<PAGE>
RYDEX VARIABLE TRUST
SUPPLEMENT DATED OCTOBER 1,1999
TO THE PROSPECTUS DATED MAY 1,1999
This supplement provides new and additional information beyond that
contained in the Prospectus and should be read in conjunction with the
Prospectus.
- --------------------------------------------------------------------------------
On September 24, 1999, Shareholders of the Precious Metals Fund (the "Fund") of
the Rydex Variable Trust voted to change the Fund's investment objective. As a
result of the change, the Fund's new objective is to seek capital appreciation
by investing in U.S. and foreign companies involved in the precious metals
industry, including exploration, mining, production and development, and other
precious metals-related services. The Fund will no longer attempt to provide
investment results that correspond to a precious metals benchmark. In addition,
the new objective is a non-fundamental policy of the Fund and may be changed
without further shareholder approval.
As a result of the change of the investment objective, the Prospectus is revised
as follows:
- - All references to the Philadelphia Stock Exchange Gold/Silver
Index-Trademark- (XAU) in the INTRODUCTION and BENCHMARK INFORMATION
sections of the Prospectus are deleted.
- - The information contained in the FUND INFORMATION section is replaced by
the following:
FUND OBJECTIVE - The Precious Metals Fund seeks to provide capital
appreciation by investing in U.S. and foreign companies that are
involved in the precious metals sector, including exploration, mining,
production and development, and other precious metals-related services
("Precious Metals Companies").
PORTFOLIO INVESTMENTS - The Fund invests substantially all of its
assets in equity securities of Precious Metals Companies that are
traded in the United States and foreign countries. Precious metals
include gold, silver, platinum and other precious metals. Precious
Metals Companies include precious metal manufacturers; distributors
of precious metal products, such as jewelry, metal foil or bullion;
mining and geological exploration companies; and companies which
provide services to Precious Metals Companies. The Fund may also
engage in futures and options transactions, purchase ADRs and U.S.
Government securities, and enter into repurchase agreements.
RISK CONSIDERATIONS - The Precious Metals Fund is subject to a
number of risks that will affect the value of its shares, including:
- EQUITY RISk -- The equity markets are volatile, and the
value of the Fund's equity securities and any futures and
options contracts may fluctuate drastically from day to day.
This volatility may cause the value of your investment in
the Fund to decrease.
- PRECIOUS METALS CONCENTRATION RISk -- The risk that the
relatively few securities of issuers in the mining industry
that the Fund purchases will
<PAGE>
underperform the market as a whole. To the extent that the
Fund's investments are concentrated in issuers conducting
business in the same industry, the Fund is subject to
legislative or regulatory changes, adverse market conditions
and/or increased competition affecting that industry, as
well as to the volatility of global prices for precious
metals. The prices of precious metals may fluctuate widely
due to changes in inflation or inflation expectations,
currency fluctuations, speculation, worldwide demand and
political developments in precious metals producing
countries.
- FOREIGN INVESTING RISK -- Investments in securities of
foreign companies can be more volatile than investments in
U.S. companies. Diplomatic, political, or economic
developments could effect investment in foreign countries.
Foreign companies generally are not subject to uniform
accounting, auditing, and financial reporting standards
comparable to those applicable to U.S. domestic companies.
- - The following sentence is added to the first paragraph of the FUND
PERFORMANCE INFORMATION and the FINANCIAL HIGHLIGHTS sections:
Prior to October 1, 1999, the Precious Metals Fund's objective was to
provide investment results that corresponded to a benchmark for precious
metals-related securities.
- - The following sentence replaces the third paragraph in the PORTFOLIO
MANAGEMENT section:
The Precious Metals Fund is managed by a team and no one person is
responsible for making investment decisions for the Fund.
