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RYDEX SERIES TRUST
[LOGO] ANNUAL REPORT
March 31, 1998
6116 Executive Boulevard, Suite 400
Rockville, MD 20852
(301) 468-8520 (800) 820-0888
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DEAR SHAREHOLDER:
The persistent bull market continued into our latest fiscal year ending
March 31,1998. Low inflation, declining interest rates and a strong U.S
economy--which completed its seventh consecutive year of expansion--fueled the
impressive climb. The benchmark Standard and Poor's 500 Composite Stock Price
Index-TM- returned 45.52% during the period. The stock market, however, was not
without its well-established volatility. Nervousness about the Asian financial
crisis triggered a one-day market correction in late October. The point decline
in the Dow Jones Industrial Average was the worst since the "Black Monday" crash
10 years earlier.
FISCAL YEAR IN REVIEW
The 12-month period ending March 31, 1998 began on a positive note. The
stock market rebounded shortly after a sharp market pullback in the first
quarter of 1997. Investors were generally optimistic about U.S. companies'
growth and earnings prospects during the stable economic environment. This
optimism was reinforced in June as economic statistics revealed that wholesale
prices fell for the sixth consecutive month. The financial markets welcomed
these new signs of low inflation as both stocks and bonds continued their
advance. The economy showed relentlessly strong growth, low inflation and low
interest rates. Equity markets responded by surging to new records as the Dow
roared past the 8000 point milestone for the first time on July 16, 1997.
By late summer, the U.S. stock market stalled as earnings disappointments
combined with the Asian currency crisis began to worry investors. In October,
these worries evolved into broad-based fears about the prospects for U.S.
companies amidst the Asian financial crisis. Investors' uncertainty became
evident on October 27 when the Dow lost over 550 points, only to rebound 330
points the next day. The S&P 500 and the NASDAQ 100 Index-TM- also sustained
major losses followed by similar recoveries. The equity markets continued to be
somewhat volatile, without gaining or losing much ground, through mid January.
While the Asian economic crisis created a threat to domestic corporate
earnings growth, it was generally viewed as a positive for the bond market. The
Asian turmoil changed the nature of the risks facing the U.S. economy from
concerns of excessively high growth and higher inflation to concerns about
deflation. The crisis also ignited a flight to quality as many investors sought
the safety of U.S. Treasury securities. In July 1997 when the Dow hit 8000, the
yield on the 30-year Treasury Bond was 6.47%. This yield declined to
<PAGE>
an all-time low of 5.69% on January 12, 1998. The chart below illustrates the
relationship between long-term interest rates and the stock market.
THE S & P 500 INDEX VS. THE 30-YEAR TREASURY BOND YIELD:
MARCH 31, 1997--MARCH 31, 1998
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
30 Year Bond S&P 500 Index
<S> <C> <C> <C> <C>
3/31/97 0.00 0.00
4/1/97 -0.27% 0.33%
4/2/97 -0.38% -0.93%
4/3/97 -0.42% -0.90%
4/4/97 0.41% 0.10%
4/7/97 -0.34% 0.66%
4/8/97 0.00% 1.19%
4/9/97 0.03% 0.46%
4/10/97 0.03% 0.16%
4/11/97 0.90% -2.57%
4/14/97 0.90% -1.77%
4/15/97 -0.20% -0.32%
4/16/97 -0.04% 0.85%
4/17/97 -0.52% 0.61%
4/18/97 -0.68% 1.22%
4/21/97 -0.23% 0.43%
4/22/97 -0.79% 2.31%
4/23/97 -0.34% 2.18%
4/24/97 0.25% 1.86%
4/25/97 0.45% 1.09%
4/28/97 0.11% 2.09%
4/29/97 -1.75% 4.88%
4/30/97 -2.11% 5.84%
5/1/97 -2.55% 5.47%
5/2/97 -2.87% 7.38%
5/5/97 -3.04% 9.66%
5/6/97 -3.11% 9.33%
5/7/97 -2.30% 7.73%
5/8/97 -2.65% 8.34%
5/9/97 -3.11% 8.94%
5/12/97 -3.34% 10.64%
5/13/97 -2.62% 10.04%
5/14/97 -3.04% 10.62%
5/15/97 -3.30% 11.20%
5/16/97 -2.79% 9.59%
5/19/97 -2.69% 10.06%
5/20/97 -2.58% 11.17%
5/21/97 -1.96% 10.86%
5/22/97 -1.66% 10.37%
5/23/97 -1.70% 11.88%
5/27/97 -1.08% 12.23%
5/28/97 -1.11% 11.90%
5/29/97 -1.70% 11.49%
5/30/97 -2.65% 12.04%
6/2/97 -2.90% 11.79%
6/3/97 -3.30% 11.67%
6/4/97 -3.18% 10.96%
6/5/97 -3.15% 11.40%
6/6/97 -4.60% 13.33%
6/9/97 -3.90% 13.97%
6/10/97 -3.79% 14.28%
6/11/97 -3.97% 14.85%
6/12/97 -4.79% 16.69%
6/13/97 -5.41% 17.98%
6/16/97 -5.79% 18.07%
6/17/97 -5.55% 18.14%
6/18/97 -5.89% 17.43%
6/19/97 -6.00% 18.61%
6/20/97 -6.41% 18.70%
6/23/97 -5.89% 16.05%
6/24/97 -5.82% 18.39%
6/25/97 -5.31% 17.42%
6/26/97 -4.63% 16.72%
6/27/97 -5.06% 17.19%
6/30/97 -4.32% 16.91%
7/1/97 -5.13% 17.69%
7/2/97 -5.58% 19.40%
7/3/97 -6.84% 21.11%
7/7/97 -7.39% 20.48%
7/8/97 -7.35% 21.35%
7/9/97 -7.76% 19.87%
7/10/97 -7.66% 20.69%
7/11/97 -8.10% 21.07%
7/14/97 -7.90% 21.30%
7/15/97 -7.86% 22.27%
7/16/97 -8.83% 23.70%
7/17/97 -8.76% 23.05%
7/18/97 -8.20% 20.89%
7/21/97 -7.93% 20.58%
7/22/97 -9.45% 23.36%
7/23/97 -9.72% 23.70%
7/24/97 -9.58% 24.19%
7/25/97 -9.25% 23.99%
7/28/97 -9.67% 23.69%
7/29/97 -10.24% 24.46%
7/30/97 -10.87% 25.78%
7/31/97 -11.36% 26.04%
8/1/97 -9.13% 25.10%
8/4/97 -8.83% 25.52%
8/5/97 -8.69% 25.79%
8/6/97 -8.83% 26.84%
8/7/97 -8.20% 25.63%
8/8/97 -6.59% 23.30%
8/11/97 -6.62% 23.76%
8/12/97 -6.27% 22.38%
8/13/97 -6.66% 21.78%
8/14/97 -7.66% 22.14%
8/15/97 -7.66% 18.98%
8/18/97 -8.18% 20.52%
8/19/97 -8.31% 22.31%
8/20/97 -8.00% 24.07%
8/21/97 -7.18% 22.18%
8/22/97 -6.14% 21.98%
8/25/97 -6.14% 21.53%
8/26/97 -6.35% 20.59%
8/27/97 -6.38% 20.68%
8/28/97 -7.46% 19.36%
8/29/97 -7.04% 18.80%
9/2/97 -7.46% 22.51%
9/3/97 -7.25% 22.55%
9/4/97 -7.11% 22.95%
9/5/97 -6.52% 22.71%
9/8/97 -6.97% 22.99%
9/9/97 -6.83% 23.31%
9/10/97 -6.45% 21.38%
9/11/97 -6.03% 20.53%
9/12/97 -7.25% 22.03%
9/15/97 -7.53% 21.48%
9/16/97 -9.83% 24.90%
9/17/97 -10.10% 24.55%
9/18/97 -10.10% 25.12%
9/19/97 -10.27% 25.54%
9/22/97 -10.66% 26.19%
9/23/97 -10.17% 25.73%
9/24/97 -10.98% 24.75%
9/25/97 -9.93% 23.88%
9/26/97 -10.36% 24.84%
9/29/97 -10.20% 25.92%
9/30/97 -9.77% 25.12%
10/1/97 -11.03% 26.19%
10/2/97 -11.28% 26.86%
10/3/97 -11.22% 27.46%
10/6/97 -11.84% 28.47%
10/7/97 -12.17% 29.85%
10/8/97 -10.36% 28.62%
10/9/97 -10.29% 28.20%
10/10/97 -9.58% 27.72%
10/13/97 -9.58% 27.87%
10/14/97 -10.53% 28.15%
10/15/97 -10.07% 27.55%
10/16/97 -10.10% 26.17%
10/17/97 -9.41% 24.70%
10/20/97 -9.63% 26.22%
10/21/97 -9.67% 28.42%
10/22/97 -9.77% 27.92%
10/23/97 -11.00% 25.57%
10/24/97 -11.39% 24.37%
10/27/97 -12.17% 15.83%
10/28/97 -11.55% 21.68%
10/29/97 -12.39% 21.40%
10/30/97 -13.20% 19.36%
10/31/97 -13.48% 20.80%
11/3/97 -12.65% 24.02%
11/4/97 -12.10% 24.26%
11/5/97 -12.14% 24.52%
11/6/97 -12.87% 23.89%
11/7/97 -13.39% 22.51%
11/10/97 -13.45% 21.66%
11/11/97 -13.45% 22.01%
11/12/97 -13.74% 19.66%
11/13/97 -14.04% 21.07%
11/14/97 -14.32% 22.62%
11/17/97 -14.52% 24.97%
11/18/97 -14.55% 23.92%
11/19/97 -15.18% 24.76%
11/20/97 -14.83% 26.66%
11/21/97 -15.08% 27.20%
11/24/97 -14.42% 25.04%
11/25/97 -14.70% 25.58%
11/26/97 -14.77% 25.69%
11/28/97 -15.00% 26.19%
12/1/97 -15.08% 28.75%
12/2/97 -15.08% 28.34%
12/3/97 -15.28% 29.01%
12/4/97 -15.00% 28.53%
12/5/97 -14.42% 29.94%
12/8/97 -13.62% 29.75%
12/9/97 -13.65% 28.88%
12/10/97 -14.20% 28.09%
12/11/97 -15.25% 26.13%
12/12/97 -16.43% 25.92%
12/15/97 -15.91% 27.24%
12/16/97 -16.15% 27.86%
12/17/97 -15.72% 27.53%
12/18/97 -16.35% 26.18%
12/19/97 -16.93% 25.05%
12/22/97 -17.08% 25.96%
12/23/97 -17.03% 24.04%
12/24/97 -16.93% 23.19%
12/26/97 -16.90% 23.69%
12/29/97 -16.66% 25.92%
12/30/97 -15.91% 28.23%
12/31/97 -16.56% 28.17%
1/2/98 -17.65% 28.78%
1/5/98 -19.32% 29.05%
1/6/98 -19.48% 27.67%
1/7/98 -18.42% 27.32%
1/8/98 -19.08% 26.27%
1/9/98 -19.67% 22.53%
1/12/98 -19.80% 24.05%
1/13/98 -19.67% 25.76%
1/14/98 -19.29% 26.52%
1/15/98 -19.18% 25.57%
1/16/98 -18.41% 27.00%
1/20/98 -18.01% 29.25%
1/21/98 -18.31% 28.22%
1/22/98 -17.70% 27.20%
1/23/98 -15.91% 26.48%
1/26/98 -17.10% 26.39%
1/27/98 -16.38% 27.99%
1/28/98 -16.42% 29.10%
1/29/98 -17.77% 30.16%
1/30/98 -18.25% 29.47%
2/2/98 -17.46% 32.25%
2/3/98 -17.46% 32.87%
2/4/98 -17.46% 32.99%
2/5/98 -16.69% 32.55%
2/6/98 -16.81% 33.73%
2/9/98 -16.32% 33.50%
2/10/98 -16.60% 34.59%
2/11/98 -17.62% 34.72%
2/12/98 -17.25% 35.27%
2/13/98 -17.70% 34.73%
2/17/98 -18.38% 35.09%
2/18/98 -17.83% 36.31%
2/19/98 -17.67% 35.81%
2/20/98 -17.46% 36.60%
2/23/98 -16.86% 37.12%
2/24/98 -15.96% 36.12%
2/25/98 -16.66% 37.75%
2/26/98 -16.32% 38.51%
2/27/98 -16.66% 38.60%
3/2/98 -15.17% 38.38%
3/3/98 -14.69% 38.95%
3/4/98 -14.91% 38.33%
3/5/98 -14.62% 36.71%
3/6/98 -15.27% 39.43%
3/9/98 -16.01% 38.99%
3/10/98 -16.08% 40.57%
3/11/98 -16.55% 41.12%
3/12/98 -17.38% 41.31%
3/13/98 -17.12% 41.14%
3/16/98 -17.65% 42.55%
3/17/98 -17.19% 42.71%
3/18/98 -16.91% 43.37%
3/19/98 -16.88% 43.93%
3/20/98 -17.17% 45.18%
3/23/98 -17.25% 44.70%
3/24/98 -17.25% 46.03%
3/25/98 -16.48% 45.54%
3/26/98 -16.24% 45.39%
3/27/98 -16.19% 44.69%
3/30/98 -15.86% 44.44%
3/31/98 -16.39% 45.52%
</TABLE>
By mid-January, stocks began to rise once again. Returns for the first
quarter of 1998 were impressive, especially in light of the trepidation the
markets faced during the last half of 1997. The negative news of the Asian
economic crisis and the parade of companies that had issued profit warnings were
discarded as either too distant or too isolated to discourage investors. On
March 31, 1998 the Dow and the S&P 500 closed near all-time highs while the
NASDAQ 100 closed at a record high.
IN SUMMARY
Our latest fiscal year was filled with opportunity and uncertainty.
Investors who remained invested in the market were greatly rewarded as equity
markets continued their strong advance. In addition, the U.S. economy is
arguably in its best shape in a generation; interest rates are low, inflation is
benign, unemployment is low and U.S. productivity is soaring. As always, Rydex
remains committed to meeting the needs of investment professionals by expanding
upon our Fund offerings.
Thank you for investing in the Rydex Funds. If you need additional
information or have any questions, please call us at (800) 820-0888 to request a
current prospectus containing more complete information including management
fees, charges and expenses. Please read the prospectus carefully before you
invest or send money.
Sincerely,
[/S/ ALBERT P. VIRAGH, JR.]
Albert P. (Skip) Viragh
Chairman of the Board
2
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RYDEX SERIES TRUST
FUND STRATEGY AND PERFORMANCE
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In this section you will find information about how each Rydex Fund performed
during the latest fiscal year in comparison to its benchmark index. In addition,
each Fund's investment strategy will be described in brief to provide an
understanding of the factors that affected the Funds' performance during the
period. If you have any questions or comments, call us at (800) 820-0888 or
(301) 468-8520.
THE U. S. GOVERNMENT MONEY MARKET FUND
THE INVESTMENT OBJECTIVE OF THE U. S. GOVERNMENT MONEY MARKET FUND IS TO PROVIDE
SECURITY OF PRINCIPAL, HIGH CURRENT INCOME, AND LIQUIDITY.
INCEPTION: DECEMBER 3, 1993
From April 1, 1997 to March 31, 1998 short-term interest rates remained
relatively stable. The yield on the three-month U. S. Treasury Bill ranged from
a high of 5.47% to a low of 4.83%.
Consistent with its objective, the Fund invested in U. S. Treasury Bills,
short-term Government Agency discount notes, and overnight repurchase agreements
fully collateralized by U. S. Government securities. The advisor generally kept
the Fund's weighted average maturity relatively short in order to maximize
liquidity and maintain a stable net asset value. The Fund returned 4.69% during
the latest fiscal year ending March 31, 1998.
3
<PAGE>
THE NOVA FUND
BENCHMARK: 150% OF THE PERFORMANCE OF THE STANDARD & POOR'S 500 COMPOSITE STOCK
PRICE INDEX-TM-
INCEPTION: JULY 12, 1993
The S&P 500, which is dominated by higher capitalization stocks such as General
Electric, Coca-Cola, Exxon and Merck, did exceptionally well during the period.
For the past 12 months, large-cap stocks outperformed mid-cap and small-cap
stocks. The S&P 500 reached an all time high of 1105.65 on March 24, 1998 and
finished the period with a total return of 45.52%. To achieve its objective,
Nova invested primarily in S&P 500 futures contracts and call options on S&P 500
futures contracts. By using call options and futures contracts, the Fund
maintained a 150% exposure to the S&P 500 Index.
CUMULATIVE FUND PERFORMANCE: JULY 12, 1993--MARCH 31, 1998
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
RYDEX NOVA FUND S&P 500 INDEX
<S> <C> <C>
7/12/93 $10,000 $10,000
9/30/93 $10,390 $10,222
12/31/93 $10,699 $10,389
3/31/94 $9,810 $9,928
5/31/94 $10,170 $10,168
8/31/94 $10,769 $10,591
10/31/94 $10,619 $10,521
1/31/95 $10,566 $10,478
4/28/95 $11,994 $11,464
6/30/95 $12,947 $12,133
9/29/95 $14,328 $13,016
11/30/95 $15,085 $13,483
2/29/96 $16,126 $14,264
5/31/96 $17,003 $14,903
7/31/96 $15,929 $14,253
10/31/96 $18,351 $15,708
12/31/96 $19,508 $16,498
3/31/97 $19,886 $16,863
6/30/97 $24,889 $19,714
8/29/97 $25,455 $20,034
11/28/97 $27,167 $21,279
2/27/98 $30,975 $23,372
3/31/98 $33,214 $24,539
</TABLE>
<TABLE>
<CAPTION>
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TOTAL RETURN
-----------------------------------------
FISCAL YEAR
ENDED SINCE INCEPTION
3-31-98 (7-12-93) TO 3-31-98
<S> <C> <C>
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Nova Fund 67.02% 232.14%
S & P 500 Index 45.52% 145.39%
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</TABLE>
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. THE S & P 500 INDEX IS AN
UNMANAGED STOCK INDEX AND, UNLIKE THE FUND, HAS NO MANAGEMENT FEES OR OTHER
OPERATING EXPENSES TO REDUCE ITS REPORTED RETURN. RETURNS ARE HISTORICAL AND
INCLUDE CHANGES IN PRINCIPAL AND REINVESTED DIVIDENDS AND CAPITAL GAINS.
4
<PAGE>
THE URSA FUND
BENCHMARK: INVERSE (OPPOSITE) OF THE STANDARD & POOR'S 500 COMPOSITE STOCK PRICE
INDEX-TM-
INCEPTION: JANUARY 7, 1994
The Ursa Fund is designed to be 100% short the market at all times. To achieve
its objective, the Ursa Fund sold S&P 500 futures contracts and purchased put
options on S&P 500 futures contracts. As designed, the Fund inversely correlated
to the S&P 500 Index. The Ursa Fund posted a -29.06% total return for the period
as a result of its short position as compared to the 45.52% return for the S&P
500. Although Ursa remained 100% short the market on each trading day, over the
entire period the Fund tended to deviate, to the benefit of shareholders, due to
a negative compounding effect.
CUMULATIVE FUND PERFORMANCE: JANUARY 7, 1994--MARCH 31, 1998
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
RYDEX URSA FUND S&P 500 INDEX
<S> <C> <C>
1/7/94 $10,000 $10,000
3/31/94 $10,500 $9,486
6/30/94 $10,540 $9,455
9/30/94 $10,200 $9,847
11/30/94 $10,440 $9,655
2/28/95 $9,838 $10,372
5/31/95 $9,164 $11,351
8/31/95 $8,850 $11,957
10/31/95 $8,644 $12,375
12/29/95 $8,283 $13,108
3/29/96 $7,985 $13,737
5/31/96 $7,820 $14,240
8/30/96 $8,098 $13,875
11/29/96 $7,068 $16,110
1/31/97 $6,903 $16,730
4/30/97 $6,841 $17,053
6/30/97 $6,231 $18,837
9/30/97 $5,880 $20,159
12/31/97 $5,749 $20,652
2/27/98 $5,365 $22,331
3/31/98 $5,147 $23,446
</TABLE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------
TOTAL RETURN
-----------------------------------------
FISCAL YEAR
ENDED SINCE INCEPTION
3-31-98 (1-7-94) TO 3-31-98
<S> <C> <C>
- ------------------------------------------------------------------------------------------------------------------
Ursa Fund -29.06 -48.53
S & P 500 Index 45.52 134.46
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. THE S & P 500 INDEX IS AN
UNMANAGED STOCK INDEX AND, UNLIKE THE FUND, HAS NO MANAGEMENT FEES OR OTHER
OPERATING EXPENSES TO REDUCE ITS REPORTED RETURN. RETURNS ARE HISTORICAL AND
INCLUDE CHANGES IN PRINCIPAL AND REINVESTED DIVIDENDS AND CAPITAL GAINS.
5
<PAGE>
THE OTC FUND
BENCHMARK: NASDAQ 100 INDEX-TM- (NDX)
INCEPTION: FEBRUARY 14, 1994
The OTC Fund finished the fiscal year with an impressive 55.05% total return.
The Fund outperformed the NASDAQ 100 Index-TM-, which posted a 53.15% total
return. To closely match the return of its benchmark, the Fund owned between 75
and 80 stocks representing approximately 95% of the capitalization of the index.
Technology companies involved in the software, electronics, and computer
industries dominate the NASDAQ 100, which consists of the largest 100
non-financial companies traded on the NASDAQ Stock Market. Even though
technology stocks were hit particularly hard during the last quarter of 1997,
these companies rebounded strongly in the first quarter of 1998.
CUMULATIVE FUND PERFORMANCE: FEBRUARY 14, 1994--MARCH 31, 1998
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
OTC FUND NASDAQ COMPOSITE NASDAQ 100
<S> <C> <C> <C>
2/14/94 $10,000 $10,000 $10,000
5/31/94 $9,260 $9,360 $9,352
7/29/94 $8,960 $9,194 $9,137
10/31/94 $10,000 $9,899 $10,196
12/30/94 $9,721 $9,574 $9,979
3/31/95 $10,721 $10,404 $11,038
5/31/95 $11,720 $11,007 $12,049
8/31/95 $14,014 $12,988 $14,237
10/31/95 $14,631 $13,191 $14,781
1/31/96 $14,424 $13,493 $14,609
3/29/96 $14,805 $14,023 $15,050
6/28/96 $16,503 $15,087 $16,719
8/30/96 $16,188 $14,533 $16,380
11/29/96 $20,455 $16,457 $20,587
1/31/97 $22,658 $17,568 $22,748
4/30/97 $21,632 $16,051 $21,593
6/30/97 $23,694 $18,360 $23,631
9/30/97 $27,132 $21,461 $27,083
11/28/97 $26,030 $20,377 $25,931
2/27/98 $29,705 $22,541 $29,477
3/31/98 $30,341 $23,371 $30,132
</TABLE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------
TOTAL RETURN
-----------------------------------------
FISCAL YEAR
ENDED SINCE INCEPTION
3-31-98 (2-14-94) TO 3-31-98
<S> <C> <C>
- ------------------------------------------------------------------------------------------------------------------
OTC Fund 55.05% 203.41%
NASDAQ 100 Index-TM- 53.15% 201.32%
NASDAQ Composite Index-TM- 50.26% 133.71%
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. THE NASDAQ COMPOSITE
INDEX-TM- AND THE NASDAQ 100 INDEX-TM- ARE UNMANAGED STOCK INDICES AND, UNLIKE
THE FUND, HAVE NO MANAGEMENT FEES OR OTHER OPERATING EXPENSES TO REDUCE THEIR
REPORTED RETURNS. RETURNS ARE HISTORICAL AND INCLUDE CHANGES IN PRINCIPAL AND
REINVESTED DIVIDENDS AND CAPITAL GAINS.
6
<PAGE>
THE PRECIOUS METALS FUND
BENCHMARK: PHILADELPHIA STOCK EXCHANGE GOLD/SILVER INDEX-TM- (XAU)
INCEPTION: DECEMBER 1, 1993
To achieve its objective, the Precious Metals Fund primarily invested in the 11
stocks that make up its benchmark index. Several negative factors affected the
price of gold over the last 12 months. These factors including continued
European central banks' selling of gold reserves, low inflation, increased mine
production, and scandals involving a junior exploration company caused precious
metals stocks to continue their downward trend. The central bank selling
occurred in preparation for the formation of the new European Central Bank and a
single European currency. As part of the preparation, each country must reduce
debt to less than 3% of GDP. To accomplish this, some central banks were selling
gold to use the proceeds to reduce debt levels. The precious metals sector has
been under pressure for several years and in November of 1997, gold dropped
below $300 an ounce for the first time since 1985. Although the last quarter of
the reporting period ended with an impressive rally in gold and silver stocks,
the total return for the XAU Index was -21.56% for the period.
CUMULATIVE FUND PERFORMANCE: DECEMBER 1, 1993--MARCH 31, 1998
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
RYDEX PRECIOUS METALS FUND XAU INDEX S&P 500 INDEX
<S> <C> <C> <C>
12/1/93 $10,000 $10,000 $10,000
1/31/94 $10,080 $10,908 $10,427
3/31/94 $10,030 $11,062 $9,651
5/31/94 $8,770 $9,955 $9,884
7/29/94 $8,150 $9,246 $9,921
9/30/94 $9,520 $10,941 $10,018
11/30/94 $7,480 $8,497 $9,822
1/31/95 $7,073 $8,057 $10,185
3/31/95 $8,854 $10,092 $10,840
5/31/95 $8,753 $9,929 $11,548
7/31/95 $8,704 $9,821 $12,169
9/29/95 $9,107 $10,276 $12,653
11/30/95 $8,906 $10,021 $13,106
1/31/96 $10,368 $11,671 $13,770
3/29/96 $10,570 $11,901 $13,975
5/31/96 $10,973 $12,319 $14,487
7/31/96 $9,138 $10,289 $13,855
8/30/96 $9,198 $10,305 $14,116
10/31/96 $8,563 $9,565 $15,269
12/31/96 $8,633 $9,660 $16,037
2/28/97 $9,087 $10,132 $17,121
4/30/97 $6,949 $7,766 $17,349
6/30/97 $7,060 $7,910 $19,163
8/29/97 $7,272 $8,181 $19,474
10/31/97 $6,394 $7,274 $19,802
12/31/97 $5,386 $6,139 $21,010
2/27/98 $5,436 $6,243 $22,718
3/31/98 $5,870 $6,757 $23,853
</TABLE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------
TOTAL RETURN
-----------------------------------------
FISCAL YEAR
ENDED SINCE INCEPTION
3-31-98 (12-1-93) TO 3-31-98
<S> <C> <C>
- ------------------------------------------------------------------------------------------------------------------
Precious Metals Fund -23.82% -41.30%
XAU Index -21.56% -32.43%
S & P 500 Index 45.52% 138.53%
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. THE S & P 500 INDEX AND THE
XAU INDEX ARE UNMANAGED STOCK INDEXES AND, UNLIKE THE FUND, HAVE NO MANAGEMENT
FEES OR OTHER OPERATING EXPENSES TO REDUCE THEIR REPORTED RETURNS. RETURNS ARE
HISTORICAL AND INCLUDE CHANGES IN PRINCIPAL AND REINVESTED DIVIDENDS AND CAPITAL
GAINS.
7
<PAGE>
THE U. S. GOVERNMENT BOND FUND
BENCHMARK: 120% OF THE PRICE MOVEMENT OF CURRENT LONG TREASURY BOND
INCEPTION: JANUARY 3, 1994
Low inflation, a flight to quality, and a strong dollar pushed bond prices
higher during the period. The Consumer Price Index rose just 1.4% in the 12
months ended March 31, 1998. This is the smallest increase in more than a
decade. In addition, the prospect for a U.S. budget surplus had a positive
influence on the price of bonds. The yield on the benchmark 30-year U.S.
Treasury Bond dropped from 7.1% to 5.93% during the reporting period. To achieve
its objective of 120% exposure to the price movement of the Long Treasury Bond,
the Fund purchased the 30-year Treasury Bond and call options on Treasury Bond
futures.
CUMULATIVE FUND PERFORMANCE: JANUARY 3, 1994--MARCH 31, 1998
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
RYDEX BOND FUND LEHMAN LONG TREASURY INDEX PRICE MOVEMENT OF LONG BOND
<S> <C> <C> <C>
1/3/94 $10,000 $10,000 $10,000
3/31/94 $8,957 $9,495 $9,175
6/30/94 $8,382 $9,222 $8,608
8/31/94 $8,548 $9,451 $8,647
11/30/94 $8,071 $9,163 $8,109
2/28/95 $8,735 $9,914 $8,610
4/28/95 $8,881 $10,155 $8,723
7/31/95 $9,670 $10,892 $9,263
9/29/95 $10,181 $11,316 $9,589
12/29/95 $11,170 $12,268 $10,326
3/29/96 $9,977 $11,457 $9,308
5/31/96 $9,639 $11,193 $8,902
8/30/96 $9,540 $11,359 $8,811
10/31/96 $10,250 $12,066 $9,276
1/31/97 $10,351 $12,205 $9,143
4/30/97 $10,212 $12,128 $8,828
6/30/97 $10,859 $12,769 $9,230
9/30/97 $11,148 $13,142 $9,346
11/28/97 $11,650 $13,648 $9,648
2/27/98 $12,300 $14,312 $10,035
3/16/98 $12,210 $14,198 $9,914
</TABLE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------
TOTAL RETURN
-----------------------------------------
FISCAL YEAR
ENDED SINCE INCEPTION
3-31-98 (1-3-94) TO 3-31-98
<S> <C> <C>
- ------------------------------------------------------------------------------------------------------------------
U.S. Government Bond Fund 24.72% 22.09%
Price movement of 30-year Treasury Bond 14.98% -0.86%
Lehman Brothers Long T-Bond Index 20.57% 41.98%
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. THE LEHMAN BROTHERS LONG
T-BOND INDEX IS AN UNMANAGED BOND INDEX AND, UNLIKE THE FUND, HAS NO MANAGEMENT
FEES OR OTHER OPERATING EXPENSES TO REDUCE ITS REPORTED RETURN. THE PRICE
MOVEMENT OF THE 30-YEAR TREASURY BOND REPRESENTS A CUMULATIVE PERCENTAGE CHANGE
IN ITS CLOSING PRICE. RETURNS ARE HISTORICAL AND INCLUDE CHANGES IN PRINCIPAL
AND REINVESTED DIVIDENDS AND CAPITAL GAINS.
8
<PAGE>
THE JUNO FUND
BENCHMARK: INVERSE (OPPOSITE) OF THE PRICE MOVEMENT OF CURRENT LONG TREASURY
BOND
INCEPTION: MARCH 3, 1995
To achieve its objective, the Juno Fund attempts to approximate a 100% short
position in the Long Treasury Bond. During the fiscal year, the Fund sold
Treasury Bond futures and bought puts on Treasury Bond futures traded on the
Chicago Board of Trade. As previously mentioned, bond prices rose during the
period. As a result of its short position in Treasury bond futures the Juno Fund
posted a -9.92% total return compared to the 14.98% total return of the 30-year
Treasury Bond.
CUMULATIVE FUND PERFORMANCE: MARCH 3, 1995--MARCH 31, 1998
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
JUNO FUND LEHMAN LONG TREASURY INDEX PRICE MOVEMENT OF LONG BOND
<S> <C> <C> <C>
3/3/95 $10,000 $10,000 $10,000
5/31/95 $9,120 $11,173 $11,136
6/30/95 $9,080 $11,291 $11,182
8/31/95 $9,130 $11,343 $11,057
10/31/95 $8,840 $11,877 $11,524
12/29/95 $8,550 $12,509 $12,128
2/29/96 $9,060 $11,902 $11,217
4/30/96 $9,510 $11,481 $10,630
6/28/96 $9,470 $11,671 $10,604
8/30/96 $9,700 $11,519 $10,275
9/30/96 $9,500 $11,834 $10,528
11/29/96 $8,970 $12,709 $11,225
1/31/97 $9,365 $12,308 $10,613
3/31/97 $9,736 $12,007 $10,127
5/30/97 $9,525 $12,429 $10,362
7/31/97 $8,963 $13,417 $11,226
9/30/97 $9,083 $13,402 $11,008
11/28/97 $8,812 $14,032 $11,477
12/31/97 $8,720 $14,260 $11,662
2/27/98 $8,741 $14,445 $11,674
3/31/98 $8,771 $14,476 $11,644
</TABLE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------
TOTAL RETURN
-----------------------------------------
FISCAL YEAR
ENDED SINCE INCEPTION
3-31-98 (3-3-95) TO 3-31-98
<S> <C> <C>
- ------------------------------------------------------------------------------------------------------------------
The Juno Fund -9.92% -12.29%
Price movement of 30-year Treasury Bond 14.98% 16.44%
Lehman Brothers Long T-Bond Index 20.57% 44.76%
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. THE LEHMAN BROTHERS LONG
T-BOND INDEX IS AN UNMANAGED BOND INDEX AND, UNLIKE THE FUND, HAS NO MANAGEMENT
FEES OR OTHER OPERATING EXPENSES TO REDUCE ITS REPORTED RETURN. THE PRICE
MOVEMENT OF THE 30-YEAR TREASURY BOND REPRESENTS A CUMULATIVE PERCENTAGE CHANGE
IN ITS CLOSING PRICE. RETURNS ARE HISTORICAL AND INCLUDE CHANGES IN PRINCIPAL
AND REINVESTED DIVIDENDS AND CAPITAL GAINS.
9
<PAGE>
THE HIGH YIELD FUND
BENCHMARK: MERRILL LYNCH HIGH YIELD MASTER INDEX
INCEPTION: JANUARY 3, 1997
The Fund invested primarily in below investment grade corporate bonds, commonly
known as "junk bonds". To achieve its objective to match the performance of the
Merrill Lynch High Yield Master Index, the Fund invested in a portfolio of
corporate bonds designed to match the risk characteristics of its benchmark.
Several negative factors including the Asian Financial crisis, bid/ask spread
slippage, uncertainty of corporate earnings prospects, and heightened volatility
in the equity markets caused the Fund to under-perform its benchmark. In
addition, high yield bonds did not quite capture the full effect of the interest
rate drop, but this is characteristic of these hybrid securities.
CUMULATIVE FUND PERFORMANCE: JANUARY 3, 1997--MARCH 31, 1998
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
RYDEX HIGH YIELD MERRILL LYNCH INDEX
<S> <C> <C>
1/3/97 $10,000 $10,000
1/31/97 $10,100 $10,094
2/28/97 $10,237 $10,236
3/31/97 $9,997 $10,122
4/30/97 $10,079 $10,237
5/30/97 $10,245 $10,441
6/30/97 $10,344 $10,602
7/31/97 $10,583 $10,857
8/29/97 $10,556 $10,832
9/30/97 $10,740 $11,017
10/31/97 $10,591 $11,090
11/28/97 $10,589 $11,190
12/31/97 $10,630 $11,302
1/30/98 $10,441 $11,467
2/27/98 $10,423 $11,514
3/31/98 $10,471 $11,617
</TABLE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------
TOTAL RETURN
-----------------------------------------
FISCAL YEAR
ENDED SINCE INCEPTION
3-31-98 (1-3-97) TO 3-31-98
<S> <C> <C>
- ------------------------------------------------------------------------------------------------------------------
High Yield Fund 4.74% 4.71%
Merrill Lynch High Yield Master Index 14.77% 16.17%
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. THE MERRILL LYNCH HIGH YIELD
MASTER INDEX IS AN UNMANAGED STOCK INDEX AND, UNLIKE THE FUND, HAS NO MANAGEMENT
FEES OR OTHER OPERATING EXPENSES TO REDUCE ITS REPORTED RETURN. RETURNS ARE
HISTORICAL AND INCLUDE CHANGES IN PRINCIPAL AND REINVESTED DIVIDENDS AND CAPITAL
GAINS.
10
<PAGE>
RYDEX SERIES TRUST
NOVA
SCHEDULE OF INVESTMENTS
- --------------------------------------------------------------------------------
March 31, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MARKET
VALUE
CONTRACTS (NOTE 1)
----------- ------------
<S> <C> <C>
OPTIONS PURCHASED 30.5%
Call Options on:
S&P 500 Index Expiring June 1998 at
775 2,103 $176,389,125
S&P 500 Index Expiring June 1998 at
400 1,145 80,578,230
S&P 500 Index Expiring June 1998 at
790 265 21,259,625
------------
Total Call Options (Cost
$265,332,465) 278,226,980
------------
<CAPTION>
FACE AMOUNT
-----------
<S> <C> <C>
U.S. TREASURY OBLIGATIONS 50.8%
U.S. Treasury Bill 5.000% 4/02/98 $40,000,000 39,994,444
U.S. Treasury Bill 5.100% 4/02/98 50,000,000 49,992,917
U.S. Treasury Bill 5.250% 4/02/98 25,000,000 24,996,354
U.S. Treasury Bill 5.310% 4/16/98 50,000,000 49,889,375
U.S. Treasury Bill 5.365% 4/16/98 25,000,000 24,944,114
U.S. Treasury Bill 5.250% 4/23/98 25,000,000 24,919,792
U.S. Treasury Bill 5.370% 4/23/98 50,000,000 49,835,917
U.S. Treasury Bill 5.085% 4/30/98 25,000,000 24,897,594
U.S. Treasury Bill 5.320% 4/30/98 50,000,000 49,785,722
U.S. Treasury Bill 4.980% 5/07/98 50,000,000 49,751,000
U.S. Treasury Bill 5.080% 5/07/98 25,000,000 24,873,000
U.S. Treasury Bill 5.040% 5/21/98 25,000,000 24,825,000
U.S. Treasury Bill 5.035% 5/28/98 25,000,000 24,800,698
------------
Total U.S. Treasury Obligations
(Cost $463,505,927) 463,505,927
------------
</TABLE>
See Notes to Financial Statements.
11
<PAGE>
RYDEX SERIES TRUST
NOVA
SCHEDULE OF INVESTMENTS (CONTINUED)
- --------------------------------------------------------------------------------
March 31, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MARKET
VALUE
FACE AMOUNT (NOTE 1)
----------- ------------
REPURCHASE AGREEMENTS 18.7%
<S> <C> <C>
Repurchase Agreements Collateralized by
U.S. Treasury Obligations (Note 3):
5.87% due 4/01/98 $40,747,797 $ 40,747,797
5.875% due 4/01/98 40,747,797 40,747,797
5.89% due 4/01/98 30,560,848 30,560,848
5.90% due 4/01/98 59,043,558 59,043,558
------------
Total Repurchase Agreements (Cost
$171,100,000) 171,100,000
------------
Total Investments 100% (Cost
$899,938,392) $912,832,907
------------
------------
<CAPTION>
UNREALIZED
GAIN
CONTRACTS (NOTE 1)
----------- ------------
<S> <C> <C>
FUTURES CONTRACTS PURCHASED
S&P 500 Futures Contracts Expiring June
1998
(Underlying Face Amount at Market
Value $707,110,875) 2,547 $ 13,453,209
------------
------------
</TABLE>
See Notes to Financial Statements.
12
<PAGE>
RYDEX SERIES TRUST
URSA
SCHEDULE OF INVESTMENTS
- --------------------------------------------------------------------------------
March 31, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MARKET
VALUE
CONTRACTS (NOTE 1)
----------- ------------
<S> <C> <C>
OPTIONS PURCHASED 8.0%
Put Options on:
S&P 500 Futures Contract Expiring
June 1998 at 1400 300 $ 21,712,500
------------
Total Put Options (Cost
$23,979,600) 21,712,500
------------
<CAPTION>
FACE AMOUNT
-----------
<S> <C> <C>
U.S. TREASURY OBLIGATIONS 76.7%
U.S. Treasury Bill 4.960% 4/02/98 $50,000,000 49,993,111
U.S. Treasury Bill 5.375% 4/16/98 25,000,000 24,944,011
U.S. Treasury Bill 5.230% 4/23/98 50,000,000 49,840,194
U.S. Treasury Bill 5.290% 4/23/98 25,000,000 24,919,181
U.S. Treasury Bill 5.000% 5/07/98* 60,000,000 59,700,000
------------
Total U.S. Treasury Obligations
(Cost $209,396,497) 209,396,497
------------
REPURCHASE AGREEMENTS 15.3%
Repurchase Agreements Collateralized by
U.S. Treasury Obligations (Note 3):
5.87% due 4/01/98 9,930,936 9,930,936
5.875% due 4/01/98 9,930,936 9,930,936
5.89% due 4/01/98 7,448,202 7,448,202
5.90% due 4/01/98 14,389,926 14,389,926
------------
Total Repurchase Agreements (Cost
$41,700,000) 41,700,000
------------
Total Investments 100% (Cost
$275,076,097) $272,808,997
------------
------------
- ------------------------------------------------------------------
<CAPTION>
UNREALIZED
LOSS
CONTRACTS (NOTE 1)
----------- ------------
<S> <C> <C>
FUTURES CONTRACTS SOLD
S&P 500 Futures Contract Expiring June
1998
(Underlying Face Amount at Market
Value $169,906,500) 612 $ (5,121,509)
------------
------------
</TABLE>
* A PORTION OF THIS HOLDING IS PLEDGED AS COLLATERAL FOR STOCK INDEX
FUTURES CONTRACTS.
See Notes to Financial Statements.
13
<PAGE>
RYDEX SERIES TRUST
U.S. GOVERNMENT MONEY MARKET
SCHEDULE OF INVESTMENTS
- --------------------------------------------------------------------------------
March 31, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MARKET
VALUE
FACE AMOUNT (NOTE 1)
----------- ------------
<S> <C> <C>
FEDERAL AGENCY DISCOUNT NOTES 72.3%
Fannie Mae 5.51% 4/13/98 $10,000,000 $ 9,981,633
Fannie Mae 5.37% 5/01/98 10,000,000 9,955,250
Fannie Mae 5.48% 5/11/98 20,000,000 19,878,222
Farmer Mac 5.51% 4/01/98 10,000,000 10,000,000
Farmer Mac 5.46% 4/17/98 10,000,000 9,975,733
Farmer Mac 5.46% 4/20/98 15,000,000 14,956,775
Federal Farm Credit Banks 5.58%
4/01/98 10,000,000 10,000,000
Federal Farm Credit Banks 5.48%
4/08/98 10,000,000 9,989,345
Federal Farm Credit Banks 5.44%
4/20/98 10,000,000 9,971,289
Federal Home Loan Banks 5.43% 4/01/98 10,000,000 10,000,000
Federal Home Loan Banks 5.58% 4/01/98 20,000,000 20,000,000
Federal Home Loan Banks 5.51% 4/03/98 10,000,000 9,996,939
Federal Home Loan Banks 5.52% 4/13/98 10,000,000 9,981,600
Federal Home Loan Banks 5.48% 4/15/98 10,000,000 9,978,689
Freddie Mac 5.42% 4/02/98 10,000,000 9,998,494
Freddie Mac 5.43% 4/06/98 10,000,000 9,992,458
Freddie Mac 5.48% 4/07/98 10,000,000 9,990,867
Freddie Mac 5.44% 4/09/98 20,000,000 19,975,822
Freddie Mac 5.38% 4/10/98 20,000,000 19,973,100
Freddie Mac 5.45% 4/15/98 10,000,000 9,978,806
Freddie Mac 5.42% 4/17/98 10,000,000 9,975,911
Freddie Mac 5.42% 5/29/98 10,000,000 9,912,678
------------
Total Federal Agency Discount Notes
(Cost $264,463,611) 264,463,611
------------
FEDERAL AGENCY BONDS 6.8%
Federal Farm Credit Banks 5.50%
6/01/98 15,000,000 15,000,000
Federal Home Loan Banks 5.725%
9/08/98 10,000,000 9,997,260
------------
Total Federal Agency Bonds (Cost
$24,997,260) 24,997,260
------------
</TABLE>
See Notes to Financial Statements.
14
<PAGE>
RYDEX SERIES TRUST
U.S. GOVERNMENT MONEY MARKET
SCHEDULE OF INVESTMENTS (CONTINUED)
- --------------------------------------------------------------------------------
March 31, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MARKET
VALUE
FACE AMOUNT (NOTE 1)
----------- ------------
REPURCHASE AGREEMENTS 20.9%
<S> <C> <C>
Repurchase Agreements Collateralized by
U.S. Treasury Obligations (Note 3):
5.87% due 4/01/98 $18,266,254 $ 18,266,254
5.875% due 4/01/98 18,266,254 18,266,254
5.89% due 4/01/98 13,699,690 13,699,690
5.90% due 4/01/98 26,487,802 26,467,802
------------
Total Repurchase Agreements (Cost
$76,700,000) 76,700,000
------------
Total Investments 100% (Cost
$366,160,871) $366,160,871
------------
------------
</TABLE>
See Notes to Financial Statements.
15
<PAGE>
RYDEX SERIES TRUST
OVER-THE-COUNTER
SCHEDULE OF INVESTMENTS
- --------------------------------------------------------------------------------
March 31, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MARKET
VALUE
SHARES (NOTE 1)
--------- ------------
<S> <C> <C>
COMMON STOCKS 98.3%
Microsoft Corporation* 1,149,070 $102,841,765
Intel Corporation 774,247 60,439,656
Cisco Systems, Inc.* 481,480 32,921,195
WorldCom, Inc.* 551,185 23,735,404
Dell Computer Corporation* 311,536 21,106,564
Oracle Corporation* 464,846 14,671,702
MCI Communications Corporation 266,712 13,202,244
Amgen, Inc.* 125,221 7,622,828
Sun Microsystems, Inc.* 178,007 7,426,230
Tele-Communications, Inc. Series A* 224,116 6,968,607
Ericsson (LM) Telephone Company Class
B ADR 132,955 6,323,672
Applied Materials, Inc.* 175,267 6,189,116
HBO & Company 100,404 6,061,892
3Com Corporation* 163,588 5,878,944
Tellabs, Inc.* 85,239 5,721,668
PeopleSoft, Inc.* 106,953 5,635,086
Costco Companies, Inc.* 102,411 5,466,187
Comcast Corporation Special Class A 145,691 5,144,713
PanAmSat Corporation 70,789 4,309,280
Parametric Technology Corporation* 128,039 4,265,299
BMC Software, Inc.* 48,304 4,048,479
Compuware Corporation* 81,726 4,035,221
Nextel Communications, Inc. Class A* 113,560 3,832,650
Ascend Communications, Inc.* 88,527 3,352,960
Paychex, Inc. 51,945 2,996,577
<CAPTION>
MARKET
VALUE
SHARES (NOTE 1)
--------- ------------
<S> <C> <C>
Northwest Airlines Corporation Class
A* 45,136 $ 2,784,327
Staples, Inc.* 115,991 2,689,541
Chancellor Media Corporation* 56,785 2,605,012
Linear Technology Corporation 36,325 2,506,425
Cintas Corporation 45,773 2,368,753
Nordstrom, Inc. 36,557 2,332,794
Maxim Integrated Products, Inc.* 62,078 2,261,967
PACCAR, Inc. 37,770 2,249,676
Network Associates, Inc.* 33,155 2,196,519
Sigma Aldrich Corporation 48,237 1,796,828
Chiron Corporation* 84,006 1,758,876
Novell, Inc.* 163,325 1,750,640
Biogen, Inc.* 35,727 1,721,595
Starbucks Corporation* 37,846 1,714,897
Quintiles Transnational Corporation* 35,588 1,714,897
Gartner Group, Inc.-- Class A* 45,731 1,709,196
Qualcomm, Inc.* 31,714 1,696,699
ADC Telecommunications, Inc.* 61,319 1,690,105
Reuters Hldgs, PLC-- Sponsor ADR 25,273 1,631,688
Apple Computer, Inc.* 59,162 1,626,955
Altera Corporation* 43,098 1,626,949
Biomet, Inc.* 53,098 1,592,940
Fiserv, Inc.* 24,929 1,579,875
General Nutrition Companies, Inc.* 38,963 1,548,779
KLA-Tencor Corporation* 40,302 1,541,552
</TABLE>
* NON-INCOME PRODUCING SECURITIES
See Notes to Financial Statements.
16
<PAGE>
RYDEX SERIES TRUST
OVER-THE-COUNTER
SCHEDULE OF INVESTMENTS (CONTINUED)
- --------------------------------------------------------------------------------
March 31, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MARKET
VALUE
SHARES (NOTE 1)
--------- ------------
Bed Bath & Beyond, Inc.* 32,501 $ 1,501,139
<S> <C> <C>
Centocor, Inc.* 33,409 1,490,877
Adobe Systems, Inc. 31,182 1,409,037
Quantum Corporation* 65,447 1,394,839
American Power Conversion
Corporation* 46,084 1,322,035
Xilinx, Inc.* 35,178 1,316,976
Electronic Arts, Inc.* 27,684 1,299,418
Jacor Communications, Inc.* 21,568 1,272,512
Genzyme Corporation-- General
Division* 37,247 1,191,904
Cambridge Technology Partners, Inc.* 23,924 1,185,733
Cracker Barrel Old Country Store,
Inc. 29,635 1,185,400
Apollo Group, Inc.-- Class A* 24,479 1,178,052
McCormick & Company, Inc. 35,313 1,138,844
<CAPTION>
MARKET
VALUE
SHARES (NOTE 1)
--------- ------------
<S> <C> <C>
Adaptec, Inc,* 53,434 $ 1,048,642
DSC Communications Corporation* 55,799 1,014,844
US Office Products Company* 53,229 1,011,351
Autodesk, Inc. 22,335 963,197
Viking Office Products, Inc.* 40,148 933,441
Tech Data Corporation* 22,769 876,607
Worthington Industries, Inc. 46,740 847,163
First Health Group Corporation* 15,400 835,450
Fastenal Company 18,066 783,613
Netscape Communications Corporation* 42,929 780,771
FORE Systems, Inc.* 47,088 741,636
Atmel Corporation* 46,709 703,554
Oxford Health Plans, Inc.* 38,429 574,033
------------
Total Common Stocks (Cost
$376,879,208) $440,896,492
------------
</TABLE>
* NON-INCOME PRODUCING SECURITIES
See Notes to Financial Statements.
17
<PAGE>
RYDEX SERIES TRUST
OVER-THE-COUNTER
SCHEDULE OF INVESTMENTS (CONTINUED)
- --------------------------------------------------------------------------------
March 31, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MARKET
VALUE
CONTRACTS (NOTE 1)
--------- ------------
OPTIONS PURCHASED 0.1%
<S> <C> <C> <C>
NASDAQ 100 Call Option Contract Expiring April
1998 at 970
(Cost $435,560) 20 $ 504,000
<CAPTION>
FACE AMOUNT
-----------
<S> <C> <C> <C>
REPURCHASE AGREEMENTS 1.6%
Repurchase Agreements Collateralized by U.S.
Treasury Obligations (Note 3):
5.87% due 4/01/98 $1,690,879 $1,690,879
5.875% due 4/01/98 1,690,879 1,690,879
5.89% due 4/01/98 1,268,160 1,268,160
5.90% due 4/01/98 2,450,082 2,450,082
----------
Total Repurchase Agreements (Cost $7,100,000) 7,100,000
----------
Total Investments 100% (Cost $384,414,768) $448,500,492
----------
----------
- ----------------------------------------------------------------------------
<CAPTION>
MARKET
CONTRACTS VALUE
----------- ----------
<S> <C> <C> <C>
WRITTEN OPTIONS CONTRACTS
Put Options On:
NASDAQ 100 Option Contract Expiring April 1998
at 970 (Proceeds $3,440) 20 $ 750
----------
----------
<CAPTION>
UNREALIZED
GAIN
----------
<S> <C> <C> <C>
FUTURES CONTRACTS PURCHASED
NASDAQ 100 Futures Contract Expiring June 1998
(Underlying Face Amount at Market Value
$5,445,000) 44 $ 163,842
----------
----------
</TABLE>
See Notes to Financial Statements.
18
<PAGE>
RYDEX SERIES TRUST
PRECIOUS METALS
SCHEDULE OF INVESTMENTS
- --------------------------------------------------------------------------------
March 31, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MARKET
VALUE
SHARES (NOTE 1)
---------- -----------
<S> <C> <C>
COMMON STOCKS 91.2%
Mining and Precious Metals Stocks
Barrick Gold Corporation 586,263 $12,677,937
Newmont Mining Corporation 246,949 7,547,386
Placer Dome, Inc. 391,324 5,160,585
Homestake Mining Company 231,588 2,518,520
Battle Mountain Gold Company, Class A 363,814 2,319,314
Getchell Gold Corporation* 48,506 1,012,563
TVX Gold, Inc.* 254,602 827,457
Hecla Mining Company* 86,204 571,101
Echo Bay Mines, Ltd. 218,426 505,110
Coeur D'Alene Mines Corporation 34,260 441,098
ASA Limited 15,012 337,770
-----------
Total Common Stocks (Cost
$29,607,872) 33,918,841
-----------
<CAPTION>
CONTRACTS
----------
<S> <C> <C>
OPTIONS PURCHASED 0.2%
XAU Index Call Option Contract Expiring
April 1998 at 60
(Cost $61,870) 40 85,500
---------- -----------
<CAPTION>
FACE
AMOUNT
----------
<S> <C> <C>
REPURCHASE AGREEMENTS 8.6%
Repurchase Agreements Collateralized by
U.S. Treasury Obligations (Note 3):
5.87% due 4/01/98 $ 762,086 762,086
5.875% due 4/01/98 762,086 762,086
5.89% due 4/01/98 571,565 571,565
5.90% due 4/01/98 1,104,263 1,104,263
-----------
Total Repurchase Agreements (Cost
$3,200,000) 3,200,000
-----------
Total Investments 100% (Cost
$32,869,742) $37,204,341
-----------
-----------
</TABLE>
* NON-INCOME PRODUCING SECURITIES
See Notes to Financial Statements.
19
<PAGE>
RYDEX SERIES TRUST
U.S. GOVERNMENT BOND
SCHEDULE OF INVESTMENTS
- --------------------------------------------------------------------------------
March 31, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MARKET
VALUE
FACE AMOUNT (NOTE 1)
----------- -----------
<S> <C> <C>
U.S. TREASURY OBLIGATIONS 93.1%
U.S. Treasury Bond 6.125% due
11/15/2027 (Cost $18,080,423) $17,843,000 $18,305,803
-----------
<CAPTION>
CONTRACTS
-----------
<S> <C> <C>
OPTIONS PURCHASED 6.4%
Call Options on U.S Treasury Bond
Futures Contract
Expiring June 1998 at 100 (Cost
$1,225,640) 62 1,255,500
-----------
<CAPTION>
FACE AMOUNT
-----------
<S> <C> <C>
REPURCHASE AGREEMENTS 0.5%
Repurchase Agreements Collateralized by
U.S. Treasury Obligations (Note 3):
5.87% due 4/01/98 $ 23,815 23,815
5.875% due 4/01/98 23,815 23,815
5.89% due 4/01/98 17,862 17,862
5.90% due 4/01/98 34,508 34,508
-----------
Total Repurchase Agreements (Cost
$100,000) 100,000
-----------
Total Investments 100.0% (Cost
$19,406,063) $19,661,303
-----------
-----------
</TABLE>
See Notes to Financial Statements.
20
<PAGE>
RYDEX SERIES TRUST
JUNO
SCHEDULE OF INVESTMENTS
- --------------------------------------------------------------------------------
March 31, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MARKET
VALUE
CONTRACTS (NOTE 1)
----------- -----------
<S> <C> <C>
OPTIONS PURCHASED 1.5%
Put options on:
U.S. Treasury Bond Futures Contracts
Expiring June 1998 at 132 (Cost
$154,596) 15 $ 176,250
-----------
<CAPTION>
FACE AMOUNT
-----------
<S> <C> <C>
U.S. TREASURY OBLIGATIONS 82.1%
U.S. Treasury Bill 5.10% 4/02/98 (Cost
$9,998,583) $10,000,000 $ 9,998,583
-----------
REPURCHASE AGREEMENTS 16.4%
Repurchase Agreements Collateralized by
U.S. Treasury Obligations (Note 3):
5.87% due 4/01/98 476,304 476,304
5.875% due 4/01/98 476,304 476,304
5.89% due 4/01/98 357,228 357,228
5.90% due 4/01/98 690,164 690,164
-----------
Total Repurchase Agreements (Cost
$2,000,000) 2,000,000
-----------
Total Investments 100% (Cost
$12,153,179) $12,174,833
-----------
-----------
- -----------------------------------------------------------------
<CAPTION>
UNREALIZED
CONTRACTS (LOSS)
----------- -----------
<S> <C> <C>
FUTURES CONTRACTS SOLD
U.S. Treasury Bond Futures Contract
Expiring June 1998
(Underlying Face Amount at Market
Value $11,784,500) 98 $ (117,587)
-----------
-----------
</TABLE>
See Notes to Financial Statements.
21
<PAGE>
RYDEX SERIES TRUST
HIGH YIELD
SCHEDULE OF INVESTMENTS
- --------------------------------------------------------------------------------
March 31, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MARKET
VALUE
FACE AMOUNT (NOTE 1)
----------- ----------
<S> <C> <C>
NON-CONVERTIBLE CORPORATE BONDS 100%
Noble Drilling Corporation 9.125% due 7/01/2006 $100,000 $ 110,606
Cleveland Electric Illumination Company 9.50%
due 5/15/2005 100,000 109,469
WorldCom, Inc. 7.75% due 4/01/2007 100,000 107,805
Comcast Corporation 9.375% due 5/15/2005 100,000 107,065
HMH Properties, Inc. 9.50% due 5/15/2005 100,000 106,250
Westinghouse Electric Corporation 8.875% due
6/01/2001 100,000 104,196
Lenfest Communications, Inc. 8.375% due
11/01/2005 100,000 103,500
CSC Holdings, Inc. 7.875% due 12/15/2007 100,000 103,000
CMS Energy Corporation 8.125 due 5/15/2002 100,000 102,914
Trump Atlantic City Associates 11.25% due
5/01/2006 100,000 102,750
Stone Container Corporation 9.875% due 2/01/2001 100,000 102,000
Rogers Communications, Inc. 8.875% due 7/15/2007 100,000 101,750
TCI Communications, Inc. 6.875% due 2/15/2006 100,000 101,082
<CAPTION>
MARKET
VALUE
FACE AMOUNT (NOTE 1)
----------- ----------
<S> <C> <C>
Energy Corporation of America 9.50% due
5/15/2007 $100,000 $ 100,000
Calenergy, Inc. 7.630% due 10/15/2007 100,000 99,556
Falcon Drilling, Inc. 8.875% due 3/15/2003 75,000 79,125
Sprint Spectrum L P 11.00% due 8/15/2006 50,000 57,750
Arvin Capital 9.50% due 2/01/2027 50,000 56,222
El Paso Electric Company 8.90% due 2/01/2006 50,000 55,440
Jones Intercable, Inc. 10.50% due 3/01/2008 50,000 55,000
CSC Holdings, Inc. 9.875% due 5/15/2006 50,000 54,750
Domtar, Inc. 9.50% due 8/01/2016 50,000 53,895
Pride Petroleum Services, Inc. 9.375% due
5/01/2007 50,000 53,250
Niagara Mohawk Power Corporation 7.750% due
5/15/2006 50,000 53,195
Rogers Cantel, Inc. 9.375% due 6/01/2008 50,000 53,125
Toll Corporation 8.75% due 11/15/2006 50,000 53,000
AMC Entertainment, Inc. 9.50% due 3/15/2009 50,000 52,750
Newport News Shipbuilding, Inc. 8.625% due
12/01/2006 50,000 52,625
Borg-Warner Security Corporation 9.625% due
3/15/2007 50,000 52,500
</TABLE>
See Notes to Financial Statements.
22
<PAGE>
RYDEX SERIES TRUST
HIGH YIELD
SCHEDULE OF INVESTMENTS (CONTINUED)
- --------------------------------------------------------------------------------
March 31, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MARKET
VALUE
FACE AMOUNT (NOTE 1)
----------- ----------
Century Communications Corporation 8.875% due
1/15/2007 $ 50,000 $ 52,375
<S> <C> <C>
Chevy Chase Savings Bank, FSB Maryland 9.250%
due 12/01/2008 50,000 52,250
Red Roof Inns, Inc. 9.625% due 12/15/2003 50,000 51,750
Chelsea GCA Realty Partnership, L. P. 7.750% due
1/26/2001 50,000 51,077
K-Mart Corporation 7.950% due 2/01/2023 50,000 50,625
<CAPTION>
MARKET
VALUE
FACE AMOUNT (NOTE 1)
----------- ----------
<S> <C> <C>
NL Industries, Inc. 11.75% due 10/15/2003 $ 25,000 $ 27,812
Texas Bottling Group, Inc. 9.00% due 11/15/2003 25,000 26,000
----------
Total Non Convertible Corporate Bonds
(Cost $2,600,368) 2,656,459
----------
Total Investments 100%
(Cost $2,600,368) $2,656,459
----------
----------
</TABLE>
See Notes to Financial Statements.
23
<PAGE>
RYDEX SERIES TRUST
STATEMENT OF ASSETS AND LIABILITIES
- --------------------------------------------------------------------------------
March 31, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
U.S.
GOVERNMENT
MONEY
NOVA FUND URSA FUND MARKET FUND
-------------- ------------ ------------
<S> <C> <C> <C>
ASSETS
Repurchase Agreements $ 171,100,000 $ 41,700,000 $ 76,700,000
Investment Securities 741,732,907 231,108,997 289,460,871
-------------- ------------ ------------
Securities at Value (Note 1)--See
Accompanying Schedules 912,832,907 272,808,997 366,160,871
Receivable for Futures Contracts
Settlement 2,721,035 -- --
Investment Income Receivable 27,971 6,817 116,396
Cash in Custodian Bank 1,524,227 1,566,934 40,911
Receivable for Shares Purchased 94,203,060 6,799,254 18,475,875
Unamortized Organization Costs (Note
1) 9,736 12,464 6,793
Other Assets -- 50 49,293
-------------- ------------ ------------
Total Assets 1,011,318,936 281,194,516 384,850,139
-------------- ------------ ------------
LIABILITIES
Payable for Securities Purchased 20,855,195 -- --
Payable for Futures Contracts
Settlement -- 839,995 --
Liability for Shares Redeemed 3,415,664 25,801,403 131,230,474
Dividends Payable -- -- 23,424
Investment Advisory Fee Payable 550,356 207,683 130,976
Transfer Agent Fee Payable 183,452 57,690 52,391
Other Liabilities 67,654 62,525 118,150
-------------- ------------ ------------
Total Liabilities 25,072,321 26,969,296 131,555,415
-------------- ------------ ------------
NET ASSETS $ 986,246,615 $254,225,220 $253,294,724
-------------- ------------ ------------
-------------- ------------ ------------
Shares Outstanding 33,075,863 51,283,295 253,235,215
-------------- ------------ ------------
-------------- ------------ ------------
Net Asset Value Per Share $29.82 $4.96 $1.00
-------------- ------------ ------------
-------------- ------------ ------------
</TABLE>
See Notes to Financial Statements.
24
<PAGE>
RYDEX SERIES TRUST
STATEMENT OF ASSETS AND LIABILITIES
- --------------------------------------------------------------------------------
March 31, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
OVER-THE- PRECIOUS U.S.
COUNTER METALS GOVERNMENT HIGH YIELD
FUND FUND BOND FUND JUNO FUND FUND
------------ ----------- ----------- ----------- ----------
<S> <C> <C> <C> <C> <C>
ASSETS
Repurchase Agreements $ 7,100,000 $ 3,200,000 $ 100,000 $ 2,000,000 $ --
Investment Securities 441,400,492 34,004,341 19,561,303 10,174,833 2,656,459
------------ ----------- ----------- ----------- ----------
Securities at Value (Note 1)--See
Accompanying Schedules 448,500,492 37,204,341 19,661,303 12,174,833 2,656,459
Receivable for Securities Sold 94,645,622 3,598,815 -- -- 108,302
Receivable for Futures Contracts
Settlement 50,162 -- -- -- --
Receivable from Advisor -- -- -- -- --
Investment Income Receivable 69,051 12,092 413,622 327 51,687
Cash in Custodian Bank 55,236 20,650 31,884 99,140 76,755
Cash on Deposit with Broker 494,526 -- -- 661,173 --
Receivable for Shares Purchased -- 3,997,891 8,441,839 647,224 75,557
Unamortized Organization Costs (Note
1) 3,719 5,085 3,125 13,024 32,851
Other Assets -- 11 11,531 -- 11,222
------------ ----------- ----------- ----------- ----------
Total Assets 543,818,808 44,838,885 28,563,304 13,595,721 3,012,833
------------ ----------- ----------- ----------- ----------
LIABILITIES
Payable for Securities Purchased 91,357,153 3,201,407 7,771,408 -- --
Payable for Futures Contracts
Settlement -- -- -- 45,938 --
Written Options at Market Value 750 -- -- -- --
Liability for Shares Redeemed 2,253,162 7,064,009 251,830 633,137 321,591
Dividends Payable -- -- 4,736 -- 936
Investment Advisory Fee Payable 288,137 17,934 7,285 13,890 1,922
Transfer Agent Fee Payable 76,836 4,783 2,914 3,858 513
Other Liabilities 48,792 12,540 17,331 11,770 2,838
------------ ----------- ----------- ----------- ----------
Total Liabilities 94,024,830 10,300,673 8,055,504 708,593 327,800
------------ ----------- ----------- ----------- ----------
NET ASSETS $449,793,978 $34,538,212 $20,507,800 $12,887,128 $2,685,033
------------ ----------- ----------- ----------- ----------
------------ ----------- ----------- ----------- ----------
Shares Outstanding 16,249,010 5,936,751 2,043,169 1,489,726 280,154
------------ ----------- ----------- ----------- ----------
------------ ----------- ----------- ----------- ----------
Net Asset Value Per Share $27.68 $5.82 $10.04 $8.65 $9.58
------------ ----------- ----------- ----------- ----------
------------ ----------- ----------- ----------- ----------
</TABLE>
See Notes to Financial Statements.
25
<PAGE>
RYDEX SERIES TRUST
STATEMENT OF OPERATIONS
- --------------------------------------------------------------------------------
Year Ended March 31, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
U.S.
GOVERNMENT
MONEY
NOVA FUND URSA FUND MARKET FUND
------------ ------------- -----------
<S> <C> <C> <C>
INVESTMENT INCOME
Interest $ 21,669,434 $ 14,829,192 $14,829,288
------------ ------------- -----------
Total Income 21,669,434 14,829,192 14,829,288
------------ ------------- -----------
EXPENSES
12b1 Distribution Fees
Advisory Fees (Note 4) 4,588,393 2,956,581 1,361,674
Transfer Agent Fees (Note 4) 1,529,464 821,273 544,706
Audit and Outside Services 34,201 25,439 18,070
Accounting Fees (Note 4) 140,353 93,626 82,651
Legal 165,454 109,795 81,261
Organizational Expenses 34,857 16,538 8,877
Registration Fees 82,966 87,387 83,293
Custodian Fees 77,428 77,261 9,273
Miscellaneous 250,942 273,192 268,929
------------ ------------- -----------
Total Expenses 6,904,058 4,461,092 2,458,734
Custodian Fees Paid Indirectly
(Note 5) 72,009 71,790 2,275
------------ ------------- -----------
Net Expenses 6,832,049 4,389,302 2,456,459
------------ ------------- -----------
Net Investment Income 14,837,385 10,439,890 12,372,829
------------ ------------- -----------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS
Net Realized Gain (Loss) on:
Investment Securities (92,130,032) (335,267,046) (8,594)
Written Options 203,571,681 319,776,505 --
Futures Contracts 76,694,849 (93,588,852) --
------------ ------------- -----------
Total Net Realized Gain (Loss) 188,136,498 (109,079,393) (8,594)
Net Change in Unrealized Appreciation
(Depreciation) on Investments,
Options and Futures Contracts 36,083,994 (36,070,499) --
------------ ------------- -----------
Net Gain (Loss) on Investments 224,220,492 (145,149,892) (8,594)
------------ ------------- -----------
Net Increase (Decrease) in Net Assets
from Operations $239,057,877 $(134,710,002) $12,364,235
------------ ------------- -----------
------------ ------------- -----------
</TABLE>
See Notes to Financial Statements.
26
<PAGE>
RYDEX SERIES TRUST
STATEMENT OF OPERATIONS
- --------------------------------------------------------------------------------
Year Ended March 31, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
U.S.
OVER-THE- PRECIOUS GOVERNMENT HIGH YIELD
COUNTER FUND METALS FUND BOND FUND JUNO FUND FUND
------------ ------------ ---------- ----------- ----------
<S> <C> <C> <C> <C> <C>
INVESTMENT INCOME
Interest $ 1,486,803 $ 169,515 $1,036,381 $ 919,004 $2,140,899
Dividends 366,882 217,004 -- -- 15,104
------------ ------------ ---------- ----------- ----------
Total Income 1,853,685 386,519 1,036,381 919,004 2,156,003
------------ ------------ ---------- ----------- ----------
EXPENSES
12b-1 Distribution Fees -- -- -- -- 63,151
Advisory Fees (Note 2) 2,529,352 200,278 91,744 160,954 189,453
Transfer Agent Fees (Note 2) 674,494 53,408 36,617 44,710 50,521
Audit and Outside Services 20,644 3,496 2,077 2,482 3,128
Accounting Fees (Note 4) 92,254 23,688 21,531 19,703 25,380
Legal 95,070 8,414 3,751 6,443 9,354
Organizational Expenses 4,931 6,839 4,150 6,756 8,753
Registration Fees 47,783 16,469 12,291 13,930 15,655
Custodian Fees 151,946 29,112 8,706 7,319 18,805
Miscellaneous 196,797 33,038 21,598 25,176 15,066
------------ ------------ ---------- ----------- ----------
Total Expenses 3,813,271 374,742 202,465 287,473 399,266
Custodian Fees Paid Indirectly
(Note 5) 2,336 2,347 2,281 2,402 214
Less Fees Waived -- 14 -- -- 45,043
------------ ------------ ---------- ----------- ----------
Net Expenses 3,810,935 372,381 200,184 285,071 354,009
------------ ------------ ---------- ----------- ----------
Net Investment Income (Loss) (1,957,250) 14,138 836,197 633,933 1,801,994
------------ ------------ ---------- ----------- ----------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS
Net Realized Gain (Loss) on:
Investment Securities 45,337,986 (14,237,472) 1,848,557 426 (197,630)
Written Options 1,378,405 (112,356) 707,044 (136,087) --
Futures Contracts 292,754 -- -- (2,143,180) --
------------ ------------ ---------- ----------- ----------
Total Net Realized Gain (Loss) 47,009,145 (14,349,828) 2,555,601 (2,278,841) (197,630)
Net Change in Unrealized Appreciation/
(Depreciation) on Investments,
Options and Futures Contracts 57,345,453 4,609,432 312,595 (794,967) 297,691
------------ ------------ ---------- ----------- ----------
Net Gain (Loss) on Investments 104,354,598 (9,740,396) 2,868,196 (3,073,808) 100,061
------------ ------------ ---------- ----------- ----------
Net Increase (Decrease) in Net Assets
from Operations $102,397,348 $ (9,726,258) $3,704,393 $(2,439,875) $1,902,055
------------ ------------ ---------- ----------- ----------
------------ ------------ ---------- ----------- ----------
</TABLE>
See Notes to Financial Statements.
27
<PAGE>
RYDEX SERIES TRUST
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NOVA FUND URSA FUND
--------------------------------- ---------------------------------
YEAR ENDED PERIOD ENDED YEAR ENDED PERIOD ENDED
MARCH 31, 1998 MARCH 31, 1997 MARCH 31, 1998 MARCH 31, 1997
--------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
FROM INVESTMENT ACTIVITIES
Net Investment Income $ 14,837,385 $ 6,526,771 $ 10,439,890 $ 7,372,787
Net Realized Gain (Loss) on
Investments 188,136,498 39,565,593 (109,079,393) (67,500,468)
Net Change in Unrealized Appreciation
(Depreciation) of Investments 36,083,994 (12,688,383) (36,070,499) 27,690,198
--------------- --------------- --------------- ---------------
Net Increase (Decrease) in Net Assets
from Operations 239,057,877 33,403,981 (134,710,002) (32,437,483)
--------------- --------------- --------------- ---------------
Distributions to Shareholders
From Net Investment Income (Note 1) -- -- (1,305,283) (752,816)
From Realized Gain on Investments (1,480,654) (6,012,731) -- --
Net Increase (Decrease) in Net Assets
from Shares Transactions (Note 8) 566,739,695 (70,002,669) (192,047,007) 422,924,543
--------------- --------------- --------------- ---------------
Net Increase (Decrease) in Net Assets 804,316,918 (42,611,419) (328,062,292) 389,734,244
--------------- --------------- --------------- ---------------
NET ASSETS--Beginning of Period 181,929,697 224,541,116 582,287,512 192,553,268
--------------- --------------- --------------- ---------------
NET ASSETS--End of Period $ 986,246,615 $ 181,929,697 $ 254,225,220 $ 582,287,512
--------------- --------------- --------------- ---------------
--------------- --------------- --------------- ---------------
</TABLE>
See Notes to Financial Statements.
28
<PAGE>
RYDEX SERIES TRUST
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
U.S. GOVERNMENT OVER-THE-
MONEY MARKET FUND COUNTER FUND
--------------------------------- ---------------------------------
YEAR ENDED PERIOD ENDED YEAR ENDED PERIOD ENDED
MARCH 31, 1998 MARCH 31, 1997 MARCH 31, 1998 MARCH 31, 1997
--------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
FROM INVESTMENT ACTIVITIES
Net Investment Income (Loss) $ 12,372,829 $ 5,843,573 $ (1,957,250) $ 85,633
Net Realized Gain (Loss) on
Investments (8,594) -- 47,009,145 18,634,695
Net Change in Unrealized Appreciation
(Depreciation) of Investments -- -- 57,345,453 (676,120)
--------------- --------------- --------------- ---------------
Net Increase (Decrease) in
Net Assets from Operations 12,364,235 5,843,573 102,397,348 18,044,208
--------------- --------------- --------------- ---------------
Distributions to Shareholders
From Net Investment Income
(Note 1) (12,303,858) (5,799,436) -- (522,552)
From Realized Gain on Investments -- -- (1,017,455) (57,883)
Net Increase (Decrease) in Net Assets
from Shares Transactions
(Note 8) (30,318,479) 129,584,142 296,135,642 (13,901,489)
--------------- --------------- --------------- ---------------
Net Increase (Decrease) in
Net Assets (30,258,102) 129,628,279 397,515,535 3,562,284
--------------- --------------- --------------- ---------------
NET ASSETS--Beginning of Period 283,552,826 153,924,547 52,278,198 48,715,914
--------------- --------------- --------------- ---------------
NET ASSETS--End of Period $ 253,294,724 $ 283,552,826 $ 449,793,733 $ 52,278,198
--------------- --------------- --------------- ---------------
--------------- --------------- --------------- ---------------
</TABLE>
See Notes to Financial Statements.
29
<PAGE>
RYDEX SERIES TRUST
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
U.S. GOVERNMENT
PRECIOUS METALS FUND BOND FUND
--------------------------------- ---------------------------------
YEAR ENDED PERIOD ENDED YEAR ENDED PERIOD ENDED
MARCH 31, 1998 MARCH 31, 1997 MARCH 31, 1998 MARCH 31, 1997
--------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
FROM INVESTMENT ACTIVITIES
Net Investment Income (Loss) $ 14,138 $ -- $ 836,197 $ 362,342
Net Realized Gain (Loss) on
Investments (14,349,828) (10,514,014) 2,555,601 (152,481)
Net Change in Unrealized Appreciation
(Depreciation) of Investments 4,609,432 2,142,579 312,595 (254,243)
--------------- --------------- --------------- ---------------
Net Increase (Decrease) in
Net Assets from Operations (9,726,258) (8,371,435) 3,704,393 (44,382)
--------------- --------------- --------------- ---------------
Distributions to Shareholders
From Net Investment Income
(Note 1) -- -- (795,589) (362,881)
Net Increase (Decrease) in Net Assets
from Shares Transactions
(Note 8) 20,584,331 (4,521,996) 14,297,344 (14,622,230)
--------------- --------------- --------------- ---------------
Net Increase (Decrease) in
Net Assets 10,858,073 (12,893,431) 17,206,148 (15,029,493)
--------------- --------------- --------------- ---------------
NET ASSETS--Beginning of Period 23,680,139 36,573,570 3,301,652 18,331,145
--------------- --------------- --------------- ---------------
NET ASSETS--End of Period $ 34,538,212 $ 23,680,139 $20,507,800 $ 3,301,652
--------------- --------------- --------------- ---------------
--------------- --------------- --------------- ---------------
</TABLE>
See Notes to Financial Statements.
30
<PAGE>
RYDEX SERIES TRUST
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
HIGH YIELD
JUNO FUND FUND
--------------------------------- ----------------------------------
YEAR ENDED PERIOD ENDED YEAR ENDED PERIOD ENDED
MARCH 31, 1998 MARCH 31, 1997 MARCH 31, 1998 MARCH 31, 1997*
--------------- --------------- --------------- ----------------
<S> <C> <C> <C> <C>
FROM INVESTMENT ACTIVITIES
Net Investment Income (Loss) $ 633,933 $ 510,807 $ 1,801,994 $ 141,743
Net Realized Gain (Loss) on
Investments (2,278,841) (1,193,075) (197,630) (95,444)
Net Change in Unrealized Appreciation
(Depreciation) of Investments (794,967) 1,086,638 297,691 (241,600)
--------------- --------------- --------------- ----------------
Net Increase (Decrease) in Net Assets
Resulting from Operations (2,439,875) 404,370 1,902,055 (195,301)
--------------- --------------- --------------- ----------------
Distributions to Shareholders
From Net Investment Income (Note 1) (128,263) (61,626) (1,802,888) (141,743)
Net Increase (Decrease) in Net Assets
Resulting from Shares Transactions
(Note 8) (17,121,999) 13,374,908 (7,931,805) 10,854,715
--------------- --------------- --------------- ----------------
Net Increase (Decrease) in
Net Assets (19,690,137) 13,717,652 (7,832,638) 10,517,671
--------------- --------------- --------------- ----------------
NET ASSETS--Beginning of Period 32,577,265 18,859,613 10,517,671 --
--------------- --------------- --------------- ----------------
NET ASSETS--End of Period $ 12,887,128 $32,577,265 $ 2,685,033 $10,517,671
--------------- --------------- --------------- ----------------
--------------- --------------- --------------- ----------------
</TABLE>
* COMMENCEMENT OF OPERATIONS: JANUARY 3, 1997
See Notes to Financial Statements.
31
<PAGE>
RYDEX SERIES TRUST
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NOVA FUND
-----------------------------------------------------------
YEAR PERIOD YEAR YEAR PERIOD
ENDED ENDED ENDED ENDED ENDED
MARCH 31, MARCH 31, JUNE 30, JUNE 30, JUNE 30,
1998 1997 1996 1995 1994*
---------- ---------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:+
NET ASSET VALUE--BEGINNING OF PERIOD $ 17.89 $ 15.68 $ 11.81 $ 9.77 $ 10.01
---------- ---------- --------- --------- ---------
Net Investment Income .59 .35 .56 .28 .01
Net Realized and Unrealized Gains
(Losses) on Securities 11.39 2.19 3.31 2.88 (.25)
---------- ---------- --------- --------- ---------
Net Increase (Decrease) in Net Asset
Value Resulting from Operations 11.98 2.54 3.87 3.16 (.24)
Dividends to Shareholders from Net
Investment Income .00 .00 .00 (.29) .00
Distributions to Shareholders from
Net Realized Capital Gain (.05) (.33) .00 (.83) .00
---------- ---------- --------- --------- ---------
Net Increase (Decrease) in Net Asset
Value 11.93 2.21 3.87 2.04 (.24)
---------- ---------- --------- --------- ---------
NET ASSET VALUE--END OF PERIOD $ 29.82 $ 17.89 $ 15.68 $ 11.81 $ 9.77
---------- ---------- --------- --------- ---------
---------- ---------- --------- --------- ---------
TOTAL INVESTMENT RETURN 67.02% 20.92%** 32.77% 32.65% (2.47)%
RATIOS TO AVERAGE NET ASSETS
Gross Expenses 1.13% 1.19%**
Net Expenses 1.11% 1.16%** 1.31% 1.43% 1.73%**
Net Investment Income 2.42% 2.69%** 3.14% 2.62% 1.05%**
SUPPLEMENTARY DATA:
Portfolio Turnover Rate*** 0% 0% 0% 0% 0%
Net Assets, End of Period (000's
omitted) $986,247 $181,930 $ 224,541 $62,916 $77,914
</TABLE>
+ THE PER SHARE DATA OF THE FINANCIAL HIGHLIGHTS TABLE IS CALCULATED USING
THE DAILY SHARES OUTSTANDING AVERAGE FOR THE YEAR.
* COMMENCEMENT OF OPERATIONS: JULY 12, 1993--NOVA FUND
** ANNUALIZED
*** PORTFOLIO TURNOVER RATIO IS CALCULATED WITHOUT REGARD TO SHORT-TERM
SECURITIES HAVING A MATURITY OF LESS THAN ONE YEAR. THE NOVA, URSA, AND
JUNO FUNDS TYPICALLY HOLD MOST OF THEIR INVESTMENTS IN OPTIONS AND
FUTURES CONTRACTS WHICH ARE DEEMED SHORT-TERM SECURITIES.
See Notes to Financial Statements.
32
<PAGE>
RYDEX SERIES TRUST
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
URSA FUND
-----------------------------------------------------------
YEAR PERIOD YEAR YEAR PERIOD
ENDED ENDED ENDED ENDED ENDED
MARCH 31, MARCH 31, JUNE 30, JUNE 30, JUNE 30,
1998 1997 1996 1995 1994*
---------- ---------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:+
NET ASSET VALUE--BEGINNING OF PERIOD $ 7.02 $ 7.55 $ 8.79 $ 10.54 $ 10.00
---------- ---------- --------- --------- ---------
Net Investment Income .19 .17 .30 .35 .01
Net Realized and Unrealized Gains
(Losses) on Securities (2.23) (.68) (1.54) (1.78) .53
---------- ---------- --------- --------- ---------
Net Increase (Decrease) in Net Asset
Value Resulting from Operations (2.04) (.51) (1.24) (1.43) .54
Dividends to Shareholders from Net
Investment Income (.02) (.02) .00 (.32) .00
---------- ---------- --------- --------- ---------
Net Increase (Decrease) in Net Asset
Value (2.06) (.53) (1.24) (1.75) .54
---------- ---------- --------- --------- ---------
NET ASSET VALUE--END OF PERIOD $ 4.96 $ 7.02 $ 7.55 $ 8.79 $ 10.54
---------- ---------- --------- --------- ---------
---------- ---------- --------- --------- ---------
TOTAL INVESTMENT RETURN (29.06)% (8.98)%** (14.11)% (14.08)% 10.89%
RATIOS TO AVERAGE NET ASSETS
Gross Expenses 1.36% 1.36%**
Net Expenses 1.34% 1.34%** 1.39% 1.39% 1.67%**
Net Investment Income 3.18% 3.21%** 3.38% 3.50% 1.43%**
SUPPLEMENTARY DATA:
Portfolio Turnover Rate*** 0% 0% 0% 0% 0%
Net Assets, End of Period (000's
omitted) $254,225 $582,288 $ 192,553 $ 127,629 $ 110,899
</TABLE>
+ THE PER SHARE DATA OF THE FINANCIAL HIGHLIGHTS TABLE IS CALCULATED USING
THE DAILY SHARES OUTSTANDING AVERAGE FOR THE YEAR.
* COMMENCEMENT OF OPERATIONS: JANUARY 7, 1994--URSA FUND
** ANNUALIZED
*** PORTFOLIO TURNOVER RATIO IS CALCULATED WITHOUT REGARD TO SHORT-TERM
SECURITIES HAVING A MATURITY OF LESS THAN ONE YEAR. THE NOVA , URSA, AND
JUNO FUNDS TYPICALLY HOLD MOST OF THEIR INVESTMENTS IN OPTIONS AND
FUTURES CONTRACTS WHICH ARE DEEMED SHORT-TERM SECURITIES.
See Notes to Financial Statements.
33
<PAGE>
RYDEX SERIES TRUST
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
U.S. GOVERNMENT MONEY MARKET FUND
-----------------------------------------------------------
YEAR PERIOD YEAR YEAR PERIOD
ENDED ENDED ENDED ENDED ENDED
MARCH 31, MARCH 31, JUNE 30, JUNE 30, JUNE 30,
1998 1997 1996 1995 1994*
---------- ---------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:+
NET ASSET VALUE--BEGINNING OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
---------- ---------- --------- --------- ---------
Net Investment Income .04 .03 .04 .04 .01
---------- ---------- --------- --------- ---------
Net Increase in Net Asset Value
Resulting from Operations .04 .03 .04 .04 .01
Dividends to Shareholders from Net
Investment Income (.04) (.03) (.04) (.04) (.01)
---------- ---------- --------- --------- ---------
Net Increase in Net Asset Value .00 .00 .00 .00 .00
---------- ---------- --------- --------- ---------
NET ASSET VALUE--END OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
---------- ---------- --------- --------- ---------
---------- ---------- --------- --------- ---------
TOTAL INVESTMENT RETURN 4.69% 4.39%** 4.60% 4.43% 2.47%
RATIOS TO AVERAGE NET ASSETS
Gross Expenses .89% .86%**
Net Expenses .89% .86%** .99% .89% 1.16%**
Net Investment Income 4.37% 4.06%** 4.18% 4.23% 2.34%**
SUPPLEMENTARY DATA:
Portfolio Turnover Rate*** 0% 0% 0% 0% 0%
Net Assets, End of Period (000's
omitted) $253,295 $283,553 $ 153,925 $ 284,198 $88,107
</TABLE>
+ THE PER SHARE DATA OF THE FINANCIAL HIGHLIGHTS TABLE IS CALCULATED USING
THE DAILY SHARES OUTSTANDING AVERAGE FOR THE YEAR.
* COMMENCEMENT OF OPERATIONS: DECEMBER 3, 1993--U.S. GOVERNMENT MONEY
MARKET FUND
** ANNUALIZED
*** PORTFOLIO TURNOVER RATIO IS CALCULATED WITHOUT REGARD TO SHORT-TERM
SECURITIES HAVING A MATURITY OF LESS THAN ONE YEAR.
See Notes to Financial Statements.
34
<PAGE>
RYDEX SERIES TRUST
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
OVER-THE-COUNTER FUND
------------------------------------------------------------------
YEAR PERIOD YEAR YEAR PERIOD
ENDED ENDED ENDED ENDED ENDED
MARCH 31, MARCH 31, JUNE 30, JUNE 30, JUNE 30,
1998 1997 1996 1995 1994*
---------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:+
NET ASSET VALUE--BEGINNING OF PERIOD $ 17.93 $ 15.16 $ 12.22 $ 8.76 $ 10.00
---------- ----------- ----------- ----------- -----------
Net Investment Income (Loss) (.14) .01 .06 .14 .01
Net Realized and Unrealized Gains
(Losses) on Securities 9.99 2.84 3.24 4.17 (1.25)
---------- ----------- ----------- ----------- -----------
Net Increase (Decrease) in Net Asset
Value Resulting from Operations 9.85 2.85 3.30 4.31 (1.24)
Dividends to Shareholders from Net
Investment Income .00 (.07) .00 (.12) .00
Distributions to Shareholders from
Net Realized Capital Gain (.10) (.01) (.36) (.73) .00
---------- ----------- ----------- ----------- -----------
Net Increase (Decrease) in Net Asset
Value 9.75 2.77 2.94 3.46 (1.24)
---------- ----------- ----------- ----------- -----------
NET ASSET VALUE--END OF PERIOD $ 27.68 $ 17.93 $ 15.16 $ 12.22 $ 8.76
---------- ----------- ----------- ----------- -----------
---------- ----------- ----------- ----------- -----------
TOTAL INVESTMENT RETURN 55.05% 24.77%** 26.44% 49.00% (30.17)%
RATIOS TO AVERAGE NET ASSETS
Gross Expenses 1.13% 1.27%**
Net Expenses 1.13% 1.27%** 1.33% 1.41% 1.97%**
Net Investment Income (.58)% .08%** .44% 1.34% 1.69%**
SUPPLEMENTARY DATA:
Portfolio Turnover Rate*** 971.80% 1,140.35% 2,578.56% 2,241.00% 1,171.00%
Net Assets, End of Period (000's
omitted) $ 449,794 $ 52,278 $ 48,716 $ 61,948 $ 30,695
</TABLE>
+ THE PER SHARE DATA OF THE FINANCIAL HIGHLIGHTS TABLE IS CALCULATED USING
THE DAILY SHARES OUTSTANDING AVERAGE FOR THE YEAR.
* COMMENCEMENT OF OPERATIONS: FEBRUARY 14, 1994--OVER-THE-COUNTER FUND
** ANNUALIZED
*** PORTFOLIO TURNOVER RATIO IS CALCULATED WITHOUT REGARD TO SHORT-TERM
SECURITIES HAVING A MATURITY OF LESS THAN ONE YEAR.
See Notes to Financial Statements.
35
<PAGE>
RYDEX SERIES TRUST
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRECIOUS METALS FUND
-----------------------------------------------------------------
YEAR PERIOD YEAR YEAR PERIOD
ENDED ENDED ENDED ENDED ENDED
MARCH 31, MARCH 31, JUNE 30, JUNE 30, JUNE 30,
1998 1997 1996 1995 1994*
---------- ---------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:+
NET ASSET VALUE--BEGINNING OF PERIOD $ 7.64 $ 9.05 $ 8.73 $ 8.29 $ 10.00
---------- ---------- ----------- ----------- -----------
Net Investment Income .00 .00 .00 .10 .01
Net Realized and Unrealized
Gains (Losses) on Securities (1.82) (1.41) .32 .43 (1.72)
---------- ---------- ----------- ----------- -----------
Net Increase (Decrease) in Net Asset
Value Resulting from Operations (1.82) (1.41) .32 .53 (1.71)
Dividends to Shareholders from Net
Investment Income .00 .00 .00 (.09) .00
---------- ---------- ----------- ----------- -----------
Net Increase (Decrease) in Net Asset
Value (1.82) (1.41) .32 .44 (1.71)
---------- ---------- ----------- ----------- -----------
NET ASSET VALUE--END OF PERIOD $ 5.82 $ 7.64 $ 9.05 $ 8.73 $ 8.29
---------- ---------- ----------- ----------- -----------
---------- ---------- ----------- ----------- -----------
TOTAL INVESTMENT RETURN (23.82)% (20.77)%** 3.67% 6.21% (29.27)%
RATIOS TO AVERAGE NET ASSETS
Gross Expenses 1.42% 1.49%**
Net Expenses 1.41% 1.45%** 1.33% 1.38% 2.06%**
Net Investment Income .05% .00%** (.01)% 1.15% 1.23%**
SUPPLEMENTARY DATA:
Portfolio Turnover Rate*** 752.05% 743.33% 1,036.37% 1,765.00% 2,728.00%
Average Commision Rate Paid**** .0140 .0101 .0151 -- --
Net Assets, End of Period (000's
omitted) $ 34,538 $ 23,680 $ 36,574 $ 40,861 $ 1,526
</TABLE>
+ THE PER SHARE DATA OF THE FINANCIAL HIGHLIGHTS TABLE IS CALCULATED USING
THE DAILY SHARES OUTSTANDING AVERAGE FOR THE YEAR.
* COMMENCEMENT OF OPERATIONS: DECEMBER 1, 1993--PRECIOUS METALS FUND
** ANNUALIZED
*** PORTFOLIO TURNOVER RATIO IS CALCULATED WITHOUT REGARD TO SHORT-TERM
SECURITIES HAVING A MATURITY OF LESS THAN ONE YEAR.
**** FOR FISCAL YEARS BEGINNING ON OR AFTER SEPTEMBER 1,1995, THE FUND IS
REQUIRED TO DISCLOSE ITS AVERAGE COMMISSION RATE PER SHARE FOR PURCHASES
AND SALES OF EQUITY SECURITIES.
See Notes to Financial Statements.
36
<PAGE>
RYDEX SERIES TRUST
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
U.S. GOVERNMENT BOND FUND
--------------------------------------------------------------
YEAR PERIOD YEAR YEAR PERIOD
ENDED ENDED ENDED ENDED ENDED
MARCH 31, MARCH 31, JUNE 30, JUNE 30, JUNE 30,
1998 1997 1996 1995 1994*
---------- ---------- --------- ----------- -----------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:+
NET ASSET VALUE--BEGINNING OF PERIOD $ 8.52 $ 8.97 $ 9.55 $ 8.24 $ 10.00
---------- ---------- --------- ----------- -----------
Net Investment Income .45 .34 .46 .39 .02
Net Realized and Unrealized Gains
(Losses) on Securities 1.50 (0.45) (0.45) 1.17 (1.76)
---------- ---------- --------- ----------- -----------
Net Increase (Decrease) in Net Asset
Value Resulting from Operations 1.95 (.11) .01 1.56 (1.74)
Dividends to Shareholders from Net
Investment Income (.43) (.34) (.46) (.25) (.02)
Distributions to Shareholders from
Net Realized Capital Gain .00 .00 (.13) .00 .00
---------- ---------- --------- ----------- -----------
Net Increase (Decrease) in Net Asset
Value 1.52 (.45) (.58) 1.31 (1.76)
---------- ---------- --------- ----------- -----------
NET ASSET VALUE--END OF PERIOD $ 10.04 $ 8.52 $ 8.97 $ 9.55 $ 8.24
---------- ---------- --------- ----------- -----------
---------- ---------- --------- ----------- -----------
TOTAL INVESTMENT RETURN 24.72% (.46)%** (1.48)% 18.97% (32.63)%
RATIOS TO AVERAGE NET ASSETS
Gross Expenses 1.13% 1.51%**
Net Expenses 1.11% 1.49%** 1.26% 2.26% 3.05%**
Net Investment Income 4.65% 5.06%** 4.73% 4.64% 3.39%**
SUPPLEMENTARY DATA:
Portfolio Turnover Rate*** 1,496.21% 962.17% 780.30% 3,452.59% 1,290.00%
Net Assets, End of Period (000's
omitted) $ 20,508 $ 3,302 $ 18,331 $ 2,592 $ 1,564
</TABLE>
+ THE PER SHARE DATA OF THE FINANCIAL HIGHLIGHTS TABLE IS CALCULATED USING
THE DAILY SHARES OUTSTANDING AVERAGE FOR THE YEAR.
* COMMENCEMENT OF OPERATIONS: JANUARY 3, 1994--U.S.GOVERNMENT BOND FUND
** ANNUALIZED
*** PORTFOLIO TURNOVER RATIO IS CALCULATED WITHOUT REGARD TO SHORT-TERM
SECURITIES HAVING A MATURITY OF LESS THAN ONE YEAR.
See Notes to Financial Statements.
37
<PAGE>
RYDEX SERIES TRUST
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
JUNO FUND
-----------------------------------------------
YEAR PERIOD YEAR PERIOD
ENDED ENDED ENDED ENDED
MARCH 31, MARCH 31, JUNE 30, JUNE 30,
1998 1997 1996 1995*
---------- ---------- --------- ---------
<S> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:+
NET ASSET VALUE--BEGINNING OF PERIOD $ 9.69 $ 9.47 $ 9.08 $ 10.00
---------- ---------- --------- ---------
Net Investment Income .16 .25 .34 .14
Net Realized and Unrealized Gains
(Losses) on Securities (1.12) .00 .05 (1.06)
---------- ---------- --------- ---------
Net Increase (Decrease) in Net Asset
Value Resulting from Operations (.96) .25 .39 (.92)
Dividends to Shareholders from Net
Investment Income (.08) (.03) .00 .00
---------- ---------- --------- ---------
Net Increase (Decrease) in Net Asset
Value (1.04) .22 .39 (.92)
---------- ---------- --------- ---------
NET ASSET VALUE--END OF PERIOD $ 8.65 $ 9.69 $ 9.47 $ 9.08
---------- ---------- --------- ---------
---------- ---------- --------- ---------
TOTAL INVESTMENT RETURN (9.92)% 3.75%** 4.30% (9.20)%
RATIOS TO AVERAGE NET ASSETS
Gross Expenses 1.61% 1.60%**
Net Expenses 1.59% 1.58%** 1.64% 1.50%**
Net Investment Income 3.55% 3.51%** 3.63% 1.32%**
SUPPLEMENTARY DATA:
Portfolio Turnover Rate*** 0% 0% 0% 0%
Net Assets, End of Period (000's
omitted) $ 12,887 $32,577 $18,860 $ 4,301
</TABLE>
+ THE PER SHARE DATA OF THE FINANCIAL HIGHLIGHTS TABLE IS CALCULATED USING
THE DAILY SHARES OUTSTANDING AVERAGE FOR THE YEAR.
* COMMENCEMENT OF OPERATIONS: MARCH 3, 1995--JUNO FUND
** ANNUALIZED
*** PORTFOLIO TURNOVER RATIO IS CALCULATED WITHOUT REGARD TO SHORT-TERM
SECURITIES HAVING A MATURITY OF LESS THAN ONE YEAR. THE NOVA , URSA, AND
JUNO FUNDS TYPICALLY HOLD MOST OF THEIR INVESTMENTS IN OPTIONS AND
FUTURES CONTRACTS WHICH ARE DEEMED SHORT-TERM SECURITIES.
See Notes to Financial Statements.
38
<PAGE>
RYDEX SERIES TRUST
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
HIGH YIELD FUND
----------------------
YEAR PERIOD
ENDED ENDED
MARCH 31, MARCH 31,
1998 1997*
---------- ----------
<S> <C> <C>
PER SHARE OPERATING PERFORMANCE:+
NET ASSET VALUE--BEGINNING OF PERIOD $ 9.81 $ 10.00
---------- ----------
Net Investment Income .73 .19
Net Realized and Unrealized Gains
(Losses) on Securities (.23) (.36)
---------- ----------
Net Increase (Decrease) in Net Asset
Value Resulting from Operations .50 (.17)
Dividends to Shareholders from Net
Investment Income (.73) (.02)
---------- ----------
Net Increase (Decrease) in Net Asset
Value (.23) (.19)
---------- ----------
NET ASSET VALUE--END OF PERIOD $ 9.58 $ 9.81
---------- ----------
---------- ----------
TOTAL INVESTMENT RETURN 4.74% (.12)%**
RATIOS TO AVERAGE NET ASSETS
Gross Expenses 1.62% 1.88%**
Net Expenses 1.44% .99%**
Net Investment Income 7.32% 8.57%**
SUPPLEMENTARY DATA:
Portfolio Turnover Rate*** 1,039.55% 763.11%
Net Assets, End of Period (000's
omitted) $ 2,685 $ 10,518
</TABLE>
+ THE PER SHARE DATA OF THE FINANCIAL HIGHLIGHTS TABLE IS CALCULATED USING
THE DAILY SHARES OUTSTANDING AVERAGE FOR THE YEAR.
* COMMENCEMENT OF OPERATIONS: JANUARY 3, 1997--HIGH YIELD FUND.
** ANNUALIZED
*** PORTFOLIO TURNOVER RATIO IS CALCULATED WITHOUT REGARD TO SHORT-TERM
SECURITIES HAVING A MATURITY OF LESS THAN ONE YEAR.
See Notes to Financial Statements.
39
<PAGE>
RYDEX SERIES TRUST
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES
The Rydex Series Trust (the "Trust") is registered with the Securities and
Exchange Commission under the Investment Company of 1940 as a non-diversified,
open-ended investment company, and is authorized to issue an unlimited number of
shares. The Trust consists of nine separate series, the Nova Fund, the Ursa
Fund, the U.S. Government Money Market Fund, the Over-the-Counter Fund, the
Precious Metals Fund, the U.S. Government Bond Fund, the Juno Fund, the High
Yield Fund and the Institutional Money Market Fund. The financial statements
include eight of the separate series. The Institutional Money Market Fund is in
a separate report. The following significant accounting policies are in
conformity with generally accepted accounting principles and are consistently
followed by the Trust.
During 1997, the Trust changed its fiscal year end from June 30 to March 31.
Accordingly, statements for the period ended March 31, 1997, reflect nine months
of activity.
A. Securities listed on an exchange are valued at the latest quoted sales prices
as of 4:00 P.M. on the valuation date. Securities not traded on an exchange are
valued at their last sales price. Listed options held by the Trust are valued at
their last bid price. Over-the-counter options held by the Trust are valued
using the average bid price obtained from one or more security dealers. The
value of futures contracts purchased and sold by the Trust are accounted for
using the unrealized gain or loss on the contracts that is determined by marking
the contracts to their current realized settlement prices. Short-term securities
are valued at amortized cost, which approximates market. Securities and assets
for which market quotations are not readily available are valued at fair value
as determined in good faith by or under direction of the Board of Trustees or by
the Advisor using methods established or ratified by the Board of Trustees.
B. Securities transactions are recorded on the trade date. Realized gains and
losses from securities transactions are recorded on the identified cost basis.
Dividend income is recorded on the ex-dividend date, net of applicable taxes
withheld by foreign countries. Interest income is accrued on a daily basis.
C. Net investment income is computed, and dividends are declared daily in the
U.S. Government Money Market Fund, the U.S. Government Bond Fund, and the High
Yield Fund. Income dividends in these funds are paid monthly. Dividends are
reinvested in additional shares unless shareholders request payment in cash.
Generally, short-term capital gains are distributed monthly in the U.S.
Government Money Market Fund.
D. When the Trust engages in a short sale, an amount equal to the proceeds
received by the Trust is reflected as an asset and an equivalent liability. The
amount of the liability is subsequently marked to
40
<PAGE>
RYDEX SERIES TRUST
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
market to reflect the market value of the short sale. The Trust maintains a
segregated account of securities as collateral for the short sales. The Trust is
exposed to market risk based on the amount, if any, that the market value of the
stock exceeds the market value of the securities in the segregated account.
E. When the Trust writes (sells) an option, an amount equal to the premium
received is entered in the Trust's accounting records as an asset and equivalent
liability. The amount of the liability is subsequently marked to market to
reflect the current value of the option written. When an option expires, or if
the Trust enters into a closing purchase transaction, the Trust realizes a gain
(or loss if the cost of a closing purchase transaction exceeds the premium
received when the option was sold).
F. The Trust may purchase or sell stock index futures contracts and options on
such futures contracts. Futures contracts are contracts for delayed delivery of
securities at a specified future delivery date and at a specific price. Upon
entering into a contract, the Trust deposits and maintains as collateral such
initial margin as required by the exchange on which the transaction is effected.
Pursuant to the contract, the Trust agrees to receive from or pay to the broker
an amount of cash equal to the daily fluctuation in value of the contract. Such
receipts or payments are known as variation margin and are recorded by the Trust
as unrealized gains or losses. When the contract is closed, the Trust records a
realized gain or loss equal to the difference between the value of the contract
at the time it was opened and the value at the time it was closed.
G. Futures contracts and written options involve, to varying degrees, elements
of market risk and risks in excess of the amount recognized in the Statements of
Assets and Liabilities. The face or contract amounts reflect the extent of the
involvement each fund has in the particular classes of instruments. Risks may be
caused by an imperfect correlation between movements in the price of the
instruments and the price of the underlying securities.
H. The Trust intends to comply with the provisions of the Internal Revenue Code
applicable to regulated investment companies and will distribute all net
investment income to its shareholders. Therefore, no Federal income tax
provision is required.
I. Costs incurred by the individual Funds in connection with their organization
and registration have been deferred and are being amortized on the straight-line
method over a five year period beginning on the date on which the individual
Fund commenced its investment activities.
J. The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amount of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial
41
<PAGE>
RYDEX SERIES TRUST
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
2. OPERATING POLICIES
The Trust utilizes futures contracts, options, and options on futures contracts
in order to meet the specific investment objectives of the individual funds.
The Nova Fund, which is designed to provide total returns over time that are
superior to the Standard and Poor's 500 Composite Stock Price Index-TM- ("S&P
500") invests primarily in futures on the S&P 500 index and options on those
futures in order to correlate its return with an amount approximately 150% of
the performance of the S&P 500. The Ursa Fund primarily sells futures contracts
and buys put options on futures contracts in furtherance of its investment
objective to inversely correlate to the S&P 500. The Precious Metals Fund seeks
capital appreciation. It buys primarily equity securities and purchases call
options and sells put options on the Philadelphia Stock Exchange Gold/Silver
Index-TM- ("XAU Index"). The U.S. Government Bond Fund strives to provide income
and capital appreciation. It purchases primarily long-term U.S. Treasury Bonds.
It also purchases futures contracts on U.S. Treasury Bonds and buys call options
on U.S. Treasury Bond futures as a substitute for a comparable market position
in the underlying U.S. Treasury Securities. The Juno Fund seeks to inversely
correlate with the price changes of the current Thirty Year U.S. Treasury Bond.
To meet this objective, Juno primarily buys put options on U.S. Treasury Bond
futures and sells U.S. Treasury Bond futures. The Over-the-Counter Fund strives
to provide investment results before fees and expenses that closely correlate
the total return of the NASDAQ 100 Index-TM-. The Over-the-Counter Fund invests
in securities included in the NASDAQ 100 Index-TM- and buys call options and
sells put options on stock indexes. The High Yield Fund, which correlates to the
Merrill Lynch High Yield ("MLHY") Index, does so by investing primarily in
long-term, intermediate-term and short-term, below investment grade, corporate
bonds. In addition the Nova Fund, the Ursa Fund, the Over-the-Counter Fund, and
the Precious Metals Fund all write options to further meet their investment
objectives.
The risks inherent in the use of options, futures contracts, and options on
futures contracts include 1) adverse changes in the value of such instruments;
2) imperfect correlation between the price of options and futures contracts and
options thereon and movements in the price of the underlying securities, index,
or futures contract; 3) the possible absences of a liquid secondary market for
any particular instrument at any time; and 4) the possible need to defer closing
out certain positions to avoid adverse tax consequences.
42
<PAGE>
RYDEX SERIES TRUST
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
3. REPURCHASE AGREEMENTS
The Trust transfers uninvested cash balances into a single joint account, the
daily aggregate balance of which is invested in one or more repurchase
agreements collateralized by U. S. Treasury obligations. As of March 31,1998 the
repurchase agreements with Fuji Securities, Inc., Paine Webber, Inc., Smith
Barney, and Prudential Securities, Inc., in the joint account and the collateral
therefore was as follows:
<TABLE>
<CAPTION>
SECURITY TYPE RANGE OF RATES PAR VALUE MARKET VALUE
- --------------------------------------- -------------- ------------ ------------
<S> <C> <C> <C>
United States Treasury Notes 5.25%-8.875% $304,468,000 $311,647,808
United States Treasury Bonds 6.375%-8.125% $ 96,310,000 $118,594,270
</TABLE>
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES
Under the terms of an investment advisory contract, the Trust pays PADCO
Advisors, Inc., an affiliated entity, investment advisory fees calculated at an
annualized rate, based on average daily net assets, of one half of one percent
(0.50%) of the net assets of the U.S. Government Money Market Fund and the U.S.
Government Bond Fund; three-quarters of one percent (0.75%) of the net assets of
the Nova Fund, the Precious Metals Fund, the Over-the-Counter Fund, and the High
Yield Fund; and nine-tenths of one percent (0.90%) of the net assets of the Ursa
Fund and the Juno Fund.
PADCO Service Company, Inc., a subsidiary of the investment advisor, provides
transfer agent service to the Trust at an annualized rate, based on average
daily net assets, of two-tenths of one percent (0.20%) of the net assets of the
U.S. Government Money Market Fund, U.S. Government Bond Fund, Precious Metals
Fund, Over-the-Counter Fund, and the High Yield Fund; and one-quarter of one
percent (0.25%) of the Nova Fund, the Ursa Fund, and the Juno Fund.
The High Yield Fund has adopted a Distribution Plan (the "Plan") pursuant to
Rule 12b-1 under the 1940 Act. The Plan provides that the High Yield Fund will
pay the Distributor, PADCO Financial Services, Inc., (an affiliated entity) up
to a maximum of 0.25% per annum of the High Yield Fund's average daily net
assets for expenses incurred by the Distributor relating to distribution and
promotion of the High Yield Fund's shares. Such expenses include, but are not
limited to, printing of certain reports used for sales purposes, preparation and
printing of sales literature, and related expenses, including any maintenance,
distribution, or service fees paid to securities dealers or brokers,
administrators, investment advisors or other institutions or persons who have
executed a distribution or service agreement. Effective September 23, 1997, the
Distributor agreed to waive amounts payable under the Plan. For the year ended
March 31, 1998, amounts waived were $22,132.
43
<PAGE>
RYDEX SERIES TRUST
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
The Trust paid PADCO Service Company, Inc. $477,866 in accounting fees for the
above eight funds for the year ended March 31, 1998.
5. ACCOUNTING FOR EXPENSES
The Trust has entered into an arrangement with its custodian whereby interest
earned on uninvested cash balances was used to offset a portion of the Trust's
expenses.
6. SECURITIES TRANSACTIONS
During the year ended March 31, 1998 purchases and sales of investment
securities were:
<TABLE>
<CAPTION>
U.S.
GOVERNMENT U.S.
MONEY OVER-THE- PRECIOUS GOVERNMENT
NOVA URSA MARKET COUNTER METALS BOND JUNO HIGH YIELD
FUND FUND FUND FUND FUND FUND FUND FUND
-- -- -- -------------- ------------ ------------ -- ------------
<S> <C> <C> <C> <C> <C>
Purchases $0 $0 $0 $3,427,893,924 $222,595,973 $228,629,330 $0 $216,211,804
Sales $0 $0 $0 $3,136,489,732 $202,535,366 $215,459,365 $0 $223,950,649
</TABLE>
The transactions shown above exclude short-term and temporary cash investments.
7. NET UNREALIZED APPRECIATION/DEPRECIATION OF SECURITIES
At March 31, 1998 unrealized appreciation (depreciation) and cost of investment
securities for Federal income tax purposes was:
<TABLE>
<CAPTION>
U.S.
GOVERNMENT U.S.
MONEY OVER-THE- PRECIOUS GOVERNMENT
NOVA URSA MARKET COUNTER METALS BOND
FUND FUND FUND FUND FUND FUND
------------ ------------ ------------ ------------ ------------ -----------
<S> <C> <C> <C> <C> <C> <C>
Gross Unrealized Appreciation $ 12,894,515 $ -- $ -- $ 9,976,834 $ -- $ 60,420
Gross Unrealized (Depreciation) -- (2,267,100) -- (95,584) (18,042,581) --
------------ ------------ ------------ ------------ ------------ -----------
Net Unrealized Appreciation/
(Depreciation) $ 12,894,515 $ (2,267,100) -- $ 9,881,250 $(18,042,581) $ 60,420
Cost of Investments for Federal Income
Tax Purposes $899,938,392 $275,076,097 $366,160,871 $438,619,242 $ 55,246,922 $19,600,883
<CAPTION>
JUNO HIGH YIELD
FUND FUND
----------- ----------
<S> <C> <C>
Gross Unrealized Appreciation $ 21,654 $ 49,036
Gross Unrealized (Depreciation) -- (4,634 )
----------- ----------
Net Unrealized Appreciation/
(Depreciation) $ 21,654 $ 44,402
Cost of Investments for Federal Income
Tax Purposes $12,153,179 $2,612,057
</TABLE>
44
<PAGE>
RYDEX SERIES TRUST
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
8. SHARE TRANSACTIONS
The Trust is authorized to distribute an unlimited number of shares.
Transactions in shares for the year ended March 31, 1998 were:
<TABLE>
<CAPTION>
U.S.
GOVERNMENT U.S.
MONEY OVER-THE- PRECIOUS GOVERNMENT
NOVA URSA MARKET COUNTER METALS BOND
FUND FUND FUND FUND FUND FUND
------------ ------------ -------------- ------------ ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Shares Purchased 298,544,343 602,377,836 7,003,801,278 211,244,843 59,825,453 31,718,190
Dividend Reinvestment 50,353 208,677 12,114,239 35,575 0 90,703
------------ ------------ -------------- ------------ ----------- -----------
Total Purchased 298,594,696 602,586,513 7,015,915,517 211,280,418 59,825,453 31,808,893
Shares Redeemed (275,687,374) (634,264,432) (7,046,233,581) (197,947,783) (56,987,792) (30,153,060)
------------ ------------ -------------- ------------ ----------- -----------
Net Shares Purchased/ (Redeemed) 22,907,322 (31,677,919) (30,318,064) 13,332,635 2,837,661 1,655,833
------------ ------------ -------------- ------------ ----------- -----------
------------ ------------ -------------- ------------ ----------- -----------
<CAPTION>
JUNO HIGH YIELD
FUND FUND
----------- -----------
<S> <C> <C>
Shares Purchased 23,983,761 16,991,233
Dividend Reinvestment 12,022 137,465
----------- -----------
Total Purchased 23,995,783 17,128,698
Shares Redeemed (25,868,396) (17,920,331)
----------- -----------
Net Shares Purchased/ (Redeemed) (1,872,613) (791,633)
----------- -----------
----------- -----------
</TABLE>
Transactions in shares for the period ended March 31, 1997 were:
<TABLE>
<CAPTION>
U.S.
GOVERNMENT U.S.
MONEY OVER-THE- PRECIOUS GOVERNMENT
NOVA URSA MARKET COUNTER METALS BOND
FUND FUND FUND FUND FUND FUND
------------ ------------ -------------- ------------ ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Shares Purchased 203,150,294 367,144,528 3,329,494,638 142,745,580 47,008,940 14,919,523
Dividend Reinvestment 300,618 90,217 5,678,838 27,056 -- 40,733
------------ ------------ -------------- ------------ ----------- -----------
Total Purchased 203,450,912 367,234,745 3,335,173,476 142,772,636 47,008,940 14,960,256
Shares Redeemed (207,604,225) (309,781,363) (3,205,603,845) (143,069,637) (47,949,316) (16,615,981)
------------ ------------ -------------- ------------ ----------- -----------
Net Shares Purchased/ (Redeemed) (4,153,313) 57,453,382 129,569,631 (297,001) (940,376) (1,655,725)
------------ ------------ -------------- ------------ ----------- -----------
------------ ------------ -------------- ------------ ----------- -----------
<CAPTION>
JUNO HIGH YIELD
FUND FUND
----------- ----------
<S> <C> <C>
Shares Purchased 14,955,089 3,374,658
Dividend Reinvestment 5,497 12,716
----------- ----------
Total Purchased 14,960,586 3,387,374
Shares Redeemed (13,589,740) (2,315,587)
----------- ----------
Net Shares Purchased/ (Redeemed) 1,370,846 1,071,787
----------- ----------
----------- ----------
</TABLE>
45
<PAGE>
RYDEX SERIES TRUST
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Transactions in dollars for the year ended March 31, 1998 were:
<TABLE>
<CAPTION>
U.S.
GOVERNMENT U.S.
MONEY OVER-THE- PRECIOUS GOVERNMENT
NOVA URSA MARKET COUNTER METALS BOND
FUND FUND FUND FUND FUND FUND
-------------- -------------- -------------- -------------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Shares Purchased $7,141,740,122 $3,520,783,180 $7,003,800,863 $4,997,462,409 $386,233,985 $307,497,702
Dividend Reinvestment 1,289,557 1,133,118 12,114,239 861,979 -- 863,573
-------------- -------------- -------------- -------------- ------------ ------------
Total Purchased 7,143,029,679 3,521,916,298 7,015,915,102 4,998,324,388 386,233,985 308,361,275
Shares Redeemed (6,576,289,984) (3,713,963,305) (7,046,233,581) (4,702,188,746) (365,649,654) (294,063,931)
-------------- -------------- -------------- -------------- ------------ ------------
Net Shares Purchased/ (Redeemed) $ 566,739,695 $ (192,047,007) $ (30,318,479) $ 296,135,642 $ 20,584,331 $14,297,344
-------------- -------------- -------------- -------------- ------------ ------------
-------------- -------------- -------------- -------------- ------------ ------------
<CAPTION>
JUNO HIGH YIELD
FUND FUND
------------ ------------
<S> <C> <C>
Shares Purchased $216,439,760 $169,670,660
Dividend Reinvestment 104,843 1,371,398
------------ ------------
Total Purchased 216,544,603 171,042,058
Shares Redeemed (233,666,602) (178,973,863)
------------ ------------
Net Shares Purchased/ (Redeemed) $(17,121,999) $ (7,931,805)
------------ ------------
------------ ------------
</TABLE>
Transactions in dollars for the period ended March 31, 1997 were:
<TABLE>
<CAPTION>
U.S.
GOVERNMENT U.S.
MONEY OVER-THE- PRECIOUS GOVERNMENT
NOVA URSA MARKET COUNTER METALS BOND
FUND FUND FUND FUND FUND FUND
-------------- -------------- -------------- -------------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Shares Purchased $3,521,884,322 $2,638,202,998 $3,329,457,087 $2,553,497,726 $413,202,942 $134,338,078
Dividend Reinvestment 5,375,055 626,105 5,730,900 507,026 -- 373,468
-------------- -------------- -------------- -------------- ------------ ------------
Total Purchased 3,527,259,377 2,638,829,103 3,335,187,987 2,554,004,752 413,202,942 134,711,546
Shares Redeemed (3,597,262,046) (2,215,904,560) (3,205,603,845) (2,567,906,241) (417,724,938) (149,333,776)
-------------- -------------- -------------- -------------- ------------ ------------
Net Shares Purchased/ (Redeemed) $ (70,002,669) $ 422,924,543 $ 129,584,142 $ (13,901,489) $ (4,521,996) $(14,622,230)
-------------- -------------- -------------- -------------- ------------ ------------
-------------- -------------- -------------- -------------- ------------ ------------
<CAPTION>
JUNO HIGH YIELD
FUND FUND
------------ -----------
<S> <C> <C>
Shares Purchased $140,757,025 $33,888,522
Dividend Reinvestment 49,308 126,588
------------ -----------
Total Purchased 140,806,333 34,015,110
Shares Redeemed (127,431,425) (23,160,395)
------------ -----------
Net Shares Purchased/ (Redeemed) $ 13,374,908 $10,854,715
------------ -----------
------------ -----------
</TABLE>
46
<PAGE>
RYDEX SERIES TRUST
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
9. OPTION CONTRACTS WRITTEN
During the year ended March 31, 1998 the Trust wrote the following contracts:
Call Options Written:
<TABLE>
<CAPTION>
NOVA FUND
---------------- URSA FUND
NUMBER ----------------------------
OF INITIAL NUMBER OF INITIAL
CONTRACTS PREMIUMS CONTRACTS PREMIUMS
-- ------------- --------- ----------------
<S> <C> <C> <C>
Outstanding at Beginning of Period 4,000 $ 184,676,444 20,000 $ 897,128,294
Options Written 13,000 682,460,750 36,000 1,866,149,192
Options Terminated (17,000) (867,137,194) (56,000) (2,763,277,486)
-- ------------- --------- ----------------
Outstanding at End of Period 0 $ 0 0 $ 0
-- ------------- --------- ----------------
-- ------------- --------- ----------------
</TABLE>
Put Options Written:
<TABLE>
<CAPTION>
OVER-THE-COUNTER
FUND
--------------
NUMBER
OF INITIAL
CONTRACTS PREMIUMS
-- -----------
<S> <C>
Outstanding at Beginning of Period 31 $ 203,450
Options Written 1,414 2,586,309
Options Terminated (1,425) (2,786,319)
-- -----------
Outstanding at End of Period 20 $ 3,440
-- -----------
-- -----------
</TABLE>
47
<PAGE>
RYDEX SERIES TRUST
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
10. NET ASSETS
At March 31, 1998, net assets consisted of:
<TABLE>
<CAPTION>
U.S.
GOVERNMENT
MONEY
NOVA FUND URSA FUND MARKET FUND
------------ ------------- ------------
<S> <C> <C> <C>
Paid-In-Capital $935,513,147 $ 513,961,691 $253,196,644
Undistributed Net Investment Income 14,837,385 871,911 106,674
Accumulated Net Realized Gain (Loss) on
Investments 9,548,359 (253,219,773) (8,594)
Net Unrealized Appreciation
(Depreciation) on Investments,
Options and Futures Contracts 26,347,724 (7,388,609) --
------------ ------------- ------------
Net Assets $986,246,615 $ 254,225,220 $253,294,724
------------ ------------- ------------
------------ ------------- ------------
</TABLE>
<TABLE>
<CAPTION>
U.S.
OVER-THE- PRECIOUS GOVERNMENT JUNO HIGH YIELD
COUNTER FUND METALS FUND BOND FUND FUND FUND
------------ ------------ ----------- ----------- ----------
<S> <C> <C> <C> <C> <C>
Paid-In-Capital $385,541,476 $ 64,163,051 $18,416,343 $19,924,100 $2,922,016
Undistributed Net Investment Income -- -- 229,758 22,515 --
Accumulated Net Realized Gain (Loss) on
Investments -- (33,959,438) 1,606,459 (6,963,554) (293,075)
Net Unrealized Appreciation
(Depreciation) on Investments,
Options and Futures Contracts 64,252,257 4,334,599 255,240 (95,933) 56,092
------------ ------------ ----------- ----------- ----------
Net Assets $449,793,733 $ 34,538,212 $20,507,800 $12,887,128 $2,685,033
------------ ------------ ----------- ----------- ----------
------------ ------------ ----------- ----------- ----------
</TABLE>
Realized capital gains differ for financial statement and tax purposes primarily
because of the timing of the recognition of post October 31 capital losses and
deferred losses on wash sales.
48
<PAGE>
RYDEX SERIES TRUST
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
11. LOSS CARRYFORWARD--FEDERAL INCOME TAX
At March 31, 1998, for Federal income tax purposes, the following funds have
capital loss carryovers which may be applied against future net taxable realized
gains of each succeeding year until the earlier of its utilization or
expiration.
<TABLE>
<CAPTION>
EXPIRES URSA PRECIOUS JUNO HIGH YIELD
MARCH 31 FUND METALS FUND FUND FUND
- --------------------------------------- ------------ ------------ ----------- -----------
<S> <C> <C> <C> <C>
2003 $ 6,618,786 $ -- $ -- $ --
2004 43,168,709 4,249,968 3,643,317 --
2005 50,012,823 709,440 106,438 18,261
2006 102,945,587 6,318,198 2,486,456 --
</TABLE>
49
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Shareholders and Board of Trustees,
Rydex Series Trust:
We have audited the statements of assets and liabilities, including the
schedules of investments, of the Nova, Ursa, U.S. Government Money Market,
Over-the-Counter, Precious Metals, U.S. Government Bond, Juno and High Yield
Funds (eight of the nine Funds) of Rydex Series Trust (the "Trust") as of March
31, 1998, the related statements of operations, changes in net assets, and the
financial highlights for each of the periods presented. These financial
statements and financial highlights are the responsibility of the Trust's
management. Our responsibility is to express an opinion on these financial
statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of March
31, 1998 by correspondence with the custodian and brokers. An audit also
includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position as of
March 31, 1998, the results of their operations, the changes in their net
assets, and the financial highlights for the periods presented in conformity
with generally accepted accounting principles.
DELOITTE & TOUCHE LLP
Princeton, New Jersey
May 22, 1998
<PAGE>
DISTRIBUTIONS (Unaudited)
During the fiscal year ended March 31, 1998, shareholders redeemed
$6,576,289,984 and $4,702,188,746 from the Nova and Over-the-Counter Funds,
respectively. A portion of those proceeds received by shareholders represent
capital gain distributions in the amounts of $134,532,110 and $2,296,599,
respectively. In addition, on December 5, 1997, the Nova and Over-the-Counter
Funds paid long-term capital gain distributions of $1,480,654 and $85,144
respectively, to shareholders of record on December 4, 1997. This notification
is to meet certain Internal Revenue Service requirements.
