RYDEX VARIABLE TRUST, 497, 2000-05-05

RYDEX VARIABLE TRUST
497, 2000-05-05

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<PAGE>
PROSPECTUS

<TABLE>
<C> <S>
1 INTRODUCTION
---

2 NOVA FUND
---

4 OTC FUND
---

6 MORE INFORMATION ABOUT FUND INVESTMENTS
--- AND RISK

9 PURCHASING AND REDEEMING SHARES
---

10 MANAGEMENT OF THE FUNDS
---

11 DIVIDENDS, DISTRIBUTIONS, AND TAXES
---

12 FINANCIAL HIGHLIGHTS
---

13 BENCHMARK INFORMATION
---

BC ADDITIONAL INFORMATION
---
</TABLE>

MAY 1, 2000

RYDEX VARIABLE TRUST

NOVA FUND
OTC FUND

6116 Executive Boulevard, Suite 400, Rockville, Maryland 20852
800-820-0888 301-468-8520
WWW.RYDEXFUNDS.COM

Rydex Variable Trust (the "Trust") is a mutual fund complex with thirty separate
investment portfolios (the "Rydex Variable Funds"). This prospectus describes
two Funds: Nova Fund and OTC Fund (together, the "Benchmark Funds").

Shares of the Funds are available exclusively for variable annuity and variable
life insurance products. Variable life and variable annuity account investors
should also review the separate account prospectus prepared by their insurance
company.

THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED OR DISAPPROVED THE
TRUST'S SHARES OR PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<PAGE>
PROSPECTUS 1
--------

RISK/RETURN INFORMATION COMMON TO THE FUNDS

THE FUNDS' INVESTMENT OBJECTIVES

Each Fund has a separate investment objective. In general, each Benchmark
Fund seeks to provide investment results that match the performance of a
specific benchmark.

RISKS OF INVESTING IN THE FUNDS

The value of the Funds may fluctuate. In addition, Fund shares:

- MAY DECLINE IN VALUE, AND YOU MAY LOSE MONEY

- ARE NOT FEDERALLY INSURED

- ARE NOT GUARANTEED BY ANY GOVERNMENT AGENCY

- ARE NOT BANK DEPOSITS

- ARE NOT GUARANTEED TO ACHIEVE THEIR OBJECTIVES
<PAGE>
- ------
2 PROSPECTUS

FUND INFORMATION -- NOVA FUND

FUND OBJECTIVE

The Nova Fund seeks to provide investment results that match the performance
of a specific benchmark on a daily basis. The Fund's current benchmark is 150%
of the performance of the S&P 500 Index-Registered Trademark- (the "S&P 500
Index").

If the Fund meets its objective, the value of the Fund's shares will tend to
increase on a daily basis by 150% of the value of any increase in the S&P 500
Index. When the value of the S&P 500 Index declines, the value of the Fund's
shares should also decrease on a daily basis by 150% of the value of any
decrease in the Index (e.g., if the S&P 500 Index goes down by 5%, the value of
the Fund's shares should go down by 7.5% on that day).

PORTFOLIO INVESTMENT STRATEGY

Unlike a traditional index fund, as its primary investment strategy, the
Fund invests to a significant extent in leveraged instruments, such as futures
contracts and options on securities, futures contracts, and stock indices, as
well as equity securities. Futures and options contracts enable the Fund to
pursue its objective without investing directly in the securities included in
the benchmark, or in the same proportion that those securities are represented
in that benchmark. On a day-to-day basis, the Fund holds U.S. Government
securities or cash equivalents to collateralize these futures and options
contracts. The Fund also may enter into repurchase agreements.

RISK CONSIDERATIONS

The Nova 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 futures and options contracts and other securities may fluctuate
drastically from day to day. This volatility may cause the value of your
investment in the Fund to decrease.

- LEVERAGING RISK -- The more the Fund invests in leveraged instruments, the
more this leverage will magnify any losses on those investments.

- TRACKING ERROR RISK -- The Advisor may not be able to cause the Fund's
performance to match the performance of the Fund's benchmark, either on a
daily or aggregate basis. Tracking Error may cause the Fund's performance
to be less than you expect.
<PAGE>
PROSPECTUS 3
--------

FUND PERFORMANCE INFORMATION

NOVA FUND PERFORMANCE

The bar chart and table below show the performance of the Nova Fund both
year-by-year and as an average over different periods of time. For investment
activity prior to November 1998, the Fund's performance reflected insurance
related charges that had the effect of reducing returns. The variability of
performance over time provides an indication of the risks of investing in the
Fund. Of course, this past performance does not necessarily indicate how the
Fund will perform in the future.

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

DURING THE PERIOD SHOWN IN THE BAR CHART, THE HIGHEST RETURN FOR A QUARTER WAS
31.57% (QUARTER ENDED DEC. 31, 1998) AND THE LOWEST RETURN FOR A QUARTER WAS
- -17.17% (QUARTER ENDED SEPT. 30, 1998).

<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURN (FOR PERIODS ENDING DECEMBER 31, 1999)(1)
NOVA FUND S&P 500 INDEX(2)
<S> <C> <C>
--------------------------------------
Past One Year 23.28% 19.53%
Since Inception (05/07/97) 28.83% 24.85%
</TABLE>

FUND INFORMATION -- OTC FUND

FUND OBJECTIVE
The OTC Fund seeks to provide investment results that correspond to a
benchmark for over-the-counter securities. The Fund's current benchmark is the
NASDAQ 100 Index-Registered Trademark- (the "NASDAQ 100 Index").
If the Fund meets its objective, the value of the Fund's shares will tend to
increase on a daily basis by the amount of the increase in value of the NASDAQ
100 Index. However, when the value of the NASDAQ 100 Index declines, the value
of the Fund's shares should also decrease on a daily basis by the amount of the
decrease in value of the Index.

PORTFOLIO INVESTMENT STRATEGY
The Fund invests principally in securities of companies included in the
NASDAQ 100 Index. It also may invest in other instruments whose performance is
expected to correspond to that of the Index, and may engage in futures and
options transactions. The Fund may also purchase U.S. Government securities and
enter into repurchase agreements.

RISK CONSIDERATIONS
The OTC 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 securities and 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.
- TRACKING ERROR RISK -- The Advisor may not be able to cause the Fund's
performance to match the performance of the Fund's benchmark, either on a
daily or aggregate basis. Tracking Error may cause the Fund's performance
to be less than you expect.
<PAGE>
PROSPECTUS 5
--------

FUND PERFORMANCE INFORMATION

OTC FUND PERFORMANCE
The bar chart and table below show the performance of the OTC Fund both
year-by-year and as an average over different periods of time. For investment
activity prior to November 1998, the Fund's performance reflected insurance
related charges that had the effect of reducing returns. The variability of
performance over time provides an indication of the risks of investing in the
Fund. Of course, this past performance does not necessarily indicate how the
Fund will perform in the future.

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

DURING THE PERIOD SHOWN IN THE BAR CHART, THE HIGHEST RETURN FOR A QUARTER WAS
53.10% (QUARTER ENDED DEC. 31, 1999) AND THE LOWEST RETURN FOR A QUARTER WAS
0.77% (QUARTER ENDED SEPT. 30, 1998).

<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURN (FOR PERIODS ENDING DECEMBER 31, 1999)(1)
OTC FUND NASDAQ 100 INDEX(2)
<S> <C> <C>
-----------------------------------------
Past One Year 101.32% 101.95%
Since Inception (05/07/97) 67.70% 69.89%
</TABLE>

(1) THESE FIGURES ASSUME THE REINVESTMENT OF DIVIDENDS AND CAPITAL GAINS
DISTRIBUTIONS.
(2) THE NASDAQ 100 INDEX IS AN UNMANAGED INDEX THAT IS A WIDELY RECOGNIZED
INDICATOR OF OTC MARKET PERFORMANCE.
<PAGE>
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6 PROSPECTUS

MORE INFORMATION ABOUT FUND INVESTMENTS AND RISK

THE BENCHMARK FUNDS' INVESTMENT OBJECTIVES

Each Benchmark Fund's objective is to provide investment results that match
the performance of a specific benchmark. The current benchmark used by each Fund
is set forth below:

<S> <C>
FUND BENCHMARK
NOVA FUND 150% OF THE PERFORMANCE OF THE S&P 500
INDEX-REGISTERED TRADEMARK- (SPX)
OTC FUND 100% OF THE PERFORMANCE OF THE NASDAQ 100
INDEX-REGISTERED TRADEMARK- (NDX)
</TABLE>

A BRIEF GUIDE TO THE BENCHMARKS.

THE S&P 500 INDEX. The S&P 500 Index is a capitalization-weighted index composed
of 500 common stocks, which are chosen by the Standard & Poor's Corporation
("S&P") on a statistical basis.

THE NASDAQ 100 INDEX. The NASDAQ 100 Index is a modified capitalization-weighted
index composed of 100 of the largest non-financial companies listed on the
National Association of Securities Dealers Automated Quotations System.

ADVISOR'S INVESTMENT STRATEGY IN MANAGING THE FUNDS

In managing the Benchmark Funds, the Advisor uses a "passive" investment
strategy to manage each Fund's portfolio, meaning that the Advisor does not
attempt to select securities based on their individual potential to perform
better than the market. The Advisor's primary objective is to match the
performance of each Fund's benchmark as closely as possible on a daily basis.
The Advisor uses quantitative analysis techniques to structure each Fund to
obtain the highest correlation to its particular benchmark. The Advisor does not
engage in temporary defensive investing, keeping each Fund's assets fully
invested in all market environments. The Advisor monitors each Fund on an
ongoing basis, and makes adjustments to its portfolio, as necessary, to minimize
tracking error and to maximize liquidity.

The Advisor may pursue the Funds' investment objectives by utilizing
leveraged instruments, such as futures contracts and options on securities,
futures contracts, and stock indices.

RISKS OF INVESTING IN THE FUNDS

As indicated below, the Funds are subject to a number of risks that may
affect the value of Fund shares.

convertible into equity securities, such as warrants or convertible debt, is
also affected by prevailing interest rates, the credit quality of the issuer and
any call provision. Fluctuations in the value of equity securities in which the
Funds invest will cause the net asset value of the Funds to fluctuate.
Historically, the equity markets have moved in cycles, and the value of the
Fund's equity securities and equity derivatives may fluctuate drastically from
day to day. This price volatility is the principal risk of investing in equity
securities. Because of their link to the equity markets, an investment in the
Funds may be more suitable for long-term investors who can bear the risk of
short-term principal fluctuations.

NON-DIVERSIFICATION RISK -- Since each Fund is non-diversified, each Fund may
invest in the securities of a limited number of issuers. To the extent that a
Fund invests a significant percentage of its assets in a limited number of
issuers, the Fund is subject to the risks of investing in those few issuers, and
may be more susceptible to a single adverse economic or regulatory occurrence.

TRACKING ERROR RISK -- While the Funds do not expect returns to deviate
significantly from their respective benchmarks on a daily basis, certain factors
may affect their ability to achieve close correlation. These factors may include
Fund expenses, imperfect correlation between the Funds' investments and those of
their benchmarks, rounding of share prices, changes to the benchmark, regulatory
policies, and leverage. The cumulative effect of these factors may over time
cause the Funds' returns to deviate from their respective benchmarks on an
aggregate basis. The magnitude of any tracking error may be affected by a higher
portfolio turnover rate.

TRADING HALT RISK -- The Funds typically will hold short-term options and
futures contracts. The major exchanges on which these contracts are traded, such
as the Chicago Mercantile Exchange ("CME"), have established limits on how much
an option or futures contract may decline over various time periods within a
day. If an option or futures contract's price declines more than the established
limits, trading on the exchange is halted on that instrument. If a trading halt
occurs, a Fund may temporarily be unable to purchase or sell options or futures
contracts. Such a trading halt near the time the Fund prices its shares may
limit the Fund's ability to use leverage and may prevent the Fund from achieving
its investment objective. In such an event, a Fund also may be required to use a
"fair-value" method to price its outstanding contracts.

FUTURES AND OPTIONS RISK -- The Funds will invest a percentage of their assets
in futures and options contracts. The Funds may use futures contracts and
related options for bona fide hedging purposes to offset changes in the value of
securities held or expected to be acquired. They may also be used to gain
exposure to a particular market or instrument, to create a synthetic money
market position, and for certain other tax-related purposes. The Funds will only
enter into futures contracts
<PAGE>
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8 PROSPECTUS

traded on a national futures exchange or board of trade. Futures and options
contracts are described in more detail below:

FUTURES CONTRACTS -- Futures contracts and options on futures contracts
provide for the future sale by one party and purchase by another party of a
specified amount of a specific security at a specified future time and at a
specified price. An option on a futures contract gives the purchaser the
right, in exchange for a premium, to assume a position in a futures contract
at a specified exercise price during the term of the option. Index futures
are futures contracts for various indices that are traded on registered
securities exchanges.

OPTIONS -- The buyer of an option acquires the right to buy (a call option)
or sell (a put option) a certain quantity of a security (the underlying
security) or instrument at a certain price up to a specified point in time.
The seller or writer of an option is obligated to sell (a call option) or
buy (a put option) the underlying security. When writing (selling) call
options on securities, the Funds may cover its position by owning the
underlying security on which the option is written or by owning a call
option on the underlying security. Alternatively, the Funds may cover its
position by maintaining in a segregated account cash or liquid securities
equal in value to the exercise price of the call option written by the
Funds.

The risks associated with the Funds' use of futures and options contracts
include:

- A Fund may experience losses over certain ranges in the market that exceed
losses experienced by a fund that does not use futures contracts and
options.

- There may be an imperfect correlation between the changes in market value
of the securities held by a Fund and the prices of futures and options on
futures.

- Although the Funds will only purchase exchange-traded futures, due to
market conditions there may not always be a liquid secondary market for a
futures contract or option. As a result, the Funds may be unable to close
out their futures contracts at a time which is advantageous.

- Trading restrictions or limitations may be imposed by an exchange, and
government regulations may restrict trading in futures contracts and
options.

- Because option premiums paid or received by the Funds are small in
relation to the market value of the investments underlying the options,
buying and selling put and call options can be more speculative than
investing directly in securities.

PORTFOLIO TURNOVER RATE RISK -- The Trust anticipates that investors that are
part of a tactical asset-allocation strategy will frequently redeem or exchange
shares of a Fund, which will cause that Fund to experience high portfolio
turnover. A higher portfolio turnover rate may result in a Fund paying higher
levels of transaction costs and generating greater tax liabilities for
shareholders.
<PAGE>
PROSPECTUS 9
--------

INDUSTRY CONCENTRATION RISK -- Neither of the Benchmark Funds will invest 25% or
more of the value of the Fund's total assets in the securities of one or more
issuers conducting their principal business activities in the same industry;
EXCEPT THAT, to the extent the index underlying a Fund's benchmark is
concentrated in a particular industry, a Fund will necessarily be concentrated
in that industry. Currently, the index underlying the OTC Fund's benchmark --
the NASDAQ 100 Index -- is concentrated in technology companies. The risk of
concentrating Fund investments in a limited number of issuers conducting
business in the same industry is that a Fund will be more susceptible to the
risks that are associated with those issuers (or that industry) than a fund that
does not concentrate its investments.

EARLY CLOSING RISK (OTC FUND) -- The normal close of trading of securities
listed on the National Association of Securities Dealers Automated Quotations
system ("NASDAQ") and the New York Stock Exchange ("NYSE") is 4:00 P.M., Eastern
Time. Unanticipated early closings may result in a Fund being unable to sell or
buy securities on that day. If an exchange closes early on a day when one or
more of the Funds needs to execute a high volume of securities trades late in a
trading day, a Fund might incur substantial trading losses.

PURCHASING AND REDEEMING SHARES

Shares are offered continuously, and may be purchased on any day that the
NYSE is open for business (a "Business Day"). On any day that the New York Fed
or the NYSE closes early, the principal government securities and corporate bond
markets close early (such as on days in advance of holidays generally observed
by participants in these markets), or as permitted by the Securities and
Exchange Commission ("SEC"), the right is reserved to advance the time on that
day by which purchase and redemption orders must be received.

Shares of each Fund can be purchased only by insurance companies for their
separate accounts to fund variable life insurance and variable annuity
contracts. All orders for the purchase of shares are subject to acceptance or
rejection by the Trust. An insurance company purchases and redeems shares of
each Fund based on, among other things, the amount of net Contract premiums or
purchase payments allocated to a separate account investment division, transfers
to or from a separate account investment division, contract loans and
repayments, contract withdrawals and surrenders, and benefit payments, at the
Fund's net asset value per share calculated as of that same day.

All redemption requests will be processed and payment with respect thereto
will be made within seven days after tender. With respect to each Fund, and as
permitted by the SEC, the right of redemption may be suspended, or the date of
payment postponed: (1) for any period during which the NYSE is closed (other
than customary weekend or holiday closings) or trading on the NYSE is
restricted; (2) for any period during which an emergency exists so that disposal
of Fund investments or the determination of net asset value per share ("NAV") is
not reasonably practicable; or (3) for such other periods as the SEC, by order,
may permit for protection of fund investors. In cases where
<PAGE>
- ------
10 PROSPECTUS

NASDAQ, the CME, Chicago Board Options Exchange ("CBOE") or the CBOT, as
appropriate, is closed or trading is restricted, a Fund may ask the SEC to
permit the right of redemption to be suspended.

NET ASSET VALUE

The price per share (the offering price) will be the NAV next determined
after your purchase order is received by the Trust. You may also redeem all or
any portion of your Fund shares at the next determined NAV after the Trust
receives your redemption request. NAV is calculated by (1) taking the current
market value of a Fund's total assets, (2) subtracting the liabilities, and
(3) dividing that amount by the total number of shares owned by shareholders.
NAV is calculated once each Business Day after the close of the NYSE (currently,
4:00 p.m., Eastern Time). If the exchange or market where a Fund's securities or
other investments are primarily traded closes early, the NAV may be calculated
earlier in accordance with the policies set forth in the Funds' SAI.

TO RECEIVE THE CURRENT BUSINESS DAY'S NAV, VARIABLE LIFE AND VARIABLE
ANNUITY ACCOUNT INVESTORS SHOULD CONSULT THEIR SEPARATE ACCOUNT PROSPECTUS.

MANAGEMENT OF THE FUNDS

THE INVESTMENT ADVISOR

Rydex Global Advisors (the "Advisor"), 6116 Executive Boulevard, Suite 400,
Rockville, Maryland 20852, serves as investment advisor and manager of the
Funds. Albert P. Viragh, Jr., the Chairman of the Board and the President of the
Advisor, owns a controlling interest in the Advisor. From 1985 until the
incorporation of the Advisor, Mr. Viragh was a Vice President of Money
Management Associates ("MMA"), a Maryland-based registered investment advisor.
From 1992 to June 1993, Mr. Viragh was the portfolio manager of The Rushmore
Nova Portfolio, a series of The Rushmore Fund, Inc., an investment company
managed by MMA.

The Advisor makes investment decisions for the assets of the Funds and
continuously reviews, supervises, and administers each Fund's investment
program. The Trustees of the Trust supervise the Advisor and establish policies
that the Advisor must follow in its day-to-day management activities. Under an
investment advisory agreement between the Trust and the Advisor, the Funds paid
the Advisor a fee at an annualized rate for the fiscal year ended December 31,
1999, based on the average daily net assets for each Fund, as set forth below:

<TABLE>
<CAPTION>
FUND ADVISORY FEE
<S> <C>
- --------------------------------------------------------------------------
Nova .75%
OTC .75%
</TABLE>

<PAGE>
PROSPECTUS 11
--------

The Advisor bears all of its own costs associated with providing these
advisory services and the expenses of the Trustees who are affiliated with the
Advisor. The Advisor may make payments from its own resources to broker-dealers
and other financial institutions in connection with the sale of Fund shares.

PORTFOLIO MANAGEMENT

The portfolio manager of the OTC Fund is Michael P. Byrum, who is a Vice
President and the Advisor's senior portfolio manager. Prior to joining the
Advisor as a portfolio manager in July 1993, Mr. Byrum worked as an investor
representative with MMA.

The portfolio manager of the Nova Fund is Thomas Michael, who joined the
Advisor as a portfolio manager in March 1994. From 1992 to February 1994, Mr.
Michael was a financial markets analyst at Cedar Street Investment Management
Co., of Chicago, Illinois, an institutional consulting firm specializing in
developing hedging and speculative strategies in stock index futures contracts
and U.S. Treasury bond futures contracts.

DIVIDENDS, DISTRIBUTIONS, AND TAXES

DIVIDENDS AND DISTRIBUTIONS

Income dividends and capital gain distributions are paid at least annually
by each of the Funds. The Trust may declare a special capital gains distribution
if the Trustees believe that such a distribution would be in the best interest
of the shareholders of a Fund.

TAXES

Each Fund is treated as a separate entity for federal tax purposes, and
intends to qualify for the special tax treatment afforded regulated investment
companies. As long as a Fund qualifies as a regulated investment company, it
pays no federal income tax on the earnings it distributes to Shareholders. A
Fund is not liable for any income or franchise tax in Delaware as long as it
qualifies as a regulated investment company for federal income tax purposes.

In addition to qualifying for special tax treatment as a regulated
investment company, the Funds intend to meet special diversification
requirements of the Internal Revenue Code (the "Code") in order to assure
insurance companies that their variable annuity and variable life contracts
qualify as insurance under the Code.
<PAGE>
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12 PROSPECTUS

FINANCIAL HIGHLIGHTS

The financial highlights table is intended to help you understand the Funds'
financial performance for the period of each Fund's (and its predecessor's)
operations. Certain information reflects financial results for a single Fund
share. The total returns in the table represent the rate that an investor would
have earned (or lost) on an investment in the Fund (assuming reinvestment of all
dividends and distributions). On November 2, 1998, the Trust acquired all of the
assets and liabilities (other than liabilities relating to insurance charges) of
Rydex Advisor Variable Annuity Account (the "Separate Account") and the
subaccounts of the Separate Account (the "Subaccounts"). The information
provided below for periods ending prior to and including December 31, 1997,
which relates to the Subaccounts, has been audited by PricewaterhouseCoopers
LLP. The information for subsequent periods has been audited by Deloitte &
Touche LLP. The Reports of Independent Accountants for each such period along
with the Funds' financial statements and related notes, are included in the
Annual Reports to Shareholders for such periods. Our 1999 Annual Report is
available upon request and without charge by calling 1-301-468-8520 collect. The
1999 Annual Report is incorporated by reference in the SAI.

FINANCIAL HIGHLIGHTS

<TABLE>
<CAPTION>
NOVA OTC
------------------------------------------ ------------------------------------------
YEAR YEAR PERIOD YEAR YEAR PERIOD
ENDED ENDED ENDED ENDED ENDED ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1999 1998 1997* 1999 1998 1997*
------------ ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Per Share Operating Performance:+
Net Asset Value -- Beginning of
Period................................. $ 15.88 $ 12.21 $ 10.00 $ 19.57 $ 10.65 $ 10.00
------- ------- ------- -------- -------- -------
Net Investment Income (Loss).......... .49 .04 .07 (.33) (.40) (.09)
Net Realized and Unrealized Gains
(Losses) on Securities............... 3.10 3.63 2.14 19.88 9.32 .74
Net Increase (Decrease) in Net Asset
Value Resulting from Operations...... 3.59 3.67 2.21 19.55 8.92 .65
Dividends to Shareholders from Net
Investment Income.................... (.01) .00 .00 .00 .00 .00
Distributions (from capital gains).... (.89) .00 .00 (.60) .00 .00
------- ------- ------- -------- -------- -------
Net Increase (Decrease) in Net Asset
Value................................ 2.69 3.67 2.21 18.95 8.92 .65
------- ------- ------- -------- -------- -------
Net Asset Value -- End of Period........ $ 18.57 $ 15.88 $ 12.21 $ 38.52 $ 19.57 $ 10.65
======= ======= ======= ======== ======== =======
Total Investment Return................. 23.28% 30.06% 101.32% 83.76%
Ratios to Average Net Assets
Gross Expenses........................ 1.55% 3.26% 9.09%** 1.55% 2.96% 9.07%**
Net Expenses.......................... 1.55% 3.22% 2.80%** 1.55% 2.96% 2.80%**
Net Investment Income (Loss).......... 2.90% 0.27% 0.91%** (1.24) (2.67)% (1.22)%**
Supplementary Data:
Portfolio Turnover Rate***.............. 0% 0% 178% 953% 1,077% 450%
Net Assets, End of Period
(000's omitted)........................ $92,922 $29,258 $10,448 $373,458 $ 22,038 $ 2,367
</TABLE>

- ------------

* COMMENCEMENT OF OPERATIONS: NOVA AND OTC -- 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.
<PAGE>
PROSPECTUS 13
--------

BENCHMARK INFORMATION

THE NOVA FUND IS NOT SPONSORED, ENDORSED, SOLD, OR PROMOTED BY STANDARD & POOR'S
CORP. (S&P); AND THE OTC FUND IS NOT SPONSORED, ENDORSED, SOLD, OR PROMOTED BY
NASDAQ OR ANY OF NASDAQ'S AFFILIATES (NASDAQ AND ITS AFFILIATES HEREINAFTER
COLLECTIVELY REFERRED TO AS "NASDAQ").

NEITHER THE S&P NOR THE NASDAQ MAKE ANY REPRESENTATION OR WARRANTY, IMPLIED OR
EXPRESS, TO THE INVESTORS IN THE FUNDS, OR ANY MEMBER OF THE PUBLIC, REGARDING
THE ADVISABILITY OF INVESTING IN INDEX FUNDS OR THE ABILITY OF THE S&P 500
INDEX-Registered Trademark- AND THE NASDAQ 100 INDEX-Registered Trademark-,
RESPECTIVELY, TO TRACK GENERAL STOCK MARKET PERFORMANCE.

NEITHER THE S&P NOR THE NASDAQ GUARANTEES THE ACCURACY AND/OR THE COMPLETENESS
OF THE S&P 500 INDEX-Registered Trademark- AND THE NASDAQ 100
INDEX-Registered Trademark-, RESPECTIVELY, OR ANY DATA INCLUDED THEREIN.

NEITHER THE S&P NOR THE NASDAQ MAKE ANY WARRANTY, EXPRESS OR IMPLIED, AS TO
RESULTS TO BE OBTAINED BY ANY OF THE FUNDS, THE INVESTORS IN THE FUNDS, OR ANY
PERSON OR ENTITY FROM THE USE OF THE S&P 500 INDEX-Registered Trademark-, THE
NASDAQ 100 INDEX-Registered Trademark-, RESPECTIVELY, OR ANY DATA INCLUDED
THEREIN.

NEITHER THE S&P NOR THE NASDAQ MAKE ANY EXPRESS OR IMPLIED WARRANTIES OF
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE FOR USE WITH RESPECT TO THE
S&P 500 INDEX-Registered Trademark-, THE NASDAQ 100 INDEX-Registered Trademark-,
RESPECTIVELY, OR ANY DATA INCLUDED THEREIN.
<PAGE>
Additional information about the Funds is included in a Statement of Additional
Information dated May 1, 2000 (the "SAI"), which contains more detailed
information about the Funds. The SAI has been filed with the Securities and
Exchange Commission ("SEC") and is incorporated by reference into this
Prospectus and, therefore, legally forms a part of this Prospectus. The SEC
maintains a web site ("http://www.sec.gov") that contains the SAI, material
incorporated by reference, and other information regarding registrants that file
electronically with the SEC. You may also review and copy documents at the SEC
Public Reference Room in Washington, D.C. (for information call 1-800-SEC-0330).
You may request documents by mail from the SEC, upon payment of a duplication
fee, by writing to: Securities and Exchange Commission, Public Reference
Section, Washington, D.C. 20549-0102. You may also obtain information, upon
payment of a duplicating fee, by e-mailing the SEC at the following address:
[email protected].

You may obtain a copy of the SAI or the annual or semi-annual reports of the
Trust without charge by calling 1-301-468-8520 collect or by writing to Rydex
Variable Trust, at 6116 Executive Boulevard, Suite 400, Rockville, Maryland
20852. Additional information about the investments of the Funds is available in
the annual and semi-annual reports. Also, in the annual report of the Trust, you
will find a discussion of the market conditions and investment strategies that
significantly affected performance during the last fiscal year.

- --------------------------------------------------------------------------------

NO ONE HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS OR IN THE TRUST'S SAI IN
CONNECTION WITH THE OFFERING OF FUND SHARES. DO NOT RELY ON ANY SUCH INFORMATION
OR REPRESENTATIONS AS HAVING BEEN AUTHORIZED BY THE TRUST OR RYDEX GLOBAL
ADVISORS. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING BY THE TRUST IN ANY
JURISDICTION WHERE SUCH AN OFFERING IS NOT LAWFUL.

THE TRUST'S SEC REGISTRATION NUMBER IS 811-08821.
<PAGE>
PROSPECTUS

<TABLE>
<C> <S>
1 INTRODUCTION
---

2 NOVA FUND
---

4 URSA FUND
---

6 OTC FUND
---

8 PRECIOUS METALS FUND
---

10 U.S. GOVERNMENT BOND FUND
---

12 MORE INFORMATION ABOUT FUND INVESTMENTS
--- AND RISK

16 PURCHASING AND REDEEMING SHARES
---

18 MANAGEMENT OF THE FUNDS
---

19 DIVIDENDS, DISTRIBUTIONS, AND TAXES
---

20 FINANCIAL HIGHLIGHTS
---

23 BENCHMARK INFORMATION
---

BC ADDITIONAL INFORMATION
---
</TABLE>

MAY 1, 2000

RYDEX VARIABLE TRUST

NOVA FUND
URSA FUND
OTC FUND
PRECIOUS METALS FUND
U.S. GOVERNMENT BOND FUND

6116 Executive Boulevard, Suite 400, Rockville, Maryland 20852
800-820-0888 301-468-8520
WWW.RYDEXFUNDS.COM

Rydex Variable Trust (the "Trust") is a mutual fund complex with thirty separate
investment portfolios (the "Rydex Variable Funds"). This prospectus describes
five Funds which are grouped into two categories:

- BENCHMARK FUNDS -- Nova Fund, Ursa Fund, OTC Fund, and U.S. Government
Bond Fund
- SECTOR FUND -- Precious Metals Fund

RISK/RETURN INFORMATION COMMON TO THE FUNDS

THE FUNDS' INVESTMENT OBJECTIVES

Each Fund has a separate investment objective. A general description of the
Funds' investment objectives are set forth below:

- BENCHMARK FUNDS -- Each Benchmark Fund seeks to provide investment results
that match the performance of a specific benchmark.

- SECTOR FUND -- The Precious Metals Fund seeks capital appreciation by
investing in companies which operate in the precious metals sector. THE
INVESTMENT OBJECTIVE OF THE PRECIOUS METALS FUND IS NON-FUNDAMENTAL AND
MAY BE CHANGED WITHOUT SHAREHOLDER APPROVAL.

RISKS OF INVESTING IN THE FUNDS

The value of the Funds may fluctuate. In addition, Fund shares:

- MAY DECLINE IN VALUE, AND YOU MAY LOSE MONEY

- ARE NOT FEDERALLY INSURED

- ARE NOT GUARANTEED BY ANY GOVERNMENT AGENCY

- ARE NOT BANK DEPOSITS

- ARE NOT GUARANTEED TO ACHIEVE THEIR OBJECTIVES
<PAGE>
- ------
2 PROSPECTUS

FUND INFORMATION -- NOVA FUND

FUND OBJECTIVE

PORTFOLIO INVESTMENT STRATEGY

RISK CONSIDERATIONS

The Nova Fund is subject to a number of risks that will affect the value of
its shares, including:

- LEVERAGING RISK -- The more the Fund invests in leveraged instruments, the
more this leverage will magnify any losses on those investments.

FUND PERFORMANCE INFORMATION

NOVA FUND PERFORMANCE

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

NOVA FUND

DURING THE PERIOD SHOWN IN THE BAR CHART, THE HIGHEST RETURN FOR A QUARTER WAS
31.57% (QUARTER ENDED DEC. 31, 1998) AND THE LOWEST RETURN FOR A QUARTER WAS
- -17.17% (QUARTER ENDED SEPT. 30, 1998).

FUND INFORMATION -- URSA FUND

FUND OBJECTIVE
The Ursa Fund seeks to provide investment results that will inversely
correlate to the performance of the S&P 500 Index.
If the Fund meets its objective, the value of the Fund's shares will tend to
increase during times when the value of the S&P 500 Index is decreasing. When
the value of the S&P 500 Index is increasing, however, the value of the Fund's
shares should decrease on a daily basis by an inversely proportionate amount
(e.g., if the S&P 500 Index goes up by 5%, the value of the Fund's shares should
go down by 5% on that day).

PORTFOLIO INVESTMENT STRATEGY
Unlike a traditional index fund, the Fund's benchmark is to perform exactly
opposite the S&P 500 Index, and the Fund will not own the securities included in
the Index. Instead, as its primary investment strategy, the Fund invests to a
significant extent in futures contracts and options on securities, futures
contracts, and stock indices. On a day-to-day basis, the Fund holds U.S.
Government securities or cash equivalents to collateralize these futures and
options contracts. The Fund also may enter into repurchase agreements and sell
securities short.

RISK CONSIDERATIONS
The Ursa 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 futures and options contracts and other securities may fluctuate
drastically from day to day. Equity market volatility may also negatively
affect the Fund's short sales of securities. This volatility may cause the
value of your investment in the Fund to decrease.
- TRACKING ERROR RISK -- The Advisor may not be able to cause the Fund's
performance to match the performance of the Fund's benchmark, either on a
daily or aggregate basis. Tracking Error may cause the Fund's performance
to be less than you expect.
<PAGE>
PROSPECTUS 5
--------

FUND PERFORMANCE INFORMATION

URSA FUND PERFORMANCE
The bar chart and table below show the performance of the Ursa Fund both
year-by-year and as an average over different periods of time. For investment
activity prior to November 1998, the Fund's performance reflected insurance
related charges that had the effect of reducing returns. The variability of
performance over time provides an indication of the risks of investing in the
Fund. Of course, this past performance does not necessarily indicate how the
Fund will perform in the future.

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

URSA FUND

DURING THE PERIOD SHOWN IN THE BAR CHART, THE HIGHEST RETURN FOR A QUARTER WAS
9.11% (QUARTER ENDED SEPT. 30, 1998) AND THE LOWEST RETURN FOR A QUARTER WAS
- -16.91% (QUARTER ENDED DEC. 31, 1998).

<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURN (FOR PERIODS ENDING DECEMBER 31, 1999)(1)
URSA FUND S&P 500 INDEX(2)
<S> <C> <C>
--------------------------------------
Past One Year -15.06% 19.53%
Since Inception of Continuous Operations (06/10/97)(3) -19.51% 22.99%
</TABLE>

(1) THESE FIGURES ASSUME THE REINVESTMENT OF DIVIDENDS AND CAPITAL GAINS
DISTRIBUTIONS.
(2) THE S&P 500 INDEX IS AN UNMANAGED INDEX THAT IS A WIDELY RECOGNIZED
INDICATOR OF GENERAL STOCK MARKET PERFORMANCE.
(3) THE FUND COMMENCED CONTINUOUS OPERATIONS ON JUNE 10, 1997. PRIOR TO THAT
TIME, DUE TO THE NATURE OF THE FUND'S INVESTMENT ACTIVITY, THE FUND
EXPERIENCED PERIODS WITH ZERO NET ASSETS. PERIODS OF OPERATION, INCLUDING
RETURNS FOR EACH DISCRETE PERIOD, WERE AS FOLLOWS: MAY 7, 1997 TO MAY 21,
1997 -3.70%; AND MAY 24, 1997 TO JUNE 3, 1997 0.10%.
<PAGE>
- ------
6 PROSPECTUS

FUND INFORMATION -- OTC FUND

FUND PERFORMANCE INFORMATION

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

OTC FUND

DURING THE PERIOD SHOWN IN THE BAR CHART, THE HIGHEST RETURN FOR A QUARTER WAS
53.10% (QUARTER ENDED DEC. 31, 1999) AND THE LOWEST RETURN FOR A QUARTER WAS
0.77% (QUARTER ENDED SEPT. 30, 1998).

<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURN (FOR PERIODS ENDING DECEMBER 31, 1999)(1)
OTC FUND NASDAQ 100 INDEX-TM- (2)
<S> <C> <C>
--------------------------------------------
Past One Year 101.32% 101.95%
Since Inception (05/07/97) 67.70% 69.89%
</TABLE>

FUND INFORMATION -- PRECIOUS METALS FUND

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 INVESTMENT STRATEGY

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 precious metals sector that the Fund
purchases will 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.
<PAGE>
PROSPECTUS 9
--------

FUND PERFORMANCE INFORMATION

PRECIOUS METALS FUND PERFORMANCE

The bar chart and table below show the performance of the Precious Metals
Fund both year-by-year and as an average over different periods of time. For
investment activity prior to November 1998, the Fund's performance reflected
insurance related charges that had the effect of reducing returns. The
variability of performance over time provides an indication of the risks of
investing in the Fund. Of course, this past performance does not necessarily
indicate how the Fund will perform in the future. 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.

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

PRECIOUS METALS FUND

DURING THE PERIOD SHOWN IN THE BAR CHART, THE HIGHEST RETURN FOR A QUARTER WAS
13.22% (QUARTER ENDED SEPT. 30, 1999) AND THE LOWEST RETURN FOR A QUARTER WAS
- -13.80% (QUARTER ENDED DEC. 31, 1999).

<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURN (FOR PERIODS ENDING DECEMBER 31, 1999)(1)
PRECIOUS METALS FUND S&P 500 INDEX(2) XAU INDEX(3)
<S> <C> <C> <C>
------------------------------------------------------
Past One Year -3.58% 19.53% 4.62%
Since Inception (05/29/97) -20.04% 23.84% -15.82%
</TABLE>

(1) THESE FIGURES ASSUME THE REINVESTMENT OF DIVIDENDS AND CAPITAL GAINS
DISTRIBUTIONS.
(2) THE S&P 500 INDEX IS AN UNMANAGED INDEX THAT IS A WIDELY RECOGNIZED
INDICATOR OF GENERAL STOCK MARKET PERFORMANCE.
(3) THE XAU INDEX IS AN UNMANAGED INDEX THAT IS A WIDELY RECOGNIZED INDICATOR OF
PRECIOUS METALS SECTOR PERFORMANCE.
<PAGE>
- ------
10 PROSPECTUS

FUND INFORMATION -- U.S. GOVERNMENT BOND FUND

FUND OBJECTIVE
The U.S. Government Bond Fund seeks to provide investment results that
correspond to a benchmark for U.S. Government securities. The Fund's current
benchmark is 120% of the price movement of the Long Treasury Bond.
If the Fund meets its objective, the value of the Fund's shares should
increase on a daily basis by 120% of any price increase by the Long Treasury
Bond. In contrast, when the price of the Long Treasury Bond declines, the value
of the Fund's shares should decline on a daily basis by 120% of any price
decline of the Long Treasury Bond.

PORTFOLIO INVESTMENT STRATEGY
The Fund invests principally in U.S. Government securities and in leveraged
instruments, such as certain futures and options contracts. Some of the Fund's
U.S. Government securities, or cash equivalents, will be used to collateralize
these futures and options. Futures and options contracts, if used properly, may
enable the Fund to meet its objective by increasing the Fund's exposure to the
securities included in its benchmark. In addition, the Fund may enter into
transactions involving zero coupon U.S. Treasury bonds and repurchase
agreements.

RISK CONSIDERATIONS
The U.S. Government Bond Fund is subject to a number of risks that will
affect the value of its shares, including:
- FIXED INCOME RISK -- The Fund's fixed income investments will change in
value in response to interest rate changes and other factors. In addition,
the value of securities with longer maturities will fluctuate more in
response to interest rate changes.
- LEVERAGING RISK -- The more the Fund invests in leveraged instruments, the
more this leverage will magnify any losses on those investments.

FUND PERFORMANCE INFORMATION

U.S. GOVERNMENT BOND FUND PERFORMANCE

The bar chart and table below show the performance of the U.S. Government
Bond Fund both year-by-year and as an average over different periods of time.
For investment activity prior to November 1998, the Fund's performance reflected
insurance related charges that had the effect of reducing returns. The
variability of performance over time provides an indication of the risks of
investing in the Fund. Of course, this past performance does not necessarily
indicate how the Fund will perform in the future.

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

U.S. GOVERNMENT BOND FUND

DURING THE PERIOD SHOWN IN THE BAR CHART, THE HIGHEST RETURN FOR A QUARTER WAS
10.08% (QUARTER ENDED SEPT. 30, 1998) AND THE LOWEST RETURN FOR A QUARTER WAS
- -9.62% (QUARTER ENDED MARCH 31, 1999).

<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURN (FOR PERIODS ENDING DECEMBER 31, 1999)(1)
U.S. GOVERNMENT BOND FUND LEHMAN LONG TREASURY INDEX(2)
<S> <C> <C>
---------------------------------------------------------
Past One Year -20.45% -8.70%
Since Inception of Continuous Operations
(08/18/97)(3) -0.53% 5.14%
</TABLE>

(1) THESE FIGURES ASSUME THE REINVESTMENT OF DIVIDENDS AND CAPITAL GAINS
DISTRIBUTIONS.
(2) THE LEHMAN LONG TREASURY INDEX IS AN UNMANAGED INDEX THAT IS A WIDELY
RECOGNIZED INDICATOR OF U.S. GOVERNMENT BOND PERFORMANCE.
(3) THE FUND COMMENCED CONTINUOUS OPERATIONS ON AUGUST 18, 1997. PRIOR TO THAT
TIME, DUE TO THE NATURE OF THE FUND'S INVESTMENT ACTIVITY, THE FUND
EXPERIENCED PERIODS WITH ZERO NET ASSETS. PERIODS OF OPERATION, INCLUDING
RETURNS FOR EACH DISCRETE PERIOD, WERE AS FOLLOWS: MAY 29, 1997 TO JUNE 5,
1997 1.50%; JUNE 24, 1997 TO JULY 14, 1997 2.20%; AND JULY 29, 1997 TO
AUGUST 12, 1997 -3.30%.
<PAGE>
- ------
12 PROSPECTUS

MORE INFORMATION ABOUT FUND INVESTMENTS AND RISK

THE BENCHMARK FUNDS' INVESTMENT OBJECTIVES

Each Benchmark Fund's objective is to provide investment results that match
the performance of a specific benchmark. The current benchmark used by each Fund
is set forth below:

<S> <C>
FUND BENCHMARK
NOVA FUND 150% OF THE PERFORMANCE OF THE S&P 500
INDEX-REGISTERED TRADEMARK- (SPX)
URSA FUND INVERSE (OPPOSITE) OF THE PERFORMANCE OF THE S&P 500
INDEX-REGISTERED TRADEMARK- (SPX)
OTC FUND 100% OF THE PERFORMANCE OF THE NASDAQ 100
INDEX-REGISTERED TRADEMARK- (NDX)
U.S. GOVERNMENT BOND FUND 120% OF THE PRICE MOVEMENT OF THE LONG TREASURY BOND
</TABLE>

A BRIEF GUIDE TO THE BENCHMARKS.

THE S&P 500 INDEX. The S&P 500 Index is a capitalization-weighted index composed
of 500 common stocks, which are chosen by the Standard & Poor's Corporation
("S&P") on a statistical basis.

THE LONG TREASURY BOND. The Long Treasury Bond is the current U.S. Treasury bond
with the longest maturity. Currently, the longest maturity of a U.S. Treasury
bond is 30 years.

ADVISOR'S INVESTMENT STRATEGY IN MANAGING THE FUNDS

BENCHMARK FUND. In managing the Benchmark Funds, the Advisor uses a "passive"
investment strategy to manage each Fund's portfolio, meaning that the Advisor
does not attempt to select securities based on their individual potential to
perform better than the market. The Advisor's primary objective is to match the
performance of each Fund's benchmark as closely as possible on a daily basis.
The Advisor uses quantitative analysis techniques to structure each Fund to
obtain the highest correlation to its particular benchmark. The Advisor does not
engage in temporary defensive investing, keeping each Fund's assets fully
invested in all market environments. The Advisor monitors each Fund on an
ongoing basis, and makes adjustments to its portfolio, as necessary, to minimize
tracking error and to maximize liquidity.

The Advisor may pursue the Funds' investment objectives by utilizing leveraged
instruments, such as futures contracts and options on securities, futures
contracts, and stock indices. In addition, the Advisor will regularly utilize
short selling techniques designed to help the Ursa Fund's performance to
inversely correlate to the performance of the S&P 500 Index.
<PAGE>
PROSPECTUS 13
--------

SECTOR FUND. In managing the Precious Metals Fund, the Advisor's investment team
employs a quantitative model that considers a number of factors. To develop a
liquid portfolio of stocks that adequately represents the precious metals market
sector, the Advisor applies filters to the broad universe of stocks of issuers
that are "principally engaged" in business activities in that industry sector.
Specifically, the Advisor's investment process screens stocks primarily based on
liquidity, market capitalization, and correlation relative to the entire
industry sector. The Advisor also may consider other factors.

The Advisor monitors the Precious Metals Fund's portfolio on an ongoing basis,
and adds or deletes stocks from the portfolio as needed.

After constructing a portfolio for the Precious Metals Fund, the Advisor may
utilize futures contracts and options to leverage the Fund's exposure to the
relevant business sector. The use of leverage will result in the Fund being
exposed to its relevant business sector with more than 100% of its total assets.

Each business sector typically consists of numerous industries. For purposes of
the Advisor's investment methodology and the policies for the Fund, a company is
considered to be "principally engaged" in a designated business activity in a
particular economic sector if at least 50% of its assets, gross income, or net
profits are committed to, or derived from, that activity. If a question exists
as to whether a company meets these standards, the Advisor will determine
whether the company's primary business is within the business sector designated
for investment by the Fund.

RISKS OF INVESTING IN THE FUNDS

As indicated below, the Funds are subject to a number of risks that may
affect the value of Fund shares.

EQUITY RISK (NOVA, URSA, OTC, AND PRECIOUS METALS FUNDS) -- The Funds may invest
in public and privately issued equity securities, including common and preferred
stocks, warrants, and rights, as well as instruments that attempt to track the
price movement of equity indices. Investments in equity securities and equity
derivatives in general are subject to market risks that may cause their prices
to fluctuate over time. The value of securities convertible into equity
securities, such as warrants or convertible debt, is also affected by prevailing
interest rates, the credit quality of the issuer and any call provision.
Fluctuations in the value of equity securities in which the Funds invest will
cause the net asset value of the Funds to fluctuate. Historically, the equity
markets have moved in cycles, and the value of the Fund's equity securities and
equity derivatives may fluctuate drastically from day to day. This price
volatility is the principal risk of investing in equity securities. Because of
their link to the equity markets, an investment in the Funds may be more
suitable for long-term investors who can bear the risk of short-term principal
fluctuations.
<PAGE>
- ------
14 PROSPECTUS

NON-DIVERSIFICATION RISK (ALL FUNDS) -- Since each Fund is non-diversified, each
Fund may invest in the securities of a limited number of issuers. To the extent
that a Fund invests a significant percentage of its assets in a limited number
of issuers, the Fund is subject to the risks of investing in those few issuers,
and may be more susceptible to a single adverse economic or regulatory
occurrence.

FIXED INCOME RISK (U.S. GOVERNMENT BOND FUND) -- The market value of fixed
income investments will change in response to interest rate changes and other
factors. During periods of falling interest rates, the values of outstanding
fixed income securities generally rise. Conversely, during periods of rising
interest rates, the values of such securities generally decline. Moreover, while
securities with longer maturities tend to produce higher yields, the prices of
longer maturity securities are also subject to greater market fluctuations as a
result of changes in interest rates.

TRACKING ERROR RISK (BENCHMARK FUNDS) -- While the Funds do not expect returns
to deviate significantly from their respective benchmarks on a daily basis,
certain factors may affect their ability to achieve close correlation. These
factors may include Fund expenses, imperfect correlation between the Funds'
investments and those of their benchmarks, rounding of share prices, changes to
the benchmark, regulatory policies, and leverage. The cumulative effect of these
factors may over time cause the Funds' returns to deviate from their respective
benchmarks on an aggregate basis. The magnitude of any tracking error may be
affected by a higher portfolio turnover rate.

TRADING HALT RISK (ALL FUNDS) -- The Funds typically will hold short-term
options and futures contracts. The major exchanges on which these contracts are
traded, such as the Chicago Mercantile Exchange ("CME"), have established limits
on how much an option or futures contract may decline over various time periods
within a day. If an option or futures contract's price declines more than the
established limits, trading on the exchange is halted on that instrument. If a
trading halt occurs, a Fund may temporarily be unable to purchase or sell
options or futures contracts. Such a trading halt near the time the Fund prices
its shares may limit the Fund's ability to use leverage and may prevent the Fund
from achieving its investment objective. In such an event, a Fund also may be
required to use a "fair-value" method to price its outstanding contracts.

FUTURES AND OPTIONS RISK (ALL FUNDS) -- The Funds will invest a percentage of
their assets in futures and options contracts. The Funds may use futures
contracts and related options for bona fide hedging purposes to offset changes
in the value of securities held or expected to be acquired. They may also be
used to gain exposure to a particular market or instrument, to create a
synthetic money market position, and for certain other tax-related purposes. The
Funds will only enter into futures
<PAGE>
PROSPECTUS 15
--------

contracts traded on a national futures exchange or board of trade. Futures and
options contracts are described in more detail below:

The risks associated with the Funds' use of futures and options contracts
include:

- A Fund may experience losses over certain ranges in the market that exceed
losses experienced by a fund that does not use futures contracts and
options.

- There may be an imperfect correlation between the changes in market value
of the securities held by a Fund and the prices of futures and options on
futures.

- Trading restrictions or limitations may be imposed by an exchange, and
government regulations may restrict trading in futures contracts and
options.

SHORT SALES RISK (URSA FUND) -- Short sales are transactions in which a Fund
sells a security it does not own. To complete the transaction, the Fund must
borrow the security to make delivery to the buyer. The Fund is then obligated to
replace the security borrowed by purchasing the security at the market price at
the time of replacement. The price at such time may be higher or lower than the
price at which the security was sold by the Fund. If the underlying security
goes down in price
<PAGE>
- ------
16 PROSPECTUS

between the time the Fund sells the security and buys it back, the Fund will
realize a gain on the transaction. Conversely, if the underlying security goes
up in price during the period, the Fund will realize a loss on the transaction.
The risk of such price increases is the principal risk of engaging in short
sales.

PORTFOLIO TURNOVER RATE RISK (ALL FUNDS) -- The Trust anticipates that investors
that are part of a tactical asset-allocation strategy will frequently redeem or
exchange shares of a Fund, which will cause that Fund to experience high
portfolio turnover. A higher portfolio turnover rate may result in a Fund paying
higher levels of transaction costs and generating greater tax liabilities for
shareholders.

INDUSTRY CONCENTRATION RISK (PRECIOUS METALS FUND) -- None of the Benchmark
Funds will invest 25% or more of the value of the Fund's total assets in the
securities of one or more issuers conducting their principal business activities
in the same industry; EXCEPT THAT, to the extent the index underlying a Fund's
benchmark is concentrated in a particular industry, a Fund will necessarily be
concentrated in that industry. Currently, the index underlying the OTC Fund's
benchmark -- the NASDAQ 100 Index -- is concentrated in technology companies.
The Precious Metals Fund invests in the securities of a limited number of
issuers conducting business in the precious metals industry and therefore is
concentrated in that industry. The risk of concentrating Fund investments in a
limited number of issuers conducting business in the same industry is that a
Fund will be more susceptible to the risks that are associated with those
issuers (or that industry) than a fund that does not concentrate its
investments.

EARLY CLOSING RISK (OTC AND PRECIOUS METALS FUNDS) -- The normal close of
trading of securities listed on the National Association of Securities Dealers
Automated Quotations system ("NASDAQ") and the New York Stock Exchange ("NYSE")
is 4:00 P.M., Eastern Time. Unanticipated early closings may result in a Fund
being unable to sell or buy securities on that day. If an exchange closes early
on a day when one or more of the Funds needs to execute a high volume of
securities trades late in a trading day, a Fund might incur substantial trading
losses.

FOREIGN INVESTING RISK (PRECIOUS METALS FUND) -- Investments in securities of
foreign companies can be more volatile than investments in U.S. companies.
Diplomatic, political, or economic developments could affect investments 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.

PURCHASING AND REDEEMING SHARES

Exchange Commission ("SEC"), the right is reserved to advance the time on that
day by which purchase and redemption orders must be received.

NET ASSET VALUE

The price per share (the offering price) will be the NAV next determined
after your purchase order is received by the Trust. You may also redeem all or
any portion of your Fund shares at the next determined NAV after the Trust
receives your redemption request. NAV is calculated by (1) taking the current
market value of a Fund's total assets, (2) subtracting the liabilities, and
(3) dividing that amount by the total number of shares owned by shareholders.
For most Funds, the NAV is calculated once each Business Day after the close of
the NYSE (currently, 4:00 p.m., Eastern Time). The NAV of the U.S. Government
Bond Fund is determined each Business Day as of the close of normal trading on
the CBOT (normally 3:00 P.M., Eastern Time). If the exchange or market where a
Fund's securities or other investments are primarily traded closes early, the
NAV may be calculated earlier in accordance with the policies set forth in the
Funds' SAI.

TO RECEIVE THE CURRENT BUSINESS DAY'S NAV, VARIABLE LIFE AND VARIABLE
ANNUITY ACCOUNT INVESTORS SHOULD CONSULT THEIR SEPARATE ACCOUNT PROSPECTUS.
<PAGE>
- ------
18 PROSPECTUS

MANAGEMENT OF THE FUNDS

THE INVESTMENT ADVISOR

<TABLE>
<CAPTION>
FUND ADVISORY FEE
<S> <C>
- --------------------------------------------------------------------------
Nova .75%
Ursa .90%
OTC .75%
Precious Metals .75%
U.S. Government Bond .50%
</TABLE>

PORTFOLIO MANAGEMENT

The portfolio manager of the Ursa Fund and the OTC Fund is Michael P. Byrum,
who is a Vice President and the Advisor's senior portfolio manager. Prior to
joining the Advisor as a portfolio manager in July 1993, Mr. Byrum worked as an
investor representative with MMA.

The Precious Metals Fund is managed by a team and no one person is
responsible for making investment decisions for the Fund.

The portfolio manager of the U.S. Government Bond Fund is Anne H. Ruff, who
joined the Advisor as a portfolio manager in August 1996. From 1989 to 1995, Ms.
Ruff worked as a portfolio manager for United Services Life Insurance Company in
Arlington, Virginia, where she managed $2.5 billion in fixed-income portfolios.

DIVIDENDS, DISTRIBUTIONS, AND TAXES

DIVIDENDS AND DISTRIBUTIONS

Income dividends and capital gain distributions are paid at least annually
by each of the Funds, except the U.S. Government Bond Fund, which declares and
pays dividends daily to the insurance company. The Trust may declare a special
capital gains distribution if the Trustees believe that such a distribution
would be in the best interest of the shareholders of a Fund.

TAXES

FINANCIAL HIGHLIGHTS

FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
NOVA URSA
------------------------------------------ ------------------------------------------
YEAR YEAR PERIOD YEAR YEAR JUNE 10,
ENDED ENDED ENDED ENDED ENDED 1997 TO
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1999 1998 1997* 1999 1998 1997+
------------ ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Per Share Operating Performance:++
Net Asset Value -- Beginning of
Period........................... $ 15.88 $ 12.21 $ 10.00 $ 6.30 $ 8.07 $ 9.36
------- ------- ------- ------- ------ ------
Net Investment Income (Loss).... .49 .04 .07 .20 .06 (.01)
Net Realized and Unrealized
Gains (Losses) on Securities... 3.10 3.63 2.14 (1.15) (1.83) (1.28)
Net Increase (Decrease) in Net
Asset Value Resulting from
Operations..................... 3.59 3.67 2.21 (.95) (1.77) (1.29)
Dividends to Shareholders from
Net Investment Income.......... (.01) .00 .00 .00 .00 .00
Distributions (from capital
gains)......................... (.89) .00 .00 .00 .00 .00
------- ------- ------- ------- ------ ------
Net Increase (Decrease) in Net
Asset Value.................... 2.69 3.67 2.21 (.95) (1.77) (1.29)
------- ------- ------- ------- ------ ------
Net Asset Value -- End of
Period........................... $ 18.57 $ 15.88 $ 12.21 $ 5.35 $ 6.30 $ 8.07
======= ======= ======= ======= ====== ======
Total Investment Return........... 23.28% 30.06% (15.06)% (21.93)%
Ratios to Average Net Assets
Gross Expenses.................. 1.55% 3.26% 9.09%** 1.73% 3.76% 9.21%**
Net Expenses.................... 1.55% 3.22% 2.80%** 1.73% 3.59% 2.90%**
Net Investment Income (Loss).... 2.90% 0.27% 0.91%** 3.34% 0.89% (0.27)%**
Supplementary Data:
Portfolio Turnover Rate***........ 0% 0% 178% 0% 0% 0%
Net Assets, End of Period
(000's omitted).................. $92,922 $29,258 $10,448 $32,310 $5,509 $2,879

<CAPTION>
URSA
---------------------------
MAY 24, MAY 7,
1997 TO 1997 TO
JUNE 3, MAY 21,
1997+ 1997+*
------------ ------------
<S> <C> <C>
Per Share Operating Performance:++
Net Asset Value -- Beginning of
Period........................... $ 9.57 $ 10.00
------ -------
Net Investment Income (Loss).... .00 (.04)
Net Realized and Unrealized
Gains (Losses) on Securities... .01 (.33)
Net Increase (Decrease) in Net
Asset Value Resulting from
Operations..................... .01 (.37)
Dividends to Shareholders from
Net Investment Income.......... .00 .00
Distributions (from capital
gains)......................... .00 .00
------ -------
Net Increase (Decrease) in Net
Asset Value.................... .01 (.37)
------ -------
Net Asset Value -- End of
Period........................... $ 9.58 $ 9.63
====== =======
Total Investment Return...........
Ratios to Average Net Assets
Gross Expenses.................. 85.10%** 13.62%**
Net Expenses.................... 2.90%** 2.90%**
Net Investment Income (Loss).... 2.76%** (10.05)%**
Supplementary Data:
Portfolio Turnover Rate***........ 0% 0%
Net Assets, End of Period
(000's omitted).................. $ -- $ --
</TABLE>

- ------------

* COMMENCEMENT OF OPERATIONS: NOVA AND URSA -- MAY 7, 1997

** ANNUALIZED

*** PORTFOLIO TURNOVER RATIO IS CALCULATED WITHOUT REGARD TO SHORT-TERM
SECURITIES HAVING A MATURITY OF LESS THAN ONE YEAR.

+ 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.

++ CALCULATED USING THE AVERAGE DAILY SHARES OUTSTANDING FOR THE PERIOD.
<PAGE>
PROSPECTUS 21
--------

FINANCIAL HIGHLIGHTS

<TABLE>
<CAPTION>
OTC PRECIOUS METALS
------------------------------------------ ------------------------------------------
YEAR ENDED YEAR ENDED PERIOD ENDED YEAR ENDED YEAR ENDED PERIOD ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1999 1998 1997* 1999 1998 1997*
------------ ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Per Share Operating Performance:++
Net Asset Value -- Beginning of
Period.......................... $ 19.57 $ 10.65 $ 10.00 $ 5.81 $ 7.02 $ 10.00
-------- -------- ------- -------- -------- -------
Net Investment Income (Loss)...... (.33) (.40) (.09) (.07) (.16) (.11)
Net Realized and Unrealized
Gains (Losses) on Securities... 19.88 9.32 .74 (.14) (1.05) (2.87)
-------- -------- ------- -------- -------- -------
Net Increase (Decrease) in Net
Asset Value Resulting from
Operations..................... 19.55 8.92 .65 (.21) (1.21) (2.98)
Dividends to Shareholders from
Net Investment Income.......... .00 .00 .00 (.17) .00 .00
Distributions (from capital
gains)......................... (.60) .00 .00 .00 .00 .00
Adjustment due to
Reorganization................. .00 .00 .00 .00 .00 .00
-------- -------- ------- -------- -------- -------
Net Increase (Decrease) in Net
Asset Value.................... 18.95 8.92 .65 (.38) (1.21) (2.98)
-------- -------- ------- -------- -------- -------
Net Asset Value -- End of
Period.......................... $ 38.52 $ 19.57 $ 10.65 $ 5.43 $ 5.81 $ 7.02
======== ======== ======= ======== ======== =======
Total Investment Return........... 101.32% 83.76% (3.58) (17.24)%
Ratios to Average Net Assets
Gross Expenses.................. 1.55% 2.96% 9.07%** 2.17% 3.39% 9.76%**
Net Expenses.................... 1.55% 2.96% 2.80%** 2.17% 3.23% 2.80%**
Net Investment Income (Loss).... (1.24) (2.67)% (1.22)%** (1.39)% (2.31)% (2.19)%**
Supplementary Data:
Portfolio Turnover Rate***...... 953% 1,077% 450% 1,239% 1,739% 914%
Net Assets, End of Period
(000's omitted)................ $373,458 $ 22,038 $ 2,367 $ 6,992 $ 2,695 $ 518
</TABLE>

- ------------

* COMMENCEMENT OF OPERATIONS: OTC -- MAY 7, 1997; PRECIOUS METALS --
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.
<PAGE>
- ------
22 PROSPECTUS

FINANCIAL HIGHLIGHTS

<TABLE>
<CAPTION>
U.S. GOVERNMENT BOND
----------------------------------------------------------------------------
AUGUST 18, JULY 29, JUNE 24, MAY 29,
YEAR ENDED YEAR ENDED 1997 TO 1997 TO 1997 TO 1997 TO
DECEMBER 31, DECEMBER 31, DECEMBER 31, AUGUST 12, JULY 14, JUNE 5,
1999 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............ .41 .24 .15 .02 .10 .00
Net Realized and Unrealized Gains
(Losses) on Securities.......... (3.09) 1.28 .97 (.38) .13 .15
------ ------ ------ ------ ------ ------
Net Increase (Decrease) in Net
Asset Value Resulting from
Operations...................... (2.68) 1.52 1.12 (.36) .23 .15
Dividends to Shareholders from
Net Investment Income........... (.43) (.06) .00 .00 .00 .00
Distributions (from capital
gains).......................... .00 .00 .00 .00 .00 .00
------ ------ ------ ------ ------ ------
Net Increase (Decrease) in Net
Asset Value..................... (3.11) 1.46 1.12 (.36) .23 .15
------ ------ ------ ------ ------ ------
Net Asset Value -- End of Period... $10.17 $13.28 $11.82 $10.56 $10.67 $10.15
====== ====== ====== ====== ====== ======
Total Investment Return............ (20.45)% 12.86%
Ratios to Average Net Assets
Gross Expenses................... 1.52% 2.71% 8.47%** 49.63%** 12.68%** 5.43%**
Net Expenses..................... 1.52% 2.71% 2.40%** 2.40%** 2.40%** 2.40%**
Net Investment Income............ 3.55% 1.92% 3.49%** 3.80%** 7.94%** 1.86%**
Supplementary Data:
Portfolio Turnover Rate***....... 1,611% 1,463% 761% 0% 0% 0%
Net Assets, End of Period
(000's omitted)................. $1,136 $4,973 $ 892 $ -- $ -- $ --
</TABLE>

- ------------

* COMMENCEMENT OF OPERATIONS: U. S. GOVERNMENT BOND -- MAY 29, 1997

** ANNUALIZED

*** PORTFOLIO TURNOVER RATIO IS CALCULATED WITHOUT REGARD TO SHORT-TERM
SECURITIES HAVING A MATURITY OF LESS THAN ONE YEAR.

+ 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.

++ CALCULATED USING THE AVERAGE DAILY SHARES OUTSTANDING FOR THE PERIOD.
<PAGE>
PROSPECTUS 23
--------

BENCHMARK INFORMATION

NEITHER THE NOVA FUND NOR THE URSA FUND IS SPONSORED, ENDORSED, SOLD, OR
PROMOTED BY STANDARD & POOR'S CORP. (S&P); AND THE OTC FUND IS NOT SPONSORED,
ENDORSED, SOLD, OR PROMOTED BY NASDAQ OR ANY OF NASDAQ'S AFFILIATES (NASDAQ AND
ITS AFFILIATES HEREINAFTER COLLECTIVELY REFERRED TO AS "NASDAQ").

- --------------------------------------------------------------------------------

THE TRUST'S SEC REGISTRATION NUMBER IS 811-08821.
<PAGE>
PROSPECTUS

<TABLE>
<C> <S>
1 INTRODUCTION
---

2 NOVA FUND
---

4 URSA FUND
---

6 OTC FUND
---

8 MORE INFORMATION ABOUT FUND INVESTMENTS
--- AND RISK

11 PURCHASING AND REDEEMING SHARES
---

12 MANAGEMENT OF THE FUNDS
---

13 DIVIDENDS, DISTRIBUTIONS, AND TAXES
---

14 FINANCIAL HIGHLIGHTS
---

16 BENCHMARK INFORMATION
---

BC ADDITIONAL INFORMATION
---
</TABLE>

MAY 1, 2000

RYDEX VARIABLE TRUST

NOVA FUND
URSA FUND
OTC FUND

6116 Executive Boulevard, Suite 400, Rockville, Maryland 20852
800-820-0888 301-468-8520
WWW.RYDEXFUNDS.COM

Rydex Variable Trust (the "Trust") is a mutual fund complex with thirty separate
investment portfolios (the "Rydex Variable Funds"). This prospectus describes
three Funds: Nova Fund, Ursa Fund, and OTC Fund (collectively, the "Funds" or
the "Benchmark Funds").

RISK/RETURN INFORMATION COMMON TO THE FUNDS

THE FUNDS' INVESTMENT OBJECTIVES

Each Fund has a separate investment objective. In general, each Benchmark
Fund seeks to provide investment results that match the performance of a
specific benchmark.

RISKS OF INVESTING IN THE FUNDS

The value of the Funds may fluctuate. In addition, Fund shares:

- MAY DECLINE IN VALUE, AND YOU MAY LOSE MONEY

- ARE NOT FEDERALLY INSURED

- ARE NOT GUARANTEED BY ANY GOVERNMENT AGENCY

- ARE NOT BANK DEPOSITS

- ARE NOT GUARANTEED TO ACHIEVE THEIR OBJECTIVES
<PAGE>
- ------
2 PROSPECTUS

FUND INFORMATION -- NOVA FUND

FUND OBJECTIVE

PORTFOLIO INVESTMENT STRATEGY

RISK CONSIDERATIONS

The Nova Fund is subject to a number of risks that will affect the value of
its shares, including:

- LEVERAGING RISK -- The more the Fund invests in leveraged instruments, the
more this leverage will magnify any losses on those investments.

FUND PERFORMANCE INFORMATION

NOVA FUND PERFORMANCE

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

DURING THE PERIOD SHOWN IN THE BAR CHART, THE HIGHEST RETURN FOR A QUARTER WAS
31.57% (QUARTER ENDED DEC. 31, 1998) AND THE LOWEST RETURN FOR A QUARTER WAS
- -17.17% (QUARTER ENDED SEPT. 30, 1998).

FUND INFORMATION -- URSA FUND

FUND PERFORMANCE INFORMATION

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

DURING THE PERIOD SHOWN IN THE BAR CHART, THE HIGHEST RETURN FOR A QUARTER WAS
9.11% (QUARTER ENDED SEPT. 30, 1998) AND THE LOWEST RETURN FOR A QUARTER WAS
- -16.91% (QUARTER ENDED DEC. 31, 1998).

<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURN (FOR PERIODS ENDING DECEMBER 31, 1999)(1)
URSA FUND S&P 500 INDEX(2)
<S> <C> <C>
--------------------------------------
Past One Year -15.06 % 19.53%
Since Inception of Continuous Operations (06/10/97)(3) -19.51 % 22.99%
</TABLE>

FUND INFORMATION -- OTC FUND

FUND PERFORMANCE INFORMATION

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

DURING THE PERIOD SHOWN IN THE BAR CHART, THE HIGHEST RETURN FOR A QUARTER WAS
53.10% (QUARTER ENDED DEC. 31, 1999) AND THE LOWEST RETURN FOR A QUARTER WAS
0.77% (QUARTER ENDED SEPT. 30, 1998).

<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURN (FOR PERIODS ENDING DECEMBER 31, 1999)(1)
OTC FUND NASDAQ 100 INDEX (2)
<S> <C> <C>
-----------------------------------------
Past One Year 101.32% 101.95%
Since Inception (05/07/97) 67.70% 69.89%
</TABLE>

MORE INFORMATION ABOUT FUND INVESTMENTS AND RISK

THE BENCHMARK FUNDS' INVESTMENT OBJECTIVES

Each Benchmark Fund's objective is to provide investment results that match
the performance of a specific benchmark. The current benchmark used by each Fund
is set forth below:

A BRIEF GUIDE TO THE BENCHMARKS.

THE S&P 500 INDEX. The S&P 500 Index is a capitalization-weighted index composed
of 500 common stocks, which are chosen by the Standard & Poor's Corporation
("S&P") on a statistical basis.

ADVISOR'S INVESTMENT STRATEGY IN MANAGING THE FUNDS

The Advisor may pursue the Funds' investment objectives by utilizing
leveraged instruments, such as futures contracts and options on securities,
futures contracts, and stock indices. In addition, the Advisor will regularly
utilize short selling techniques designed to help the Ursa Fund's performance to
inversely correlate to the performance of the S&P 500 Index.

RISKS OF INVESTING IN THE FUNDS

As indicated below, the Funds are subject to a number of risks that may
affect the value of Fund shares.
<PAGE>
PROSPECTUS 9
--------

EQUITY RISK -- The Funds may invest in public and privately issued equity
securities, including common and preferred stocks, warrants, and rights, as well
as instruments that attempt to track the price movement of equity indices.
Investments in equity securities and equity derivatives in general are subject
to market risks that may cause their prices to fluctuate over time. The value of
securities convertible into equity securities, such as warrants or convertible
debt, is also affected by prevailing interest rates, the credit quality of the
issuer and any call provision. Fluctuations in the value of equity securities in
which the Funds invest will cause the net asset value of the Funds to fluctuate.
Historically, the equity markets have moved in cycles, and the value of the
Fund's equity securities and equity derivatives may fluctuate drastically from
day to day. This price volatility is the principal risk of investing in equity
securities. Because of their link to the equity markets, an investment in the
Funds may be more suitable for long-term investors who can bear the risk of
short-term principal fluctuations.

position, and for certain other tax-related purposes. The Funds will only enter
into futures contracts traded on a national futures exchange or board of trade.
Futures and options contracts are described in more detail below:

OPTIONS -- The buyer of an option acquires the right to buy (a call option)
or sell (a put option) a certain quantity of a security (the underlying
security) or instrument at a certain price up to a specified point in time.
The seller or writer of an option is obligated to sell (a call option) or
buy (a put option) the underlying security. When writing (selling) call
options on securities, the Funds may cover their position by owning the
underlying security on which the option is written or by owning a call
option on the underlying security. Alternatively, the Funds may cover their
position by maintaining in a segregated account cash or liquid securities
equal in value to the exercise price of the call option written by the
Funds.

The risks associated with the Funds' use of futures and options contracts
include:

- A Fund may experience losses over certain ranges in the market that exceed
losses experienced by a fund that does not use futures contracts and
options.

- There may be an imperfect correlation between the changes in market value
of the securities held by a Fund and the prices of futures and options on
futures.

- Trading restrictions or limitations may be imposed by an exchange, and
government regulations may restrict trading in futures contracts and
options.

price at which the security was sold by the Fund. If the underlying security
goes down in price between the time the Fund sells the security and buys it
back, the Fund will realize a gain on the transaction. Conversely, if the
underlying security goes up in price during the period, the Fund will realize a
loss on the transaction. The risk of such price increases is the principal risk
of engaging in short sales.

INDUSTRY CONCENTRATION RISK -- None of the Benchmark Funds will invest 25% or
more of the value of the Fund's total assets in the securities of one or more
issuers conducting their principal business activities in the same industry;
EXCEPT THAT, to the extent the index underlying a Fund's benchmark is
concentrated in a particular industry, a Fund will necessarily be concentrated
in that industry. Currently, the index underlying the OTC Fund's benchmark --
the NASDAQ 100 Index -- is concentrated in technology companies. The risk of
concentrating Fund investments in a limited number of issuers conducting
business in the same industry is that a Fund will be more susceptible to the
risks that are associated with those issuers (or that industry) than a fund that
does not concentrate its investments.

PURCHASING AND REDEEMING SHARES

payments allocated to a separate account investment division, transfers to or
from a separate account investment division, contract loans and repayments,
contract withdrawals and surrenders, and benefit payments, at the Fund's net
asset value per share calculated as of that same day.

NET ASSET VALUE

TO RECEIVE THE CURRENT BUSINESS DAY'S NAV, VARIABLE LIFE AND VARIABLE
ANNUITY ACCOUNT INVESTORS SHOULD CONSULT THEIR SEPARATE ACCOUNT PROSPECTUS.

MANAGEMENT OF THE FUNDS

THE INVESTMENT ADVISOR

Under an investment advisory agreement between the Trust and the Advisor, the
Funds paid the Advisor a fee at an annualized rate for the fiscal year ended
December 31, 1999, based on the average daily net assets for each Fund, as set
forth below:

<TABLE>
<CAPTION>
FUND ADVISORY FEE
<S> <C>
- --------------------------------------------------------------------------
Nova .75%
Ursa .90%
OTC .75%
</TABLE>

PORTFOLIO MANAGEMENT

DIVIDENDS, DISTRIBUTIONS, AND TAXES

DIVIDENDS AND DISTRIBUTIONS

TAXES

FINANCIAL HIGHLIGHTS

FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
NOVA URSA
-------------------------------------------- --------------------------------------------
YEAR YEAR PERIOD YEAR YEAR JUNE 10,
ENDED ENDED ENDED ENDED ENDED 1997 TO
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1999 1998 1997* 1999 1998 1997+
------------ ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Per Share Operating
Performance:++
Net Asset Value -- Beginning
of Period.................. $ 15.88 $ 12.21 $ 10.00 $ 6.30 $ 8.07 $ 9.36
------- ------- ------- ------- ------ ------
Net Investment Income
(Loss)................... .49 .04 .07 .20 .06 (.01)
Net Realized and
Unrealized Gains (Losses)
on Securities............ 3.10 3.63 2.14 (1.15) (1.83) (1.28)
Net Increase (Decrease) in
Net Asset Value Resulting
from Operations.......... 3.59 3.67 2.21 (.95) (1.77) (1.29)
Dividends to Shareholders
from Net Investment
Income................... (.01) .00 .00 .00 .00 .00
Distributions (from
capital gains)........... (.89) .00 .00 .00 .00 .00
------- ------- ------- ------- ------ ------
Net Increase (Decrease) in
Net Asset Value.......... 2.69 3.67 2.21 (.95) (1.77) (1.29)
------- ------- ------- ------- ------ ------
Net Asset Value -- End of
Period..................... $ 18.57 $ 15.88 $ 12.21 $ 5.35 $ 6.30 $ 8.07
======= ======= ======= ======= ====== ======
Total Investment Return..... 23.28% 30.06% (15.06)% (21.93)%
Ratios to Average Net Assets
Gross Expenses............ 1.55% 3.26% 9.09%** 1.73% 3.76% 9.21%**
Net Expenses.............. 1.55% 3.22% 2.80%** 1.73% 3.59% 2.90%**
Net Investment Income
(Loss)................... 2.90% 0.27% 0.91%** 3.34% 0.89% (0.27)%**
Supplementary Data:
Portfolio Turnover
Rate***.................... 0% 0% 178% 0% 0% 0%
Net Assets, End of Period
(000's omitted)............ $92,922 $29,258 $10,448 $32,310 $5,509 $2,879

<CAPTION>
URSA
--------------------------
MAY 24, MAY 7,
1997 TO 1997 TO
JUNE 3, MAY 21,
1997+ 1997+*
----------- -----------
<S> <C> <C>
Per Share Operating
Performance:++
Net Asset Value -- Beginning
of Period.................. $ 9.57 $ 10.00
------ -------
Net Investment Income
(Loss)................... .00 (.04)
Net Realized and
Unrealized Gains (Losses)
on Securities............ .01 (.33)
Net Increase (Decrease) in
Net Asset Value Resulting
from Operations.......... .01 (.37)
Dividends to Shareholders
from Net Investment
Income................... .00 .00
Distributions (from
capital gains)........... .00 .00
------ -------
Net Increase (Decrease) in
Net Asset Value.......... .01 (.37)
------ -------
Net Asset Value -- End of
Period..................... $ 9.58 $ 9.63
====== =======
Total Investment Return.....
Ratios to Average Net Assets
Gross Expenses............ 85.10%** 13.62%**
Net Expenses.............. 2.90%** 2.90%**
Net Investment Income
(Loss)................... 2.76%** (10.05)%**
Supplementary Data:
Portfolio Turnover
Rate***.................... 0% 0%
Net Assets, End of Period
(000's omitted)............ $ -- $ --
</TABLE>

- ------------

* COMMENCEMENT OF OPERATIONS: NOVA AND URSA -- MAY 7, 1997

** ANNUALIZED

*** PORTFOLIO TURNOVER RATIO IS CALCULATED WITHOUT REGARD TO SHORT-TERM
SECURITIES HAVING A MATURITY OF LESS THAN ONE YEAR.

+ 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.

++ CALCULATED USING THE AVERAGE DAILY SHARES OUTSTANDING FOR THE PERIOD.
<PAGE>
PROSPECTUS 15
--------

FINANCIAL HIGHLIGHTS

<TABLE>
<CAPTION>
OTC
----------------------------------------
YEAR ENDED YEAR ENDED PERIOD ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31,
1999 1998 1997*
------------ ------------ ------------
<S> <C> <C> <C>
Per Share Operating Performance:++
Net Asset Value -- Beginning of
Period........................... $ 19.57 $ 10.65 $ 10.00
-------- -------- -------
Net Investment Income (Loss)....... (.33) (.40) (.09)
Net Realized and Unrealized Gains
(Losses) on Securities.......... 19.88 9.32 .74
-------- -------- -------
Net Increase (Decrease) in Net
Asset Value Resulting from
Operations...................... 19.55 8.92 .65
Dividends to Shareholders from
Net Investment Income........... .00 .00 .00
Distributions (from capital
gains).......................... (.60) .00 .00
Adjustment due to
Reorganization.................. .00 .00 .00
-------- -------- -------
Net Increase (Decrease) in Net
Asset Value..................... 18.95 8.92 .65
-------- -------- -------
Net Asset Value -- End of Period... $ 38.52 $ 19.57 $ 10.65
======== ======== =======
Total Investment Return............ 101.32% 83.76%
Ratios to Average Net Assets
Gross Expenses................... 1.55% 2.96% 9.07%**
Net Expenses..................... 1.55% 2.96% 2.80%**
Net Investment Income (Loss)..... (1.24) (2.67)% (1.22)%**
Supplementary Data:
Portfolio Turnover Rate***....... 953% 1,077% 450%
Net Assets, End of Period
(000's omitted)................. $373,458 $ 22,038 $ 2,367
</TABLE>

- ------------

* COMMENCEMENT OF OPERATIONS: OTC -- 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.
<PAGE>
- -------
16 PROSPECTUS

BENCHMARK INFORMATION

- --------------------------------------------------------------------------------

THE TRUST'S SEC REGISTRATION NUMBER IS 811-08821.
<PAGE>
PROSPECTUS

<TABLE>
<C> <S>
1 INTRODUCTION
---

2 NOVA FUND
---

4 URSA FUND
---

6 OTC FUND
---

8 PRECIOUS METALS FUND
---

10 U.S. GOVERNMENT BOND FUND
---

12 U.S. GOVERNMENT MONEY MARKET FUND
---

14 MORE INFORMATION ABOUT FUND INVESTMENTS
--- AND RISK

18 PURCHASING AND REDEEMING SHARES
---

20 MANAGEMENT OF THE FUNDS
---

21 DIVIDENDS, DISTRIBUTIONS, AND TAXES
---

22 FINANCIAL HIGHLIGHTS
---

25 BENCHMARK INFORMATION
---

BC ADDITIONAL INFORMATION
---
</TABLE>

MAY 1, 2000

RYDEX VARIABLE TRUST

NOVA FUND
URSA FUND
OTC FUND
PRECIOUS METALS FUND
U.S. GOVERNMENT BOND FUND
U.S. GOVERNMENT MONEY MARKET FUND

6116 Executive Boulevard, Suite 400, Rockville, Maryland 20852
800-820-0888 301-468-8520
WWW.RYDEXFUNDS.COM

Rydex Variable Trust (the "Trust") is a mutual fund complex with thirty separate
investment portfolios (the "Rydex Variable Funds"). This prospectus describes
six Funds which are grouped into three categories:

- BENCHMARK FUNDS -- Nova Fund, Ursa Fund, OTC Fund, and U.S. Government
Bond Fund
- SECTOR FUND -- Precious Metals Fund
- MONEY MARKET FUND -- U.S. Government Money Market Fund

RISK/RETURN INFORMATION COMMON TO THE FUNDS

THE FUNDS' INVESTMENT OBJECTIVES

Each Fund has a separate investment objective. A general description of the
Funds' investment objectives are set forth below:

- BENCHMARK FUNDS -- Each Benchmark Fund seeks to provide investment results
that match the performance of a specific benchmark.

- MONEY MARKET FUND -- The U.S. Government Money Market Fund seeks to
provide security of principal, high current income and liquidity.

RISKS OF INVESTING IN THE FUNDS

The value of the Funds may fluctuate. In addition, Fund shares:

- MAY DECLINE IN VALUE, AND YOU MAY LOSE MONEY

- ARE NOT FEDERALLY INSURED

- ARE NOT GUARANTEED BY ANY GOVERNMENT AGENCY

- ARE NOT BANK DEPOSITS

- ARE NOT GUARANTEED TO ACHIEVE THEIR OBJECTIVES
<PAGE>
- ------
2 PROSPECTUS

FUND INFORMATION -- NOVA FUND

FUND OBJECTIVE

PORTFOLIO INVESTMENT STRATEGY

RISK CONSIDERATIONS

The Nova Fund is subject to a number of risks that will affect the value of
its shares, including:

- LEVERAGING RISK -- The more the Fund invests in leveraged instruments, the
more this leverage will magnify any losses on those investments.

FUND PERFORMANCE INFORMATION

NOVA FUND PERFORMANCE

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

DURING THE PERIOD SHOWN IN THE BAR CHART, THE HIGHEST RETURN FOR A QUARTER WAS
31.57% (QUARTER ENDED DEC. 31, 1998) AND THE LOWEST RETURN FOR A QUARTER WAS
- -17.17% (QUARTER ENDED SEPT. 30, 1998).

FUND INFORMATION -- URSA FUND

FUND PERFORMANCE INFORMATION

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

DURING THE PERIOD SHOWN IN THE BAR CHART, THE HIGHEST RETURN FOR A QUARTER WAS
9.11% (QUARTER ENDED SEPT. 30, 1998) AND THE LOWEST RETURN FOR A QUARTER WAS
- -16.91% (QUARTER ENDED DEC. 31, 1998).

<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURN (FOR PERIODS ENDING DECEMBER 31, 1999)(1)
URSA FUND S&P 500 INDEX(2)
<S> <C> <C>
--------------------------------------
Past One Year -15.06 % 19.53%
Since Inception of Continuous Operations (06/10/97)(3) -19.51 % 22.99%
</TABLE>

FUND INFORMATION -- OTC FUND

FUND PERFORMANCE INFORMATION

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

DURING THE PERIOD SHOWN IN THE BAR CHART, THE HIGHEST RETURN FOR A QUARTER WAS
53.10% (QUARTER ENDED DEC. 31, 1999) AND THE LOWEST RETURN FOR A QUARTER WAS
0.77% (QUARTER ENDED SEPT. 30, 1998).

FUND INFORMATION -- PRECIOUS METALS FUND

FUND OBJECTIVE

PORTFOLIO INVESTMENT STRATEGY

RISK CONSIDERATIONS

The Precious Metals Fund is subject to a number of risks that will affect
the value of its shares, including:

FUND PERFORMANCE INFORMATION

PRECIOUS METALS FUND PERFORMANCE

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<CAPTION>
PRECIOUS METALS FUND
<S> <C>
1999 -3.58%
1998 -17.24%
</TABLE>

DURING THE PERIOD SHOWN IN THE BAR CHART, THE HIGHEST RETURN FOR A QUARTER WAS
13.22% (QUARTER ENDED SEPT. 30, 1999) AND THE LOWEST RETURN FOR A QUARTER WAS
- -13.80% (QUARTER ENDED DEC. 31, 1999).

(1) THESE FIGURES ASSUME THE REINVESTMENT OF DIVIDENDS AND CAPITAL GAINS
DISTRIBUTIONS.
(2) THE S&P 500 INDEX IS AN UNMANAGED INDEX THAT IS A WIDELY RECOGNIZED
INDICATOR OF GENERAL STOCK MARKET PERFORMANCE.
(3) THE XAU INDEX IS AN UNMANAGED INDEX THAT IS A WIDELY RECOGNIZED INDICATOR OF
PRECIOUS METALS SECTOR PERFORMANCE.
<PAGE>
- ------
10 PROSPECTUS

FUND INFORMATION -- U.S. GOVERNMENT BOND FUND

FUND PERFORMANCE INFORMATION

U.S. GOVERNMENT BOND FUND PERFORMANCE

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<CAPTION>
U.S. GOVERNMENT BOND FUND
<S> <C>
1999 -20.45%
1998 12.86%
</TABLE>

DURING THE PERIOD SHOWN IN THE BAR CHART, THE HIGHEST RETURN FOR A QUARTER WAS
10.08% (QUARTER ENDED SEPT. 30, 1998) AND THE LOWEST RETURN FOR A QUARTER WAS
- -9.62% (QUARTER ENDED MARCH 31, 1999).

FUND INFORMATION -- U.S. GOVERNMENT MONEY MARKET FUND

FUND OBJECTIVE

The U.S. Government Money Market Fund seeks to provide security of
principal, high current income, and liquidity.

PORTFOLIO INVESTMENT STRATEGY
The U.S. Government Money Market Fund invests primarily in money market
instruments issued or guaranteed as to principal and interest by the U.S.
Government, its agencies or instrumentalities, and enters into repurchase
agreements fully collateralized by U.S. Government securities. The Fund operates
under SEC rules, which impose certain liquidity, maturity and diversification
requirements. All securities purchased by the Fund must have remaining
maturities of 397 days or less, and must be found by the Advisor to represent
minimal credit risk and be of eligible quality.

RISK CONSIDERATIONS
The U.S. Government Money Market Fund is subject to the following risks that
will potentially affect the value of its shares:
- INTEREST RATE RISK -- Interest Rate Risk involves the potential for
decline in the rate of dividends the Fund pays in the event of declining
interest rates.
- STABLE PRICE PER SHARE RISK -- The Fund's assets are valued using the
amortized cost method, which enables the Fund to maintain a stable price
of $1.00 per share. ALTHOUGH THE FUND IS MANAGED TO MAINTAIN A STABLE
PRICE PER SHARE OF $1.00, THERE IS NO GUARANTEE THAT THE PRICE WILL BE
CONSTANTLY MAINTAINED, AND IT IS POSSIBLE TO LOSE MONEY.
<PAGE>
PROSPECTUS 13
--------

FUND PERFORMANCE INFORMATION

U.S. GOVERNMENT MONEY MARKET FUND PERFORMANCE
The bar chart and table below show the performance of the U.S. Government
Money Market Fund both year-by-year and as an average over different periods of
time. For investment activity prior to November 1998, the Fund's performance
reflected insurance related charges that had the effect of reducing returns. The
variability of performance over time provides an indication of the risks of
investing in the Fund. Of course, this past performance does not necessarily
indicate how the Fund will perform in the future.

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<CAPTION>
U.S. GOVERNMENT MONEY MARKET FUND
<S> <C>
1999 3.92%
1998 2.22%
</TABLE>

DURING THE PERIOD SHOWN IN THE BAR CHART, THE HIGHEST RETURN FOR A QUARTER WAS
1.09% (QUARTER ENDED DEC. 31, 1999) AND THE LOWEST RETURN FOR A QUARTER WAS
0.64% (QUARTERS ENDED MARCH 31, 1998 AND JUNE 30, 1998).

<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURN (FOR PERIODS ENDING DECEMBER 31, 1999)(1)
U.S. GOVERNMENT
MONEY MARKET FUND
<S> <C>
----
Past One Year 3.92%
Since Inception (05/07/97) 3.41%
</TABLE>

(1) THESE FIGURES ASSUME THE REINVESTMENT OF DIVIDENDS AND CAPITAL GAINS
DISTRIBUTIONS.

YIELD - As of December 31, 1999, the current yield of the Fund was 4.16%.
<PAGE>
- ------
14 PROSPECTUS

MORE INFORMATION ABOUT FUND INVESTMENTS AND RISK

THE BENCHMARK FUNDS' INVESTMENT OBJECTIVES

Each Benchmark Fund's objective is to provide investment results that match
the performance of a specific benchmark. The current benchmark used by each Fund
is set forth below:

<S> <C>
FUND BENCHMARK
Nova Fund 150% of the performance of the S&P 500
Index-Registered Trademark- (SPX)
Ursa Fund Inverse (opposite) of the performance of the S&P 500
Index-Registered Trademark- (SPX)
OTC Fund 100% of the performance of the NASDAQ 100
Index-Registered Trademark- (NDX)
U.S. Government Bond Fund 120% of the price movement of the Long Treasury Bond
</TABLE>

A BRIEF GUIDE TO THE BENCHMARKS.

THE S&P 500 INDEX. The S&P 500 Index is a capitalization-weighted index composed
of 500 common stocks, which are chosen by the Standard & Poor's Corporation
("S&P") on a statistical basis.

THE LONG TREASURY BOND. The Long Treasury Bond is the current U.S. Treasury bond
with the longest maturity. Currently, the longest maturity of a U.S. Treasury
bond is 30 years.

ADVISOR'S INVESTMENT STRATEGY IN MANAGING THE FUNDS

BENCHMARK FUNDS. In managing the Benchmark Funds, the Advisor uses a "passive"
investment strategy to manage each Fund's portfolio, meaning that the Advisor
does not attempt to select securities based on their individual potential to
perform better than the market. The Advisor's primary objective is to match the
performance of each Fund's benchmark as closely as possible on a daily basis.
The Advisor uses quantitative analysis techniques to structure each Fund to
obtain the highest correlation to its particular benchmark. The Advisor does not
engage in temporary defensive investing, keeping each Fund's assets fully
invested in all market environments. The Advisor monitors each Fund on an
ongoing basis, and makes adjustments to its portfolio, as necessary, to minimize
tracking error and to maximize liquidity.

The Advisor monitors the Precious Metals Fund's portfolio on an ongoing basis,
and adds or deletes stocks from the portfolio as needed.

RISKS OF INVESTING IN THE FUNDS

As indicated below, the Funds are subject to a number of risks that may
affect the value of Fund shares.

NON-DIVERSIFICATION RISK (ALL FUNDS EXCEPT U.S. GOVERNMENT MONEY MARKET FUND) --
Since each Fund is non-diversified, each Fund may invest in the securities of a
limited number of issuers. To the extent that a Fund invests a significant
percentage of its assets in a limited number of issuers, the Fund is subject to
the risks of investing in those few issuers, and may be more susceptible to a
single adverse economic or regulatory occurrence.

TRADING HALT RISK (ALL FUNDS EXCEPT U.S. GOVERNMENT MONEY MARKET) -- The Funds
typically will hold short-term options and futures contracts. The major
exchanges on which these contracts are traded, such as the Chicago Mercantile
Exchange ("CME"), have established limits on how much an option or futures
contract may decline over various time periods within a day. If an option or
futures contract's price declines more than the established limits, trading on
the exchange is halted on that instrument. If a trading halt occurs, a Fund may
temporarily be unable to purchase or sell options or futures contracts. Such a
trading halt near the time the Fund prices its shares may limit the Fund's
ability to use leverage and may prevent the Fund from achieving its investment
objective. In such an event, a Fund also may be required to use a "fair-value"
method to price its outstanding contracts.

FUTURES AND OPTIONS RISK (ALL FUNDS EXCEPT U.S. GOVERNMENT MONEY MARKET FUND) --
The Funds will invest a percentage of their assets in futures and options
contracts. The Funds may use futures contracts and related options for bona fide
hedging purposes to offset changes in the value of securities held or expected
to be acquired. They may also be used to gain exposure to a particular market or
instrument, to create a synthetic money market position, and for certain other
tax-related
<PAGE>
PROSPECTUS 17
--------

purposes. The Funds will only enter into futures contracts traded on a national
futures exchange or board of trade. Futures and options contracts are described
in more detail below:

OPTIONS -- The buyer of an option acquires the right to buy (a call option)
or sell (a put option) a certain quantity of a security (the underlying
security) or instrument at a certain price up to a specified point in time.
The seller or writer of an option is obligated to sell (a call option) or
buy (a put option) the underlying security. When writing (selling) call
options on securities, the Funds may cover their position by owning the
underlying security on which the option is written or by owning a call
option on the underlying security. Alternatively, the Funds may cover their
position by maintaining in a segregated account cash or liquid securities
equal in value to the exercise price of the call option written by the
Funds.

The risks associated with the Funds' use of futures and options contracts
include:

- A Fund may experience losses over certain ranges in the market that exceed
losses experienced by a fund that does not use futures contracts and
options.

- There may be an imperfect correlation between the changes in market value
of the securities held by a Fund and the prices of futures and options on
futures.

- Trading restrictions or limitations may be imposed by an exchange, and
government regulations may restrict trading in futures contracts and
options.

PORTFOLIO TURNOVER RATE RISK (ALL FUNDS EXCEPT U.S. GOVERNMENT MONEY MARKET
FUND) -- The Trust anticipates that investors that are part of a tactical
asset-allocation strategy will frequently redeem or exchange shares of a Fund,
which will cause that Fund to experience high portfolio turnover. A higher
portfolio turnover rate may result in a Fund paying higher levels of transaction
costs and generating greater tax liabilities for shareholders.

PURCHASING AND REDEEMING SHARES

of holidays generally observed by participants in these markets), or as
permitted by the Securities and Exchange Commission ("SEC"), the right is
reserved to advance the time on that day by which purchase and redemption orders
must be received.

NET ASSET VALUE

The price per share (the offering price) will be the NAV next determined
after your purchase order is received by the Trust. You may also redeem all or
any portion of your Fund shares at the next determined NAV after the Trust
receives your redemption request. NAV is calculated by (1) taking the current
market value of a Fund's total assets, (2) subtracting the liabilities, and
(3) dividing that amount by the total number of shares owned by shareholders.
For most Funds, the NAV is calculated once each Business Day after the close of
the NYSE (currently, 4:00 p.m., Eastern Time). The NAV of the U.S. Government
Bond Fund is determined each Business Day as of the close of normal trading on
the CBOT (normally 3:00 P.M., Eastern Time). If the exchange or market where a
Fund's securities or other investments are primarily traded closes early, the
NAV may be calculated earlier in accordance with the policies set forth in the
Funds' SAI.

TO RECEIVE THE CURRENT BUSINESS DAY'S NAV, VARIABLE LIFE AND VARIABLE
ANNUITY ACCOUNT INVESTORS SHOULD CONSULT THEIR SEPARATE ACCOUNT PROSPECTUS.
<PAGE>
- ------
20 PROSPECTUS

MANAGEMENT OF THE FUNDS

THE INVESTMENT ADVISOR

PORTFOLIO MANAGEMENT

firm specializing in developing hedging and speculative strategies in stock
index futures contracts and U.S. Treasury bond futures contracts.

The Precious Metals Fund is managed by a team and no one person is
responsible for making investment decisions for the Fund.

DIVIDENDS, DISTRIBUTIONS, AND TAXES

DIVIDENDS AND DISTRIBUTIONS

Income dividends and capital gain distributions are paid at least annually
by each of the Funds, except the U.S. Government Money Market and the U.S.
Government Bond Funds, which declare and pay dividends daily to the insurance
company. The Trust may declare a special capital gains distribution if the
Trustees believe that such a distribution would be in the best interest of the
shareholders of a Fund.

TAXES

FINANCIAL HIGHLIGHTS

- ------------

* COMMENCEMENT OF OPERATIONS: NOVA AND URSA -- MAY 7, 1997

** ANNUALIZED

*** PORTFOLIO TURNOVER RATIO IS CALCULATED WITHOUT REGARD TO SHORT-TERM
SECURITIES HAVING A MATURITY OF LESS THAN ONE YEAR.

+ 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.

++ CALCULATED USING THE AVERAGE DAILY SHARES OUTSTANDING FOR THE PERIOD.
<PAGE>
PROSPECTUS 23
--------

FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
U.S. GOVERNMENT
MONEY MARKET OTC
---------------------------------------- ----------------------------------------
YEAR ENDED YEAR ENDED PERIOD ENDED YEAR ENDED YEAR ENDED PERIOD ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1999 1998 1997* 1999 1998 1997*
------------ ------------ ------------ ------------ ------------ ------------
<S> <C> <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 $ 10.00
------- ------- ------- -------- -------- -------
Net Investment Income (Loss)....... .04 .08 .31 (.33) (.40) (.09)
Net Realized and Unrealized Gains
(Losses) on Securities.......... .00 .00 .01 19.88 9.32 .74
------- ------- ------- -------- -------- -------
Net Increase (Decrease) in Net
Asset Value Resulting from
Operations...................... .04 .08 .32 19.55 8.92 .65
Dividends to Shareholders from
Net Investment Income........... (.04) (.01) .00 .00 .00 .00
Distributions (from capital
gains).......................... .00 .00 .00 (.60) .00 .00
Adjustment due to
Reorganization.................. .00 (9.39) .00 .00 .00 .00
------- ------- ------- -------- -------- -------
Net Increase (Decrease) in Net
Asset Value..................... -- (9.32) .32 18.95 8.92 .65
------- ------- ------- -------- -------- -------
Net Asset Value -- End of Period... $ 1.00 $ 1.00 $ 10.32 $ 38.52 $ 19.57 $ 10.65
======= ======= ======= ======== ======== =======
Total Investment Return............ 3.92% 2.22% 101.32% 83.76%
Ratios to Average Net Assets
Gross Expenses................... 1.39% 2.99% 6.82%** 1.55% 2.96% 9.07%**
Net Expenses..................... 1.39% 2.67% 2.20%** 1.55% 2.96% 2.80%**
Net Investment Income (Loss)..... 3.64% 2.61% 3.34%** (1.24) (2.67)% (1.22)%**
Supplementary Data:
Portfolio Turnover Rate***....... 0% 0% 0% 953% 1,077% 450%
Net Assets, End of Period
(000's omitted)................. $99,396 $40,971 $17,903 $373,458 $ 22,038 $ 2,367

PRECIOUS METALS
----------------------------------------
YEAR ENDED YEAR ENDED PERIOD ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31,
1999 1998 1997*
------------ ------------ ------------
<S> <C> <C> <C>
Per Share Operating Performance:++
Net Asset Value -- Beginning of
Period........................... $ 5.81 $ 7.02 $ 10.00
-------- -------- -------
Net Investment Income (Loss)....... (.07) (.16) (.11)
Net Realized and Unrealized Gains
(Losses) on Securities.......... (.14) (1.05) (2.87)
-------- -------- -------
Net Increase (Decrease) in Net
Asset Value Resulting from
Operations...................... (.21) (1.21) (2.98)
Dividends to Shareholders from
Net Investment Income........... (.17) .00 .00
Distributions (from capital
gains).......................... .00 .00 .00
Adjustment due to
Reorganization.................. .00 .00 .00
-------- -------- -------
Net Increase (Decrease) in Net
Asset Value..................... (.38) (1.21) (2.98)
-------- -------- -------
Net Asset Value -- End of Period... $ 5.43 $ 5.81 $ 7.02
======== ======== =======
Total Investment Return............ (3.58) (17.24)%
Ratios to Average Net Assets
Gross Expenses................... 2.17% 3.39% 9.76%**
Net Expenses..................... 2.17% 3.23% 2.80%**
Net Investment Income (Loss)..... (1.39)% (2.31)% (2.19)%**
Supplementary Data:
Portfolio Turnover Rate***....... 1,239% 1,739% 914%
Net Assets, End of Period
(000's omitted)................. $ 6,992 $ 2,695 $ 518
</TABLE>

- ------------

* COMMENCEMENT OF OPERATIONS: U.S. GOVERNMENT MONEY MARKET AND OTC --
MAY 7, 1997; PRECIOUS METALS -- 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.
<PAGE>
- ------
24 PROSPECTUS

FINANCIAL HIGHLIGHTS

<TABLE>
<CAPTION>
U.S. GOVERNMENT BOND
---------------------------------------------------------------------------------
AUGUST 18, JULY 29, JUNE 24, MAY 29,
YEAR ENDED YEAR ENDED 1997 TO 1997 TO 1997 TO 1997 TO
DECEMBER 31, DECEMBER 31, DECEMBER 31, AUGUST 12, JULY 14, JUNE 5,
1999 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..................... .41 .24 .15 .02 .10 .00
Net Realized and Unrealized Gains (Losses)
on Securities............................ (3.09) 1.28 .97 (.38) .13 .15
------- ------- ------ ------ ------ ------
Net Increase (Decrease) in Net Asset Value
Resulting from Operations................ (2.68) 1.52 1.12 (.36) .23 .15
Dividends to Shareholders from Net
Investment Income........................ (.43) (.06) .00 .00 .00 .00
Distributions (from capital gains)........ .00 .00 .00 .00 .00 .00
------- ------- ------ ------ ------ ------
Net Increase (Decrease) in Net Asset
Value.................................... (3.11) 1.46 1.12 (.36) .23 .15
------- ------- ------ ------ ------ ------
Net Asset Value -- End of Period............ $ 10.17 $ 13.28 $11.82 $10.56 $10.67 $10.15
======= ======= ====== ====== ====== ======
Total Investment Return..................... (20.45)% 12.86%
Ratios to Average Net Assets
Gross Expenses............................ 1.52% 2.71% 8.47%** 49.63%** 12.68%** 5.43%**
Net Expenses.............................. 1.52% 2.71% 2.40%** 2.40%** 2.40%** 2.40%**
Net Investment Income..................... 3.55% 1.92% 3.49%** 3.80%** 7.94%** 1.86%**
Supplementary Data:
Portfolio Turnover Rate***................ 1,611% 1,463% 761% 0% 0% 0%
Net Assets, End of Period
(000's omitted).......................... $ 1,136 $ 4,973 $ 892 $ -- $ -- $ --
</TABLE>

- ------------

* COMMENCEMENT OF OPERATIONS: U. S. GOVERNMENT BOND -- MAY 29, 1997

** ANNUALIZED

*** PORTFOLIO TURNOVER RATIO IS CALCULATED WITHOUT REGARD TO SHORT-TERM
SECURITIES HAVING A MATURITY OF LESS THAN ONE YEAR.

+ 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.

++ CALCULATED USING THE AVERAGE DAILY SHARES OUTSTANDING FOR THE PERIOD.
<PAGE>
PROSPECTUS 25
--------

BENCHMARK INFORMATION

- --------------------------------------------------------------------------------

THE TRUST'S SEC REGISTRATION NUMBER IS 811-08821.
<PAGE>
PROSPECTUS

<TABLE>
<C> <S>
1 INTRODUCTION
---

2 OTC FUND
---

4 MORE INFORMATION ABOUT FUND INVESTMENTS
--- AND RISK

7 PURCHASING AND REDEEMING SHARES
---

8 MANAGEMENT OF THE FUND
---

9 DIVIDENDS, DISTRIBUTIONS, AND TAXES
---

10 FINANCIAL HIGHLIGHTS
---

11 BENCHMARK INFORMATION
---

BC ADDITIONAL INFORMATION
---
</TABLE>

MAY 1, 2000

RYDEX VARIABLE TRUST
OTC FUND

6116 Executive Boulevard, Suite 400, Rockville, Maryland 20852
800-820-0888 301-468-8520
WWW.RYDEXFUNDS.COM

Rydex Variable Trust (the "Trust") is a mutual fund complex with thirty separate
investment portfolios (the "Rydex Variable Funds"). This prospectus describes
the OTC Fund (the "Fund").

Shares of the Fund are available exclusively for variable annuity and variable
life insurance products. Variable life and variable annuity account investors
should also review the separate account prospectus prepared by their insurance
company.

INTRODUCTION

RISKS OF INVESTING IN THE FUND

The value of the Fund may fluctuate. In addition, Fund shares:

- MAY DECLINE IN VALUE, AND YOU MAY LOSE MONEY

- ARE NOT FEDERALLY INSURED

- ARE NOT GUARANTEED BY ANY GOVERNMENT AGENCY

- ARE NOT BANK DEPOSITS

- ARE NOT GUARANTEED TO ACHIEVE THEIR OBJECTIVES
<PAGE>
- ------
2 PROSPECTUS

FUND INFORMATION -- OTC FUND

FUND OBJECTIVE

The OTC Fund seeks to provide investment results that correspond to a
benchmark for over-the-counter securities. The Fund's current benchmark is the
NASDAQ 100 Index-Registered Trademark- (the "NASDAQ 100 Index").

If the Fund meets its objective, the value of the Fund's shares will tend to
increase on a daily basis by the amount of the increase in value of the NASDAQ
100 Index. However, when the value of the NASDAQ 100 Index declines, the value
of the Fund's shares should also decrease on a daily basis by the amount of the
decrease in value of the Index.

PORTFOLIO INVESTMENT STRATEGY

The Fund invests principally in securities of companies included in the
NASDAQ 100 Index. It also may invest in other instruments whose performance is
expected to correspond to that of the Index, and may engage in futures and
options transactions. The Fund may also purchase U.S. Government securities and
enter into repurchase agreements.

RISK CONSIDERATIONS

The OTC 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 securities and 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.

FUND PERFORMANCE INFORMATION

OTC FUND PERFORMANCE

The bar chart and table below show the performance of the OTC Fund both
year-by-year and as an average over different periods of time. For investment
activity prior to November 1998, the Fund's performance reflected insurance
related charges that had the effect of reducing returns. The variability of
performance over time provides an indication of the risks of investing in the
Fund. Of course, this past performance does not necessarily indicate how the
Fund will perform in the future.

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

DURING THE PERIOD SHOWN IN THE BAR CHART, THE HIGHEST RETURN FOR A QUARTER WAS
53.10% (QUARTER ENDED DEC. 31, 1999) AND THE LOWEST RETURN FOR A QUARTER WAS
0.77% (QUARTER ENDED SEPT. 30, 1998).

MORE INFORMATION ABOUT FUND INVESTMENTS AND RISK

THE FUND'S INVESTMENT OBJECTIVE

The Fund's objective is to provide investment results that match the
performance of a specific benchmark. The current benchmark used by the Fund is
set forth below:

<S> <C>
FUND BENCHMARK
OTC Fund 100% of the performance of the NASDAQ 100
Index-Registered Trademark- (NDX)
</TABLE>

A BRIEF GUIDE TO THE BENCHMARK.

ADVISOR'S INVESTMENT STRATEGY IN MANAGING THE FUND

In managing the Fund, the Advisor uses a "passive" investment strategy to
manage the Fund's portfolio, meaning that the Advisor does not attempt to select
securities based on their individual potential to perform better than the
market. The Advisor's primary objective is to match the performance of the
Fund's benchmark as closely as possible on a daily basis. The Advisor uses
quantitative analysis techniques to structure the Fund to obtain the highest
correlation to its benchmark. The Advisor does not engage in temporary defensive
investing, keeping the Fund's assets fully invested in all market environments.
The Advisor monitors the Fund on an ongoing basis, and makes adjustments to its
portfolio, as necessary, to minimize tracking error and to maximize liquidity.

The Advisor may pursue the Fund's investment objectives by utilizing
leveraged instruments, such as futures contracts and options on securities,
futures contracts, and stock indices.

RISKS OF INVESTING IN THE FUND

As indicated below, the Fund is subject to a number of risks that may affect
the value of Fund shares.

EQUITY RISK -- The Fund may invest in public and privately issued equity
securities, including common and preferred stocks, warrants, and rights, as well
as instruments that attempt to track the price movement of equity indices.
Investments in equity securities and equity derivatives in general are subject
to market risks that may cause their prices to fluctuate over time. The value of
securities convertible into equity securities, such as warrants or convertible
debt, is also affected by prevailing interest rates, the credit quality of the
issuer and any call provision. Fluctuations in the value of equity securities in
which the Fund invests will cause the net asset value of the Fund to fluctuate.
Historically, the equity markets have moved in cycles, and the value of the
Fund's equity securities
<PAGE>
PROSPECTUS 5
--------

and equity derivatives may fluctuate drastically from day to day. This price
volatility is the principal risk of investing in equity securities. Because of
their link to the equity markets, an investment in the Fund may be more suitable
for long-term investors who can bear the risk of short-term principal
fluctuations.

NON-DIVERSIFICATION RISK -- Since the Fund is non-diversified, it may invest in
the securities of a limited number of issuers. To the extent that the Fund
invests a significant percentage of its assets in a limited number of issuers,
the Fund is subject to the risks of investing in those few issuers, and may be
more susceptible to a single adverse economic or regulatory occurrence.

TRACKING ERROR RISK -- While the Fund does not expect returns to deviate
significantly from their respective benchmarks on a daily basis, certain factors
may affect their ability to achieve close correlation. These factors may include
Fund expenses, imperfect correlation between the Fund's investments and those of
its benchmark, rounding of share prices, changes to the benchmark, regulatory
policies, and leverage. The cumulative effect of these factors may over time
cause the Fund's returns to deviate from its benchmark on an aggregate basis.
The magnitude of any tracking error may be affected by a higher portfolio
turnover rate.

TRADING HALT RISK -- The Fund typically will hold short-term options and futures
contracts. The major exchanges on which these contracts are traded, such as the
Chicago Mercantile Exchange ("CME"), have established limits on how much an
option or futures contract may decline over various time periods within a day.
If an option or futures contract's price declines more than the established
limits, trading on the exchange is halted on that instrument. If a trading halt
occurs, the Fund may temporarily be unable to purchase or sell options or
futures contracts. Such a trading halt near the time the Fund prices its shares
may limit the Fund's ability to use leverage and may prevent the Fund from
achieving its investment objective. In such an event, the Fund also may be
required to use a "fair-value" method to price its outstanding contracts.

FUTURES AND OPTIONS RISK -- The Fund will invest a percentage of its assets in
futures and options contracts. The Fund may use futures contracts and related
options for bona fide hedging purposes to offset changes in the value of
securities held or expected to be acquired. They may also be used to gain
exposure to a particular market or instrument, to create a synthetic money
market position, and for certain other tax-related purposes. The Fund will only
enter into futures contracts traded on a national futures exchange or board of
trade. Futures and options contracts are described in more detail below:

exercise price during the term of the option. Index futures are futures
contracts for various indices that are traded on registered securities
exchanges.

OPTIONS -- The buyer of an option acquires the right to buy (a call option)
or sell (a put option) a certain quantity of a security (the underlying
security) or instrument at a certain price up to a specified point in time.
The seller or writer of an option is obligated to sell (a call option) or
buy (a put option) the underlying security. When writing (selling) call
options on securities, the Fund may cover its position by owning the
underlying security on which the option is written or by owning a call
option on the underlying security. Alternatively, the Fund may cover its
position by maintaining in a segregated account cash or liquid securities
equal in value to the exercise price of the call option written by the Fund.

The risks associated with the Fund's use of futures and options contracts
include:

- The Fund may experience losses over certain ranges in the market that
exceed losses experienced by a fund that does not use futures contracts
and options.

- There may be an imperfect correlation between the changes in market value
of the securities held by the Fund and the prices of futures and options
on futures.

- Although the Fund will only purchase exchange-traded futures, due to
market conditions there may not always be a liquid secondary market for a
futures contract or option. As a result, the Fund may be unable to close
out its futures contracts at a time which is advantageous.

- Trading restrictions or limitations may be imposed by an exchange, and
government regulations may restrict trading in futures contracts and
options.

- Because option premiums paid or received by the Fund are small in relation
to the market value of the investments underlying the options, buying and
selling put and call options can be more speculative than investing
directly in securities.

PORTFOLIO TURNOVER RATE RISK -- The Trust anticipates that investors that are
part of a tactical asset-allocation strategy will frequently redeem or exchange
shares of the Fund, which will cause the Fund to experience high portfolio
turnover. A higher portfolio turnover rate may result in the Fund paying higher
levels of transaction costs and generating greater tax liabilities for
shareholders.

INDUSTRY CONCENTRATION RISK -- The Fund will not invest 25% or more of the value
of the Fund's total assets in the securities of one or more issuers conducting
their principal business activities in the same industry; EXCEPT THAT, to the
extent the index underlying the Fund's benchmark is concentrated in a particular
industry, the Fund will necessarily be concentrated in that industry. Currently,
the index underlying the OTC Fund's benchmark -- the NASDAQ 100 Index -- is
concentrated in technology companies. The risk of concentrating Fund investments
in a limited number of issuers conducting business in the same industry is that
the Fund will be more susceptible to the risks that are associated with those
issuers (or that industry) than a fund that does not concentrate its
investments.
<PAGE>
PROSPECTUS 7
--------

EARLY CLOSING RISK -- The normal close of trading of securities listed on the
National Association of Securities Dealers Automated Quotations system
("NASDAQ") and the New York Stock Exchange ("NYSE") is 4:00 P.M., Eastern Time.
Unanticipated early closings may result in the Fund being unable to sell or buy
securities on that day. If an exchange closes early on a day when the Fund needs
to execute a high volume of securities trades late in a trading day, the Fund
might incur substantial trading losses.

PURCHASING AND REDEEMING SHARES

Shares of the Fund can be purchased only by insurance companies for their
separate accounts to fund variable life insurance and variable annuity
contracts. All orders for the purchase of shares are subject to acceptance or
rejection by the Trust. An insurance company purchases and redeems shares of the
Fund based on, among other things, the amount of net Contract premiums or
purchase payments allocated to a separate account investment division, transfers
to or from a separate account investment division, contract loans and
repayments, contract withdrawals and surrenders, and benefit payments, at the
Fund's net asset value per share calculated as of that same day.

All redemption requests will be processed and payment with respect thereto
will be made within seven days after tender. With respect to the Fund, and as
permitted by the SEC, the right of redemption may be suspended, or the date of
payment postponed: (1) for any period during which the NYSE is closed (other
than customary weekend or holiday closings) or trading on the NYSE is
restricted; (2) for any period during which an emergency exists so that disposal
of Fund investments or the determination of net asset value per share ("NAV") is
not reasonably practicable; or (3) for such other periods as the SEC, by order,
may permit for protection of fund investors. In cases where NASDAQ, the CME,
Chicago Board Options Exchange ("CBOE") or the CBOT, as appropriate, is closed
or trading is restricted, the Fund may ask the SEC to permit the right of
redemption to be suspended.

NET ASSET VALUE

exchange or market where the Fund's securities or other investments are
primarily traded closes early, the NAV may be calculated earlier in accordance
with the policies set forth in the Fund's SAI.

TO RECEIVE THE CURRENT BUSINESS DAY'S NAV, VARIABLE LIFE AND VARIABLE
ANNUITY ACCOUNT INVESTORS SHOULD CONSULT THEIR SEPARATE ACCOUNT PROSPECTUS.

MANAGEMENT OF THE FUND

THE INVESTMENT ADVISOR

Rydex Global Advisors (the "Advisor"), 6116 Executive Boulevard, Suite 400,
Rockville, Maryland 20852, serves as investment advisor and manager of the Fund.
Albert P. Viragh, Jr., the Chairman of the Board and the President of the
Advisor, owns a controlling interest in the Advisor. From 1985 until the
incorporation of the Advisor, Mr. Viragh was a Vice President of Money
Management Associates ("MMA"), a Maryland-based registered investment advisor.
From 1992 to June 1993, Mr. Viragh was the portfolio manager of The Rushmore
Nova Portfolio, a series of The Rushmore Fund, Inc., an investment company
managed by MMA.

The Advisor makes investment decisions for the assets of the Fund and
continuously reviews, supervises, and administers the Fund's investment program.
The Trustees of the Trust supervise the Advisor and establish policies that the
Advisor must follow in its day-to-day management activities. Under an investment
advisory agreement between the Trust and the Advisor, the Fund paid the Advisor
a fee at an annualized rate for the fiscal year ended December 31, 1999, based
on the average daily net assets for the Fund, as set forth below:

<TABLE>
<CAPTION>
FUND ADVISORY FEE
<S> <C>
- --------------------------------------------------------------------------
OTC .75%
</TABLE>

PORTFOLIO MANAGEMENT

DIVIDENDS, DISTRIBUTIONS, AND TAXES

DIVIDENDS AND DISTRIBUTIONS

Income dividends and capital gain distributions are paid at least annually
by the Fund. The Trust may declare a special capital gains distribution if the
Trustees believe that such a distribution would be in the best interest of the
shareholders of the Fund.

TAXES

The Fund is treated as a separate entity for federal tax purposes, and
intends to qualify for the special tax treatment afforded regulated investment
companies. As long as the Fund qualifies as a regulated investment company, it
pays no federal income tax on the earnings it distributes to Shareholders. The
Fund is not liable for any income or franchise tax in Delaware as long as it
qualifies as a regulated investment company for federal income tax purposes.

In addition to qualifying for special tax treatment as a regulated
investment company, the Fund intends to meet special diversification
requirements of the Internal Revenue Code (the "Code") in order to assure
insurance companies that their variable annuity and variable life contracts
qualify as insurance under the Code.
<PAGE>
- ------
10 PROSPECTUS

FINANCIAL HIGHLIGHTS

The financial highlights table is intended to help you understand the Fund's
financial performance for the period of the Fund's (and its predecessor's)
operations. Certain information reflects financial results for a single Fund
share. The total returns in the table represent the rate that an investor would
have earned (or lost) on an investment in the Fund (assuming reinvestment of all
dividends and distributions). On November 2, 1998, the Trust acquired all of the
assets and liabilities (other than liabilities relating to insurance charges) of
Rydex Advisor Variable Annuity Account (the "Separate Account") and the
subaccounts of the Separate Account (the "Subaccounts"). The information
provided below for periods ending prior to and including December 31, 1997,
which relates to the Subaccounts, has been audited by PricewaterhouseCoopers
LLP. The information for subsequent periods has been audited by Deloitte &
Touche LLP. The Reports of Independent Accountants for each such period along
with the Fund's financial statements and related notes, are included in the
Annual Reports to Shareholders for such periods. Our 1999 Annual Report is
available upon request and without charge by calling 1-301-468-8520 collect. The
1999 Annual Report is incorporated by reference in the SAI.

FINANCIAL HIGHLIGHTS

<TABLE>
<CAPTION>
OTC
--------------------------------------------
YEAR ENDED YEAR ENDED PERIOD ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31,
1999 1998 1997*
------------ ------------ ------------
<S> <C> <C> <C>
Per Share Operating
Performance:+
Net Asset Value -- Beginning
of Period.................. $ 19.57 $ 10.65 $10.00
-------- ------- ------
Net Investment Income
(Loss)................... (.33) (.40) (.09)
Net Realized and
Unrealized Gains (Losses)
on Securities............ 19.88 9.32 .74
Net Increase (Decrease) in
Net Asset Value Resulting
from Operations.......... 19.55 8.92 .65
Dividends to Shareholders
from Net Investment
Income................... .00 .00 .00
Distributions (from
capital gains)........... (.60) .00 .00
Adjustment due to
Reorganization........... .00 .00 .00
-------- ------- ------
Net Asset Value -- End of
Period..................... 18.95 8.92 .65
-------- ------- ------
Net Increase (Decrease) in
Net Asset Value.......... $ 38.52 $ 19.57 $10.65
======== ======= ======
Total Investment Return..... 101.32% 83.76%
Ratios to Average Net Assets
Gross Expenses............ 1.55% 2.96% 9.07%**
Net Expenses.............. 1.55% 2.96% 2.80%**
Net Investment Income
(Loss)................... (1.24) (2.67)% (1.22)%**
Supplementary Data:
Portfolio Turnover
Rate***.................... 953% 1,077% 450%
Net Assets, End of Period
(000's omitted)............ $373,458 $22,038 $2,367
</TABLE>

- ------------

* COMMENCEMENT OF OPERATIONS: OTC -- 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.
<PAGE>
PROSPECTUS 11
--------

BENCHMARK INFORMATION

THE OTC FUND IS NOT SPONSORED, ENDORSED, SOLD, OR PROMOTED BY NASDAQ OR ANY OF
NASDAQ'S AFFILIATES (NASDAQ AND ITS AFFILIATES HEREINAFTER COLLECTIVELY REFERRED
TO AS "NASDAQ").

THE NASDAQ DOES NOT MAKE ANY REPRESENTATION OR WARRANTY, IMPLIED OR EXPRESS, TO
THE INVESTORS IN THE FUND, OR ANY MEMBER OF THE PUBLIC, REGARDING THE
ADVISABILITY OF INVESTING IN INDEX FUNDS OR THE ABILITY OF THE NASDAQ 100
INDEX-Registered Trademark- TO TRACK GENERAL STOCK MARKET PERFORMANCE.

THE NASDAQ DOES NOT GUARANTEE THE ACCURACY AND/OR THE COMPLETENESS OF THE NASDAQ
100 INDEX-Registered Trademark- OR ANY DATA INCLUDED THEREIN.

THE NASDAQ DOES NOT MAKE ANY WARRANTY, EXPRESS OR IMPLIED, AS TO RESULTS TO BE
OBTAINED BY THE FUND, THE INVESTORS IN THE FUND, OR ANY PERSON OR ENTITY FROM
THE USE OF THE NASDAQ 100 INDEX-Registered Trademark- OR ANY DATA INCLUDED
THEREIN.

THE NASDAQ DOES NOT MAKE ANY EXPRESS OR IMPLIED WARRANTIES OF MERCHANTABILITY OR
FITNESS FOR A PARTICULAR PURPOSE FOR USE WITH RESPECT TO THE NASDAQ 100
INDEX-Registered Trademark- OR ANY DATA INCLUDED THEREIN.
<PAGE>
Additional information about the Fund is included in a Statement of Additional
Information dated May 1, 2000 (the "SAI"), which contains more detailed
information about the Fund. The SAI has been filed with the Securities and
Exchange Commission ("SEC") and is incorporated by reference into this
Prospectus and, therefore, legally forms a part of this Prospectus. The SEC
maintains a web site ("http://www.sec.gov") that contains the SAI, material
incorporated by reference, and other information regarding registrants that file
electronically with the SEC. You may also review and copy documents at the SEC
Public Reference Room in Washington, D.C. (for information call 1-800-SEC-0330).
You may request documents by mail from the SEC, upon payment of a duplication
fee, by writing to: Securities and Exchange Commission, Public Reference
Section, Washington, D.C. 20549-0102. You may also obtain information, upon
payment of a duplicating fee, by e-mailing the SEC at the following address:
[email protected].

You may obtain a copy of the SAI or the annual or semi-annual reports of the
Trust without charge by calling 1-301-468-8520 collect or by writing to Rydex
Variable Trust, at 6116 Executive Boulevard, Suite 400, Rockville, Maryland
20852. Additional information about the investments of the Fund is available in
the annual and semi-annual reports. Also, in the annual report of the Trust, you
will find a discussion of the market conditions and investment strategies that
significantly affected performance during the last fiscal year.

- --------------------------------------------------------------------------------

THE TRUST'S SEC REGISTRATION NUMBER IS 811-08821.
<PAGE>
PROSPECTUS

<TABLE>
<C> <S>
1 INTRODUCTION
---

2 OTC FUND
---

4 MORE INFORMATION ABOUT FUND INVESTMENTS
--- AND RISK

7 PURCHASING AND REDEEMING SHARES
---

8 MANAGEMENT OF THE FUND
---

9 DIVIDENDS, DISTRIBUTIONS, AND TAXES
---

10 FINANCIAL HIGHLIGHTS
---

11 BENCHMARK INFORMATION
---

BC ADDITIONAL INFORMATION
---
</TABLE>

MAY 1, 2000

RYDEX VARIABLE TRUST

OTC FUND

6116 Executive Boulevard, Suite 400, Rockville, Maryland 20852
800-820-0888 301-468-8520
WWW.RYDEXFUNDS.COM

Rydex Variable Trust (the "Trust") is a mutual fund complex with thirty separate
investment portfolios (the "Rydex Variable Funds"). This prospectus describes
the OTC Fund (the "Fund").

INTRODUCTION

RISKS OF INVESTING IN THE FUND

The value of the Fund may fluctuate. In addition, Fund shares:

- MAY DECLINE IN VALUE, AND YOU MAY LOSE MONEY

- ARE NOT FEDERALLY INSURED

- ARE NOT GUARANTEED BY ANY GOVERNMENT AGENCY

- ARE NOT BANK DEPOSITS

- ARE NOT GUARANTEED TO ACHIEVE THEIR OBJECTIVES
<PAGE>
- ------
2 PROSPECTUS

FUND INFORMATION -- OTC FUND

FUND OBJECTIVE

PORTFOLIO INVESTMENT STRATEGY

RISK CONSIDERATIONS

The OTC Fund is subject to a number of risks that will affect the value of
its shares, including:

FUND PERFORMANCE INFORMATION

OTC FUND PERFORMANCE

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

DURING THE PERIOD SHOWN IN THE BAR CHART, THE HIGHEST RETURN FOR A QUARTER WAS
53.10% (QUARTER ENDED DEC. 31, 1999) AND THE LOWEST RETURN FOR A QUARTER WAS
0.77% (QUARTER ENDED SEPT. 30, 1998).

MORE INFORMATION ABOUT FUND INVESTMENTS AND RISK

THE FUND'S INVESTMENT OBJECTIVE

The Fund's objective is to provide investment results that match the
performance of a specific benchmark. The current benchmark used by the Fund is
set forth below:

<S> <C>
FUND BENCHMARK
OTC FUND 100% OF THE PERFORMANCE OF THE NASDAQ 100
INDEX-REGISTERED TRADEMARK- (NDX)
</TABLE>

A BRIEF GUIDE TO THE BENCHMARK.

ADVISOR'S INVESTMENT STRATEGY IN MANAGING THE FUND

The Advisor may pursue the Fund's investment objectives by utilizing
leveraged instruments, such as futures contracts and options on securities,
futures contracts, and stock indices.

RISKS OF INVESTING IN THE FUND

As indicated below, the Fund is subject to a number of risks that may affect
the value of Fund shares.

exercise price during the term of the option. Index futures are futures
contracts for various indices that are traded on registered securities
exchanges.

OPTIONS -- The buyer of an option acquires the right to buy (a call option)
or sell (a put option) a certain quantity of a security (the underlying
security) or instrument at a certain price up to a specified point in time.
The seller or writer of an option is obligated to sell (a call option) or
buy (a put option) the underlying security. When writing (selling) call
options on securities, the Fund may cover its position by owning the
underlying security on which the option is written or by owning a call
option on the underlying security. Alternatively, the Fund may cover its
position by maintaining in a segregated account cash or liquid securities
equal in value to the exercise price of the call option written by the Fund.

The risks associated with the Fund's use of futures and options contracts
include:

- The Fund may experience losses over certain ranges in the market that
exceed losses experienced by a fund that does not use futures contracts
and options.

- There may be an imperfect correlation between the changes in market value
of the securities held by the Fund and the prices of futures and options
on futures.

- Trading restrictions or limitations may be imposed by an exchange, and
government regulations may restrict trading in futures contracts and
options.

business in the same industry is that the Fund will be more susceptible to the
risks that are associated with those issuers (or that industry) than a fund that
does not concentrate its investments.

PURCHASING AND REDEEMING SHARES

NET ASSET VALUE

next determined NAV after the Trust receives your redemption request. NAV is
calculated by (1) taking the current market value of a Fund's total assets,
(2) subtracting the liabilities, and (3) dividing that amount by the total
number of shares owned by shareholders. NAV is calculated once each Business Day
after the close of the NYSE (currently, 4:00 p.m., Eastern Time). If the
exchange or market where the Fund's securities or other investments are
primarily traded closes early, the NAV may be calculated earlier in accordance
with the policies set forth in the Fund's SAI.

TO RECEIVE THE CURRENT BUSINESS DAY'S NAV, VARIABLE LIFE AND VARIABLE
ANNUITY ACCOUNT INVESTORS SHOULD CONSULT THEIR SEPARATE ACCOUNT PROSPECTUS.

MANAGEMENT OF THE FUND

THE INVESTMENT ADVISOR

<TABLE>
<CAPTION>
FUND ADVISORY FEE
<S> <C>
- --------------------------------------------------------------------------
OTC .75%
</TABLE>

PORTFOLIO MANAGEMENT

DIVIDENDS, DISTRIBUTIONS, AND TAXES

DIVIDENDS AND DISTRIBUTIONS

TAXES

FINANCIAL HIGHLIGHTS

<TABLE>
<CAPTION>
OTC
----------------------------------------
YEAR ENDED YEAR ENDED PERIOD ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31,
1999 1998 1997*
------------ ------------ ------------
<S> <C> <C> <C>
Per Share Operating
Performance:+
Net Asset Value -- Beginning
of Period.................. $ 19.57 $ 10.65 $10.00
-------- ------- ------
Net Investment Income
(Loss)................... (.33) (.40) (.09)
Net Realized and
Unrealized Gains (Losses)
on Securities............ 19.88 9.32 .74
-------- ------- ------
Net Increase (Decrease) in
Net Asset Value Resulting
from Operations.......... 19.55 8.92 .65
Dividends to Shareholders
from Net Investment
Income................... .00 .00 .00
Distributions (from
capital gains)........... (.60) .00 .00
Adjustment due to
Reorganization........... .00 .00 .00
-------- ------- ------
Net Increase (Decrease) in
Net Asset Value.......... 18.95 8.92 .65
-------- ------- ------
Net Asset Value -- End of
Period..................... $ 38.52 $ 19.57 $10.65
======== ======= ======
Total Investment Return..... 101.32% 83.76%
Ratios to Average Net Assets
Gross Expenses............ 1.55% 2.96% 9.07%**
Net Expenses.............. 1.55% 2.96% 2.80%**
Net Investment Income
(Loss)................... (1.24) (2.67)% (1.22)%**
Supplementary Data:
Portfolio Turnover
Rate***.................... 953% 1,077% 450%
Net Assets, End of Period
(000's omitted)............ $373,458 $22,038 $2,367
</TABLE>

- ------------

* COMMENCEMENT OF OPERATIONS: OTC -- 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.
<PAGE>
PROSPECTUS 11
--------

BENCHMARK INFORMATION

THE OTC FUND IS NOT SPONSORED, ENDORSED, SOLD, OR PROMOTED BY NASDAQ OR ANY OF
NASDAQ'S AFFILIATES (NASDAQ AND ITS AFFILIATES HEREINAFTER COLLECTIVELY REFERRED
TO AS "NASDAQ").

THE NASDAQ DOES NOT GUARANTEE THE ACCURACY AND/OR THE COMPLETENESS OF THE NASDAQ
100 INDEX-Registered Trademark- OR ANY DATA INCLUDED THEREIN.

You may obtain a copy of the SAI or the annual or semi-annual reports of the
Trust without charge by calling 1-301-468-8520 collect or by writing to Rydex
Variable Trust, at 6116 Executive Boulevard, Suite 400, Rockville, Maryland
20852. Additional information about the investments of the Fund is available in
the annual and semi-annual reports. Also, in the annual report of the Trust, you
will find a discussion of the market conditions and investment strategies that
significantly affected performance during the last fiscal year.

- --------------------------------------------------------------------------------

THE TRUST'S SEC REGISTRATION NUMBER IS 811-08821.