1997+ 1997+ 1997+*
----------- --------------- --------------- ----------- -------------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
NET ASSET VALUE--BEGINNING OF PERIOD... $6.30 $8.07 $9.36 $9.57 $10.00
----------- --------------- --------------- ----------- -------------
Net Investment Income (Loss)++....... .07 .06 (.01) -- (.04)
Net Realized and Unrealized Gains
(Losses) on Securities............. (.76) (1.83) (1.28) .01 (.33)
----------- --------------- --------------- ----------- -------------
Net Increase (Decrease) in Net Asset
Value.............................. (.69) (1.77) (1.29) .01 (.37)
----------- --------------- --------------- ----------- -------------
NET ASSET VALUE--END OF PERIOD......... $5.61 $6.30 $8.07 $9.58 $9.63
----------- --------------- --------------- ----------- -------------
----------- --------------- --------------- ----------- -------------
TOTAL INVESTMENT RETURN................ (10.95%) (21.93%)
RATIOS TO AVERAGE NET ASSETS:
Gross Expenses....................... 2.08%** 3.76% 9.21%** 85.1%** 13.62%**
Net Expenses......................... 2.08%** 3.59% 2.90%** 2.90%** 2.90%**
Net Investment Income (Loss)......... 2.52%** 0.89% (0.27%)** 2.76%** (10.05%)**
SUPPLEMENTARY DATA:
Portfolio Turnover Rate***........... 0% 0% 0% 0% 0%
Net Assets, End of Period (000's
omitted)........................... $15,137 $5,509 $2,879 $-- $--
</TABLE>
* COMMENCEMENT OF OPERATIONS: MAY 7, 1997
+ DUE TO THE NATURE OF THE INVESTMENT ACTIVITY, THE FUND EXPERIENCED
PERIODS WITH ZERO NET ASSETS. FINANCIAL HIGHLIGHTS ARE PRESENTED ONLY
FOR PERIODS WITH NET ASSETS GREATER THAN ZERO.
** ANNUALIZED
*** PORTFOLIO TURNOVER RATIO IS CALCULATED WITHOUT REGARD TO SHORT-TERM
SECURITIES HAVING A MATURITY OF LESS THAN ONE YEAR.
++ CALCULATED USING THE AVERAGE DAILY SHARES OUTSTANDING FOR THE PERIOD.
See Notes to Financial Statements.
20
<PAGE>
RYDEX VARIABLE TRUST
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
U.S. GOVERNMENT MONEY MARKET FUND OTC FUND
------------------------------------------------ ------------------------------
SIX MONTHS SIX MONTHS
ENDED YEAR PERIOD ENDED YEAR
JUNE 30, ENDED ENDED JUNE 30, ENDED
1999 DECEMBER 31, DECEMBER 31, 1999 DECEMBER 31,
(UNAUDITED) 1998 1997* (UNAUDITED) 1998
----------- ---------------- --------------- ----------- ----------------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
NET ASSET VALUE--BEGINNING OF PERIOD... $1.00 $10.32 $10.00 $19.57 $10.65
----------- -------- --------------- ----------- --------
Net Investment Income (Loss)++....... .02 .08 .31 (.14) (.40)
Net Realized and Unrealized Gains on
Securities......................... -- -- .01 5.20 9.32
----------- -------- --------------- ----------- --------
Net Increase in Net Asset Value...... .02 .08 .32 5.06 8.92
Dividends to Shareholders from:
Net Investment Income.............. (.02) (.01) -- -- --
Adjustment due to Reorganization
(Note 1)......................... -- (9.39) -- -- --
----------- -------- --------------- ----------- --------
Net Increase (Decrease) in Net
Asset Value...................... -- (9.32) .32 5.06 8.92
----------- -------- --------------- ----------- --------
NET ASSET VALUE--END OF PERIOD......... $1.00 $1.00 $10.32 $24.63 $19.57
----------- -------- --------------- ----------- --------
----------- -------- --------------- ----------- --------
TOTAL INVESTMENT RETURN................ 1.72% 2.22% 25.86% 83.76%
RATIOS TO AVERAGE NET ASSETS:
Gross Expenses....................... 1.60%** 2.99% 6.82%** 1.70%** 2.96%
Net Expenses......................... 1.60%** 2.67% 2.20%** 1.70%** 2.96%
Net Investment Income (Loss)......... 3.19%** 2.61% 3.34%** (1.23%)** (2.67%)
SUPPLEMENTARY DATA:
Portfolio Turnover Rate***........... 0% 0% 0% 490% 1077%
Net Assets, End of Period (000's
omitted)........................... $83,285 $40,971 $17,903 $93,518 $22,038
<CAPTION>
PERIOD
ENDED
DECEMBER 31,
1997*
---------------
<S> <C>
PER SHARE OPERATING PERFORMANCE:
NET ASSET VALUE--BEGINNING OF PERIOD... $10.00
---------------
Net Investment Income (Loss)++....... (.09)
Net Realized and Unrealized Gains on
Securities......................... .74
---------------
Net Increase in Net Asset Value...... .65
Dividends to Shareholders from:
Net Investment Income.............. --
Adjustment due to Reorganization
(Note 1)......................... --
---------------
Net Increase (Decrease) in Net
Asset Value...................... .65
---------------
NET ASSET VALUE--END OF PERIOD......... $10.65
---------------
---------------
TOTAL INVESTMENT RETURN................
RATIOS TO AVERAGE NET ASSETS:
Gross Expenses....................... 9.07%**
Net Expenses......................... 2.80%**
Net Investment Income (Loss)......... (1.22%)**
SUPPLEMENTARY DATA:
Portfolio Turnover Rate***........... 450%
Net Assets, End of Period (000's
omitted)........................... $2,367
</TABLE>
* COMMENCEMENT OF OPERATIONS: MAY 7, 1997
** ANNUALIZED
*** PORTFOLIO TURNOVER RATIO IS CALCULATED WITHOUT REGARD TO SHORT-TERM
SECURITIES HAVING A MATURITY OF LESS THAN ONE YEAR.
++ CALCULATED USING THE AVERAGE DAILY SHARES OUTSTANDING FOR THE PERIOD.
See Notes to Financial Statements.
21
<PAGE>
RYDEX VARIABLE TRUST
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRECIOUS METALS FUND
-------------------------------------------------------
SIX MONTHS ENDED YEAR ENDED PERIOD ENDED
JUNE 30, 1999 DECEMBER 31, DECEMBER 31,
(UNAUDITED) 1998 1997*
----------------- ---------------- ----------------
<S> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
NET ASSET VALUE--BEGINNING OF PERIOD... $5.81 $7.02 $10.00
----------------- ---------------- ----------------
Net Investment Loss++................ (.03) (.16) (.11)
Net Realized and Unrealized Losses on
Securities......................... (.04) (1.05) (2.87)
----------------- ---------------- ----------------
Net Decrease in Net Asset Value...... (.07) (1.21) (2.98)
----------------- ---------------- ----------------
NET ASSET VALUE--END OF PERIOD......... $5.74 $5.81 $7.02
----------------- ---------------- ----------------
----------------- ---------------- ----------------
TOTAL INVESTMENT RETURN.............. (1.21%) (17.24%)
RATIOS TO AVERAGE NET ASSETS:
Gross Expenses..................... 2.06%** 3.39% 9.76%**
Net Expenses....................... 2.06%** 3.23% 2.80%**
Net Investment Loss................ (1.26%)** (2.31%) (2.19%)**
SUPPLEMENTARY DATA:
Portfolio Turnover Rate***........... 1228% 1739% 914%
Net Assets, End of Period (000's
omitted)........................... $836 $2,695 $518
</TABLE>
* COMMENCEMENT OF OPERATIONS: MAY 29, 1997
** ANNUALIZED
*** PORTFOLIO TURNOVER RATIO IS CALCULATED WITHOUT REGARD TO SHORT-TERM
SECURITIES HAVING A MATURITY OF LESS THAN ONE YEAR.
++ CALCULATED USING THE AVERAGE DAILY SHARES OUTSTANDING FOR THE PERIOD.
See Notes to Financial Statements.
22
<PAGE>
RYDEX VARIABLE TRUST
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
U. S. GOVERNMENT BOND FUND
----------------------------------------------------------------------------------------
SIX MONTHS
ENDED AUGUST 18, JULY 29, JUNE 24, MAY 29,
JUNE 30, YEAR ENDED 1997 TO 1997 TO 1997 TO 1997 TO
1999 DECEMBER 31, DECEMBER 31, AUGUST 12, JULY 14, JUNE 5,
(UNAUDITED) 1998 1997+ 1997+ 1997+ 1997+*
----------- --------------- --------------- ------------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
NET ASSET VALUE--BEGINNING OF PERIOD... $13.28 $11.82 $10.70 $10.92 $10.44 $10.00
----------- --------------- --------------- ------------- ---------- ---------
Net Investment Income++.............. .20 .24 .15 .02 .10 --
Net Realized and Unrealized Gains
(Losses) on Securities............. (2.08) 1.28 .97 (.38) .13 .15
----------- --------------- --------------- ------------- ---------- ---------
Net Increase (Decrease) in Net Asset
Value.............................. (1.88) 1.52 1.12 (.36) .23 .15
Dividends to Shareholders from:
Net Investment Income.............. (.21) (.06) -- -- -- --
----------- --------------- --------------- ------------- ---------- ---------
Net Increase (Decrease) in Net
Asset Value...................... (2.09) 1.46 1.12 (.36) .23 .15
----------- --------------- --------------- ------------- ---------- ---------
NET ASSET VALUE--END OF PERIOD......... $11.19 $13.28 $11.82 $10.56 $10.67 $10.15
----------- --------------- --------------- ------------- ---------- ---------
----------- --------------- --------------- ------------- ---------- ---------
TOTAL INVESTMENT RETURN................ 13.49% 12.86%
RATIOS TO AVERAGE NET ASSETS:
Gross Expenses....................... 1.49%** 2.71% 8.47%** 49.63%** 12.68%** 5.43%**
Net Expenses......................... 1.49%** 2.71% 2.40%** 2.40%** 2.40%** 2.40%**
Net Investment Income................ 3.33%** 1.92% 3.49%** 3.80%** 7.94%** 1.86%**
SUPPLEMENTARY DATA:
Portfolio Turnover Rate***........... 856% 1463% 761% 0% 0% 0%
Net Assets, End of Period (000's
omitted)........................... $2,311 $4,973 $892 $-- $-- $--
</TABLE>
* COMMENCEMENT OF OPERATIONS: MAY 29, 1997
+ DUE TO THE NATURE OF THE INVESTMENT ACTIVITY, THE FUND EXPERIENCED
PERIODS WITH ZERO NET ASSETS. FINANCIAL HIGHLIGHTS ARE PRESENTED ONLY
FOR PERIODS WITH NET ASSETS GREATER THAN ZERO.
** ANNUALIZED
*** PORTFOLIO TURNOVER RATIO IS CALCULATED WITHOUT REGARD TO SHORT-TERM
SECURITIES HAVING A MATURITY OF LESS THAN ONE YEAR.
++ CALCULATED USING THE AVERAGE DAILY SHARES OUTSTANDING FOR THE PERIOD.
See Notes to Financial Statements.
23
<PAGE>
RYDEX VARIABLE TRUST
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
JUNO FUND
-------------------------------------------------------------------------------------
SIX MONTHS
ENDED MARCH 3, MARCH 1, FEBRUARY 22 FEBRUARY 1, JANUARY 19,
JUNE 30, 1998 TO 1998 TO 1998 TO 1998 TO 1998 TO
1999 DECEMBER 31, MARCH 2, FEBRUARY 24, FEBRUARY 2, JANUARY 25,
(UNAUDITED) 1998+ 1998+ 1998+ 1998+ 1998+
----------- ------------ ---------- ------------ ----------- --------------
<S> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
NET ASSET VALUE--BEGINNING OF PERIOD... $8.40 $9.20 $9.09 $9.03 $8.98 $8.88
----------- ------------ ---------- ------------ ----------- --------------
Net Investment Income (Loss)++....... .08 (.05) -- -- -- --
Net Realized and Unrealized Gains
(Losses) on Securities............. .92 (.75) .08 .11 .04 .26
----------- ------------ ---------- ------------ ----------- --------------
Net Increase (Decrease) in Net Asset
Value.............................. 1.00 (.80) .08 .11 .04 .26
----------- ------------ ---------- ------------ ----------- --------------
NET ASSET VALUE--END OF PERIOD......... $9.40 $8.40 $9.17 $9.14 $9.02 $9.14
----------- ------------ ---------- ------------ ----------- --------------
----------- ------------ ---------- ------------ ----------- --------------
TOTAL INVESTMENT RETURN................ 3.57% (8.70%) 0.88% 1.22% 0.45% 2.93%
RATIOS TO AVERAGE NET ASSETS:
Gross Expenses....................... 2.29%** 5.72%** 13.10%** 4.39%** 4.42%** 4.42%**
Net Expenses......................... 2.29%** 5.18%** 11.01%** 3.68%** 3.68%** 3.67%**
Net Investment Income (Loss)......... 1.82%** (1.10)%** (5.32)%** 1.60%** 1.92%** 1.73%**
SUPPLEMENTARY DATA:
Portfolio Turnover Rate***........... 0% 0% 0% 0% 0% 0%
Net Assets, End of Period (000's
omitted)........................... $321 $69 $-- $-- $-- $--
</TABLE>
+ DUE TO THE NATURE OF THE INVESTMENT ACTIVITY, THE FUND EXPERIENCED
PERIODS WITH ZERO NET ASSETS. FINANCIAL HIGHLIGHTS ARE PRESENTED ONLY
FOR PERIODS WITH NET ASSETS GREATER THAN ZERO.
** ANNUALIZED
*** PORTFOLIO TURNOVER RATIO IS CALCULATED WITHOUT REGARD TO SHORT-TERM
SECURITIES HAVING A MATURITY OF LESS THAN ONE YEAR.
++ CALCULATED USING THE AVERAGE DAILY SHARES OUTSTANDING FOR THE PERIOD.
See Notes to Financial Statements.
24
<PAGE>
RYDEX VARIABLE TRUST
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
JUNO FUND
-----------------------------------------------------------------------------
OCTOBER 22, AUGUST 26, JULY 24, JUNE 16,
1997 TO 1997 TO 1997 TO 1997 TO
DECEMBER 11, OCTOBER 19, AUGUST 11, JULY 7, JULY 2,
1997+ 1997+ 1997+ 1997+ 1997+
--------------- --------------- ------------- ------------ ----------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
NET ASSET VALUE--BEGINNING OF PERIOD... $9.50 $9.72 $9.41 $9.59 $9.71
--------------- --------------- ------------- ------------ ----------
Net Investment Income++.............. .11 .01 .01 -- --
Net Realized and Unrealized Gains
(Losses) on Securities............. (.60) (.21) .26 (.05) (.03)
--------------- --------------- ------------- ------------ ----------
Net Increase (Decrease) in Net Asset
Value.............................. (.49) (.20) .27 (.05) (.03)
--------------- --------------- ------------- ------------ ----------
NET ASSET VALUE--END OF PERIOD......... $9.01 $9.52 $9.68 $9.54 $9.68
--------------- --------------- ------------- ------------ ----------
--------------- --------------- ------------- ------------ ----------
RATIOS TO AVERAGE NET ASSETS:
Gross Expenses....................... 19.73%** 7.88%** 3.23%** 111.10%** 5.71%**
Net Expenses......................... 2.90%** 2.90%** 2.90%** 2.90%** 2.90%**
Net Investment Income................ 8.68%** 0.80%** 1.50%** 0.74%** 1.29%**
SUPPLEMENTARY DATA:
Portfolio Turnover Rate***........... 0% 0% 0% 0% 0%
Net Assets, End of Period (000's
omitted)........................... $-- $-- $-- $-- $--
<CAPTION>
MAY 7,
1997 TO
JUNE 3,
1997+*
------------
<S> <C>
PER SHARE OPERATING PERFORMANCE:
NET ASSET VALUE--BEGINNING OF PERIOD... $10.00
------------
Net Investment Income++.............. --
Net Realized and Unrealized Gains
(Losses) on Securities............. (.14)
------------
Net Increase (Decrease) in Net Asset
Value.............................. (.14)
------------
NET ASSET VALUE--END OF PERIOD......... $9.86
------------
------------
RATIOS TO AVERAGE NET ASSETS:
Gross Expenses....................... 6.13%**
Net Expenses......................... 2.90%**
Net Investment Income................ (0.37%)**
SUPPLEMENTARY DATA:
Portfolio Turnover Rate***........... 0%
Net Assets, End of Period (000's
omitted)........................... $--
</TABLE>
* COMMENCEMENT OF OPERATIONS: MAY 7, 1997
+ DUE TO THE NATURE OF THE INVESTMENT ACTIVITY, THE FUND EXPERIENCED
PERIODS WITH ZERO NET ASSETS. FINANCIAL HIGHLIGHTS ARE PRESENTED ONLY
FOR PERIODS WITH NET ASSETS GREATER THAN ZERO.
** ANNUALIZED
*** PORTFOLIO TURNOVER RATIO IS CALCULATED WITHOUT REGARD TO SHORT-TERM
SECURITIES HAVING A MATURITY OF LESS THAN ONE YEAR.
++ THE PER SHARE DATA OF THE FINANCIAL HIGHLIGHTS TABLE IS CALCULATED USING
THE AVERAGE DAILY SHARES OUTSTANDING FOR THE YEAR.
See Notes to Financial Statements. 25
<PAGE>
RYDEX VARIABLE TRUST
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES
The Rydex Variable Trust (the "Trust") is registered with the Securities and
Exchange Commission under the Investment Company Act of 1940 as a
non-diversified, open-ended investment company and is authorized to issue an
unlimited number of shares. The Trust currently has seven operating Funds: the
Nova Fund, the Ursa Fund, the U.S. Government Money Market Fund, the OTC Fund,
the Precious Metals Fund, the U.S. Government Bond Fund, and the Juno Fund
(collectively the "Funds"), and is managed by PADCO Advisors II, Inc. ("PADCO").
PADCO Financial Services, Inc. ("PFSI") acts as principal underwriter for the
Trust.
The Trust was organized on June 11, 1998 as a Delaware business trust. Effective
November 2, 1998, the assets and fund liabilities of Rydex Advisor Variable
Annuity Account (the "Separate Account"), a segregated investment account of
Conseco Variable Insurance Company (formerly Great American Reserve Insurance
Company), were transferred to the Trust in exchange for shares of the Funds of
the Trust (the "Separate Account Restructuring"). Shares of the Funds (full and
fractional) were issued to corresponding subaccounts of the Separate Account.
The value of the shares of each Fund, except for U.S. Government Money Market
shares which were adjusted to $1.00, were equivalent in value to the value of
outstanding accumulation units of the corresponding subaccount. The Trust offers
shares of the Funds to the Separate Account and other insurance companies for
their variable annuity and variable life insurance contracts.
The following significant accounting policies are in conformity with generally
accepted accounting principles and are consistently followed by the Trust.
SECURITY VALUATION
Securities listed on an exchange are valued at the latest quoted sales prices as
of 4:00 P.M. on the valuation date. Securities not traded on an exchange are
valued at their last sales price. Listed options held by the Trust are valued at
their last bid price. Over-the-counter options held by the Trust are valued
using the average bid price obtained from one or more securities dealers. The
value of futures contracts purchased and sold by the Trust are accounted for
using the unrealized gain or loss on the contracts that is determined by marking
the contracts to their current realized settlement prices. Short-term securities
with less than sixty days to maturity are valued at amortized cost, which
approximates market. Securities and assets for which market quotations are not
readily available are valued at fair value as determined in good faith by or
under the direction of the Board of Trustees.
26
<PAGE>
RYDEX VARIABLE TRUST
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
INVESTMENT TRANSACTIONS AND INVESTMENT INCOME
Securities transactions are generally recorded on the day after the trade is
executed. Realized gains and losses from securities transactions are recorded on
the identified cost basis. Dividend income is recorded on the ex-dividend date,
net of applicable taxes withheld by foreign countries. Interest income and
expenses are accrued on a daily basis.
ORGANIZATION COSTS
Deferred organization costs, which totaled approximately $821,573, represent
expenses incurred and paid on behalf of the Trust by PADCO. These initial costs
were allocated to the Funds within the Trust and are being amortized on a
straight line basis over a five year period beginning with the commencement of
operations. These amortized costs are then allocated to the Funds daily and
reconciled and settled monthly between the Funds on the basis of the relative
net assets of each Fund to the total net assets of the Trust. The monthly
amortized amount is reimbursed to PADCO. An additional $35,000 of organization
costs associated with the Separate Account Restructuring were incurred by the
Trust and allocated to the Funds. These costs are being amortized over the
remaining amortization period of the initial organization costs. At June 30,
1999, accrued organization costs payable by the Trust were $512,832.
OPTIONS AND FUTURES
Upon the purchase of a put option or a call option by a Fund, the premium paid
is recorded as an investment, the value of which is marked-to-market daily. When
a purchased option expires, the Fund will realize a loss in the amount of the
cost of the option. When a Fund enters into a closing sale transaction, the Fund
will realized a gain or loss depending on whether the proceeds from the closing
sale transaction are greater or less than the cost of the option. When a Fund
exercises a put option, it will realize a gain or loss from the sale of the
underlying security and the proceeds from such sale will be decreased by the
premium originally paid. When a Fund exercises a call option, the cost of the
security which the Fund purchases upon exercise will be increased by the premium
originally paid.
When a Fund writes a call option or a put option, an amount equal to the premium
received by the Fund is recorded as a liability, the value of which is
marked-to-market daily. When a written option expires, the Fund realizes a gain
equal to the amount of the premium received. When a Fund enters into a closing
purchase transaction. The Fund realizes a gain (or loss if the cost of the
closing purchase transaction exceeds the premium received when the option was
sold) without regard to any unrealized gain or loss on the underlying security,
and the liability related to the option is eliminated.
27
<PAGE>
RYDEX VARIABLE TRUST
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
When a written call option is exercised, the Fund realizes a gain or loss from
the sale of the underlying security and the proceeds from such sale are
increased by the premium originally received. When a written put option is
exercised, the amount of the premium originally received will reduce the cost of
the security that the Fund purchased upon exercise.
Futures contracts provide for the future sale by one party and the future
purchase by another party of a specified amount of a specified financial
instrument at an agreed upon price, date, time, and place. Upon entering into a
futures contract, the Fund is required to deposit with the broker an amount of
cash or cash equivalents equal to a certain percentage of the contract amount.
This is known as "initial margin." Subsequent payments ("variation margin") are
made or received by the Fund each day, depending on the daily fluctuation of the
value of the contract. The daily changes in contract value are recorded as
unrealized gains or losses and the Fund recognizes a realized gain or loss when
the contract is closed. Futures contracts are valued daily at the settlement
price established by the board of trade or exchange on which they are traded.
SHORT SALES
The Funds may make short sales of securities. A short sale is a transaction in
which the Fund sells a security it does not own (but has borrowed) in
anticipation of a decline in the market price of the security. A Fund may make
short sales to offset a potential decline in a long position or a group of long
positions, or if the Fund believes that a decline in the price of a particular
security or group of securities is likely.
When a Fund makes a short sale, the proceeds it receives are retained by the
broker until the Fund replaces the borrowed security. In order to deliver the
security to the buyer, the Fund must arrange through a broker to borrow the
security, and in so doing, the Fund becomes obligated to replace the security
borrowed at its market price at the time of replacement, whatever that price may
be. The Fund may have to pay a premium to borrow the security. The Fund must
also pay any dividends or interest payable on the security until the Fund
replaces the security.
The Fund's obligation to replace the security borrowed in connection with the
short sale will be secured by collateral deposited with the broker, consisting
of cash or U.S. Government securities or other securities acceptable to the
broker. In addition, with respect to any short sale, other than short sales
against the box, the Fund will be required to maintain collateral consisting of
cash, cash items, or U.S. Government securities segregated with its custodian,
or repurchase agreements allocated to the Fund, in an amount such that the value
of the sum of both collateral deposits is at all times equal
28
<PAGE>
RYDEX VARIABLE TRUST
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
to at least 100% of the current market value of the securities sold short. The
deposits do not necessarily limit the Fund's potential loss on a short sale,
which may exceed the entire amount of the collateral.
If the price of the security sold short increases between the time of the short
sale and the time the Fund replaces the borrowed security, the Fund will incur a
loss, and if the price declines during this period, the Fund will realize a
capital gain. Any realized gain will be decreased, and any incurred loss
increased, by the amount of transactional costs and any premium, dividend, or
interest which the Fund may have to pay in connection with such short sale.
2. FINANCIAL INSTRUMENTS
As part of its investment program, the Fund may utilize options and futures. The
risk associated with purchasing options is limited to the premium originally
paid. Options written by a Fund involve to varying degrees, risk of loss in
excess of the option value reflected in the Statement of Assets and Liabilities.
The risk in writing a covered call option is that a Fund may forego the
opportunity for profit if the market price of the underlying security increases
and the option is exercised. The risk in writing a covered put option is that a
Fund may incur a loss if the market price of the underlying security decreases
and the option is exercised. In addition, there is the risk that a Fund may not
be able to enter into a closing transaction because of an illiquid secondary
market or, for over-the-counter options, because of the counterparty's inability
to perform.
There are several risks in connection with the use of futures contracts. Futures
contracts involve, to varying degrees, risk of loss in excess of amounts
reflected in the financial statements. The change in the value of futures
contracts primarily corresponds with the value of their underlying instruments,
which may not correlate with the change in the value of the hedged instruments.
In addition, there is the risk that a Fund may not be able to enter into a
closing transaction because of an illiquid secondary market.
In conjunction with the use of options and futures, as well as short sales of
securities, the Funds are required to maintain collateral in various forms. The
Funds use, where appropriate depending upon the financial instrument utilized
and the broker involved, margin deposits at the broker, cash segregated at the
custodian bank, or the repurchase agreements allocated to each Fund.
3. FEDERAL INCOME TAXES
The Trust intends to comply with the provisions of the Internal Revenue Code
applicable to regulated investment companies and will distribute all net
investment income to its shareholders. Therefore, no Federal income tax
provision is required.
29
<PAGE>
RYDEX VARIABLE TRUST
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
4. USE OF ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amount of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
5. REPURCHASE AGREEMENTS
The Trust transfers uninvested cash balances into a single joint account, the
daily aggregate balance of which is invested in repurchase agreements
collaterized by U.S. Treasury obligations. Collateral is in the possession of
the Trust's custodian and it is evaluated daily to ensure that its market value
exceeds the delivery value of the repurchase agreements at maturity. As of June
30, 1999, the repurchase agreements with Fuji Securities, PaineWebber, Inc.,
Salomon Smith Barney, Inc., Prudential Securities, and Lehman Brothers, Inc. in
the joint account and the collateral was as follows:
<TABLE>
<CAPTION>
RANGE OF MARKET
SECURITY TYPE RATES PAR VALUE VALUE
- --------------------------------------- ------------- ----------- -----------
<S> <C> <C> <C>
U.S. Treasury Notes.................... 5.500%-6.375% $44,011,000 $43,834,638
U.S. Treasury Bonds.................... 8.125% $11,155,000 $13,500,000
</TABLE>
6. FEES AND OTHER TRANSACTIONS WITH AFFILIATES
Under the terms of an investment advisory contract, the Trust pays PADCO
investment advisory fees calculated at an annual percentage rate of one-half of
one percent (0.50%) of the average daily net assets of the U.S. Government Money
Market Fund and the U.S. Government Bond Fund, three-quarters of one percent
(0.75%) of the average daily net assets of the Nova Fund, the Precious Metals
Fund, and the OTC Fund, and nine-tenths of one percent (0.90%) of the daily
average net assets of the Ursa Fund and the Juno Fund.
PADCO Service Company, Inc., (the "Servicer") provides tactical allocation and
administrative services to the Trust calculated at an annual percentage rate of
two-tenths of one percent (0.20%) of the average daily net assets of the U.S.
Government Money Market Fund, the U.S. Government Bond Fund, the Precious Metals
Fund, and the OTC Fund; and at an annual rate of one-quarter of one percent
(0.25%) of the average daily net assets of the Nova Fund, the Ursa Fund, and the
Juno Fund.
The Servicer also provides other necessary services to the Trust, such as
accounting and auditing services, legal services, custody, printing and mailing,
etc., on a pass-through basis. Such expenses vary from Fund to Fund.
30
<PAGE>
RYDEX VARIABLE TRUST
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
The Trust has adopted an Investor Services Plan for which PFSI (an affiliated
entity) and other firms that provide shareholder services ("Service Providers")
may receive compensation. The Trust will pay fees to PFSI at an annual rate not
to exceed one quarter of one percent (0.25%) of average daily net assets. PFSI,
in turn, will compensate Service Providers for providing such services, while
retaining a portion of such payments to compensate itself for shareholder
services it performs.
PADCO and the Servicer have voluntarily agreed to waive their investment
advisory and tactical allocation and administrative service fees and, if
necessary, to reimburse any Fund expenses which would cause the ratio of
expenses to average net assets to exceed 2.20% for the Nova Fund, the Precious
Metals Fund, and the OTC Fund; 2.30% for the Ursa Fund and the Juno Fund; 1.60%
for the U.S. Government Money Market Fund; and 1.80% for the U.S. Government
Bond Fund, effective November 2, 1998. For the six months ended June 30, 1999,
there were no fees waived by PADCO or the Servicer.
Effective October 24, 1997 through October 24, 1999, the Funds are required to
reimburse PADCO and the Servicer for any expenses, previously waived or
reimbursed, provided that average net assets have grown or expenses have
declined sufficiently to allow reimbursement without causing the Funds' ratio of
expenses to average net assets to exceed the specified rates. For the six months
ended June 30, 1999, the Funds have reimbursed $67,628 to PADCO and the
Servicer. As of June 30, 1999 the remaining fees and expenses subject to
reimbursement to PADCO and the Servicer total $471,134.
7. SECURITIES TRANSACTIONS
During the six months ended June 30, 1999 purchases and sales of investment
securities, excluding short-term and temporary cash investments, were:
<TABLE>
<CAPTION>
U.S.
GOVERNMENT
MONEY U.S.
NOVA URSA MARKET OTC PRECIOUS GOVERNMENT JUNO
FUND FUND FUND FUND METALS FUND BOND FUND FUND
---------- ---- ---- ------------ ----------- ----------- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Purchases.............................. $ -- $-- $-- $244,910,520 $15,883,744 $28,393,883 $--
Sales.................................. $1,204,575 $-- $-- $184,245,589 $15,458,939 $30,332,500 $--
</TABLE>
31
<PAGE>
RYDEX VARIABLE TRUST
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
8. NET ASSETS
Certain adjustments have been made to the components of net assets to reflect
temporary and permanent differences in the recognition and timing of net
investment income, realized capital gains (losses), and distributions. At June
30, 1999, net assets consisted of:
<TABLE>
<CAPTION>
U.S.
GOVERNMENT
NOVA URSA MONEY OTC
FUND FUND MARKET FUND FUND
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Paid-In-Capital........................ $37,132,799 $18,034,972 $82,541,032 $78,377,294
Undistributed Net Investment Income
(Loss)............................... 418,641 190,938 744,273 (195,290)
Accumulated Net Realized Gain (Loss) on
Investments.......................... 3,793,137 (2,738,770) (719) 3,764,530
Net Unrealized Appreciation
(Depreciation) on Investments,
Options and Futures Contracts........ 2,019,649 (350,034) -- 11,571,001
----------- ----------- ----------- -----------
Net Assets $43,364,226 $15,137,106 $83,284,586 $93,517,535
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
</TABLE>
<TABLE>
<CAPTION>
U.S.
PRECIOUS GOVERNMENT JUNO
METALS FUND BOND FUND FUND
----------- ---------- --------
<S> <C> <C> <C>
Paid-In-Capital........................ $ 2,063,020 $3,022,603 $312,663
Undistributed Net Investment Income
(Loss)............................... (9,749) 25,292 13,474
Accumulated Net Realized Gain (Loss) on
Investments.......................... (1,295,785) (632,759) (2,868)
Net Unrealized Appreciation
(Depreciation) on Investments,
Options and Futures Contracts........ 78,787 (103,903) (1,985)
----------- ---------- --------
Net Assets............................. $ 836,273 $2,311,233 $321,284
----------- ---------- --------
----------- ---------- --------
</TABLE>
9. SHARE TRANSACTIONS
The Trust is authorized to distribute an unlimited number of shares.
Transactions in shares for the six months ended June 30, 1999 were:
<TABLE>
<CAPTION>
U.S.
GOVERNMENT U.S.
NOVA URSA MONEY OTC PRECIOUS GOVERNMENT JUNO
FUND FUND MARKET FUND FUND METALS FUND BOND FUND FUND
----------- ----------- ------------ ---------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Shares Purchased....................... 16,525,331 36,232,387 296,170,940 11,451,010 2,560,101 2,053,105 1,391,074
Purchased through Dividend
Reinvestment......................... -- -- 971,272 -- -- 5,242 --
----------- ----------- ------------ ---------- ----------- ---------- ----------
Total Purchased........................ 16,525,331 36,232,387 297,142,212 11,451,010 2,560,101 2,058,347 1,391,074
Shares Redeemed........................ (15,968,331) (34,409,317) (254,827,534) (8,779,625) (2,878,540) (2,226,300) (1,365,076)
----------- ----------- ------------ ---------- ----------- ---------- ----------
Net Shares Purchased (Redeemed)........ 557,000 1,823,070 42,314,678 2,671,385 (318,439) (167,953) 25,998
----------- ----------- ------------ ---------- ----------- ---------- ----------
----------- ----------- ------------ ---------- ----------- ---------- ----------
</TABLE>
32
<PAGE>
RYDEX VARIABLE TRUST
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Transactions in shares for the year ended December 31,1998 were:
<TABLE>
<CAPTION>
U.S.
GOVERNMENT U.S.
NOVA URSA MONEY OTC PRECIOUS GOVERNMENT JUNO
FUND FUND MARKET FUND FUND METALS FUND BOND FUND FUND
----------- ----------- ------------ ----------- ----------- ---------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Shares Purchased....................... 30,899,625 38,101,331 131,244,147 12,540,353 2,877,138 1,880,535 688,698
Purchased through Dividend
Reinvestment......................... -- -- 215,212 -- -- 1,435 --
----------- ----------- ------------ ----------- ----------- ---------- --------
Total Purchased........................ 30,899,625 38,101,331 131,459,359 12,540,353 2,877,138 1,881,970 688,698
Shares Issued for Restructuring*....... -- -- 29,078,048 -- -- -- --
Shares Redeemed........................ (29,913,354) (37,583,808) (121,301,754) (11,636,468) (2,486,791) (1,582,992) (680,511)
----------- ----------- ------------ ----------- ----------- ---------- --------
Net Shares Purchased................... 986,271 517,523 39,235,653 903,885 390,347 298,978 8,187
----------- ----------- ------------ ----------- ----------- ---------- --------
----------- ----------- ------------ ----------- ----------- ---------- --------
</TABLE>
* Additional shares in U.S. Government Money Market Fund were issued as a result
to the Separate Account Restructuring on November 2, 1998 (refer to Note 1).
Transactions in dollars for the six months ended June 30, 1999 were:
<TABLE>
<CAPTION>
U.S.
GOVERNMENT U.S.
NOVA URSA MONEY OTC PRECIOUS GOVERNMENT
FUND FUND MARKET FUND FUND METALS FUND BOND FUND
------------- ------------- ------------- ------------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Shares Purchased....................... $ 279,370,717 $ 213,353,658 $ 296,170,941 $ 260,590,044 $ 14,931,843 $ 24,985,056
Purchased through Dividend
Reinvestment......................... -- -- 971,272 -- -- 63,759
------------- ------------- ------------- ------------- ------------ ------------
Total Purchased........................ 279,370,717 213,353,658 297,142,213 260,590,044 14,931,843 25,048,815
Shares Redeemed........................ (267,693,353) (202,780,153) (254,825,565) (195,907,613) (16,236,664) (27,004,864)
------------- ------------- ------------- ------------- ------------ ------------
Net Shares Purchased (Redeemed)........ $ 11,677,364 $ 10,573,505 $ 42,316,648 $ 64,682,431 $ (1,304,821) $ (1,956,049)
------------- ------------- ------------- ------------- ------------ ------------
------------- ------------- ------------- ------------- ------------ ------------
<CAPTION>
JUNO
FUND
------------
<S> <C>
Shares Purchased....................... $ 12,315,169
Purchased through Dividend
Reinvestment......................... --
------------
Total Purchased........................ 12,315,169
Shares Redeemed........................ (12,107,569)
------------
Net Shares Purchased (Redeemed)........ $ 207,600
------------
------------
</TABLE>
Transactions in dollars for the year ended December 31, 1998 were:
<TABLE>
<CAPTION>
U.S.
GOVERNMENT U.S.
NOVA URSA MONEY OTC PRECIOUS GOVERNMENT
FUND FUND MARKET FUND FUND METALS FUND BOND FUND
------------- ------------- ------------- ------------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Shares Purchased....................... $ 419,952,323 $ 276,426,278 $ 559,383,619 $ 178,243,785 $ 19,872,131 $ 24,089,105
Purchased through Dividend
Reinvestment......................... -- -- 215,212 -- -- 18,864
------------- ------------- ------------- ------------- ------------ ------------
Total Purchased........................ 419,952,323 276,426,278 559,598,831 178,243,785 19,872,131 24,107,969
Shares Redeemed........................ (404,608,219) (272,178,829) (537,056,181) (166,694,207) (17,324,929) (19,983,929)
------------- ------------- ------------- ------------- ------------ ------------
Net Shares Purchased................... $ 15,344,104 $ 4,247,449 $ 22,542,650 $ 11,549,578 $ 2,547,202 $ 4,124,040
------------- ------------- ------------- ------------- ------------ ------------
------------- ------------- ------------- ------------- ------------ ------------
<CAPTION>
JUNO
FUND
-----------
<S> <C>
Shares Purchased....................... $ 6,011,996
Purchased through Dividend
Reinvestment......................... --
-----------
Total Purchased........................ 6,011,996
Shares Redeemed........................ (5,927,097)
-----------
Net Shares Purchased................... $ 84,899
-----------
-----------
</TABLE>
33
<PAGE>
RYDEX VARIABLE TRUST
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONCLUDED)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
10. NET UNREALIZED APPRECIATION (DEPRECIATION) OF SECURITIES
At June 30, 1999 unrealized appreciation (depreciation) and cost of investment
securities for Federal income tax purposes was:
<TABLE>
<CAPTION>
U.S.
GOVERNMENT U.S.
NOVA URSA MONEY OTC PRECIOUS GOVERNMENT
FUND FUND MARKET FUND FUND METALS FUND BOND FUND
----------- ----------- ----------- ----------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Gross Unrealized Appreciation.......... $ 488,757 $ -- $ -- $11,427,655 $ 79,607 $ --
Gross Unrealized (Depreciation)........ (4,700) (56,217) -- (158,047) (820) (103,913)
----------- ----------- ----------- ----------- ------------ ------------
Net Unrealized Appreciation
(Depreciation)....................... $ 484,057 $ (56,217) $ -- $11,269,608 $ 78,787 $ (103,913)
----------- ----------- ----------- ----------- ------------ ------------
----------- ----------- ----------- ----------- ------------ ------------
Cost of Investments for Federal Income
Tax Purposes......................... $42,800,397 $11,145,950 $83,456,266 $81,022,750 $ 753,381 $ 2,374,951
----------- ----------- ----------- ----------- ------------ ------------
----------- ----------- ----------- ----------- ------------ ------------
<CAPTION>
JUNO
FUND
----------
<S> <C>
Gross Unrealized Appreciation.......... $ --
Gross Unrealized (Depreciation)........ (872)
----------
Net Unrealized Appreciation
(Depreciation)....................... $ (872)
----------
----------
Cost of Investments for Federal Income
Tax Purposes......................... $ 340,655
----------
----------
</TABLE>
11. OPTION CONTRACTS WRITTEN
During the six monts ended June 30, 1999 the Trust wrote the following
contracts:
PUT OPTIONS WRITTEN:
<TABLE>
<CAPTION>
JUNO FUND
-----------------
NUMBER
OF INITIAL
CONTRACTS PREMIUMS
------- --------
<S> <C> <C>
Outstanding at Beginning of Year....... -- $ --
Options Written........................ 2 21,294
Options Terminated..................... (2) (21,294)
------- --------
Outstanding at End of Year............. -- $ --
------- --------
------- --------
</TABLE>
12. LOSS CARRYFORWARD--FEDERAL INCOME TAX
At June 30, 1999, for Federal income tax purposes, the following funds have
capital loss carryovers which may be applied against future net taxable realized
gains of each succeeding year until the earlier of its utilization or
expiration.
<TABLE>
<CAPTION>
U.S.
GOVERNMENT
EXPIRES URSA BOND
DECEMBER 31 FUND FUND
- --------------------------------------- -------- --------
<S> <C> <C>
2006 $613,636 $146,093
</TABLE>
34
<PAGE>
THIS REPORT AND THE FINANCIAL STATEMENTS CONTAINED HEREIN ARE SUBMITTED FOR THE
GENERAL INFORMATION OF OUR SHAREHOLDERS. THE REPORT IS NOT AUTHORIZED FOR
DISTRIBUTION TO PROSPECTIVE INVESTORS UNLESS PRECEDED OR ACCOMPANIED BY AN
EFFECTIVE PROSPECTUS.
[RYDEX LOGO]
RYDEX VARIABLE TRUST
SEMI-ANNUAL REPORT
JUNE 30, 1999
NOVA FUND
URSA FUND
U.S. GOVERNMENT MONEY MARKET FUND
OTC FUND
PRECIOUS METALS FUND
U.S. GOVERNMENT BOND FUND
JUNO FUND
