DECEMBER 31, 2007
RYDEX VARIABLE TRUST ANNUAL REPORT
SECTOR FUNDS
BANKING FUND
INTERNET FUND
BASIC MATERIALS FUND
LEISURE FUND
BIOTECHNOLOGY FUND
PRECIOUS METALS FUND
CONSUMER PRODUCTS FUND
RETAILING FUND
ELECTRONICS FUND
TECHNOLOGY FUND
ENERGY FUND
TELECOMMUNICATIONS FUND
ENERGY SERVICES FUND
TRANSPORTATION FUND
FINANCIAL SERVICES FUND
UTILITIES FUND
HEALTH CARE FUND
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TABLE OF CONTENTS
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2
ABOUT SHAREHOLDERS’ FUND EXPENSES
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3
PERFORMANCE REPORTS AND FUND PROFILES
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
5
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
22
STATEMENTS OF ASSETS AND LIABILITIES
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
44
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
48
STATEMENTS OF CHANGES IN NET ASSETS
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
52
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
58
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
61
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
. . . . . . . . . . . . . . . . . . . . . . . . . . . .
71
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
72
INFORMATION ON BOARD OF TRUSTEES AND OFFICERS
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
77
THE RYDEX VARIABLE TRUST ANNUAL REPORT
|
1
DEAR SHAREHOLDER,
By the last three months of 2007 the stock market gains of summer and fall seemed like a distant memory.
The intertwined crises in the nation’s housing and credit markets had, by the fourth quarter, led to huge
drops in stock prices and unprecedented volatility. Despite the end of year turmoil, stocks actually turned in
a respectable performance in 2007 with the bellwether Dow Jones Industrial AverageSM and S&P 500®
indexes up 8.88% and 5.49%, respectively, on a total return basis. The tech-heavy Nasdaq 100 Index® , which
was up 19.24%, showed that investors had a robust appetite for risk for much of the year. Despite the fact
that calendar year returns were strong, 2007 will in all likelihood be remembered for the housing debacle
that hammered stocks and sent the economy to the brink of recession.
The unfolding housing crisis began to ripple through the world’s financial markets as far back as July, but it
was in the fourth quarter that both the U.S. economy and global financial markets lost momentum—with
the contagion effects of the subprime debt crisis reaching deeper into the global financial system. The
credit crunch that began in the third quarter enveloped the G-7 economies as traditional sources of credit
dried up. As asset values plummeted, financial institutions throughout the developed world found
themselves suddenly undercapitalized. With a full-blown financial crisis unfolding, central banks moved
into crisis prevention mode by pumping capital into their respective financial systems and slashing interest
rates. In perhaps one of the most important developments of the year, the outlines of a coordinated,
global easing campaign began to emerge.
In this uncertain environment fears grew that the Federal Reserve (“Fed”) was “behind the curve,” adding
to the volatility in stock prices. In fact, the Fed’s initial responses to the unfolding crisis were tempered by
inflationary concerns as high energy and commodity prices and a weak U.S. dollar drove inflation
significantly higher towards year end.
Risk appetites that had been running high disappeared, and the avoidance of risk became the dominant
theme as investors fled financial, consumer discretionary, value and small-cap stocks. The small-cap Russell
2000® Index fell 1.57%, confirming the rotation away from small caps that began to unfold early in the
year. Value stocks also underperformed in 2007 with the S&P 500/Citigroup Pure Value Index
underperforming its growth counterpart by more than 10 points. Both of these trends dovetailed in the
S&P SmallCap 600/Citigroup Pure Value Index which dropped nearly 18.60%, vastly underperforming all
other “style-box” exposures.
Predictably, defensive sectors such as utilities and consumer staples were favored. And, reflecting the
“decoupling” theory—which assumes growth in the developing world can continue in the face of slowing
growth elsewhere—energy, materials and technology stocks rose stratospherically as the respective S&P
500 sector indices rose 34.41%, 22.53% and 16.30%.
Returns for U.S. investors in international stock markets were also boosted by the ongoing decline in the
exchange value of the U.S. dollar, which fell 8.31% against a basket of the world’s major currencies. The
currency effect helped to propel full-year gains for the MSCI EAFE and Emerging Market indices to
11.66% and 38.79%, respectively.
With the flight-to-quality trade fully in motion, interest rates declined and the yield curve steepened.
We think that, as we move into the early months of 2008, stock market volatility will remain a fact of life.
Defensive exposures that performed well should continue to do so, at least on a relative basis until
recession fears abate. Uncorrelated investment strategies, such as absolute return, long/short, commodity,
managed futures and the like, should also provide refuge in a challenging investment climate.
We appreciate the trust you have placed in our firm’s quality and integrity by investing with us.
Sincerely,
David C. Reilly, CFA
Director, Portfolio Strategies
2
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THE RYDEX VARIABLE TRUST ANNUAL REPORT
ABOUT SHAREHOLDERS’ FUND EXPENSES (Unaudited)
All mutual funds have operating expenses and it is important for our shareholders to understand the
impact of costs on their investments. Shareholders of a Fund incur two types of costs: (i) transaction costs,
including sales charges (loads) on purchase payments, reinvested dividends, or other distributions;
redemption fees; and exchange fees; and (ii) ongoing costs, including management fees, administrative
services, and shareholder reports, among others. These ongoing costs, or operating expenses, are deducted
from a fund’s gross income and reduce the investment return of the fund.
A fund’s expenses are expressed as a percentage of its average net assets, which is known as the expense
ratio. The following examples are intended to help investors understand the ongoing costs (in dollars) of
investing in a Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
The examples are based on an investment of $1,000 made at the beginning of the period and held for the
entire six-month period beginning June 30, 2007 and ending December 31, 2007.
The following tables illustrate a Fund’s costs in two ways:
Table 1. Based on actual Fund return. This section helps investors estimate the actual expenses paid over
the period. The “Ending Account Value” shown is derived from the Fund’s actual return, and the fourth
column shows the dollar amount that would have been paid by an investor who started with $1,000 in
the Fund. Investors may use the information here, together with the amount invested, to estimate the
expenses paid over the period. Simply divide the Fund’s account value by $1,000 (for example, an
$8,600 account value divided by $1,000 = 8.6), then multiply the result by the number provided under
the heading “Expenses Paid During Period.”
Table 2. Based on hypothetical 5% return. This section is intended to help investors compare a Fund’s
cost with those of other mutual funds. The table provides information about hypothetical account
values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of
return of 5% per year before expenses, which is not the Fund’s actual return. The hypothetical account
values and expenses may not be used to estimate the actual ending account balance or expenses paid
during the period. The example is useful in making comparisons because the U.S. Securities and
Exchange Commission (the “SEC”) requires all mutual funds to calculate expenses based on the 5%
return. Investors can assess a Fund’s costs by comparing this hypothetical example with the hypothetical
examples that appear in shareholder reports of other funds.
The calculations above assume no shares were bought or sold during the period. Actual costs may have
been higher or lower, depending on the amount of investment and the timing of any purchases or
redemptions.
Note that the expenses shown in the table are meant to highlight and help compare ongoing costs only
and do not reflect any transactional costs which may be incurred by a Fund.
More information about a Fund’s expenses, including annual expense ratios for the past five years, can be
found in the Financial Highlights section of this report. For additional information on operating expenses
and other shareholder costs, please refer to the appropriate Fund prospectus.
THE RYDEX VARIABLE TRUST ANNUAL REPORT
|
3
ABOUT SHAREHOLDERS’ FUND EXPENSES (Unaudited) (concluded)
Beginning
Ending
Expenses
Expense
Account Value
Account Value
Paid During
Ratio†
June 30, 2007
December 31, 2007
Period*
Table 1. Based on actual Fund return
Banking Fund
1.56%
$1,000.00
$
772.80
$6.97
Basic Materials Fund
1.57%
1,000.00
1,102.50
8.32
Biotechnology Fund
1.57%
1,000.00
1,050.70
8.12
Consumer Products Fund
1.56%
1,000.00
1,054.30
8.08
Electronics Fund
1.57%
1,000.00
895.80
7.50
Energy Fund
1.57%
1,000.00
1,112.00
8.36
Energy Services Fund
1.57%
1,000.00
1,077.60
8.22
Financial Services Fund
1.56%
1,000.00
822.50
7.17
Health Care Fund
1.56%
1,000.00
994.40
7.84
Internet Fund
1.53%
1,000.00
1,000.60
7.72
Leisure Fund
1.55%
1,000.00
955.60
7.64
Precious Metals Fund
1.42%
1,000.00
1,207.10
7.90
Retailing Fund
1.55%
1,000.00
825.20
7.13
Technology Fund
1.55%
1,000.00
990.30
7.78
Telecommunications Fund
1.56%
1,000.00
941.80
7.64
Transportation Fund
1.56%
1,000.00
840.50
7.24
Utilities Fund
1.54%
1,000.00
1,055.50
7.98
Table 2. Based on hypothetical 5% return
Banking Fund
1.56%
1,000.00
1,017.24
7.96
Basic Materials Fund
1.57%
1,000.00
1,017.19
8.01
Biotechnology Fund
1.57%
1,000.00
1,017.19
8.01
Consumer Products Fund
1.56%
1,000.00
1,017.24
7.96
Electronics Fund
1.57%
1,000.00
1,017.19
8.01
Energy Fund
1.57%
1,000.00
1,017.19
8.01
Energy Services Fund
1.57%
1,000.00
1,017.19
8.01
Financial Services Fund
1.56%
1,000.00
1,017.24
7.96
Health Care Fund
1.56%
1,000.00
1,017.24
7.96
Internet Fund
1.53%
1,000.00
1,017.40
7.81
Leisure Fund
1.55%
1,000.00
1,017.29
7.91
Precious Metals Fund
1.42%
1,000.00
1,017.96
7.25
Retailing Fund
1.55%
1,000.00
1,017.29
7.91
Technology Fund
1.55%
1,000.00
1,017.29
7.91
Telecommunications Fund
1.56%
1,000.00
1,017.24
7.96
Transportation Fund
1.56%
1,000.00
1,017.24
7.96
Utilities Fund
1.54%
1,000.00
1,017.34
7.86
* Expenses are equal to the Fund’s annualized expense ratio, multiplied by the average account value over the period, multiplied by the
number of days in the most recent fiscal half-year, then divided by 365. Expenses shown do not include fees charged by insurance companies.
† Annualized
4
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THE RYDEX VARIABLE TRUST ANNUAL REPORT
PERFORMANCE REPORTS AND FUND PROFILES (Unaudited)
BANKING FUND
Cumulative Fund Performance:
May 2, 2001 – December 31, 2007
OBJECTIVE:
Seeks capital appreciation by investing in
companies that are involved in the banking sector, including
BANKING FUND
S&P 500 FINANCIALS INDEX†
S&P 500 INDEX
commercial banks (and their holding companies) and
$20,000
saving-and-loan institutions.
Inception: May 2, 2001
$15,000
$13,025
Despite four 25 basis point cuts that lowered the Fed
$11,929
funds rate from 5.25% to 4.25%, the subprime debacle
$10,000
$10,432
and collapse of the U.S. housing market decimated the
banking sector. Rydex Banking Fund fell 27.08% as
$5,000
compared to the S&P 500’s 5.49% return. Every industry
in the banking sector was negative on the year. Thrifts &
mortgage finance lost more than 40% and commercial
$0
05/02/01
12/31/01
12/31/02
12/31/03
12/31/04
12/31/05
12/31/06
12/31/07
banks lost more than 20% of their value in 2007. The
losers were led by Countrywide Financial Corp. (-78%),
† Data points for the line graph do not reflect the reinvestment of dividends
Washington Mutual, Inc. (-68%) and Sovereign Bancorp,
on securities in the index.
Inc. (-55%). Despite an abysmal year, a few bright spots
included First Bancorp, First Republic Bank and ABN
AMRO Holding NV.
AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIOD ENDED 12/31/07
SINCE
ONE
FIVE
INCEPTION
YEAR
YEAR
(05/02/01)
BANKING FUND
-27.08%
3.58%
2.68%
S&P 500 INDEX
5.49%
12.83%
4.04%
S&P 500 FINANCIALS INDEX
-18.52%
8.49%
3.12%
The returns presented above do not reflect the effects of taxes. Past performance is no guarantee of future results. The S&P 500 Index and the S&P
500 Financials Index 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.
Industry Diversification (Market Exposure as % of Net Assets)
Ten Largest Holdings (% of Total Net Assets)
ABN AMRO Holding NV —
Capital Markets
SP ADR
4.8%
9%
HSBC Holdings PLC — SP ADR
4.7%
Diversified
Wells Fargo & Co.
4.7%
Financial Services
JPMorgan Chase & Co.
4.6%
9%
Bank of America Corp.
4.6%
UBS AG — SP ADR
4.5%
Credit Suisse Group — SP ADR
4.0%
Wachovia Corp.
3.8%
Thrifts & Mortgage
Commercial
Finance
Banks
U.S. Bancorp
3.7%
16%
66%
Barclays PLC — SP ADR
3.7%
Top Ten Total
43.1%
“Ten Largest Holdings” exclude any temporary
cash or derivative investments.
Banking Fund
“Industry Diversification (Market Exposure as % of Net Assets)”
excludes any temporary cash investments.
THE RYDEX VARIABLE TRUST ANNUAL REPORT
|
5
PERFORMANCE REPORTS AND FUND PROFILES (Unaudited) (continued)
BASIC MATERIALS FUND
Cumulative Fund Performance:
May 2, 2001 – December 31, 2007
OBJECTIVE:
Seeks capital appreciation by investing in
companies engaged in the mining, manufacture or sale of
BASIC MATERIALS FUND
S&P 500 MATERIALS INDEX†
S&P 500 INDEX
basic materials, such as lumber, steel, iron, aluminum,
$25,000
concrete, chemicals and other basic building and
$22,877
manufacturing materials.
$20,000
$18,731
Inception: May 2, 2001
$15,000
$13,025
Rydex Basic Materials Fund turned in a 33.97% return
$10,000
for the one-year period ended December 31, 2007, as
compared to the S&P 500’s 5.49% return. The top
$5,000
performing industries were also the two largest industry
groups in this sector. Weighted at approximately 39%
$0
each, metals & mining were up 60.52% and chemicals
05/02/01
12/31/01
12/31/02
12/31/03
12/31/04
12/31/05
12/31/06
12/31/07
were up 38.61%. The worst performing industry group
was paper & forest products which lost 7.08%. The best
† Data points for the line graph do not reflect the reinvestment of dividends
on securities in the index.
performing stock was The Mosaic Co., up 335.75%, while
the worst performing stock was Louisiana-Pacific Corp.,
down 35.53%.
AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIOD ENDED 12/31/07
SINCE
ONE
FIVE
INCEPTION
YEAR
YEAR
(05/02/01)
BASIC MATERIALS FUND
33.97%
22.04%
13.22%
S&P 500 INDEX
5.49%
12.83%
4.04%
S&P 500 MATERIALS INDEX
22.53%
19.01%
12.55%
The returns presented above do not reflect the effects of taxes. Past performance is no guarantee of future results. The S&P 500 Index and the S&P
500 Materials Index 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.
Industry Diversification (Market Exposure as % of Net Assets)
Ten Largest Holdings (% of Total Net Assets)
Rio Tinto PLC — SP ADR
4.3%
Containers &
ArcelorMittal
3.9%
Packaging
Other
Monsanto Co.
3.3%
8%
10%
The Mosaic Co.
3.2%
Potash Corporation of Saskatchewan
2.9%
Barrick Gold Corp.
2.3%
E.I. du Pont de Nemours and Co.
2.3%
Freeport-McMoRan
Copper & Gold, Inc.
2.3%
Metals & Mining
Dow Chemical Co.
2.2%
Chemicals
43%
Alcoa, Inc.
2.1%
39%
Top Ten Total
28.8%
“Ten Largest Holdings” exclude any temporary
cash or derivative investments.
Basic Materials Fund
“Industry Diversification (Market Exposure as % of Net Assets)”
excludes any temporary cash investments.
6
|
THE RYDEX VARIABLE TRUST ANNUAL REPORT
PERFORMANCE REPORTS AND FUND PROFILES (Unaudited) (continued)
BIOTECHNOLOGY FUND
Cumulative Fund Performance:
May 2, 2001 – December 31, 2007
OBJECTIVE:
Seeks capital appreciation by investing in
companies that are involved in the biotechnology industry,
BIOTECHNOLOGY FUND
S&P 500 HEALTH CARE INDEX†
S&P 500 INDEX
including companies involved in research and development,
$20,000
genetic or biological engineering and in the design,
manufacture or sale of related biotechnology products or
$15,000
services.
$13,025
Inception: May 2, 2001
$10,663
$10,000
$8,655
Rydex Biotechnology Fund returned 4.40% as compared
to the S&P 500’s 5.49% return. Pharmion Corp., Onyx
$5,000
Pharmaceuticals, Inc., BioMarin Pharmaceuticals, Inc.,
Alexion Pharmaceuticals, Inc., United Therapeutics Corp.
$0
and Medimmune were all up more than 75% for the year.
05/02/01
12/31/01
12/31/02
12/31/03
12/31/04
12/31/05
12/31/06
12/31/07
Unfortunately, Vanda Pharmaceuticals, Inc., Momenta
Pharmaceuticals, Inc., Neurochem, Inc., Dendreon Corp.,
† Data points for the line graph do not reflect the reinvestment of dividends
on securities in the index.
InterMune, Inc. and MannKind Corp. were all down more
than 50% for the year.
AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIOD ENDED 12/31/07
SINCE
ONE
FIVE
INCEPTION
YEAR
YEAR
(05/02/01)
BIOTECHNOLOGY FUND
4.40%
9.92%
-2.14%
S&P 500 INDEX
5.49%
12.83%
4.04%
S&P 500 HEALTH CARE INDEX
7.32%
7.52%
2.51%
The returns presented above do not reflect the effects of taxes. Past performance is no guarantee of future results. The S&P 500 Index and the S&P
500 Health Care Index 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.
Industry Diversification (Market Exposure as % of Net Assets)
Ten Largest Holdings (% of Total Net Assets)
Genentech, Inc.
9.2%
Gilead Sciences, Inc.
8.0%
Amgen, Inc.
7.5%
Genzyme Corp.
5.3%
Biogen Idec, Inc.
4.3%
Celgene Corp.
3.9%
Biotechnology
Millennium Pharmaceuticals, Inc.
3.1%
100%
Cephalon, Inc.
2.5%
BioMarin Pharmaceuticals, Inc.
2.5%
OSI Pharmaceuticals, Inc.
2.3%
Top Ten Total
48.6%
“Ten Largest Holdings” exclude any temporary
cash or derivative investments.
Biotechnology Fund
“Industry Diversification (Market Exposure as % of Net Assets)”
excludes any temporary cash investments.
THE RYDEX VARIABLE TRUST ANNUAL REPORT
|
7
PERFORMANCE REPORTS AND FUND PROFILES (Unaudited) (continued)
CONSUMER PRODUCTS FUND
Cumulative Fund Performance:
May 29, 2001 – December 31, 2007
OBJECTIVE:
Seeks capital appreciation by investing in
companies engaged in manufacturing finished goods and
CONSUMER PRODUCTS FUND
S&P 500 CONSUMER STAPLES INDEX†
S&P 500 INDEX
services both domestically and internationally.
$20,000
Inception: May 29, 2001
$17,512
$15,000
Rydex Consumer Products Fund rose 11.08% besting the
$13,853
$13,004
S&P 500’s 5.49% return by 5.59%. Beverages, tobacco,
$10,000
household products and food products all had strong
years. All other industries also added at least a little value
to the Fund as no industries in this sector had negative
$5,000
returns for the year. Energizer Holdings, Inc., Archer-
Daniels-Midland Co. and Bunge Ltd. led the winners while
$0
the big losers were Spectrum Brands Corp., Hershey Co.,
05/29/01
12/31/01
12/31/02
12/31/03
12/31/04
12/31/05
12/31/06
12/31/07
Bare Escentuals, Inc. and Corn Products International
Incorporated.
† Data points for the line graph do not reflect the reinvestment of dividends
on securities in the index.
AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIOD ENDED 12/31/07
SINCE
ONE
FIVE
INCEPTION
YEAR
YEAR
(05/29/01)
CONSUMER PRODUCTS FUND
11.08%
12.40%
8.87%
S&P 500 INDEX
5.49%
12.83%
4.07%
S&P 500 CONSUMER STAPLES INDEX
14.36%
10.37%
7.43%
The returns presented above do not reflect the effects of taxes. Past performance is no guarantee of future results. The S&P 500 Index and the S&P
500 Consumer Staples Index 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.
Industry Diversification (Market Exposure as % of Net Assets)
Ten Largest Holdings (% of Total Net Assets)
Procter & Gamble Co.
7.4%
Food & Staples
Other
Altria Group, Inc.
6.3%
Retailing
3%
Coca-Cola Co.
5.9%
8%
PepsiCo, Inc.
5.4%
Tobacco
Unilever NV
4.1%
11%
Diageo PLC — SP ADR
3.5%
Kraft Foods, Inc. — Class A
3.4%
Food
Colgate-Palmolive Co.
3.1%
Products
Archer-Daniels-Midland Co.
3.1%
Household
35%
Anheuser-Busch Cos., Inc.
3.0%
Products
17%
Top Ten Total
45.2%
“Ten Largest Holdings” exclude any temporary
cash or derivative investments.
Beverages
26%
Consumer Products Fund
“Industry Diversification (Market Exposure as % of Net Assets)”
excludes any temporary cash investments.
8
|
THE RYDEX VARIABLE TRUST ANNUAL REPORT
PERFORMANCE REPORTS AND FUND PROFILES (Unaudited) (continued)
ELECTRONICS FUND
Cumulative Fund Performance:
August 3, 2001 – December 31, 2007
OBJECTIVE:
Seeks capital appreciation by investing in
companies that are involved in the electronics sector,
ELECTRONICS FUND
S&P 500 INDEX
including semiconductor manufacturers and distributors,
S&P 500 INFORMATION TECHNOLOGY INDEX†
$15,000
and makers and vendors of other electronic components
$13,547
and devices.
Inception: August 3, 2001
$10,653
$10,000
Rydex Electronics Fund returned -2.50%, as compared
to the S&P 500’s return of 5.49% for the same period.
$5,880
The electronics sector consists primarily of one industry
$5,000
group—semiconductors & semiconductor equipment—
which lost 0.26%. There were a wide range of returns
amongst this sector’s constituents. The two best
$0
08/03/01
12/31/01
12/31/02
12/31/03
12/31/04
12/31/05
12/31/06
12/31/07
performing stocks, MEMC Electronic Materials, Inc. and
Cypress Semiconductor Corp., were up 119.41% and
† Data points for the line graph do not reflect the reinvestment of dividends
114.46%, respectively. The worst performing stock was
on securities in the index.
Advanced Micro Devices, Inc. down 61.58%.
AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIOD ENDED 12/31/07
SINCE
ONE
FIVE
INCEPTION
YEAR
YEAR
(08/03/01)
ELECTRONICS FUND
-2.50%
6.58%
-7.95%
S&P 500 INDEX
5.49%
12.83%
4.85%
S&P 500 INFORMATION TECHNOLOGY INDEX
16.30%
13.96%
1.49%
The returns presented above do not reflect the effects of taxes. Past performance is no guarantee of future results. The S&P 500 Index and the S&P
500 Information Technology Index 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.
Industry Diversification (Market Exposure as % of Net Assets)
Ten Largest Holdings (% of Total Net Assets)
Intel Corp.
10.4%
Other
Taiwan Semiconductor
6%
Manufacturing Co. Ltd. —
SP ADR
5.7%
Texas Instruments, Inc.
5.4%
MEMC Electronic Materials, Inc.
4.3%
Applied Materials, Inc.
3.8%
Nvidia Corp.
3.4%
ASML Holding NV
3.0%
Semiconductors &
STMicroelectronics NV — SP ADR
2.8%
Semiconductor
Equipment
Analog Devices, Inc.
2.4%
94%
KLA-Tencor Corp.
2.4%
Top Ten Total
43.6%
“Ten Largest Holdings” exclude any temporary
cash or derivative investments.
Electronics Fund
“Industry Diversification (Market Exposure as % of Net Assets)”
excludes any temporary cash investments.
THE RYDEX VARIABLE TRUST ANNUAL REPORT
|
9
PERFORMANCE REPORTS AND FUND PROFILES (Unaudited) (continued)
ENERGY FUND
Cumulative Fund Performance:
May 29, 2001 – December 31, 2007
OBJECTIVE:
Seeks capital appreciation by investing in
companies involved in the energy field, including the
ENERGY FUND
S&P 500 ENERGY INDEX†
S&P 500 INDEX
exploration, production and development of oil, gas, coal
$30,000
and alternative sources of energy.
$24,536
$24,488
Inception: May 29, 2001
$20,000
Propelled by rising energy costs in 2007, Rydex Energy
Fund delivered a 33.22% one-year return, easily outpacing
$13,004
the S&P 500’s return of 5.49% for the same period. The
$10,000
sector consists of two industry groups—energy equipment
& services and oil, gas & consumable fuels—both of which
were up strongly, 48.14% and 36.45%, respectively. Even
$0
with its strong performance, the sector experienced a wide
05/29/01
12/31/01
12/31/02
12/31/03
12/31/04
12/31/05
12/31/06
12/31/07
range of returns amongst its constituents. The two best
† Data points for the line graph do not reflect the reinvestment of dividends
performing stocks, National-Oilwell Varco, Inc. and Consol
on securities in the index.
Energy, Inc., were up 152.27% and 138.28%, respectively.
The worst performing stock was Western Refining Inc.,
down 35.19%.
AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIOD ENDED 12/31/07
SINCE
ONE
FIVE
INCEPTION
YEAR
YEAR
(05/29/01)
ENERGY FUND
33.22%
27.44%
14.59%
S&P 500 INDEX
5.49%
12.83%
4.07%
S&P 500 ENERGY INDEX
34.41%
29.36%
16.88%
The returns presented above do not reflect the effects of taxes. Past performance is no guarantee of future results. The S&P 500 Index and the S&P
500 Energy Index 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.
Industry Diversification (Market Exposure as % of Net Assets)
Ten Largest Holdings (% of Total Net Assets)
Exxon Mobil Corp.
6.8%
Energy Equipment
BP PLC — SP ADR
4.8%
& Services
Chevron Corp.
4.2%
29%
Royal Dutch Shell PLC — SP ADR
3.7%
ConocoPhillips
3.6%
Schlumberger Ltd.
3.1%
Transocean, Inc.
2.6%
Occidental Petroleum Corp.
2.5%
Hess Corp.
2.1%
Marathon Oil Corp.
1.9%
Oil, Gas &
Top Ten Total
35.3%
Consumable Fuels
71%
“Ten Largest Holdings” exclude any temporary
cash or derivative investments.
Energy Fund
“Industry Diversification (Market Exposure as % of Net Assets)”
excludes any temporary cash investments.
10
|
THE RYDEX VARIABLE TRUST ANNUAL REPORT
PERFORMANCE REPORTS AND FUND PROFILES (Unaudited) (continued)
ENERGY SERVICES FUND
Cumulative Fund Performance:
May 2, 2001 – December 31, 2007
OBJECTIVE:
Seeks capital appreciation by investing in
companies that are involved in the energy services field,
ENERGY SERVICES FUND
S&P 500 ENERGY INDEX†
S&P 500 INDEX
including those that provide services and equipment in
$30,000
the areas of oil, coal and gas exploration and production.
$25,376
Inception: May 2, 2001
$20,000
$20,412
Rydex Energy Services Fund handed in 37.10% return
for the one-year period ended December 31, 2007.
$13,025
The Fund represents a singular industry group—energy
$10,000
equipment & services—which experienced strong returns
of 45.22%. The industry holdings in this Fund are broader
and include more smaller-cap names than its counterparts
$0
held in the Rydex Energy Fund. Even with its strong
05/02/01
12/31/01
12/31/02
12/31/03
12/31/04
12/31/05
12/31/06
12/31/07
performance, the sector experienced a wide range of
returns amongst its constituents. Its best performing
† Data points for the line graph do not reflect the reinvestment of dividends
on securities in the index.
stock, National-Oilwell Varco, Inc., was up 152.27%, while
its worst performing stock was Tetra Technologies, Inc.,
down 32.30%.
AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIOD ENDED 12/31/07
SINCE
ONE
FIVE
INCEPTION
YEAR
YEAR
(05/02/01)
ENERGY SERVICES FUND
37.10%
26.75%
11.30%
S&P 500 INDEX
5.49%
12.83%
4.04%
S&P 500 ENERGY INDEX
34.41%
29.36%
17.39%
The returns presented above do not reflect the effects of taxes. Past performance is no guarantee of future results. The S&P 500 Index and S&P
500 Energy Index 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.
Industry Diversification (Market Exposure as % of Net Assets)
Ten Largest Holdings (% of Total Net Assets)
Schlumberger Ltd.
9.9%
Transocean, Inc.
8.3%
Halliburton Co.
5.4%
National-Oilwell Varco, Inc.
4.8%
Diamond Offshore Drilling, Inc.
4.7%
Energy Equipment
Weatherford International Ltd.
4.7%
& Services
Baker Hughes, Inc.
4.5%
100%
Tenaris SA — SP ADR
4.5%
Noble Corp.
4.0%
Smith International, Inc.
3.7%
Top Ten Total
54.5%
“Ten Largest Holdings” exclude any temporary
cash or derivative investments.
Energy Services Fund
“Industry Diversification (Market Exposure as % of Net Assets)”
excludes any temporary cash investments.
THE RYDEX VARIABLE TRUST ANNUAL REPORT
|
11
PERFORMANCE REPORTS AND FUND PROFILES (Unaudited) (continued)
FINANCIAL SERVICES FUND
Cumulative Fund Performance:
July 20, 2001 – December 31, 2007
OBJECTIVE:
Seeks capital appreciation by investing in
companies involved in the financial services sector.
FINANCIAL SERVICES FUND
S&P 500 FINANCIALS INDEX†
S&P 500 INDEX
$20,000
Inception: July 20, 2001
Despite four 25 basis point cuts that lowered the Fed
$15,000
funds rate from 5.25% to 4.25%, the subprime debacle
$13,593
$12,008
and collapse of the U.S. housing market decimated the
$10,000
$10,488
financial services sector. Rydex Financial Services Fund
returned -18.80% as compared to the S&P 500’s 5.49%
return. Every industry in the financial services sector was
$5,000
negative on the year. Thrifts & mortgage finance lost
more than 40%, consumer finance lost more than 30%
$0
and commercial banks lost more than 20% of their value
07/20/01
12/31/01
12/31/02
12/31/03
12/31/04
12/31/05
12/31/06
12/31/07
in 2007. The industry hurt the least was capital markets as
strong trading profits helped to mitigate some of the
† Data points for the line graph do not reflect the reinvestment of dividends
on securities in the index.
huge write-offs taken for bad subprime investments. The
losers were lead by E*Trade Financial Corp. (-85%),
Countrywide Financial Corp. (-78%), MBIA, Inc. (-74%),
and Washington Mutual, Inc. (-68%). Despite an abysmal
year a few bright spots included Janus Capital Group,
Inc., IntercontinentalExchange, Inc. and Blackrock
Incorporated.
AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIOD ENDED 12/31/07
SINCE
ONE
FIVE
INCEPTION
YEAR
YEAR
(07/20/01)
FINANCIAL SERVICES FUND
-18.80%
8.15%
2.88%
S&P 500 INDEX
5.49%
12.83%
4.87%
S&P 500 FINANCIALS INDEX
-18.52%
8.49%
3.26%
The returns presented above do not reflect the effects of taxes. Past performance is no guarantee of future results. The S&P 500 Index and the S&P
500 Financials Index 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.
Industry Diversification (Market Exposure as % of Net Assets)
Ten Largest Holdings (% of Total Net Assets)
HSBC Holdings PLC — SP ADR
2.3%
Diversified
Other
Bank of America Corp.
2.2%
Financial Services
9%
10%
JPMorgan Chase & Co.
2.1%
Real Estate
American International Group, Inc.
2.0%
Investment Trusts
ABN AMRO Holding NV —
14%
SP ADR
1.8%
Citigroup, Inc.
1.7%
Insurance
27%
Wells Fargo & Co.
1.6%
Goldman Sachs Group, Inc.
1.6%
UBS AG — SP ADR
1.6%
Credit Suisse Group — SP ADR
1.4%
Commercial
Banks
Top Ten Total
18.3%
20%
Capital
“Ten Largest Holdings” exclude any temporary
Markets
cash or derivative investments.
20%
Financial Services Fund
“Industry Diversification (Market Exposure as % of Net Assets)”
excludes any temporary cash investments.
12
|
THE RYDEX VARIABLE TRUST ANNUAL REPORT
PERFORMANCE REPORTS AND FUND PROFILES (Unaudited) (continued)
HEALTH CARE FUND
Cumulative Fund Performance:
June 19, 2001 – December 31, 2007
OBJECTIVE:
Seeks capital appreciation by investing in
companies that are involved in the health care industry.
HEALTH CARE FUND
S&P 500 HEALTH CARE INDEX†
S&P 500 INDEX
$15,000
Inception: June 19, 2001
$13,587
$12,744
Rydex Health Care Fund rose 6.02%, outperforming the
S&P 500’s 5.49% return by .53%. At the industry level, life
$10,000
$10,305
sciences tools & services, providers & services and
equipment & supplies all provided impressive returns.
Industry detractors included relatively small exposures to
$5,000
health care technology and biotechnology. Intuitive
Surgical, Inc. Express Scripts, Inc. and Medco Health
Solutions, Inc. provided impressive returns while Sepracor,
$0
Inc., Vertex Pharmaceuticals, Inc. and Brookdale Senior
06/19/01
12/31/01
12/31/02
12/31/03
12/31/04
12/31/05
12/31/06
12/31/07
Living, Inc. all had disappointing years.
† Data points for the line graph do not reflect the reinvestment of dividends
on securities in the index.
AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIOD ENDED 12/31/07
SINCE
ONE
FIVE
INCEPTION
YEAR
YEAR
(06/19/01)
HEALTH CARE FUND
6.02%
11.19%
3.78%
S&P 500 INDEX
5.49%
12.83%
4.80%
S&P 500 HEALTH CARE INDEX
7.32%
7.52%
2.00%
The returns presented above do not reflect the effects of taxes. Past performance is no guarantee of future results. The S&P 500 Index and the S&P
500 Health Care Index 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.
Industry Diversification (Market Exposure as % of Net Assets)
Ten Largest Holdings (% of Total Net Assets)
Johnson & Johnson, Inc.
3.8%
Life Sciences
Tools & Services
Pfizer, Inc.
3.2%
Other 3%
6%
Merck & Co., Inc.
3.2%
Biotechnology
GlaxoSmithKline PLC — SP ADR
3.2%
11%
Novartis AG — SP ADR
3.1%
Sanofi-Aventis — SP ADR
3.1%
UnitedHealth Group, Inc.
2.6%
Pharmaceuticals
Abbott Laboratories
2.6%
Health Care
40%
Genentech, Inc.
2.2%
Providers &
Services
WellPoint, Inc.
2.1%
19%
Top Ten Total
29.1%
“Ten Largest Holdings” exclude any temporary
cash or derivative investments.
Health Care
Equipment &
Supplies
21%
Health Care Fund
“Industry Diversification (Market Exposure as % of Net Assets)”
excludes any temporary cash investments.
THE RYDEX VARIABLE TRUST ANNUAL REPORT
|
13
PERFORMANCE REPORTS AND FUND PROFILES (Unaudited) (continued)
INTERNET FUND
Cumulative Fund Performance:
May 24, 2001 – December 31, 2007
OBJECTIVE:
Seeks capital appreciation by investing in
companies that provide products or services designed for
INTERNET FUND
S&P 500 INFORMATION TECHNOLOGY INDEX†
S&P 500 INDEX
or related to the Internet.
$15,000
Inception: May 24, 2001
$12,751
Rydex Internet Fund rose 10.39% outperforming the
$10,000
$9,448
S&P 500’s 5.49% return by 4.90%. At the industry level
$8,126
Internet & catalog retail, communications equipment
and Internet software & services all provided impressive
$5,000
returns. Industry detractors included relatively small
exposures to media, semiconductors and commercial
services & supplies. As the sector as a whole advanced,
$0
there was a wide dispersion of returns within the sector.
05/24/01
12/31/01
12/31/02
12/31/03
12/31/04
12/31/05
12/31/06
12/31/07
Amazon.com, Inc., Research in Motion Ltd., aQuantive, Inc.
and Priceline.com, Inc. all rose more than 130% for the
† Data points for the line graph do not reflect the reinvestment of dividends
on securities in the index.
year, while E*Trade Financial Corp. and Digital River, Inc.
were both down more than 40% on the year.
AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIOD ENDED 12/31/07
SINCE
ONE
FIVE
INCEPTION
YEAR
YEAR
(05/24/01)
INTERNET FUND
10.39%
17.87%
-3.09%
S&P 500 INDEX
5.49%
12.83%
3.75%
S&P 500 INFORMATION TECHNOLOGY INDEX
16.30%
13.96%
-0.38%
The returns presented above do not reflect the effects of taxes. Past performance is no guarantee of future results. The S&P 500 Index and the S&P
500 Information Technolgy Index 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.
Industry Diversification (Market Exposure as % of Net Assets)
Ten Largest Holdings (% of Total Net Assets)
Google, Inc. — Class A
10.2%
Capital Markets
Other
6%
11%
Cisco Systems, Inc.
8.8%
Research In Motion Ltd.
6.0%
Health Care
Qualcomm, Inc.
5.9%
Technology
12%
Time Warner, Inc.
5.5%
eBay, Inc.
4.7%
Amazon.com, Inc.
4.6%
Commercial
Yahoo!, Inc.
3.8%
Services
Juniper Networks, Inc.
2.9%
& Supplies
Sun Microsystems, Inc.
2.6%
13%
Top Ten Total
55.0%
“Ten Largest Holdings” exclude any temporary
Diversified
cash or derivative investments.
Semiconductors &
Telecommunication
Semiconductor
Services
Equipment
32%
26%
Internet Fund
“Industry Diversification (Market Exposure as % of Net Assets)”
excludes any temporary cash investments.
14
|
THE RYDEX VARIABLE TRUST ANNUAL REPORT
PERFORMANCE REPORTS AND FUND PROFILES (Unaudited) (continued)
LEISURE FUND
Cumulative Fund Performance:
May 22, 2001 – December 31, 2007
OBJECTIVE:
Seeks capital appreciation by investing in
companies in leisure and entertainment businesses.
LEISURE FUND
S&P 500 CONSUMER
S&P 500 INDEX
DISCRETIONARY INDEX†
Inception: May 22, 2001
$15,000
Rydex Leisure Fund turned in a -2.54% return as compared
$12,594
to the S&P 500’s 5.49% return. Other than entertainment
$11,797
software, which was up more then 20%, all other
$10,000
$9,371
industries provided minimal to negative returns for the
year. Leisure equipment & products was down 12% and
media was down 8% for the year. Bally Technologies, Inc.,
$5,000
Activision, Inc. and MGM MIRAGE led the winners while
the big losers were Warner Music Group Corp., Pool
Corp., Brunswick Corp. and Starbucks Corporation.
$0
05/22/01
12/31/01
12/31/02
12/31/03
12/31/04
12/31/05
12/31/06
12/31/07
† Data points for the line graph do not reflect the reinvestment of dividends
on securities in the index.
AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIOD ENDED 12/31/07
SINCE
ONE
FIVE
INCEPTION
YEAR
YEAR
(05/22/01)
LEISURE FUND
-2.54%
13.85%
2.53%
S&P 500 INDEX
5.49%
12.83%
3.55%
S&P 500 CONSUMER DISCRETIONARY INDEX
-13.21%
8.45%
0.06%
The returns presented above do not reflect the effects of taxes. Past performance is no guarantee of future results. The S&P 500 Index and the S&P
500 Consumer Discretionary Index 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.
Industry Diversification (Market Exposure as % of Net Assets)
Ten Largest Holdings (% of Total Net Assets)
McDonald’s Corp.
6.0%
Software
Walt Disney Co.
5.3%
7%
Time Warner, Inc.
5.1%
Leisure Equipment
& Products
News Corp. — Class A
4.4%
8%
Viacom, Inc. — Class A
3.8%
Las Vegas Sands Corp.
3.7%
Carnival Corp.
3.4%
MGM MIRAGE
3.1%
Yum! Brands, Inc.
3.1%
Media
Electronic Arts, Inc.
3.0%
24%
Top Ten Total
40.9%
Hotels,
“Ten Largest Holdings” exclude any temporary
Restaurants
cash or derivative investments.
& Leisure
61%
Leisure Fund
“Industry Diversification (Market Exposure as % of Net Assets)”
excludes any temporary cash investments.
THE RYDEX VARIABLE TRUST ANNUAL REPORT
|
15
PERFORMANCE REPORTS AND FUND PROFILES (Unaudited) (continued)
PRECIOUS METALS FUND
Cumulative Fund Performance:
December 31, 1997 – December 31, 2007
OBJECTIVE:
To provide capital appreciation by investing
in U.S. and foreign companies that are involved in the
PRECIOUS METALS FUND
S&P 500 MATERIALS INDEX†
S&P 500 INDEX
precious metals sector, including exploration, mining,
$25,000
production and development, and other precious metals-
$22,103
related services.
$20,000
$18,380
$17,756
Inception: May 29, 1997
$15,000
Volatility and rising market uncertainty, as well as strong
$10,000
demand contributed to the strong performance in the
precious metals industry. Rydex Precious Metals Fund’s
$5,000
one-year performance reflects the bounce in this sector
with a one-year total return of 19.55%. The Fund
$0
represents a concentrated investment in the stocks of
12/31/97
12/31/99
12/31/01
12/31/03
12/31/05
12/31/07
gold and other precious metal producers. Even with its
strong performance, the sector experienced a wide
† Data points for the line graph do not reflect the reinvestment of dividends
on securities in the index.
range of returns amongst its constituents. The best
performing stocks, Minas Buenaventura SA and
Freeport-McMoran Copper & Gold, Inc. were up 107.97%
and 106.23%, respectively. On the other side of the
spectrum, the worst performing stock was NovaGold
Resources, Inc., down 49.78%.
AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIOD ENDED 12/31/07
ONE
FIVE
TEN
YEAR
YEAR
YEAR
PRECIOUS METALS FUND
19.55%
16.23%
8.25%
S&P 500 INDEX
5.49%
12.83%
5.91%
S&P 500 MATERIALS INDEX
22.53%
19.01%
8.75%
The returns presented above do not reflect the effects of taxes. Past performance is no guarantee of future results. The S&P 500 Index and the
S&P 500 Materials Index 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.
Industry Diversification (Market Exposure as % of Net Assets)
Ten Largest Holdings (% of Total Net Assets)
Freeport-McMoRan Copper &
Gold, Inc.
14.5%
Newmont Mining Corp.
10.6%
Goldcorp, Inc.
8.0%
Barrick Gold Corp.
7.8%
Agnico-Eagle Mines Ltd.
5.1%
Metals & Mining
Yamana Gold, Inc.
4.7%
100%
Kinross Gold Corp.
4.6%
AngloGold Ashanti Ltd. —
SP ADR
4.1%
Silver Wheaton Corp.
3.5%
Gold Fields Ltd. — SP ADR
3.4%
Top Ten Total
66.3%
Precious Metals Fund
“Ten Largest Holdings” exclude any temporary
cash or derivative investments.
“Industry Diversification (Market Exposure as % of Net Assets)”
excludes any temporary cash investments.
16
|
THE RYDEX VARIABLE TRUST ANNUAL REPORT
PERFORMANCE REPORTS AND FUND PROFILES (Unaudited) (continued)
RETAILING FUND
Cumulative Fund Performance:
July 23, 2001 – December 31, 2007
OBJECTIVE:
Seeks capital appreciation by investing in
companies engaged in merchandising finished goods
RETAILING FUND
S&P 500 CONSUMER DISCRETIONARY INDEX†
S&P 500 INDEX
and services, including department stores, restaurant
$20,000
franchises, mail-order operations and other companies
involved in selling products to consumers.
$15,000
$13,819
Inception: July 23, 2001
$12,104
$10,000
$10,259
Rydex Retailing Fund delivered a one-year -12.60% return
as compared to the S&P 500’s 5.49% return. Internet &
catalog retail, distributors and food & staples retailing all
$5,000
had strong to positive years. Unfortunately those industries
represent less than 30% of the retail sector. The specialty
$0
and mutliline industries, which represent the bulk of the
07/23/01
12/31/01
12/31/02
12/31/03
12/31/04
12/31/05
12/31/06
12/31/07
sector, were both down more than 18% for the year.
Amazon.com, Inc., GameStop Corp. and Priceline.com,
† Data points for the line graph do not reflect the reinvestment of dividends
on securities in the index.
Inc. led the winners while the big losers were Circuit City
Stores, Inc., Office Depot, Inc., OfficeMax, Inc. and Rite
Aid Corporation.
AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIOD ENDED 12/31/07
SINCE
ONE
FIVE
INCEPTION
YEAR
YEAR
(07/23/01)
RETAILING FUND
-12.60%
8.60%
3.01%
S&P 500 INDEX
5.49%
12.83%
5.15%
S&P 500 CONSUMER DISCRETIONARY INDEX
-13.21%
8.45%
1.46%
The returns presented above do not reflect the effects of taxes. Past performance is no guarantee of future results. The S&P 500 Index and the S&P
500 Consumer Discretionary Index 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.
Industry Diversification (Market Exposure as % of Net Assets)
Ten Largest Holdings (% of Total Net Assets)
Wal-Mart Stores, Inc.
8.0%
Internet & Catalog
CVS Caremark Corp.
4.3%
Retail
Other
Amazon.com, Inc.
3.4%
11%
3%
Walgreen Co.
3.4%
Home Depot, Inc.
3.4%
Multiline Retail
Costco Wholesale Corp.
3.2%
15%
Target Corp.
3.2%
Best Buy Co., Inc.
2.9%
Lowe’s Cos., Inc.
2.8%
Specialty Retail
50%
The Gap, Inc.
2.4%
Top Ten Total
37.0%
“Ten Largest Holdings” exclude any temporary
cash or derivative investments.
Food & Staples
Retailing
21%
Retailing Fund
“Industry Diversification (Market Exposure as % of Net Assets)”
excludes any temporary cash investments.
THE RYDEX VARIABLE TRUST ANNUAL REPORT
|
17
PERFORMANCE REPORTS AND FUND PROFILES (Unaudited) (continued)
TECHNOLOGY FUND
Cumulative Fund Performance:
May 2, 2001 – December 31, 2007
OBJECTIVE:
Seeks capital appreciation by investing in
companies that are involved in the technology sector,
TECHNOLOGY FUND
S&P 500 INFORMATION TECHNOLOGY INDEX†
S&P 500 INDEX
including computer software and service companies,
$15,000
semiconductor manufacturers, networking and telecom-
$13,025
munications equipment manufacturers, PC hardware and
peripherals companies.
$10,000
$9,453
$8,914
Inception: May 2, 2001
For the one-year period ended December 31, 2007,
$5,000
Rydex Technology Fund returned 10.38%. Performance
was generally strong on the industry level, with the top
performing industries—Internet software & services and
$0
software—up 27.26% and 26.16%, respectively. The
05/02/01
12/31/01
12/31/02
12/31/03
12/31/04
12/31/05
12/31/06
12/31/07
worst performing industry group, semiconductors &
semiconductor equipment, was still up marginally gaining
† Data points for the line graph do not reflect the reinvestment of dividends
on securities in the index.
0.39%. The best performing stock was Research In Motion
Ltd., up 141.57%. The worst performing stock was
Advanced Micro Devices, Inc., down 61.58%.
AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIOD ENDED 12/31/07
SINCE
ONE
FIVE
INCEPTION
YEAR
YEAR
(05/02/01)
TECHNOLOGY FUND
10.38%
14.48%
-1.71%
S&P 500 INDEX
5.49%
12.83%
4.04%
S&P 500 INFORMATION TECHNOLOGY INDEX
16.30%
13.96%
-0.36%
The returns presented above do not reflect the effects of taxes. Past performance is no guarantee of future results. The S&P 500 Index and the S&P
500 Information Technology Index are unmanaged stock indices and, unlike the Fund, have no management fees or other operating expenses to
reduce its reported returns. Returns are historical and include changes in principal and reinvested dividends and capital gains.
Industry Diversification (Market Exposure as % of Net Assets)
Ten Largest Holdings (% of Total Net Assets)
Internet Software
Microsoft Corp.
4.1%
& Services
Other
Apple, Inc.
2.9%
7%
2%
Google, Inc. — Class A
2.8%
Electronic
Equipment &
Software
Intel Corp.
2.6%
Instruments
21%
Nokia Oyj — SP ADR
2.6%
8%
Cisco Systems, Inc.
2.4%
International Business Machines
Corp.
2.4%
IT Services
13%
Hewlett-Packard Co.
2.3%
Oracle Corp.
2.2%
Research In Motion Ltd.
1.6%
Top Ten Total
25.9%
Computers &
Peripherals
“Ten Largest Holdings” exclude any temporary
14%
Semiconductors &
cash or derivative investments.
Communications
Semiconductor
Equipment
Equipment
16%
Technology Fund
19%
“Industry Diversification (Market Exposure as % of Net Assets)”
excludes any temporary cash investments.
18
|
THE RYDEX VARIABLE TRUST ANNUAL REPORT
PERFORMANCE REPORTS AND FUND PROFILES (Unaudited) (continued)
TELECOMMUNICATIONS FUND
Cumulative Fund Performance:
July 27, 2001 – December 31, 2007
OBJECTIVE:
Seeks capital appreciation by investing in
companies engaged in the development, manufacture or
TELECOMMUNICATIONS FUND
S&P 500 INDEX
sale of communications services or communications
S&P 500 TELECOMMUNICATION SERVICES INDEX†
equipment.
$15,000
$13,648
Inception: July 27, 2001
$10,845
Rydex Telecommunications Fund provided a 9.23%
$10,000
one-year total return. Industry performance was mostly
$8,448
positive. The top performing industry was communications
equipment, up 12.01%. The worst performing industry
$5,000
group, IT services, was down 13.31%. However, because
the Fund has marginal exposure to this industry, it did not
detract greatly from performance. The best performing
$0
stock was Research In Motion Ltd., up 141.57%, while the
07/27/01
12/31/01
12/31/02
12/31/03
12/31/04
12/31/05
12/31/06
12/31/07
worst performing stock was Alcatel-Lucent, down 51.05%.
† Data points for the line graph do not reflect the reinvestment of dividends
on securities in the index.
AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIOD ENDED 12/31/07
SINCE
ONE
FIVE
INCEPTION
YEAR
YEAR
(07/27/01)
TELECOMMUNICATIONS FUND
9.23%
14.74%
1.27%
S&P 500 INDEX
5.49%
12.83%
4.96%
S&P 500 TELECOMMUNICATION SERVICES INDEX
11.88%
13.19%
0.59%
The returns presented above do not reflect the effects of taxes. Past performance is no guarantee of future results. The S&P 500 Index and the S&P
500 Telecommunication Services Index 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.
Industry Diversification (Market Exposure as % of Net Assets)
Ten Largest Holdings (% of Total Net Assets)
AT&T, Inc.
8.9%
Wireless
Vodafone Group PLC — SP ADR
8.5%
Telecommunication
Nokia Oyj — SP ADR
7.0%
Services
28%
Cisco Systems, Inc.
6.5%
Communications
Equipment
Verizon Communications, Inc.
6.2%
42%
America Movil SAB de CV —
SP ADR
4.7%
Research In Motion Ltd.
4.4%
Qualcomm, Inc.
4.4%
Corning, Inc.
3.3%
Motorola, Inc.
3.1%
Diversified
Top Ten Total
57.0%
Telecommunication
Services
“Ten Largest Holdings” exclude any temporary
30%
cash or derivative investments.
Telecommunications Fund
“Industry Diversification (Market Exposure as % of Net Assets)”
excludes any temporary cash investments.
THE RYDEX VARIABLE TRUST ANNUAL REPORT
|
19
PERFORMANCE REPORTS AND FUND PROFILES (Unaudited) (continued)
TRANSPORTATION FUND
Cumulative Fund Performance:
June 11, 2001 – December 31, 2007
OBJECTIVE:
Seeks capital appreciation by investing
in companies engaged in providing transportation
TRANSPORTATION FUND
S&P 500 INDUSTRIALS INDEX†
S&P 500 INDEX
services or companies engaged in the design,
$20,000
manufacture, distribution or sale of transportation
equipment.
$15,000
$13,580
Inception: June 11, 2001
$13,138
$12,299
Rydex Transportation Fund returned -8.75%. Only one
$10,000
of its four component industries was in positive territory.
The top performing industry was road & rail, up 7.23%.
$5,000
The worst performing industry group, airlines, was down
43.67%. The best performing stock was Union Pacific
$0
Corp., up 37.64%, while the worst performing stock was
06/11/01
12/31/01
12/31/02
12/31/03
12/31/04
12/31/05
12/31/06
12/31/07
US Airways Group, Inc., down 73.87%.
† Data points for the line graph do not reflect the reinvestment of dividends
on securities in the index.
AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIOD ENDED 12/31/07
SINCE
ONE
FIVE
INCEPTION
YEAR
YEAR
(06/11/01)
TRANSPORTATION FUND
-8.75%
9.52%
4.78%
S&P 500 INDEX
5.49%
12.83%
4.25%
S&P 500 INDUSTRIALS INDEX
12.04%
15.16%
5.14%
The returns presented above do not reflect the effects of taxes. Past performance is no guarantee of future results. The S&P 500 Index and the S&P
500 Industrials Index 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.
Industry Diversification (Market Exposure as % of Net Assets)
Ten Largest Holdings (% of Total Net Assets)
United Parcel Service, Inc. —
Marine
9%
Class B
8.3%
Union Pacific Corp.
7.4%
Burlington Northern Santa Fe
Airlines
Corp.
6.6%
18%
FedEx Corp.
5.9%
Canadian National Railway Co.
5.5%
Road & Rail
CSX Corp.
5.5%
49%
Norfolk Southern Corp.
5.3%
CH Robinson Worldwide, Inc.
3.8%
Expeditors International
Washington, Inc.
3.6%
Air, Freight &
Southwest Airlines Co.
3.4%
Logistics
Top Ten Total
55.3%
24%
“Ten Largest Holdings” exclude any temporary
Transportation Fund
cash or derivative investments.
“Industry Diversification (Market Exposure as % of Net Assets)”
excludes any temporary cash investments.
20
|
THE RYDEX VARIABLE TRUST ANNUAL REPORT
PERFORMANCE REPORTS AND FUND PROFILES (Unaudited) (concluded)
UTILITIES FUND
Cumulative Fund Performance:
May 2, 2001 – December 31, 2007
OBJECTIVE:
Seeks capital appreciation by investing in
companies that operate public utilities.
UTILITIES FUND
S&P 500 UTILITIES INDEX†
S&P 500 INDEX
$15,000
Inception: May 2, 2001
$13,025
With industry performance mostly positive, Rydex Utilities
$10,877
Fund returned 12.86%. The top performing industry was
$10,000
$10,504
independent power producers & energy traders, up
26.53%. The worst performing industry group, water
utilities, was down 3.81%. The best performing stock was
$5,000
NRG Energy, Inc., up 55.26%, while the worst performing
stock was PNM Resources, Inc., down 19.39%.
$0
05/02/01
12/31/01
12/31/02
12/31/03
12/31/04
12/31/05
12/31/06
12/31/07
† Data points for the line graph do not reflect the reinvestment of dividends
on securities in the index.
AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIOD ENDED 12/31/07
SINCE
ONE
FIVE
INCEPTION
YEAR
YEAR
(05/02/01)
UTILITIES FUND
12.86%
17.30%
1.27%
S&P 500 INDEX
5.49%
12.83%
4.04%
S&P 500 UTILITIES INDEX
19.38%
21.49%
4.54%
The returns presented above do not reflect the effects of taxes. Past performance is no guarantee of future results. The S&P 500 Index and the S&P
500 Utilities Index 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.
Industry Diversification (Market Exposure as % of Net Assets)
Ten Largest Holdings (% of Total Net Assets)
Exelon Corp.
4.5%
Independent Power
Other
Southern Co.
3.3%
Producers & Energy
1%
Traders
Dominion Resources, Inc.
3.2%
10%
FPL Group, Inc.
3.2%
Gas Utilities
Public Service Enterprise Group,
12%
Inc.
3.1%
Duke Energy Corp.
3.1%
Electric Utilities
Entergy Corp.
2.9%
42%
FirstEnergy Corp.
2.9%
Constellation Energy Group, Inc.
2.7%
PPL Corp.
2.7%
Top Ten Total
31.6%
Multi-Utilities
“Ten Largest Holdings” exclude any temporary
35%
cash or derivative investments.
Utilities Fund
“Industry Diversification (Market Exposure as % of Net Assets)”
excludes any temporary cash investments.
THE RYDEX VARIABLE TRUST ANNUAL REPORT
|
21
December 31, 2007
BANKING FUND
MARKET
MARKET
VALUE
VALUE
SHARES
(NOTE 1)
SHARES
(NOTE 1)
COMMON STOCKS 99.9%
FirstMerit Corp.†
2,971
$
59,450
First Horizon National Corp.†
3,227
58,570
ABN AMRO Holding NV — SP ADR†
8,133
$
439,507
TCF Financial Corp.
3,226
57,842
HSBC Holdings PLC — SP ADR†
5,148
430,939
Investors Bancorp, Inc.*†
4,065
57,479
Wells Fargo & Co.†
14,274
430,932
Fulton Financial Corp.
5,093
57,144
JPMorgan Chase & Co.
9,666
421,921
Washington Federal, Inc.
2,689
56,765
Bank of America Corp.
10,214
421,430
UMB Financial Corp.†
1,445
55,430
UBS AG — SP ADR
9,013
414,598
Colonial BancGroup, Inc.†
3,979
53,876
Credit Suisse Group — SP ADR†
6,126
368,173
First Midwest Bancorp, Inc.†
1,752
53,611
Wachovia Corp.
9,268
352,462
Trustmark Corp.†
2,090
53,002
U.S. Bancorp†
10,734
340,697
Webster Financial Corp.
1,653
52,847
Barclays PLC — SP ADR†
8,314
335,636
MGIC Investment Corp.†
2,291
51,387
Fannie Mae
5,696
227,726
UCBH Holdings, Inc.†
3,427
48,526
PNC Financial Services Group, Inc.†
3,288
215,857
Cathay General Bancorp†
1,828
48,424
SunTrust Banks, Inc.†
3,182
198,843
NewAlliance Bancshares, Inc.
4,060
46,771
Regions Financial Corp.†
7,122
168,435
East-West Bancorp, Inc.†
1,921
46,546
BB&T Corp.†
5,414
166,047
First Community Bancorp
1,070
44,127
Freddie Mac
4,850
165,240
South Financial Group, Inc.†
2,626
41,044
Fifth Third Bancorp†
5,837
146,684
Downey Financial Corp.†
1,028
31,981
Hudson City Bancorp, Inc.
8,614
129,382
Radian Group, Inc.†
2,723
31,805
Commerce Bancorp, Inc.†
3,269
124,680
PMI Group, Inc.†
2,372
31,500
National City Corp.
7,470
122,956
IndyMac Bancorp, Inc.†
2,750
16,363
Synovus Financial Corp.
5,073
122,158
Total Common Stocks
M&T Bank Corp.†
1,495
121,947
(Cost $9,066,132)
9,179,542
KeyCorp†
5,096
119,501
UnionBanCal Corp.
2,276
111,319
FACE
People’s United Financial, Inc.
6,144
109,363
AMOUNT
Comerica, Inc.†
2,503
108,956
REPURCHASE AGREEMENT 0.4%
New York Community Bancorp, Inc.†
6,107
107,361
Repurchase Agreement (Note 5)
Washington Mutual, Inc.
7,325
99,693
Lehman Brothers Holdings, Inc.
Huntington Bancshares, Inc.†
6,691
98,759
issued 12/31/07 at 1.00%
Marshall & Ilsley Corp.†
3,629
96,096
due 01/02/08
$
33,815
33,815
Sovereign Bancorp, Inc.†
7,917
90,254
Total Repurchase Agreement
TFS Financial Corp*
7,510
89,669
(Cost $33,815)
33,815
BOK Financial Corp.
1,675
86,598
Zions Bancorporation†
1,831
85,489
SECURITIES LENDING COLLATERAL 24.3%
Commerce Bancshares, Inc.
1,886
84,606
Investment in Securities Lending Short Term
Associated Banc-Corp.
3,056
82,787
Investment Portfolio Held by
Cullen/Frost Bankers, Inc.†
1,602
81,157
U.S. Bank (Note 8)
2,232,478
2,232,478
Popular, Inc.†
7,110
75,366
Total Securities Lending Collateral
Countrywide Financial Corp.†
8,188
73,201
(Cost $2,232,478)
2,232,478
Bank of Hawaii Corp.
1,429
73,079
Total Investments 124.6%
City National Corp.
1,226
73,008
(Cost $11,332,425)
$ 11,445,835
Wilmington Trust Corp.
1,936
68,147
Liabilities in Excess of
Capitol Federal Financial†
2,150
66,650
Other Assets – (24.6)%
$ (2,259,548)
Astoria Financial Corp.
2,800
65,156
Valley National Bancorp
3,381
64,442
Net Assets – 100.0%
$
9,186,287
BancorpSouth, Inc.
2,700
63,747
SVB Financial Group*†
1,230
61,992
Whitney Holding Corp.
2,353
61,531
Chittenden Corp.
1,709
60,875
*
Non-Income Producing Security.
†
All or a portion of this security is on loan at December 31, 2007 — See Note 8.
ADR — American Depository Receipt.
22
|
THE RYDEX VARIABLE TRUST ANNUAL REPORT
See Notes to Financial Statements.
SCHEDULE OF INVESTMENTS
December 31, 2007
BASIC MATERIALS FUND
MARKET
MARKET
VALUE
VALUE
SHARES
(NOTE 1)
SHARES
(NOTE 1)
COMMON STOCKS 99.5%
Cleveland-Cliffs, Inc.†
7,534
$
759,427
FMC Corp.
13,822
753,990
Rio Tinto PLC — SP ADR
9,767
$
4,101,162
Carpenter Technology Corp.
10,028
753,805
ArcelorMittal†
47,912
3,705,993
Airgas, Inc.
14,287
744,496
Monsanto Co.
28,519
3,185,287
Harmony Gold Mining Co. Ltd. —
The Mosaic Co.*
32,496
3,065,673
SP ADR*
71,875
741,031
Potash Corporation of
Reliance Steel & Aluminum Co.
13,228
716,958
Saskatchewan
19,300
2,778,428
International Flavors & Fragrances,
Barrick Gold Corp.
52,439
2,205,060
Inc.†
14,830
713,768
E.I. du Pont de Nemours and Co.
49,822
2,196,652
Meridian Gold, Inc.*
19,900
706,450
Freeport-McMoRan Copper &
Ball Corp.
15,604
702,180
Gold, Inc.
21,253
2,177,157
Albemarle Corp.†
16,900
697,125
Dow Chemical Co.
53,051
2,091,270
Sonoco Products Co.
20,761
678,469
Alcoa, Inc.
54,446
1,990,001
Titanium Metals Corp.†
25,204
666,646
Praxair, Inc.
22,370
1,984,443
Domtar Corp.*
86,200
662,878
Goldcorp, Inc.†
55,129
1,870,527
Sealed Air Corp.†
28,109
650,442
Southern Copper Corp.†
17,485
1,838,198
Pan American Silver Corp.*
18,500
646,205
Newmont Mining Corp.
35,169
1,717,302
Pactiv Corp.*
23,876
635,818
Air Products & Chemicals, Inc.
17,147
1,691,209
Randgold Resources Ltd. —
Nucor Corp.
25,587
1,515,262
SP ADR†
17,100
634,923
Vulcan Materials Co.†
19,116
1,511,884
Commercial Metals Co.
21,292
627,049
United States Steel Corp.
12,111
1,464,341
Lubrizol Corp.
11,526
624,248
Cemex SA de CV — SP ADR*†
56,439
1,458,948
AptarGroup, Inc.†
15,176
620,850
Weyerhaeuser Co.†
19,512
1,438,815
Cytec Industries, Inc.
10,025
617,340
Ecolab, Inc.†
26,380
1,350,920
Packaging Corporation of America
21,763
613,717
Kinross Gold Corp.*†
71,976
1,324,358
Nalco Holding Co.
25,259
610,763
Agrium, Inc.
18,107
1,307,506
Bemis Co.
21,494
588,506
International Paper Co.†
39,254
1,271,045
Smurfit-Stone Container Corp.*†
53,003
559,712
AngloGold Ashanti Ltd. —
Iamgold Corp.†
67,877
549,804
SP ADR†
28,900
1,237,209
RPM International, Inc.†
26,658
541,157
Rohm & Haas Co.†
22,637
1,201,346
Silver Standard Resources, Inc.*†
14,782
539,986
PPG Industries, Inc.
16,669
1,170,664
Rockwood Holdings, Inc.*†
16,129
535,805
CF Industries Holdings, Inc.†
10,100
1,111,606
Ashland, Inc.
11,184
530,457
Cia de Minas Buenaventura SA —
Hercules, Inc.†
27,148
525,314
SP ADR†
19,200
1,086,720
Century Aluminum Co.*
9,600
517,824
Owens-Illinois, Inc.*
21,763
1,077,268
Cabot Corp.
15,409
513,736
Agnico-Eagle Mines Ltd.†
19,154
1,046,383
Valspar Corp.
22,690
511,433
Sigma-Aldrich Corp.†
18,658
1,018,727
Scotts Miracle-Gro Co. — Class A†
13,655
510,970
Gold Fields Ltd. — SP ADR
69,079
980,922
Silgan Holdings, Inc.
9,462
491,456
Terra Industries, Inc.*†
19,800
945,648
Eldorado Gold Corp.*
84,528
490,262
Steel Dynamics, Inc.†
15,858
944,661
W.R. Grace & Co.*†
18,200
476,476
Celanese Corp.
22,118
936,034
Texas Industries, Inc.
6,679
468,198
Allegheny Technologies, Inc.
10,810
933,984
Chemtura Corp.
58,236
454,241
MeadWestvaco Corp.
27,825
870,923
Louisiana-Pacific Corp.
27,293
373,368
Huntsman Corp.
33,100
850,670
Worthington Industries, Inc.†
20,812
372,119
Martin Marietta Materials, Inc.†
6,363
843,734
Temple-Inland, Inc.†
15,801
329,451
AK Steel Holding Corp.*
17,500
809,200
Forestar Real Estate Group, Inc.*
5,200
122,676
Yamana Gold, Inc.
62,500
808,750
Guaranty Financial Group, Inc.*
5,200
83,205
Crown Holdings, Inc.*
30,563
783,941
Total Common Stocks
Eastman Chemical Co.†
12,767
779,936
(Cost $70,397,295)
95,121,354
Silver Wheaton Corp.*†
45,778
776,853
See Notes to Financial Statements.
THE RYDEX VARIABLE TRUST ANNUAL REPORT
|
23
SCHEDULE OF INVESTMENTS (concluded)
December 31, 2007
BASIC MATERIALS FUND
MARKET
FACE
VALUE
AMOUNT
(NOTE 1)
REPURCHASE AGREEMENT 0.5%
Repurchase Agreement (Note 5)
Lehman Brothers Holdings, Inc.
issued 12/31/07 at 1.00%
due 01/02/08
$
443,629
$
443,629
Total Repurchase Agreement
(Cost $443,629)
443,629
SECURITIES LENDING COLLATERAL 21.9%
Investment in Securities Lending Short Term
Investment Portfolio Held by
U.S. Bank (Note 8)
20,976,254
20,976,254
Total Securities Lending Collateral
(Cost $20,976,254)
20,976,254
Total Investments 121.9%
(Cost $91,817,178)
$ 116,541,237
Liabilities in Excess of
Other Assets – (21.9)%
$ (20,950,393)
Net Assets – 100.0%
$
95,590,844
*
Non-Income Producing Security.
†
All or a portion of this security is on loan at December 31, 2007 — See Note 8.
ADR — American Depository Receipt.
24
|
THE RYDEX VARIABLE TRUST ANNUAL REPORT
See Notes to Financial Statements.
SCHEDULE OF INVESTMENTS
December 31, 2007
BIOTECHNOLOGY FUND
MARKET
MARKET
VALUE
VALUE
SHARES
(NOTE 1)
SHARES
(NOTE 1)
COMMON STOCKS 99.4%
Array Biopharma, Inc.*†
10,477
$
88,216
Keryx Biopharmaceuticals, Inc.*†
10,360
87,024
Genentech, Inc.*†
19,013
$
1,275,156
Acadia Pharmaceuticals, Inc.*†
7,810
86,457
Gilead Sciences, Inc.*
24,079
1,107,875
Momenta Pharmaceuticals, Inc.*
8,964
64,003
Amgen, Inc.*†
22,396
1,040,070
Vanda Pharmaceuticals, Inc.*†
6,750
46,440
Genzyme Corp.*
10,002
744,549
Genomic Health, Inc.*†
4
91
Biogen Idec, Inc.*†
10,618
604,377
Total Common Stocks
Celgene Corp.*†
11,712
541,211
(Cost $10,940,824)
13,848,822
Millennium Pharmaceuticals, Inc.*†
28,473
426,525
Cephalon, Inc.*†
4,811
345,237
FACE
BioMarin Pharmaceuticals, Inc.*†
9,748
345,079
AMOUNT
OSI Pharmaceuticals, Inc.*
6,717
325,842
REPURCHASE AGREEMENT 0.8%
Onyx Pharmaceuticals, Inc.*
5,720
318,146
Repurchase Agreement (Note 5)
Amylin Pharmaceuticals, Inc.*†
8,518
315,166
Lehman Brothers Holdings, Inc.
ImClone Systems, Inc.*†
7,178
308,654
issued 12/31/07 at 1.00%
United Therapeutics Corp.*†
2,887
281,916
due 01/02/08
$
106,874
106,874
Alexion Pharmaceuticals, Inc.*
3,714
278,661
Total Repurchase Agreement
Pharmion Corp.*†
4,344
273,064
(Cost $106,874)
106,874
Regeneron Pharmaceuticals, Inc.*†
9,796
236,573
Vertex Pharmaceuticals, Inc.*
9,872
229,327
SECURITIES LENDING COLLATERAL 29.4%
Savient Pharmaceuticals, Inc.*†
9,659
221,867
Investment in Securities Lending Short Term
Myriad Genetics, Inc.*†
4,438
206,012
Investment Portfolio Held by
PDL BioPharma, Inc.*†
11,592
203,092
U.S. Bank (Note 8)
4,092,845
4,092,845
Cepheid, Inc.*†
7,700
202,895
Total Securities Lending Collateral
LifeCell Corp.*†
4,670
201,324
(Cost $4,092,845)
4,092,845
Human Genome Sciences, Inc.*†
18,879
197,097
Total Investments 129.6%
Alkermes, Inc.*†
12,061
188,031
(Cost $15,140,543)
$ 18,048,541
Isis Pharmaceuticals, Inc.*†
11,768
185,346
Liabilities in Excess of
Applera Corp. - Celera Group*
11,496
182,441
Other Assets – (29.6)%
$ (4,121,966)
Incyte Corp.*
16,563
166,458
Cubist Pharmaceuticals, Inc.*†
8,113
166,398
Net Assets – 100.0%
$ 13,926,575
Medarex, Inc.*†
15,241
158,811
Martek Biosciences Corp.*†
5,360
158,549
Alnylam Pharmaceuticals, Inc.*†
5,209
151,478
Zymogenetics, Inc.*†
11,762
137,262
Seattle Genetics, Inc.*†
12,019
137,017
Acorda Therapeutics, Inc.*†
5,909
129,762
Metabolix, Inc.*
5,060
120,428
Omrix Biopharmaceuticals, Inc.*
3,446
119,714
CV Therapeutics, Inc.*
12,969
117,369
Indevus Pharmaceuticals, Inc.*†
16,560
115,092
Halozyme Therapeutics, Inc.*†
15,293
108,733
Enzon Pharmaceuticals, Inc.*†
11,358
108,242
Progenics Pharmaceuticals, Inc.*
5,804
104,878
Dendreon Corp.*†
16,710
103,936
Ligand Pharmaceuticals, Inc. —
Class B†
21,485
103,773
MannKind Corp.*†
12,747
101,466
XOMA Ltd.*†
29,461
99,873
InterMune, Inc.*†
7,341
97,855
Arena Pharmaceuticals, Inc.*†
12,200
95,526
Geron Corp.*†
15,570
88,438
*
Non-Income Producing Security.
†
All or a portion of this security is on loan at December 31, 2007 — See Note 8.
See Notes to Financial Statements.
THE RYDEX VARIABLE TRUST ANNUAL REPORT
|
25
SCHEDULE OF INVESTMENTS
December 31, 2007
CONSUMER PRODUCTS FUND
MARKET
MARKET
VALUE
FACE
VALUE
SHARES
(NOTE 1)
AMOUNT
(NOTE 1)
COMMON STOCKS 99.6%
REPURCHASE AGREEMENT 0.8%
Repurchase Agreement (Note 5)
Procter & Gamble Co.
40,949
$
3,006,476
Lehman Brothers Holdings, Inc.
Altria Group, Inc.
33,932
2,564,581
issued 12/31/07 at 1.00%
Coca-Cola Co.
39,099
2,399,506
due 01/02/08
$
321,901
$
321,901
PepsiCo, Inc.
29,054
2,205,199
Total Repurchase Agreement
Unilever NV
46,190
1,684,087
(Cost $321,901)
321,901
Diageo PLC — SP ADR
16,680
1,431,644
Kraft Foods, Inc. — Class A
42,051
1,372,124
SECURITIES LENDING COLLATERAL 7.0%
Colgate-Palmolive Co.†
16,365
1,275,815
Investment in Securities Lending Short Term
Archer-Daniels-Midland Co.
27,116
1,258,996
Investment Portfolio Held by
Anheuser-Busch Cos., Inc.
23,577
1,234,020
U.S. Bank (Note 8)
2,859,901
2,859,901
Kimberly-Clark Corp.
15,238
1,056,603
Total Securities Lending Collateral
Cadbury Schweppes PLC — SP ADR
20,220
998,261
(Cost $2,859,901)
2,859,901
Reynolds American, Inc.†
13,462
887,954
Total Investments 107.4%
Kellogg Co.†
16,526
866,458
(Cost $38,125,668)
$ 43,861,870
Avon Products, Inc.†
20,996
829,972
Liabilities in Excess of
General Mills, Inc.
14,550
829,350
Other Assets – (7.4)%
$ (3,014,901)
Sysco Corp.
25,974
810,649
Kroger Co.
30,107
804,158
Net Assets – 100.0%
$ 40,846,969
Safeway, Inc.
22,446
767,878
H.J. Heinz Co.
16,294
760,604
Bunge Ltd.†
6,530
760,157
Campbell Soup Co.
20,191
721,424
Coca-Cola Enterprises, Inc.†
27,529
716,580
Sara Lee Corp.
40,905
656,934
WM Wrigley Jr Co.†
11,208
656,228
ConAgra Foods, Inc.
27,282
649,039
UST, Inc.†
11,189
613,157
Clorox Co.
9,211
600,281
Loews Corp. - Carolina Group
6,956
593,347
Pepsi Bottling Group, Inc.
14,657
578,365
SUPERVALU, Inc.
15,086
566,027
Molson Coors Brewing Co. —
Class B†
9,884
510,212
Hormel Foods Corp.
11,940
483,331
Energizer Holdings, Inc.*
4,220
473,189
Hershey Co.
11,781
464,171
Estee Lauder Cos., Inc. — Class A
10,002
436,187
Brown-Forman Corp. — Class B†
5,750
426,133
McCormick & Co., Inc.
11,174
423,606
Whole Foods Market, Inc.†
10,031
409,265
PepsiAmericas, Inc.
12,230
407,504
Constellation Brands, Inc. — Class A*
16,923
400,060
Church & Dwight Co., Inc.†
7,220
390,385
Tyson Foods, Inc. — Class A
24,443
374,711
Smithfield Foods, Inc.*†
12,912
373,415
Dean Foods Co.
13,611
351,980
Hansen Natural Corp.*†
7,300
323,317
Corn Products International, Inc.
7,530
276,728
Total Common Stocks
(Cost $34,943,866)
40,680,068
*
Non-Income Producing Security.
†
All or a portion of this security is on loan at December 31, 2007 — See Note 8.
ADR — American Depository Receipt.
26
|
THE RYDEX VARIABLE TRUST ANNUAL REPORT
See Notes to Financial Statements.
SCHEDULE OF INVESTMENTS
December 31, 2007
ELECTRONICS FUND
MARKET
MARKET
VALUE
VALUE
SHARES
(NOTE 1)
SHARES
(NOTE 1)
COMMON STOCKS 99.9%
PMC - Sierra, Inc.*
3,748
$
24,512
MKS Instruments, Inc.*†
1,264
24,193
Intel Corp.
11,528
$
307,336
RF Micro Devices, Inc.*†
4,010
22,897
Taiwan Semiconductor Manufacturing
Semtech Corp.*†
1,369
21,247
Co. Ltd. — SP ADR
16,773
167,059
FEI Co.*
831
20,634
Texas Instruments, Inc.
4,792
160,053
Cabot Microelectronics Corp.*
549
19,715
MEMC Electronic Materials, Inc.*
1,436
127,072
OmniVision Technologies, Inc.*†
1,147
17,951
Applied Materials, Inc.
6,262
111,213
Spansion, Inc.*
3,136
12,324
Nvidia Corp.*
2,958
100,631
Total Common Stocks
ASML Holding NV
2,818
88,175
(Cost $1,998,594)
2,939,442
STMicroelectronics NV — SP ADR
5,683
81,267
Analog Devices, Inc.
2,232
70,754
FACE
KLA-Tencor Corp.†
1,447
69,688
AMOUNT
Broadcom Corp. — Class A*
2,627
68,670
REPURCHASE AGREEMENT 1.1%
Maxim Integrated Products, Inc.
2,551
67,550
Repurchase Agreement (Note 5)
Marvell Technology Group Ltd.*
4,583
64,070
Lehman Brothers Holdings, Inc.
Microchip Technology, Inc.
2,005
62,997
issued 12/31/07 at 1.00%
Linear Technology Corp.†
1,972
62,769
due 01/02/08
$
33,356
33,356
Cypress Semiconductor Corp.*†
1,713
61,719
Total Repurchase Agreement
Infineon Technologies AG — SP ADR*
5,287
61,541
(Cost $33,356)
33,356
Altera Corp.
2,925
56,511
Xilinx, Inc.
2,558
55,943
SECURITIES LENDING COLLATERAL 23.2%
National Semiconductor Corp.
2,418
54,744
Investment in Securities Lending Short Term
Lam Research Corp.*
1,162
50,233
Investment Portfolio Held by
Advanced Micro Devices, Inc.*†
6,670
50,025
U.S. Bank (Note 8)
681,815
681,815
Micron Technology, Inc.*
6,467
46,886
Total Securities Lending Collateral
Novellus Systems, Inc.*†
1,612
44,443
(Cost $681,815)
681,815
Intersil Corp. — Class A
1,555
38,066
Total Investments 124.2%
International Rectifier Corp.*
1,104
37,503
(Cost $2,713,765)
$ 3,654,613
Varian Semiconductor Equipment
Liabilities in Excess of
Associates, Inc.*†
973
36,001
Other Assets – (24.2)%
$
(711,350)
Cree, Inc.*†
1,304
35,821
Rambus, Inc.*
1,702
35,640
Net Assets – 100.0%
$2,943,263
Tessera Technologies, Inc.*†
838
34,861
ON Semiconductor Corp.*†
3,702
32,874
Silicon Laboratories, Inc.*
878
32,864
Atheros Communications, Inc.*
1,074
32,800
Atmel Corp.*
7,416
32,037
Integrated Device Technology, Inc.*
2,818
31,872
Hittite Microwave Corp.*†
636
30,375
Sigma Designs, Inc.*†
545
30,084
Fairchild Semiconductor International,
Inc.*
2,029
29,278
Teradyne, Inc.*†
2,752
28,456
SiRF Technology Holdings, Inc.*†
1,118
28,095
Skyworks Solutions, Inc.*
3,229
27,446
Microsemi Corp.*†
1,230
27,232
Formfactor, Inc.*†
806
26,679
Cymer, Inc.*
681
26,511
Amkor Technology, Inc.*†
2,975
25,377
Diodes, Inc.*†
823
24,748
*
Non-Income Producing Security.
†
All or a portion of this security is on loan at December 31, 2007 — See Note 8.
ADR — American Depository Receipt.
See Notes to Financial Statements.
THE RYDEX VARIABLE TRUST ANNUAL REPORT
|
27
SCHEDULE OF INVESTMENTS
December 31, 2007
ENERGY FUND
MARKET
MARKET
VALUE
VALUE
SHARES
(NOTE 1)
SHARES
(NOTE 1)
COMMON STOCKS 99.5%
Pioneer Natural Resources Co.†
15,510
$
757,508
BJ Services Co.†
31,031
752,812
Exxon Mobil Corp.
73,455
$
6,881,999
Tesoro Corp.
15,460
737,442
BP PLC — SP ADR
65,982
4,827,903
Quicksilver Resources, Inc.*†
12,054
718,298
Chevron Corp.
45,433
4,240,262
Pride International, Inc.*
20,737
702,984
Royal Dutch Shell PLC — SP ADR†
44,823
3,774,097
Continental Resources, Inc.*
26,700
697,671
ConocoPhillips
41,283
3,645,289
Exterran Holdings, Inc.*
8,355
683,439
Schlumberger Ltd.
31,991
3,146,955
Forest Oil Corp.*
13,400
681,256
Transocean, Inc.†
18,509
2,649,563
Helmerich & Payne, Inc.
16,954
679,347
Occidental Petroleum Corp.
33,442
2,574,700
CNX Gas Corp.*
21,262
679,321
Hess Corp.†
20,864
2,104,343
Rowan Cos., Inc.†
16,335
644,579
Marathon Oil Corp.
32,382
1,970,769
Cabot Oil & Gas Corp.†
15,460
624,120
Apache Corp.
18,122
1,948,840
Frontier Oil Corp.†
14,848
602,532
Devon Energy Corp.
21,576
1,918,322
Cimarex Energy Co.†
14,080
598,822
Canadian Natural Resources Ltd.†
25,600
1,872,384
Teekay Shipping Corp.†
10,900
579,989
Valero Energy Corp.
26,290
1,841,089
Frontline, Ltd.†
11,800
566,400
Anadarko Petroleum Corp.
27,649
1,816,263
Helix Energy Solutions Group,
Halliburton Co.
45,065
1,708,414
Inc.*†
13,516
560,914
Diamond Offshore Drilling, Inc.†
10,686
1,517,412
Oceaneering International, Inc.*
8,058
542,706
National-Oilwell Varco, Inc.*
20,629
1,515,406
Dresser-Rand Group, Inc.*
13,867
541,506
EOG Resources, Inc.†
16,880
1,506,540
PetroHawk Energy Corp.*
29,300
507,183
XTO Energy, Inc.
29,332
1,506,492
Patterson-UTI Energy, Inc.†
25,458
496,940
Weatherford International Ltd.*
21,597
1,481,554
Tidewater, Inc.†
8,988
493,082
Baker Hughes, Inc.
17,669
1,432,956
Superior Energy Services*
14,311
492,585
Tenaris SA — SP ADR
31,630
1,414,810
Holly Corp.
8,730
444,270
Williams Cos., Inc.
39,300
1,406,154
Global Industries Ltd.*†
19,951
427,350
Peabody Energy Corp.†
21,660
1,335,122
Western Refining, Inc.†
12,200
295,362
Chesapeake Energy Corp.†
33,980
1,332,016
Total Common Stocks
Consol Energy, Inc.
18,440
1,318,829
(Cost $67,951,853)
100,983,604
Murphy Oil Corp.†
15,165
1,286,599
Talisman Energy, Inc.
69,360
1,284,547
FACE
Noble Corp.
22,690
1,282,212
AMOUNT
Nexen, Inc.†
39,250
1,266,597
REPURCHASE AGREEMENT 0.5%
Plains Exploration & Production
Repurchase Agreement (Note 5)
Co.*
23,417
1,264,518
Lehman Brothers Holdings, Inc.
Spectra Energy Corp.†
47,340
1,222,319
issued 12/31/07 at 1.00%
Smith International, Inc.
15,957
1,178,424
due 01/02/08
$
554,119
554,119
Noble Energy, Inc.
14,520
1,154,630
Total Repurchase Agreement
Cameco Corp.
26,900
1,070,889
(Cost $554,119)
554,119
El Paso Corp.
60,648
1,045,572
Ultra Petroleum Corp.*
14,600
1,043,900
SECURITIES LENDING COLLATERAL 17.1%
Southwestern Energy Co.*
18,492
1,030,374
Investment in Securities Lending Short Term
Cameron International Corp.*
19,906
958,076
Investment Portfolio Held by
ENSCO International, Inc.†
15,580
928,880
U.S. Bank (Note 8)
17,299,779
17,299,779
Denbury Resources, Inc.*
30,414
904,816
Total Securities Lending Collateral
Range Resources Corp.†
17,545
901,111
(Cost $17,299,779)
17,299,779
Arch Coal, Inc.
19,350
869,396
Total Investments 117.1%
Sunoco, Inc.†
11,926
863,919
(Cost $85,805,751)
$ 118,837,502
Grant Prideco, Inc.*
14,739
818,162
Liabilities in Excess of
Nabors Industries Ltd.*
29,554
809,484
Other Assets – (17.1)%
$ (17,379,802)
Newfield Exploration Co.*†
15,240
803,148
FMC Technologies, Inc.*
14,094
799,130
Net Assets – 100.0%
$ 101,457,700
*
Non-Income Producing Security.
†
All or a portion of this security is on loan at December 31, 2007 — See Note 8.
ADR — American Depository Receipt.
28
|
THE RYDEX VARIABLE TRUST ANNUAL REPORT
See Notes to Financial Statements.
SCHEDULE OF INVESTMENTS
December 31, 2007
ENERGY SERVICES FUND
MARKET
MARKET
VALUE
FACE
VALUE
SHARES
(NOTE 1)
AMOUNT
(NOTE 1)
COMMON STOCKS 99.6%
REPURCHASE AGREEMENT 0.6%
Repurchase Agreement (Note 5)
Schlumberger Ltd.
96,672
$
9,509,625
Lehman Brothers Holdings, Inc.
Transocean, Inc.†
55,928
8,006,093
issued 12/31/07 at 1.00%
Halliburton Co.
136,011
5,156,177
due 01/02/08
$
541,733
$
541,733
National-Oilwell Varco, Inc.*
62,085
4,560,764
Total Repurchase Agreement
Diamond Offshore Drilling, Inc.†
32,008
4,545,136
(Cost $541,733)
541,733
Weatherford International Ltd.*
65,218
4,473,955
Baker Hughes, Inc.†
53,166
4,311,762
SECURITIES LENDING COLLATERAL 26.3%
Tenaris SA — SP ADR
95,500
4,271,715
Investment in Securities Lending Short Term
Noble Corp.
68,354
3,862,684
Investment Portfolio Held by
Smith International, Inc.
47,995
3,544,431
U.S. Bank (Note 8)
25,285,475
25,285,475
Cameron International Corp.*
60,194
2,897,137
Total Securities Lending Collateral
ENSCO International, Inc.†
46,875
2,794,687
(Cost $25,285,475)
25,285,475
Grant Prideco, Inc.*
44,360
2,462,424
Total Investments 126.5%
Nabors Industries Ltd.*
89,238
2,444,229
(Cost $88,064,402)
$ 121,340,530
FMC Technologies, Inc.*
42,320
2,399,544
Liabilities in Excess of
BJ Services Co.†
93,619
2,271,197
Other Assets – (26.5)%
$ (25,423,703)
Pride International, Inc.*†
62,424
2,116,174
Exterran Holdings, Inc.*†
25,295
2,069,131
Net Assets – 100.0%
$
95,916,827
Helmerich & Payne, Inc.†
50,932
2,040,845
Rowan Cos., Inc.†
49,084
1,936,855
Atwood Oceanics, Inc.*†
17,891
1,793,394
Dresser-Rand Group, Inc.*
41,555
1,622,723
Oceaneering International, Inc.*
23,987
1,615,524
Patterson-UTI Energy, Inc.†
76,386
1,491,055
Superior Energy Services*
42,921
1,477,341
Tidewater, Inc.†
26,829
1,471,839
Dril-Quip, Inc.*
25,289
1,407,586
SEACOR Holdings, Inc.*†
14,267
1,323,121
Unit Corp.*
28,219
1,305,129
Global Industries Ltd.*†
60,278
1,291,155
Hercules Offshore*†
52,016
1,236,940
W-H Energy Services, Inc.*†
18,908
1,062,819
Oil States International, Inc.*†
28,674
978,357
Complete Production Services,
Inc.*†
52,658
946,264
Tetra Technologies, Inc.*†
52,377
815,510
Total Common Stocks
(Cost $62,237,194)
95,513,322
*
Non-Income Producing Security.
†
All or a portion of this security is on loan at December 31, 2007 — See Note 8.
ADR — American Depository Receipt.
See Notes to Financial Statements.
THE RYDEX VARIABLE TRUST ANNUAL REPORT
|
29
SCHEDULE OF INVESTMENTS
December 31, 2007
FINANCIAL SERVICES FUND
MARKET
MARKET
VALUE
VALUE
SHARES
(NOTE 1)
SHARES
(NOTE 1)
COMMON STOCKS 100.0%
TD Ameritrade Holding Corp.*
5,502
$
110,370
Public Storage, Inc.
1,428
104,829
HSBC Holdings PLC — SP ADR†
4,880
$
408,505
Ameriprise Financial, Inc.
1,870
103,056
Bank of America Corp.
9,179
378,726
Vornado Realty Trust†
1,136
99,911
JPMorgan Chase & Co.
8,424
367,708
Fifth Third Bancorp†
3,902
98,057
American International Group, Inc.
6,041
352,190
Assurant, Inc.†
1,460
97,674
ABN AMRO Holding NV — SP ADR†
5,991
323,754
Leucadia National Corp.†
2,050
96,555
Citigroup, Inc.
10,212
300,641
Genworth Financial, Inc. — Class A†
3,730
94,928
Wells Fargo & Co.†
9,543
288,103
Boston Properties, Inc.†
1,031
94,656
Goldman Sachs Group, Inc.
1,300
279,565
Plum Creek Timber Co., Inc. (REIT)†
2,000
92,080
UBS AG — SP ADR
6,020
276,920
Equity Residential†
2,500
91,175
Credit Suisse Group — SP ADR†
4,093
245,989
Legg Mason, Inc.
1,230
89,974
Bank of New York Mellon Corp.
5,024
244,970
UnumProvident Corp.†
3,730
88,737
Wachovia Corp.
6,196
235,634
CNA Financial Corp.
2,620
88,346
U.S. Bancorp†
7,180
227,893
HCP, Inc.†
2,488
86,533
American Express Co.
4,344
225,975
Hudson City Bancorp, Inc.
5,755
86,440
Barclays PLC — SP ADR
5,554
224,215
General Growth Properties, Inc.†
2,073
85,366
Morgan Stanley
3,918
208,085
KIMCO Realty Corp.
2,330
84,812
Prudential Financial, Inc.
2,160
200,966
Bear Stearns Cos., Inc.†
950
83,837
CME Group Inc.†
292
200,312
Annaly Mortgage Management, Inc.†
4,600
83,628
MetLife, Inc.
3,238
199,526
Commerce Bancorp, Inc.†
2,184
83,298
State Street Corp.
2,372
192,606
National City Corp.
4,993
82,185
Charles Schwab Corp.
7,380
188,559
SEI Investments Co.†
2,554
82,162
Travelers Cos, Inc.
3,504
188,515
M&T Bank Corp.†
1,004
81,896
Lehman Brothers Holdings, Inc.†
2,864
187,420
Synovus Financial Corp.
3,390
81,631
Merrill Lynch & Co., Inc.†
3,418
183,478
Nasdaq Stock Market, Inc.*†
1,640
81,164
AFLAC, Inc.
2,890
181,001
Moody’s Corp.†
2,270
81,039
Blackrock, Inc.
790
171,272
Host Hotels & Resorts, Inc.†
4,748
80,906
Loews Corp.
3,284
165,317
KeyCorp†
3,402
79,777
Allstate Corp.
3,150
164,524
Ventas, Inc.†
1,725
78,056
Hartford Financial Services Group,
Cincinnati Financial Corp.†
1,960
77,498
Inc.
1,798
156,768
Eaton Vance Corp.
1,680
76,289
NYSE Euronext†
1,750
153,597
Axis Capital Holdings Ltd.
1,950
75,991
Franklin Resources, Inc.†
1,340
153,336
AvalonBay Communities, Inc.
800
75,312
Fannie Mae
3,808
152,244
Everest Re Group Ltd.
750
75,300
Chubb Corp.
2,663
145,347
XL Capital Ltd.†
1,490
74,962
PNC Financial Services Group, Inc.†
2,195
144,102
Brookfield Properties Corp.
3,865
74,401
ACE Ltd.
2,280
140,858
UnionBanCal Corp.
1,520
74,343
Principal Financial Group, Inc.
2,020
139,057
Janus Capital Group, Inc.†
2,233
73,354
Brookfield Asset Management, Inc. —
Torchmark Corp.†
1,210
73,241
Class A†
3,815
136,081
People’s United Financial, Inc.
4,109
73,140
Northern Trust Corp.
1,750
134,015
Comerica, Inc.†
1,680
73,130
SunTrust Banks, Inc.†
2,126
132,854
W.R. Berkley Corp.
2,432
72,498
T. Rowe Price Group, Inc.
2,130
129,674
White Mountains Insurance Group
Simon Property Group, Inc.†
1,446
125,600
Ltd.
140
71,967
ProLogis†
1,889
119,725
Safeco Corp.
1,290
71,827
Marsh & McLennan Cos., Inc.
4,510
119,380
New York Community Bancorp, Inc.†
4,080
71,726
Aon Corp.
2,500
119,225
AMB Property Corp.†
1,240
71,374
Lincoln National Corp.
1,980
115,276
Willis Group Holdings Ltd.
1,860
70,624
Capital One Financial Corp.†
2,403
113,566
PartnerRe Ltd.
840
69,325
Progressive Corp.
5,910
113,236
Markel Corp.*
140
68,754
Regions Financial Corp.†
4,761
112,598
Discover Financial Services†
4,550
68,614
Nymex Holdings, Inc.
835
111,564
Transatlantic Holdings, Inc.
940
68,310
BB&T Corp.†
3,620
111,025
Arch Capital Group Ltd.*
960
67,536
Freddie Mac
3,240
110,387
American Capital Strategies, Ltd.†
2,030
66,909
30
|
THE RYDEX VARIABLE TRUST ANNUAL REPORT
See Notes to Financial Statements.
SCHEDULE OF INVESTMENTS (concluded)
December 31, 2007
FINANCIAL SERVICES FUND
MARKET
MARKET
VALUE
VALUE
SHARES
(NOTE 1)
SHARES
(NOTE 1)
Washington Mutual, Inc.
4,902
$
66,716
Countrywide Financial Corp.†
5,476
$
48,955
Huntington Bancshares, Inc.†
4,471
65,992
City National Corp.
820
48,831
SL Green Realty Corp.†
699
65,329
Jefferies Group, Inc.†
2,090
48,175
Federated Investors, Inc. — Class B†
1,580
65,033
Hospitality Properties Trust†
1,490
48,008
Marshall & Ilsley Corp.†
2,420
64,082
Allied Capital Corp.
2,230
47,945
Federal Realty Investment Trust†
780
64,077
Taubman Centers, Inc.
940
46,239
RenaissanceRe Holdings Ltd.†
1,060
63,854
UDR, Inc.†
2,281
45,278
CB Richard Ellis Group, Inc. —
Camden Property Trust
923
44,442
Class A*†
2,909
62,689
Essex Property Trust, Inc.†
450
43,871
Macerich Co.†
880
62,533
Weingarten Realty Investors†
1,390
43,702
Rayonier, Inc.
1,290
60,940
Jones Lang LaSalle, Inc.
600
42,696
Raymond James Financial, Inc.
1,850
60,421
Liberty Property Trust
1,455
41,919
Sovereign Bancorp, Inc.†
5,298
60,397
First Horizon National Corp.†
2,153
39,077
Regency Centers Corp.†
930
59,976
TCF Financial Corp.
2,150
38,550
TFS Financial Corp*
5,020
59,939
Student Loan Corp.
330
36,300
Health Care REIT, Inc.†
1,330
59,438
Colonial BancGroup, Inc.
2,665
36,084
SLM Corp.†
2,915
58,708
Ambac Financial Group, Inc.†
1,220
31,439
BOK Financial Corp.
1,124
58,111
MBIA, Inc.†
1,360
25,337
American Financial Group, Inc.
1,986
57,356
First Marblehead Corp.†
1,543
23,608
Zions Bancorporation†
1,220
56,962
E*Trade Financial Corp.*†
5,499
19,521
Commerce Bancshares, Inc.
1,260
56,524
Total Common Stocks
Alleghany Corp.*
140
56,280
(Cost $16,623,927)
17,512,949
Developers Diversified Realty Corp.†
1,450
55,520
Associated Banc-Corp.
2,040
55,264
FACE
Affiliated Managers Group, Inc.*†
470
55,206
AMOUNT
HCC Insurance Holdings, Inc.
1,912
54,836
REPURCHASE AGREEMENT 0.7%
First American Corp.†
1,596
54,456
Repurchase Agreement (Note 5)
Reinsurance Group of America, Inc.
1,034
54,264
Lehman Brothers Holdings, Inc.
Cullen/Frost Bankers, Inc.†
1,070
54,206
issued 12/31/07 at 1.00%
Allied World Assurance Company
due 01/02/08
$
115,215
115,215
Holdings Ltd
1,077
54,033
Total Repurchase Agreement
Alexandria Real Estate Equities, Inc.†
530
53,885
(Cost $115,215)
115,215
Unitrin, Inc.
1,120
53,749
Brown & Brown, Inc.
2,285
53,697
SECURITIES LENDING COLLATERAL 19.5%
Duke Realty Corp.†
2,056
53,620
Investment in Securities Lending Short Term
Old Republic International Corp.
3,458
53,288
Investment Portfolio Held by
CapitalSource, Inc.†
3,029
53,280
U.S. Bank (Note 8)
3,413,726
3,413,726
CIT Group, Inc.
2,185
52,506
Total Securities Lending Collateral
Protective Life Corp.
1,270
52,095
(Cost $3,413,726)
3,413,726
Fidelity National Financial, Inc. —
Total Investments 120.2%
Class A†
3,546
51,807
(Cost $20,152,868)
$ 21,041,890
Forest City Enterprises, Inc. —
Liabilities in Excess of
Class A†
1,154
51,284
Other Assets – (20.2)%
$ (3,534,204)
Erie Indemnity Co. — Class A
980
50,852
Popular, Inc.†
4,760
50,456
Net Assets – 100.0%
$ 17,507,686
Philadelphia Consolidated Holding
Corp.*
1,260
49,581
iStar Financial, Inc.†
1,890
49,235
Apartment Investment &
Management Co. — Class A†
1,414
49,108
*
Non-Income Producing Security.
†
All or a portion of this security is on loan at December 31, 2007 — See Note 8.
ADR — American Depository Receipt.
REIT — Real Estate Investment Trust.
See Notes to Financial Statements.
THE RYDEX VARIABLE TRUST ANNUAL REPORT
|
31
SCHEDULE OF INVESTMENTS
December 31, 2007
HEALTH CARE FUND
MARKET
MARKET
VALUE
VALUE
SHARES
(NOTE 1)
SHARES
(NOTE 1)
COMMON STOCKS 99.6%
AmerisourceBergen Corp.
6,497
$
291,520
Varian Medical Systems, Inc.*†
5,541
289,019
Johnson & Johnson, Inc.
21,486
$
1,433,116
DENTSPLY International, Inc.
6,126
275,793
Pfizer, Inc.
53,549
1,217,169
Hospira, Inc.*
6,325
269,698
Merck & Co., Inc.
20,676
1,201,482
Respironics, Inc.*
4,010
262,575
GlaxoSmithKline PLC — SP ADR†
23,500
1,184,165
Covance, Inc.*
2,993
259,254
Novartis AG — SP ADR
21,430
1,163,863
Applera Corp. - Applied Biosystems
Sanofi-Aventis — SP ADR
25,350
1,154,186
Group
7,366
249,855
UnitedHealth Group, Inc.
16,993
988,993
Henry Schein, Inc.*
3,960
243,144
Abbott Laboratories
17,256
968,924
Charles River Laboratories
Genentech, Inc.*
12,048
808,059
International, Inc.*
3,658
240,696
WellPoint, Inc.*
8,933
783,692
DaVita, Inc.*†
4,255
239,769
Wyeth
17,367
767,448
Barr Pharmaceuticals, Inc.*
4,511
239,534
Eli Lilly & Co.
14,314
764,225
Pharmaceutical Product Development,
AstraZeneca PLC — SP ADR†
17,260
739,073
Inc.†
5,685
229,504
Medtronic, Inc.
14,544
731,127
Health Net, Inc.*
4,684
226,237
Bristol-Myers Squibb Co.
26,462
701,772
Cephalon, Inc.*†
3,128
224,465
Gilead Sciences, Inc.*
15,250
701,653
Invitrogen Corp.*
2,400
224,184
Alcon, Inc. — SP ADR
4,635
662,990
Beckman Coulter, Inc.
2,940
214,032
Amgen, Inc.*†
14,188
658,891
Warner Chilcott Ltd.*
11,860
210,278
Teva Pharmaceutical Industries
Cerner Corp.*†
3,728
210,259
Ltd. — SP ADR†
13,920
647,002
Millipore Corp.*†
2,844
208,124
Baxter International, Inc.
11,072
642,730
Patterson Cos., Inc.*
6,117
207,672
Schering-Plough Corp.
22,124
589,383
Idexx Laboratories, Inc.*
3,460
202,860
Stryker Corp.†
7,685
574,223
VCA Antech, Inc.*
4,550
201,247
Aetna, Inc.
9,922
572,797
Amylin Pharmaceuticals, Inc.*†
5,406
200,022
Medco Health Solutions, Inc.*
5,618
569,665
ImClone Systems, Inc.*†
4,550
195,650
Thermo Fisher Scientific, Inc.*
8,724
503,200
Kinetic Concepts, Inc.*†
3,591
192,334
Covidien Ltd.
11,209
496,447
Endo Pharmaceuticals Holdings, Inc.*
7,127
190,077
Express Scripts, Inc.*
6,796
496,108
IMS Health, Inc.
8,235
189,734
McKesson Corp.
7,241
474,358
Gen-Probe, Inc.*
2,900
182,497
Genzyme Corp.*
6,340
471,950
Mylan Laboratories, Inc.†
12,738
179,096
Becton, Dickinson & Co.
5,550
463,869
PerkinElmer, Inc.
6,560
170,691
Allergan, Inc.
6,904
443,513
Brookdale Senior Living, Inc.†
5,130
145,743
Cardinal Health, Inc.†
7,662
442,481
Vertex Pharmaceuticals, Inc.*
6,263
145,490
CIGNA Corp.
7,491
402,491
Omnicare, Inc.
6,252
142,608
Intuitive Surgical, Inc.*†
1,233
400,109
APP Pharmaceuticals Inc.*†
8,350
85,755
Biogen Idec, Inc.*†
6,734
383,299
WellCare Health Plans, Inc.*
1,983
84,099
Boston Scientific Corp.*
32,780
381,231
Total Common Stocks
Hologic, Inc.*†
5,538
380,128
(Cost $30,407,103)
37,359,954
Humana, Inc.*
4,994
376,098
St. Jude Medical, Inc.*
9,021
366,613
FACE
Zimmer Holdings, Inc.*
5,515
364,817
AMOUNT
Shire PLC — SP ADR†
5,120
353,024
REPURCHASE AGREEMENT 0.4%
Celgene Corp.*
7,425
343,109
Repurchase Agreement (Note 5)
C.R. Bard, Inc.†
3,619
343,081
Lehman Brothers Holdings, Inc.
Forest Laboratories, Inc.*
9,322
339,787
issued 12/31/07 at 1.00%
Elan Corp. PLC -SP ADR*†
14,910
327,722
due 01/02/08
$
139,364
139,364
Waters Corp.*
4,074
322,131
Total Repurchase Agreement
Quest Diagnostics, Inc.
5,978
316,236
(Cost $139,364)
139,364
Coventry Health Care, Inc.*
5,218
309,167
Laboratory Corporation of America
Holdings*†
4,089
308,842
32
|
THE RYDEX VARIABLE TRUST ANNUAL REPORT
See Notes to Financial Statements.
SCHEDULE OF INVESTMENTS (concluded)
December 31, 2007
HEALTH CARE FUND
MARKET
FACE
VALUE
AMOUNT
(NOTE 1)
SECURITIES LENDING COLLATERAL 13.5%
Investment in Securities Lending Short Term
Investment Portfolio Held by
U.S. Bank (Note 8)
$5,069,100
$
5,069,100
Total Securities Lending Collateral
(Cost $5,069,100)
5,069,100
Total Investments 113.5%
(Cost $35,615,567)
$ 42,568,418
Liabilities in Excess of
Other Assets – (13.5)%
$ (5,047,223)
Net Assets – 100.0%
$ 37,521,195
*
Non-Income Producing Security.
†
All or a portion of this security is on loan at December 31, 2007 — See Note 8.
ADR — American Depository Receipt.
See Notes to Financial Statements.
See Notes to Financial Statements.
THE RYDEX VARIABLE TRUST ANNUAL REPORT
THE RYDEX VARIABLE TRUST ANNUAL REPORT
|
|
33
33
SCHEDULE OF INVESTMENTS
December 31, 2007
INTERNET FUND
MARKET
MARKET
VALUE
FACE
VALUE
SHARES
(NOTE 1)
AMOUNT
(NOTE 1)
COMMON STOCKS 99.5%
REPURCHASE AGREEMENT 0.0%
Repurchase Agreement (Note 5)
Google, Inc. — Class A*
3,671
$
2,538,423
Lehman Brothers Holdings, Inc.
Cisco Systems, Inc.*
80,966
2,191,750
issued 12/31/07 at 1.00%
Research In Motion Ltd.*
13,124
1,488,262
due 01/02/08
$
9,132
$
9,132
Qualcomm, Inc.
37,361
1,470,155
Total Repurchase Agreement
Time Warner, Inc.
83,283
1,375,002
(Cost $9,132)
9,132
eBay, Inc.*
35,148
1,166,562
Amazon.com, Inc.*
12,421
1,150,681
SECURITIES LENDING COLLATERAL 22.9%
Yahoo!, Inc.*
41,096
955,893
Investment in Securities Lending Short Term
Juniper Networks, Inc.*†
22,036
731,595
Investment Portfolio Held by
Sun Microsystems, Inc.*
35,681
646,897
U.S. Bank (Note 8)
5,718,672
5,718,672
Symantec Corp.*
38,126
615,354
Total Securities Lending Collateral
Intuit, Inc.*†
19,333
611,116
(Cost $5,718,672)
5,718,672
VeriSign, Inc.*†
16,139
606,988
Total Investments 122.4%
Qwest Communications International,
(Cost $27,576,377)
$ 30,533,393
Inc.*†
83,417
584,753
Liabilities in Excess of
Expedia, Inc.*†
16,942
535,706
Other Assets – (22.4)%
$ (5,596,136)
Broadcom Corp. — Class A*
20,427
533,962
BEA Systems, Inc.*†
31,500
497,070
Net Assets – 100.0%
$ 24,937,257
IAC/InterActiveCorp*†
17,716
476,915
McAfee, Inc.*
11,899
446,212
Akamai Technologies, Inc.*†
12,862
445,025
Priceline.com, Inc.*†
3,821
438,880
Check Point Software Technologies
Ltd.*†
17,348
380,962
Red Hat, Inc.*
17,921
373,474
Equinix, Inc.*†
3,640
367,895
Monster Worldwide, Inc.*†
11,077
358,895
Sohu.com, Inc.*
5,670
309,128
Foundry Networks, Inc.*†
16,455
288,292
HLTH Corp.*†
20,721
277,661
Ciena Corp.*†
8,130
277,314
Netflix, Inc.*†
10,245
272,722
VistaPrint Ltd.*†
6,110
261,813
Omniture, Inc.*†
7,730
257,332
ValueClick, Inc.*
11,250
246,375
TIBCO Software, Inc.*†
30,122
243,085
F5 Networks, Inc.*†
8,350
238,142
CNET Networks, Inc.*†
25,916
236,872
SAVVIS, Inc.*†
6,650
185,601
DealerTrack Holdings, Inc.*†
5,450
182,412
Digital River, Inc.*†
5,328
176,197
j2 Global Communications, Inc.*†
7,120
150,730
E*Trade Financial Corp.*†
32,823
116,522
Palm, Inc.†
15,294
96,964
Total Common Stocks
(Cost $21,848,573)
24,805,589
*
Non-Income Producing Security.
†
All or a portion of this security is on loan at December 31, 2007 — See Note 8.
34
|
THE RYDEX VARIABLE TRUST ANNUAL REPORT
See Notes to Financial Statements.
SCHEDULE OF INVESTMENTS
December 31, 2007
LEISURE FUND
MARKET
MARKET
VALUE
VALUE
SHARES
(NOTE 1)
SHARES
(NOTE 1)
COMMON STOCKS 99.5%
Callaway Golf Co.†
6,953
$
121,191
Sonic Corp.*†
5,470
119,793
McDonald’s Corp.
15,466
$
911,102
Gaylord Entertainment Co.*†
2,950
119,386
Walt Disney Co.†
25,112
810,615
Jack in the Box, Inc.*
4,580
118,027
Time Warner, Inc.
47,396
782,508
Pinnacle Entertainment, Inc.*†
4,819
113,536
News Corp. — Class A
32,718
670,392
Brunswick Corp.†
6,558
111,814
Viacom, Inc. — Class A
13,280
583,258
International Speedway Corp. —
Las Vegas Sands Corp.*†
5,507
567,496
Class A
2,690
110,774
Carnival Corp.
11,834
526,495
Panera Bread Co. — Class A*†
2,710
97,072
MGM MIRAGE*
5,726
481,098
Pool Corp.†
4,560
90,425
Yum! Brands, Inc.
12,540
479,906
Live Nation, Inc.*†
5,660
82,183
Electronic Arts, Inc.*†
7,743
452,269
Warner Music Group Corp.†
12,410
75,205
Harrah’s Entertainment, Inc.
4,949
439,224
IHOP Corp.†
1,710
62,552
International Game Technology, Inc.†
9,256
406,616
Total Common Stocks
Starbucks Corp.*†
17,916
366,740
(Cost $12,199,354)
15,232,288
Activision, Inc.*
11,816
350,935
Marriott International, Inc. — Class A
10,050
343,509
FACE
Royal Caribbean Cruises Ltd.†
7,887
334,724
AMOUNT
Wynn Resorts Ltd.†
2,889
323,944
REPURCHASE AGREEMENT 0.4%
Tim Hortons, Inc.†
7,700
284,361
Repurchase Agreement (Note 5)
Starwood Hotels & Resorts
Lehman Brothers Holdings, Inc.
Worldwide, Inc.
6,341
279,194
issued 12/31/07 at 1.00%
Mattel, Inc.
14,122
268,883
due 01/02/08
$
56,089
56,089
CTC Media, Inc.*
8,620
260,324
Total Repurchase Agreement
Penn National Gaming, Inc.*
4,050
241,177
(Cost $56,089)
56,089
Eastman Kodak Co.†
10,942
239,302
Burger King Holdings, Inc.
7,674
218,786
SECURITIES LENDING COLLATERAL 20.0%
Hasbro, Inc.
7,963
203,694
Investment in Securities Lending Short Term
Bally Technologies, Inc.*
3,978
197,786
Investment Portfolio Held by
Wyndham Worldwide Corp.†
7,840
184,710
U.S. Bank (Note 8)
3,062,987
3,062,987
Scientific Games Corp. — Class A*†
5,250
174,562
Total Securities Lending Collateral
Darden Restaurants, Inc.†
6,041
167,396
(Cost $3,062,987)
3,062,987
Chipotle Mexican Grill, Inc.*
1,340
164,887
Total Investments 119.9%
Orient-Express Hotels Ltd. - Class A
2,860
164,507
(Cost $15,318,430)
$ 18,351,364
Boyd Gaming Corp.
4,720
160,810
Liabilities in Excess of
Marvel Entertainment, Inc.*
5,990
159,993
Other Assets – (19.9)%
$ (3,040,309)
THQ, Inc.*
5,374
151,493
WMS Industries, Inc.*
4,065
148,942
Net Assets – 100.0%
$ 15,311,055
Regal Entertainment Group —
Class A†
8,210
148,355
Vail Resorts, Inc.*†
2,630
141,520
Choice Hotels International, Inc.†
4,254
141,233
Wendy’s International, Inc.
5,447
140,750
Polaris Industries, Inc.†
2,922
139,584
Cheesecake Factory, Inc.*†
5,786
137,186
DreamWorks Animation SKG, Inc. —
Class A*†
5,362
136,945
Ameristar Casinos, Inc.†
4,920
135,497
Life Time Fitness, Inc.*†
2,660
132,149
Brinker International, Inc.
6,628
129,644
Take-Two Interactive Software, Inc.*†
6,820
125,829
*
Non-Income Producing Security.
†
All or a portion of this security is on loan at December 31, 2007 — See Note 8.
See Notes to Financial Statements.
THE RYDEX VARIABLE TRUST ANNUAL REPORT
|
35
SCHEDULE OF INVESTMENTS
December 31, 2007
PRECIOUS METALS FUND
MARKET
MARKET
VALUE
FACE
VALUE
SHARES
(NOTE 1)
AMOUNT
(NOTE 1)
COMMON STOCKS 99.5%
REPURCHASE AGREEMENT 0.4%
Freeport-McMoRan Copper &
Repurchase Agreement (Note 5)
Gold, Inc.
129,698
$
13,286,263
Lehman Brothers Holdings, Inc.
Newmont Mining Corp.
199,576
9,745,296
issued 12/31/07 at 1.00%
Goldcorp, Inc.†
216,183
7,335,089
due 01/02/08
$
355,404
$
355,404
Barrick Gold Corp.
170,642
7,175,496
Total Repurchase Agreement
Agnico-Eagle Mines Ltd.†
85,863
4,690,696
(Cost $355,404)
355,404
Yamana Gold, Inc.
331,704
4,292,250
Kinross Gold Corp.*†
230,589
4,242,838
SECURITIES LENDING COLLATERAL 27.2%
AngloGold Ashanti Ltd. —
Investment in Securities Lending Short Term
SP ADR†
86,860
3,718,477
Investment Portfolio Held by
Silver Wheaton Corp.*†
187,234
3,177,361
U.S. Bank (Note 8)
24,965,966
24,965,966
Gold Fields Ltd. — SP ADR
220,467
3,130,631
Total Securities Lending Collateral
Coeur d’Alene Mines Corp.*†
599,538
2,961,718
(Cost $24,965,966)
24,965,966
Pan American Silver Corp.*
82,680
2,888,012
Total Investments 127.1%
Meridian Gold, Inc.*
77,583
2,754,197
(Cost $86,343,118)
$ 116,467,298
Cia de Minas Buenaventura SA —
Liabilities in Excess of
SP ADR†
44,675
2,528,605
Other Assets – (27.1)%
$ (24,854,733)
Harmony Gold Mining Co. Ltd. —
SP ADR*
224,731
2,316,977
Net Assets – 100.0%
$
91,612,565
Silver Standard Resources, Inc.*†
60,011
2,192,202
Hecla Mining Co.*†
223,869
2,093,175
Randgold Resources Ltd. —
SP ADR†
53,403
1,982,853
Royal Gold, Inc.†
53,093
1,620,398
Golden Star Resources Ltd.*†
467,406
1,477,003
Northgate Minerals Corp.*
449,668
1,362,494
Iamgold Corp.
161,460
1,307,826
Stillwater Mining Co.*†
127,097
1,227,757
Eldorado Gold Corp.*
202,226
1,172,911
Apex Silver Mines Ltd.*†
64,783
987,293
Crystallex International Corp.*†
402,950
918,726
NovaGold Resources, Inc.*†
68,552
559,384
Total Common Stocks
(Cost $61,021,748)
91,145,928
*
Non-Income Producing Security.
†
All or a portion of this security is on loan at December 31, 2007 — See Note 8.
ADR — American Depository Receipt.
36
|
THE RYDEX VARIABLE TRUST ANNUAL REPORT
See Notes to Financial Statements.
SCHEDULE OF INVESTMENTS
December 31, 2007
RETAILING FUND
MARKET
MARKET
VALUE
VALUE
SHARES
(NOTE 1)
SHARES
(NOTE 1)
COMMON STOCKS 98.4%
RadioShack Corp.†
2,104
$
35,473
Longs Drug Stores Corp.
711
33,417
Wal-Mart Stores, Inc.
7,785
$
370,021
Dollar Tree Stores, Inc.*
1,244
32,244
CVS Caremark Corp.
5,053
200,857
Penske Auto Group, Inc.
1,758
30,695
Amazon.com, Inc.*†
1,709
158,322
Rite Aid Corp.*†
10,933
30,503
Walgreen Co.
4,133
157,385
AnnTaylor Stores Corp.*
1,114
28,474
Home Depot, Inc.
5,803
156,333
Dillard’s, Inc. — Class A†
1,504
28,245
Costco Wholesale Corp.
2,158
150,542
Bebe Stores, Inc.
2,085
26,813
Target Corp.
2,945
147,250
Tractor Supply Co.*
746
26,811
Best Buy Co., Inc.†
2,532
133,310
OfficeMax, Inc.†
1,238
25,577
Lowe’s Cos., Inc.†
5,859
132,531
Chico’s FAS, Inc.*
2,809
25,365
The Gap, Inc.†
5,322
113,252
Collective Brands, Inc.*
1,448
25,181
Staples, Inc.
4,605
106,237
Big Lots, Inc.*†
1,523
24,353
TJX Cos., Inc.
3,178
91,304
Rent-A-Center, Inc.*
1,601
23,247
Kohl’s Corp.*
1,885
86,333
Men’s Wearhouse, Inc.†
860
23,203
Liberty Media Corp - Interactive*
4,484
85,555
Blue Nile, Inc.*†
326
22,188
GameStop Corp. — Class A*
1,351
83,911
Cabela’s, Inc. — Class A*†
1,389
20,932
Sears Holdings Corp.*†
812
82,865
GSI Commerce, Inc.*†
1,070
20,865
Macy’s, Inc.
2,930
75,799
Zale Corp.*†
1,150
18,469
Expedia, Inc.*
2,332
73,738
Zumiez, Inc.*
641
15,615
AutoZone, Inc.*
601
72,066
Circuit City Stores, Inc.†
3,513
14,755
Genuine Parts Co.
1,516
70,191
Total Common Stocks
Nordstrom, Inc.†
1,833
67,326
(Cost $3,151,527)
4,579,653
Abercrombie & Fitch Co. — Class A
838
67,015
Sherwin-Williams Co.
1,154
66,978
FACE
Bed Bath & Beyond, Inc.*
2,247
66,039
AMOUNT
IAC/InterActiveCorp*†
2,439
65,658
REPURCHASE AGREEMENT 1.1%
J.C. Penney Co., Inc.
1,492
65,633
Repurchase Agreement (Note 5)
Limited Brands, Inc.
3,370
63,794
Lehman Brothers Holdings, Inc.
Priceline.com, Inc.*†
525
60,301
issued 12/31/07 at 1.00%
Tiffany & Co.†
1,282
59,010
due 01/02/08
$
49,581
49,581
Urban Outfitters, Inc.*†
2,151
58,636
Total Repurchase Agreement
Advance Auto Parts, Inc.
1,407
53,452
(Cost $49,581)
49,581
CarMax, Inc.*†
2,587
51,093
American Eagle Outfitters, Inc.
2,411
50,076
SECURITIES LENDING COLLATERAL 18.8%
Saks, Inc.*
2,354
48,869
Investment in Securities Lending Short Term
O’Reilly Automotive, Inc.*
1,495
48,483
Investment Portfolio Held by
Ross Stores, Inc.
1,846
47,202
U.S. Bank (Note 8)
873,568
873,568
J. Crew Group, Inc.*†
971
46,812
Total Securities Lending Collateral
LKQ Corp.*†
2,209
46,433
(Cost $873,568)
873,568
Aeropostale, Inc.*†
1,628
43,142
Total Investments 118.3%
AutoNation, Inc.*†
2,729
42,736
(Cost $4,074,676)
$ 5,502,802
Guess?, Inc.†
1,098
41,603
Liabilities in Excess of
Office Depot, Inc.*
2,922
40,645
Other Assets – (18.3)%
$
(851,541)
Petsmart, Inc.
1,673
39,366
Williams-Sonoma, Inc.†
1,488
38,539
Net Assets – 100.0%
$ 4,651,261
Netflix, Inc.*†
1,410
37,534
BJ’s Wholesale Club, Inc.*
1,106
37,416
Barnes & Noble, Inc.
1,084
37,344
Family Dollar Stores, Inc.†
1,895
36,441
Dick’s Sporting Goods, Inc.*
1,302
36,143
Foot Locker, Inc.†
2,614
35,707
*
Non-Income Producing Security.
†
All or a portion of this security is on loan at December 31, 2007 — See Note 8.
See Notes to Financial Statements.
THE RYDEX VARIABLE TRUST ANNUAL REPORT
|
37
SCHEDULE OF INVESTMENTS
December 31, 2007
TECHNOLOGY FUND
MARKET
MARKET
VALUE
VALUE
SHARES
(NOTE 1)
SHARES
(NOTE 1)
COMMON STOCKS 99.5%
Electronic Data Systems Corp.
10,167
$
210,762
Amphenol Corp. — Class A
4,488
208,109
Microsoft Corp.
37,761
$
1,344,292
Fiserv, Inc.*†
3,709
205,812
Apple, Inc.*
4,864
963,461
Harris Corp.
3,212
201,328
Google, Inc. — Class A*
1,318
911,371
Analog Devices, Inc.
6,223
197,269
Intel Corp.
32,121
856,346
Satyam Computer Services Ltd. —
Nokia Oyj — SP ADR†
22,119
849,148
SP ADR†
7,370
196,926
Cisco Systems, Inc.*
29,015
785,436
Iron Mountain, Inc.*†
5,264
194,873
International Business Machines
KLA-Tencor Corp.†
4,039
194,518
Corp.
7,242
782,860
Business Objects SA — SP ADR*
3,180
193,662
Hewlett-Packard Co.
14,976
755,988
Salesforce.com, Inc.*
3,080
193,085
Oracle Corp.*
32,178
726,579
Network Appliance, Inc.*
7,682
191,743
Research In Motion Ltd.*
4,700
532,980
Broadcom Corp. — Class A*
7,321
191,371
Qualcomm, Inc.
13,389
526,857
Cognizant Technology Solutions
SAP AG — SP ADR†
10,010
511,010
Corp. — Class A*
5,592
189,792
Dell, Inc.*
19,273
472,381
BMC Software, Inc.*
5,306
189,106
Taiwan Semiconductor Manufacturing
Maxim Integrated Products, Inc.
7,106
188,167
Co. Ltd. — SP ADR
46,736
465,491
Western Digital Corp.*
6,177
186,607
Texas Instruments, Inc.
13,353
445,990
Computer Sciences Corp.*
3,755
185,760
eBay, Inc.*
12,597
418,094
NAVTEQ Corp.*
2,440
184,464
Corning, Inc.
16,558
397,226
Fidelity National Information Services,
EMC Corp*†
20,957
388,333
Inc.
4,303
178,962
Motorola, Inc.
23,644
379,250
Marvell Technology Group Ltd.*
12,773
178,567
MEMC Electronic Materials, Inc.*†
4,007
354,579
BEA Systems, Inc.*†
11,292
178,188
Yahoo!, Inc.*
14,722
342,434
Microchip Technology, Inc.
5,589
175,606
Adobe Systems, Inc.*
7,636
326,286
Linear Technology Corp.†
5,497
174,970
MasterCard, Inc.
1,500
322,800
Amdocs, Ltd.*†
5,071
174,797
Western Union Co.
12,990
315,397
Cypress Semiconductor Corp.*†
4,777
172,115
Infosys Technologies Ltd. — SP ADR
6,950
315,252
Infineon Technologies AG — SP ADR*
14,730
171,457
Automatic Data Processing, Inc.
7,066
314,649
Citrix Systems, Inc.*
4,462
169,601
Applied Materials, Inc.
17,455
310,001
Nortel Networks Corp.*†
10,960
165,386
Telefonaktiebolaget LM Ericsson —
Cognos Inc*
2,790
160,620
SP ADR†
12,918
301,635
McAfee, Inc.*
4,267
160,013
Accenture Ltd. — Class A
8,192
295,158
Akamai Technologies, Inc.*†
4,610
159,506
Tyco Electronics Ltd.
7,860
291,842
Alliance Data Systems Corp.*†
2,124
159,279
Electronic Arts, Inc.*†
4,878
284,924
Altera Corp.
8,155
157,555
Nvidia Corp.*
8,247
280,563
Xilinx, Inc.
7,132
155,977
AU Optronics Corp. — SP ADR†
13,653
262,138
Total System Services, Inc.†
5,560
155,680
Juniper Networks, Inc.*†
7,892
262,014
National Semiconductor Corp.
6,743
152,662
Xerox Corp.
15,549
251,738
DST Systems, Inc.*†
1,832
151,232
Agilent Technologies, Inc.*
6,803
249,942
SanDisk Corp.*
4,506
149,464
ASML Holding NV
7,856
245,814
Mettler Toledo International, Inc.*
1,269
144,412
Seagate Technology†
9,500
242,250
Flir Systems, Inc.*
4,610
144,293
Alcatel-Lucent
32,388
237,080
Hewitt Associates, Inc. — Class A*
3,740
143,205
CA, Inc.
9,431
235,303
Arrow Electronics, Inc.*†
3,623
142,311
Sun Microsystems, Inc.*
12,790
231,883
Lam Research Corp.*
3,235
139,849
Paychex, Inc.†
6,352
230,069
NCR Corp.*†
5,537
138,979
Autodesk, Inc.*
4,562
227,005
Avnet, Inc.*
3,965
138,656
STMicroelectronics NV — SP ADR
15,840
226,512
Check Point Software Technologies
Activision, Inc.*†
7,438
220,909
Ltd.*†
6,217
136,525
Symantec Corp.*
13,656
220,408
Red Hat, Inc.*
6,424
133,876
Intuit, Inc.*†
6,932
219,121
Equinix, Inc.*†
1,310
132,402
Flextronics International Ltd.*†
18,120
218,527
Global Payments, Inc.
2,830
131,652
VeriSign, Inc.*†
5,785
217,574
Micron Technology, Inc.*†
18,018
130,631
38
|
THE RYDEX VARIABLE TRUST ANNUAL REPORT
See Notes to Financial Statements.
SCHEDULE OF INVESTMENTS (concluded)
December 31, 2007
TECHNOLOGY FUND
MARKET
MARKET
VALUE
FACE
VALUE
SHARES
(NOTE 1)
AMOUNT
(NOTE 1)
Cadence Design Systems, Inc.*†
7,608
$
129,412
REPURCHASE AGREEMENT 0.4%
Affiliated Computer Services, Inc. —
Repurchase Agreement (Note 5)
Class A*
2,847
128,400
Lehman Brothers Holdings, Inc.
Broadridge Financial Solutions, Inc.
5,706
127,986
issued 12/31/07 at 1.00%
Ansys, Inc.*†
3,050
126,453
due 01/02/08
$
124,322
$
124,322
Synopsys, Inc.*†
4,876
126,435
Total Repurchase Agreement
Novellus Systems, Inc.*†
4,494
123,900
(Cost $124,322)
124,322
Micros Systems, Inc.*†
1,680
117,869
CommScope, Inc.*
2,392
117,710
SECURITIES LENDING COLLATERAL 18.0%
Nuance Communications, Inc.*†
6,240
116,563
Investment in Securities Lending Short Term
Advanced Micro Devices, Inc.*†
15,182
113,865
Investment Portfolio Held by
Lexmark International, Inc.*†
3,246
113,156
U.S. Bank (Note 8)
5,974,778
5,974,778
Ingram Micro, Inc. — Class A*
6,239
112,552
Total Securities Lending Collateral
Itron, Inc.*†
1,170
112,285
(Cost $5,974,778)
5,974,778
LSI Logic Corp.*
20,895
110,952
Total Investments 117.9%
Molex, Inc.
4,045
110,429
(Cost $33,776,299)
$ 39,063,197
Trimble Navigation Ltd.*†
3,620
109,469
Liabilities in Excess of
National Instruments Corp.
3,210
106,989
Other Assets – (17.9)%
$ (5,940,486)
Intersil Corp. — Class A
4,334
106,096
Brocade Communications Systems,
Net Assets – 100.0%
$ 33,122,711
Inc.*†
14,273
104,764
International Rectifier Corp.*
3,080
104,628
JDS Uniphase Corp.*†
7,863
104,578
Foundry Networks, Inc.*†
5,897
103,315
Varian Semiconductor Equipment
Associates, Inc.*
2,713
100,381
Jabil Circuit, Inc.
6,559
100,156
Ciena Corp.*†
2,911
99,294
Factset Research Systems, Inc.†
1,768
98,478
Tellabs, Inc.*†
15,011
98,172
Novell, Inc.*
14,190
97,485
ON Semiconductor Corp.*†
10,320
91,642
AVX Corp.†
6,760
90,719
Anixter International, Inc.*
1,427
88,859
Integrated Device Technology, Inc.*
7,856
88,851
F5 Networks, Inc.*†
2,993
85,360
Teradyne, Inc.*
7,666
79,266
Gartner, Inc. — Class A*†
4,310
75,684
Diebold, Inc.†
2,606
75,522
Riverbed Technology, Inc.*
2,620
70,059
VeriFone Holdings, Inc.*†
2,911
67,681
Total Common Stocks
(Cost $27,677,199)
32,964,097
*
Non-Income Producing Security.
†
All or a portion of this security is on loan at December 31, 2007 — See Note 8.
ADR — American Depository Receipt.
See Notes to Financial Statements.
See Notes to Financial Statements.
THE RYDEX VARIABLE TRUST ANNUAL REPORT
THE RYDEX VARIABLE TRUST ANNUAL REPORT
|
|
39
39
SCHEDULE OF INVESTMENTS
December 31, 2007
TELECOMMUNICATIONS FUND
MARKET
MARKET
VALUE
FACE
VALUE
SHARES
(NOTE 1)
AMOUNT
(NOTE 1)
COMMON STOCKS 99.4%
SECURITIES LENDING COLLATERAL 18.3%
Investment in Securities Lending Short Term
AT&T, Inc.
67,930
$
2,823,171
Investment Portfolio Held by
Vodafone Group PLC — SP ADR
72,267
2,697,004
U.S. Bank (Note 8)
$5,825,031
$
5,825,031
Nokia Oyj — SP ADR†
58,354
2,240,210
Total Securities Lending Collateral
Cisco Systems, Inc.*
76,525
2,071,532
(Cost $5,825,031)
5,825,031
Verizon Communications, Inc.
44,950
1,963,865
Total Investments 117.7%
America Movil SAB de CV — SP ADR
24,373
1,496,258
(Cost $29,242,425)
$ 37,421,537
Research In Motion Ltd.*
12,408
1,407,067
Qualcomm, Inc.
35,309
1,389,409
Liabilities in Excess of
Corning, Inc.†
43,676
1,047,787
Other Assets – (17.7)%
$ (5,640,738)
Motorola, Inc.
62,365
1,000,335
Net Assets – 100.0%
$ 31,780,799
BCE, Inc.
24,930
990,718
Sprint Nextel Corp.†
69,403
911,261
Telefonaktiebolaget LM Ericsson —
SP ADR
34,060
795,301
American Tower Corp. — Class A*
17,466
744,052
Juniper Networks, Inc.*†
20,827
691,456
Crown Castle International Corp.*†
15,228
633,485
Alcatel-Lucent
85,438
625,406
Qwest Communications International,
Inc.*†
78,846
552,710
Harris Corp.
8,478
531,401
Embarq Corp.†
9,209
456,122
Nortel Networks Corp.*†
28,900
436,101
Windstream Corp.†
32,851
427,720
NII Holdings, Inc. — Class B*†
8,750
422,800
MetroPCS Communications, Inc.*†
20,910
406,700
Golden Telecom, Inc.*†
3,980
401,781
Tele Norte Leste Participacoes SA —
ADR
18,870
363,814
CenturyTel, Inc.
8,711
361,158
U.S. Cellular Corp.*†
4,223
355,154
Citizens Communications Co.
27,609
351,463
SBA Communications Corp.*†
9,620
325,541
Brasil Telecom Participacoes SA —
SP ADR†
4,282
319,352
Telephone & Data Systems, Inc.
4,898
306,615
Level 3 Communications, Inc.*†
99,430
302,267
Time Warner Telecom, Inc. —
Class A*†
14,020
284,466
JDS Uniphase Corp.*
20,743
275,882
Ciena Corp.*†
7,683
262,067
Tellabs, Inc.*†
39,602
258,997
Leap Wireless International, Inc. —
Class B*†
5,280
246,259
F5 Networks, Inc.*†
7,894
225,137
Clearwire Corp.*†
14,200
194,682
Total Common Stocks
(Cost $23,417,394)
31,596,506
*
Non-Income Producing Security.
†
All or a portion of this security is on loan at December 31, 2007 — See Note 8.
ADR — American Depository Receipt.
40
|
THE RYDEX VARIABLE TRUST ANNUAL REPORT
See Notes to Financial Statements.
SCHEDULE OF INVESTMENTS
December 31, 2007
TRANSPORTATION FUND
MARKET
MARKET
VALUE
FACE
VALUE
SHARES
(NOTE 1)
AMOUNT
(NOTE 1)
COMMON STOCKS 99.1%
REPURCHASE AGREEMENT 0.9%
Repurchase Agreement (Note 5)
United Parcel Service, Inc. — Class B†
9,952
$
703,805
Lehman Brothers Holdings, Inc.
Union Pacific Corp.
5,012
629,607
issued 12/31/07 at 1.00%
Burlington Northern Santa Fe Corp.
6,754
562,135
due 01/02/08
$
74,412
$
74,412
FedEx Corp.†
5,680
506,486
Total Repurchase Agreement
Canadian National Railway Co.
10,000
469,300
(Cost $74,412)
74,412
CSX Corp.
10,598
466,100
Norfolk Southern Corp.
9,012
454,565
SECURITIES LENDING COLLATERAL 21.3%
CH Robinson Worldwide, Inc.
5,999
324,666
Investment in Securities Lending Short Term
Expeditors International Washington,
Investment Portfolio Held by
Inc.
6,771
302,528
U.S. Bank (Note 8)
1,812,172
1,812,172
Southwest Airlines Co.†
23,602
287,944
Total Securities Lending Collateral
J.B. Hunt Transport Services, Inc.
7,510
206,901
(Cost $1,812,172)
1,812,172
Hertz Global Holdings, Inc.*†
11,980
190,362
Total Investments 121.3%
Delta Air Lines, Inc.*
12,323
183,489
(Cost $8,350,551)
$ 10,328,069
UAL Corp.*†
5,131
182,971
Liabilities in Excess of
Ryder System, Inc.†
3,760
176,758
Other Assets – (21.3)%
$ (1,814,937)
Kansas City Southern*†
5,068
173,984
Kirby Corp.*
3,581
166,445
Net Assets – 100.0%
$
8,513,132
Northwest Airlines Corp.*
11,139
161,627
Landstar System, Inc.†
3,730
157,220
Alexander & Baldwin, Inc.†
2,979
153,895
AMR Corp.*
10,487
147,133
DryShips, Inc.†
1,850
143,190
SkyWest, Inc.
5,133
137,821
Con-way, Inc.
3,313
137,622
UTI Worldwide, Inc.
6,589
129,144
Continental Airlines, Inc. — Class B*
5,404
120,239
Werner Enterprises, Inc.†
6,775
115,378
Eagle Bulk Shipping, Inc.†
4,230
112,307
Genco Shipping & Trading Ltd.
2,020
110,615
Knight Transportation, Inc.†
7,259
107,506
Copa Holdings SA†
2,780
104,445
HUB Group, Inc. — Class A*†
3,603
95,768
Genesee & Wyoming, Inc. — Class A*
3,790
91,604
Avis Budget Group, Inc.*
6,961
90,493
JetBlue Airways Corp.*†
14,728
86,895
US Airways Group, Inc.*†
5,691
83,715
American Commercial Lines, Inc.*†
5,140
83,474
YRC Worldwide, Inc.*†
4,877
83,348
Total Common Stocks
(Cost $6,463,967)
8,441,485
*
Non-Income Producing Security.
†
All or a portion of this security is on loan at December 31, 2007 — See Note 8.
See Notes to Financial Statements.
See Notes to Financial Statements.
THE RYDEX VARIABLE TRUST ANNUAL REPORT
THE RYDEX VARIABLE TRUST ANNUAL REPORT
|
|
41
41
SCHEDULE OF INVESTMENTS
December 31, 2007
UTILITIES FUND
MARKET
MARKET
VALUE
VALUE
SHARES
(NOTE 1)
SHARES
(NOTE 1)
COMMON STOCKS 99.5%
AGL Resources, Inc.
16,926
$
637,095
Dynegy Inc.*
89,024
635,631
Exelon Corp.
36,009
$
2,939,774
Aqua America, Inc.†
29,168
618,362
Southern Co.†
55,348
2,144,735
ITC Holdings Corp.
10,910
615,542
Dominion Resources, Inc.
44,508
2,111,905
Great Plains Energy, Inc.†
20,872
611,967
FPL Group, Inc.
31,074
2,106,196
Atmos Energy Corp.
21,339
598,345
Public Service Enterprise Group, Inc.
20,521
2,015,983
Westar Energy, Inc.†
22,804
591,536
Duke Energy Corp.†
99,120
1,999,250
Nicor, Inc.†
12,339
522,557
Entergy Corp.
15,934
1,904,432
Total Common Stocks
FirstEnergy Corp.
26,131
1,890,316
(Cost $53,084,841)
65,204,589
Constellation Energy Group, Inc.
17,377
1,781,664
PPL Corp.
34,092
1,775,852
FACE
American Electric Power Co., Inc.
35,314
1,644,220
AMOUNT
Sempra Energy†
25,993
1,608,447
REPURCHASE AGREEMENT 0.3%
Edison International
29,295
1,563,474
Repurchase Agreement (Note 5)
AES Corp.*
68,930
1,474,413
Lehman Brothers Holdings, Inc.
Consolidated Edison, Inc.
29,249
1,428,814
issued 12/31/07 at 1.00%
PG&E Corp.†
32,973
1,420,807
due 01/02/08
$
204,223
204,223
Progress Energy, Inc.†
28,684
1,389,166
Total Repurchase Agreement
Allegheny Energy, Inc.
21,190
1,347,896
(Cost $204,223)
204,223
Ameren Corp.†
24,085
1,305,648
NRG Energy, Inc.*†
28,580
1,238,657
SECURITIES LENDING COLLATERAL 14.9%
Xcel Energy, Inc.†
53,520
1,207,946
Investment in Securities Lending Short Term
Questar Corp.
22,138
1,197,666
Investment Portfolio Held by
Mirant Corp.*†
29,965
1,168,036
U.S. Bank (Note 8)
9,772,704
9,772,704
Reliant Energy, Inc.*
44,032
1,155,400
Total Securities Lending Collateral
DTE Energy Co.
22,700
997,892
(Cost $9,772,704)
9,772,704
Equitable Resources, Inc.
18,345
977,422
Total Investments 114.7%
Wisconsin Energy Corp.
19,525
951,063
(Cost $63,061,768)
$ 75,181,516
Pepco Holdings, Inc.
32,061
940,349
Liabilities in Excess of
CenterPoint Energy, Inc.†
53,110
909,774
Other Assets – (14.7)%
$ (9,649,970)
SCANA Corp.
21,015
885,782
Northeast Utilities
28,199
882,911
Net Assets – 100.0%
$ 65,531,546
Energen Corp.
13,425
862,288
MDU Resources Group, Inc.
31,100
858,671
NiSource, Inc.†
44,778
845,856
Alliant Energy Corp.
20,708
842,608
Pinnacle West Capital Corp.†
19,078
809,098
Oneok, Inc.
18,036
807,472
Energy East Corp.
29,377
799,348
CMS Energy Corp.†
44,865
779,754
Sierra Pacific Resources†
45,605
774,373
NSTAR†
21,350
773,297
TECO Energy, Inc.†
43,977
756,844
Integrys Energy Group, Inc.
14,595
754,415
National Fuel Gas Co.†
16,155
754,115
DPL, Inc.
25,291
749,878
OGE Energy Corp.†
20,244
734,655
Puget Energy, Inc.
26,689
732,079
Southern Union Co.
23,907
701,909
UGI Corp.
24,624
671,004
*
Non-Income Producing Security.
†
All or a portion of this security is on loan at December 31, 2007 — See Note 8.
42
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THE RYDEX VARIABLE TRUST ANNUAL REPORT
See Notes to Financial Statements.
This page intentionally left blank.
THE RYDEX VARIABLE TRUST ANNUAL REPORT
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43
STATEMENTS OF ASSETS AND LIABILITIES
Basic
Bio-
Consumer
Banking
Materials
technology
Products
Fund
Fund
Fund
Fund
ASSETS
Investment Securities* (Notes 1, 2 and 8)
$11,412,020
$116,097,608
$17,941,667
$ 43,539,969
Repurchase Agreements* (Note 5)
33,815
443,629
106,874
321,901
Receivable for Securities Sold (Note 1)
—
—
—
—
Receivable for Fund Shares Sold
1,920,567
1,571,794
579,026
775,258
Investment Income Receivable (Note 1)
21,326
84,795
2,039
78,777
Total Assets
13,387,728
118,197,826
18,629,606
44,715,905
LIABILITIES
Payable upon Return of Securities Loaned (Note 8)
2,232,478
20,976,254
4,092,845
2,859,901
Payable for Securities Purchased (Note 1)
1,893,929
1,340,045
582,628
738,827
Payable for Fund Shares Redeemed
55,571
118,762
696
199,103
Investment Advisory Fees Payable (Note 3)
5,073
64,423
8,855
25,807
Transfer Agent and Administrative Fees Payable (Note 3)
1,492
18,948
2,604
7,590
Distribution and Service Fees Payable (Note 3)
1,492
18,948
2,604
7,590
Portfolio Accounting Fees Payable (Note 3)
597
7,579
1,042
3,036
Custody Fees Payable
179
2,274
313
985
Overdraft Due to Custodian Bank
—
2,168
—
—
Other Liabilities
10,630
57,581
11,444
26,097
Total Liabilities
4,201,441
22,606,982
4,703,031
3,868,936
NET ASSETS
$
9,186,287
$
95,590,844
$13,926,575
$ 40,846,969
NET ASSETS CONSIST OF
Paid-In Capital
$11,078,061
$ 75,646,788
$18,730,623
$ 36,273,099
Undistributed Net Investment Income
31,117
210,622
—
52,693
Accumulated Net Realized Loss on Investments
(2,036,301)
(4,990,625)
(7,712,046)
(1,215,025)
Net Unrealized Appreciation on Investments
113,410
24,724,059
2,907,998
5,736,202
NET ASSETS
$ 9,186,287
$ 95,590,844
$13,926,575
$ 40,846,969
SHARES OUTSTANDING
402,944
2,294,648
645,587
1,103,281
NET ASSET VALUES
$22.80
$41.66
$21.57
$37.02
*
The cost of investments is $11,332,425, $91,817,178, $15,140,543, $38,125,668, $2,713,765, $85,805,751, $88,064,402, $20,152,868,
$35,615,567, $27,576,377, $15,318,430 and $86,343,118, respectively.
44
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THE RYDEX VARIABLE TRUST ANNUAL REPORT
See Notes to Financial Statements.
December 31, 2007
Energy
Financial
Health
Precious
Electronics
Energy
Services
Services
Care
Internet
Leisure
Metals
Fund
Fund
Fund
Fund
Fund
Fund
Fund
Fund
$
3,621,257
$ 118,283,383
$120,798,797
$20,926,675
$42,429,054
$30,524,261
$18,295,275
$116,111,894
33,356
554,119
541,733
115,215
139,364
9,132
56,089
355,404
1,406,261
537,055
—
—
1,294,546
1,224,178
—
—
23,731
74,708
158,950
3,784,412
—
54,800
202,181
797,234
984
41,398
30,909
40,696
35,351
9,500
19,531
22,567
5,085,589
119,490,663
121,530,389
24,866,998
43,898,315
31,821,871
18,573,076
117,287,099
681,815
17,299,779
25,285,475
3,413,726
5,069,100
5,718,672
3,062,987
24,965,966
—
—
—
3,900,403
—
—
161,049
556,451
1,446,195
554,986
151,803
991
1,224,733
1,124,527
345
13,567
3,202
66,118
64,623
9,851
27,804
19,776
10,881
55,863
942
19,446
19,007
2,897
8,178
5,817
3,200
18,621
942
19,446
19,007
2,897
8,178
5,817
3,200
18,621
377
7,779
7,603
1,159
3,271
2,327
1,280
7,448
113
2,334
2,281
348
981
734
384
2,243
—
—
—
70
—
—
—
—
8,740
63,075
63,763
26,970
34,875
6,944
18,695
35,754
2,142,326
18,032,963
25,613,562
7,359,312
6,377,120
6,884,614
3,262,021
25,674,534
$
2,943,263
$101,457,700
$
95,916,827
$17,507,686
$37,521,195
$24,937,257
$15,311,055
$
91,612,565
$13,035,713
$ 71,887,363
$ 65,465,652
$20,026,700
$32,728,512
$26,029,050
$12,816,490
$ 74,412,642
—
—
—
—
—
—
—
—
(11,033,298)
(3,461,414)
(2,824,953)
(3,408,036)
(2,160,168)
(4,048,809)
(538,369)
(12,924,257)
940,848
33,031,751
33,276,128
889,022
6,952,851
2,957,016
3,032,934
30,124,180
$
2,943,263
$101,457,700
$ 95,916,827
$17,507,686
$37,521,195
$24,937,257
$15,311,055
$ 91,612,565
215,318
2,547,322
2,480,253
797,353
1,267,345
1,396,860
721,413
6,091,922
$13.67
$39.83
$38.67
$21.96
$29.61
$17.85
$21.22
$15.04
See Notes to Financial Statements.
THE RYDEX VARIABLE TRUST ANNUAL REPORT
|
45
STATEMENTS OF ASSETS AND LIABILITIES (concluded)
Telecom-
Trans-
Retailing
Technology
munications
portation
Fund
Fund
Fund
Fund
ASSETS
Investment Securities* (Notes 1, 2 and 8)
$5,453,221
$38,938,875
$37,421,537
$10,253,657
Repurchase Agreements* (Note 5)
49,581
124,322
—
74,412
Receivable for Securities Sold (Note 1)
107,394
5,159,054
2,280,096
519,002
Receivable for Fund Shares Sold
52,534
13,668
6,138
34,243
Investment Income Receivable (Note 1)
4,847
32,891
86,875
12,012
Total Assets
5,667,577
44,268,810
39,794,646
10,893,326
LIABILITIES
Payable upon Return of Securities Loaned (Note 8)
873,568
5,974,778
5,825,031
1,812,172
Payable for Securities Purchased (Note 1)
—
—
—
—
Payable for Fund Shares Redeemed
122,313
5,103,749
2,103,152
537,401
Investment Advisory Fees Payable (Note 3)
3,546
27,401
24,737
5,665
Transfer Agent and Administrative Fees Payable (Note 3)
1,043
8,059
7,276
1,666
Distribution and Service Fees Payable (Note 3)
1,043
8,059
7,276
1,666
Portfolio Accounting Fees Payable (Note 3)
417
3,224
2,910
666
Custody Fees Payable
135
967
873
208
Overdraft Due to Custodian Bank
—
—
11,358
—
Other Liabilities
14,251
19,862
31,234
20,750
Total Liabilities
1,016,316
11,146,099
8,013,847
2,380,194
NET ASSETS
$4,651,261
$33,122,711
$31,780,799
$
8,513,132
NET ASSETS CONSIST OF
Paid-In Capital
$4,140,001
$30,323,941
$25,972,429
$
7,722,371
Undistributed Net Investment Income
—
—
27,542
—
Accumulated Net Realized Loss on Investments
(916,866)
(2,488,128)
(2,398,284)
(1,186,757)
Net Unrealized Appreciation on Investments
1,428,126
5,286,898
8,179,112
1,977,518
NET ASSETS
$4,651,261
$33,122,711
$31,780,799
$
8,513,132
SHARES OUTSTANDING
412,790
2,035,713
1,330,348
573,449
NET ASSET VALUES
$11.27
$16.27
$23.89
$14.85
*
The cost of investments is $4,074,676, $33,776,299, $29,242,425, $8,350,551 and $63,061,768, respectively.
46
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THE RYDEX VARIABLE TRUST ANNUAL REPORT
See Notes to Financial Statements.
December 31, 2007
Utilities
Fund
$74,977,293
204,223
—
1,045,951
107,467
76,334,934
9,772,704
747,215
160,704
44,339
13,041
13,041
5,216
1,565
—
45,563
10,803,388
$65,531,546
$54,716,582
168,848
(1,473,632)
12,119,748
$65,531,546
2,940,041
$22.29
See Notes to Financial Statements.
THE RYDEX VARIABLE TRUST ANNUAL REPORT
|
47
Basic
Bio-
Consumer
Banking
Materials
technology
Products
Fund
Fund
Fund
Fund
INVESTMENT INCOME
Interest (Note 1)
$
2,695
$
18,335
$
2,729
$
7,035
Income from Securities Lending, net (Note 8)
6,990
55,137
23,861
7,761
Dividends, Net of Foreign Tax Withheld* (Note 1)
420,854
1,455,952
18,875
864,096
Total Income
430,539
1,529,424
45,465
878,892
EXPENSES
Investment Advisory Fees (Note 3)
106,478
697,322
99,625
278,587
Transfer Agent and Administrative Fees (Note 3)
31,317
205,095
29,301
81,937
Portfolio Accounting Fees (Note 3)
12,527
82,038
11,721
32,775
Trustees’ Fees**
1,376
5,706
1,387
3,078
Service Fees (Note 3)
31,317
205,095
29,301
81,937
Custody Fees
3,430
25,068
5,300
8,880
Miscellaneous
12,652
81,723
9,959
32,313
Total Expenses
199,097
1,302,047
186,594
519,507
Net Investment Income (Loss)
231,442
227,377
(141,129)
359,385
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS (NOTE 1)
Net Realized Gain (Loss) on:
Investment Securities
(236,806)
4,888,395
469,104
3,935,767
Total Net Realized Gain (Loss)
(236,806)
4,888,395
469,104
3,935,767
Net Change in Unrealized Appreciation (Depreciation) on:
Investment Securities
(2,663,252)
13,276,324
(231,721)
(1,236,597)
Net Change in Unrealized Appreciation (Depreciation)
(2,663,252)
13,276,324
(231,721)
(1,236,597)
Net Gain (Loss) on Investments
(2,900,058)
18,164,719
237,383
2,699,170
Net Increase (Decrease) in Net Assets from Operations
$ (2,668,616)
$18,392,096
$
96,254
$ 3,058,555
*
Foreign tax withheld of $11,937, $13,496, $0, $1,645, $3,161, $18,357, $0, $9,613, $10,341, $0, $0 and $17,382, respectively.
**
Relates to Trustees not deemed “interested persons” within the meaning of Section 2(a)(19) of the 1940 Act.
48
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THE RYDEX VARIABLE TRUST ANNUAL REPORT
See Notes to Financial Statements.
Year Ended December 31, 2007
Energy
Financial
Health
Precious
Electronics
Energy
Services
Services
Care
Internet
Leisure
Metals
Fund
Fund
Fund
Fund
Fund
Fund
Fund
Fund
$
2,646
$
17,623
$
21,097
$
7,397
$
9,557
$
3,569
$
6,775
$
16,817
6,836
32,401
43,186
19,202
10,144
12,213
17,264
72,017
64,191
958,172
465,391
809,027
670,606
165,148
360,724
376,732
73,673
1,008,196
529,674
835,626
690,307
180,930
384,763
465,566
72,886
655,578
673,997
285,255
375,917
122,869
225,200
473,091
21,437
192,817
198,234
83,899
110,564
36,138
66,235
157,697
8,575
77,127
79,294
33,559
44,225
14,455
26,494
63,079
1,009
6,452
6,267
3,423
4,093
904
2,527
5,330
21,437
192,817
198,234
83,899
110,564
36,138
66,235
157,697
2,951
20,855
22,015
8,833
12,655
4,068
6,825
17,628
7,720
74,205
76,281
35,020
43,268
8,821
26,978
42,327
136,015
1,219,851
1,254,322
533,888
701,286
223,393
420,494
916,849
(62,342)
(211,655)
(724,648)
301,738
(10,979)
(42,463)
(35,731)
(451,283)
(51,554)
9,147,271
5,318,870
(2,475,909)
1,289,369
(2,185,780)
3,885,473
2,831,069
(51,554)
9,147,271
5,318,870
(2,475,909)
1,289,369
(2,185,780)
3,885,473
2,831,069
(389,276)
9,036,708
15,361,157
(3,591,390)
668,394
637,407
(3,807,495)
5,749,066
(389,276)
9,036,708
15,361,157
(3,591,390)
668,394
637,407
(3,807,495)
5,749,066
(440,830)
18,183,979
20,680,027
(6,067,299)
1,957,763
(1,548,373)
77,978
8,580,135
$(503,172)
$17,972,324
$19,955,379
$ (5,765,561)
$1,946,784
$(1,590,836)
$
42,247
$8,128,852
See Notes to Financial Statements.
THE RYDEX VARIABLE TRUST ANNUAL REPORT
|
49
STATEMENTS OF OPERATIONS (concluded)
Telecom-
Trans-
Retailing
Technology
munications
portation
Fund
Fund
Fund
Fund
INVESTMENT INCOME
Interest (Note 1)
$
4,833
$
9,258
$
10,192
$
7,386
Income from Securities Lending, net (Note 8)
8,948
12,599
19,739
10,054
Dividends, Net of Foreign Tax Withheld* (Note 1)
124,284
200,338
783,786
324,767
Total Income
138,065
222,195
813,717
342,207
EXPENSES
Investment Advisory Fees (Note 3)
149,844
289,011
389,137
197,961
Transfer Agent and Administrative Fees (Note 3)
44,072
85,003
114,452
58,224
Portfolio Accounting Fees (Note 3)
17,629
34,001
45,781
23,290
Trustees’ Fees**
1,946
2,381
3,453
2,741
Service Fees (Note 3)
44,072
85,003
114,452
58,224
Custody Fees
4,760
9,211
12,532
6,333
Miscellaneous
18,061
27,598
44,573
23,828
Total Expenses
280,384
532,208
724,380
370,601
Net Investment Income (Loss)
(142,319)
(310,013)
89,337
(28,394)
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS (NOTE 1)
Net Realized Gain (Loss) on:
Investment Securities
4,054,955
(97,899)
829,644
6,322,992
Total Net Realized Gain (Loss)
4,054,955
(97,899)
829,644
6,322,992
Net Change in Unrealized Appreciation (Depreciation) on:
Investment Securities
(4,163,479)
2,356,246
1,033,472
(6,232,420)
Net Change in Unrealized Appreciation (Depreciation)
(4,163,479)
2,356,246
1,033,472
(6,232,420)
Net Gain (Loss) on Investments
(108,524)
2,258,347
1,863,116
90,572
Net Increase (Decrease) in Net Assets from Operations
$
(250,843)
$1,948,334
$1,952,453
$
62,178
*
Foreign tax withheld of $0, $8,186, $23,143, $2,056 and $0, respectively.
**
Relates to Trustees not deemed “interested persons” within the meaning of Section 2(a)(19) of the 1940 Act.
50
|
THE RYDEX VARIABLE TRUST ANNUAL REPORT
See Notes to Financial Statements.
Year Ended December 31, 2007
Utilities
Fund
$
14,156
20,672
1,952,115
1,986,943
582,353
171,280
68,512
5,861
171,280
19,017
65,310
1,083,613
903,330
6,950,046
6,950,046
(471,010)
(471,010)
6,479,036
$7,382,366
See Notes to Financial Statements.
THE RYDEX VARIABLE TRUST ANNUAL REPORT
|
51
STATEMENTS OF CHANGES IN NET ASSETS
Banking Fund
Basic Materials Fund
Year
Year
Year
Year
Ended
Ended
Ended
Ended
December 31,
December 31,
December 31,
December 31,
2007
2006
2007
2006
FROM OPERATIONS
Net Investment Income (Loss)
$
231,442
$
244,749
$
227,377
$
413,490
Net Realized Gain (Loss) on Investments
(236,806)
(81,922)
4,888,395
(1,526,414)
Net Change in Unrealized Appreciation (Depreciation) on Investments
(2,663,252)
1,594,484
13,276,324
7,071,428
Net Increase (Decrease) in Net Assets from Operations
(2,668,616)
1,757,311
18,392,096
5,958,504
Distributions to Shareholders from: (Note 1)
Net Investment Income
(264,031)
(400,775)
(115,536)
(461,631)
Realized Gain on Investments
—
—
(6,304,782)
(668,570)
Total Distributions to Shareholders
(264,031)
(400,775)
(6,420,318)
(1,130,201)
SHARE TRANSACTIONS
Proceeds from Shares Purchased
53,295,310
56,465,015
207,462,598
126,002,457
Value of Shares Purchased through Dividend Reinvestment
264,031
400,775
6,420,318
1,130,201
Cost of Shares Redeemed
(65,788,808)
(48,453,716)
(188,885,815)
(101,656,305)
Net Increase (Decrease) in Net Assets From Share Transactions
(12,229,467)
8,412,074
24,997,101
25,476,353
Net Increase (Decrease) in Net Assets
(15,162,114)
9,768,610
36,968,879
30,304,656
NET ASSETS—BEGINNING OF PERIOD
24,348,401
14,579,791
58,621,965
28,317,309
NET ASSETS—END OF PERIOD
$
9,186,287
$ 24,348,401
$
95,590,844
$
58,621,965
Undistributed Net Investment Income—End of Period
$
31,117
$
63,706
$
210,622
$
98,781
52
|
THE RYDEX VARIABLE TRUST ANNUAL REPORT
See Notes to Financial Statements.
Biotechnology Fund
Consumer Products Fund
Electronics Fund
Energy Fund
Year
Year
Year
Year
Year
Year
Year
Year
Ended
Ended
Ended
Ended
Ended
Ended
Ended
Ended
December 31,
December 31,
December 31,
December 31,
December 31,
December 31,
December 31,
December 31,
2007
2006
2007
2006
2007
2006
2007
2006
$
(141,129)
$
(387,888)
$
359,385
$
488,856
$
(62,342)
$
(221,839)
$
(211,655)
$
(242,437)
469,104
(1,311,771)
3,935,767
(453,196)
(51,554)
(5,336,688)
9,147,271
7,402,486
(231,721)
(1,248,519)
(1,236,597)
5,348,010
(389,276)
66,493
9,036,708
(221,636)
96,254
(2,948,178)
3,058,555
5,383,670
(503,172)
(5,492,034)
17,972,324
6,938,413
—
—
(619,303)
(304,159)
—
—
—
—
—
—
(2,667,488)
(362,611)
—
—
(9,416,467)
(18,089,879)
—
—
(3,286,791)
(666,770)
—
—
(9,416,467)
(18,089,879)
86,196,308
101,241,326
88,745,950
107,976,426
96,620,046
115,099,952
215,732,736
151,331,360
—
—
3,286,791
666,770
—
—
9,416,467
18,089,879
(83,120,184)
(123,624,888)
(93,964,574)
(92,529,674)
(97,029,201)
(114,058,438)
(202,437,037)
(171,517,424)
3,076,124
(22,383,562)
(1,931,833)
16,113,522
(409,155)
1,041,514
22,712,166
(2,096,185)
3,172,378
(25,331,740)
(2,160,069)
20,830,422
(912,327)
(4,450,520)
31,268,023
(13,247,651)
10,754,197
36,085,937
43,007,038
22,176,616
3,855,590
8,306,110
70,189,677
83,437,328
$ 13,926,575
$
10,754,197
$ 40,846,969
$
43,007,038
$
2,943,263
$
3,855,590
$ 101,457,700
$
70,189,677
$
—
$
—
$
52,693
$
312,611
$
—
$
—
$
—
$
—
See Notes to Financial Statements.
THE RYDEX VARIABLE TRUST ANNUAL REPORT
|
53
STATEMENTS OF CHANGES IN NET ASSETS (continued)
Energy Services Fund
Financial Services Fund
Year
Year
Year
Year
Ended
Ended
Ended
Ended
December 31,
December 31,
December 31,
December 31,
2007
2006
2007
2006
FROM OPERATIONS
Net Investment Income (Loss)
$
(724,648)
$
(838,689)
$
301,738
$
302,842
Net Realized Gain (Loss) on Investments
5,318,870
9,657,085
(2,475,909)
3,185,263
Net Change in Unrealized Appreciation (Depreciation) on Investments
15,361,157
(6,692,881)
(3,591,390)
2,469,827
Net Increase (Decrease) in Net Assets from Operations
19,955,379
2,125,515
(5,765,561)
5,957,932
Distributions to Shareholders from: (Note 1)
Net Investment Income
—
—
(356,724)
(551,120)
Realized Gain on Investments
(4,988,289)
(6,569,274)
(1,965,631)
(1,965,220)
Total Distributions to Shareholders
(4,988,289)
(6,569,274)
(2,322,355)
(2,516,340)
SHARE TRANSACTIONS
Proceeds from Shares Purchased
208,159,435
179,186,685
79,190,928
85,868,908
Value of Shares Purchased through Dividend Reinvestment
4,988,289
6,569,274
2,322,355
2,516,340
Cost of Shares Redeemed
(176,108,208)
(217,123,691)
(106,107,981)
(78,476,024)
Net Increase (Decrease) in Net Assets From Share Transactions
37,039,516
(31,367,732)
(24,594,698)
9,909,224
Net Increase (Decrease) in Net Assets
52,006,606
(35,811,491)
(32,682,614)
13,350,816
NET ASSETS—BEGINNING OF PERIOD
43,910,221
79,721,712
50,190,300
36,839,484
NET ASSETS—END OF PERIOD
$
95,916,827
$
43,910,221
$
17,507,686
$ 50,190,300
Undistributed Net Investment Income—End of Period
$
—
$
—
$
—
$
38,835
54
|
THE RYDEX VARIABLE TRUST ANNUAL REPORT
See Notes to Financial Statements.
Health Care Fund
Internet Fund
Leisure Fund
Precious Metals Fund
Year
Year
Year
Year
Year
Year
Year
Year
Ended
Ended
Ended
Ended
Ended
Ended
Ended
Ended
December 31,
December 31,
December 31,
December 31,
December 31,
December 31,
December 31,
December 31,
2007
2006
2007
2006
2007
2006
2007
2006
$
(10,979)
$
(242,781)
$
(42,463)
$
(132,769)
$
(35,731)
$
(14,750)
$
(451,283)
$
(199,783)
1,289,369
2,083,105
(2,185,780)
1,298,775
3,885,473
(280,600)
2,831,069
(158,248)
668,394
(284,078)
637,407
(96,412)
(3,807,495)
4,863,439
5,749,066
6,543,672
1,946,784
1,556,246
(1,590,836)
1,069,594
42,247
4,568,089
8,128,852
6,185,641
—
—
—
—
—
—
—
—
(704,340)
(1,655,023)
—
—
(2,699,704)
(1,244,064)
—
—
(704,340)
(1,655,023)
—
—
(2,699,704)
(1,244,064)
—
—
92,827,139
99,583,702
88,043,421
49,845,898
44,910,850
65,902,349
241,306,780
202,255,388
704,340
1,655,023
—
—
2,699,704
1,244,064
—
—
(98,077,985)
(112,006,276)
(70,895,883)
(62,493,795)
(67,341,016)
(46,732,242)
(220,733,106)
(213,772,035)
(4,546,506)
(10,767,551)
17,147,538
(12,647,897)
(19,730,462)
20,414,171
20,573,674
(11,516,647)
(3,304,062)
(10,866,328)
15,556,702
(11,578,303)
(22,387,919)
23,738,196
28,702,526
(5,331,006)
40,825,257
51,691,585
9,380,555
20,958,858
37,698,974
13,960,778
62,910,039
68,241,045
$ 37,521,195
$
40,825,257
$ 24,937,257
$
9,380,555
$ 15,311,055
$ 37,698,974
$
91,612,565
$
62,910,039
$
—
$
—
$
—
$
—
$
—
$
—
$
—
$
—
See Notes to Financial Statements.
THE RYDEX VARIABLE TRUST ANNUAL REPORT
|
55
STATEMENTS OF CHANGES IN NET ASSETS (concluded)
Retailing Fund
Technology Fund
Year
Year
Year
Year
Ended
Ended
Ended
Ended
December 31,
December 31,
December 31,
December 31,
2007
2006
2007
2006
FROM OPERATIONS
Net Investment Income (Loss)
$
(142,319)
$
(76,910)
$
(310,013)
$
(230,779)
Net Realized Gain (Loss) on Investments
4,054,955
69,862
(97,899)
1,022,806
Net Change in Unrealized Appreciation (Depreciation) on Investments
(4,163,479)
2,141,712
2,356,246
39,358
Net Increase (Decrease) in Net Assets from Operations
(250,843)
2,134,664
1,948,334
831,385
Distributions to Shareholders from: (Note 1)
Net Investment Income
—
—
—
—
Realized Gain on Investments
(2,790,535)
(787,401)
—
—
Total Distributions to Shareholders
(2,790,535)
(787,401)
—
—
SHARE TRANSACTIONS
Proceeds from Shares Purchased
32,143,772
61,809,702
107,559,082
73,893,194
Value of Shares Purchased through Dividend Reinvestment
2,790,535
787,401
—
—
Cost of Shares Redeemed
(55,548,038)
(53,253,592)
(99,599,978)
(70,654,267)
Net Increase (Decrease) in Net Assets From Share Transactions
(20,613,731)
9,343,511
7,959,104
3,238,927
Net Increase (Decrease) in Net Assets
(23,655,109)
10,690,774
9,907,438
4,070,312
NET ASSETS—BEGINNING OF PERIOD
28,306,370
17,615,596
23,215,273
19,144,961
NET ASSETS—END OF PERIOD
$
4,651,261
$ 28,306,370
$
33,122,711
$ 23,215,273
Undistributed Net Investment Income—End of Period
$
—
$
—
$
—
$
—
56
|
THE RYDEX VARIABLE TRUST ANNUAL REPORT
See Notes to Financial Statements.
Telecommunications Fund
Transportation Fund
Utilities Fund
Year
Year
Year
Year
Year
Year
Ended
Ended
Ended
Ended
Ended
Ended
December 31,
December 31,
December 31,
December 31,
December 31,
December 31,
2007
2006
2007
2006
2007
2006
$
89,337
$
189,827
$
(28,394)
$
(278,072)
$
903,330
$
798,197
829,644
(564,196)
6,322,992
(1,939,146)
6,950,046
1,047,225
1,033,472
3,515,223
(6,232,420)
1,698,672
(471,010)
7,548,217
1,952,453
3,140,854
62,178
(518,546)
7,382,366
9,393,639
(61,795)
(377,386)
—
—
(965,717)
(1,439,819)
—
(369,517)
(4,179,577)
—
(6,515,265)
(638,278)
(61,795)
(746,903)
(4,179,577)
—
(7,480,982)
(2,078,097)
127,767,300
90,834,218
67,872,597
109,748,402
183,701,392
124,654,699
61,795
746,903
4,179,577
—
7,480,982
2,078,097
(131,276,188)
(77,535,729)
(88,970,860)
(111,058,172)
(197,270,858)
(102,273,074)
(3,447,093)
14,045,392
(16,918,686)
(1,309,770)
(6,088,484)
24,459,722
(1,556,435)
16,439,343
(21,036,085)
(1,828,316)
(6,187,100)
31,775,264
33,337,234
16,897,891
29,549,217
31,377,533
71,718,646
39,943,382
$
31,780,799
$ 33,337,234
$
8,513,132
$
29,549,217
$
65,531,546
$
71,718,646
$
27,542
$
—
$
—
$
—
$
168,848
$
231,235
See Notes to Financial Statements.
THE RYDEX VARIABLE TRUST ANNUAL REPORT
|
57
This table is presented to show selected data for a share outstanding throughout each period, and to assist shareholders in evaluating a Fund’s performance for the periods presented.
RATIOS TO
AVERAGE NET ASSETS:
Net Increase
Net Realized
(Decrease)
NET ASSET
Net
and
in Net Asset
Distributions
Distributions
Net Increase
NET ASSET
Net
Net Assets,
VALUE,
Investment
Unrealized
Value
from Net
from Net
(Decrease) in
VALUE,
Total
Investment
Portfolio
End of
BEGINNING
Income
Gains (Losses)
Resulting from
Investment
Realized
Total
Net Asset
END OF
Investment
Total
Income
Turnover
Period (000's
Year Ended
OF PERIOD
(Loss)†
on Investments
Operations
Income
Gains
Distributions
Value
PERIOD
Return††
Expenses
(Loss)
Rate
omitted)
Banking Fund
December 31, 2007
$32.44
$
.56
$
(9.32)
$
(8.76)
$
(0.88)
$
—
$
(0.88)
$
(9.64)
$22.80
(27.08)%
1.59%
1.85%
405%
$
9,186
December 31, 2006
29.69
.44
2.89
3.33
(.58)
—
(.58)
2.75
32.44
11.25%
1.59%
1.42%
259%
24,348
December 31, 2005
36.29
.44
(1.52)
(1.08)
(.49)
(5.03)
(5.52)
(6.60)
29.69
(2.77)%
1.58%
1.34%
532%
14,580
December 31, 2004
32.50
.35
4.38
4.73
(.11)
(.83)
(.94)
3.79
36.29
14.74%
1.59%
1.02%
884%
21,920
December 31, 2003
24.95
.36
7.52
7.88
(.33)
—
(.33)
7.55
32.50
31.74%
1.65%
1.24%
1,268%
17,115
Basic Materials Fund
December 31, 2007
33.33
.11
11.21
11.32
(.05)
(2.94)
(2.99)
8.33
41.66
33.97%
1.58%
0.28%
244%
95,591
December 31, 2006
27.87
.32
5.90
6.22
(.31)
(.45)
(.76)
5.46
33.33
22.29%
1.60%
1.02%
225%
58,622
December 31, 2005
32.66
.12
.80
.92
(.13)
(5.58)
(5.71)
(4.79)
27.87
4.04%
1.57%
0.41%
364%
28,317
December 31, 2004
27.69
.09
5.58
5.67
(.01)
(.69)
(.70)
4.97
32.66
20.83%
1.59%
0.30%
725%
46,162
December 31, 2003
21.07
.04
6.59
6.63
(.01)
—
(.01)
6.62
27.69
31.46%
1.67%
0.17%
1,175%
44,561
Biotechnology Fund
December 31, 2007
20.66
(.26)
1.17
.91
—
—
—
.91
21.57
4.40%
1.59%
(1.20)%
660%
13,927
December 31, 2006
21.37
(.32)
(.39)
(.71)
—
—
—
(.71)
20.66
(3.32)%
1.59%
(1.48)%
379%
10,754
December 31, 2005
19.31
(.31)
2.37
2.06
—
—
—
2.06
21.37
10.67%
1.66%
(1.59)%
652%
36,086
December 31, 2004
19.10
(.29)
.50
.21
—
—
—
.21
19.31
1.10%
1.59%
(1.51)%
1,169%
6,588
December 31, 2003
13.44
(.28)
5.94
5.66
—
—
—
5.66
19.10
42.11%
1.64%
(1.61)%
1,475%
12,557
Consumer Products Fund
December 31, 2007
36.55
.42
3.69
4.11
(.69)
(2.95)
(3.64)
.47
37.02
11.08%
1.59%
1.10%
260%
40,847
December 31, 2006
31.63
.48
5.03
5.51
(.27)
(.32)
(.59)
4.92
36.55
17.42%
1.59%
1.41%
219%
43,007
December 31, 2005
32.95
.14
(.26)
(.12)
(.17)
(1.03)
(1.20)
(1.32)
31.63
(0.40)%
1.58%
0.42%
357%
22,177
December 31, 2004
29.39
.11
3.78
3.89
(.01)
(.32)
(.33)
3.56
32.95
13.30%
1.59%
0.36%
730%
24,433
December 31, 2003
24.36
.01
5.29
5.30
(.02)
(.25)
(.27)
5.03
29.39
21.86%
1.63%
0.12%
936%
8,818
Electronics Fund
December 31, 2007
14.02
(.11)
(.24)
(.35)
—
—
—
(.35)
13.67
(2.50)%
1.59%
(0.73)%
1,009%
2,943
December 31, 2006
13.68
(.15)
.49
.34
—
—
—
.34
14.02
2.49%
1.59%
(1.02)%
477%
3,856
December 31, 2005
13.17
(.16)
.67
.51
—
—
—
.51
13.68
3.87%
1.62%
(1.24)%
1,136%
8,306
December 31, 2004
16.88
(.20)
(3.51)
(3.71)
—
—
—
(3.71)
13.17
(21.98)%
1.59%
(1.34)%
1,325%
12,289
December 31, 2003
9.94
(.21)
7.15
6.94
—
—
—
6.94
16.88
69.82%
1.65%
(1.51)%
1,264%
27,918
Energy Fund
December 31, 2007
33.14
(.11)
11.01
10.90
—
(4.21)
(4.21)
6.69
39.83
33.22%
1.58%
(0.27)%
217%
101,458
December 31, 2006
39.20
(.13)
5.28
5.15
—
(11.21)
(11.21)
(6.06)
33.14
11.93%
1.59%
(0.31)%
146%
70,190
December 31, 2005
29.68
—§
11.44
11.44
(.01)
(1.91)
(1.92)
9.52
39.20
38.54%
1.59%
(0.01)%
351%
83,437
December 31, 2004
22.45
.01
7.23
7.24
(—)§
(.01)
(.01)
7.23
29.68
32.27%
1.58%
0.04%
542%
60,501
December 31, 2003
18.25
.01
4.19
4.20
—
—
—
4.20
22.45
23.01%
1.66%
0.04%
1,225%
31,832
FINANCIAL HIGHLIGHTS (continued)
This table is presented to show selected data for a share outstanding throughout each period, and to assist shareholders in evaluating a Fund’s performance for the periods presented.
RATIOS TO
AVERAGE NET ASSETS:
Net Increase
Net Realized
(Decrease)
NET ASSET
Net
and
in Net Asset
Distributions
Distributions
Net Increase
NET ASSET
Net
Net Assets,
VALUE,
Investment
Unrealized
Value
from Net
from Net
(Decrease) in
VALUE,
Total
Investment
Portfolio
End of
BEGINNING
Income
Gains (Losses)
Resulting from
Investment
Realized
Total
Net Asset
END OF
Investment
Total
Income
Turnover
Period (000's
Year Ended
OF PERIOD
(Loss)†
on Investments
Operations
Income
Gains
Distributions
Value
PERIOD
Return††
Expenses
(Loss)
Rate
omitted)
Energy Services Fund
December 31, 2007
$29.79
$
(.34)
$
11.37
$
11.03
$
—
$
(2.15)
$
(2.15)
$
8.88
$38.67
37.10%
1.58%
(0.91)%
193%
$ 95,917
December 31, 2006
30.92
(.37)
4.01
3.64
—
(4.77)
(4.77)
(1.13)
29.79
10.98%
1.59%
(1.08)%
184%
43,910
December 31, 2005
20.85
(.30)
10.37
10.07
—
—
—
10.07
30.92
48.30%
1.61%
(1.17)%
317%
79,722
December 31, 2004
15.59
(.22)
5.48
5.26
—
—
—
5.26
20.85
33.74%
1.58%
(1.19)%
808%
29,316
December 31, 2003
14.38
(.16)
1.37
1.21
—
—
—
1.21
15.59
8.41%
1.65%
(1.13)%
2,691%
7,754
Financial Services Fund
December 31, 2007
32.18
.28
(6.23)
(5.95)
(.66)
(3.61)
(4.27)
(10.22)
21.96
(18.80)%
1.59%
0.90%
525%
17,508
December 31, 2006
29.10
.26
4.59
4.85
(.39)
(1.38)
(1.77)
3.08
32.18
16.73%
1.59%
0.83%
330%
50,190
December 31, 2005
30.38
.28
.67
.95
(.25)
(1.98)
(2.23)
(1.28)
29.10
3.38%
1.59%
0.94%
549%
36,839
December 31, 2004
26.00
.23
4.21
4.44
(.06)
—
(.06)
4.38
30.38
17.12%
1.59%
0.84%
762%
45,180
December 31, 2003
20.19
.14
5.70
5.84
(.03)
—
(.03)
5.81
26.00
28.92%
1.64%
0.61%
2,039%
15,581
Health Care Fund
December 31, 2007
28.41
(.01)
1.73
1.72
—
(.52)
(.52)
1.20
29.61
6.02%
1.59%
(0.02)%
424%
37,521
December 31, 2006
28.17
(.15)
1.59
1.44
—
(1.20)
(1.20)
.24
28.41
5.11%
1.59%
(0.52)%
251%
40,825
December 31, 2005
25.46
(.16)
2.87
2.71
—
—
—
2.71
28.17
10.64%
1.60%
(0.62)%
330%
51,692
December 31, 2004
24.28
(.16)
1.65
1.49
—
(.31)
(.31)
1.18
25.46
6.22%
1.59%
(0.67)%
629%
30,435
December 31, 2003
18.71
(.19)
5.76
5.57
—
—
—
5.57
24.28
29.77%
1.64%
(0.88)%
1,222%
27,880
Internet Fund
December 31, 2007
16.17
(.05)
1.73
1.68
—
—
—
1.68
17.85
10.39%
1.54%
(0.29)%
432%
24,937
December 31, 2006
14.74
(.21)
1.64
1.43
—
—
—
1.43
16.17
9.70%
1.58%
(1.33)%
420%
9,381
December 31, 2005
17.01
(.21)
(.13)
(.34)
—
(1.93)
(1.93)
(2.27)
14.74
(1.38)%
1.61%
(1.36)%
676%
20,959
December 31, 2004
14.68
(.23)
2.56
2.33
—
—
—
2.33
17.01
15.87%
1.58%
(1.49)%
693%
36,922
December 31, 2003
8.93
(.20)
5.95
5.75
—
—
—
5.75
14.68
64.39%
1.65%
(1.59)%
957%
25,101
Leisure Fund
December 31, 2007
26.19
(.04)
(.51)
(.55)
—
(4.42)
(4.42)
(4.97)
21.22
(2.54)%
1.59%
(0.14)%
171%
15,311
December 31, 2006
21.96
(.02)
5.17
5.15
—
(.92)
(.92)
4.23
26.19
23.47%
1.60%
(0.07)%
221%
37,699
December 31, 2005
25.39
(.19)
(1.03)
(1.22)
—
(2.21)
(2.21)
(3.43)
21.96
(4.87)%
1.56%
(0.79)%
369%
13,961
December 31, 2004
20.80
(.17)
5.07
4.90
—
(.31)
(.31)
4.59
25.39
23.86%
1.58%
(0.74)%
663%
51,755
December 31, 2003
15.42
(.08)
5.46
5.38
—
—
—
5.38
20.80
34.89%
1.65%
(0.41)%
1,353%
30,016
Precious Metals Fund
December 31, 2007
12.58
(.10)
2.56
2.46
—
—
—
2.46
15.04
19.55%
1.45%
(0.71)%
268%
91,613
December 31, 2006
10.36
(.03)
2.25
2.22
—
—
—
2.22
12.58
21.43%
1.49%
(0.26)%
228%
62,910
December 31, 2005
8.57
(.02)
1.81
1.79
—
—
—
1.79
10.36
20.89%
1.57%
(0.24)%
308%
68,241
December 31, 2004
9.99
(.05)
(1.37)
(1.42)
—
—
—
(1.42)
8.57
(14.21)%
1.46%
(0.54)%
519%
35,043
December 31, 2003
7.09
(.03)
2.93
2.90
—
—
—
2.90
9.99
40.90%
1.54%
(0.38)%
658%
44,606
FINANCIAL HIGHLIGHTS (concluded)
This table is presented to show selected data for a share outstanding throughout each period, and to assist shareholders in evaluating a Fund’s performance for the periods presented.
RATIOS TO
AVERAGE NET ASSETS:
Net Increase
Net Realized
(Decrease)
NET ASSET
Net
and
in Net Asset
Distributions
Distributions
Net Increase
NET ASSET
Net
Net Assets,
VALUE,
Investment
Unrealized
Value
from Net
from Net
(Decrease) in
VALUE,
Total
Investment
Portfolio
End of
BEGINNING
Income
Gains (Losses)
Resulting from
Investment
Realized
Total
Net Asset
END OF
Investment
Total
Income
Turnover
Period (000's
Year Ended
OF PERIOD
(Loss)†
on Investments
Operations
Income
Gains
Distributions
Value
PERIOD
Return††
Expenses
(Loss)
Rate
omitted)
Retailing Fund
December 31, 2007
$29.78
$
(.24)
$
(2.95)
$
(3.19)
$
—
$
(15.32)
$
(15.32)
$
(18.51)
$11.27
(12.60)%
1.60%
(0.81)%
182%
$ 4,651
December 31, 2006
27.85
(.11)
2.92
2.81
—
(.88)
(.88)
1.93
29.78
10.08%
1.59%
(0.37)%
227%
28,306
December 31, 2005
26.65
(.25)
1.70
1.45
—
(.25)
(.25)
1.20
27.85
5.48%
1.58%
(0.90)%
421%
17,616
December 31, 2004
25.99
(.22)
2.62
2.40
—
(1.74)
(1.74)
.66
26.65
10.06%
1.58%
(0.83)%
609%
20,800
December 31, 2003
19.29
(.25)
7.05
6.80
—
(.10)
(.10)
6.70
25.99
35.27%
1.64%
(1.04)%
785%
15,149
Technology Fund
December 31, 2007
14.74
(.15)
1.68
1.53
—
—
—
1.53
16.27
10.38%
1.56%
(0.91)%
584%
33,123
December 31, 2006
13.92
(.16)
.98
.82
—
—
—
.82
14.74
5.89%
1.59%
(1.09)%
403%
23,215
December 31, 2005
13.50
(.16)
.58
.42
—
—
—
.42
13.92
3.11%
1.62%
(1.21)%
541%
19,145
December 31, 2004
14.88
(.05)
.03
(.02)
—
(1.36)
(1.36)
(1.38)
13.50
1.15%
1.58%
(0.36)%
767%
19,919
December 31, 2003
9.92
(.18)
6.21
6.03
—
(1.07)
(1.07)
4.96
14.88
61.32%
1.64%
(1.39)%
1,302%
20,641
Telecommunications Fund
December 31, 2007
21.91
.05
1.97
2.02
(.04)
—
(.04)
1.98
23.89
9.23%
1.58%
0.20%
295%
31,781
December 31, 2006
18.81
.15
3.52
3.67
(.29)
(.28)
(.57)
3.10
21.91
19.51%
1.59%
0.72%
264%
33,337
December 31, 2005
20.53
.19
.06
.25
—
(1.97)
(1.97)
(1.72)
18.81
1.16%
1.60%
0.98%
362%
16,898
December 31, 2004
18.22
(.02)
2.33
2.31
—
—
—
2.31
20.53
12.68%
1.58%
(0.08)%
809%
30,191
December 31, 2003
13.63
(.03)
4.62
4.59
—
(—)§
(—)§
4.59
18.22
33.68%
1.64%
(0.19)%
974%
14,543
Transportation Fund
December 31, 2007
35.05
(.04)
(2.24)
(2.28)
—
(17.92)
(17.92)
(20.20)
14.85
(8.75)%
1.60%
(0.12)%
284%
8,513
December 31, 2006
32.64
(.24)
2.65
2.41
—
—
—
2.41
35.05
7.38%
1.59%
(0.68)%
249%
29,549
December 31, 2005
31.45
(.19)
2.64
2.45
—
(1.26)
(1.26)
1.19
32.64
8.48%
1.58%
(0.63)%
258%
31,378
December 31, 2004
25.97
(.20)
6.09
5.89
—
(.41)
(.41)
5.48
31.45
22.99%
1.57%
(0.71)%
473%
47,333
December 31, 2003
21.55
(.15)
4.57
4.42
—
—
—
4.42
25.97
20.51%
1.64%
(0.65)%
1,045%
8,032
Utilities Fund
December 31, 2007
22.38
.32
2.59
2.91
(.39)
(2.61)
(3.00)
(.09)
22.29
12.86%
1.58%
1.32%
244%
65,532
December 31, 2006
19.09
.36
3.64
4.00
(.49)
(.22)
(.71)
3.29
22.38
20.96%
1.59%
1.73%
169%
71,719
December 31, 2005
17.34
.34
1.50
1.84
(.09)
—
(.09)
1.75
19.09
10.56%
1.60%
1.80%
342%
39,943
December 31, 2004
14.96
.33
2.24
2.57
(.19)
—
(.19)
2.38
17.34
17.31%
1.57%
2.06%
904%
21,902
December 31, 2003
12.24
.31
2.77
3.08
(.36)
—
(.36)
2.72
14.96
25.40%
1.62%
2.29%
1,491%
13,430
†
Calculated using the average daily shares outstanding for the year.
††
Total investment return does not reflect the impact of any additional fees charged by insurance companies and has not been annualized.
§
Less than $.01 per share.
1.
Organization and Significant Accounting Policies
usually 4:00 p.m., adjusted for any interest accruals and
Organization
financing charges. If the securities comprising the
The Rydex Variable Trust (the “Trust”), a Delaware business
underlying index cease trading before a Fund’s close of
trust, is registered with the SEC under the Investment
business, the index will be fair valued with the use of an
Company Act of 1940 (the “1940 Act”) as a non-diversified,
appropriate market indicator.
open-ended investment company and is authorized to issue
Traditional open-end investment companies (“Mutual
an unlimited number of no par value shares. The Trust offers
Funds”) are valued at their Net Asset Value as of the close
shares of the Funds to insurance companies for their
of business, usually 4:00 p.m., Eastern time, on the valuation
variable annuity and variable life insurance contracts.
date. Exchange Traded Funds (“ETFs”) and closed-end
At December 31, 2007, the Trust consisted of fifty-five
investment companies are valued at the last quoted sales
separate Funds: twenty-three Benchmark Funds, one Money
price.
Market Fund, eight Alternative Strategy Funds, seventeen
The value of domestic equity index and credit default swap
Sector Funds, three Essential Portfolio Funds and three CLS
agreements entered into by a Fund is accounted for using
AdvisorOne Funds. This report covers the Sector Funds (the
the unrealized gain or loss on the agreements that is
“Funds”), while the Benchmark Funds, the Money Market
determined by marking the agreements to the last quoted
Fund, the Alternative Strategies Funds, the Essential
value of the index that the swap pertains to at the close of
Portfolio Funds and the CLS AdvisorOne Funds are
the NYSE, usually 4:00 p.m. The swap’s market value is then
contained in separate reports.
adjusted to include dividends accrued, financing charges
Rydex Investments provides advisory, transfer agent and
and/or interest associated with the swap agreements.
administrative services, and accounting services to the Trust.
The value of foreign equity index and currency index swap
Rydex Distributors, Inc. (the “Distributor”) acts as principal
agreements entered into by the Funds are accounted for
underwriter for the Trust. Both Rydex Investments and the
using the unrealized gain or loss on the agreements that is
Distributor are affiliated entities.
determined by marking the agreements to the price at which
Significant Accounting Policies
orders are being filled at the close of the NYSE, usually 4:00
p.m. In the event that no order is filled at 4:00 p.m., the
The following significant accounting policies are in conformity
security dealer provides a fair value quote at which the swap
with U.S. generally accepted accounting principles and are
agreement is valued. The swap’s market value is then
consistently followed by the Trust. All time references are
adjusted to include dividends accrued, financing charges
based on Eastern Time. The information contained in these
and/or interest associated with the swap agreements.
notes may not apply to every Fund in the Trust.
Investments for which market quotations are not readily
A. Equity securities listed on an exchange (New York Stock
available are fair valued as determined in good faith by
Exchange (“NYSE”) or American Stock Exchange) are
Rydex Investments under direction of the Board of Trustees
valued at the last quoted sales price as of the close of
using methods established or ratified by the Board of
business on the NYSE, usually 4:00 p.m. on the valuation
Trustees. These methods include, but are not limited to:
date. Equity securities listed on the NASDAQ market
(i) general information as to how these securities and assets
system are valued at the NASDAQ Official Closing Price,
trade; (ii) in connection with futures contracts and options
usually as of 4:00 p.m. on the valuation date. Listed options
thereupon, and other derivative investments, information as
held by the Trust are valued at the Official Settlement Price
to how (a) these contracts and other derivative investments
listed by the exchange, usually as of 4:00 p.m. Over-the-
trade in the futures or other derivative markets, respectively,
Counter options held by the Trust are valued using the
and (b) the securities underlying these contracts and other
average bid price obtained from one or more security
derivative investments trade in the cash market; and (iii)
dealers. The value of futures contracts purchased and sold
other information and considerations, including current
by the Trust is accounted for using the unrealized gain or
values in related markets.
loss on the contracts that is determined by marking the
contracts to their current realized settlement prices.
B. Securities transactions are recorded on the trade date for
Financial futures contracts are valued at the last quoted
financial reporting purposes. Realized gains and losses from
sales price, usually as of 4:00 p.m. on the valuation date. In
securities transactions are recorded using the identified cost
the event that the exchange for a specific futures contract
basis. Proceeds from lawsuits related to investment holdings
closes earlier than 4:00 p.m., the futures contract is valued
are recorded as realized gains in the respective Fund.
at the Official Settlement Price of the exchange. However,
Dividend income is recorded on the ex-dividend date, net
the underlying securities from which the futures contract
of applicable taxes withheld by foreign countries. Interest
value is derived are monitored until 4:00 p.m. to determine
income, including amortization of premiums and accretion
if fair valuation would provide a more accurate valuation.
of discount, is accrued on a daily basis.
Short-term securities, if any, are valued at amortized cost,
C. Distributions of net investment income and net realized
which approximates market value.
capital gains are recorded on the ex-dividend date and are
Structured notes are valued in accordance with the terms of
determined in accordance with income tax regulations which
their agreement at the value of the underlying index close,
may differ from U.S. generally accepted accounting
THE RYDEX VARIABLE TRUST ANNUAL REPORT
|
61
NOTES TO FINANCIAL STATEMENTS (continued)
principles. These differences are primarily due to differing
amount of cash equal to the daily fluctuation in value of the
treatments for items such as deferral of wash sales and post-
contract. Such receipts or payments are known as variation
October losses and regulated futures contracts and options.
margin and are recorded by the Fund as unrealized gains or
Net investment income and loss, net realized gains and
losses. When the contract is closed, the Fund records a
losses, and net assets are not affected by these differences.
realized gain or loss equal to the difference between the
D. The Funds seek capital appreciation and invest
value of the contract at the time it was opened and the
substantially all of their assets in equity securities of
value at the time it was closed.
companies involved in their sector.
H. The Trust may enter into domestic equity index and
E. When a Fund engages in a short sale of an equity or
domestic currency index swap agreements, which are over-
fixed income security, an amount equal to the proceeds is
the-counter contracts in which one party agrees to make
reflected as an asset and an equivalent liability. The amount
periodic payments based on the change in market value of
of the liability is subsequently marked-to-market to reflect
a specified equity security, basket of equity securities,
the market value of the short sale. The Fund maintains a
equity index or domestic currency index, in return for
segregated account of cash and/or securities as collateral
periodic payments based on a fixed or variable interest rate
for short sales. The Fund is exposed to market risk based on
or the change in market value of a different equity security,
the amount, if any, that the market value of the security
basket of equity securities, equity index or domestic
exceeds the market value of the securities in the
currency index. Swap agreements are used to obtain
segregated account. Fees, if any, paid to brokers to borrow
exposure to an equity or market without owning or taking
securities in connection with short sales are considered part
physical custody of securities. The swap agreements are
of the cost of short sale transactions. In addition, the Fund
marked-to-market daily based upon quotations from market
must pay out the dividend rate of the equity or coupon rate
makers and the change, if any, is recorded as unrealized
of the treasury obligation to the lender and records this as
gain or loss. Payments received or made as a result of an
an expense. Short dividends or interest expense is a cost
agreement or termination of the agreement are recognized
associated with the investment objective of short sales
as realized gains or losses.
transactions, rather than an operational cost associated with
The Trust may enter into credit default swap agreements
the day-to-day management of any mutual fund.
where one party, the protection buyer, makes an upfront or
F. Upon the purchase of an option by a Fund, the premium
periodic payment to counterparty, the protection seller, in
paid is recorded as an investment, the value of which is
exchange for the right to receive a contingent payment.
marked-to-market daily. When a purchased option expires,
The maximum amount of the payment may equal the
that Fund will realize a loss in the amount of the cost of the
notional amount, at par, of the underlying index or security
option. When a Fund enters into a closing sale transaction,
as a result of a related credit event. Upfront payments
that Fund will realize a gain or loss depending on whether
received or made by a Fund, are amortized over the
the proceeds from the closing sale transaction are greater or
expected life of the agreement. Periodic payments received
less than the cost of the option. When a Fund exercises a
or paid by a Fund are recorded as realized gains or losses.
put option, that Fund will realize a gain or loss from the sale
The credit default contracts are marked-to-market daily
of the underlying security and the proceeds from such sale
based upon quotations from market makers and the
will be decreased by the premium originally paid. When a
change, if any, is recorded as unrealized gain or loss.
Fund exercises a call option, the cost of the security
Payments received or made as a result of a credit event or
purchased by that Fund upon exercise will be increased by
termination of the contract are recognized, net of a
the premium originally paid. When a Fund writes (sells) an
proportional amount of the upfront payment, as realized
option, an amount equal to the premium received is entered
gains or losses.
in that Fund’s accounting records as an asset and equivalent
I. The Trust may invest in structured notes, which are over-
liability. The amount of the liability is subsequently marked-
the-counter contracts linked to the performance of an
to-market to reflect the current value of the option written.
underlying benchmark such as interest rates, equity
When a written option expires, or if a Fund enters into a
markets, equity indices, commodities indices, corporate
closing purchase transaction, that Fund realizes a gain (or
credits or foreign exchange markets. A structured note is a
loss if the cost of a closing purchase transaction exceeds the
type of bond in which an issuer borrows money from
premium received when the option was sold).
investors and pays back the principal, adjusted for
G. The Trust may enter into stock and bond index futures
performance of the underlying benchmark, at a specified
contracts and options on such futures contracts. Futures
maturity date. In addition, the contract may require periodic
contracts are contracts for delayed delivery of securities at a
interest payments. Structured notes are used to obtain
specified future delivery date and at a specific price. Upon
exposure to a market without owning or taking physical
entering into a contract, a Fund deposits and maintains as
custody of securities or commodities. Fluctuations in value
collateral such initial margin as required by the exchange on
of the structured notes are recorded as unrealized gains and
which the transaction is effected. Pursuant to the contract,
losses in the accompanying financial statements. Coupon
the Fund agrees to receive from or pay to the broker an
payments are recorded as income while net payments are
recorded as net realized gains or losses.
62
|
THE RYDEX VARIABLE TRUST ANNUAL REPORT
NOTES TO FINANCIAL STATEMENTS (continued)
J. Investment securities and other assets and liabilities
to varying degrees, elements of market risk and risks in
denominated in foreign currencies are translated into U.S.
excess of the amounts recognized in the Statements of
dollar amounts at the date of valuation. Purchases and sales
Assets and Liabilities.
of investment securities and income and expense items
Throughout the normal course of business, the Funds enter
denominated in foreign currencies are translated into U.S.
into contracts that contain a variety of representations and
dollar amounts on the respective dates of such transactions.
warranties which provide general indemnifications. The
The Trust does not isolate that portion of the results of
Funds’ maximum exposure under these arrangements is
operations resulting from changes in foreign exchange rates
unknown, as this would involve future claims that may be
on investments from the fluctuations arising from changes in
made against the Funds and/or their affiliates that have not
market prices of securities held. Such fluctuations are
yet occurred. However, based on experience, the Funds
included with the net realized and unrealized gain and loss
expect the risk of loss to be remote.
from investments.
Short sales are transactions in which a Fund sells an equity
Reported net realized foreign exchange gains or losses arise
or fixed income security it does not own. If the security sold
from sales of foreign currencies and currency gains or losses
short decreases in price between the time the Fund sells the
realized between the trade and settlement dates on
security and closes its short position, that Fund will realize a
investment transactions. Net unrealized exchange gains and
gain on the transaction. Conversely, if the security increases
losses arise from changes in the fair values of assets and
in price during the period, that Fund will realize a loss on
liabilities other than investments in securities at the fiscal
the transaction. The risk of such price increases is the
period end, resulting from changes in exchange rates.
principal risk of engaging in short sales.
K. The Trust may enter into forward currency contracts
The risk associated with purchasing options is limited to the
primarily to hedge against foreign currency exchange rate
premium originally paid. The risk in writing a covered call
risks on its non-U.S. dollar denominated investment
option is that a Fund may forego the opportunity for profit
securities. When entering into a forward currency contract, a
if the market price of the underlying security increases and
Fund agrees to receive or deliver a fixed quantity of foreign
the option is exercised. The risk in writing a covered put
currency for an agreed-upon price on an agreed future date.
option is that a Fund may incur a loss if the market price of
These contracts are valued daily and the corresponding
the underlying security decreases and the option is
unrealized gain or loss on the contracts, as measured by the
exercised. In addition, there is the risk that a Fund may not
difference between the forward foreign exchange rates at
be able to enter into a closing transaction because of an
the dates of entry into the contracts and the forward rates at
illiquid secondary market or, for over-the-counter options,
the reporting date, is included in the Statement of Assets
because of the counterparty’s inability to perform.
and Liabilities. Realized and unrealized gains and losses are
included in the Statement of Operations.
There are several risks in connection with the use of futures
contracts. Risks may be caused by an imperfect correlation
L. The Funds may also purchase American Depository
between movements in the price of the instruments and the
Receipts, U.S. Government securities, and enter into
price of the underlying securities. In addition, there is the
repurchase agreements.
risk that a Fund may not be able to enter into a closing
M. The Funds may leave cash overnight in their cash
transaction because of an illiquid secondary market.
account with the custodian, U.S. Bank. Periodically, a Fund
There are several risks associated with the use of structured
may have cash due to custodian bank as an overdraft
notes. Structured securities are leveraged, thereby
balance. A fee is incurred on this overdraft, calculated by
providing an exposure to the underlying benchmark of
multiplying the overdraft by a rate based on the federal
three times the face amount and increasing the volatility of
funds rate.
each note relative to the change in the underlying linked
N. The preparation of financial statements in conformity
financial instrument. A highly liquid secondary market may
with U.S. generally accepted accounting principles requires
not exist for the structured notes a Fund invests in, which
management to make estimates and assumptions that affect
may make it difficult for that Fund to sell the structured
the reported amount of assets and liabilities and disclosure
notes it holds at an acceptable price or to accurately value
of contingent assets and liabilities at the date of the
them. In addition, structured notes are subject to the risk
financial statements and the reported amounts of revenues
that the counterparty to the instrument, or issuer, might not
and expenses during the reporting period. Actual results
pay interest when due or repay principal at maturity of the
could differ from these estimates.
obligation. Although the Trust will not invest in any
2.
Financial Instruments
structured notes unless Rydex Investments believes that the
issuer is creditworthy, a Fund does bear the risk of loss of
As part of its investment strategy, the Trust may utilize
the amount expected to be received in the event of the
short sales and a variety of derivative instruments,
default or bankruptcy of the issuer.
including options, futures, options on futures, structured
notes, and swap agreements. These investments involve,
THE RYDEX VARIABLE TRUST ANNUAL REPORT
|
63
NOTES TO FINANCIAL STATEMENTS (continued)
There are several risks associated with the use of swap
Rydex Investments provides transfer agent and administrative
agreements that are different from those associated with
services to the Funds for fees calculated at an annualized
ordinary portfolio securities transactions, due to the fact
rate of 0.25% of the average daily net assets of each of
that they could be considered illiquid. Although the Trust
the Funds.
will not enter into any swap agreement unless Rydex
Rydex Investments also provides accounting services to the
Investments believes that the other party to the transaction
Trust for fees calculated at an annualized rate of 0.10% on
is creditworthy, the Funds bear the risk of loss of the
the first $250 million of the average daily net assets, 0.075%
amount expected to be received under a swap agreement
on the next $250 million of the average daily net assets,
in the event of the default or bankruptcy of the agreement
0.05% on the next $250 million of the average daily net
counterparty.
assets, and 0.03% on the average daily net assets over $750
There are several risks associated with credit default swaps.
million of each Fund.
Credit default swaps involve the exchange of a fixed-rate
Rydex Investments engages external service providers to
premium for protection against the loss in value of an
perform other necessary services to the Trust, such as
underlying debt instrument in the event of a defined credit
accounting and auditing related services, legal services,
event (such as payment default or bankruptcy). Under the
printing and mailing, etc. on a pass-through basis. Such
terms of the swap, one party acts as a “guarantor,”
expenses vary from Fund to Fund and are allocated to the
receiving a periodic payment that is a fixed percentage
Funds based on relative net assets. Organizational and
applied to a notional principal amount. In return, the party
setup costs for new Funds are paid by the Trust.
agrees to purchase the notional amount of the underlying
instrument, at par, if a credit event occurs during the term
The Trust has adopted an Investor Services Plan for which
of the swap. A Fund may enter into credit default swaps in
the Distributor and other firms that provide shareholder
which that Fund or its counterparty acts as guarantor. By
services (“Service Providers”) may receive compensation.
acting as the guarantor of a swap, that Fund assumes the
The Trust will pay fees to the Distributor at an annual rate
market and credit risk of the underlying instrument,
not to exceed 0.25% of average daily net assets. The
including liquidity and loss of value.
Distributor, in turn, will compensate Service Providers for
providing such services, while retaining a portion of such
In conjunction with the use of short sales, options, futures,
payments to compensate itself for shareholder services it
options on futures, and swap agreements, the Funds are
performs.
required to maintain collateral in various forms. The Funds
use, where appropriate, depending on the financial
Certain officers and trustees of the Trust are also officers of
instrument utilized and the broker involved, margin deposits
Rydex Investments.
at the broker, cash and/or securities segregated at the
4.
Federal Income Tax Information
custodian bank, discount notes, or the repurchase
agreements allocated to each Fund.
The Funds intend to comply with the provisions of
Subchapter M of the Internal Revenue Code applicable to
The risks inherent in the use of short sales, options, futures
regulated investment companies and will distribute
contracts, options on futures contracts, structured notes,
substantially all net investment income and capital gains to
and swap agreements, include i) adverse changes in the
shareholders. Therefore, no Federal income tax provision
value of such instruments; ii) imperfect correlation between
has been recorded.
the price of the instruments and movements in the price of
the underlying securities, indices, or futures contracts; iii)
Income and capital gain distributions are determined in
the possible absence of a liquid secondary market for any
accordance with Federal income tax regulations, which may
particular instrument at any time; and iv) the potential of
differ from U.S. generally accepted accounting principles.
counterparty default. The Trust has established strict
These differences are primarily due to differing treatments
counterparty credit guidelines and enters into transactions
for derivatives, foreign currency transactions, losses
only with financial institutions of investment grade or better.
deferred due to wash sales, losses deferred due to post-
October losses, and excise tax regulations.
3.
Fees And Other Transactions With Affiliates
Permanent book and tax basis differences, if any, relating to
Under the terms of an investment advisory contract, the
shareholder distributions will result in reclassifications to
Trust pays Rydex Investments investment advisory fees
paid-in capital. This includes net operating losses not utilized
calculated at an annualized rate of 0.85% of the average
during the current period and capital loss carry forward
daily net assets of each of the Funds, except the Precious
expired. These reclassifications have no effect on net assets
Metals Fund, which is 0.75% of the average daily net assets.
or net asset values per share. Any taxable gain remaining
at fiscal year end is distributed in the following year.
64
|
THE RYDEX VARIABLE TRUST ANNUAL REPORT
NOTES TO FINANCIAL STATEMENTS (continued)
The Fund’s tax basis capital gains and losses are determined only at the end of each fiscal year. Tax basis capital losses in excess
of capital gains are carried forward to offset future net capital gains. For the year ended December 31, 2007, the following Funds
offset net realized capital gains with capital losses from previous years:
Fund
Amount
Banking Fund
$
44,741
Internet Fund
310,768
Precious Metals Fund
3,647,915
Telecommunications Fund
21,714
Transportation Fund
337,822
The tax character of distributions paid during 2007 was as follows:
Ordinary
Long-Term
Return of
Total
Fund
Income
Capital Gain
Capital
Distributions
Banking Fund
$
264,031
$
—
$
—
$
264,031
Basic Materials Fund
3,917,113
2,503,205
—
6,420,318
Biotechnology Fund
—
—
—
—
Consumer Products Fund
2,278,448
1,008,343
—
3,286,791
Electronics Fund
—
—
—
—
Energy Fund
218,328
9,198,139
—
9,416,467
Energy Services Fund
124,501
4,863,788
—
4,988,289
Financial Services Fund
1,354,485
472,030
495,840
2,322,355
Health Care Fund
669,151
35,189
—
704,340
Internet Fund
—
—
—
—
Leisure Fund
2,084,487
615,217
—
2,699,704
Precious Metals Fund
—
—
—
—
Retailing Fund
909,107
1,881,428
—
2,790,535
Technology Fund
—
—
—
—
Telecommunications Fund
61,795
—
—
61,795
Transportation Fund
—
4,179,577
—
4,179,577
Utilities Fund
4,017,476
3,463,506
—
7,480,982
The tax character of distributions paid during 2006 was as follows:
Ordinary
Long-Term
Total
Fund
Income
Capital Gain
Distributions
Banking Fund
$
400,775
$
—
$
400,775
Basic Materials Fund
650,459
479,742
1,130,201
Biotechnology Fund
—
—
—
Consumer Products Fund
576,317
90,453
666,770
Electronics Fund
—
—
—
Energy Fund
8,102,643
9,987,236
18,089,879
Energy Services Fund
352,839
6,216,435
6,569,274
Financial Services Fund
2,321,852
194,488
2,516,340
Health Care Fund
1,655,023
—
1,655,023
Internet Fund
—
—
—
Leisure Fund
803,877
440,187
1,244,064
Precious Metals Fund
—
—
—
Retailing Fund
200,751
586,650
787,401
Technology Fund
—
—
—
Telecommunications Fund
746,903
—
746,903
Transportation Fund
—
—
—
Utilities Fund
1,439,819
638,278
2,078,097
THE RYDEX VARIABLE TRUST ANNUAL REPORT
|
65
NOTES TO FINANCIAL STATEMENTS (continued)
The tax character of distributable earnings/(accumulated losses) at December 31, 2007, was as follows:
Undistributed
Undistributed
Net Unrealized
Ordinary
Long-Term
Appreciation/
Capital Loss
Fund
Income
Capital Gain
Depreciation
Carryforward
Banking Fund
$
31,117
$
—
$ (1,452,335)
$
(470,556)2
Basic Materials Fund
1,786,119
549,396
17,608,541
—
Biotechnology Fund
—
—
191,511
(4,995,559)3
Consumer Products Fund
208,803
567,319
3,797,748
—
Electronics Fund
—
—
(304,985)
(9,787,465)3
Energy Fund
1,012,934
370,013
28,187,390
—
Energy Services Fund
2,132,477
691,633
27,627,065
—
Financial Services Fund
—
—
(1,396,525)
(1,122,489)1
Health Care Fund
777,941
1,033,100
2,981,642
—
Internet Fund
—
—
(707,591)
(384,202)2
Leisure Fund
117,360
779,696
1,597,509
—
Precious Metals Fund
—
—
18,135,145
(935,222)2
Retailing Fund
—
43,364
467,896
—
Technology Fund
1,726,089
12,082
1,060,599
—
Telecommunications Fund
1,453,922
1,141,718
3,212,730
—
Transportation Fund
—
426,402
364,359
—
Utilities Fund
441,479
174,096
10,199,389
—
Capital Loss Carryforward amounts may be limited due to Treasury Regulations.
1 Expires in 2015.
2 Expires in 2013.
3 Biotechnology Fund: $608,485 expires in 2010, $1,880,980 expires in 2012, $739,559 expires in 2013, $1,048,743 expires in 2014, and $717,792
expires in 2015.
Electronics Fund: $324,070 expires in 2010, $549,313 expires in 2012, $1,309,130 expires in 2013, $6,193,088 expires in 2014, and $1,411,864
expires in 2015.
At December 31, 2007, the cost of securities for Federal income tax purposes, the aggregate gross unrealized gain for all
securities for which there was an excess of value over tax cost and the aggregate gross unrealized loss for all securities for which
there was an excess of tax cost over value, were as follows:
Tax
Tax
Net
Tax
Unrealized
Unrealized
Unrealized
Fund
Cost
Gain
Loss
Gain (Loss)
Banking Fund
$12,898,170
$
—
$(1,452,335)
$
(1,452,335)
Basic Materials Fund
98,932,696
18,869,081
(1,260,540)
17,608,541
Biotechnology Fund
17,857,030
578,592
(387,081)
191,511
Consumer Products Fund
40,064,123
3,883,405
(85,657)
3,797,748
Electronics Fund
3,959,598
—
(304,985)
(304,985)
Energy Fund
90,650,112
29,022,396
(835,006)
28,187,390
Energy Services Fund
93,713,465
28,228,861
(601,796)
27,627,065
Financial Services Fund
22,438,415
239,697
(1,636,222)
(1,396,525)
Health Care Fund
39,586,776
3,589,762
(608,120)
2,981,642
Internet Fund
31,240,984
229,179
(936,770)
(707,591)
Leisure Fund
16,753,855
1,998,787
(401,278)
1,597,509
Precious Metals Fund
98,332,153
18,789,521
(654,376)
18,135,145
Retailing Fund
5,034,906
593,434
(125,538)
467,896
Technology Fund
38,002,598
2,402,270
(1,341,671)
1,060,599
Telecommunications Fund
34,208,807
4,299,157
(1,086,427)
3,212,730
Transportation Fund
9,963,710
1,026,731
(662,372)
364,359
Utilities Fund
64,982,127
10,199,389
—
10,199,389
66
|
THE RYDEX VARIABLE TRUST ANNUAL REPORT
NOTES TO FINANCIAL STATEMENTS (continued)
5.
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 obligations of the U.S. Treasury and U.S. Government Agencies. The collateral is in
the possession of the Trust’s custodian and is evaluated daily to ensure that its market value exceeds by, at a minimum, 102% of
the delivery value of the repurchase agreement at maturity. Each Fund holds a pro rata share of the collateral based on the dollar
amount of the repurchase agreement entered into by each Fund.
The repurchase agreements executed by the joint account and outstanding as of December 31, 2007, were as follows:
Counterparty
Terms of Agreement
Face Value
Market Value
Repurchase Price
Mizuho Financial Group, Inc.
1.40% due 01/02/08
$100,000,000
$100,000,000
$100,007,778
Morgan Stanley
1.20% due 01/02/08
100,000,000
100,000,000
100,006,667
UBS Financial Services, Inc.
1.14% due 01/02/08
100,000,000
100,000,000
100,006,333
Lehman Brothers Holdings, Inc.
1.00% due 01/02/08
76,214,183
76,214,183
76,218,418
$376,214,183
$376,239,196
As of December 31, 2007, the collateral for the repurchase agreements in the joint account was as follows:
Security Type
Maturity Dates
Range of Rates
Par Value
Market Value
U.S. Treasury Notes
11/15/08 - 11/15/16
3.375% - 4.750%
$193,110,000
$197,169,227
TIP Notes
01/15/09 - 07/15/17
1.875% - 4.250%
141,445,000
165,690,117
Federal Home Loan Bank
08/05/09 - 09/09/16
5.000% - 5.375%
7,755,000
8,203,002
TIP Bonds
01/15/25
2.375%
5,920,000
6,890,030
Federal Discount Note
02/29/08
0.000%
3,950,000
3,922,350
U.S. Treasury Bills
02/14/08 - 02/21/08
0.000%
1,883,000
1,875,790
$383,750,516
In the event of counterparty default, the Trust has the right to collect the collateral to offset losses incurred. There is potential loss
to the Trust in the event the Trust is delayed or prevented from exercising its rights to dispose of the collateral securities, including
the risk of a possible decline in the value of the underlying securities during the period while the Trust seeks to assert its rights. The
Trust’s investment advisor, acting under the supervision of the Board of Trustees, reviews the value of the collateral and the credit-
worthiness of those banks and dealers with which the Trust enters into repurchase agreements to evaluate potential risks.
6.
Securities Transactions
During the year ended December 31, 2007, the cost of purchases and sales from investment securities, excluding short-term and
temporary cash investments, were:
Basic
Biotech-
Consumer
Energy
Banking
Materials
nology
Products
Electronics
Energy
Services
Fund
Fund
Fund
Fund
Fund
Fund
Fund
Purchases
$
51,840,380
$214,635,560
$
80,857,889
$87,466,765
$
86,162,342
$181,446,387
$181,588,066
Sales
$
63,981,650
$196,074,699
$
77,941,624
$92,283,984
$
86,576,773
$168,490,400
$150,442,058
Financial
Health
Precious
Services
Care
Internet
Leisure
Metals
Retailing
Technology
Fund
Fund
Fund
Fund
Fund
Fund
Fund
Purchases
$180,249,024
$185,792,889
$
80,156,246
$45,202,597
$192,052,432
$
33,295,900
$203,163,091
Sales
$206,617,295
$191,044,552
$
63,174,573
$67,561,317
$172,145,792
$
56,737,039
$195,533,964
Telecommu-
Transpor-
nications
tation
Utilities
Fund
Fund
Fund
Purchases
$130,848,257
$
67,040,855
$166,329,893
Sales
$134,349,925
$
88,097,056
$178,955,410
THE RYDEX VARIABLE TRUST ANNUAL REPORT
|
67
NOTES TO FINANCIAL STATEMENTS (continued)
7.
Share Transactions
The Trust is authorized to distibute an unlimited number of no par value shares. Transactions in shares for the years presented were:
Purchased through
Net Shares
Shares Purchased
Dividend Reinvestment
Shares Redeemed
Purchased (Redeemed)
Year Ended
Year Ended
Year Ended
Year Ended
Year Ended
Year Ended
Year Ended
Year Ended
December 31,
December 31,
December 31,
December 31,
December 31,
December 31,
December 31,
December 31,
2007
2006
2007
2006
2007
2006
2007
2006
Banking Fund
1,845,752
1,815,362
11,231
12,647
(2,204,564)
(1,568,504)
(347,581)
259,505
Basic Materials Fund
5,190,655
4,052,298
154,149
33,458
(4,808,890)
(3,342,920)
535,914
742,836
Biotechnology Fund
3,990,446
4,689,808
—
—
(3,865,363)
(5,858,197)
125,083
(1,168,389)
Consumer Products Fund
2,294,742
3,163,231
87,391
18,313
(2,455,664)
(2,705,761)
(73,531)
475,783
Electronics Fund
6,529,568
7,828,397
—
—
(6,589,223)
(8,160,471)
(59,655)
(332,074)
Energy Fund
5,614,940
3,541,676
242,255
522,678
(5,427,952)
(4,074,714)
429,243
(10,360)
Energy Services Fund
5,771,123
5,147,643
130,277
209,346
(4,895,054)
(6,461,195)
1,006,346
(1,104,206)
Financial Services Fund
2,645,597
2,765,913
103,354
79,205
(3,511,041)
(2,551,604)
(762,090)
293,514
Health Care Fund
3,090,996
3,512,906
23,261
58,255
(3,283,734)
(3,969,488)
(169,477)
(398,327)
Internet Fund
4,841,463
3,248,938
—
—
(4,024,787)
(4,090,703)
816,676
(841,765)
Leisure Fund
1,694,357
2,699,093
123,953
47,592
(2,536,595)
(1,942,702)
(718,285)
803,983
Precious Metals Fund
17,782,601
16,881,002
—
—
(16,689,984)
(18,466,236)
1,092,617
(1,585,234)
Retailing Fund
1,126,720
2,119,692
238,507
26,194
(1,903,105)
(1,827,722)
(537,878)
318,164
Technology Fund
6,680,204
5,204,228
—
—
(6,219,761)
(5,004,676)
460,443
199,552
Telecommunications Fund
5,213,399
4,358,934
2,537
34,356
(5,406,876)
(3,770,580)
(190,940)
622,710
Transportation Fund
1,928,033
3,109,837
269,129
—
(2,466,872)
(3,228,069)
(269,710)
(118,232)
Utilities Fund
7,620,878
6,017,977
331,751
92,980
(8,217,534)
(4,998,132)
(264,905)
1,112,825
NOTES TO FINANCIAL STATEMENTS (continued)
8.
Portfolio Securities Loaned
The Trust may lend its securities to approved brokers to earn additional income. Security lending income shown on the statement
of operations is shown net of rebates paid to borrowers and earnings on cash collateral investments shared with the lending
agent. Within this arrangement, the Trust acts as the lender, U.S. Bank acts as the agent, and other approved registered broker
dealers act as the borrowers. The Trust receives cash collateral, valued at 100% of the value of the securities on loan, which is
initially held in a segregated account at U.S. Bank. Under the terms of the Trust’s securities lending agreement with U.S. Bank,
cash collateral may be invested by U.S. Bank in certain high quality, liquid investments. At December 31, 2007, the cash collateral
investments consisted of mutual funds. Collateral is maintained over the life of the loan in an amount not less than the value of
loaned securities, as determined at the close of fund business each day; any additional collateral required due to changes in
security values is delivered to the Fund the next business day. Although the collateral mitigates risk, the Trust could experience a
delay in recovering its securities and a possible loss of income or value if the borrower fails to return the securities. The Trust has
the right under the securities lending agreement to recover the securities from the borrower on demand.
The following represents a breakdown of the collateral, its rates, and maturities:
MUTUAL FUND
Issuer
Shares
Market Value
Mount Vernon Securities Lending Trust
139,917,251
$ 139,917,251
Total Mutual Fund
$139,917,251
At December 31, 2007, the following Funds participated in securities lending and received cash collateral:
Fund
Cash Collateral
Value of Securities Loaned
Banking Fund
$ 2,232,478
$ 2,153,688
Basic Materials Fund
20,976,254
20,004,223
Biotechnology Fund
4,092,845
3,870,308
Consumer Products Fund
2,859,901
2,760,783
Electronics Fund
681,815
647,560
Energy Fund
17,299,779
16,652,261
Energy Services Fund
25,285,475
24,276,396
Financial Services Fund
3,413,726
3,313,379
Health Care Fund
5,069,100
4,887,865
Internet Fund
5,718,672
5,377,599
Leisure Fund
3,062,987
2,933,748
Precious Metals Fund
24,965,966
23,402,023
Retailing Fund
873,568
832,801
Technology Fund
5,974,778
5,708,546
Telecommunications Fund
5,825,031
5,465,706
Transportation Fund
1,812,172
1,736,676
Utilities Fund
9,772,704
9,404,326
THE RYDEX VARIABLE TRUST ANNUAL REPORT
|
69
NOTES TO FINANCIAL STATEMENTS (concluded)
9.
New Accounting Pronouncements
On July 13, 2006, the Financial Accounting Standards Board (FASB) released FASB Interpretation No. 48 “Accounting for
Uncertainty in Income Taxes” (FIN 48). FIN 48 provides guidance for how uncertain tax positions should be recognized, measured,
presented and disclosed in the financial statements. FIN 48 requires the evaluation of tax positions taken or expected to be taken
in the course of preparing the Fund’s tax returns to determine whether the tax positions are “more-likely-than-not” of being
sustained by the applicable tax authority. Tax positions not deemed to meet the more-likely-than-not threshold would be
recorded as a tax benefit or expense in the current year. Adoption of FIN 48 is required for fiscal years beginning after December
15, 2006 and is to be applied to all open tax years as of the effective date. Recent SEC guidance allows implementing FIN 48 in
fund net asset value calculations as late as a fund’s last net asset value calculation in the first required financial statement reporting
period. Management adopted FIN 48 on June 29, 2007. There is no material impact to the financial statements or disclosures
thereto as a result of the adopting of this pronouncement.
The Funds file U.S. federal income tax returns and returns in various foreign jurisdictions in which it invests. While the statute of
limitations remains open to examine the Fund’s U.S. federal income tax returns filed for the fiscal years 2004 to 2007, no
examinations are in progress or anticipated at this time. The Funds are not aware of any tax positions for which it is reasonably
possible that the total amounts of unrecognized tax benefits will significantly change in the next twelve months.
On September 15, 2006, the FASB released Statement of Financial Accounting Standard No. 157 (“FAS 157”) Fair Value
Measurement which provided enhanced guidance for using fair value to measure assets and liabilities. The standard requires
companies to provide expanded information about the assets and liabilities measured at fair value and the potential effect of these
fair valuations on an entity’s financial performance. The standard does not expand the use of fair value in any new circumstances,
but provides clarification on acceptable fair valuation methods and applications. Adoption of FAS 157 is required for fiscal years
beginning after November 15, 2007. The standard is not expected to materially impact the Funds’ financial statements.
10.
Subsequent Event
At the close of business on January 17, 2008, Rydex NV, Inc., comprised of Rydex Investments, together with several other Rydex
entities, was acquired by Security Benefit Corporation (“Security Benefit”), a financial services firm that provides a broad variety of
financial programs to investors in the advisor, banking, education, government, institutional, and qualified plan markets (the
“Transaction”). As a result of the Transaction’s completion, Rydex Investments and the Distributor are wholly-owned subsidiaries of
Security Benefit. While the Transaction has no material impact on the Funds or their shareholders, it resulted in a change of
control of Rydex Investments, which in turn caused the termination of the investment advisory agreement between Rydex
Investments and the Funds.
A new investment advisory agreement between Rydex Investments and the Funds was approved under substantially the same
terms as the previous investment advisory agreement (the “New Agreement”). This New Agreement was approved by
shareholders, via proxy, and took effect upon the closing of the Transaction.
The Transaction has no impact on the day-to-day operations of Rydex Investments, the fees payable to Rydex Investments under
the New Agreement, or the persons responsible for the management of the Funds.
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THE RYDEX VARIABLE TRUST ANNUAL REPORT
REPORT OF INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM
To the Board of Trustees and Shareholders
of Rydex Variable Trust:
In our opinion, the accompanying statements of assets and liabilities, including the schedules of investments, and the related
statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the
financial position of the Banking Fund, Basic Materials Fund, Biotechnology Fund, Consumer Products Fund, Electronics Fund,
Energy Fund, Energy Services Fund, Financial Services Fund, Health Care Fund, Internet Fund, Leisure Fund, Precious Metals
Fund, Retailing Fund, Technology Fund, Telecommunications Fund, Transportation Fund and Utilities Fund (seventeen series of
Rydex Variable Trust, hereafter referred to as the “Funds”) at December 31, 2007, the results of each of their operations for the
year then ended, the changes in each of their net assets for each of the two years in the period then ended and the financial
highlights for each of the five years in the period then ended, in conformity with accounting principles generally accepted in the
United States of America. These financial statements and financial highlights (hereafter referred to as “financial statements”) are
the responsibility of the Funds’ management; our responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these financial statements in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable
assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and
significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our
audits, which included confirmation of securities at December 31, 2007 by correspondence with the custodian and brokers,
provide a reasonable basis for our opinion.
PricewaterhouseCoopers LLP
Baltimore, Maryland
February 25, 2008
THE RYDEX VARIABLE TRUST ANNUAL REPORT
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71
Tax Information
This information is being provided as required by the Internal Revenue Code. Amounts shown may differ from those elsewhere in
the report because of differences in tax and financial reporting practice.
Of the ordinary income distributions paid during the year, the following Funds had the corresponding percentages qualify for the
dividends received deduction for corporations:
Fund
% Qualifying
Banking Fund
75.87%
Basic Materials Fund
19.40%
Consumer Products Fund
28.51%
Energy Services Fund
20.18%
Financial Services Fund
22.28%
Leisure Fund
15.44%
Retailing Fund
12.78%
Telecommunications Fund
26.15%
Utilities Fund
40.53%
The Funds’ distributions to shareholders, as finally determined, included:
Basic
Consumer
Energy
Materials
Products
Energy
Services
Fund
Fund
Fund
Fund
From short-term capital gains:
$3,801,577
$1,659,145
$
218,328
$
124,501
From long-term capital gains,
subject to the 15% rate gains category:
2,503,205
1,008,343
9,198,139
4,863,788
Financial
Health
Services
Care
Leisure
Retailing
Fund
Fund
Fund
Fund
From short-term capital gains:
$1,013,912
$
669,151
$2,084,487
$
928,153
From long-term capital gains,
subject to the 15% rate gains category:
472,030
35,189
615,217
1,881,428
Return of Capital:
495,840
Transportation
Utilities
Fund
Fund
From short-term capital gains:
$
—
$3,051,759
From long-term capital gains,
subject to the 15% rate gains category:
4,179,577
3,463,506
Proxy Voting Information
A description of the policies and procedures that the Trust uses to determine how to vote proxies relating to securities held in the
Funds’ portfolios is available, without charge and upon request, by calling 1-800-820-0888. This information is also available from
the EDGAR database on the SEC’s website at http://www.sec.gov.
Information regarding how the Funds voted proxies relating to portfolio securities during the most recent 12-month period ended
June 30 is available without charge, upon request, by calling 1-800-820-0888. This information is also available from the EDGAR
database on the SEC’s website at http://www.sec.gov.
Quarterly Portfolio Schedules Information
The Trust files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form
N-Q, which is available on the SEC’s website at http://www.sec.gov. The Funds’ Forms N-Q may be reviewed and copied at the
SEC’s Public Reference Room in Washington, DC, and that information on the operation of the Public Reference Room may be
obtained by calling 1-800-SEC-0330. Copies of the portfolio holdings are also available to shareholders, without charge and upon
request, by calling 1-800-820-0888.
Rydex Investments Board Review and Approval of the Investment Advisory Agreement
The Investment Company Act of 1940 (the “1940 Act”) requires that the initial approval of, as well as the continuation of, a fund’s
investment advisory agreement be specifically approved by the vote of a majority of the trustees who are not parties to the
investment advisory agreement or “interested persons” of any party (the “Independent Trustees”), cast in person at a meeting
called for the purpose of voting on such approval. In connection with such approvals, the fund’s trustees must request and
evaluate, and the investment adviser is required to furnish, such information as may be reasonably necessary to evaluate the terms
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THE RYDEX VARIABLE TRUST ANNUAL REPORT
OTHER INFORMATION (Unaudited) (continued)
of the advisory agreement. In addition, the Securities and Exchange Commission (the “SEC”) takes the position that, as part of
their fiduciary duties with respect to fund fees, fund boards are required to evaluate the material factors applicable to a decision
to approve an investment advisory agreement.
Consistent with these responsibilities, the Rydex Variable Trust Board of Trustees (the “Board”) generally calls and holds one
meeting each year that is dedicated to considering whether to renew the investment advisory agreements between Rydex
Variable Trust (the “Trust”) and PADCO Advisors II, Inc., which does business under the name Rydex Investments (“Rydex
Investments”), (the “Current Agreements”) with respect to existing funds in the Trust, including the funds discussed in this Annual
Report (each a “Fund” and collectively, the “Funds”), and to reviewing certain other agreements pursuant to which Rydex
Investments provides investment advisory services to certain other registered investment companies. In preparation for the
meeting, the Board requests and reviews a wide variety of materials provided by Rydex Investments, including information about
Rydex Investments’ affiliates, personnel and operations. The Board also receives data provided by third parties. This information is
in addition to the detailed information about the Funds that the Board reviews during the course of each year, including
information that relates to Fund operations and performance. The Board also receives a memorandum from Fund counsel
regarding the responsibilities of the Board for the approval of investment advisory agreements. In addition, the Independent
Trustees receive advice from independent counsel to the Independent Trustees, meet in executive session outside the presence of
fund management, and participate in question and answer sessions with representatives of Rydex Investments.
At a Special Meeting of the Board held on July 10, 2007, and subsequently, during the Board’s regular quarterly meeting held on
August 27 and 28, 2007 (the “Annual Renewal Meeting” and together with the July 10, 2007 Meeting, the “Meetings”), the
Board considered and voted in favor of new investment advisory agreements for Rydex Variable Trust (each, a “New Agreement”
and collectively, the “New Agreements”), which, subject to their approval by each Fund’s shareholders, will enable Rydex
Investments to continue to serve as investment adviser to each Fund after the completion of the acquisition of Rydex Investments’
parent, Rydex Holdings, Inc. (the “Transaction”). During the Annual Renewal Meeting, the Board also considered and approved
the selection of Rydex Investments and the continuance of the Current Agreements for an additional one-year period or until the
closing of the Transaction, based on its review of qualitative and quantitative information provided by Rydex Investments.
Board Considerations in Approving the New Investment Advisory Agreements and the Continuation of the Current
Investment Advisory Agreements
In preparation for the Annual Renewal Meeting, the Board requested and received written materials from Rydex Investments
about: (a) the quality of Rydex Investments’ investment management and other services; (b) Rydex Investments’ investment
management personnel; (c) Rydex Investments’ operations and financial condition; (d) Rydex Investments’ brokerage practices
(including any soft dollar arrangements) and investment strategies; (e) the level of the advisory fees that Rydex Investments
charges the Funds compared with the fees it charges to comparable mutual funds or accounts; (f) each Fund’s overall fees and
operating expenses compared with similar mutual funds; (g) the level of Rydex Investments’ profitability from its Fund-related
operations; (h) Rydex Investments’ compliance systems; (i) Rydex Investments’ policies on and compliance procedures for personal
securities transactions; (j) Rydex Investments’ reputation, expertise and resources in domestic financial markets; and (k) Fund
performance compared with similar mutual funds. Certain of these considerations are discussed in more detail below.
In its deliberations at the Annual Renewal Meeting, the Board did not identify any single piece of information that was all-
important or controlling. Based on the Board’s deliberations and its evaluation of the information referenced above and described
in more detail below, the Board, including all of the Independent Trustees, unanimously: (a) concluded that terms of the Current
Agreements and New Agreements were fair and reasonable; (b) concluded that Rydex Investments’ fees were reasonable in light
of the services that Rydex Investments provides to the Funds; (c) agreed to renew each Current Agreement for an additional one-
year term; and (d) agreed to approve the New Agreements for an initial term of two years. In approving the New Agreements and
the continuation of the Current Agreements at the Annual Renewal Meeting, the Board, including the Independent Trustees,
advised by independent counsel, considered the factors discussed below.
Nature, Extent, and Quality of Services Provided by Rydex Investments
At the Annual Renewal Meeting, the Board reviewed the scope of services to be provided by Rydex Investments
under each Current Agreement and noted that there would be no significant differences between the scope of
services required to be provided by Rydex Investments for the past year and the scope of services required to be
provided by Rydex Investments for the upcoming year. In reviewing the scope of services provided to the Funds by
Rydex Investments, the Board reviewed and discussed Rydex Investments’ investment experience, noting that Rydex
Investments and its affiliates have committed significant resources over time to the support of the Funds. The Board
also considered Rydex Investments’ compliance program and its compliance record with respect to the Funds. In that
regard, the Board noted that Rydex Investments provides information regarding the portfolio management and
compliance to the Board on a periodic basis in connection with regularly scheduled meetings of the Board. In addition
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73
OTHER INFORMATION (Unaudited) (continued)
to the above considerations, the Board reviewed and considered Rydex Investments’ investment processes and
strategies, and matters related to Rydex Investments’ portfolio transaction policies and procedures. With respect to
those Funds that invest in unaffiliated ETFs in reliance on exemptive orders pursuant to Section 12(d)(1), the Board
considered and determined that the advisory fees charged under the Current Agreements are based on services
provided that will be in addition to, rather than duplicative of, the services provides under the investment advisory
agreement of any ETF in which the Funds are invested. In particular, the Board recognized that Rydex Investments
must manage a Fund’s investment in an unaffiliated ETF in the same manner as other investments in the Fund’s
portfolio in order to ensure that the Fund achieves its investment objective. Thus, a Fund’s investment in an unaffiliated
ETF does not alleviate Rydex Investments’ duties and responsibilities as investment adviser to the Fund. The Board
also noted the substantial volume of portfolio trades and shareholder transaction activity, in general, processed by
Rydex Investments due to the unlimited exchange policy of the majority of the Funds. The Board further noted that
the Funds have consistently met their investment objectives since their respective inception dates. Based on this
review, the Board concluded that the nature, extent, and quality of services to be provided by Rydex Investments to
the Funds under the Current Agreements were appropriate and continued to support the Board’s original selection of
Rydex Investments as investment adviser to the Funds.
Fund Expenses and Performance of the Funds and Rydex Investments
At the Annual Renewal Meeting, the Board reviewed statistical information prepared by Rydex Investments regarding
the expense ratio components, including actual advisory fees, waivers/reimbursements, and gross and net total
expenses of each Fund in comparison with the same information for other funds registered under the 1940 Act
determined by Rydex Investments to comprise each Fund’s applicable peer group. Because few funds seek to provide
unlimited exchange privileges similar to those of the majority of the Funds, each Fund’s applicable peer group is
generally limited to the funds of two unaffiliated mutual fund families. In addition, the Board reviewed statistical
information prepared by Rydex Investments relating to the performance of each Fund, as well as each Fund’s ability to
successfully track its benchmark over time, and a comparison of each Fund’s performance to funds with similar
investment objectives for the same periods and to appropriate indices/benchmarks, in light of total return, yield and
market trends. The Board further noted that despite the unique nature of the Funds, the peer fund information
presented to the Board was meaningful because the peer funds’ investment objectives and strategies were closely
aligned with those of the Funds. The Board noted that most of the Funds either outperformed their peer funds or
performed in line with them over relevant periods. The Board also noted that the investment advisory fees for the Funds
were equivalent to those of their peers and that the overall expenses for the Funds were only slightly higher than the
total expenses of the peer funds, due in part to differing share classes and distribution fees. Based on this review, the
Board concluded that the investment advisory fees and expense levels and the historical performance of the Funds, as
managed by Rydex Investments, as compared to the investment advisory fees and expense levels and performance of
the peer funds, were satisfactory for the purposes of approving the continuance of the Current Agreements.
Costs of Services Provided to the Funds and Profits Realized by Rydex Investments and its Affiliates
At the Annual Renewal Meeting, the Board reviewed information about the profitability of the Funds to Rydex
Investments based on the advisory fees payable under the Current Agreements for the last calendar year. Rydex
Investments also presented the Board with material discussing its methodology for determining the level of advisory
fees assessable to the Funds. The Board analyzed the Funds’ expenses, including the investment advisory fees paid to
Rydex Investments. The Board also reviewed information regarding direct revenue received by Rydex Investments and
ancillary revenue received by Rydex Investments and/or its affiliates in connection with the services provided to the
Funds by Rydex Investments (as discussed below) and/or its affiliates. The Board also discussed Rydex Investments’
profit margin as reflected in Rydex Investments’ profitability analysis and reviewed information regarding economies of
scale (as discussed below). Based on this review, the Board concluded that the profits to be realized by Rydex
Investments and its affiliates under the Current Agreements and from other relationships between the Funds and
Rydex Investments and/or its affiliates, if any, were within the range the Board considered reasonable and appropriate.
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THE RYDEX VARIABLE TRUST ANNUAL REPORT
OTHER INFORMATION (Unaudited) (continued)
Economies of Scale
In connection with its review of the Funds’ profitability analysis at the Annual Renewal Meeting, the Board reviewed
information regarding economies of scale or other efficiencies that may result from increases in the Funds’ asset levels.
The Board noted that neither the Current Agreements nor the New Agreements for the Funds provided for any
breakpoints in the investment advisory fees as a result of increases in the asset levels of the Funds. The Board also
noted that though Rydex Investments’ assets under management were significant, the amount is spread among more
than 100 Funds. Further limiting the realization of economies of scale, is the ability of shareholders of many of the
Funds to engage in unlimited trading. The Board also reviewed and considered Rydex Investments’ historic profitability
as investment adviser to the Funds and determined that reductions in advisory fees or additions of breakpoints were
not warranted at this juncture. Based on this review, the Board, recognizing its responsibility to consider this issue at
least annually, determined that the economies of scale, if any, were de minimis.
Other Benefits to Rydex Investments and/or its Affiliates
At the Annual Renewal Meeting, in addition to evaluating the services provided by Rydex Investments, the Board also
considered the nature, extent, quality and cost of the administrative, distribution, and shareholder services performed
by Rydex Investments’ affiliates under separate agreements. The Board noted that Rydex Investments reports its use
of soft dollars to the Board on a quarterly basis, as well as any portfolio transactions on behalf of the Funds placed
through an affiliate of the Funds or Rydex Investments pursuant to Rule 17e-1 under the 1940 Act. Based on its review,
the Board concluded that the nature and quality of the services provided by Rydex Investments’ affiliates to the Trust
will benefit the Funds’ shareholders, and that any ancillary benefits would not be disadvantageous to the Funds’
shareholders, particularly in light of the Board’s view that the Funds’ shareholders benefit from investing in a fund that
is part of a large family of funds offering a variety of investment strategies and services.
Additional Considerations in Approving the New Agreements
On June 18, 2007, the Trustees met with representatives of Security Benefit and the management of Rydex Investments for the
purpose of learning more about Security Benefit and the proposed Transaction. Immediately following the announcement that
Rydex and Security Benefit entered into a purchase and sale agreement, the Trustees requested that Rydex Investments provide
the Board with additional information pertaining to the effect of the proposed change of control on Rydex Investments’ personnel
and operations and the terms of the New Agreements. Rydex Investments presented its response to the Board’s request for
additional information prior to and at a Special Meeting of the Boards of Trustees held on July 10, 2007. Rydex Investments
provided the Board with oral and written information to help the Board evaluate the impact of the change of control on Rydex
Investments, Rydex Investments’ ability to continue to provide investment advisory services to the Funds under the New
Agreements, and informed the Board that the contractual rate of Rydex Investments’ fees will not change under the New
Agreements. Rydex Investments also affirmed that the terms of the New Agreements were the same in all material respects to
those of the Current Agreements.
The Trustees deliberated on the approval of each New Agreement in light of the information provided. The Board determined
that the terms of the New Agreements set forth materially similar rights, duties and obligations on Rydex Investments with regard
to the services to be provided to the Trust, and provided at least the same level of protection to the Trust, the Funds and the
Funds’ shareholders as the Current Agreements. The Board also noted that Rydex Investments’ fees for their services to the Funds
under each New Agreement would be the same as their fees under the corresponding Current Agreement. The Board further
noted that all considerations, determinations and findings related to the approval of the continuation of the Current Agreements,
as discussed above, were equally relevant to their approval of the New Agreements along with the additional factors relevant to
the proposed change in control discussed below.
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75
OTHER INFORMATION
(Unaudited)
(concluded)
Nature, Extent and Quality of Services Provided by Rydex Investments; Performance of the Funds
The Board noted that Rydex Investments was taking appropriate steps to maintain its associates through the closing
of the Transaction by, in part, keeping them informed of the potential Transaction and awarding key personnel with
incentives to emphasize their value to Rydex Investments. As a result of these efforts, it is anticipated that the key
investment and management personnel servicing the Funds will remain with Rydex Investments following the
Transaction and that the investment and management services provided to the Funds by Rydex Investments will not
change. The Board also considered Rydex Investments’ and Security Benefit’s representations to the Board that
Security Benefit intends for Rydex Investments to continue to operate following the closing of the Transaction in much
the same manner as it operates today, and that the Transaction should have no impact on the day-to-day operations
of Rydex Investments, or the persons responsible for the management of the Funds. Based on this review, the Board
concluded that the range and quality of services provided by Rydex Investments to the Funds were appropriate and
were expected to continue under the New Agreements, and that there was no reason to expect the consummation
of the Transaction to have any adverse effect on the services provided by Rydex Investments and its affiliates or the
future performance of the Funds.
Fund Expenses
The Board also considered the fact that the fees payable to Rydex Investments and other expenses of the Funds
would be the same under the New Agreements as they are under the Current Agreements, and on this basis, the
Board concluded that these fees and expenses continued to be satisfactory for the purposes of approving the New
Agreements. More detailed information regarding the fees under the New Agreements is contained in the Proxy
Statement and accompanying materials dated September 6, 2007.
Costs of Services Provided to the Funds and Profits Realized by Rydex Investments and its Affiliates
Because Rydex Investments’ fees under the New Agreements are the same as those assessed under the Current
Agreements, the Board concluded that the profits to be realized by Rydex Investments and its affiliates under the New
Agreements and from other relationships between the Funds and Rydex Investments and/or its affiliates, if any, should
remain within the range the Board considered reasonable and appropriate. The Board further noted that, although it is
not possible to predict how the Transaction may affect Rydex Investments’ future profitability from its relationship with
the Funds, this matter would be given further consideration on an annual basis going forward.
Economies of Scale
The Board further considered the potential economies of scale that may result from the Transaction, and concluded
that the extent of such economies of scale could not be predicted in advance of the closing of the Transaction.
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THE RYDEX VARIABLE TRUST ANNUAL REPORT
INFORMATION ON BOARD OF TRUSTEES AND OFFICERS (Unaudited)
A Board of Trustees oversees all Rydex Investments, in which its members have no stated term of service, and continue to serve
after election until resignation. The Statement of Additional Information includes further information about Fund Trustees and
Officers, and can be obtained without charge by calling 1-800-820-0888.
All Trustees and Officers may be reached c/o Rydex Investments, 9601 Blackwell Rd., Suite 500, Rockville, MD 20850.
TRUSTEES AND OFFICERS
Length of Service
Name, Position and
As Trustee
Number of
Year of Birth
(Year Began)
Funds Overseen
Carl G. Verboncoeur*
Rydex Series Funds – 2004
147
Trustee, President (1952)
Rydex Variable Trust – 2004
Rydex Dynamic Funds – 2004
Rydex ETF Trust – 2004
Principal Occupations During Past Five Years: Chief Executive Officer and Treasurer of Rydex Specialized Products, LLC (2005 to
present); Chief Executive Officer of Rydex Investments and Rydex Distributors, Inc. (2003 to present); Executive Vice President of
Rydex Investments (2000 to 2003)
Michael P. Byrum*
Rydex Series Funds – 2005
147
Trustee, Vice President
Rydex Variable Trust – 2005
(1970)
Rydex Dynamic Funds – 2005
Rydex ETF Trust – 2005
Principal Occupations During Past Five Years: Secretary of Rydex Specialized Products, LLC (2005 to present); Vice President of
Rydex Series Funds (1997 to present); Vice President of Rydex Variable Trust (1998 to present); Vice President of Rydex Dynamic
Funds (1999 to present); Vice President of Rydex ETF Trust (2002 to present); President and Trustee of Rydex Capital Partners
SPhinX Fund (2003 to 2006); President of Rydex Investments (2004 to present); Chief Operating Officer of Rydex Investments and
Rydex Distributors, Inc. (2003 to 2004)
INDEPENDENT TRUSTEES
Length of Service
Name, Position and
As Trustee
Number of
Year of Birth
(Year Began)
Funds Overseen
John O. Demaret
Rydex Series Funds – 1997
139
Trustee, Chairman of the
Rydex Variable Trust – 1998
Board (1940)
Rydex Dynamic Funds – 1999
Rydex ETF Trust – 2003
Principal Occupations During Past Five Years: Retired
Corey A. Colehour
Rydex Series Funds – 1993
139
Trustee (1945)
Rydex Variable Trust – 1998
Rydex Dynamic Funds – 1999
Rydex ETF Trust – 2003
Principal Occupations During Past Five Years: Retired (2006 to present); Owner and President of Schield Management Company,
registered investment adviser (2005 to 2006); Senior Vice President of Marketing and Co-Owner of Schield Management
Company, registered investment adviser (1985 to 2005)
J. Kenneth Dalton
Rydex Series Funds – 1995
139
Trustee (1941)
Rydex Variable Trust – 1998
Rydex Dynamic Funds – 1999
Rydex ETF Trust – 2003
Principal Occupations During Past Five Years: Mortgage Banking Consultant and Investor, The Dalton Group
Werner E. Keller
Rydex Series Funds - 2005
139
Trustee (1940)
Rydex Variable Trust - 2005
Rydex Dynamic Funds - 2005
Rydex ETF Trust - 2005
Principal Occupations During Past Five Years: Retired (2001 to present); Chairman, Centurion Capital Management (1991 to 2001)
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INFORMATION ON BOARD OF TRUSTEES AND OFFICERS (Unaudited) (concluded)
Length of Service
Name, Position and
As Trustee
Number of
Year of Birth
(Year Began)
Funds Overseen
Thomas F. Lydon, Jr.
Rydex Series Funds – 2005
139
Trustee (1960)
Rydex Variable Trust - 2005
Rydex Dynamic Funds - 2005
Rydex ETF Trust - 2005
Principal Occupations During Past Five Years: President, Global Trends Investments
Patrick T. McCarville
Rydex Series Funds – 1997
139
Trustee (1942)
Rydex Variable Trust – 1998
Rydex Dynamic Funds – 1999
Rydex ETF Trust – 2003
Principal Occupations During Past Five Years: Founder and Chief Executive Officer, Par Industries, Inc.
Roger Somers
Rydex Series Funds – 1993
139
Trustee (1944)
Rydex Variable Trust – 1998
Rydex Dynamic Funds – 1999
Rydex ETF Trust – 2003
Principal Occupations During Past Five Years: Owner, Arrow Limousine
EXECUTIVE OFFICERS
Name, Position and
Principal Occupations
Year of Birth
During Past Five Years
Nick Bonos*
Chief Financial Officer of Rydex Specialized Products, LLC (2005 to
Vice President and Treasurer (1963)
present); Vice President and Treasurer of Rydex Series Funds,
Rydex Variable Trust, Rydex Dynamic Funds, and Rydex ETF Trust
(2003 to present); Senior Vice President of Rydex Investments
(2003 to present); Vice President and Treasurer of Rydex Capital
Partners SPhinX Fund (2003 to 2006); Vice President of
Accounting of Rydex Investments (2000 to 2003)
Joanna M. Haigney*
Chief Compliance Officer of Rydex Series Funds, Rydex
Variable
Chief Compliance Officer and Secretary (1966)
Trust, and Rydex Dynamic Funds (2004 to present); Secretary of
Rydex Series Funds, Rydex Variable Trust, and Rydex Dynamic
Funds (2000 to present); Secretary of Rydex ETF Trust (2002 to
present); Vice President of Compliance of Rydex Investments
(2000 to present); Secretary of Rydex Capital Partners SPhinX
Fund (2003 to 2006)
Joseph Arruda*
Assistant Treasurer of Rydex Series Funds, Rydex Variable Trust,
Assistant Treasurer (1966)
Rydex Dynamic Funds, Rydex ETF Trust (2006 to present); Vice
President of Rydex Investments (2004 to present); Director of
Accounting of Rydex Investments (2003 to 2004); Vice President of
Mutual Funds, State Street Bank & Trust (2000 to 2003)
Paula Billos*
Controller of Rydex Series Funds, Rydex Variable Trust, Rydex
Controller (1974)
Dynamic Funds, Rydex ETF Trust (2006 to present); Director of
Fund Administration of Rydex Investments (2001 to present)
* Officers of the Fund are deemed to be “interested persons” of the Trust, within the meaning of Section 2(a)(19) of the 1940 Act, inasmuch as
this person is affiliated with Rydex Investments.
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9601 Blackwell Road, Suite 500
Rockville, MD 20850
www.rydexinvestments.com
800.820.0888
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