UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number 811- 07584
Rydex Series Funds
(Exact name of registrant as specified in charter)
(Exact name of registrant as specified in charter)
805 King Farm Boulevard, Suite 600
Rockville, Maryland 20850
(Address of principal executive offices) (Zip code)
Rockville, Maryland 20850
(Address of principal executive offices) (Zip code)
Amy J. Lee
Rydex Series Funds
805 King Farm Boulevard, Suite 600
Rockville, Maryland 20850
(Name and address of agent for service)
805 King Farm Boulevard, Suite 600
Rockville, Maryland 20850
(Name and address of agent for service)
Registrant's telephone number, including area code: 1-301-296-5100
Date of fiscal year end: March 31
Date of reporting period: March 31, 2015
Form N-CSR is to be used by management investment companies to file reports with the Commission not later than 10 days after the transmission to stockholders of any report that is required to be transmitted to stockholders under Rule 30e-1 under the Investment Company Act of 1940 (17 CFR 270.30e-1). The Commission may use the information provided on Form N-CSR in its regulatory, disclosure review, inspection, and policymaking roles.
A registrant is required to disclose the information specified by Form N-CSR, and the Commission will make this information public. A registrant is not required to respond to the collection of information contained in Form N-CSR unless the Form displays a currently valid Office of Management and Budget ("OMB") control number. Please direct comments concerning the accuracy of the information collection burden estimate and any suggestions for reducing the burden to Secretary, Securities and Exchange Commission, 450 Fifth Street, NW, Washington, DC 20549-0609. The OMB has reviewed this collection of information under the clearance requirements of 44 U.S.C. § 3507.
Item 1. Reports to Stockholders.
The registrant’s annual report transmitted to shareholders pursuant to Rule 30e-1 under the Investment Company Act of 1940, as amended (the “Investment Company Act”), is as follows:
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3.31.2015
Rydex Funds Annual Report
Sector Funds | ||
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 | ||
Real Estate Fund | ||
Retailing Fund | ||
Technology Fund | ||
Telecommunications Fund | ||
Transportation Fund | ||
Utilities Fund |
RSECF-ANN-2-0315x0316 | guggenheiminvestments.com |
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TABLE OF CONTENTS
DEAR SHAREHOLDER | 2 |
ECONOMIC AND MARKET OVERVIEW | 3 |
ABOUT SHAREHOLDERS’ FUND EXPENSES | 6 |
BANKING FUND | 11 |
BASIC MATERIALS FUND | 19 |
BIOTECHNOLOGY FUND | 27 |
CONSUMER PRODUCTS FUND | 35 |
ELECTRONICS FUND | 44 |
ENERGY FUND | 52 |
ENERGY SERVICES FUND | 60 |
FINANCIAL SERVICES FUND | 67 |
HEALTH CARE FUND | 77 |
INTERNET FUND | 87 |
LEISURE FUND | 95 |
PRECIOUS METALS FUND | 105 |
REAL ESTATE FUND | 113 |
RETAILING FUND | 122 |
TECHNOLOGY FUND | 131 |
TELECOMMUNICATIONS FUND | 141 |
TRANSPORTATION FUND | 149 |
UTILITIES FUND | 157 |
NOTES TO FINANCIAL STATEMENTS | 165 |
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM | 178 |
OTHER INFORMATION | 179 |
INFORMATION ON BOARD OF TRUSTEES AND OFFICERS | 181 |
GUGGENHEIM INVESTMENTS PRIVACY POLICIES | 184 |
THE RYDEX FUNDS ANNUAL REPORT | 1 |
March 31, 2015
Dear Shareholder:
Security Investors, LLC (the “Investment Adviser”) is pleased to present the annual shareholder report for 18 of our sector funds (the “Funds”) for the annual period ended March 31, 2015.
The Investment Adviser is part of Guggenheim Investments, which represents the investment management businesses of Guggenheim Partners, LLC (“Guggenheim”), a global, diversified financial services firm.
Guggenheim Funds Distributors, LLC is the distributor of the Funds. Guggenheim Funds Distributors, LLC is affiliated with Guggenheim and the Investment Adviser.
We encourage you to read the Economic and Market Overview section of the report, which follows this letter, and then the Performance Report and Fund Profile for each Fund.
We are committed to providing innovative investment solutions and appreciate the trust you place in us.
Sincerely,
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Donald C. Cacciapaglia
President
April 30, 2015
Read a prospectus and summary prospectus (if available) carefully before investing. It contains the investment objectives, risks, charges, expenses, and other information, which should be considered carefully before investing. Obtain a prospectus and summary prospectus (if available) at guggenheiminvestments.com or call 800.820.0888.
Sector funds may not be suitable for all investors. Investing in sector funds is more volatile than investing in broadly diversified funds, as there is a greater risk due to the concentration of the fund’s holdings in issuers of the same or similar offerings. These funds are considered non-diversified and can invest a greater portion of their assets in securities of individual issuers than a diversified fund. As a result, changes in the market value of a single security could cause greater fluctuations in the value of fund shares than would occur in a more diversified fund.
2 | THE RYDEX FUNDS ANNUAL REPORT |
ECONOMIC AND MARKET OVERVIEW (Unaudited) | March 31, 2015 |
The U.S. continued to enjoy a self-sustaining economic expansion for the 12-month period ended March 31, 2015, although winter weather was likely to distort first-quarter economic data. In addition, U.S. companies scaled back hiring in the last month of the period, adding to evidence that the domestic economy has lost some momentum since the turn of the year. The March increase in payrolls was the smallest since December 2013 and broke a 12-month run of gains above 200,000.
Despite this short-term dislocation, the economy remains on track. Indeed, many other labor market indicators, such as initial jobless claims and the job openings rate, suggest that the U.S. labor market remains quite strong, supporting the conclusion that March’s payroll report was just a temporary blip, similar to the one witnessed last winter. As soon as temporary seasonal factors have dissipated, economic data is likely to bounce back. The labor market has improved over the past year, as subdued mortgage rates and tight housing inventory continue to point to fairly stable appreciation in the housing market, which is key to the ongoing recovery. Consumers are also being helped by lower fuel prices, which are acting as a tax cut for U.S. consumers, freeing up discretionary spending in other areas and acting as a support for consumption.
In Europe, economic data has been surprisingly good and should continue along that path on the back of the European Central Bank’s program of quantitative easing and depreciation of the euro. Japan’s economy remains weak and, without more structural reform, continued monetary accommodation could lead to stagflation. China’s policymakers appear likely to continue the supply of credit and do whatever else is necessary to maintain growth there at an acceptable pace for the near term.
Given weakness overseas and the effect of a stronger U.S. dollar on international earnings, some stocks could face a more challenging environment in the near term, but our research shows that equity markets tend to perform quite well in the periods leading up to a U.S. Federal Reserve (the “Fed”) rate increase. The yield on the 10-year Treasury note declined in January by more than 50 basis points before rebounding in February, echoing the pattern since 2009—Treasury yields decline and a sell-off ensues, driving rates higher. Then conditions stabilize, and rates test their previous lows. Liquidity from foreign central banks and comparatively attractive U.S. yields continue to push global investors to U.S. Treasuries, which should hold down U.S. interest rates in the near term.
Against this backdrop, the U.S. central bank feels pressure to raise its key rate above zero, but insists the decision will be data-dependent and not occur prematurely. With a secular inflation increase unlikely in the near term, slack in the economy, and disinflation being imported from abroad, the Fed may not hike rates until later in the year. The Fed for now appears to be focused on wage growth, which is key for sustaining the expansion but also an indicator of inflationary pressure. The lack of sustained wage growth has been a topic that has confounded the Fed lately. Given the strengthening employment numbers and the apparent reduction in labor market slack, wages should start to increase more steadily across the board. This is one of the most important data points at the moment for the Fed.
The underlying U.S. economy remains strong and investors should avoid being panicked by seasonal setbacks. Indeed, considering the strength of the economy and the wave of liquidity emanating from various central banks around the world, the general investment environment should remain attractive.
For the 12 months ended March 31, 2015, the Standard & Poor’s 500® (“S&P 500”) Index* returned 12.73%. The Morgan Stanley Capital International (“MSCI”) Europe-Australasia-Far East (“EAFE”) Index* returned -0.92%. The return of the MSCI Emerging Markets Index* was 0.44%.
In the bond market, the Barclays U.S. Aggregate Bond Index* posted a 5.72% return for the period, while the Barclays U.S. Corporate High Yield Index* returned 2.00%. The return of the Bank of America Merrill Lynch 3-Month U.S. Treasury Bill Index* was 0.03% for the 12-month period.
The opinions and forecasts expressed may not actually come to pass. This information is subject to change at any time, based on market and other conditions, and should not be construed as a recommendation of any specific security or strategy.
THE RYDEX FUNDS ANNUAL REPORT | 3 |
ECONOMIC AND MARKET OVERVIEW (Unaudited)(continued) | March 31, 2015 |
*Index Definitions:
The following indices are referenced throughout this report. Indices are unmanaged and not available for direct investment. Index performance does not reflect transaction costs, fees, or expenses.
Barclays U.S. Aggregate Bond Index is a broad-based benchmark that measures the investment grade, U.S. dollar-denominated, fixed-rate taxable bond market, including U.S. Treasuries, government-related and corporate securities, MBS (agency fixed-rate and hybrid ARM pass-throughs), ABS, and CMBS.
Barclays U.S. Corporate High Yield Index measures the market of U.S. dollar-denominated, non-investment grade, fixed-rate, taxable corporate bonds. Securities are classified as high yield if the middle rating of Moody’s, Fitch, and S&P is Ba1/BB+/BB+ or below.
Bank of America (“BofA”) Merrill Lynch 3-Month U.S. Treasury Bill Index is an unmanaged market index of U.S. Treasury securities maturing in 90 days that assumes reinvestment of all income.
MSCI EAFE Index is a free float-adjusted market capitalization index that is designed to measure the equity market performance of developed markets, excluding the U.S. & Canada.
MSCI Emerging Markets Index is a free float-adjusted market capitalization weighted index that is designed to measure equity market performance in the global emerging markets.
MSCI U.S. REIT Index is a free-float market capitalization weighted index that is comprised of equity real estate investment trust (“REIT”) securities that belong to the MSCI U.S. Investable Market 2500 Index. The MSCI U.S. REIT Index includes only REIT securities that are of reasonable size in terms of full and free float-adjusted market capitalization to ensure that the performance of the equity REIT universe can be captured and replicated in actual institutional and retail portfolios of different sizes.
S&P 500® Index is a capitalization-weighted index of 500 stocks designed to measure the performance of the broad economy, representing all major industries and is considered a representation of the U.S. stock market.
S&P 500® Consumer Discretionary Index is a sub-index of the S&P 500® Index, a capitalization-weighted index covering 500 industrial, utility, transportation, and financial companies of the U.S. markets (mostly NYSE Euronext issues). The Consumer Discretionary Index includes companies in the following industries: automobiles and components, consumer durables, apparel, hotels, restaurants, leisure, media, and retailing.
S&P 500® Consumer Staples Index is a sub-index of the S&P 500® Index, a capitalization-weighted index covering 500 industrial, utility, transportation, and financial companies of the U.S. markets (mostly NYSE Euronext issues). The Consumer Staples Index comprises companies whose businesses are less sensitive to economic cycles. It includes manufacturers and distributors of food, beverages, and tobacco and producers of non-durable household goods and personal products. It also includes food & drug retailing companies as well as hypermarkets and consumer super centers.
S&P 500® Energy Index is a sub-index of the S&P 500® Index, a capitalization-weighted index covering 500 industrial, utility, transportation, and financial companies of the U.S. markets (mostly NYSE Euronext issues). The Energy Index comprises companies whose businesses are dominated by either of the following activities: the construction or provision of oil rigs, drilling equipment, and other energy-related equipment and services, including seismic data collection; companies engaged in the exploration, production, marketing, refining, and/or transportation of oil and gas products, coal, and other consumable fuels.
S&P 500® Financials Index is a sub-index of the S&P 500® Index, a capitalization-weighted index covering 500 industrial, utility, transportation, and financial companies of the U.S. markets (mostly NYSE Euronext issues). The Financials Index contains companies involved in activities such as banking, mortgage finance, consumer finance, specialized finance, investment banking and brokerage, asset management and custody, corporate lending, insurance, financial investment, and real estate, including REITs.
S&P 500® Health Care Index is a sub-index of the S&P 500® Index, a capitalization-weighted index covering 500 industrial, utility, transportation, and financial companies of the U.S. markets (mostly NYSE Euronext issues). The Health Care Index encompasses two main industry groups. The first includes companies which manufacture health care equipment and supplies or provide health care-related services, including distributors of health care products, providers of basic health-care services, and owners and operators of health care facilities and organizations. The first group also includes companies operating in the health care technology industry. The second group includes companies primarily involved in the research, development, production, and marketing of pharmaceuticals, biotechnology, and life sciences products.
S&P 500® Industrials Index is a sub-index of the S&P 500® Index, a capitalization-weighted index covering 500 industrial, utility, transportation, and financial companies of the U.S. markets (mostly NYSE Euronext issues). The Industrials Index includes companies whose businesses are dominated by one of the following activities: the manufacture and distribution of capital goods, including aerospace & defense, construction, engineering & building products, electrical equipment, and industrial machinery; the provision of commercial services and supplies, including printing, environmental, office, and security services; the provision of professional services, including employment and research & consulting services; or the provision of transportation services, including airlines, couriers, marine, road & rail, and transportation infrastructure.
S&P 500® Information Technology Index is a sub-index of the S&P 500® Index, a capitalization-weighted index covering 500 industrial, utility, transportation, and financial companies of the U.S. markets (mostly NYSE Euronext issues). The Information Technology Index covers the following general areas: technology software & services, including companies that primarily develop software in various fields such as the internet, applications, systems, databases management, and/or home entertainment, and companies that provide information technology consulting and services, as well as data processing and outsourced services; secondly, technology hardware & equipment, including manufacturers and distributors of communications equipment, computers & peripherals, electronic equipment, and related instruments; and thirdly, semiconductors & semiconductor equipment manufacturers.
S&P 500® Materials Index is a sub-index of the S&P 500® Index, a capitalization-weighted index covering 500 industrial, utility, transportation, and financial companies of the U.S. markets (mostly NYSE Euronext issues). The Materials Index encompasses a wide range of commodity-related manufacturing industries. Included in this sector are companies that manufacture chemicals, construction materials, glass, paper, forest products, and related packaging products, and metals, minerals, and mining companies, including producers of steel.
4 | THE RYDEX FUNDS ANNUAL REPORT |
ECONOMIC AND MARKET OVERVIEW (Unaudited)(concluded) | March 31, 2015 |
S&P 500® Telecommunication Services Index is a sub-index of the S&P 500® Index, a capitalization-weighted index covering 500 industrial, utility, transportation, and financial companies of the U.S. markets (mostly NYSE Euronext issues). The Telecommunications Services Index contains companies that provide communications services primarily through a fixed-line, cellular, wireless, high bandwidth, and/or fiber optic cable network.
S&P 500® Utilities Index is a sub-index of the S&P 500® Index, a capitalization-weighted index covering 500 industrial, utility, transportation, and financial companies of the U.S. markets (mostly NYSE Euronext issues). The Utilities Index encompasses those companies considered electric, gas or water utilities, or companies that operate as independent producers and/or distributors of power.
THE RYDEX FUNDS ANNUAL REPORT | 5 |
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; 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 September 30, 2014 and ending March 31, 2015.
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 illustrated 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.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads) on purchase payments, and contingent deferred sales charges (“CDSC”) on redemptions, if any. Therefore, the second table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
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.
6 | THE RYDEX FUNDS ANNUAL REPORT |
ABOUT SHAREHOLDERS’ FUND EXPENSES (Unaudited)(continued)
Expense Ratio1 | Fund Return | Beginning Account Value September 30, 2014 | Ending Account Value March 31, 2015 | Expenses Paid During Period2 | |
Table 1. Based on actual Fund return3 | |||||
Banking Fund | |||||
Investor Class | 1.33% | 0.71% | $1,000.00 | $1,007.10 | $6.66 |
Advisor Class | 1.84% | 0.47% | 1,000.00 | 1,004.70 | 9.20 |
A-Class | 1.59% | 0.56% | 1,000.00 | 1,005.60 | 7.95 |
C-Class | 2.33% | 0.21% | 1,000.00 | 1,002.10 | 11.63 |
Basic Materials Fund | |||||
Investor Class | 1.33% | (3.04%) | 1,000.00 | 969.60 | 6.53 |
Advisor Class | 1.83% | (3.33%) | 1,000.00 | 966.70 | 8.97 |
A-Class | 1.58% | (3.18%) | 1,000.00 | 968.20 | 7.75 |
C-Class | 2.34% | (3.54%) | 1,000.00 | 964.60 | 11.46 |
Biotechnology Fund | |||||
Investor Class | 1.31% | 27.18% | 1,000.00 | 1,271.80 | 7.42 |
Advisor Class | 1.81% | 26.86% | 1,000.00 | 1,268.60 | 10.24 |
A-Class | 1.56% | 27.02% | 1,000.00 | 1,270.20 | 8.83 |
C-Class | 2.31% | 26.52% | 1,000.00 | 1,265.20 | 13.05 |
Consumer Products Fund | |||||
Investor Class | 1.32% | 8.20% | 1,000.00 | 1,082.00 | 6.85 |
Advisor Class | 1.83% | 7.93% | 1,000.00 | 1,079.30 | 9.49 |
A-Class | 1.57% | 8.04% | 1,000.00 | 1,080.40 | 8.14 |
C-Class | 2.32% | 7.64% | 1,000.00 | 1,076.40 | 12.01 |
Electronics Fund | |||||
Investor Class | 1.33% | 11.39% | 1,000.00 | 1,113.90 | 7.01 |
Advisor Class | 1.83% | 11.09% | 1,000.00 | 1,110.90 | 9.63 |
A-Class | 1.59% | 11.27% | 1,000.00 | 1,112.70 | 8.37 |
C-Class | 2.34% | 10.86% | 1,000.00 | 1,108.60 | 12.30 |
Energy Fund | |||||
Investor Class | 1.33% | (21.47%) | 1,000.00 | 785.30 | 5.92 |
Advisor Class | 1.83% | (21.61%) | 1,000.00 | 783.90 | 8.14 |
A-Class | 1.58% | (21.46%) | 1,000.00 | 785.40 | 7.03 |
C-Class | 2.33% | (21.87%) | 1,000.00 | 781.30 | 10.35 |
Energy Services Fund | |||||
Investor Class | 1.34% | (32.66%) | 1,000.00 | 673.40 | 5.59 |
Advisor Class | 1.83% | (32.89%) | 1,000.00 | 671.10 | 7.62 |
A-Class | 1.58% | (32.76%) | 1,000.00 | 672.40 | 6.59 |
C-Class | 2.34% | (33.01%) | 1,000.00 | 669.90 | 9.74 |
Financial Services Fund | |||||
Investor Class | 1.33% | 6.96% | 1,000.00 | 1,069.60 | 6.86 |
Advisor Class | 1.83% | 6.70% | 1,000.00 | 1,067.00 | 9.43 |
A-Class | 1.57% | 6.83% | 1,000.00 | 1,068.30 | 8.10 |
C-Class | 2.33% | 6.44% | 1,000.00 | 1,064.40 | 11.99 |
Health Care Fund | |||||
Investor Class | 1.33% | 20.04% | 1,000.00 | 1,200.40 | 7.30 |
Advisor Class | 1.83% | 19.74% | 1,000.00 | 1,197.40 | 10.03 |
A-Class | 1.58% | 19.88% | 1,000.00 | 1,198.80 | 8.66 |
C-Class | 2.33% | 19.47% | 1,000.00 | 1,194.70 | 12.75 |
THE RYDEX FUNDS ANNUAL REPORT | 7 |
ABOUT SHAREHOLDERS’ FUND EXPENSES (Unaudited)(continued)
Expense Ratio1 | Fund Return | Beginning Account Value September 30, 2014 | Ending Account Value March 31, 2015 | Expenses Paid During Period2 | |
Internet Fund | |||||
Investor Class | 1.33% | 2.59% | $1,000.00 | $1,025.90 | $6.72 |
Advisor Class | 1.83% | 2.32% | 1,000.00 | 1,023.20 | 9.23 |
A-Class | 1.59% | 2.46% | 1,000.00 | 1,024.60 | 8.03 |
C-Class | 2.33% | 2.07% | 1,000.00 | 1,020.70 | 11.74 |
Leisure Fund | |||||
Investor Class | 1.32% | 8.86% | 1,000.00 | 1,088.60 | 6.87 |
Advisor Class | 1.81% | 8.65% | 1,000.00 | 1,086.50 | 9.42 |
A-Class | 1.56% | 8.73% | 1,000.00 | 1,087.30 | 8.12 |
C-Class | 2.33% | 8.34% | 1,000.00 | 1,083.40 | 12.10 |
Precious Metals Fund | |||||
Investor Class | 1.23% | (19.68%) | 1,000.00 | 803.20 | 5.53 |
Advisor Class | 1.73% | (19.90%) | 1,000.00 | 801.00 | 7.77 |
A-Class | 1.48% | (19.85%) | 1,000.00 | 801.50 | 6.65 |
C-Class | 2.23% | (20.13%) | 1,000.00 | 798.70 | 10.00 |
Real Estate Fund | |||||
A-Class | 1.58% | 13.81% | 1,000.00 | 1,138.10 | 8.42 |
C-Class | 2.33% | 13.39% | 1,000.00 | 1,133.90 | 12.40 |
H-Class | 1.57% | 13.81% | 1,000.00 | 1,138.10 | 8.37 |
Retailing Fund | |||||
Investor Class | 1.32% | 18.39% | 1,000.00 | 1,183.90 | 7.19 |
Advisor Class | 1.81% | 18.16% | 1,000.00 | 1,181.60 | 9.84 |
A-Class | 1.56% | 18.28% | 1,000.00 | 1,182.80 | 8.49 |
C-Class | 2.33% | 17.77% | 1,000.00 | 1,177.70 | 12.65 |
Technology Fund | |||||
Investor Class | 1.33% | 5.44% | 1,000.00 | 1,054.40 | 6.81 |
Advisor Class | 1.84% | 5.17% | 1,000.00 | 1,051.70 | 9.41 |
A-Class | 1.58% | 5.33% | 1,000.00 | 1,053.30 | 8.09 |
C-Class | 2.33% | 4.92% | 1,000.00 | 1,049.20 | 11.90 |
Telecommunications Fund | |||||
Investor Class | 1.34% | 0.08% | 1,000.00 | 1,000.80 | 6.68 |
Advisor Class | 1.85% | (0.16%) | 1,000.00 | 998.40 | 9.22 |
A-Class | 1.58% | (0.04%) | 1,000.00 | 999.60 | 7.88 |
C-Class | 2.33% | (0.44%) | 1,000.00 | 995.60 | 11.59 |
Transportation Fund | |||||
Investor Class | 1.33% | 11.38% | 1,000.00 | 1,113.80 | 7.01 |
Advisor Class | 1.83% | 11.08% | 1,000.00 | 1,110.80 | 9.63 |
A-Class | 1.58% | 11.24% | 1,000.00 | 1,112.40 | 8.32 |
C-Class | 2.33% | 10.81% | 1,000.00 | 1,108.10 | 12.25 |
Utilities Fund | |||||
Investor Class | 1.33% | 7.51% | 1,000.00 | 1,075.10 | 6.88 |
Advisor Class | 1.83% | 7.25% | 1,000.00 | 1,072.50 | 9.46 |
A-Class | 1.58% | 7.34% | 1,000.00 | 1,073.40 | 8.17 |
C-Class | 2.33% | 6.98% | 1,000.00 | 1,069.80 | 12.02 |
8 | THE RYDEX FUNDS ANNUAL REPORT |
ABOUT SHAREHOLDERS’ FUND EXPENSES (Unaudited)(continued)
Expense Ratio1 | Fund Return | Beginning Account Value September 30, 2014 | Ending Account Value March 31, 2015 | Expenses Paid During Period2 | |
Table 2. Based on hypothetical 5% return (before expenses) | |||||
Banking Fund | |||||
Investor Class | 1.33% | 5.00% | $1,000.00 | $1,018.30 | $6.69 |
Advisor Class | 1.84% | 5.00% | 1,000.00 | 1,015.76 | 9.25 |
A-Class | 1.59% | 5.00% | 1,000.00 | 1,017.00 | 8.00 |
C-Class | 2.33% | 5.00% | 1,000.00 | 1,013.31 | 11.70 |
Basic Materials Fund | |||||
Investor Class | 1.33% | 5.00% | 1,000.00 | 1,018.30 | 6.69 |
Advisor Class | 1.83% | 5.00% | 1,000.00 | 1,015.81 | 9.20 |
A-Class | 1.58% | 5.00% | 1,000.00 | 1,017.05 | 7.95 |
C-Class | 2.34% | 5.00% | 1,000.00 | 1,013.26 | 11.75 |
Biotechnology Fund | |||||
Investor Class | 1.31% | 5.00% | 1,000.00 | 1,018.40 | 6.59 |
Advisor Class | 1.81% | 5.00% | 1,000.00 | 1,015.91 | 9.10 |
A-Class | 1.56% | 5.00% | 1,000.00 | 1,017.15 | 7.85 |
C-Class | 2.31% | 5.00% | 1,000.00 | 1,013.41 | 11.60 |
Consumer Products Fund | |||||
Investor Class | 1.32% | 5.00% | 1,000.00 | 1,018.35 | 6.64 |
Advisor Class | 1.83% | 5.00% | 1,000.00 | 1,015.81 | 9.20 |
A-Class | 1.57% | 5.00% | 1,000.00 | 1,017.10 | 7.90 |
C-Class | 2.32% | 5.00% | 1,000.00 | 1,013.36 | 11.65 |
Electronics Fund | |||||
Investor Class | 1.33% | 5.00% | 1,000.00 | 1,018.30 | 6.69 |
Advisor Class | 1.83% | 5.00% | 1,000.00 | 1,015.81 | 9.20 |
A-Class | 1.59% | 5.00% | 1,000.00 | 1,017.00 | 8.00 |
C-Class | 2.34% | 5.00% | 1,000.00 | 1,013.26 | 11.75 |
Energy Fund | |||||
Investor Class | 1.33% | 5.00% | 1,000.00 | 1,018.30 | 6.69 |
Advisor Class | 1.83% | 5.00% | 1,000.00 | 1,015.81 | 9.20 |
A-Class | 1.58% | 5.00% | 1,000.00 | 1,017.05 | 7.95 |
C-Class | 2.33% | 5.00% | 1,000.00 | 1,013.31 | 11.70 |
Energy Services Fund | |||||
Investor Class | 1.34% | 5.00% | 1,000.00 | 1,018.25 | 6.74 |
Advisor Class | 1.83% | 5.00% | 1,000.00 | 1,015.81 | 9.20 |
A-Class | 1.58% | 5.00% | 1,000.00 | 1,017.05 | 7.95 |
C-Class | 2.34% | 5.00% | 1,000.00 | 1,013.26 | 11.75 |
Financial Services Fund | |||||
Investor Class | 1.33% | 5.00% | 1,000.00 | 1,018.30 | 6.69 |
Advisor Class | 1.83% | 5.00% | 1,000.00 | 1,015.81 | 9.20 |
A-Class | 1.57% | 5.00% | 1,000.00 | 1,017.10 | 7.90 |
C-Class | 2.33% | 5.00% | 1,000.00 | 1,013.31 | 11.70 |
Health Care Fund | |||||
Investor Class | 1.33% | 5.00% | 1,000.00 | 1,018.30 | 6.69 |
Advisor Class | 1.83% | 5.00% | 1,000.00 | 1,015.81 | 9.20 |
A-Class | 1.58% | 5.00% | 1,000.00 | 1,017.05 | 7.95 |
C-Class | 2.33% | 5.00% | 1,000.00 | 1,013.31 | 11.70 |
THE RYDEX FUNDS ANNUAL REPORT | 9 |
ABOUT SHAREHOLDERS’ FUND EXPENSES (Unaudited)(concluded)
Expense Ratio1 | Fund Return | Beginning Account Value September 30, 2014 | Ending Account Value March 31, 2015 | Expenses Paid During Period2 | |
Internet Fund | |||||
Investor Class | 1.33% | 5.00% | $1,000.00 | $1,018.30 | $6.69 |
Advisor Class | 1.83% | 5.00% | 1,000.00 | 1,015.81 | 9.20 |
A-Class | 1.59% | 5.00% | 1,000.00 | 1,017.00 | 8.00 |
C-Class | 2.33% | 5.00% | 1,000.00 | 1,013.31 | 11.70 |
Leisure Fund | |||||
Investor Class | 1.32% | 5.00% | 1,000.00 | 1,018.35 | 6.64 |
Advisor Class | 1.81% | 5.00% | 1,000.00 | 1,015.91 | 9.10 |
A-Class | 1.56% | 5.00% | 1,000.00 | 1,017.15 | 7.85 |
C-Class | 2.33% | 5.00% | 1,000.00 | 1,013.31 | 11.70 |
Precious Metals Fund | |||||
Investor Class | 1.23% | 5.00% | 1,000.00 | 1,018.80 | 6.19 |
Advisor Class | 1.73% | 5.00% | 1,000.00 | 1,016.31 | 8.70 |
A-Class | 1.48% | 5.00% | 1,000.00 | 1,017.55 | 7.44 |
C-Class | 2.23% | 5.00% | 1,000.00 | 1,013.81 | 11.20 |
Real Estate Fund | |||||
A-Class | 1.58% | 5.00% | 1,000.00 | 1,017.05 | 7.95 |
C-Class | 2.33% | 5.00% | 1,000.00 | 1,013.31 | 11.70 |
H-Class | 1.57% | 5.00% | 1,000.00 | 1,017.10 | 7.90 |
Retailing Fund | |||||
Investor Class | 1.32% | 5.00% | 1,000.00 | 1,018.35 | 6.64 |
Advisor Class | 1.81% | 5.00% | 1,000.00 | 1,015.91 | 9.10 |
A-Class | 1.56% | 5.00% | 1,000.00 | 1,017.15 | 7.85 |
C-Class | 2.33% | 5.00% | 1,000.00 | 1,013.31 | 11.70 |
Technology Fund | |||||
Investor Class | 1.33% | 5.00% | 1,000.00 | 1,018.30 | 6.69 |
Advisor Class | 1.84% | 5.00% | 1,000.00 | 1,015.76 | 9.25 |
A-Class | 1.58% | 5.00% | 1,000.00 | 1,017.05 | 7.95 |
C-Class | 2.33% | 5.00% | 1,000.00 | 1,013.31 | 11.70 |
Telecommunications Fund | |||||
Investor Class | 1.34% | 5.00% | 1,000.00 | 1,018.25 | 6.74 |
Advisor Class | 1.85% | 5.00% | 1,000.00 | 1,015.71 | 9.30 |
A-Class | 1.58% | 5.00% | 1,000.00 | 1,017.05 | 7.95 |
C-Class | 2.33% | 5.00% | 1,000.00 | 1,013.31 | 11.70 |
Transportation Fund | |||||
Investor Class | 1.33% | 5.00% | 1,000.00 | 1,018.30 | 6.69 |
Advisor Class | 1.83% | 5.00% | 1,000.00 | 1,015.81 | 9.20 |
A-Class | 1.58% | 5.00% | 1,000.00 | 1,017.05 | 7.95 |
C-Class | 2.33% | 5.00% | 1,000.00 | 1,013.31 | 11.70 |
Utilities Fund | |||||
Investor Class | 1.33% | 5.00% | 1,000.00 | 1,018.30 | 6.69 |
Advisor Class | 1.83% | 5.00% | 1,000.00 | 1,015.81 | 9.20 |
A-Class | 1.58% | 5.00% | 1,000.00 | 1,017.05 | 7.95 |
C-Class | 2.33% | 5.00% | 1,000.00 | 1,013.31 | 11.70 |
1 | Annualized and excludes expenses in the underlying funds in which the Funds invest. |
2 | Expenses are equal to the Fund's annualized expense ratio, net of any applicable fee waivers, multiplied by the average account value over the period, multiplied by 182/365 (to reflect the one-half year period). |
3 | Actual cumulative return at net asset value for the period September 30, 2014 to March 31, 2015. |
10 | THE RYDEX FUNDS ANNUAL REPORT |
PERFORMANCE REPORT AND FUND PROFILE (Unaudited) | March 31, 2015 |
BANKING FUND
OBJECTIVE: Seeks to provide capital appreciation by investing in companies that are involved in the banking sector, including commercial banks (and their holding companies) and savings and loan institutions (“banking companies”).
For the one-year period ended March 31, 2015, Banking Fund Investor Class returned -0.73%, compared with the S&P 500 Financials Index, which returned 9.96%. The broader S&P 500 Index returned 12.73%.
The industry that contributed most to performance was banks, followed by diversified financial services. The thrifts & mortgage finance industry contributed least to Fund return. The commercial banks industry was the only detractor from return.
Among the best-performing holdings in the Fund for the period were Wells Fargo & Co., HDFC Bank Ltd. ADR, and Bank of New York Mellon Corp. The worst-performing holdings for the period were Fifth Third Bancorp, Bancolombia S.A. ADR, and Bank of America Corp.
Performance displayed represents past performance, which is no guarantee of future results.
Holdings Diversification (Market Exposure as % of Net Assets)
![](https://capedge.com/proxy/N-CSR/0001398344-15-003814/rsecf_01.jpg)
“Holdings Diversification (Market Exposure as % of Net Assets)” excludes any temporary cash investments.
Inception Dates: | |
Investor Class | April 1, 1998 |
Advisor Class | April 1, 1998 |
A-Class | September 1, 2004 |
C-Class | March 30, 2001 |
Ten Largest Holdings (% of Total Net Assets) | |
JPMorgan Chase & Co. | 4.0% |
Wells Fargo & Co. | 4.0% |
Citigroup, Inc. | 3.9% |
Bank of America Corp. | 3.9% |
U.S. Bancorp | 3.1% |
PNC Financial Services Group, Inc. | 2.4% |
Bank of New York Mellon Corp. | 2.4% |
Capital One Financial Corp. | 2.3% |
State Street Corp. | 1.9% |
BB&T Corp. | 1.9% |
Top Ten Total | 29.8% |
“Ten Largest Holdings” exclude any temporary cash or derivative investments. |
THE RYDEX FUNDS ANNUAL REPORT | 11 |
PERFORMANCE REPORT AND FUND PROFILE (Unaudited)(concluded) | March 31, 2015 |
Cumulative Fund Performance*
![](https://capedge.com/proxy/N-CSR/0001398344-15-003814/rsecf_02.jpg)
![](https://capedge.com/proxy/N-CSR/0001398344-15-003814/rsecf_03.jpg)
Average Annual Returns*
Periods Ended March 31, 2015
1 Year | 5 Year | 10 Year | |
Investor Class Shares | -0.73% | 4.84% | -3.43% |
Advisor Class Shares | -1.19% | 4.32% | -3.92% |
A-Class Shares | -0.98% | 4.57% | -3.70% |
A-Class Shares with sales charge† | -5.68% | 3.56% | -4.17% |
C-Class Shares | -1.71% | 3.80% | -4.35% |
C-Class Shares with CDSC‡ | -2.69% | 3.80% | -4.35% |
S&P 500 Financials Index | 9.96% | 10.53% | 0.58% |
S&P 500 Index | 12.73% | 14.47% | 8.01% |
* | The performance data above represents past performance that is not predictive of future results. The investment return and principal value of an investment in the Fund will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Returns are historical and include changes in principal and reinvested dividends and capital gains and do not reflect the effect of taxes. The S&P 500 Index and the S&P 500 Financials Index are unmanaged indices and, unlike the Fund, have no management fees or operating expenses to reduce their reported returns. The graphs are based on Investor Class shares and A-Class shares only; performance for Advisor Class shares and C-Class shares will vary due to differences in fee structures. |
† | Fund returns are calculated using the maximum sales charge of 4.75%. |
‡ | Fund returns include a CDSC of 1% if redeemed within 12 months of purchase. |
12 | THE RYDEX FUNDS ANNUAL REPORT |
SCHEDULE OF INVESTMENTS | March 31, 2015 |
BANKING FUND |
Shares | Value | |||||||
COMMON STOCKS† - 100.2% | ||||||||
SUPER-REGIONAL BANKS-U.S. - 18.0% | ||||||||
Wells Fargo & Co. | 35,627 | $ | 1,938,108 | |||||
U.S. Bancorp | 34,469 | 1,505,261 | ||||||
PNC Financial Services Group, Inc. | 12,816 | 1,194,964 | ||||||
Capital One Financial Corp. | 14,201 | 1,119,323 | ||||||
SunTrust Banks, Inc. | 19,199 | 788,887 | ||||||
Fifth Third Bancorp | 35,731 | 673,529 | ||||||
KeyCorp | 42,113 | 596,320 | ||||||
Huntington Bancshares, Inc. | 47,017 | 519,538 | ||||||
Comerica, Inc. | 10,827 | 488,623 | ||||||
Total Super-Regional Banks-U.S. | 8,824,553 | |||||||
COMMERCIAL BANKS-NON-U.S. - 17.8% | ||||||||
Itau Unibanco Holding S.A. ADR | 59,238 | 655,172 | ||||||
ICICI Bank Ltd. ADR | 55,785 | 577,933 | ||||||
Royal Bank of Canada | 9,556 | 576,800 | ||||||
Banco Bradesco S.A. ADR | 62,088 | 576,177 | ||||||
Toronto-Dominion Bank | 12,992 | 556,707 | ||||||
Banco Santander S.A. ADR | 73,648 | 548,678 | ||||||
HDFC Bank Ltd. ADR | 9,109 | 536,429 | ||||||
Credicorp Ltd. | 3,755 | 528,066 | ||||||
Bank of Montreal | 8,302 | 497,871 | ||||||
Bank of Nova Scotia | 9,774 | 490,948 | ||||||
Bancolombia S.A. ADR | 12,085 | 475,303 | ||||||
Canadian Imperial Bank of Commerce | 6,496 | 470,960 | ||||||
Banco Santander Chile ADR | 21,636 | 469,068 | ||||||
ING Groep N.V. ADR* | 32,016 | 467,754 | ||||||
Banco Bilbao Vizcaya Argentaria S.A. ADR | 45,631 | 457,679 | ||||||
Grupo Financiero Santander Mexico SAB de CV ADR | 40,364 | 440,775 | ||||||
Sumitomo Mitsui Financial Group, Inc. ADR | 55,234 | 427,511 | ||||||
Total Commercial Banks-Non-U.S. | 8,753,831 | |||||||
DIVERSIFIED BANKING INSTITUTIONS - 16.7% | ||||||||
JPMorgan Chase & Co. | 32,103 | 1,944,799 | ||||||
Citigroup, Inc. | 36,973 | 1,904,849 | ||||||
Bank of America Corp. | 123,107 | 1,894,617 | ||||||
HSBC Holdings plc ADR | 14,146 | 602,478 | ||||||
Deutsche Bank AG | 15,441 | 536,266 | ||||||
Credit Suisse Group AG ADR | 18,892 | 508,762 | ||||||
Barclays plc ADR | 31,220 | 454,875 | ||||||
UBS Group AG* | 19,238 | 361,097 | ||||||
Total Diversified Banking Institutions | 8,207,743 | |||||||
COMMERCIAL BANKS-SOUTHERN U.S. - 11.0% | ||||||||
BB&T Corp. | 23,547 | 918,098 | ||||||
Regions Financial Corp. | 64,389 | 608,476 | ||||||
Popular, Inc.* | 13,019 | 447,723 | ||||||
Synovus Financial Corp. | 11,987 | 335,756 | ||||||
BankUnited, Inc. | 9,713 | 318,004 | ||||||
First Horizon National Corp. | 22,158 | 316,638 | ||||||
Bank of the Ozarks, Inc. | 8,382 | 309,547 | ||||||
First Citizens BancShares, Inc. — Class A | 1,120 | 290,853 | ||||||
IBERIABANK Corp. | 4,548 | 286,660 | ||||||
United Bankshares, Inc. | 7,398 | 278,017 | ||||||
Hancock Holding Co. | 9,166 | 273,697 | ||||||
Home BancShares, Inc. | 7,760 | 262,986 | ||||||
BancorpSouth, Inc. | 11,279 | 261,898 | ||||||
Hilltop Holdings, Inc.* | 12,329 | 239,676 | ||||||
Trustmark Corp. | 9,267 | 225,003 | ||||||
Total Commercial Banks-Southern U.S. | 5,373,032 | |||||||
COMMERCIAL BANKS-WESTERN U.S. - 9.4% | ||||||||
First Republic Bank | 8,642 | 493,371 | ||||||
SVB Financial Group* | 3,560 | 452,262 | ||||||
East West Bancorp, Inc. | 10,341 | 418,397 | ||||||
Zions Bancorporation | 15,034 | 405,918 | ||||||
City National Corp. | 4,413 | 393,110 | ||||||
PacWest Bancorp | 8,101 | 379,856 | ||||||
Umpqua Holdings Corp. | 19,749 | 339,288 | ||||||
Bank of Hawaii Corp. | 4,749 | 290,686 | ||||||
Western Alliance Bancorporation* | 9,408 | 278,853 | ||||||
Cathay General Bancorp | 9,290 | 264,301 | ||||||
Glacier Bancorp, Inc. | 9,490 | 238,674 | ||||||
CVB Financial Corp. | 14,312 | 228,133 | ||||||
Columbia Banking System, Inc. | 7,743 | 224,315 | ||||||
Westamerica Bancorporation | 4,304 | 185,976 | ||||||
Total Commercial Banks-Western U.S. | 4,593,140 | |||||||
COMMERCIAL BANKS-CENTRAL U.S. - 8.8% | ||||||||
Cullen/Frost Bankers, Inc. | 5,243 | 362,185 | ||||||
BOK Financial Corp. | 5,882 | 360,096 | ||||||
Commerce Bancshares, Inc. | 8,287 | 350,706 | ||||||
Prosperity Bancshares, Inc. | 6,393 | 335,505 | ||||||
FirstMerit Corp. | 16,298 | 310,640 | ||||||
Associated Banc-Corp. | 15,609 | 290,327 | ||||||
PrivateBancorp, Inc. — Class A | 8,177 | 287,585 | ||||||
TCF Financial Corp. | 17,904 | 281,451 | ||||||
UMB Financial Corp. | 5,157 | 272,754 | ||||||
MB Financial, Inc. | 8,530 | 267,074 | ||||||
Wintrust Financial Corp. | 5,490 | 261,763 | ||||||
Texas Capital Bancshares, Inc.* | 5,364 | 260,959 | ||||||
First Financial Bankshares, Inc.1 | 8,456 | 233,724 | ||||||
Old National Bancorp | 15,777 | 223,876 | ||||||
First Midwest Bancorp, Inc. | 11,650 | 202,361 | ||||||
Total Commercial Banks-Central U.S. | 4,301,006 | |||||||
FIDUCIARY BANKS - 7.3% | ||||||||
Bank of New York Mellon Corp. | 28,705 | 1,155,088 | ||||||
State Street Corp. | 12,792 | 940,596 | ||||||
Northern Trust Corp. | 9,860 | 686,749 | ||||||
Citizens Financial Group, Inc. | 25,336 | 611,358 | ||||||
Boston Private Financial Holdings, Inc. | 14,250 | 173,138 | ||||||
Total Fiduciary Banks | 3,566,929 |
SEE NOTES TO FINANCIAL STATEMENTS. | THE RYDEX FUNDS ANNUAL REPORT | 13 |
SCHEDULE OF INVESTMENTS (concluded) | March 31, 2015 |
BANKING FUND |
Shares | Value | |||||||
COMMERCIAL BANKS-EASTERN U.S. - 7.0% | ||||||||
M&T Bank Corp. | 5,641 | $ | 716,408 | |||||
CIT Group, Inc. | 10,944 | 493,793 | ||||||
Signature Bank* | 3,436 | 445,237 | ||||||
Webster Financial Corp. | 8,716 | 322,928 | ||||||
Susquehanna Bancshares, Inc. | 19,997 | 274,159 | ||||||
FNB Corp. | 20,060 | 263,588 | ||||||
Fulton Financial Corp. | 21,032 | 259,535 | ||||||
Valley National Bancorp | 27,355 | 258,231 | ||||||
National Penn Bancshares, Inc. | 20,003 | 215,432 | ||||||
Community Bank System, Inc. | 5,890 | 208,447 | ||||||
Total Commercial Banks-Eastern U.S. | 3,457,758 | |||||||
SAVINGS & LOANS/THRIFTS-EASTERN U.S. - 3.1% | ||||||||
New York Community Bancorp, Inc. | 28,284 | 473,191 | ||||||
People’s United Financial, Inc. | 24,748 | 376,170 | ||||||
Investors Bancorp, Inc. | 30,530 | 357,812 | ||||||
First Niagara Financial Group, Inc. | 34,516 | 305,121 | ||||||
Total Savings & Loans/Thrifts-Eastern U.S. | 1,512,294 | |||||||
MULTI-LINE INSURANCE - 1.1% | ||||||||
Voya Financial, Inc. | 12,386 | 533,960 | ||||||
Total Common Stocks | ||||||||
(Cost $45,373,174) | 49,124,246 |
Face Amount | ||||||||
REPURCHASE AGREEMENT††,2 - 0.3% | ||||||||
HSBC Group issued 03/31/15 at 0.03% due 04/01/15 | $ | 174,353 | 174,353 | |||||
Total Repurchase Agreement | ||||||||
(Cost $174,353) | 174,353 | |||||||
SECURITIES LENDING COLLATERAL††,3 - 0.4% | ||||||||
Repurchase Agreements | ||||||||
HSBC Securities, Inc. issued 03/31/15 at 0.10% due 04/01/15 | 117,470 | 117,470 | ||||||
BNP Paribas Securities Corp. issued 03/31/15 at 0.10% due 04/01/15 | 40,410 | 40,410 | ||||||
Barclays Capital, Inc. issued 03/31/15 at 0.10% due 04/01/15 | 20,858 | 20,858 | ||||||
Total Securities Lending Collateral | ||||||||
(Cost $178,738) | 178,738 | |||||||
Total Investments - 100.9% | ||||||||
(Cost $45,726,265) | $ | 49,477,337 | ||||||
Other Assets & Liabilities, net - (0.9)% | (456,235 | ) | ||||||
Total Net Assets - 100.0% | $ | 49,021,102 |
* | Non-income producing security. |
† | Value determined based on Level 1 inputs — See Note 4. |
†† | Value determined based on Level 2 inputs — See Note 4. |
1 | All or portion of this security is on loan at March 31, 2015 — See Note 6. |
2 | Repurchase Agreement — See Note 5. |
3 | Securities lending collateral — See Note 6. |
ADR — American Depositary Receipt | |
plc — Public Limited Company |
14 | THE RYDEX FUNDS ANNUAL REPORT | SEE NOTES TO FINANCIAL STATEMENTS. |
BANKING FUND |
STATEMENT OF ASSETS AND LIABILITIES
March 31, 2015
Assets: | ||||
Investments, at value - including $171,368 of securities loaned (cost $45,373,174) | $ | 49,124,246 | ||
Repurchase agreements, at value (cost $353,091) | 353,091 | |||
Total investments (cost $45,726,265) | 49,477,337 | |||
Segregated cash with broker | 2,612 | |||
Receivables: | ||||
Dividends | 47,797 | |||
Fund shares sold | 45,839 | |||
Foreign taxes reclaim | 237 | |||
Securities lending income | 199 | |||
Total assets | 49,574,021 | |||
Liabilities: | ||||
Payable for: | ||||
Fund shares redeemed | 333,608 | |||
Return of securities loaned | 181,350 | |||
Management fees | 18,151 | |||
Transfer agent and administrative fees | 5,339 | |||
Distribution and service fees | 3,264 | |||
Portfolio accounting fees | 2,135 | |||
Miscellaneous | 9,072 | |||
Total liabilities | 552,919 | |||
Commitments and contingent liabilities (Note 10) | — | |||
Net assets | $ | 49,021,102 | ||
Net assets consist of: | ||||
Paid in capital | $ | 70,535,768 | ||
Undistributed net investment income | 84,494 | |||
Accumulated net realized loss on investments | (25,350,232 | ) | ||
Net unrealized appreciation on investments | 3,751,072 | |||
Net assets | $ | 49,021,102 | ||
Investor Class: | ||||
Net assets | $ | 43,989,231 | ||
Capital shares outstanding | 701,415 | |||
Net asset value per share | $ | 62.71 | ||
Advisor Class: | ||||
Net assets | $ | 847,006 | ||
Capital shares outstanding | 15,045 | |||
Net asset value per share | $ | 56.30 | ||
A-Class: | ||||
Net assets | $ | 1,053,542 | ||
Capital shares outstanding | 18,240 | |||
Net asset value per share | $ | 57.76 | ||
Maximum offering price per share (Net asset value divided by 95.25%) | $ | 60.64 | ||
C-Class: | ||||
Net assets | $ | 3,131,323 | ||
Capital shares outstanding | 58,704 | |||
Net asset value per share | $ | 53.34 |
STATEMENT OF OPERATIONS
Year Ended March 31, 2015
Investment Income: | ||||
Dividends (net of foreign withholding tax of $8,007) | $ | 366,280 | ||
Income from securities lending, net | 1,021 | |||
Interest | 19 | |||
Total investment income | 367,320 | |||
Expenses: | ||||
Management fees | 148,278 | |||
Transfer agent and administrative fees | 43,611 | |||
Distribution and service fees: | ||||
Advisor Class | 7,577 | |||
A-Class | 4,773 | |||
C-Class | 35,551 | |||
Portfolio accounting fees | 17,444 | |||
Custodian fees | 2,033 | |||
Trustees’ fees* | 1,235 | |||
Line of credit fees | 150 | |||
Tax expense | 85 | |||
Miscellaneous | 22,089 | |||
Total expenses | 282,826 | |||
Net investment income | 84,494 | |||
Net Realized and Unrealized Gain (Loss): | ||||
Net realized gain (loss) on: | ||||
Investments | (1,094,981 | ) | ||
Net realized loss | (1,094,981 | ) | ||
Net change in unrealized appreciation (depreciation) on: | ||||
Investments | (1,758,526 | ) | ||
Net change in unrealized appreciation (depreciation) | (1,758,526 | ) | ||
Net realized and unrealized loss | (2,853,507 | ) | ||
Net decrease in net assets resulting from operations | $ | (2,769,013 | ) |
* | Relates to Trustees not deemed “interested persons” within the meaning of Section 2(a)(19) of the 1940 Act. |
SEE NOTES TO FINANCIAL STATEMENTS. | THE RYDEX FUNDS ANNUAL REPORT | 15 |
BANKING FUND |
STATEMENTS OF CHANGES IN NET ASSETS
Year Ended March 31, 2015 | Year Ended March 31, 2014 | |||||||
Increase (Decrease) in Net Assets from Operations: | ||||||||
Net investment income | $ | 84,494 | $ | 104,560 | ||||
Net realized gain (loss) on investments | (1,094,981 | ) | 2,054,539 | |||||
Net change in unrealized appreciation (depreciation) on investments | (1,758,526 | ) | 456,330 | |||||
Net increase (decrease) in net assets resulting from operations | (2,769,013 | ) | 2,615,429 | |||||
Distributions to shareholders from: | ||||||||
Net investment income | ||||||||
Investor Class | (62,935 | ) | (69,539 | ) | ||||
Advisor Class | (2,498 | ) | (27,301 | ) | ||||
A-Class | (9,050 | ) | (69,825 | ) | ||||
C-Class | (30,239 | ) | (40,063 | ) | ||||
Total distributions to shareholders | (104,722 | ) | (206,728 | ) | ||||
Capital share transactions: | ||||||||
Proceeds from sale of shares | ||||||||
Investor Class | 83,258,043 | 55,738,638 | ||||||
Advisor Class | 50,602,118 | 20,491,522 | ||||||
A-Class | 8,604,560 | 21,112,841 | ||||||
C-Class | 17,385,423 | 22,307,410 | ||||||
Distributions reinvested | ||||||||
Investor Class | 61,028 | 66,494 | ||||||
Advisor Class | 2,476 | 27,265 | ||||||
A-Class | 6,880 | 34,044 | ||||||
C-Class | 27,648 | 37,004 | ||||||
Cost of shares redeemed | ||||||||
Investor Class | (48,577,787 | ) | (54,691,263 | ) | ||||
Advisor Class | (50,158,024 | ) | (24,496,009 | ) | ||||
A-Class | (15,238,033 | ) | (15,248,615 | ) | ||||
C-Class | (18,472,784 | ) | (22,684,146 | ) | ||||
Net increase from capital share transactions | 27,501,548 | 2,695,185 | ||||||
Net increase in net assets | 24,627,813 | 5,103,886 | ||||||
Net assets: | ||||||||
Beginning of year | 24,393,289 | 19,289,403 | ||||||
End of year | $ | 49,021,102 | $ | 24,393,289 | ||||
Undistributed net investment income at end of year | $ | 84,494 | $ | 104,722 | ||||
Capital share activity: | ||||||||
Shares sold | ||||||||
Investor Class | 1,317,679 | 942,203 | ||||||
Advisor Class | 911,673 | 383,290 | ||||||
A-Class | 147,860 | 377,509 | ||||||
C-Class | 323,866 | 443,798 | ||||||
Shares issued from reinvestment of distributions | ||||||||
Investor Class | 954 | 1,089 | ||||||
Advisor Class | 43 | 494 | ||||||
A-Class | 117 | 603 | ||||||
C-Class | 507 | 703 | ||||||
Shares redeemed | ||||||||
Investor Class | (793,962 | ) | (936,087 | ) | ||||
Advisor Class | (906,078 | ) | (463,143 | ) | ||||
A-Class | (271,097 | ) | (279,911 | ) | ||||
C-Class | (344,416 | ) | (453,983 | ) | ||||
Net increase in shares | 387,146 | 16,565 |
16 | THE RYDEX FUNDS ANNUAL REPORT | SEE NOTES TO FINANCIAL STATEMENTS. |
BANKING FUND |
FINANCIAL HIGHLIGHTS
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.
Investor Class | Year Ended March 31, 2015 | Year Ended March 31, 2014 | Year Ended March 28, 2013 | Year Ended March 31, 2012 | Year Ended March 31, 2011 | |||||||||||||||
Per Share Data | ||||||||||||||||||||
Net asset value, beginning of period | $ | 63.60 | $ | 52.58 | $ | 46.75 | $ | 49.75 | $ | 50.73 | ||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||
Net investment income (loss)a | .51 | .54 | .54 | .44 | .13 | |||||||||||||||
Net gain (loss) on investments (realized and unrealized) | (.98 | ) | 11.09 | 5.44 | (3.39 | ) | (.99 | ) | ||||||||||||
Total from investment operations | (.47 | ) | 11.63 | 5.98 | (2.95 | ) | (.86 | ) | ||||||||||||
Less distributions from: | ||||||||||||||||||||
Net investment income | (.42 | ) | (.61 | ) | (.15 | ) | (.05 | ) | (.12 | ) | ||||||||||
Total distributions | (.42 | ) | (.61 | ) | (.15 | ) | (.05 | ) | (.12 | ) | ||||||||||
Net asset value, end of period | $ | 62.71 | $ | 63.60 | $ | 52.58 | $ | 46.75 | $ | 49.75 | ||||||||||
Total Returnb | (0.73 | %) | 22.17 | % | 12.84 | % | (5.89 | %) | (1.66 | %) | ||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||
Net assets, end of period (in thousands) | $ | 43,989 | $ | 11,241 | $ | 8,915 | $ | 29,061 | $ | 8,711 | ||||||||||
Ratios to average net assets: | ||||||||||||||||||||
Net investment income (loss) | 0.82 | % | 0.92 | % | 1.16 | % | 1.02 | % | 0.27 | % | ||||||||||
Total expenses | 1.34 | % | 1.37 | % | 1.35 | % | 1.34 | % | 1.39 | % | ||||||||||
Portfolio turnover rate | 583 | % | 481 | % | 382 | % | 544 | % | 1,130 | % |
Advisor Class | Year Ended March 31, 2015 | Year Ended March 31, 2014 | Year Ended March 28, 2013 | Year Ended March 31, 2012 | Year Ended March 31, 2011 | |||||||||||||||
Per Share Data | ||||||||||||||||||||
Net asset value, beginning of period | $ | 57.40 | $ | 47.71 | $ | 42.63 | $ | 45.63 | $ | 46.79 | ||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||
Net investment income (loss)a | (.01 | ) | .23 | .17 | .12 | (.08 | ) | |||||||||||||
Net gain (loss) on investments (realized and unrealized) | (.67 | ) | 10.07 | 5.06 | (3.07 | ) | (.96 | ) | ||||||||||||
Total from investment operations | (.68 | ) | 10.30 | 5.23 | (2.95 | ) | (1.04 | ) | ||||||||||||
Less distributions from: | ||||||||||||||||||||
Net investment income | (.42 | ) | (.61 | ) | (.15 | ) | (.05 | ) | (.12 | ) | ||||||||||
Total distributions | (.42 | ) | (.61 | ) | (.15 | ) | (.05 | ) | (.12 | ) | ||||||||||
Net asset value, end of period | $ | 56.30 | $ | 57.40 | $ | 47.71 | $ | 42.63 | $ | 45.63 | ||||||||||
Total Returnb | (1.19 | %) | 21.64 | % | 12.32 | % | (6.43 | %) | (2.19 | %) | ||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||
Net assets, end of period (in thousands) | $ | 847 | $ | 540 | $ | 4,235 | $ | 1,105 | $ | 629 | ||||||||||
Ratios to average net assets: | ||||||||||||||||||||
Net investment income (loss) | (0.02 | %) | 0.44 | % | 0.38 | % | 0.30 | % | (0.18 | %) | ||||||||||
Total expenses | 1.85 | % | 1.87 | % | 1.86 | % | 1.83 | % | 1.89 | % | ||||||||||
Portfolio turnover rate | 583 | % | 481 | % | 382 | % | 544 | % | 1,130 | % |
SEE NOTES TO FINANCIAL STATEMENTS. | THE RYDEX FUNDS ANNUAL REPORT | 17 |
BANKING FUND |
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.
A-Class | Year Ended March 31, 2015 | Year Ended March 31, 2014 | Year Ended March 28, 2013 | Year Ended March 31, 2012 | Year Ended March 31, 2011 | |||||||||||||||
Per Share Data | ||||||||||||||||||||
Net asset value, beginning of period | $ | 58.75 | $ | 48.74 | $ | 43.45 | $ | 46.38 | $ | 47.41 | ||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||
Net investment income (loss)a | .26 | .39 | .36 | .30 | .04 | |||||||||||||||
Net gain (loss) on investments (realized and unrealized) | (.83 | ) | 10.23 | 5.08 | (3.18 | ) | (.95 | ) | ||||||||||||
Total from investment operations | (.57 | ) | 10.62 | 5.44 | (2.88 | ) | (.91 | ) | ||||||||||||
Less distributions from: | ||||||||||||||||||||
Net investment income | (.42 | ) | (.61 | ) | (.15 | ) | (.05 | ) | (.12 | ) | ||||||||||
Total distributions | (.42 | ) | (.61 | ) | (.15 | ) | (.05 | ) | (.12 | ) | ||||||||||
Net asset value, end of period | $ | 57.76 | $ | 58.75 | $ | 48.74 | $ | 43.45 | $ | 46.38 | ||||||||||
Total Returnb | (0.98 | %) | 21.84 | % | 12.60 | % | (6.19 | %) | (1.89 | %) | ||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||
Net assets, end of period (in thousands) | $ | 1,054 | $ | 8,305 | $ | 2,103 | $ | 3,088 | $ | 913 | ||||||||||
Ratios to average net assets: | ||||||||||||||||||||
Net investment income (loss) | 0.45 | % | 0.71 | % | 0.88 | % | 0.73 | % | 0.09 | % | ||||||||||
Total expenses | 1.60 | % | 1.62 | % | 1.59 | % | 1.61 | % | 1.64 | % | ||||||||||
Portfolio turnover rate | 583 | % | 481 | % | 382 | % | 544 | % | 1,130 | % |
C-Class | Year Ended March 31, 2015 | Year Ended March 31, 2014 | Year Ended March 28, 2013 | Year Ended March 31, 2012 | Year Ended March 31, 2011 | |||||||||||||||
Per Share Data | ||||||||||||||||||||
Net asset value, beginning of period | $ | 54.69 | $ | 45.74 | $ | 41.09 | $ | 44.20 | $ | 45.51 | ||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||
Net investment income (loss)a | (.14 | ) | (.05 | ) | .01 | (.01 | ) | (.29 | ) | |||||||||||
Net gain (loss) on investments (realized and unrealized) | (.79 | ) | 9.61 | 4.79 | (3.05 | ) | (.90 | ) | ||||||||||||
Total from investment operations | (.93 | ) | 9.56 | 4.80 | (3.06 | ) | (1.19 | ) | ||||||||||||
Less distributions from: | ||||||||||||||||||||
Net investment income | (.42 | ) | (.61 | ) | (.15 | ) | (.05 | ) | (.12 | ) | ||||||||||
Total distributions | (.42 | ) | (.61 | ) | (.15 | ) | (.05 | ) | (.12 | ) | ||||||||||
Net asset value, end of period | $ | 53.34 | $ | 54.69 | $ | 45.74 | $ | 41.09 | $ | 44.20 | ||||||||||
Total Returnb | (1.71 | %) | 20.95 | % | 11.74 | % | (6.88 | %) | (2.58 | %) | ||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||
Net assets, end of period (in thousands) | $ | 3,131 | $ | 4,307 | $ | 4,036 | $ | 3,841 | $ | 2,844 | ||||||||||
Ratios to average net assets: | ||||||||||||||||||||
Net investment income (loss) | (0.26 | %) | (0.10 | %) | 0.02 | % | (0.03 | %) | (0.67 | %) | ||||||||||
Total expenses | 2.35 | % | 2.37 | % | 2.35 | % | 2.35 | % | 2.38 | % | ||||||||||
Portfolio turnover rate | 583 | % | 481 | % | 382 | % | 544 | % | 1,130 | % |
a | Net investment income (loss) per share was computed using average shares outstanding throughout the period. |
b | Total return does not reflect the impact of any applicable sales charges. |
18 | THE RYDEX FUNDS ANNUAL REPORT | SEE NOTES TO FINANCIAL STATEMENTS. |
PERFORMANCE REPORT AND FUND PROFILE (Unaudited) | March 31, 2015 |
BASIC MATERIALS FUND
OBJECTIVE: Seeks to provide capital appreciation by investing in companies engaged in the mining, manufacture, or sale of basic materials, such as lumber, steel, iron, aluminum, concrete, chemicals, and other basic building and manufacturing materials (“basic materials companies”).
For the one-year period ended March 31, 2015, Basic Materials Fund Investor Class returned -3.77%, compared with 4.97% for the S&P 500 Materials Index. The broader S&P 500 Index returned 12.73%.
The Fund is composed largely of two industries—chemicals, and metals & mining. The industry that contributed most to performance was chemicals, followed by containers & packaging. The largest detractor from return was the metals & mining industry, followed by the capital markets industry.
The top-performing holdings were Sherwin-Williams Co., Sigma-Aldrich Corp., and Air Products & Chemicals, Inc. The worst-performing holdings included Barrick Gold Corp., Freeport-McMoRan, Inc., and Vale S.A. ADR.
Performance displayed represents past performance, which is no guarantee of future results.
Holdings Diversification (Market Exposure as % of Net Assets)
![](https://capedge.com/proxy/N-CSR/0001398344-15-003814/rsecf_04.jpg)
“Holdings Diversification (Market Exposure as % of Net Assets)” excludes any temporary cash investments.
Inception Dates: | |
Investor Class | April 1, 1998 |
Advisor Class | April 14, 1998 |
A-Class | September 1, 2004 |
C-Class | May 3, 2001 |
Ten Largest Holdings (% of Total Net Assets) | |
EI du Pont de Nemours & Co. | 2.9% |
Dow Chemical Co. | 2.7% |
Monsanto Co. | 2.6% |
LyondellBasell Industries N.V. — Class A | 2.3% |
Praxair, Inc. | 2.1% |
Ecolab, Inc. | 2.1% |
Air Products & Chemicals, Inc. | 2.1% |
PPG Industries, Inc. | 2.0% |
Sherwin-Williams Co. | 1.9% |
Southern Copper Corp. | 1.8% |
Top Ten Total | 22.5% |
“Ten Largest Holdings” exclude any temporary cash or derivative investments. |
THE RYDEX FUNDS ANNUAL REPORT | 19 |
PERFORMANCE REPORT AND FUND PROFILE (Unaudited)(concluded) | March 31, 2015 |
Cumulative Fund Performance*
![](https://capedge.com/proxy/N-CSR/0001398344-15-003814/rsecf_05.jpg)
![](https://capedge.com/proxy/N-CSR/0001398344-15-003814/rsecf_06.jpg)
Average Annual Returns*
Periods Ended March 31, 2015
1 Year | 5 Year | 10 Year | |
Investor Class Shares | -3.77% | 2.76% | 5.65% |
Advisor Class Shares | -4.30% | 2.24% | 5.12% |
A-Class Shares | -4.05% | 2.50% | 5.39% |
A-Class Shares with sales charge† | -8.61% | 1.50% | 4.88% |
C-Class Shares | -4.76% | 1.73% | 4.60% |
C-Class Shares with CDSC‡ | -5.70% | 1.73% | 4.60% |
S&P 500 Materials Index | 4.97% | 10.82% | 7.55% |
S&P 500 Index | 12.73% | 14.47% | 8.01% |
* | The performance data above represents past performance that is not predictive of future results. The investment return and principal value of an investment in the Fund will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Returns are historical and include changes in principal and reinvested dividends and capital gains and do not reflect the effect of taxes. The S&P 500 Index and the S&P 500 Materials Index are unmanaged indices and, unlike the Fund, have no management fees or operating expenses to reduce their reported returns. The graphs are based on Investor Class shares and A-Class shares only; performance for Advisor Class shares and C-Class shares will vary due to differences in fee structures. |
† | Fund returns are calculated using the maximum sales charge of 4.75%. |
‡ | Fund returns include a CDSC of 1% if redeemed within 12 months of purchase. |
20 | THE RYDEX FUNDS ANNUAL REPORT |
SCHEDULE OF INVESTMENTS | March 31, 2015 |
BASIC MATERIALS FUND |
Shares | Value | |||||||
COMMON STOCKS† - 99.5% | ||||||||
CHEMICALS-DIVERSIFIED - 15.2% | ||||||||
EI du Pont de Nemours & Co. | 23,128 | $ | 1,652,957 | |||||
Dow Chemical Co. | 32,834 | 1,575,375 | ||||||
LyondellBasell Industries N.V. — Class A | 15,476 | 1,358,793 | ||||||
PPG Industries, Inc. | 5,100 | 1,150,254 | ||||||
Westlake Chemical Corp. | 9,340 | 671,920 | ||||||
Celanese Corp. — Class A | 11,082 | 619,041 | ||||||
FMC Corp. | 9,851 | 563,970 | ||||||
Huntsman Corp. | 22,235 | 492,950 | ||||||
Axiall Corp. | 8,180 | 383,969 | ||||||
Olin Corp. | 10,828 | 346,929 | ||||||
Total Chemicals-Diversified | 8,816,158 | |||||||
CHEMICALS-SPECIALTY - 15.0% | ||||||||
Ecolab, Inc. | 10,621 | 1,214,831 | ||||||
Sigma-Aldrich Corp. | 6,169 | 852,864 | ||||||
Eastman Chemical Co. | 9,728 | 673,761 | ||||||
International Flavors & Fragrances, Inc. | 5,471 | 642,295 | ||||||
Ashland, Inc. | 4,872 | 620,254 | ||||||
WR Grace & Co.* | 5,845 | 577,895 | ||||||
NewMarket Corp. | 1,175 | 561,415 | ||||||
Albemarle Corp. | 9,649 | 509,853 | ||||||
Platform Specialty Products Corp.* | 17,900 | 459,314 | ||||||
Methanex Corp. | 8,470 | 453,738 | ||||||
Cytec Industries, Inc. | 7,726 | 417,513 | ||||||
Sensient Technologies Corp. | 5,680 | 391,238 | ||||||
Cabot Corp. | 8,070 | 363,150 | ||||||
Minerals Technologies, Inc. | 4,645 | 339,550 | ||||||
HB Fuller Co. | 7,170 | 307,378 | ||||||
Chemtura Corp.* | 10,800 | 294,732 | ||||||
Total Chemicals-Specialty | 8,679,781 | |||||||
GOLD MINING - 9.3% | ||||||||
Barrick Gold Corp. | 71,168 | 780,000 | ||||||
Goldcorp, Inc. | 38,856 | 704,071 | ||||||
Newmont Mining Corp. | 31,305 | 679,632 | ||||||
Agnico Eagle Mines Ltd. | 18,903 | 528,150 | ||||||
Randgold Resources Ltd. ADR | 7,484 | 518,417 | ||||||
AngloGold Ashanti Ltd. ADR* | 52,039 | 486,044 | ||||||
Franco-Nevada Corp. | 9,808 | 476,080 | ||||||
Royal Gold, Inc. | 6,643 | 419,240 | ||||||
Eldorado Gold Corp. | 89,632 | 411,411 | ||||||
Cia de Minas Buenaventura S.A.A. ADR | 40,053 | 405,737 | ||||||
Total Gold Mining | 5,408,782 | |||||||
CONTAINERS-PAPER/PLASTIC - 7.9% | ||||||||
Sealed Air Corp. | 14,063 | 640,710 | ||||||
Rock-Tenn Co. — Class A | 9,590 | 618,555 | ||||||
MeadWestvaco Corp. | 11,972 | 597,044 | ||||||
Packaging Corporation of America | 7,400 | 578,606 | ||||||
Graphic Packaging Holding Co. | 31,120 | 452,485 | ||||||
Sonoco Products Co. | 9,910 | 450,509 | ||||||
Berry Plastics Group, Inc.* | 12,136 | 439,202 | ||||||
Bemis Company, Inc. | 9,472 | 438,648 | ||||||
KapStone Paper and Packaging Corp. | 11,411 | 374,737 | ||||||
Total Containers-Paper/Plastic | 4,590,496 | |||||||
AGRICULTURAL CHEMICALS - 7.3% | ||||||||
Monsanto Co. | 13,373 | 1,504,997 | ||||||
Mosaic Co. | 18,438 | 849,254 | ||||||
CF Industries Holdings, Inc. | 2,764 | 784,092 | ||||||
Potash Corporation of Saskatchewan, Inc. | 18,980 | 612,105 | ||||||
Agrium, Inc. | 4,813 | 501,852 | ||||||
Total Agricultural Chemicals | 4,252,300 | |||||||
STEEL-PRODUCERS - 5.9% | ||||||||
Nucor Corp. | 17,087 | 812,145 | ||||||
Steel Dynamics, Inc. | 24,040 | 483,204 | ||||||
Reliance Steel & Aluminum Co. | 7,678 | 468,972 | ||||||
ArcelorMittal1 | 44,714 | 421,206 | ||||||
United States Steel Corp.1 | 16,994 | 414,654 | ||||||
Commercial Metals Co. | 19,110 | 309,391 | ||||||
Carpenter Technology Corp. | 7,805 | 303,458 | ||||||
AK Steel Holding Corp.*,1 | 44,763 | 200,091 | ||||||
Total Steel-Producers | 3,413,121 | |||||||
INDUSTRIAL GASES - 5.2% | ||||||||
Praxair, Inc. | 10,112 | 1,220,923 | ||||||
Air Products & Chemicals, Inc. | 7,858 | 1,188,758 | ||||||
Airgas, Inc. | 5,366 | 569,386 | ||||||
Total Industrial Gases | 2,979,067 | |||||||
BUILDING PRODUCTS-CEMENT/AGGREGATES - 4.2% | ||||||||
Vulcan Materials Co. | 8,248 | 695,307 | ||||||
Cemex SAB de CV ADR* | 70,686 | 669,396 | ||||||
Martin Marietta Materials, Inc. | 4,559 | 637,348 | ||||||
Eagle Materials, Inc. | 5,221 | 436,267 | ||||||
Total Building Products-Cement/Aggregates | 2,438,318 | |||||||
COATINGS/PAINT - 3.7% | ||||||||
Sherwin-Williams Co. | 3,856 | 1,097,032 | ||||||
Valspar Corp. | 6,375 | 535,691 | ||||||
RPM International, Inc. | 11,031 | 529,378 | ||||||
Total Coatings/Paint | 2,162,101 | |||||||
CONTAINERS-METAL/GLASS - 3.5% | ||||||||
Ball Corp. | 9,114 | 643,813 | ||||||
Crown Holdings, Inc.* | 10,881 | 587,792 | ||||||
Silgan Holdings, Inc. | 7,000 | 406,910 | ||||||
Owens-Illinois, Inc.* | 17,441 | 406,724 | ||||||
Total Containers-Metal/Glass | 2,045,239 | |||||||
METAL-COPPER - 3.4% | ||||||||
Southern Copper Corp.1 | 34,860 | 1,017,215 | ||||||
Freeport-McMoRan, Inc. | 50,518 | 957,316 | ||||||
Total Metal-Copper | 1,974,531 |
SEE NOTES TO FINANCIAL STATEMENTS. | THE RYDEX FUNDS ANNUAL REPORT | 21 |
SCHEDULE OF INVESTMENTS (concluded) | March 31, 2015 |
BASIC MATERIALS FUND |
Shares | Value | |||||||
DIVERSIFIED MINERALS - 3.0% | ||||||||
BHP Billiton Ltd. ADR1 | 15,375 | $ | 714,476 | |||||
BHP Billiton plc ADR1 | 11,660 | 516,072 | ||||||
Teck Resources Ltd. — Class B | 34,933 | 479,630 | ||||||
Total Diversified Minerals | 1,710,178 | |||||||
METAL-ALUMINUM - 2.9% | ||||||||
Alcoa, Inc. | 64,066 | 827,733 | ||||||
Constellium N.V. — Class A* | 18,600 | 377,952 | ||||||
Kaiser Aluminum Corp. | 3,190 | 245,279 | ||||||
Century Aluminum Co.* | 16,700 | 230,460 | ||||||
Total Metal-Aluminum | 1,681,424 | |||||||
PAPER & RELATED PRODUCTS - 2.6% | ||||||||
International Paper Co. | 18,301 | 1,015,523 | ||||||
Domtar Corp. | 10,443 | 482,675 | ||||||
Total Paper & Related Products | 1,498,198 | |||||||
METAL-IRON - 1.7% | ||||||||
Vale S.A. ADR1 | 144,542 | 816,663 | ||||||
Cliffs Natural Resources, Inc.1 | 37,345 | 179,629 | ||||||
Total Metal-Iron | 996,292 | |||||||
SILVER MINING - 1.6% | ||||||||
Silver Wheaton Corp. | 27,856 | 529,821 | ||||||
Pan American Silver Corp. | 44,306 | 388,564 | ||||||
Total Silver Mining | 918,385 | |||||||
METAL-DIVERSIFIED - 1.0% | ||||||||
Rio Tinto plc ADR | 13,825 | 572,355 | ||||||
OFFICE SUPPLIES & FORMS - 0.8% | ||||||||
Avery Dennison Corp. | 8,577 | 453,809 | ||||||
GARDEN PRODUCTS - 0.7% | ||||||||
Scotts Miracle-Gro Co. — Class A | 6,200 | 416,454 | ||||||
MISCELLANEOUS MANUFACTURING - 0.7% | ||||||||
AptarGroup, Inc. | 6,474 | 411,228 | ||||||
CHEMICALS-PLASTICS - 0.7% | ||||||||
PolyOne Corp. | 10,312 | 385,153 | ||||||
STEEL-SPECIALTY - 0.7% | ||||||||
Allegheny Technologies, Inc. | 12,698 | 381,067 | ||||||
QUARRYING - 0.6% | ||||||||
Compass Minerals International, Inc. | 3,978 | 370,789 | ||||||
BUILDING & CONSTRUCTION PRODUCTS-MISCELLANEOUS - 0.6% | ||||||||
Louisiana-Pacific Corp.* | 20,053 | 331,075 | ||||||
BUILDING PRODUCTS - WOOD - 0.5% | ||||||||
Boise Cascade Co.* | 7,000 | 262,220 | ||||||
PLATINUM - 0.5% | ||||||||
Stillwater Mining Co.* | 20,029 | 258,775 | ||||||
OIL FIELD MACHINERY & EQUIPMENT - 0.3% | ||||||||
Flotek Industries, Inc.* | 12,953 | 190,927 | ||||||
Total Common Stocks | ||||||||
(Cost $41,804,915) | 57,598,223 | |||||||
Face Amount | ||||||||
REPURCHASE AGREEMENT††,2 - 0.5% | ||||||||
HSBC Group issued 03/31/15 at 0.03% due 04/01/15 | $ | 298,279 | 298,279 | |||||
Total Repurchase Agreement | ||||||||
(Cost $298,279) | 298,279 | |||||||
SECURITIES LENDING COLLATERAL††,3 - 5.1% | ||||||||
Repurchase Agreements | ||||||||
HSBC Securities, Inc. issued 03/31/15 at 0.10% due 04/01/15 | 1,942,643 | 1,942,643 | ||||||
BNP Paribas Securities Corp. issued 03/31/15 at 0.10% due 04/01/15 | 668,269 | 668,269 | ||||||
Barclays Capital, Inc. issued 03/31/15 at 0.10% due 04/01/15 | 344,936 | 344,936 | ||||||
Total Securities Lending Collateral | ||||||||
(Cost $2,955,848) | 2,955,848 | |||||||
Total Investments - 105.1% | ||||||||
(Cost $45,059,042) | $ | 60,852,350 | ||||||
Other Assets & Liabilities, net - (5.1)% | (2,944,129 | ) | ||||||
Total Net Assets - 100.0% | $ | 57,908,221 |
* | Non-income producing security. |
† | Value determined based on Level 1 inputs — See Note 4. |
†† | Value determined based on Level 2 inputs — See Note 4. |
1 | All or portion of this security is on loan at March 31, 2015 — See Note 6. |
2 | Repurchase Agreement — See Note 5. |
3 | Securities lending collateral — See Note 6. |
ADR — American Depositary Receipt | |
plc — Public Limited Company |
22 | THE RYDEX FUNDS ANNUAL REPORT | SEE NOTES TO FINANCIAL STATEMENTS. |
BASIC MATERIALS FUND |
STATEMENT OF ASSETS AND LIABILITIES
March 31, 2015
Assets: | ||||
Investments, at value - including $2,849,049 of securities loaned (cost $41,804,915) | $ | 57,598,223 | ||
Repurchase agreements, at value (cost $3,254,127) | 3,254,127 | |||
Total investments (cost $45,059,042) | 60,852,350 | |||
Segregated cash with broker | 43,202 | |||
Cash | 18,409 | |||
Receivables: | ||||
Securities sold | 1,302,096 | |||
Dividends | 98,965 | |||
Fund shares sold | 88,829 | |||
Securities lending income | 2,234 | |||
Total assets | 62,406,085 | |||
Liabilities: | ||||
Payable for: | ||||
Return of securities loaned | 2,999,050 | |||
Fund shares redeemed | 1,402,711 | |||
Management fees | 45,083 | |||
Transfer agent and administrative fees | 13,260 | |||
Distribution and service fees | 6,264 | |||
Portfolio accounting fees | 5,304 | |||
Miscellaneous | 26,192 | |||
Total liabilities | 4,497,864 | |||
Commitments and contingent liabilities (Note 10) | — | |||
Net assets | $ | 57,908,221 | ||
Net assets consist of: | ||||
Paid in capital | $ | 69,726,908 | ||
Undistributed net investment income | 213,276 | |||
Accumulated net realized loss on investments | (27,825,271 | ) | ||
Net unrealized appreciation on investments | 15,793,308 | |||
Net assets | $ | 57,908,221 | ||
Investor Class: | ||||
Net assets | $ | 46,508,703 | ||
Capital shares outstanding | 926,908 | |||
Net asset value per share | $ | 50.18 | ||
Advisor Class: | ||||
Net assets | $ | 2,073,365 | ||
Capital shares outstanding | 44,890 | |||
Net asset value per share | $ | 46.19 | ||
A-Class: | ||||
Net assets | $ | 6,193,560 | ||
Capital shares outstanding | 130,281 | |||
Net asset value per share | $ | 47.54 | ||
Maximum offering price per share (Net asset value divided by 95.25%) | $ | 49.91 | ||
C-Class: | ||||
Net assets | $ | 3,132,593 | ||
Capital shares outstanding | 72,247 | |||
Net asset value per share | $ | 43.36 |
STATEMENT OF OPERATIONS
Year Ended March 31, 2015
Investment Income: | ||||
Dividends (net of foreign withholding tax of $19,591) | $ | 967,278 | ||
Income from securities lending, net | 31,975 | |||
Interest | 50 | |||
Total investment income | 999,303 | |||
Expenses: | ||||
Management fees | 449,417 | |||
Transfer agent and administrative fees | 132,181 | |||
Distribution and service fees: | ||||
Advisor Class | 17,912 | |||
A-Class | 22,151 | |||
C-Class | 45,185 | |||
Portfolio accounting fees | 52,872 | |||
Custodian fees | 6,156 | |||
Trustees’ fees* | 3,650 | |||
Tax expense | 1,493 | |||
Line of credit fees | 98 | |||
Miscellaneous | 66,506 | |||
Total expenses | 797,621 | |||
Net investment income | 201,682 | |||
Net Realized and Unrealized Gain (Loss): | ||||
Net realized gain (loss) on: | ||||
Investments | 451,596 | |||
Net realized gain | 451,596 | |||
Net change in unrealized appreciation (depreciation) on: | ||||
Investments | (3,176,749 | ) | ||
Net change in unrealized appreciation (depreciation) | (3,176,749 | ) | ||
Net realized and unrealized loss | (2,725,153 | ) | ||
Net decrease in net assets resulting from operations | $ | (2,523,471 | ) |
* | Relates to Trustees not deemed “interested persons” within the meaning of Section 2(a)(19) of the 1940 Act. |
SEE NOTES TO FINANCIAL STATEMENTS. | THE RYDEX FUNDS ANNUAL REPORT | 23 |
BASIC MATERIALS FUND |
STATEMENTS OF CHANGES IN NET ASSETS
Year Ended March 31, 2015 | Year Ended March 31, 2014 | |||||||
Increase (Decrease) in Net Assets from Operations: | ||||||||
Net investment income | $ | 201,682 | $ | 217,641 | ||||
Net realized gain on investments | 451,596 | 6,023,395 | ||||||
Net change in unrealized appreciation (depreciation) on investments | (3,176,749 | ) | (5,738,840 | ) | ||||
Net increase (decrease) in net assets resulting from operations | (2,523,471 | ) | 502,196 | |||||
Distributions to shareholders from: | ||||||||
Net investment income | ||||||||
Investor Class | (126,318 | ) | (196,131 | ) | ||||
Advisor Class | (15,206 | ) | (14,384 | ) | ||||
A-Class | (52,521 | ) | (54,137 | ) | ||||
C-Class | (38,108 | ) | (34,529 | ) | ||||
Total distributions to shareholders | (232,153 | ) | (299,181 | ) | ||||
Capital share transactions: | ||||||||
Proceeds from sale of shares | ||||||||
Investor Class | 174,133,848 | 162,952,932 | ||||||
Advisor Class | 93,725,732 | 8,129,722 | ||||||
A-Class | 17,363,620 | 13,387,890 | ||||||
C-Class | 21,170,418 | 22,384,921 | ||||||
Distributions reinvested | ||||||||
Investor Class | 122,696 | 187,009 | ||||||
Advisor Class | 14,751 | 13,713 | ||||||
A-Class | 48,718 | 50,565 | ||||||
C-Class | 33,909 | 31,129 | ||||||
Cost of shares redeemed | ||||||||
Investor Class | (159,713,668 | ) | (165,714,358 | ) | ||||
Advisor Class | (93,948,162 | ) | (9,087,918 | ) | ||||
A-Class | (24,254,035 | ) | (11,090,005 | ) | ||||
C-Class | (22,896,209 | ) | (23,983,376 | ) | ||||
Net increase (decrease) from capital share transactions | 5,801,618 | (2,737,776 | ) | |||||
Net increase (decrease) in net assets | 3,045,994 | (2,534,761 | ) | |||||
Net assets: | ||||||||
Beginning of year | 54,862,227 | 57,396,988 | ||||||
End of year | $ | 57,908,221 | $ | 54,862,227 | ||||
Undistributed net investment income at end of year | $ | 213,276 | $ | 199,782 | ||||
Capital share activity: | ||||||||
Shares sold | ||||||||
Investor Class | 3,328,992 | 3,283,583 | ||||||
Advisor Class | 1,959,976 | 179,322 | ||||||
A-Class | 343,124 | 276,591 | ||||||
C-Class | 460,459 | 520,203 | ||||||
Shares issued from reinvestment of distributions | ||||||||
Investor Class | 2,376 | 3,814 | ||||||
Advisor Class | 310 | 302 | ||||||
A-Class | 995 | 1,084 | ||||||
C-Class | 757 | 724 | ||||||
Shares redeemed | ||||||||
Investor Class | (3,045,699 | ) | (3,367,228 | ) | ||||
Advisor Class | (1,970,445 | ) | (202,337 | ) | ||||
A-Class | (481,155 | ) | (243,630 | ) | ||||
C-Class | (501,150 | ) | (559,837 | ) | ||||
Net increase (decrease) in shares | 98,540 | (107,409 | ) |
24 | THE RYDEX FUNDS ANNUAL REPORT | SEE NOTES TO FINANCIAL STATEMENTS. |
BASIC MATERIALS FUND |
FINANCIAL HIGHLIGHTS
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.
Investor Class | Year Ended March 31, 2015 | Year Ended March 31, 2014 | Year Ended March 28, 2013 | Year Ended March 31, 2012 | Year Ended March 31, 2011 | |||||||||||||||
Per Share Data | ||||||||||||||||||||
Net asset value, beginning of period | $ | 52.53 | $ | 49.94 | $ | 49.80 | $ | 56.36 | $ | 44.65 | ||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||
Net investment income (loss)a | .29 | .32 | .46 | .09 | — | b | ||||||||||||||
Net gain (loss) on investments (realized and unrealized) | (2.26 | ) | 2.58 | (.15 | ) | (6.65 | ) | 11.82 | ||||||||||||
Total from investment operations | (1.97 | ) | 2.90 | .31 | (6.56 | ) | 11.82 | |||||||||||||
Less distributions from: | ||||||||||||||||||||
Net investment income | (.38 | ) | (.31 | ) | (.17 | ) | — | (.11 | ) | |||||||||||
Total distributions | (.38 | ) | (.31 | ) | (.17 | ) | — | (.11 | ) | |||||||||||
Net asset value, end of period | $ | 50.18 | $ | 52.53 | $ | 49.94 | $ | 49.80 | $ | 56.36 | ||||||||||
Total Returnc | (3.77 | %) | 5.84 | % | 0.65 | % | (11.66 | %) | 26.50 | % | ||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||
Net assets, end of period (in thousands) | $ | 46,509 | $ | 33,687 | $ | 36,012 | $ | 36,847 | $ | 73,606 | ||||||||||
Ratios to average net assets: | ||||||||||||||||||||
Net investment income (loss) | 0.56 | % | 0.66 | % | 0.95 | % | 0.17 | % | 0.00 | % | ||||||||||
Total expenses | 1.34 | % | 1.38 | % | 1.36 | % | 1.36 | % | 1.39 | % | ||||||||||
Portfolio turnover rate | 358 | % | 349 | % | 251 | % | 217 | % | 292 | % |
Advisor Class | Year Ended March 31, 2015 | Year Ended March 31, 2014 | Year Ended March 28, 2013 | Year Ended March 31, 2012 | Year Ended March 31, 2011 | |||||||||||||||
Per Share Data | ||||||||||||||||||||
Net asset value, beginning of period | $ | 48.64 | $ | 46.50 | $ | 46.61 | $ | 53.00 | $ | 42.20 | ||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||
Net investment income (loss)a | — | b | .08 | .19 | .08 | (.20 | ) | |||||||||||||
Net gain (loss) on investments (realized and unrealized) | (2.07 | ) | 2.37 | (.13 | ) | (6.47 | ) | 11.11 | ||||||||||||
Total from investment operations | (2.07 | ) | 2.45 | .06 | (6.39 | ) | 10.91 | |||||||||||||
Less distributions from: | ||||||||||||||||||||
Net investment income | (.38 | ) | (.31 | ) | (.17 | ) | — | (.11 | ) | |||||||||||
Total distributions | (.38 | ) | (.31 | ) | (.17 | ) | — | (.11 | ) | |||||||||||
Net asset value, end of period | $ | 46.19 | $ | 48.64 | $ | 46.50 | $ | 46.61 | $ | 53.00 | ||||||||||
Total Returnc | (4.30 | %) | 5.31 | % | 0.16 | % | (12.08 | %) | 25.88 | % | ||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||
Net assets, end of period (in thousands) | $ | 2,073 | $ | 2,678 | $ | 3,616 | $ | 5,287 | $ | 15,986 | ||||||||||
Ratios to average net assets: | ||||||||||||||||||||
Net investment income (loss) | 0.00 | %d | 0.18 | % | 0.43 | % | 0.17 | % | (0.44 | %) | ||||||||||
Total expenses | 1.85 | % | 1.88 | % | 1.86 | % | 1.86 | % | 1.89 | % | ||||||||||
Portfolio turnover rate | 358 | % | 349 | % | 251 | % | 217 | % | 292 | % |
SEE NOTES TO FINANCIAL STATEMENTS. | THE RYDEX FUNDS ANNUAL REPORT | 25 |
BASIC MATERIALS FUND |
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.
A-Class | Year Ended March 31, 2015 | Year Ended March 31, 2014 | Year Ended March 28, 2013 | Year Ended March 31, 2012 | Year Ended March 31, 2011 | |||||||||||||||
Per Share Data | ||||||||||||||||||||
Net asset value, beginning of period | $ | 49.93 | $ | 47.60 | $ | 47.58 | $ | 53.99 | $ | 42.88 | ||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||
Net investment income (loss)a | .13 | .22 | .32 | (.01 | ) | (.09 | ) | |||||||||||||
Net gain (loss) on investments (realized and unrealized) | (2.14 | ) | 2.42 | (.13 | ) | (6.40 | ) | 11.31 | ||||||||||||
Total from investment operations | (2.01 | ) | 2.64 | .19 | (6.41 | ) | 11.22 | |||||||||||||
Less distributions from: | ||||||||||||||||||||
Net investment income | (.38 | ) | (.31 | ) | (.17 | ) | — | (.11 | ) | |||||||||||
Total distributions | (.38 | ) | (.31 | ) | (.17 | ) | — | (.11 | ) | |||||||||||
Net asset value, end of period | $ | 47.54 | $ | 49.93 | $ | 47.60 | $ | 47.58 | $ | 53.99 | ||||||||||
Total Returnc | (4.05 | %) | 5.58 | % | 0.41 | % | (11.87 | %) | 26.20 | % | ||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||
Net assets, end of period (in thousands) | $ | 6,194 | $ | 13,347 | $ | 11,104 | $ | 9,410 | $ | 18,187 | ||||||||||
Ratios to average net assets: | ||||||||||||||||||||
Net investment income (loss) | 0.27 | % | 0.47 | % | 0.69 | % | (0.03 | %) | (0.19 | %) | ||||||||||
Total expenses | 1.60 | % | 1.63 | % | 1.61 | % | 1.61 | % | 1.64 | % | ||||||||||
Portfolio turnover rate | 358 | % | 349 | % | 251 | % | 217 | % | 292 | % |
C-Class | Year Ended March 31, 2015 | Year Ended March 31, 2014 | Year Ended March 28, 2013 | Year Ended March 31, 2012 | Year Ended March 31, 2011 | |||||||||||||||
Per Share Data | ||||||||||||||||||||
Net asset value, beginning of period | $ | 45.91 | $ | 44.12 | $ | 44.45 | $ | 50.80 | $ | 40.67 | ||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||
Net investment income (loss)a | (.23 | ) | (.15 | ) | (.03 | ) | (.33 | ) | (.40 | ) | ||||||||||
Net gain (loss) on investments (realized and unrealized) | (1.94 | ) | 2.25 | (.13 | ) | (6.02 | ) | 10.64 | ||||||||||||
Total from investment operations | (2.17 | ) | 2.10 | (.16 | ) | (6.35 | ) | 10.24 | ||||||||||||
Less distributions from: | ||||||||||||||||||||
Net investment income | (.38 | ) | (.31 | ) | (.17 | ) | — | (.11 | ) | |||||||||||
Total distributions | (.38 | ) | (.31 | ) | (.17 | ) | — | (.11 | ) | |||||||||||
Net asset value, end of period | $ | 43.36 | $ | 45.91 | $ | 44.12 | $ | 44.45 | $ | 50.80 | ||||||||||
Total Returnc | (4.76 | %) | 4.80 | % | (0.35 | %) | (12.50 | %) | 25.21 | % | ||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||
Net assets, end of period (in thousands) | $ | 3,133 | $ | 5,150 | $ | 6,666 | $ | 8,317 | $ | 13,353 | ||||||||||
Ratios to average net assets: | ||||||||||||||||||||
Net investment income (loss) | (0.49 | %) | (0.34 | %) | (0.07 | %) | (0.73 | %) | (0.93 | %) | ||||||||||
Total expenses | 2.35 | % | 2.38 | % | 2.36 | % | 2.36 | % | 2.39 | % | ||||||||||
Portfolio turnover rate | 358 | % | 349 | % | 251 | % | 217 | % | 292 | % |
a | Net investment income (loss) per share was computed using average shares outstanding throughout the period. |
b | Net investment income is less than $0.01 per share. |
c | Total return does not reflect the impact of any applicable sales charges. |
d | Less than 0.01%. |
26 | THE RYDEX FUNDS ANNUAL REPORT | SEE NOTES TO FINANCIAL STATEMENTS. |
PERFORMANCE REPORT AND FUND PROFILE (Unaudited) | March 31, 2015 |
BIOTECHNOLOGY FUND
OBJECTIVE: Seeks to provide capital appreciation by investing in companies that are involved in the biotechnology industry, including companies involved in research and development, genetic or biological engineering, and in the design, manufacture, or sale of related biotechnology products or services (“biotechnology companies”).
For the one-year period ended March 31, 2015, Biotechnology Fund Investor Class returned 42.19%, compared with the S&P 500 Health Care Index, which returned 26.19%. The broader S&P 500 Index returned 12.73%.
The industry that contributed most to return was biotechnology, followed by life sciences tools & services. The pharmaceuticals industry detracted from return.
The best-performing holdings in the Fund were Gilead Sciences, Inc., Celgene Corp., and Puma Biotechnology, Inc. The worst-performing holdings in the Fund included Seattle Genetics, Inc., Aegerion Pharmaceuticals, Inc., and Theravance Biopharma, Inc.
Performance displayed represents past performance, which is no guarantee of future results.
Holdings Diversification (Market Exposure as % of Net Assets)
![](https://capedge.com/proxy/N-CSR/0001398344-15-003814/rsecf_07.jpg)
“Holdings Diversification (Market Exposure as % of Net Assets)” excludes any temporary cash investments.
Inception Dates: | |
Investor Class | April 1, 1998 |
Advisor Class | April 1, 1998 |
A-Class | September 1, 2004 |
C-Class | March 30, 2001 |
Ten Largest Holdings (% of Total Net Assets) | |
Gilead Sciences, Inc. | 6.8% |
Amgen, Inc. | 6.1% |
Biogen, Inc. | 5.7% |
Celgene Corp. | 5.3% |
Regeneron Pharmaceuticals, Inc. | 3.5% |
Alexion Pharmaceuticals, Inc. | 3.3% |
Vertex Pharmaceuticals, Inc. | 2.9% |
Illumina, Inc. | 2.8% |
BioMarin Pharmaceutical, Inc. | 2.6% |
Pharmacyclics, Inc. | 2.5% |
Top Ten Total | 41.5% |
“Ten Largest Holdings” exclude any temporary cash or derivative investments. |
THE RYDEX FUNDS ANNUAL REPORT | 27 |
PERFORMANCE REPORT AND FUND PROFILE (Unaudited)(concluded) | March 31, 2015 |
Cumulative Fund Performance*
![](https://capedge.com/proxy/N-CSR/0001398344-15-003814/rsecf_08.jpg)
![](https://capedge.com/proxy/N-CSR/0001398344-15-003814/rsecf_09.jpg)
Average Annual Returns*
Periods Ended March 31, 2015
1 Year | 5 Year | 10 Year | |
Investor Class Shares | 42.19% | 28.92% | 18.66% |
Advisor Class Shares | 41.49% | 28.27% | 18.08% |
A-Class Shares | 41.83% | 28.59% | 18.36% |
A-Class Shares with sales charge† | 35.10% | 27.34% | 17.79% |
C-Class Shares | 40.75% | 27.64% | 17.50% |
C-Class Shares with CDSC‡ | 39.75% | 27.64% | 17.50% |
S&P 500 Health Care Index | 26.19% | 20.09% | 11.41% |
S&P 500 Index | 12.73% | 14.47% | 8.01% |
* | The performance data above represents past performance that is not predictive of future results. The investment return and principal value of an investment in the Fund will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Returns are historical and include changes in principal and reinvested dividends and capital gains and do not reflect the effect of taxes. The S&P 500 Index and the S&P 500 Health Care Index are unmanaged indices and, unlike the Fund, have no management fees or operating expenses to reduce their reported returns. The graphs are based on Investor Class shares and A-Class shares only; performance for Advisor Class shares and C-Class shares will vary due to differences in fee structures. |
† | Fund returns are calculated using the maximum sales charge of 4.75%. |
‡ | Fund returns include a CDSC of 1% if redeemed within 12 months of purchase. |
28 | THE RYDEX FUNDS ANNUAL REPORT |
SCHEDULE OF INVESTMENTS | March 31, 2015 |
BIOTECHNOLOGY FUND |
Shares | Value | |||||||
COMMON STOCKS† - 99.4% | ||||||||
MEDICAL-BIOMEDICAL/GENETICS - 70.4% | ||||||||
Gilead Sciences, Inc.* | 477,742 | $ | 46,880,822 | |||||
Amgen, Inc. | 263,144 | 42,063,569 | ||||||
Biogen, Inc.* | 93,401 | 39,437,638 | ||||||
Celgene Corp.* | 319,185 | 36,795,647 | ||||||
Regeneron Pharmaceuticals, Inc.* | 54,314 | 24,521,685 | ||||||
Alexion Pharmaceuticals, Inc.* | 132,602 | 22,979,927 | ||||||
Vertex Pharmaceuticals, Inc.* | 168,670 | 19,898,000 | ||||||
Illumina, Inc.* | 105,123 | 19,515,034 | ||||||
BioMarin Pharmaceutical, Inc.* | 142,144 | 17,713,985 | ||||||
Incyte Corp.* | 169,999 | 15,582,108 | ||||||
Medivation, Inc.* | 95,545 | 12,331,993 | ||||||
Intrexon Corp.*,1 | 262,400 | 11,905,088 | ||||||
Alnylam Pharmaceuticals, Inc.* | 106,133 | 11,082,408 | ||||||
United Therapeutics Corp.* | 62,426 | 10,764,427 | ||||||
Isis Pharmaceuticals, Inc.*,1 | 160,787 | 10,237,308 | ||||||
Intercept Pharmaceuticals, Inc.*,1 | 31,335 | 8,837,097 | ||||||
Puma Biotechnology, Inc.* | 36,836 | 8,697,348 | ||||||
Seattle Genetics, Inc.*,1 | 222,094 | 7,851,023 | ||||||
Bio-Rad Laboratories, Inc. — Class A* | 58,069 | 7,849,767 | ||||||
Bluebird Bio, Inc.* | 63,700 | 7,693,049 | ||||||
Charles River Laboratories International, Inc.* | 94,485 | 7,491,716 | ||||||
Myriad Genetics, Inc.*,1 | 182,580 | 6,463,332 | ||||||
Synageva BioPharma Corp.* | 64,880 | 6,327,746 | ||||||
Kite Pharma, Inc.*,1 | 104,300 | 6,016,024 | ||||||
Celldex Therapeutics, Inc.*,1 | 212,993 | 5,936,115 | ||||||
Exact Sciences Corp.*,1 | 250,055 | 5,506,211 | ||||||
Novavax, Inc.* | 628,585 | 5,198,398 | ||||||
Medicines Co.* | 182,472 | 5,112,865 | ||||||
PTC Therapeutics, Inc.* | 83,175 | 5,061,199 | ||||||
AMAG Pharmaceuticals, Inc.*,1 | 92,200 | 5,039,652 | ||||||
Halozyme Therapeutics, Inc.* | 349,655 | 4,993,073 | ||||||
ARIAD Pharmaceuticals, Inc.*,1 | 575,489 | 4,742,029 | ||||||
NewLink Genetics Corp.*,1 | 84,560 | 4,626,278 | ||||||
Acorda Therapeutics, Inc.* | 138,922 | 4,623,324 | ||||||
Ligand Pharmaceuticals, Inc. — Class B*,1 | 59,143 | 4,560,517 | ||||||
Merrimack Pharmaceuticals, Inc.*,1 | 377,100 | 4,479,948 | ||||||
PDL BioPharma, Inc.1 | 601,170 | 4,229,231 | ||||||
Repligen Corp.* | 130,224 | 3,953,601 | ||||||
Aegerion Pharmaceuticals, Inc.*,1 | 127,225 | 3,329,478 | ||||||
Juno Therapeutics, Inc.* | 48,500 | 2,942,010 | ||||||
Theravance, Inc.1 | 165,064 | 2,594,806 | ||||||
ZIOPHARM Oncology, Inc.*,1 | 122,800 | 1,322,556 | ||||||
Total Medical-Biomedical/Genetics | 487,188,032 | |||||||
MEDICAL-DRUGS - 16.8% | ||||||||
OPKO Health, Inc.*,1 | 814,640 | 11,543,449 | ||||||
Quintiles Transnational Holdings, Inc.* | 169,264 | 11,335,610 | ||||||
Alkermes plc* | 165,378 | 10,083,097 | ||||||
Receptos, Inc.* | 53,513 | 8,823,759 | ||||||
ACADIA Pharmaceuticals, Inc.* | 209,628 | 6,831,777 | ||||||
Anacor Pharmaceuticals, Inc.* | 107,700 | 6,230,445 | ||||||
Endo International plc* | 66,900 | 6,000,930 | ||||||
Ironwood Pharmaceuticals, Inc. — Class A* | 369,996 | 5,919,936 | ||||||
Clovis Oncology, Inc.*,1 | 78,997 | 5,863,947 | ||||||
TESARO, Inc.*,1 | 100,403 | 5,763,132 | ||||||
Insys Therapeutics, Inc.*,1 | 97,823 | 5,686,451 | ||||||
Keryx Biopharmaceuticals, Inc.*,1 | 365,265 | 4,649,823 | ||||||
Chimerix, Inc.* | 118,450 | 4,464,381 | ||||||
Shire plc ADR | 17,900 | 4,283,291 | ||||||
Salix Pharmaceuticals Ltd.* | 22,900 | 3,957,349 | ||||||
Regulus Therapeutics, Inc.* | 202,632 | 3,432,586 | ||||||
Akorn, Inc.* | 64,900 | 3,083,399 | ||||||
Jazz Pharmaceuticals plc* | 14,100 | 2,436,339 | ||||||
Pacira Pharmaceuticals, Inc.* | 22,900 | 2,034,665 | ||||||
Radius Health, Inc.* | 34,000 | 1,399,440 | ||||||
Cempra, Inc.* | 39,800 | 1,365,538 | ||||||
Array BioPharma, Inc.* | 173,600 | 1,279,432 | ||||||
Total Medical-Drugs | 116,468,776 | |||||||
THERAPEUTICS - 6.4% | ||||||||
Pharmacyclics, Inc.* | 67,200 | 17,199,840 | ||||||
Agios Pharmaceuticals, Inc.* | 75,104 | 7,082,307 | ||||||
Neurocrine Biosciences, Inc.* | 174,775 | 6,940,315 | ||||||
Dyax Corp.* | 351,565 | 5,890,472 | ||||||
Portola Pharmaceuticals, Inc.* | 137,370 | 5,214,565 | ||||||
MannKind Corp.*,1 | 309,600 | 1,609,920 | ||||||
Total Therapeutics | 43,937,419 | |||||||
MEDICAL-GENERIC DRUGS - 1.3% | ||||||||
Mylan N.V.* | 115,700 | 6,866,795 | ||||||
Impax Laboratories, Inc.* | 48,100 | 2,254,447 | ||||||
Total Medical-Generic Drugs | 9,121,242 | |||||||
DIAGNOSTIC EQUIPMENT - 1.1% | ||||||||
Cepheid* | 136,876 | 7,788,244 | ||||||
MEDICAL INSTRUMENTS - 1.1% | ||||||||
Bio-Techne Corp. | 77,597 | 7,782,203 | ||||||
DIAGNOSTIC KITS - 1.1% | ||||||||
QIAGEN N.V.* | 297,600 | 7,499,520 | ||||||
DRUG DELIVERY SYSTEMS - 0.8% | ||||||||
Nektar Therapeutics* | 380,280 | 4,183,080 | ||||||
Depomed, Inc.* | 66,200 | 1,483,542 | ||||||
Total Drug Delivery Systems | 5,666,622 | |||||||
DIVERSIFIED OPERATIONS - 0.4% | ||||||||
Horizon Pharma plc* | 99,800 | 2,591,806 | ||||||
Total Common Stocks | ||||||||
(Cost $375,167,671) | 688,043,864 |
SEE NOTES TO FINANCIAL STATEMENTS. | THE RYDEX FUNDS ANNUAL REPORT | 29 |
SCHEDULE OF INVESTMENTS (concluded) | March 31, 2015 |
BIOTECHNOLOGY FUND |
Shares | Value | |||||||
RIGHTS††† - 0.0% | ||||||||
Chelsea Therapeutics International | ||||||||
Expires 12/31/17*,1 | 263,700 | $ | 21,096 | |||||
Clinical Data, Inc. | ||||||||
Expires 12/31/20* | 24,000 | — | ||||||
Total Rights | ||||||||
(Cost $19,745) | 21,096 |
Face Amount | ||||||||
REPURCHASE AGREEMENT††,2 - 1.1% | ||||||||
HSBC Group issued 03/31/15 at 0.03% due 04/01/15 | $ | 7,696,522 | 7,696,522 | |||||
Total Repurchase Agreement | ||||||||
(Cost $7,696,522) | 7,696,522 | |||||||
SECURITIES LENDING COLLATERAL††,3 - 11.9% | ||||||||
Repurchase Agreements | ||||||||
HSBC Securities, Inc. issued 03/31/15 at 0.10% due 04/01/15 | 54,157,844 | 54,157,844 | ||||||
BNP Paribas Securities Corp. issued 03/31/15 at 0.10% due 04/01/15 | 18,630,298 | 18,630,298 | ||||||
Barclays Capital, Inc. issued 03/31/15 at 0.10% due 04/01/15 | 9,616,267 | 9,616,267 | ||||||
Total Securities Lending Collateral | ||||||||
(Cost $82,404,409) | 82,404,409 | |||||||
Total Investments - 112.4% | ||||||||
(Cost $465,288,347) | $ | 778,165,891 | ||||||
Other Assets & Liabilities, net - (12.4)% | (86,217,685 | ) | ||||||
Total Net Assets - 100.0% | $ | 691,948,206 |
* | Non-income producing security. |
† | Value determined based on Level 1 inputs — See Note 4. |
†† | Value determined based on Level 2 inputs — See Note 4. |
††† | Value determined based on Level 3 inputs — See Note 4. |
1 | All or portion of this security is on loan at March 31, 2015 — See Note 6. |
2 | Repurchase Agreement — See Note 5. |
3 | Securities lending collateral — See Note 6. |
ADR — American Depositary Receipt | |
plc — Public Limited Company |
30 | THE RYDEX FUNDS ANNUAL REPORT | SEE NOTES TO FINANCIAL STATEMENTS. |
BIOTECHNOLOGY FUND |
STATEMENT OF ASSETS AND LIABILITIES
March 31, 2015
Assets: | ||||
Investments, at value - including $79,529,180 of securities loaned (cost $375,187,416) | $ | 688,064,960 | ||
Repurchase agreements, at value (cost $90,100,931) | 90,100,931 | |||
Total investments (cost $465,288,347) | 778,165,891 | |||
Segregated cash with broker | 1,204,397 | |||
Receivables: | ||||
Securities sold | 6,644,482 | |||
Fund shares sold | 3,596,231 | |||
Securities lending income | 275,996 | |||
Interest | 6 | |||
Total assets | 789,887,003 | |||
Liabilities: | ||||
Payable for: | ||||
Return of securities loaned | 83,608,806 | |||
Fund shares redeemed | 13,307,815 | |||
Management fees | 498,622 | |||
Transfer agent and administrative fees | 146,653 | |||
Distribution and service fees | 80,763 | |||
Portfolio accounting fees | 44,685 | |||
Miscellaneous | 251,453 | |||
Total liabilities | 97,938,797 | |||
Commitments and contingent liabilities (Note 10) | — | |||
Net assets | $ | 691,948,206 | ||
Net assets consist of: | ||||
Paid in capital | $ | 391,315,217 | ||
Undistributed net investment income | 1 | |||
Accumulated net realized loss on investments | (12,244,556 | ) | ||
Net unrealized appreciation on investments | 312,877,544 | |||
Net assets | $ | 691,948,206 | ||
Investor Class: | ||||
Net assets | $ | 498,068,443 | ||
Capital shares outstanding | 5,319,592 | |||
Net asset value per share | $ | 93.63 | ||
Advisor Class: | ||||
Net assets | $ | 63,195,768 | ||
Capital shares outstanding | 740,128 | |||
Net asset value per share | $ | 85.38 | ||
A-Class: | ||||
Net assets | $ | 89,260,236 | ||
Capital shares outstanding | 1,018,626 | |||
Net asset value per share | $ | 87.63 | ||
Maximum offering price per share (Net asset value divided by 95.25%) | $ | 92.00 | ||
C-Class: | ||||
Net assets | $ | 41,423,759 | ||
Capital shares outstanding | 512,184 | |||
Net asset value per share | $ | 80.88 |
STATEMENT OF OPERATIONS
Year Ended March 31, 2015
Investment Income: | ||||
Income from securities lending, net | $ | 3,343,368 | ||
Dividends | 1,433,083 | |||
Interest | 540 | |||
Total investment income | 4,776,991 | |||
Expenses: | ||||
Management fees | 4,096,238 | |||
Transfer agent and administrative fees | 1,204,772 | |||
Distribution and service fees: | ||||
Advisor Class | 219,630 | |||
A-Class | 146,149 | |||
C-Class | 287,763 | |||
Portfolio accounting fees | 414,558 | |||
Custodian fees | 56,160 | |||
Trustees’ fees* | 31,049 | |||
Line of credit fees | 5,296 | |||
Miscellaneous | 601,767 | |||
Total expenses | 7,063,382 | |||
Net investment loss | (2,286,391 | ) | ||
Net Realized and Unrealized Gain (Loss): | ||||
Net realized gain (loss) on: | ||||
Investments | 37,059,172 | |||
Net realized gain | 37,059,172 | |||
Net change in unrealized appreciation (depreciation) on: | ||||
Investments | 131,104,324 | |||
Net change in unrealized appreciation (depreciation) | 131,104,324 | |||
Net realized and unrealized gain | 168,163,496 | |||
Net increase in net assets resulting from operations | $ | 165,877,105 |
* | Relates to Trustees not deemed “interested persons” within the meaning of Section 2(a)(19) of the 1940 Act. |
SEE NOTES TO FINANCIAL STATEMENTS. | THE RYDEX FUNDS ANNUAL REPORT | 31 |
BIOTECHNOLOGY FUND |
STATEMENTS OF CHANGES IN NET ASSETS
Year Ended March 31, 2015 | Year Ended March 31, 2014 | |||||||
Increase (Decrease) in Net Assets from Operations: | ||||||||
Net investment loss | $ | (2,286,391 | ) | $ | (3,549,985 | ) | ||
Net realized gain on investments | 37,059,172 | 22,271,740 | ||||||
Net change in unrealized appreciation (depreciation) on investments | 131,104,324 | 84,195,149 | ||||||
Net increase in net assets resulting from operations | 165,877,105 | 102,916,904 | ||||||
Distributions to shareholders from: | ||||||||
Net realized gains | ||||||||
Investor Class | (14,483,457 | ) | — | |||||
Advisor Class | (2,030,607 | ) | — | |||||
A-Class | (2,447,445 | ) | — | |||||
C-Class | (1,355,470 | ) | — | |||||
Total distributions to shareholders | (20,316,979 | ) | — | |||||
Capital share transactions: | ||||||||
Proceeds from sale of shares | ||||||||
Investor Class | 565,896,488 | 520,369,253 | ||||||
Advisor Class | 173,383,484 | 128,608,371 | ||||||
A-Class | 66,728,700 | 68,697,208 | ||||||
C-Class | 34,835,985 | 39,913,128 | ||||||
Distributions reinvested | ||||||||
Investor Class | 13,882,734 | — | ||||||
Advisor Class | 2,002,511 | — | ||||||
A-Class | 2,278,723 | — | ||||||
C-Class | 1,312,852 | — | ||||||
Cost of shares redeemed | ||||||||
Investor Class | (501,097,404 | ) | (452,747,513 | ) | ||||
Advisor Class | (163,288,238 | ) | (123,757,687 | ) | ||||
A-Class | (48,804,711 | ) | (55,968,103 | ) | ||||
C-Class | (30,485,330 | ) | (32,688,163 | ) | ||||
Net increase from capital share transactions | 116,645,794 | 92,426,494 | ||||||
Net increase in net assets | 262,205,920 | 195,343,398 | ||||||
Net assets: | ||||||||
Beginning of year | 429,742,286 | 234,398,888 | ||||||
End of year | $ | 691,948,206 | $ | 429,742,286 | ||||
Undistributed net investment income at end of year | $ | 1 | $ | — | ||||
Capital share activity: | ||||||||
Shares sold | ||||||||
Investor Class | 7,040,074 | 8,519,648 | ||||||
Advisor Class | 2,393,490 | 2,294,916 | ||||||
A-Class | 882,961 | 1,179,822 | ||||||
C-Class | 511,004 | 749,811 | ||||||
Shares issued from reinvestment of distributions | ||||||||
Investor Class | 174,846 | — | ||||||
Advisor Class | 27,605 | — | ||||||
A-Class | 30,636 | — | ||||||
C-Class | 19,095 | — | ||||||
Shares redeemed | ||||||||
Investor Class | (6,471,507 | ) | (7,452,878 | ) | ||||
Advisor Class | (2,283,995 | ) | (2,188,643 | ) | ||||
A-Class | (691,018 | ) | (955,296 | ) | ||||
C-Class | (470,009 | ) | (612,767 | ) | ||||
Net increase in shares | 1,163,182 | 1,534,613 |
32 | THE RYDEX FUNDS ANNUAL REPORT | SEE NOTES TO FINANCIAL STATEMENTS. |
BIOTECHNOLOGY FUND |
FINANCIAL HIGHLIGHTS
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.
Investor Class | Year Ended March 31, 2015 | Year Ended March 31, 2014 | Year Ended March 28, 2013 | Year Ended March 31, 2012 | Year Ended March 31, 2011 | |||||||||||||||
Per Share Data | ||||||||||||||||||||
Net asset value, beginning of period | $ | 68.47 | $ | 48.97 | $ | 36.90 | $ | 29.16 | $ | 27.34 | ||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||
Net investment income (loss)a | (.27 | ) | (.51 | ) | (.40 | ) | (.34 | ) | (.33 | ) | ||||||||||
Net gain (loss) on investments (realized and unrealized) | 28.59 | 20.01 | 12.47 | 8.08 | 2.15 | |||||||||||||||
Total from investment operations | 28.32 | 19.50 | 12.07 | 7.74 | 1.82 | |||||||||||||||
Less distributions from: | ||||||||||||||||||||
Net realized gains | (3.16 | ) | — | — | — | — | ||||||||||||||
Total distributions | (3.16 | ) | — | — | — | — | ||||||||||||||
Net asset value, end of period | $ | 93.63 | $ | 68.47 | $ | 48.97 | $ | 36.90 | $ | 29.16 | ||||||||||
Total Returnb | 42.19 | % | 39.82 | % | 32.71 | % | 26.54 | % | 6.66 | % | ||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||
Net assets, end of period (in thousands) | $ | 498,068 | $ | 313,324 | $ | 171,844 | $ | 89,027 | $ | 44,686 | ||||||||||
Ratios to average net assets: | ||||||||||||||||||||
Net investment income (loss) | (0.34 | %) | (0.82 | %) | (0.98 | %) | (1.09 | %) | (1.26 | %) | ||||||||||
Total expenses | 1.33 | % | 1.36 | % | 1.35 | % | 1.36 | % | 1.39 | % | ||||||||||
Portfolio turnover rate | 107 | % | 119 | % | 197 | % | 333 | % | 337 | % |
Advisor Class | Year Ended March 31, 2015 | Year Ended March 31, 2014 | Year Ended March 28, 2013 | Year Ended March 31, 2012 | Year Ended March 31, 2011 | |||||||||||||||
Per Share Data | ||||||||||||||||||||
Net asset value, beginning of period | $ | 62.98 | $ | 45.27 | $ | 34.27 | $ | 27.22 | $ | 25.66 | ||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||
Net investment income (loss)a | (.61 | ) | (.74 | ) | (.56 | ) | (.48 | ) | (.43 | ) | ||||||||||
Net gain (loss) on investments (realized and unrealized) | 26.17 | 18.45 | 11.56 | 7.53 | 1.99 | |||||||||||||||
Total from investment operations | 25.56 | 17.71 | 11.00 | 7.05 | 1.56 | |||||||||||||||
Less distributions from: | ||||||||||||||||||||
Net realized gains | (3.16 | ) | — | — | — | — | ||||||||||||||
Total distributions | (3.16 | ) | — | — | — | — | ||||||||||||||
Net asset value, end of period | $ | 85.38 | $ | 62.98 | $ | 45.27 | $ | 34.27 | $ | 27.22 | ||||||||||
Total Returnb | 41.49 | % | 39.12 | % | 32.10 | % | 25.90 | % | 6.08 | % | ||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||
Net assets, end of period (in thousands) | $ | 63,196 | $ | 37,978 | $ | 22,486 | $ | 8,313 | $ | 7,410 | ||||||||||
Ratios to average net assets: | ||||||||||||||||||||
Net investment income (loss) | (0.84 | %) | (1.32 | %) | (1.46 | %) | (1.65 | %) | (1.77 | %) | ||||||||||
Total expenses | 1.83 | % | 1.86 | % | 1.86 | % | 1.87 | % | 1.89 | % | ||||||||||
Portfolio turnover rate | 107 | % | 119 | % | 197 | % | 333 | % | 337 | % |
SEE NOTES TO FINANCIAL STATEMENTS. | THE RYDEX FUNDS ANNUAL REPORT | 33 |
BIOTECHNOLOGY FUND |
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.
A-Class | Year Ended March 31, 2015 | Year Ended March 31, 2014 | Year Ended March 28, 2013 | Year Ended March 31, 2012 | Year Ended March 31, 2011 | |||||||||||||||
Per Share Data | ||||||||||||||||||||
Net asset value, beginning of period | $ | 64.41 | $ | 46.18 | $ | 34.88 | $ | 27.64 | $ | 25.98 | ||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||
Net investment income (loss)a | (.44 | ) | (.62 | ) | (.48 | ) | (.37 | ) | (.37 | ) | ||||||||||
Net gain (loss) on investments (realized and unrealized) | 26.82 | 18.85 | 11.78 | 7.61 | 2.03 | |||||||||||||||
Total from investment operations | 26.38 | 18.23 | 11.30 | 7.24 | 1.66 | |||||||||||||||
Less distributions from: | ||||||||||||||||||||
Net realized gains | (3.16 | ) | — | — | — | — | ||||||||||||||
Total distributions | (3.16 | ) | — | — | — | — | ||||||||||||||
Net asset value, end of period | $ | 87.63 | $ | 64.41 | $ | 46.18 | $ | 34.88 | $ | 27.64 | ||||||||||
Total Returnb | 41.83 | % | 39.48 | % | 32.40 | % | 26.19 | % | 6.39 | % | ||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||
Net assets, end of period (in thousands) | $ | 89,260 | $ | 51,270 | $ | 26,391 | $ | 4,741 | $ | 2,211 | ||||||||||
Ratios to average net assets: | ||||||||||||||||||||
Net investment income (loss) | (0.59 | %) | (1.07 | %) | (1.21 | %) | (1.30 | %) | (1.51 | %) | ||||||||||
Total expenses | 1.58 | % | 1.61 | % | 1.61 | % | 1.61 | % | 1.64 | % | ||||||||||
Portfolio turnover rate | 107 | % | 119 | % | 197 | % | 333 | % | 337 | % |
C-Class | Year Ended March 31, 2015 | Year Ended March 31, 2014 | Year Ended March 28, 2013 | Year Ended March 31, 2012 | Year Ended March 31, 2011 | |||||||||||||||
Per Share Data | ||||||||||||||||||||
Net asset value, beginning of period | $ | 60.10 | $ | 43.41 | $ | 33.04 | $ | 26.38 | $ | 24.96 | ||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||
Net investment income (loss)a | (.92 | ) | (.99 | ) | (.73 | ) | (.58 | ) | (.54 | ) | ||||||||||
Net gain (loss) on investments (realized and unrealized) | 24.86 | 17.68 | 11.10 | 7.24 | 1.96 | |||||||||||||||
Total from investment operations | 23.94 | 16.69 | 10.37 | 6.66 | 1.42 | |||||||||||||||
Less distributions from: | ||||||||||||||||||||
Net realized gains | (3.16 | ) | — | — | — | — | ||||||||||||||
Total distributions | (3.16 | ) | — | — | — | — | ||||||||||||||
Net asset value, end of period | $ | 80.88 | $ | 60.10 | $ | 43.41 | $ | 33.04 | $ | 26.38 | ||||||||||
Total Returnb | 40.75 | % | 38.45 | % | 31.39 | % | 25.25 | % | 5.65 | % | ||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||
Net assets, end of period (in thousands) | $ | 41,424 | $ | 27,170 | $ | 13,677 | $ | 6,969 | $ | 3,393 | ||||||||||
Ratios to average net assets: | ||||||||||||||||||||
Net investment income (loss) | (1.34 | %) | (1.82 | %) | (1.96 | %) | (2.06 | %) | (2.27 | %) | ||||||||||
Total expenses | 2.33 | % | 2.36 | % | 2.36 | % | 2.36 | % | 2.39 | % | ||||||||||
Portfolio turnover rate | 107 | % | 119 | % | 197 | % | 333 | % | 337 | % |
a | Net investment income (loss) per share was computed using average shares outstanding throughout the period. |
b | Total return does not reflect the impact of any applicable sales charges. |
34 | THE RYDEX FUNDS ANNUAL REPORT | SEE NOTES TO FINANCIAL STATEMENTS. |
PERFORMANCE REPORT AND FUND PROFILE (Unaudited) | March 31, 2015 |
CONSUMER PRODUCTS FUND
OBJECTIVE: Seeks to provide capital appreciation by investing in companies engaged in manufacturing finished goods and services both domestically and internationally (“consumer products companies”).
For the one-year period ended March 31, 2015, Consumer Products Fund Investor Class returned 13.77%, compared with 16.53% for the S&P 500 Consumer Staples Index. The broader S&P 500 Index returned 12.73%.
The industry that contributed most to return was food products, followed by beverages. The leading detractors from return were the health care equipment & supplies industry, followed by the oil, gas & consumable fuels industry.
Fund performance for the period got the biggest boost from Altria Group, Inc., Kroger Co., and Kraft Foods Group, Inc. The Fund’s leading detractors during the period were Darling Ingredients, Inc., Ambev S.A. ADR, and Avon Products, Inc.
Performance displayed represents past performance, which is no guarantee of future results.
Holdings Diversification (Market Exposure as % of Net Assets)
![](https://capedge.com/proxy/N-CSR/0001398344-15-003814/rsecf_10.jpg)
“Holdings Diversification (Market Exposure as % of Net Assets)” excludes any temporary cash investments.
Inception Dates: | |
Investor Class | July 6, 1998 |
Advisor Class | August 17, 1998 |
A-Class | September 1, 2004 |
C-Class | July 24, 2001 |
Ten Largest Holdings (% of Total Net Assets) | |
Procter & Gamble Co. | 5.0% |
Coca-Cola Co. | 4.6% |
PepsiCo, Inc. | 4.1% |
Philip Morris International, Inc. | 3.7% |
Altria Group, Inc. | 3.3% |
Kraft Foods Group, Inc. | 2.9% |
Colgate-Palmolive Co. | 2.7% |
Mondelez International, Inc. — Class A | 2.7% |
Kimberly-Clark Corp. | 2.2% |
Kroger Co. | 2.1% |
Top Ten Total | 33.3% |
“Ten Largest Holdings” exclude any temporary cash or derivative investments. |
THE RYDEX FUNDS ANNUAL REPORT | 35 |
PERFORMANCE REPORT AND FUND PROFILE (Unaudited)(concluded) | March 31, 2015 |
Cumulative Fund Performance*
![](https://capedge.com/proxy/N-CSR/0001398344-15-003814/rsecf_11.jpg)
![](https://capedge.com/proxy/N-CSR/0001398344-15-003814/rsecf_12.jpg)
Average Annual Returns*
Periods Ended March 31, 2015
1 Year | 5 Year | 10 Year | |
Investor Class Shares | 13.77% | 15.21% | 10.04% |
Advisor Class Shares | 13.19% | 14.65% | 9.49% |
A-Class Shares | 13.47% | 14.94% | 9.77% |
A-Class Shares with sales charge† | 8.09% | 13.82% | 9.24% |
C-Class Shares | 12.62% | 14.08% | 8.93% |
C-Class Shares with CDSC‡ | 11.62% | 14.08% | 8.93% |
S&P 500 Consumer Staples Index | 16.53% | 15.00% | 10.76% |
S&P 500 Index | 12.73% | 14.47% | 8.01% |
* | The performance data above represents past performance that is not predictive of future results. The investment return and principal value of an investment in the Fund will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Returns are historical and include changes in principal and reinvested dividends and capital gains and do not reflect the effect of taxes. The S&P 500 Index and the S&P 500 Consumer Staples Index are unmanaged indices and, unlike the Fund, have no management fees or operating expenses to reduce their reported returns. The graphs are based on Investor Class shares and A-Class shares only; performance for Advisor Class shares and C-Class shares will vary due to differences in fee structures. |
† | Fund returns are calculated using the maximum sales charge of 4.75%. |
‡ | Fund returns include a CDSC of 1% if redeemed within 12 months of purchase. |
36 | THE RYDEX FUNDS ANNUAL REPORT |
SCHEDULE OF INVESTMENTS | March 31, 2015 |
CONSUMER PRODUCTS FUND |
Shares | Value | |||||||
COMMON STOCKS† - 99.0% | ||||||||
FOOD-MISCELLANEOUS/DIVERSIFIED - 17.2% | ||||||||
Kraft Foods Group, Inc. | 108,390 | $ | 9,442,395 | |||||
Mondelez International, Inc. — Class A | 242,626 | 8,756,372 | ||||||
General Mills, Inc. | 119,537 | 6,765,794 | ||||||
Kellogg Co. | 83,620 | 5,514,739 | ||||||
ConAgra Foods, Inc. | 123,232 | 4,501,665 | ||||||
Campbell Soup Co. | 92,717 | 4,315,976 | ||||||
McCormick & Company, Inc. | 46,739 | 3,604,044 | ||||||
Hain Celestial Group, Inc.* | 44,660 | 2,860,473 | ||||||
Ingredion, Inc. | 33,430 | 2,601,523 | ||||||
Pinnacle Foods, Inc. | 59,900 | 2,444,519 | ||||||
Lancaster Colony Corp. | 19,452 | 1,851,247 | ||||||
Cal-Maine Foods, Inc.1 | 40,200 | 1,570,212 | ||||||
B&G Foods, Inc. | 48,970 | 1,441,187 | ||||||
Total Food-Miscellaneous/Diversified | 55,670,146 | |||||||
BEVERAGES-NON-ALCOHOLIC - 13.8% | ||||||||
Coca-Cola Co. | 365,856 | 14,835,460 | ||||||
PepsiCo, Inc. | 138,337 | 13,227,783 | ||||||
Monster Beverage Corp.* | 38,753 | 5,363,221 | ||||||
Dr Pepper Snapple Group, Inc. | 55,541 | 4,358,858 | ||||||
Coca-Cola Enterprises, Inc. | 82,194 | 3,632,975 | ||||||
Fomento Economico Mexicano SAB de CV ADR* | 32,793 | 3,066,146 | ||||||
Total Beverages-Non-alcoholic | 44,484,443 | |||||||
TOBACCO - 12.4% | ||||||||
Philip Morris International, Inc. | 157,097 | 11,834,117 | ||||||
Altria Group, Inc. | 215,530 | 10,780,811 | ||||||
Reynolds American, Inc. | 96,133 | 6,624,525 | ||||||
Lorillard, Inc. | 81,001 | 5,293,415 | ||||||
British American Tobacco plc ADR | 23,800 | 2,469,726 | ||||||
Vector Group Ltd. | 83,900 | 1,843,283 | ||||||
Universal Corp.1 | 25,200 | 1,188,432 | ||||||
Total Tobacco | 40,034,309 | |||||||
COSMETICS & TOILETRIES - 12.3% | ||||||||
Procter & Gamble Co. | 198,630 | 16,275,742 | ||||||
Colgate-Palmolive Co. | 127,499 | 8,840,781 | ||||||
Estee Lauder Companies, Inc. — Class A | 75,856 | 6,308,185 | ||||||
Coty, Inc. — Class A* | 138,000 | 3,349,260 | ||||||
Unilever N.V. — Class Y | 66,561 | 2,779,587 | ||||||
Avon Products, Inc. | 280,946 | 2,244,759 | ||||||
Total Cosmetics & Toiletries | 39,798,314 | |||||||
FOOD-RETAIL - 5.5% | ||||||||
Kroger Co. | 88,797 | 6,807,178 | ||||||
Whole Foods Market, Inc. | 90,342 | 4,705,011 | ||||||
Sprouts Farmers Market, Inc.* | 74,290 | 2,617,237 | ||||||
SUPERVALU, Inc.* | 169,332 | 1,969,331 | ||||||
Fresh Market, Inc.*,1 | 38,020 | 1,545,133 | ||||||
Total Food-Retail | 17,643,890 | |||||||
BREWERY - 4.9% | ||||||||
Anheuser-Busch InBev N.V. ADR | 51,612 | 6,292,019 | ||||||
Molson Coors Brewing Co. — Class B | 55,644 | 4,142,696 | ||||||
Ambev S.A. ADR | 593,600 | 3,419,136 | ||||||
Boston Beer Company, Inc. — Class A*,1 | 7,835 | 2,095,079 | ||||||
Total Brewery | 15,948,930 | |||||||
CONSUMER PRODUCTS-MISCELLANEOUS - 4.2% | ||||||||
Kimberly-Clark Corp. | 65,162 | 6,979,502 | ||||||
Clorox Co. | 38,567 | 4,257,411 | ||||||
Spectrum Brands Holdings, Inc. | 26,800 | 2,400,208 | ||||||
Total Consumer Products-Miscellaneous | 13,637,121 | |||||||
FOOD-MEAT PRODUCTS - 4.1% | ||||||||
Tyson Foods, Inc. — Class A | 114,295 | 4,377,498 | ||||||
Hormel Foods Corp. | 76,576 | 4,353,346 | ||||||
BRF S.A. ADR | 142,080 | 2,810,342 | ||||||
Darling Ingredients, Inc.* | 120,669 | 1,690,573 | ||||||
Total Food-Meat Products | 13,231,759 | |||||||
BEVERAGES-WINE/SPIRITS - 4.0% | ||||||||
Constellation Brands, Inc. — Class A* | 45,144 | 5,246,184 | ||||||
Brown-Forman Corp. — Class B | 53,920 | 4,871,672 | ||||||
Diageo plc ADR | 26,540 | 2,934,528 | ||||||
Total Beverages-Wine/Spirits | 13,052,384 | |||||||
AGRICULTURAL OPERATIONS - 3.5% | ||||||||
Archer-Daniels-Midland Co. | 130,103 | 6,166,882 | ||||||
Bunge Ltd. | 47,696 | 3,928,243 | ||||||
Andersons, Inc. | 30,500 | 1,261,785 | ||||||
Total Agricultural Operations | 11,356,910 | |||||||
FOOD-CONFECTIONERY - 2.8% | ||||||||
Hershey Co. | 51,992 | 5,246,512 | ||||||
JM Smucker Co. | 33,531 | 3,880,543 | ||||||
Total Food-Confectionery | 9,127,055 | |||||||
VITAMINS & NUTRITION PRODUCTS - 2.4% | ||||||||
Mead Johnson Nutrition Co. — Class A | 49,479 | 4,974,124 | ||||||
Herbalife Ltd.1 | 61,614 | 2,634,615 | ||||||
Total Vitamins & Nutrition Products | 7,608,739 | |||||||
FOOD-WHOLESALE/DISTRIBUTION - 2.3% | ||||||||
Sysco Corp. | 137,815 | 5,199,760 | ||||||
United Natural Foods, Inc.* | 28,866 | 2,223,837 | ||||||
Total Food-Wholesale/Distribution | 7,423,597 | |||||||
FOOD-DAIRY PRODUCTS - 1.4% | ||||||||
WhiteWave Foods Co. — Class A* | 71,900 | 3,188,046 | ||||||
Dean Foods Co. | 87,540 | 1,447,036 | ||||||
Total Food-Dairy Products | 4,635,082 | |||||||
COFFEE - 1.4% | ||||||||
Keurig Green Mountain, Inc. | 39,974 | 4,466,295 | ||||||
SEE NOTES TO FINANCIAL STATEMENTS. | THE RYDEX FUNDS ANNUAL REPORT | 37 |
SCHEDULE OF INVESTMENTS (concluded) | March 31, 2015 |
CONSUMER PRODUCTS FUND |
Shares | Value | |||||||
POULTRY - 1.3% | ||||||||
Pilgrim’s Pride Corp.1 | 114,300 | $ | 2,582,037 | |||||
Sanderson Farms, Inc.1 | 19,409 | 1,545,927 | ||||||
Total Poultry | 4,127,964 | |||||||
SOAP & CLEANING PREPARATION - 1.1% | ||||||||
Church & Dwight Company, Inc. | 43,366 | 3,704,324 | ||||||
BATTERIES/BATTERY SYSTEMS - 1.0% | ||||||||
Energizer Holdings, Inc. | 23,535 | 3,249,007 | ||||||
FOOD-BAKING - 0.8% | ||||||||
Flowers Foods, Inc. | 109,492 | 2,489,848 | ||||||
MULTILEVEL DIRECT SELLING - 0.7% | ||||||||
Nu Skin Enterprises, Inc. — Class A1 | 36,130 | 2,175,388 | ||||||
FOOD-CANNED - 0.7% | ||||||||
TreeHouse Foods, Inc.* | 24,901 | 2,117,083 | ||||||
RETAIL-CONVENIENCE STORE - 0.6% | ||||||||
Casey’s General Stores, Inc. | 23,423 | 2,110,412 | ||||||
FOOD-FLOUR & GRAIN - 0.6% | ||||||||
Post Holdings, Inc.* | 39,300 | 1,840,812 | ||||||
Total Common Stocks | ||||||||
(Cost $237,185,815) | 319,933,812 | |||||||
RIGHTS†††- 0.0% | ||||||||
Casa Ley | ||||||||
Expires 01/17/19* | 93,765 | 14,064 | ||||||
PDC | ||||||||
Expires 01/17/17* | 93,765 | 6,564 | ||||||
Total Rights | ||||||||
(Cost $23,055) | 20,628 | |||||||
Face Amount | ||||||||
REPURCHASE AGREEMENT††,2 - 0.4% | ||||||||
HSBC Group issued 03/31/15 at 0.03% due 04/01/15 | $ | 1,404,800 | 1,404,800 | |||||
Total Repurchase Agreement | ||||||||
(Cost $1,404,800) | 1,404,800 | |||||||
SECURITIES LENDING COLLATERAL††,3 - 2.7% | ||||||||
Repurchase Agreements | ||||||||
HSBC Securities, Inc. issued 03/31/15 at 0.10% due 04/01/15 | 5,724,449 | 5,724,449 | ||||||
BNP Paribas Securities Corp. issued 03/31/15 at 0.10% due 04/01/15 | 1,969,210 | 1,969,210 | ||||||
Barclays Capital, Inc. issued 03/31/15 at 0.10% due 04/01/15 | 1,016,433 | 1,016,433 | ||||||
Total Securities Lending Collateral | ||||||||
(Cost $8,710,092) | 8,710,092 | |||||||
Total Investments - 102.1% | ||||||||
(Cost $247,323,762) | $ | 330,069,332 | ||||||
Other Assets & Liabilities, net - (2.1)% | (6,885,086 | ) | ||||||
Total Net Assets - 100.0% | $ | 323,184,246 |
* | Non-income producing security. |
† | Value determined based on Level 1 inputs — See Note 4. |
†† | Value determined based on Level 2 inputs — See Note 4. |
††† | Value determined based on Level 3 inputs — See Note 4. |
1 | All or portion of this security is on loan at March 31, 2015 — See Note 6. |
2 | Repurchase Agreement — See Note 5. |
3 | Securities lending collateral — See Note 6. |
ADR — American Depositary Receipt | |
plc — Public Limited Company |
38 | THE RYDEX FUNDS ANNUAL REPORT | SEE NOTES TO FINANCIAL STATEMENTS. |
CONSUMER PRODUCTS FUND |
STATEMENT OF ASSETS AND LIABILITIES
March 31, 2015
Assets: | ||||
Investments, at value - including $8,624,874 of securities loaned (cost $237,208,870) | $ | 319,954,440 | ||
Repurchase agreements, at value (cost $10,114,892) | 10,114,892 | |||
Total investments (cost $247,323,762) | 330,069,332 | |||
Segregated cash with broker | 127,304 | |||
Receivables: | ||||
Fund shares sold | 3,769,399 | |||
Dividends | 852,417 | |||
Securities lending income | 14,002 | |||
Foreign taxes reclaim | 3,976 | |||
Total assets | 334,836,430 | |||
Liabilities: | ||||
Payable for: | ||||
Return of securities loaned | 8,837,396 | |||
Fund shares redeemed | 2,319,682 | |||
Management fees | 224,959 | |||
Transfer agent and administrative fees | 66,164 | |||
Distribution and service fees | 40,613 | |||
Portfolio accounting fees | 24,986 | |||
Miscellaneous | 138,384 | |||
Total liabilities | 11,652,184 | |||
Commitments and contingent liabilities (Note 10) | — | |||
Net assets | $ | 323,184,246 | ||
Net assets consist of: | ||||
Paid in capital | $ | 253,407,913 | ||
Undistributed net investment income | 2,821,703 | |||
Accumulated net realized loss on investments | (15,790,940 | ) | ||
Net unrealized appreciation on investments | 82,745,570 | |||
Net assets | $ | 323,184,246 | ||
Investor Class: | ||||
Net assets | $ | 222,954,377 | ||
Capital shares outstanding | 3,807,959 | |||
Net asset value per share | $ | 58.55 | ||
Advisor Class: | ||||
Net assets | $ | 49,750,721 | ||
Capital shares outstanding | 939,790 | |||
Net asset value per share | $ | 52.94 | ||
A-Class: | ||||
Net assets | $ | 32,762,389 | ||
Capital shares outstanding | 599,364 | |||
Net asset value per share | $ | 54.66 | ||
Maximum offering price per share (Net asset value divided by 95.25%) | $ | 57.39 | ||
C-Class: | ||||
Net assets | $ | 17,716,759 | ||
Capital shares outstanding | 360,242 | |||
Net asset value per share | $ | 49.18 |
STATEMENT OF OPERATIONS
Year Ended March 31, 2015
Investment Income: | ||||
Dividends (net of foreign withholding tax of $19,260) | $ | 6,677,348 | ||
Income from securities lending, net | 78,752 | |||
Interest | 255 | |||
Total investment income | 6,756,355 | |||
Expenses: | ||||
Management fees | 2,214,869 | |||
Transfer agent and administrative fees | 651,430 | |||
Distribution and service fees: | ||||
Advisor Class | 204,711 | |||
A-Class | 68,773 | |||
C-Class | 157,545 | |||
Portfolio accounting fees | 252,145 | |||
Custodian fees | 30,334 | |||
Trustees’ fees* | 15,413 | |||
Tax expense | 14,930 | |||
Line of credit fees | 230 | |||
Miscellaneous | 328,357 | |||
Total expenses | 3,938,737 | |||
Net investment income | 2,817,618 | |||
Net Realized and Unrealized Gain (Loss): | ||||
Net realized gain (loss) on: | ||||
Investments | 2,102,672 | |||
Net realized gain | 2,102,672 | |||
Net change in unrealized appreciation (depreciation) on: | ||||
Investments | 28,060,008 | |||
Net change in unrealized appreciation (depreciation) | 28,060,008 | |||
Net realized and unrealized gain | 30,162,680 | |||
Net increase in net assets resulting from operations | $ | 32,980,298 |
* | Relates to Trustees not deemed “interested persons” within the meaning of Section 2(a)(19) of the 1940 Act. |
SEE NOTES TO FINANCIAL STATEMENTS. | THE RYDEX FUNDS ANNUAL REPORT | 39 |
CONSUMER PRODUCTS FUND |
STATEMENTS OF CHANGES IN NET ASSETS
Year Ended March 31, 2015 | Year Ended March 31, 2014 | |||||||
Increase (Decrease) in Net Assets from Operations: | ||||||||
Net investment income | $ | 2,817,618 | $ | 1,430,602 | ||||
Net realized gain on investments | 2,102,672 | 16,541,099 | ||||||
Net change in unrealized appreciation (depreciation) on investments | 28,060,008 | 2,525,092 | ||||||
Net increase in net assets resulting from operations | 32,980,298 | 20,496,793 | ||||||
Distributions to shareholders from: | ||||||||
Net investment income | ||||||||
Investor Class | (990,101 | ) | (1,145,002 | ) | ||||
Advisor Class | (228,315 | ) | (232,317 | ) | ||||
A-Class | (146,232 | ) | (203,982 | ) | ||||
C-Class | (80,799 | ) | (138,802 | ) | ||||
Net realized gains | ||||||||
Investor Class | (1,759,312 | ) | (3,773,580 | ) | ||||
Advisor Class | (405,693 | ) | (765,646 | ) | ||||
A-Class | (259,839 | ) | (672,262 | ) | ||||
C-Class | (143,573 | ) | (457,448 | ) | ||||
Total distributions to shareholders | (4,013,864 | ) | (7,389,039 | ) | ||||
Capital share transactions: | ||||||||
Proceeds from sale of shares | ||||||||
Investor Class | 261,191,921 | 198,150,046 | ||||||
Advisor Class | 186,583,796 | 38,899,657 | ||||||
A-Class | 31,333,989 | 21,016,640 | ||||||
C-Class | 23,898,739 | 27,537,280 | ||||||
Distributions reinvested | ||||||||
Investor Class | 2,302,863 | 4,792,637 | ||||||
Advisor Class | 632,540 | 995,811 | ||||||
A-Class | 319,969 | 697,114 | ||||||
C-Class | 218,591 | 581,614 | ||||||
Cost of shares redeemed | ||||||||
Investor Class | (162,176,613 | ) | (291,984,030 | ) | ||||
Advisor Class | (169,292,713 | ) | (24,065,444 | ) | ||||
A-Class | (27,757,505 | ) | (19,454,898 | ) | ||||
C-Class | (22,094,028 | ) | (26,613,638 | ) | ||||
Net increase (decrease) from capital share transactions | 125,161,549 | (69,447,211 | ) | |||||
Net increase (decrease) in net assets | 154,127,983 | (56,339,457 | ) | |||||
Net assets: | ||||||||
Beginning of year | 169,056,263 | 225,395,720 | ||||||
End of year | $ | 323,184,246 | $ | 169,056,263 | ||||
Undistributed net investment income at end of year | $ | 2,821,703 | $ | 1,445,447 |
40 | THE RYDEX FUNDS ANNUAL REPORT | SEE NOTES TO FINANCIAL STATEMENTS. |
CONSUMER PRODUCTS FUND |
STATEMENTS OF CHANGES IN NET ASSETS (concluded) |
Year Ended March 31, 2015 | Year Ended March 31, 2014 | |||||||
Capital share activity: | ||||||||
Shares sold | ||||||||
Investor Class | 4,679,252 | 3,954,307 | ||||||
Advisor Class | 3,693,937 | 847,688 | ||||||
A-Class | 596,417 | 446,742 | ||||||
C-Class | 506,456 | 642,147 | ||||||
Shares issued from reinvestment of distributions | ||||||||
Investor Class | 40,408 | 94,753 | ||||||
Advisor Class | 12,254 | 21,601 | ||||||
A-Class | 6,008 | 14,701 | ||||||
C-Class | 4,561 | 13,476 | ||||||
Shares redeemed | ||||||||
Investor Class | (2,874,581 | ) | (5,892,976 | ) | ||||
Advisor Class | (3,339,602 | ) | (527,437 | ) | ||||
A-Class | (526,497 | ) | (418,104 | ) | ||||
C-Class | (469,691 | ) | (619,832 | ) | ||||
Net increase (decrease) in shares | 2,328,922 | (1,422,934 | ) |
SEE NOTES TO FINANCIAL STATEMENTS. | THE RYDEX FUNDS ANNUAL REPORT | 41 |
CONSUMER PRODUCTS FUND |
FINANCIAL HIGHLIGHTS
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.
Investor Class | Year Ended March 31, 2015 | Year Ended March 31, 2014 | Year Ended March 28, 2013 | Year Ended March 31, 2012 | Year Ended March 31, 2011 | |||||||||||||||
Per Share Data | ||||||||||||||||||||
Net asset value, beginning of period | $ | 52.08 | $ | 47.79 | $ | 40.19 | $ | 36.37 | $ | 37.83 | ||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||
Net investment income (loss)a | .71 | .46 | .57 | .49 | .69 | |||||||||||||||
Net gain (loss) on investments (realized and unrealized) | 6.44 | 5.81 | 7.14 | 4.82 | 4.40 | |||||||||||||||
Total from investment operations | 7.15 | 6.27 | 7.71 | 5.31 | 5.09 | |||||||||||||||
Less distributions from: | ||||||||||||||||||||
Net investment income | (.24 | ) | (.46 | ) | (.11 | ) | (.57 | ) | (.82 | ) | ||||||||||
Net realized gains | (.44 | ) | (1.52 | ) | — | (.92 | ) | (5.73 | ) | |||||||||||
Total distributions | (.68 | ) | (1.98 | ) | (.11 | ) | (1.49 | ) | (6.55 | ) | ||||||||||
Net asset value, end of period | $ | 58.55 | $ | 52.08 | $ | 47.79 | $ | 40.19 | $ | 36.37 | ||||||||||
Total Returnb | 13.77 | % | 13.24 | % | 19.26 | % | 15.06 | % | 14.81 | % | ||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||
Net assets, end of period (in thousands) | $ | 222,954 | $ | 102,231 | $ | 181,945 | $ | 155,432 | $ | 57,876 | ||||||||||
Ratios to average net assets: | ||||||||||||||||||||
Net investment income (loss) | 1.27 | % | 0.91 | % | 1.38 | % | 1.29 | % | 1.84 | % | ||||||||||
Total expenses | 1.34 | % | 1.37 | % | 1.35 | % | 1.35 | % | 1.38 | % | ||||||||||
Portfolio turnover rate | 87 | % | 112 | % | 230 | % | 402 | % | 400 | % |
Advisor Class | Year Ended March 31, 2015 | Year Ended March 31, 2014 | Year Ended March 28, 2013 | Year Ended March 31, 2012 | Year Ended March 31, 2011 | |||||||||||||||
Per Share Data | ||||||||||||||||||||
Net asset value, beginning of period | $ | 47.39 | $ | 43.87 | $ | 37.08 | $ | 33.84 | $ | 35.77 | ||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||
Net investment income (loss)a | .37 | .24 | .35 | .24 | .62 | |||||||||||||||
Net gain (loss) on investments (realized and unrealized) | 5.86 | 5.26 | 6.55 | 4.49 | 4.00 | |||||||||||||||
Total from investment operations | 6.23 | 5.50 | 6.90 | 4.73 | 4.62 | |||||||||||||||
Less distributions from: | ||||||||||||||||||||
Net investment income | (.24 | ) | (.46 | ) | (.11 | ) | (.57 | ) | (.82 | ) | ||||||||||
Net realized gains | (.44 | ) | (1.52 | ) | — | (.92 | ) | (5.73 | ) | |||||||||||
Total distributions | (.68 | ) | (1.98 | ) | (.11 | ) | (1.49 | ) | (6.55 | ) | ||||||||||
Net asset value, end of period | $ | 52.94 | $ | 47.39 | $ | 43.87 | $ | 37.08 | $ | 33.84 | ||||||||||
Total Returnb | 13.19 | % | 12.66 | % | 18.66 | % | 14.49 | % | 14.32 | % | ||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||
Net assets, end of period (in thousands) | $ | 49,751 | $ | 27,162 | $ | 10,148 | $ | 16,975 | $ | 3,475 | ||||||||||
Ratios to average net assets: | ||||||||||||||||||||
Net investment income (loss) | 0.74 | % | 0.51 | % | 0.93 | % | 0.68 | % | 1.78 | % | ||||||||||
Total expenses | 1.85 | % | 1.87 | % | 1.85 | % | 1.84 | % | 1.88 | % | ||||||||||
Portfolio turnover rate | 87 | % | 112 | % | 230 | % | 402 | % | 400 | % |
42 | THE RYDEX FUNDS ANNUAL REPORT | SEE NOTES TO FINANCIAL STATEMENTS. |
CONSUMER PRODUCTS FUND |
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.
A-Class | Year Ended March 31, 2015 | Year Ended March 31, 2014 | Year Ended March 28, 2013 | Year Ended March 31, 2012 | Year Ended March 31, 2011 | |||||||||||||||
Per Share Data | ||||||||||||||||||||
Net asset value, beginning of period | $ | 48.79 | $ | 45.00 | $ | 37.93 | $ | 34.49 | $ | 36.26 | ||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||
Net investment income (loss)a | .48 | .33 | .44 | .40 | .41 | |||||||||||||||
Net gain (loss) on investments (realized and unrealized) | 6.07 | 5.44 | 6.74 | 4.53 | 4.37 | |||||||||||||||
Total from investment operations | 6.55 | 5.77 | 7.18 | 4.93 | 4.78 | |||||||||||||||
Less distributions from: | ||||||||||||||||||||
Net investment income | (.24 | ) | (.46 | ) | (.11 | ) | (.57 | ) | (.82 | ) | ||||||||||
Net realized gains | (.44 | ) | (1.52 | ) | — | (.92 | ) | (5.73 | ) | |||||||||||
Total distributions | (.68 | ) | (1.98 | ) | (.11 | ) | (1.49 | ) | (6.55 | ) | ||||||||||
Net asset value, end of period | $ | 54.66 | $ | 48.79 | $ | 45.00 | $ | 37.93 | $ | 34.49 | ||||||||||
Total Returnb | 13.47 | % | 12.95 | % | 18.98 | % | 14.80 | % | 14.58 | % | ||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||
Net assets, end of period (in thousands) | $ | 32,762 | $ | 25,538 | $ | 21,604 | $ | 21,021 | $ | 5,033 | ||||||||||
Ratios to average net assets: | ||||||||||||||||||||
Net investment income (loss) | 0.92 | % | 0.70 | % | 1.12 | % | 1.11 | % | 1.14 | % | ||||||||||
Total expenses | 1.60 | % | 1.62 | % | 1.60 | % | 1.60 | % | 1.63 | % | ||||||||||
Portfolio turnover rate | 87 | % | 112 | % | 230 | % | 402 | % | 400 | % |
C-Class | Year Ended March 31, 2015 | Year Ended March 31, 2014 | Year Ended March 28, 2013 | Year Ended March 31, 2012 | Year Ended March 31, 2011 | |||||||||||||||
Per Share Data | ||||||||||||||||||||
Net asset value, beginning of period | $ | 44.29 | $ | 41.32 | $ | 35.11 | $ | 32.28 | $ | 34.57 | ||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||
Net investment income (loss)a | .09 | (.01 | ) | .13 | .12 | .30 | ||||||||||||||
Net gain (loss) on investments (realized and unrealized) | 5.48 | 4.96 | 6.19 | 4.20 | 3.96 | |||||||||||||||
Total from investment operations | 5.57 | 4.95 | 6.32 | 4.32 | 4.26 | |||||||||||||||
Less distributions from: | ||||||||||||||||||||
Net investment income | (.24 | ) | (.46 | ) | (.11 | ) | (.57 | ) | (.82 | ) | ||||||||||
Net realized gains | (.44 | ) | (1.52 | ) | — | (.92 | ) | (5.73 | ) | |||||||||||
Total distributions | (.68 | ) | (1.98 | ) | (.11 | ) | (1.49 | ) | (6.55 | ) | ||||||||||
Net asset value, end of period | $ | 49.18 | $ | 44.29 | $ | 41.32 | $ | 35.11 | $ | 32.28 | ||||||||||
Total Returnb | 12.62 | % | 12.11 | % | 18.06 | % | 13.91 | % | 13.78 | % | ||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||
Net assets, end of period (in thousands) | $ | 17,717 | $ | 14,125 | $ | 11,699 | $ | 9,712 | $ | 3,484 | ||||||||||
Ratios to average net assets: | ||||||||||||||||||||
Net investment income (loss) | 0.20 | % | (0.02 | %) | 0.37 | % | 0.36 | % | 0.90 | % | ||||||||||
Total expenses | 2.35 | % | 2.37 | % | 2.35 | % | 2.35 | % | 2.38 | % | ||||||||||
Portfolio turnover rate | 87 | % | 112 | % | 230 | % | 402 | % | 400 | % |
a | Net investment income (loss) per share was computed using average shares outstanding throughout the period. |
b | Total return does not reflect the impact of any applicable sales charges. |
SEE NOTES TO FINANCIAL STATEMENTS. | THE RYDEX FUNDS ANNUAL REPORT | 43 |
PERFORMANCE REPORT AND FUND PROFILE (Unaudited) | March 31, 2015 |
ELECTRONICS FUND
OBJECTIVE: Seeks to provide capital appreciation by investing in companies that are involved in the electronics sector, including semiconductor manufacturers and distributors, and makers and vendors of other electronic components and devices (“electronics companies”).
For the one-year period ended March 31, 2015, Electronics Fund Investor Class returned 19.65%, compared with 18.11% for the S&P 500 Information Technology Index. The broader S&P 500 Index returned 12.73%.
Almost all the holdings in the Fund are in the semiconductors industry and the semiconductor equipment industry. Both contributed to the Fund’s positive performance for the period.
For the period, Fund performance got the biggest boost from Skyworks Solutions, Inc., Intel Corp., and Avago Technologies Ltd. Holdings detracting from Fund performance for the period were Himax Technologies, Inc. ADR, Yingli Green Energy Holding Company Ltd. ADR, and GT Advanced Technologies, Inc.
Performance displayed represents past performance, which is no guarantee of future results.
Holdings Diversification (Market Exposure as % of Net Assets)
![](https://capedge.com/proxy/N-CSR/0001398344-15-003814/rsecf_13.jpg)
“Holdings Diversification (Market Exposure as % of Net Assets)” excludes any temporary cash investments.
Inception Dates: | |
Investor Class | April 1, 1998 |
Advisor Class | April 2, 1998 |
A-Class | September 1, 2004 |
C-Class | March 26, 2001 |
Ten Largest Holdings (% of Total Net Assets) | |
Intel Corp. | 8.3% |
Texas Instruments, Inc. | 5.1% |
Micron Technology, Inc. | 3.6% |
Applied Materials, Inc. | 3.4% |
Broadcom Corp. — Class A | 3.3% |
Analog Devices, Inc. | 3.1% |
Skyworks Solutions, Inc. | 2.9% |
Avago Technologies Ltd. | 2.7% |
NXP Semiconductor N.V. | 2.7% |
Altera Corp. | 2.6% |
Top Ten Total | 37.7% |
“Ten Largest Holdings” exclude any temporary cash or derivative investments. |
44 | THE RYDEX FUNDS ANNUAL REPORT |
PERFORMANCE REPORT AND FUND PROFILE (Unaudited)(concluded) | March 31, 2015 |
Cumulative Fund Performance*
![](https://capedge.com/proxy/N-CSR/0001398344-15-003814/rsecf_14.jpg)
![](https://capedge.com/proxy/N-CSR/0001398344-15-003814/rsecf_15.jpg)
Average Annual Returns*
Periods Ended March 31, 2015
1 Year | 5 Year | 10 Year | |
Investor Class Shares | 19.65% | 9.82% | 4.95% |
Advisor Class Shares | 19.04% | 9.26% | 4.43% |
A-Class Shares | 19.36% | 9.54% | 4.68% |
A-Class Shares with sales charge† | 13.69% | 8.48% | 4.17% |
C-Class Shares | 18.50% | 8.74% | 3.93% |
C-Class Shares with CDSC‡ | 17.50% | 8.74% | 3.93% |
S&P 500 Information Technology Index | 18.11% | 14.55% | 9.77% |
S&P 500 Index | 12.73% | 14.47% | 8.01% |
* | The performance data above represents past performance that is not predictive of future results. The investment return and principal value of an investment in the Fund will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Returns are historical and include changes in principal and reinvested dividends and capital gains and do not reflect the effect of taxes. The S&P 500 Index and the S&P 500 Information Technology Index are unmanaged indices and, unlike the Fund, have no management fees or operating expenses to reduce their reported returns. The graphs are based on Investor Class shares and A-Class shares only; performance for Advisor Class shares and C-Class shares will vary due to differences in fee structures. |
† | Fund returns are calculated using the maximum sales charge of 4.75%. |
‡ | Fund returns include a CDSC of 1% if redeemed within 12 months of purchase. |
THE RYDEX FUNDS ANNUAL REPORT | 45 |
SCHEDULE OF INVESTMENTS | March 31, 2015 |
ELECTRONICS FUND |
Shares | Value | |||||||
COMMON STOCKS† - 99.3% | ||||||||
ELECTRONIC COMPONENTS - SEMICONDUCTOR - 53.5% | ||||||||
Intel Corp. | 72,421 | $ | 2,264,607 | |||||
Texas Instruments, Inc. | 24,455 | 1,398,459 | ||||||
Micron Technology, Inc.* | 35,991 | 976,436 | ||||||
Broadcom Corp. — Class A | 21,012 | 909,715 | ||||||
Skyworks Solutions, Inc. | 8,025 | 788,777 | ||||||
Avago Technologies Ltd. | 5,803 | 736,865 | ||||||
Altera Corp. | 16,776 | 719,858 | ||||||
Freescale Semiconductor Ltd.* | 15,713 | 640,462 | ||||||
Xilinx, Inc. | 14,361 | 607,470 | ||||||
NVIDIA Corp. | 28,375 | 593,747 | ||||||
Microchip Technology, Inc. | 11,559 | 565,235 | ||||||
ON Semiconductor Corp.* | 33,429 | 404,825 | ||||||
Cavium, Inc.* | 5,100 | 361,182 | ||||||
Cree, Inc.*,1 | 10,052 | 356,745 | ||||||
ARM Holdings plc ADR | 7,153 | 352,643 | ||||||
Microsemi Corp.* | 9,671 | 342,353 | ||||||
Mellanox Technologies Ltd.* | 6,526 | 295,889 | ||||||
Ambarella, Inc.*,1 | 3,840 | 290,726 | ||||||
Tower Semiconductor Ltd.* | 16,810 | 285,434 | ||||||
Silicon Laboratories, Inc.* | 5,259 | 266,999 | ||||||
Fairchild Semiconductor International, Inc. — Class A* | 14,667 | 266,646 | ||||||
Monolithic Power Systems, Inc. | 4,942 | 260,196 | ||||||
PMC-Sierra, Inc.* | 26,740 | 248,147 | ||||||
Intersil Corp. — Class A | 16,736 | 239,660 | ||||||
Semtech Corp.* | 8,970 | 239,006 | ||||||
OmniVision Technologies, Inc.* | 8,717 | 229,867 | ||||||
Total Electronic Components - Semiconductor | 14,641,949 | |||||||
SEMICONDUCTOR COMPONENTS - INTEGRATED CIRCUIT - 21.3% | ||||||||
Analog Devices, Inc. | 13,286 | 837,018 | ||||||
NXP Semiconductor N.V.* | 7,311 | 733,732 | ||||||
Linear Technology Corp. | 12,978 | 607,370 | ||||||
Taiwan Semiconductor Manufacturing Company Ltd. ADR | 25,379 | 595,899 | ||||||
Maxim Integrated Products, Inc. | 16,108 | 560,719 | ||||||
Marvell Technology Group Ltd. | 31,594 | 464,432 | ||||||
Cypress Semiconductor Corp. | 26,547 | 374,578 | ||||||
Atmel Corp. | 39,976 | 329,002 | ||||||
Integrated Device Technology, Inc.* | 15,647 | 313,253 | ||||||
Siliconware Precision Industries Company Ltd. ADR1 | 33,610 | 274,930 | ||||||
Cirrus Logic, Inc.* | 7,779 | 258,730 | ||||||
Himax Technologies, Inc. ADR | 40,593 | 256,954 | ||||||
Power Integrations, Inc. | 4,200 | 218,736 | ||||||
Total Semiconductor Components - Integrated Circuit | 5,825,353 | |||||||
SEMICONDUCTOR EQUIPMENT - 12.6% | ||||||||
Applied Materials, Inc. | 40,976 | 924,419 | ||||||
Lam Research Corp. | 8,175 | 574,171 | ||||||
KLA-Tencor Corp. | 9,359 | 545,536 | ||||||
Teradyne, Inc. | 19,134 | 360,676 | ||||||
ASML Holding N.V. — Class G | 3,428 | 346,331 | ||||||
Tessera Technologies, Inc. | 6,710 | 270,279 | ||||||
MKS Instruments, Inc. | 7,030 | 237,684 | ||||||
Veeco Instruments, Inc.* | 6,577 | 200,927 | ||||||
Total Semiconductor Equipment | 3,460,023 | |||||||
ENERGY-ALTERNATE SOURCES - 5.8% | ||||||||
SunEdison, Inc.* | 19,402 | 465,648 | ||||||
First Solar, Inc.* | 7,549 | 451,355 | ||||||
JinkoSolar Holding Company Ltd. ADR*,1 | 13,347 | 342,217 | ||||||
Trina Solar Ltd. ADR*,1 | 26,770 | 323,649 | ||||||
Total Energy-Alternate Sources | 1,582,869 | |||||||
POWER CONVERTER/SUPPLY EQUIPMENT - 2.7% | ||||||||
Canadian Solar, Inc.* | 11,261 | 376,004 | ||||||
SunPower Corp. — Class A*,1 | 11,692 | 366,077 | ||||||
Total Power Converter/Supply Equipment | 742,081 | |||||||
TELECOMMUNICATION SERVICES - 2.3% | ||||||||
Qorvo, Inc.* | 7,933 | 632,260 | ||||||
COMPUTERS-PERIPHERAL EQUIPMENT - 1.1% | ||||||||
Synaptics, Inc.* | 3,835 | 311,805 | ||||||
Total Common Stocks | ||||||||
(Cost $19,808,904) | 27,196,340 | |||||||
46 | THE RYDEX FUNDS ANNUAL REPORT | SEE NOTES TO FINANCIAL STATEMENTS. |
SCHEDULE OF INVESTMENTS (concluded) | March 31, 2015 |
ELECTRONICS FUND |
Face Amount | Value | |||||||
REPURCHASE AGREEMENT††,2 - 0.9% | ||||||||
HSBC Group issued 03/31/15 at 0.03% due 04/01/15 | $ | 245,325 | $ | 245,325 | ||||
Total Repurchase Agreement | ||||||||
(Cost $245,325) | 245,325 | |||||||
SECURITIES LENDING COLLATERAL††,3 - 5.1% | ||||||||
Repurchase Agreements | ||||||||
HSBC Securities, Inc. issued 03/31/15 at 0.10% due 04/01/15 | 923,258 | 923,258 | ||||||
BNP Paribas Securities Corp. issued 03/31/15 at 0.10% due 04/01/15 | 317,601 | 317,601 | ||||||
Barclays Capital, Inc. issued 03/31/15 at 0.10% due 04/01/15 | 163,934 | 163,934 | ||||||
Total Securities Lending Collateral | ||||||||
(Cost $1,404,793) | 1,404,793 | |||||||
Total Investments - 105.3% | ||||||||
(Cost $21,459,022) | $ | 28,846,458 | ||||||
Other Assets & Liabilities, net - (5.3)% | (1,458,770 | ) | ||||||
Total Net Assets - 100.0% | $ | 27,387,688 |
* | Non-income producing security. |
† | Value determined based on Level 1 inputs — See Note 4. |
†† | Value determined based on Level 2 inputs — See Note 4. |
1 | All or portion of this security is on loan at March 31, 2015 — See Note 6. |
2 | Repurchase Agreement — See Note 5. |
3 | Securities lending collateral — See Note 6. |
ADR — American Depositary Receipt | |
plc — Public Limited Company |
SEE NOTES TO FINANCIAL STATEMENTS. | THE RYDEX FUNDS ANNUAL REPORT | 47 |
ELECTRONICS FUND |
STATEMENT OF ASSETS AND LIABILITIES
March 31, 2015
Assets: | ||||
Investments, at value - including $1,377,165 of securities loaned (cost $19,808,904) | $ | 27,196,340 | ||
Repurchase agreements, at value (cost $1,650,118) | 1,650,118 | |||
Total investments (cost $21,459,022) | 28,846,458 | |||
Segregated cash with broker | 20,532 | |||
Cash | 2,080 | |||
Receivables: | ||||
Fund shares sold | 325,848 | |||
Securities lending income | 7,880 | |||
Dividends | 7,077 | |||
Total assets | 29,209,875 | |||
Liabilities: | ||||
Payable for: | ||||
Return of securities loaned | 1,425,325 | |||
Fund shares redeemed | 353,600 | |||
Management fees | 18,740 | |||
Transfer agent and administrative fees | 5,512 | |||
Distribution and service fees | 3,739 | |||
Portfolio accounting fees | 2,205 | |||
Miscellaneous | 13,066 | |||
Total liabilities | 1,822,187 | |||
Commitments and contingent liabilities (Note 10) | — | |||
Net assets | $ | 27,387,688 | ||
Net assets consist of: | ||||
Paid in capital | $ | 37,149,248 | ||
Undistributed net investment income | 42,413 | |||
Accumulated net realized loss on investments | (17,191,409 | ) | ||
Net unrealized appreciation on investments | 7,387,436 | |||
Net assets | $ | 27,387,688 | ||
Investor Class: | ||||
Net assets | $ | 18,143,531 | ||
Capital shares outstanding | 217,173 | |||
Net asset value per share | $ | 83.54 | ||
Advisor Class: | ||||
Net assets | $ | 6,284,583 | ||
Capital shares outstanding | 81,976 | |||
Net asset value per share | $ | 76.66 | ||
A-Class: | ||||
Net assets | $ | 1,679,567 | ||
Capital shares outstanding | 21,364 | |||
Net asset value per share | $ | 78.62 | ||
Maximum offering price per share (Net asset value divided by 95.25%) | $ | 82.54 | ||
C-Class: | ||||
Net assets | $ | 1,280,007 | ||
Capital shares outstanding | 17,593 | |||
Net asset value per share | $ | 72.76 |
STATEMENT OF OPERATIONS
Year Ended March 31, 2015
Investment Income: | ||||
Dividends (net of foreign withholding tax of $5,178) | $ | 383,218 | ||
Income from securities lending, net | 67,567 | |||
Interest | 29 | |||
Total investment income | 450,814 | |||
Expenses: | ||||
Management fees | 221,570 | |||
Transfer agent and administrative fees | 65,167 | |||
Distribution and service fees: | ||||
Advisor Class | 21,931 | |||
A-Class | 7,239 | |||
C-Class | 15,217 | |||
Portfolio accounting fees | 26,067 | |||
Custodian fees | 3,050 | |||
Trustees’ fees* | 1,503 | |||
Line of credit fees | 293 | |||
Miscellaneous | 33,950 | |||
Total expenses | 395,987 | |||
Net investment income | 54,827 | |||
Net Realized and Unrealized Gain (Loss): | ||||
Net realized gain (loss) on: | ||||
Investments | (4,156,771 | ) | ||
Net realized loss | (4,156,771 | ) | ||
Net change in unrealized appreciation (depreciation) on: | ||||
Investments | 4,425,744 | |||
Net change in unrealized appreciation (depreciation) | 4,425,744 | |||
Net realized and unrealized gain | 268,973 | |||
Net increase in net assets resulting from operations | $ | 323,800 |
* | Relates to Trustees not deemed “interested persons” within the meaning of Section 2(a)(19) of the 1940 Act. |
48 | THE RYDEX FUNDS ANNUAL REPORT | SEE NOTES TO FINANCIAL STATEMENTS. |
ELECTRONICS FUND |
STATEMENTS OF CHANGES IN NET ASSETS
Year Ended March 31, 2015 | Year Ended March 31, 2014 | |||||||
Increase (Decrease) in Net Assets from Operations: | ||||||||
Net investment income (loss) | $ | 54,827 | $ | (23,668 | ) | |||
Net realized gain (loss) on investments | (4,156,771 | ) | 690,809 | |||||
Net change in unrealized appreciation (depreciation) on investments | 4,425,744 | 1,007,719 | ||||||
Net increase in net assets resulting from operations | 323,800 | 1,674,860 | ||||||
Distributions to shareholders from: | ||||||||
Net investment income | ||||||||
Investor Class | — | (1,558 | ) | |||||
Advisor Class | — | (974 | ) | |||||
A-Class | — | (118 | ) | |||||
C-Class | — | (329 | ) | |||||
Total distributions to shareholders | — | (2,979 | ) | |||||
Capital share transactions: | ||||||||
Proceeds from sale of shares | ||||||||
Investor Class | 149,252,908 | 119,447,698 | ||||||
Advisor Class | 34,345,705 | 29,407,626 | ||||||
A-Class | 15,359,168 | 15,892,309 | ||||||
C-Class | 18,220,155 | 20,348,276 | ||||||
Distributions reinvested | ||||||||
Investor Class | — | 1,521 | ||||||
Advisor Class | — | 967 | ||||||
A-Class | — | 118 | ||||||
C-Class | — | 328 | ||||||
Cost of shares redeemed | ||||||||
Investor Class | (140,624,704 | ) | (113,730,945 | ) | ||||
Advisor Class | (32,080,298 | ) | (27,385,057 | ) | ||||
A-Class | (18,830,964 | ) | (11,112,191 | ) | ||||
C-Class | (18,183,162 | ) | (20,133,392 | ) | ||||
Net increase from capital share transactions | 7,458,808 | 12,737,258 | ||||||
Net increase in net assets | 7,782,608 | 14,409,139 | ||||||
Net assets: | ||||||||
Beginning of year | 19,605,080 | 5,195,941 | ||||||
End of year | $ | 27,387,688 | $ | 19,605,080 | ||||
Undistributed net investment income/(Accumulated net investment loss) at end of year | $ | 42,413 | $ | (12,414 | ) | |||
Capital share activity: | ||||||||
Shares sold | ||||||||
Investor Class | 1,964,674 | 1,999,524 | ||||||
Advisor Class | 497,436 | 523,694 | ||||||
A-Class | 217,511 | 274,282 | ||||||
C-Class | 277,943 | 391,550 | ||||||
Shares issued from reinvestment of distributions | ||||||||
Investor Class | — | 25 | ||||||
Advisor Class | — | 17 | ||||||
A-Class | — | 2 | ||||||
C-Class | — | 6 | ||||||
Shares redeemed | ||||||||
Investor Class | (1,885,797 | ) | (1,917,706 | ) | ||||
Advisor Class | (471,009 | ) | (494,817 | ) | ||||
A-Class | (277,054 | ) | (199,435 | ) | ||||
C-Class | (277,335 | ) | (388,980 | ) | ||||
Net increase in shares | 46,369 | 188,162 |
SEE NOTES TO FINANCIAL STATEMENTS. | THE RYDEX FUNDS ANNUAL REPORT | 49 |
ELECTRONICS FUND |
FINANCIAL HIGHLIGHTS
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.
Investor Class | Year Ended March 31, 2015 | Year Ended March 31, 2014 | Year Ended March 28, 2013 | Year Ended March 31, 2012 | Year Ended March 31, 2011 | |||||||||||||||
Per Share Data | ||||||||||||||||||||
Net asset value, beginning of period | $ | 69.82 | $ | 52.11 | $ | 55.09 | $ | 60.57 | $ | 52.33 | ||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||
Net investment income (loss)a | .29 | (.04 | ) | .22 | (.12 | ) | (.13 | ) | ||||||||||||
Net gain (loss) on investments (realized and unrealized) | 13.43 | 17.79 | (3.20 | ) | (5.36 | ) | 8.37 | |||||||||||||
Total from investment operations | 13.72 | 17.75 | (2.98 | ) | (5.48 | ) | 8.24 | |||||||||||||
Less distributions from: | ||||||||||||||||||||
Net investment income | — | (.04 | ) | — | — | — | ||||||||||||||
Total distributions | — | (.04 | ) | — | — | — | ||||||||||||||
Net asset value, end of period | $ | 83.54 | $ | 69.82 | $ | 52.11 | $ | 55.09 | $ | 60.57 | ||||||||||
Total Returnb | 19.65 | % | 34.07 | % | (5.41 | %) | (9.05 | %) | 15.75 | % | ||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||
Net assets, end of period (in thousands) | $ | 18,144 | $ | 9,655 | $ | 2,942 | $ | 5,453 | $ | 6,976 | ||||||||||
Ratios to average net assets: | ||||||||||||||||||||
Net investment income (loss) | 0.38 | % | (0.07 | %) | 0.45 | % | (0.22 | %) | (0.23 | %) | ||||||||||
Total expenses | 1.35 | % | 1.37 | % | 1.35 | % | 1.35 | % | 1.39 | % | ||||||||||
Portfolio turnover rate | 562 | % | 1,436 | % | 1,640 | % | 1,329 | % | 1,171 | % |
Advisor Class | Year Ended March 31, 2015 | Year Ended March 31, 2014 | Year Ended March 28, 2013 | Year Ended March 31, 2012 | Year Ended March 31, 2011 | |||||||||||||||
Per Share Data | ||||||||||||||||||||
Net asset value, beginning of period | $ | 64.40 | $ | 48.33 | $ | 51.40 | $ | 56.77 | $ | 49.26 | ||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||
Net investment income (loss)a | .06 | (.17 | ) | (.12 | ) | (.34 | ) | (.41 | ) | |||||||||||
Net gain (loss) on investments (realized and unrealized) | 12.20 | 16.28 | (2.95 | ) | (5.03 | ) | 7.92 | |||||||||||||
Total from investment operations | 12.26 | 16.11 | (3.07 | ) | (5.37 | ) | 7.51 | |||||||||||||
Less distributions from: | ||||||||||||||||||||
Net investment income | — | (.04 | ) | — | — | — | ||||||||||||||
Total distributions | — | (.04 | ) | — | — | — | ||||||||||||||
Net asset value, end of period | $ | 76.66 | $ | 64.40 | $ | 48.33 | $ | 51.40 | $ | 56.77 | ||||||||||
Total Returnb | 19.04 | % | 33.34 | % | (5.97 | %) | (9.46 | %) | 15.25 | % | ||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||
Net assets, end of period (in thousands) | $ | 6,285 | $ | 3,577 | $ | 1,288 | $ | 1,271 | $ | 3,081 | ||||||||||
Ratios to average net assets: | ||||||||||||||||||||
Net investment income (loss) | 0.09 | % | (0.29 | %) | (0.26 | %) | (0.67 | %) | (0.79 | %) | ||||||||||
Total expenses | 1.85 | % | 1.87 | % | 1.85 | % | 1.86 | % | 1.89 | % | ||||||||||
Portfolio turnover rate | 562 | % | 1,436 | % | 1,640 | % | 1,329 | % | 1,171 | % |
50 | THE RYDEX FUNDS ANNUAL REPORT | SEE NOTES TO FINANCIAL STATEMENTS. |
ELECTRONICS FUND |
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.
A-Class | Year Ended March 31, 2015 | Year Ended March 31, 2014 | Year Ended March 28, 2013 | Year Ended March 31, 2012 | Year Ended March 31, 2011 | |||||||||||||||
Per Share Data | ||||||||||||||||||||
Net asset value, beginning of period | $ | 65.87 | $ | 49.29 | $ | 52.23 | $ | 57.59 | $ | 49.88 | ||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||
Net investment income (loss)a | (.17 | ) | (.33 | ) | .24 | (.19 | ) | (.21 | ) | |||||||||||
Net gain (loss) on investments (realized and unrealized) | 12.92 | 16.95 | (3.18 | ) | (5.17 | ) | 7.92 | |||||||||||||
Total from investment operations | 12.75 | 16.62 | (2.94 | ) | (5.36 | ) | 7.71 | |||||||||||||
Less distributions from: | ||||||||||||||||||||
Net investment income | — | (.04 | ) | — | — | — | ||||||||||||||
Total distributions | — | (.04 | ) | — | — | — | ||||||||||||||
Net asset value, end of period | $ | 78.62 | $ | 65.87 | $ | 49.29 | $ | 52.23 | $ | 57.59 | ||||||||||
Total Returnb | 19.36 | % | 33.72 | % | (5.63 | %) | (9.31 | %) | 15.46 | % | ||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||
Net assets, end of period (in thousands) | $ | 1,680 | $ | 5,329 | $ | 299 | $ | 659 | $ | 1,619 | ||||||||||
Ratios to average net assets: | ||||||||||||||||||||
Net investment income (loss) | (0.24 | %) | (0.59 | %) | 0.51 | % | (0.36 | %) | (0.43 | %) | ||||||||||
Total expenses | 1.61 | % | 1.62 | % | 1.60 | % | 1.62 | % | 1.64 | % | ||||||||||
Portfolio turnover rate | 562 | % | 1,436 | % | 1,640 | % | 1,329 | % | 1,171 | % |
C-Class | Year Ended March 31, 2015 | Year Ended March 31, 2014 | Year Ended March 28, 2013 | Year Ended March 31, 2012 | Year Ended March 31, 2011 | |||||||||||||||
Per Share Data | ||||||||||||||||||||
Net asset value, beginning of period | $ | 61.40 | $ | 46.32 | $ | 49.50 | $ | 55.03 | $ | 47.90 | ||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||
Net investment income (loss)a | (.35 | ) | (.54 | ) | (.18 | ) | (.70 | ) | (.65 | ) | ||||||||||
Net gain (loss) on investments (realized and unrealized) | 11.71 | 15.66 | (3.00 | ) | (4.83 | ) | 7.78 | |||||||||||||
Total from investment operations | 11.36 | 15.12 | (3.18 | ) | (5.53 | ) | 7.13 | |||||||||||||
Less distributions from: | ||||||||||||||||||||
Net investment income | — | (.04 | ) | — | — | — | ||||||||||||||
Total distributions | — | (.04 | ) | — | — | — | ||||||||||||||
Net asset value, end of period | $ | 72.76 | $ | 61.40 | $ | 46.32 | $ | 49.50 | $ | 55.03 | ||||||||||
Total Returnb | 18.50 | % | 32.65 | % | (6.44 | %) | (10.01 | %) | 14.86 | % | ||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||
Net assets, end of period (in thousands) | $ | 1,280 | $ | 1,043 | $ | 667 | $ | 263 | $ | 1,246 | ||||||||||
Ratios to average net assets: | ||||||||||||||||||||
Net investment income (loss) | (0.55 | %) | (1.03 | %) | (0.41 | %) | (1.42 | %) | (1.31 | %) | ||||||||||
Total expenses | 2.35 | % | 2.37 | % | 2.35 | % | 2.36 | % | 2.39 | % | ||||||||||
Portfolio turnover rate | 562 | % | 1,436 | % | 1,640 | % | 1,329 | % | 1,171 | % |
a | Net investment income (loss) per share was computed using average shares outstanding throughout the period. |
b | Total return does not reflect the impact of any applicable sales charges. |
SEE NOTES TO FINANCIAL STATEMENTS. | THE RYDEX FUNDS ANNUAL REPORT | 51 |
PERFORMANCE REPORT AND FUND PROFILE (Unaudited) | March 31, 2015 |
ENERGY FUND
OBJECTIVE: Seeks to provide capital appreciation by investing in companies involved in the energy field, including the exploration, production, and development of oil, gas, coal, and alternative sources of energy (“energy companies”).
For the one-year period ended March 31, 2015, Energy Fund Investor Class returned -21.42%, compared with -11.11% for the S&P 500 Energy Index. The broader S&P 500 Index returned 12.73%.
Within the sector, the gas utilities industry was the largest contributor to return, followed by the commercial services & supplies industry. The oil, gas & consumable fuels industry was the largest detractor from return, followed by the energy equipment & services industry.
Kinder Morgan, Inc., Tesoro Corp., and Valero Energy Corp. were among the most significant positive contributors to Fund performance for the period. Holdings detracting most from performance were Transocean Ltd., Seadrill Ltd., and Petroleo Brasileiro S.A. ADR.
Performance displayed represents past performance, which is no guarantee of future results.
Holdings Diversification (Market Exposure as % of Net Assets)
![](https://capedge.com/proxy/N-CSR/0001398344-15-003814/rsecf_16.jpg)
“Holdings Diversification (Market Exposure as % of Net Assets)” excludes any temporary cash investments.
Inception Dates: | |
Investor Class | April 21, 1998 |
Advisor Class | May 5, 1998 |
A-Class | September 1, 2004 |
C-Class | April 19, 2001 |
Ten Largest Holdings (% of Total Net Assets) | |
Exxon Mobil Corp. | 5.3% |
Chevron Corp. | 4.0% |
Schlumberger Ltd. | 3.0% |
Kinder Morgan, Inc. | 2.7% |
ConocoPhillips | 2.5% |
Occidental Petroleum Corp. | 2.1% |
EOG Resources, Inc. | 2.0% |
Phillips 66 | 1.9% |
Anadarko Petroleum Corp. | 1.8% |
Williams Companies, Inc. | 1.8% |
Top Ten Total | 27.1% |
“Ten Largest Holdings” exclude any temporary cash or derivative investments. |
52 | THE RYDEX FUNDS ANNUAL REPORT |
PERFORMANCE REPORT AND FUND PROFILE (Unaudited)(concluded) | March 31, 2015 |
Cumulative Fund Performance*
![](https://capedge.com/proxy/N-CSR/0001398344-15-003814/rsecf_17.jpg)
![](https://capedge.com/proxy/N-CSR/0001398344-15-003814/rsecf_18.jpg)
Average Annual Returns*
Periods Ended March 31, 2015
1 Year | 5 Year | 10 Year | |
Investor Class Shares | -21.42% | 2.67% | 4.61% |
Advisor Class Shares | -21.76% | 2.16% | 4.08% |
A-Class Shares | -21.49% | 2.42% | 4.34% |
A-Class Shares with sales charge† | -25.22% | 1.42% | 3.83% |
C-Class Shares | -22.18% | 1.64% | 3.56% |
C-Class Shares with CDSC‡ | -22.95% | 1.64% | 3.56% |
S&P 500 Energy Index | -11.11% | 8.00% | 7.41% |
S&P 500 Index | 12.73% | 14.47% | 8.01% |
* | The performance data above represents past performance that is not predictive of future results. The investment return and principal value of an investment in the Fund will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Returns are historical and include changes in principal and reinvested dividends and capital gains and do not reflect the effect of taxes. The S&P 500 Index and the S&P 500 Energy Index are unmanaged indices and, unlike the Fund, have no management fees or operating expenses to reduce their reported returns. The graphs are based on Investor Class shares and A-Class shares only; performance for Advisor Class shares and C-Class shares will vary due to differences in fee structures. |
† | Fund returns are calculated using the maximum sales charge of 4.75%. |
‡ | Fund returns include a CDSC of 1% if redeemed within 12 months of purchase. |
THE RYDEX FUNDS ANNUAL REPORT | 53 |
SCHEDULE OF INVESTMENTS | March 31, 2015 |
ENERGY FUND |
Shares | Value | |||||||
COMMON STOCKS† - 99.7% | ||||||||
OIL COMPANY - EXPLORATION & PRODUCTION - 37.4% | ||||||||
ConocoPhillips | 18,267 | $ | 1,137,303 | |||||
Occidental Petroleum Corp. | 13,406 | 978,638 | ||||||
EOG Resources, Inc. | 10,187 | 934,046 | ||||||
Anadarko Petroleum Corp. | 10,228 | 846,981 | ||||||
Devon Energy Corp. | 10,845 | 654,062 | ||||||
Pioneer Natural Resources Co. | 3,995 | 653,222 | ||||||
Apache Corp. | 10,345 | 624,114 | ||||||
Noble Energy, Inc. | 11,852 | 579,563 | ||||||
Hess Corp. | 8,382 | 568,886 | ||||||
Continental Resources, Inc.* | 12,582 | 549,456 | ||||||
Concho Resources, Inc.* | 4,301 | 498,572 | ||||||
Equities Corp. | 5,750 | 476,503 | ||||||
Cabot Oil & Gas Corp. — Class A | 15,810 | 466,869 | ||||||
Cimarex Energy Co. | 3,714 | 427,444 | ||||||
Antero Resources Corp.* | 11,650 | 411,478 | ||||||
Range Resources Corp. | 7,850 | 408,514 | ||||||
Chesapeake Energy Corp.1 | 28,382 | 401,889 | ||||||
Southwestern Energy Co.* | 17,006 | 394,369 | ||||||
Newfield Exploration Co.* | 9,310 | 326,688 | ||||||
Encana Corp. | 26,874 | 299,645 | ||||||
Energen Corp. | 4,507 | 297,462 | ||||||
Canadian Natural Resources Ltd. | 9,502 | 291,806 | ||||||
Diamondback Energy, Inc.* | 3,790 | 291,224 | ||||||
Whiting Petroleum Corp.* | 8,728 | 269,695 | ||||||
Cobalt International Energy, Inc.* | 28,110 | 264,515 | ||||||
Memorial Resource Development Corp.* | 14,870 | 263,794 | ||||||
SM Energy Co. | 5,099 | 263,516 | ||||||
Gulfport Energy Corp.* | 5,630 | 258,473 | ||||||
QEP Resources, Inc. | 12,062 | 251,493 | ||||||
Rice Energy, Inc.* | 11,230 | 244,365 | ||||||
California Resources Corp. | 31,543 | 240,042 | ||||||
Laredo Petroleum, Inc.* | 18,088 | 235,868 | ||||||
Talisman Energy, Inc. | 30,198 | 231,921 | ||||||
Denbury Resources, Inc.1 | 28,548 | 208,115 | ||||||
Ultra Petroleum Corp.*,1 | 13,112 | 204,941 | ||||||
Carrizo Oil & Gas, Inc.* | 4,069 | 202,026 | ||||||
CNOOC Ltd. ADR | 1,400 | 198,548 | ||||||
WPX Energy, Inc.* | 18,134 | 198,205 | ||||||
Oasis Petroleum, Inc.*,1 | 13,410 | 190,690 | ||||||
PDC Energy, Inc.* | 3,460 | 186,978 | ||||||
RSP Permian, Inc.* | 7,080 | 178,345 | ||||||
Rosetta Resources, Inc.* | 8,680 | 147,734 | ||||||
Bonanza Creek Energy, Inc.* | 5,980 | 147,467 | ||||||
Sanchez Energy Corp.*,1 | 9,510 | 123,725 | ||||||
Stone Energy Corp.* | 8,020 | 117,734 | ||||||
Comstock Resources, Inc.1 | 14,477 | 51,683 | ||||||
Total Oil Company - Exploration & Production | 17,198,607 | |||||||
OIL COMPANY - INTEGRATED - 16.8% | ||||||||
Exxon Mobil Corp. | 28,947 | 2,460,495 | ||||||
Chevron Corp. | 17,528 | 1,840,089 | ||||||
Marathon Oil Corp. | 20,977 | 547,709 | ||||||
Petroleo Brasileiro S.A. ADR1 | 79,972 | 480,632 | ||||||
Royal Dutch Shell plc — Class A ADR | 8,017 | 478,214 | ||||||
BP plc ADR | 10,406 | 406,979 | ||||||
Murphy Oil Corp. | 7,929 | 369,491 | ||||||
Suncor Energy, Inc. | 10,431 | 305,107 | ||||||
Statoil ASA ADR | 12,830 | 225,680 | ||||||
Sasol Ltd. ADR | 6,300 | 214,452 | ||||||
Cenovus Energy, Inc. | 12,570 | 212,182 | ||||||
YPF S.A. ADR | 6,780 | 186,111 | ||||||
Total Oil Company - Integrated | 7,727,141 | |||||||
OIL-FIELD SERVICES - 11.7% | ||||||||
Schlumberger Ltd. | 16,319 | 1,361,657 | ||||||
Halliburton Co. | 18,866 | 827,840 | ||||||
Baker Hughes, Inc. | 11,036 | 701,669 | ||||||
Oceaneering International, Inc. | 5,957 | 321,261 | ||||||
Targa Resources Corp. | 3,240 | 310,360 | ||||||
Weatherford International plc* | 24,410 | 300,243 | ||||||
Core Laboratories N.V.1 | 2,647 | 276,585 | ||||||
Superior Energy Services, Inc. | 11,319 | 252,866 | ||||||
Exterran Holdings, Inc. | 6,354 | 213,304 | ||||||
Oil States International, Inc.* | 4,707 | 187,197 | ||||||
Bristow Group, Inc. | 3,172 | 172,715 | ||||||
Helix Energy Solutions Group, Inc.* | 11,532 | 172,519 | ||||||
CARBO Ceramics, Inc.1 | 3,601 | 109,867 | ||||||
C&J Energy Services Ltd.* | 9,565 | 106,458 | ||||||
Basic Energy Services, Inc.* | 11,960 | 82,883 | ||||||
Total Oil-Field Services | 5,397,424 | |||||||
OIL REFINING & MARKETING - 9.6% | ||||||||
Phillips 66 | 10,919 | 858,234 | ||||||
Valero Energy Corp. | 12,034 | 765,604 | ||||||
Marathon Petroleum Corp. | 6,839 | 700,245 | ||||||
Cheniere Energy, Inc.* | 7,261 | 562,001 | ||||||
Tesoro Corp. | 4,908 | 448,051 | ||||||
HollyFrontier Corp. | 9,035 | 363,839 | ||||||
Western Refining, Inc. | 5,760 | 284,486 | ||||||
PBF Energy, Inc. — Class A | 7,020 | 238,118 | ||||||
Delek US Holdings, Inc. | 5,030 | 199,943 | ||||||
Total Oil Refining & Marketing | 4,420,521 | |||||||
PIPELINES - 8.4% | ||||||||
Kinder Morgan, Inc. | 29,696 | 1,249,014 | ||||||
Williams Companies, Inc. | 16,445 | 831,953 | ||||||
Spectra Energy Corp. | 18,260 | 660,464 | ||||||
ONEOK, Inc. | 8,867 | 427,744 | ||||||
SemGroup Corp. — Class A | 3,150 | 256,221 | ||||||
Enbridge, Inc. | 4,770 | 231,345 | ||||||
TransCanada Corp. | 5,270 | 225,134 | ||||||
Total Pipelines | 3,881,875 |
54 | THE RYDEX FUNDS ANNUAL REPORT | SEE NOTES TO FINANCIAL STATEMENTS. |
SCHEDULE OF INVESTMENTS (concluded) | March 31, 2015 |
ENERGY FUND |
Shares | Value | |||||||
OIL & GAS DRILLING - 7.2% | ||||||||
Transocean Ltd.1 | 31,256 | $ | 458,525 | |||||
Ensco plc — Class A | 18,648 | 392,913 | ||||||
Nabors Industries Ltd. | 27,324 | 372,973 | ||||||
Helmerich & Payne, Inc. | 5,295 | 360,431 | ||||||
Noble Corporation plc | 25,073 | 358,042 | ||||||
Seadrill Ltd.1 | 32,405 | 302,987 | ||||||
Diamond Offshore Drilling, Inc.1 | 9,161 | 245,423 | ||||||
Patterson-UTI Energy, Inc. | 12,069 | 226,595 | ||||||
Parsley Energy, Inc. — Class A* | 12,520 | 200,070 | ||||||
Rowan Companies plc — Class A | 10,835 | 191,888 | ||||||
Atwood Oceanics, Inc. | 6,250 | 175,688 | ||||||
Total Oil & Gas Drilling | 3,285,535 | |||||||
OIL FIELD MACHINERY & EQUIPMENT - 4.2% | ||||||||
National Oilwell Varco, Inc. | 12,053 | 602,530 | ||||||
Cameron International Corp.* | 8,654 | 390,468 | ||||||
FMC Technologies, Inc.* | 10,297 | 381,092 | ||||||
Dresser-Rand Group, Inc.* | 4,040 | 324,614 | ||||||
Dril-Quip, Inc.* | 3,149 | 215,360 | ||||||
Total Oil Field Machinery & Equipment | 1,914,064 | |||||||
TRANSPORT-MARINE - 1.1% | ||||||||
Golar LNG Ltd.1 | 6,260 | 208,332 | ||||||
Teekay Corp. | 4,240 | 197,457 | ||||||
Tidewater, Inc.1 | 5,998 | 114,802 | ||||||
Total Transport-Marine | 520,591 | |||||||
COAL - 1.0% | ||||||||
CONSOL Energy, Inc. | 11,976 | 334,010 | ||||||
Peabody Energy Corp.1 | 29,266 | 143,989 | ||||||
Total Coal | 477,999 | |||||||
RETAIL-PETROLEUM PRODUCTS - 0.6% | ||||||||
World Fuel Services Corp. | 4,680 | 269,006 | ||||||
STEEL PIPE & TUBE - 0.5% | ||||||||
Tenaris S.A. ADR | 8,249 | 230,972 | ||||||
DIVERSIFIED MINERALS - 0.5% | ||||||||
US Silica Holdings, Inc.1 | 5,780 | 205,826 | ||||||
NON-FERROUS METALS - 0.4% | ||||||||
Cameco Corp. | 13,004 | 181,146 | ||||||
ENERGY-ALTERNATE SOURCES - 0.3% | ||||||||
Green Plains, Inc. | 4,900 | 139,895 | ||||||
Total Common Stocks | ||||||||
(Cost $29,431,203) | 45,850,602 | |||||||
Face Amount | ||||||||
REPURCHASE AGREEMENT††,2 - 0.5% | ||||||||
HSBC Group issued 03/31/15 at 0.03% due 04/01/15 | $ | 233,695 | 233,695 | |||||
Total Repurchase Agreement | ||||||||
(Cost $233,695) | 233,695 | |||||||
SECURITIES LENDING COLLATERAL††,3 - 4.5% | ||||||||
Repurchase Agreements | ||||||||
HSBC Securities, Inc. issued 03/31/15 at 0.10% due 04/01/15 | 1,354,840 | 1,354,840 | ||||||
BNP Paribas Securities Corp. issued 03/31/15 at 0.10% due 04/01/15 | 466,065 | 466,065 | ||||||
Barclays Capital, Inc. issued 03/31/15 at 0.10% due 04/01/15 | 240,565 | 240,565 | ||||||
Total Securities Lending Collateral | ||||||||
(Cost $2,061,470) | 2,061,470 | |||||||
Total Investments - 104.7% | ||||||||
(Cost $31,726,368) | $ | 48,145,767 | ||||||
Other Assets & Liabilities, net - (4.7)% | (2,145,835 | ) | ||||||
Total Net Assets - 100.0% | $ | 45,999,932 |
* | Non-income producing security. |
† | Value determined based on Level 1 inputs — See Note 4. |
†† | Value determined based on Level 2 inputs — See Note 4. |
1 | All or portion of this security is on loan at March 31, 2015 — See Note 6. |
2 | Repurchase Agreement — See Note 5. |
3 | Securities lending collateral — See Note 6. |
ADR — American Depositary Receipt | |
plc — Public Limited Company |
SEE NOTES TO FINANCIAL STATEMENTS. | THE RYDEX FUNDS ANNUAL REPORT | 55 |
ENERGY FUND |
STATEMENT OF ASSETS AND LIABILITIES
March 31, 2015
Assets: | ||||
Investments, at value - including $2,013,020 of securities loaned (cost $29,431,203) | $ | 45,850,602 | ||
Repurchase agreements, at value (cost $2,295,165) | 2,295,165 | |||
Total investments (cost $31,726,368) | 48,145,767 | |||
Segregated cash with broker | 30,130 | |||
Cash | 6,193 | |||
Receivables: | ||||
Fund shares sold | 7,068,498 | |||
Dividends | 24,524 | |||
Securities lending income | 7,840 | |||
Total assets | 55,282,952 | |||
Liabilities: | ||||
Payable for: | ||||
Securities purchased | 5,890,117 | |||
Return of securities loaned | 2,091,600 | |||
Fund shares redeemed | 1,229,755 | |||
Management fees | 28,631 | |||
Distribution and service fees | 8,442 | |||
Transfer agent and administrative fees | 8,421 | |||
Portfolio accounting fees | 3,368 | |||
Miscellaneous | 22,686 | |||
Total liabilities | 9,283,020 | |||
Commitments and contingent liabilities (Note 10) | — | |||
Net assets | $ | 45,999,932 | ||
Net assets consist of: | ||||
Paid in capital | $ | 39,403,380 | ||
Undistributed net investment income | 334,376 | |||
Accumulated net realized loss on investments | (10,157,223 | ) | ||
Net unrealized appreciation on investments | 16,419,399 | |||
Net assets | $ | 45,999,932 | ||
Investor Class: | ||||
Net assets | $ | 28,123,067 | ||
Capital shares outstanding | 1,209,890 | |||
Net asset value per share | $ | 23.24 | ||
Advisor Class: | ||||
Net assets | $ | 6,452,354 | ||
Capital shares outstanding | 302,359 | |||
Net asset value per share | $ | 21.34 | ||
A-Class: | ||||
Net assets | $ | 4,670,595 | ||
Capital shares outstanding | 212,875 | |||
Net asset value per share | $ | 21.94 | ||
Maximum offering price per share (Net asset value divided by 95.25%) | $ | 23.03 | ||
C-Class: | ||||
Net assets | $ | 6,753,916 | ||
Capital shares outstanding | 337,980 | |||
Net asset value per share | $ | 19.98 |
STATEMENT OF OPERATIONS
Year Ended March 31, 2015
Investment Income: | ||||
Dividends (net of foreign withholding tax of $18,860) | $ | 1,270,683 | ||
Income from securities lending, net | 51,471 | |||
Interest | 53 | |||
Total investment income | 1,322,207 | |||
Expenses: | ||||
Management fees | 538,595 | |||
Transfer agent and administrative fees | 158,410 | |||
Distribution and service fees: | ||||
Advisor Class | 34,422 | |||
A-Class | 15,536 | |||
C-Class | 81,628 | |||
Portfolio accounting fees | 63,363 | |||
Custodian fees | 7,404 | |||
Trustees’ fees* | 5,184 | |||
Line of credit fees | 189 | |||
Miscellaneous | 84,269 | |||
Total expenses | 989,000 | |||
Net investment income | 333,207 | |||
Net Realized and Unrealized Gain (Loss): | ||||
Net realized gain (loss) on: | ||||
Investments | (139,801 | ) | ||
Net realized loss | (139,801 | ) | ||
Net change in unrealized appreciation (depreciation) on: | ||||
Investments | (9,779,125 | ) | ||
Net change in unrealized appreciation (depreciation) | (9,779,125 | ) | ||
Net realized and unrealized loss | (9,918,926 | ) | ||
Net decrease in net assets resulting from operations | $ | (9,585,719 | ) |
* | Relates to Trustees not deemed “interested persons” within the meaning of Section 2(a)(19) of the 1940 Act. |
56 | THE RYDEX FUNDS ANNUAL REPORT | SEE NOTES TO FINANCIAL STATEMENTS. |
ENERGY FUND |
STATEMENTS OF CHANGES IN NET ASSETS
Year Ended March 31, 2015 | Year Ended March 31, 2014 | |||||||
Increase (Decrease) in Net Assets from Operations: | ||||||||
Net investment income | $ | 333,207 | $ | 200,733 | ||||
Net realized gain (loss) on investments | (139,801 | ) | 14,055,229 | |||||
Net change in unrealized appreciation (depreciation) on investments | (9,779,125 | ) | (5,739,014 | ) | ||||
Net increase (decrease) in net assets resulting from operations | (9,585,719 | ) | 8,516,948 | |||||
Distributions to shareholders from: | ||||||||
Net investment income | ||||||||
Investor Class | (122,605 | ) | — | |||||
Advisor Class | (19,193 | ) | — | |||||
A-Class | (21,643 | ) | — | |||||
C-Class | (37,292 | ) | — | |||||
Total distributions to shareholders | (200,733 | ) | — | |||||
Capital share transactions: | ||||||||
Proceeds from sale of shares | ||||||||
Investor Class | 261,136,749 | 143,421,747 | ||||||
Advisor Class | 75,602,721 | 9,124,810 | ||||||
A-Class | 24,712,863 | 9,853,780 | ||||||
C-Class | 24,858,323 | 25,870,251 | ||||||
Distributions reinvested | ||||||||
Investor Class | 119,147 | — | ||||||
Advisor Class | 18,825 | — | ||||||
A-Class | 16,607 | — | ||||||
C-Class | 35,962 | — | ||||||
Cost of shares redeemed | ||||||||
Investor Class | (263,698,107 | ) | (163,234,190 | ) | ||||
Advisor Class | (72,212,828 | ) | (10,093,114 | ) | ||||
A-Class | (25,606,281 | ) | (9,665,717 | ) | ||||
C-Class | (24,487,521 | ) | (28,215,805 | ) | ||||
Net increase (decrease) from capital share transactions | 496,460 | (22,938,238 | ) | |||||
Net decrease in net assets | (9,289,992 | ) | (14,421,290 | ) | ||||
Net assets: | ||||||||
Beginning of year | 55,289,924 | 69,711,214 | ||||||
End of year | $ | 45,999,932 | $ | 55,289,924 | ||||
Undistributed net investment income at end of year | $ | 334,376 | $ | 200,733 | ||||
Capital share activity: | ||||||||
Shares sold | ||||||||
Investor Class | 8,974,883 | 5,152,398 | ||||||
Advisor Class | 2,974,818 | 356,398 | ||||||
A-Class | 986,870 | 388,496 | ||||||
C-Class | 1,026,731 | 1,083,634 | ||||||
Shares issued from reinvestment of distributions | ||||||||
Investor Class | 4,447 | — | ||||||
Advisor Class | 764 | — | ||||||
A-Class | 657 | — | ||||||
C-Class | 1,548 | — | ||||||
Shares redeemed | ||||||||
Investor Class | (8,966,417 | ) | (5,837,470 | ) | ||||
Advisor Class | (2,847,072 | ) | (400,131 | ) | ||||
A-Class | (1,010,592 | ) | (378,139 | ) | ||||
C-Class | (1,014,166 | ) | (1,182,490 | ) | ||||
Net increase (decrease) in shares | 132,471 | (817,304 | ) |
SEE NOTES TO FINANCIAL STATEMENTS. | THE RYDEX FUNDS ANNUAL REPORT | 57 |
ENERGY FUND |
FINANCIAL HIGHLIGHTS
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.
Investor Class | Year Ended March 31, 2015 | Year Ended March 31, 2014 | Year Ended March 28, 2013 | Year Ended March 31, 2012 | Year Ended March 31, 2011 | |||||||||||||||
Per Share Data | ||||||||||||||||||||
Net asset value, beginning of period | $ | 29.70 | $ | 26.12 | $ | 24.58 | $ | 28.70 | $ | 20.91 | ||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||
Net investment income (loss)a | .21 | .15 | .12 | .07 | — | b | ||||||||||||||
Net gain (loss) on investments (realized and unrealized) | (6.56 | ) | 3.43 | 1.89 | (4.19 | ) | 7.82 | |||||||||||||
Total from investment operations | (6.35 | ) | 3.58 | 2.01 | (4.12 | ) | 7.82 | |||||||||||||
Less distributions from: | ||||||||||||||||||||
Net investment income | (.11 | ) | — | (.07 | ) | — | (.03 | ) | ||||||||||||
Return of capital | — | — | (.40 | ) | — | — | ||||||||||||||
Total distributions | (.11 | ) | — | (.47 | ) | — | (.03 | ) | ||||||||||||
Net asset value, end of period | $ | 23.24 | $ | 29.70 | $ | 26.12 | $ | 24.58 | $ | 28.70 | ||||||||||
Total Returnc | (21.42 | %) | 13.71 | % | 8.50 | % | (14.39 | %) | 37.43 | % | ||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||
Net assets, end of period (in thousands) | $ | 28,123 | $ | 35,546 | $ | 49,160 | $ | 40,947 | $ | 93,648 | ||||||||||
Ratios to average net assets: | ||||||||||||||||||||
Net investment income (loss) | 0.72 | % | 0.55 | % | 0.52 | % | 0.27 | % | 0.00 | % | ||||||||||
Total expenses | 1.35 | % | 1.37 | % | 1.35 | % | 1.36 | % | 1.39 | % | ||||||||||
Portfolio turnover rate | 463 | % | 231 | % | 248 | % | 288 | % | 273 | % |
Advisor Class | Year Ended March 31, 2015 | Year Ended March 31, 2014 | Year Ended March 28, 2013 | Year Ended March 31, 2012 | Year Ended March 31, 2011 | |||||||||||||||
Per Share Data | ||||||||||||||||||||
Net asset value, beginning of period | $ | 27.40 | $ | 24.23 | $ | 22.95 | $ | 26.93 | $ | 19.72 | ||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||
Net investment income (loss)a | .07 | (.02 | ) | .01 | (.08 | ) | (.11 | ) | ||||||||||||
Net gain (loss) on investments (realized and unrealized) | (6.02 | ) | 3.19 | 1.74 | (3.90 | ) | 7.35 | |||||||||||||
Total from investment operations | (5.95 | ) | 3.17 | 1.75 | (3.98 | ) | 7.24 | |||||||||||||
Less distributions from: | ||||||||||||||||||||
Net investment income | (.11 | ) | — | (.07 | ) | — | (.03 | ) | ||||||||||||
Return of capital | — | — | (.40 | ) | — | — | ||||||||||||||
Total distributions | (.11 | ) | — | (.47 | ) | — | (.03 | ) | ||||||||||||
Net asset value, end of period | $ | 21.34 | $ | 27.40 | $ | 24.23 | $ | 22.95 | $ | 26.93 | ||||||||||
Total Returnc | (21.76 | %) | 13.08 | % | 7.92 | % | (14.78 | %) | 36.75 | % | ||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||
Net assets, end of period (in thousands) | $ | 6,452 | $ | 4,764 | $ | 5,272 | $ | 11,080 | $ | 16,015 | ||||||||||
Ratios to average net assets: | ||||||||||||||||||||
Net investment income (loss) | 0.27 | % | (0.09 | %) | 0.06 | % | (0.33 | %) | (0.53 | %) | ||||||||||
Total expenses | 1.85 | % | 1.87 | % | 1.85 | % | 1.86 | % | 1.89 | % | ||||||||||
Portfolio turnover rate | 463 | % | 231 | % | 248 | % | 288 | % | 273 | % |
58 | THE RYDEX FUNDS ANNUAL REPORT | SEE NOTES TO FINANCIAL STATEMENTS. |
ENERGY FUND |
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.
A-Class | Year Ended March 31, 2015 | Year Ended March 31, 2014 | Year Ended March 28, 2013 | Year Ended March 31, 2012 | Year Ended March 31, 2011 | |||||||||||||||
Per Share Data | ||||||||||||||||||||
Net asset value, beginning of period | $ | 28.07 | $ | 24.76 | $ | 23.38 | $ | 27.40 | $ | 20.01 | ||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||
Net investment income (loss)a | .12 | .08 | .08 | (.01 | ) | (.08 | ) | |||||||||||||
Net gain (loss) on investments (realized and unrealized) | (6.14 | ) | 3.23 | 1.77 | (4.01 | ) | 7.50 | |||||||||||||
Total from investment operations | (6.02 | ) | 3.31 | 1.85 | (4.02 | ) | 7.42 | |||||||||||||
Less distributions from: | ||||||||||||||||||||
Net investment income | (.11 | ) | — | (.07 | ) | — | (.03 | ) | ||||||||||||
Return of capital | — | — | (.40 | ) | — | — | ||||||||||||||
Total distributions | (.11 | ) | — | (.47 | ) | — | (.03 | ) | ||||||||||||
Net asset value, end of period | $ | 21.94 | $ | 28.07 | $ | 24.76 | $ | 23.38 | $ | 27.40 | ||||||||||
Total Returnc | (21.49 | %) | 13.37 | % | 8.20 | % | (14.67 | %) | 37.11 | % | ||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||
Net assets, end of period (in thousands) | $ | 4,671 | $ | 6,624 | $ | 5,586 | $ | 5,622 | $ | 14,752 | ||||||||||
Ratios to average net assets: | ||||||||||||||||||||
Net investment income (loss) | 0.43 | % | 0.30 | % | 0.38 | % | (0.05 | %) | (0.38 | %) | ||||||||||
Total expenses | 1.60 | % | 1.62 | % | 1.60 | % | 1.61 | % | 1.64 | % | ||||||||||
Portfolio turnover rate | 463 | % | 231 | % | 248 | % | 288 | % | 273 | % |
C-Class | Year Ended March 31, 2015 | Year Ended March 31, 2014 | Year Ended March 28, 2013 | Year Ended March 31, 2012 | Year Ended March 31, 2011 | |||||||||||||||
Per Share Data | ||||||||||||||||||||
Net asset value, beginning of period | $ | 25.80 | $ | 22.93 | $ | 21.85 | $ | 25.78 | $ | 18.97 | ||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||
Net investment income (loss)a | (.05 | ) | (.12 | ) | (.09 | ) | (.19 | ) | (.20 | ) | ||||||||||
Net gain (loss) on investments (realized and unrealized) | (5.66 | ) | 2.99 | 1.64 | (3.74 | ) | 7.04 | |||||||||||||
Total from investment operations | (5.71 | ) | 2.87 | 1.55 | (3.93 | ) | 6.84 | |||||||||||||
Less distributions from: | ||||||||||||||||||||
Net investment income | (.11 | ) | — | (.07 | ) | — | (.03 | ) | ||||||||||||
Return of capital | — | — | (.40 | ) | — | — | ||||||||||||||
Total distributions | (.11 | ) | — | (.47 | ) | — | (.03 | ) | ||||||||||||
Net asset value, end of period | $ | 19.98 | $ | 25.80 | $ | 22.93 | $ | 21.85 | $ | 25.78 | ||||||||||
Total Returnc | (22.18 | %) | 12.52 | % | 7.40 | % | (15.24 | %) | 36.09 | % | ||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||
Net assets, end of period (in thousands) | $ | 6,754 | $ | 8,357 | $ | 9,693 | $ | 13,153 | $ | 19,993 | ||||||||||
Ratios to average net assets: | ||||||||||||||||||||
Net investment income (loss) | (0.20 | %) | (0.52 | %) | (0.45 | %) | (0.84 | %) | (0.99 | %) | ||||||||||
Total expenses | 2.35 | % | 2.37 | % | 2.35 | % | 2.36 | % | 2.39 | % | ||||||||||
Portfolio turnover rate | 463 | % | 231 | % | 248 | % | 288 | % | 273 | % |
a | Net investment income (loss) per share was computed using average shares outstanding throughout the period. |
b | Net investment income is less than $0.01 per share. |
c | Total return does not reflect the impact of any applicable sales charges. |
SEE NOTES TO FINANCIAL STATEMENTS. | THE RYDEX FUNDS ANNUAL REPORT | 59 |
PERFORMANCE REPORT AND FUND PROFILE (Unaudited) | March 31, 2015 |
ENERGY SERVICES FUND
OBJECTIVE: Seeks to provide capital appreciation by investing in companies that are involved in the energy services field, including those that provide services and equipment in the areas of oil, coal, and gas exploration and production (“energy services companies”).
For the one-year period ended March 31, 2015, Energy Services Fund Investor Class returned -36.95%, compared with the S&P 500 Energy Index, which returned -11.11%. The broader S&P 500 Index returned 12.73%.
The diversified support services industry accounted for all of the Fund’s positive return for the period. Detracting from return were the oil & gas equipment & services holdings, followed by the oil & gas drilling industry.
U.S. Silica Holdings, Inc., Dresser-Rank Group, Inc., and Baker Hughes, Inc. were the Fund’s best-performing holdings for the period. The Fund’s worst-performing holdings included Ensco plc — Class A, Seadrill Ltd., and Transocean Ltd.
Performance displayed represents past performance, which is no guarantee of future results.
Holdings Diversification (Market Exposure as % of Net Assets)
![](https://capedge.com/proxy/N-CSR/0001398344-15-003814/rsecf_19.jpg)
“Holdings Diversification (Market Exposure as % of Net Assets)” excludes any temporary cash investments.
Inception Dates: | |
Investor Class | April 1, 1998 |
Advisor Class | April 2, 1998 |
A-Class | September 1, 2004 |
C-Class | March 30, 2001 |
Ten Largest Holdings (% of Total Net Assets) | |
Schlumberger Ltd. | 11.9% |
Halliburton Co. | 7.2% |
Baker Hughes, Inc. | 6.1% |
National Oilwell Varco, Inc. | 5.3% |
Transocean Ltd. | 3.9% |
Cameron International Corp. | 3.4% |
FMC Technologies, Inc. | 3.3% |
Helmerich & Payne, Inc. | 3.2% |
Ensco plc — Class A | 2.9% |
Dresser-Rand Group, Inc. | 2.8% |
Top Ten Total | 50.0% |
“Ten Largest Holdings” exclude any temporary cash or derivative investments. |
60 | THE RYDEX FUNDS ANNUAL REPORT |
PERFORMANCE REPORT AND FUND PROFILE (Unaudited)(concluded) | March 31, 2015 |
Cumulative Fund Performance*
![](https://capedge.com/proxy/N-CSR/0001398344-15-003814/rsecf_20.jpg)
![](https://capedge.com/proxy/N-CSR/0001398344-15-003814/rsecf_21.jpg)
Average Annual Returns*
Periods Ended March 31, 2015
1 Year | 5 Year | 10 Year | |
Investor Class Shares | -36.95% | -1.68% | 2.71% |
Advisor Class Shares | -37.33% | -2.18% | 2.19% |
A-Class Shares | -37.11% | -1.92% | 2.47% |
A-Class Shares with sales charge† | -40.10% | -2.87% | 1.97% |
C-Class Shares | -37.58% | -2.66% | 1.69% |
C-Class Shares with CDSC‡ | -38.21% | -2.66% | 1.69% |
S&P 500 Energy Index | -11.11% | 8.00% | 7.41% |
S&P 500 Index | 12.73% | 14.47% | 8.01% |
* | The performance data above represents past performance that is not predictive of future results. The investment return and principal value of an investment in the Fund will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Returns are historical and include changes in principal and reinvested dividends and capital gains and do not reflect the effect of taxes. The S&P 500 Index and the S&P 500 Energy Index are unmanaged indices and, unlike the Fund, have no management fees or operating expenses to reduce their reported returns. The graphs are based on Investor Class shares and A-Class shares only; performance for Advisor Class shares and C-Class shares will vary due to differences in fee structures. |
† | Fund returns are calculated using the maximum sales charge of 4.75%. |
‡ | Fund returns include a CDSC of 1% if redeemed within 12 months of purchase. |
THE RYDEX FUNDS ANNUAL REPORT | 61 |
SCHEDULE OF INVESTMENTS | March 31, 2015 |
ENERGY SERVICES FUND |
Shares | Value | |||||||
COMMON STOCKS† - 99.4% | ||||||||
OIL-FIELD SERVICES - 48.4% | ||||||||
Schlumberger Ltd. | 36,242 | $ | 3,024,031 | |||||
Halliburton Co. | 41,894 | 1,838,309 | ||||||
Baker Hughes, Inc. | 24,515 | 1,558,664 | ||||||
Oceaneering International, Inc. | 13,233 | 713,656 | ||||||
Superior Energy Services, Inc. | 25,142 | 561,672 | ||||||
Weatherford International plc* | 42,640 | 524,472 | ||||||
RPC, Inc. | 39,806 | 509,915 | ||||||
Core Laboratories N.V. | 4,545 | 474,907 | ||||||
Exterran Holdings, Inc. | 14,105 | 473,505 | ||||||
Oil States International, Inc.* | 10,461 | 416,034 | ||||||
Bristow Group, Inc. | 7,046 | 383,655 | ||||||
Helix Energy Solutions Group, Inc.* | 25,614 | 383,185 | ||||||
SEACOR Holdings, Inc.* | 4,734 | 329,818 | ||||||
Frank’s International N.V. | 14,000 | 261,800 | ||||||
CARBO Ceramics, Inc.1 | 8,004 | 244,202 | ||||||
C&J Energy Services Ltd.* | 21,238 | 236,379 | ||||||
Basic Energy Services, Inc.* | 26,557 | 184,040 | ||||||
Gulfmark Offshore, Inc. — Class A | 12,578 | 164,017 | ||||||
Total Oil-Field Services | 12,282,261 | |||||||
OIL & GAS DRILLING - 26.0% | ||||||||
Transocean Ltd.1 | 67,848 | 995,329 | ||||||
Helmerich & Payne, Inc. | 11,751 | 799,891 | ||||||
Ensco plc — Class A | 34,416 | 725,145 | ||||||
Nabors Industries Ltd. | 49,013 | 669,027 | ||||||
Noble Corporation plc | 45,483 | 649,497 | ||||||
Diamond Offshore Drilling, Inc.1 | 22,535 | 603,713 | ||||||
Seadrill Ltd.1 | 57,042 | 533,343 | ||||||
Patterson-UTI Energy, Inc. | 26,809 | 503,339 | ||||||
Rowan Companies plc — Class A | 24,074 | 426,351 | ||||||
Atwood Oceanics, Inc. | 13,885 | 390,307 | ||||||
Precision Drilling Corp. | 49,890 | 316,303 | ||||||
Total Oil & Gas Drilling | 6,612,245 | |||||||
OIL FIELD MACHINERY & EQUIPMENT - 18.3% | ||||||||
National Oilwell Varco, Inc. | 26,769 | 1,338,181 | ||||||
Cameron International Corp.* | 19,222 | 867,297 | ||||||
FMC Technologies, Inc.* | 22,874 | 846,567 | ||||||
Dresser-Rand Group, Inc.* | 8,973 | 720,981 | ||||||
Dril-Quip, Inc.* | 6,989 | 477,978 | ||||||
Forum Energy Technologies, Inc.* | 20,270 | 397,292 | ||||||
Total Oil Field Machinery & Equipment | 4,648,296 | |||||||
TRANSPORT-MARINE - 2.0% | ||||||||
Tidewater, Inc.1 | 13,319 | 254,926 | ||||||
Hornbeck Offshore Services, Inc.* | 12,710 | 239,075 | ||||||
Total Transport-Marine | 494,001 | |||||||
DIVERSIFIED MINERALS - 1.8% | ||||||||
U.S. Silica Holdings, Inc.1 | 12,842 | 457,304 | ||||||
STEEL PIPE & TUBE - 1.5% | ||||||||
Tenaris S.A. ADR | 13,471 | 377,188 | ||||||
OIL COMPANY - EXPLORATION & PRODUCTION - 1.4% | ||||||||
Unit Corp.* | 12,758 | 356,969 | ||||||
Total Common Stocks | ||||||||
(Cost $13,994,257) | 25,228,264 | |||||||
Face Amount | ||||||||
REPURCHASE AGREEMENT††,2 - 0.5% | ||||||||
HSBC Group issued 03/31/15 at 0.03% due 04/01/15 | $ | 137,735 | 137,735 | |||||
Total Repurchase Agreement | ||||||||
(Cost $137,735) | 137,735 | |||||||
SECURITIES LENDING COLLATERAL††,3 - 8.1% | ||||||||
Repurchase Agreements | ||||||||
HSBC Securities, Inc. issued 03/31/15 at 0.10% due 04/01/15 | 1,357,366 | 1,357,366 | ||||||
BNP Paribas Securities Corp. issued 03/31/15 at 0.10% due 04/01/15 | 466,934 | 466,934 | ||||||
Barclays Capital, Inc. issued 03/31/15 at 0.10% due 04/01/15 | 241,014 | 241,014 | ||||||
Total Securities Lending Collateral | ||||||||
(Cost $2,065,314) | 2,065,314 | |||||||
Total Investments - 108.0% | ||||||||
(Cost $16,197,306) | $ | 27,431,313 | ||||||
Other Assets & Liabilities, net - (8.0)% | (2,039,213 | ) | ||||||
Total Net Assets - 100.0% | $ | 25,392,100 |
* | Non-income producing security. |
† | Value determined based on Level 1 inputs — See Note 4. |
†† | Value determined based on Level 2 inputs — See Note 4. |
1 | All or portion of this security is on loan at March 31, 2015 — See Note 6. |
2 | Repurchase Agreement — See Note 5. |
3 | Securities lending collateral — See Note 6. |
ADR — American Depositary Receipt | |
plc — Public Limited Company |
62 | THE RYDEX FUNDS ANNUAL REPORT | SEE NOTES TO FINANCIAL STATEMENTS. |
ENERGY SERVICES FUND |
STATEMENT OF ASSETS AND LIABILITIES
March 31, 2015
Assets: | ||||
Investments, at value - including $2,024,426 of securities loaned (cost $13,994,257) | $ | 25,228,264 | ||
Repurchase agreements, at value (cost $2,203,049) | 2,203,049 | |||
Total investments (cost $16,197,306) | 27,431,313 | |||
Segregated cash with broker | 30,186 | |||
Cash | 3,443 | |||
Receivables: | ||||
Fund shares sold | 2,034,521 | |||
Dividends | 22,136 | |||
Securities lending income | 10,696 | |||
Total assets | 29,532,295 | |||
Liabilities: | ||||
Payable for: | ||||
Return of securities loaned | 2,095,500 | |||
Fund shares redeemed | 1,483,589 | |||
Securities purchased | 514,227 | |||
Management fees | 18,013 | |||
Distribution and service fees | 5,496 | |||
Transfer agent and administrative fees | 5,298 | |||
Portfolio accounting fees | 2,119 | |||
Miscellaneous | 15,953 | |||
Total liabilities | 4,140,195 | |||
Commitments and contingent liabilities (Note 10) | — | |||
Net assets | $ | 25,392,100 | ||
Net assets consist of: | ||||
Paid in capital | $ | 48,271,893 | ||
Undistributed net investment income | 231,483 | |||
Accumulated net realized loss on investments | (34,345,283 | ) | ||
Net unrealized appreciation on investments | 11,234,007 | |||
Net assets | $ | 25,392,100 | ||
Investor Class: | ||||
Net assets | $ | 16,144,400 | ||
Capital shares outstanding | 410,166 | |||
Net asset value per share | $ | 39.36 | ||
Advisor Class: | ||||
Net assets | $ | 1,813,787 | ||
Capital shares outstanding | 49,987 | |||
Net asset value per share | $ | 36.29 | ||
A-Class: | ||||
Net assets | $ | 3,545,100 | ||
Capital shares outstanding | 94,981 | |||
Net asset value per share | $ | 37.32 | ||
Maximum offering price per share (Net asset value divided by 95.25%) | $ | 39.18 | ||
C-Class: | ||||
Net assets | $ | 3,888,813 | ||
Capital shares outstanding | 113,442 | |||
Net asset value per share | $ | 34.28 |
STATEMENT OF OPERATIONS
Year Ended March 31, 2015
Investment Income: | ||||
Dividends (net of foreign withholding tax of $4,579) | $ | 861,642 | ||
Income from securities lending, net | 87,618 | |||
Interest | 33 | |||
Total investment income | 949,293 | |||
Expenses: | ||||
Management fees | 374,777 | |||
Transfer agent and administrative fees | 110,228 | |||
Distribution and service fees: | ||||
Advisor Class | 30,842 | |||
A-Class | 13,437 | |||
C-Class | 70,278 | |||
Portfolio accounting fees | 44,091 | |||
Custodian fees | 5,155 | |||
Trustees’ fees* | 3,716 | |||
Line of credit fees | 322 | |||
Miscellaneous | 59,372 | |||
Total expenses | 712,218 | |||
Net investment income | 237,075 | |||
Net Realized and Unrealized Gain (Loss): | ||||
Net realized gain (loss) on: | ||||
Investments | (5,210,662 | ) | ||
Net realized loss | (5,210,662 | ) | ||
Net change in unrealized appreciation (depreciation) on: | ||||
Investments | (14,210,065 | ) | ||
Net change in unrealized appreciation (depreciation) | (14,210,065 | ) | ||
Net realized and unrealized loss | (19,420,727 | ) | ||
Net decrease in net assets resulting from operations | $ | (19,183,652 | ) |
* | Relates to Trustees not deemed “interested persons” within the meaning of Section 2(a)(19) of the 1940 Act. |
SEE NOTES TO FINANCIAL STATEMENTS. | THE RYDEX FUNDS ANNUAL REPORT | 63 |
ENERGY SERVICES FUND |
STATEMENTS OF CHANGES IN NET ASSETS
Year Ended March 31, 2015 | Year Ended March 31, 2014 | |||||||
Increase (Decrease) in Net Assets from Operations: | ||||||||
Net investment income (loss) | $ | 237,075 | $ | (128,281 | ) | |||
Net realized gain (loss) on investments | (5,210,662 | ) | 10,172,016 | |||||
Net change in unrealized appreciation (depreciation) on investments | (14,210,065 | ) | (4,603,394 | ) | ||||
Net increase (decrease) in net assets resulting from operations | (19,183,652 | ) | 5,440,341 | |||||
Capital share transactions: | ||||||||
Proceeds from sale of shares | ||||||||
Investor Class | 155,300,672 | 136,799,275 | ||||||
Advisor Class | 138,874,968 | 47,862,323 | ||||||
A-Class | 18,229,626 | 11,403,811 | ||||||
C-Class | 22,985,448 | 25,331,498 | ||||||
Cost of shares redeemed | ||||||||
Investor Class | (160,581,256 | ) | (132,689,190 | ) | ||||
Advisor Class | (139,441,804 | ) | (53,070,944 | ) | ||||
A-Class | (20,303,746 | ) | (10,306,276 | ) | ||||
C-Class | (24,839,035 | ) | (26,390,621 | ) | ||||
Net decrease from capital share transactions | (9,775,127 | ) | (1,060,124 | ) | ||||
Net increase (decrease) in net assets | (28,958,779 | ) | 4,380,217 | |||||
Net assets: | ||||||||
Beginning of year | 54,350,879 | 49,970,662 | ||||||
End of year | $ | 25,392,100 | $ | 54,350,879 | ||||
Undistributed net investment income/(Accumulated net investment loss) at end of year | $ | 231,483 | $ | (5,592 | ) | |||
Capital share activity: | ||||||||
Shares sold | ||||||||
Investor Class | 2,859,922 | 2,359,895 | ||||||
Advisor Class | 2,915,122 | 898,924 | ||||||
A-Class | 419,738 | 204,539 | ||||||
C-Class | 503,113 | 497,418 | ||||||
Shares redeemed | ||||||||
Investor Class | (2,982,262 | ) | (2,306,869 | ) | ||||
Advisor Class | (2,950,353 | ) | (1,004,649 | ) | ||||
A-Class | (452,109 | ) | (183,900 | ) | ||||
C-Class | (546,543 | ) | (519,469 | ) | ||||
Net decrease in shares | (233,372 | ) | (54,111 | ) |
64 | THE RYDEX FUNDS ANNUAL REPORT | SEE NOTES TO FINANCIAL STATEMENTS. |
ENERGY SERVICES FUND |
FINANCIAL HIGHLIGHTS
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.
Investor Class | Year Ended March 31, 2015 | Year Ended March 31, 2014 | Year Ended March 28, 2013 | Year Ended March 31, 2012 | Year Ended March 31, 2011 | |||||||||||||||
Per Share Data | ||||||||||||||||||||
Net asset value, beginning of period | $ | 62.43 | $ | 54.43 | $ | 50.87 | $ | 62.66 | $ | 42.83 | ||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||
Net investment income (loss)a | .48 | .02 | (.05 | ) | (.14 | ) | (.21 | ) | ||||||||||||
Net gain (loss) on investments (realized and unrealized) | (23.55 | ) | 7.98 | 3.61 | (11.65 | ) | 20.04 | |||||||||||||
Total from investment operations | (23.07 | ) | 8.00 | 3.56 | (11.79 | ) | 19.83 | |||||||||||||
Net asset value, end of period | $ | 39.36 | $ | 62.43 | $ | 54.43 | $ | 50.87 | $ | 62.66 | ||||||||||
Total Returnb | (36.95 | %) | 14.70 | % | 7.00 | % | (18.82 | %) | 46.27 | % | ||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||
Net assets, end of period (in thousands) | $ | 16,144 | $ | 33,244 | $ | 26,097 | $ | 34,353 | $ | 151,318 | ||||||||||
Ratios to average net assets: | ||||||||||||||||||||
Net investment income (loss) | 0.86 | % | 0.03 | % | (0.10 | %) | (0.25 | %) | (0.42 | %) | ||||||||||
Total expenses | 1.36 | % | 1.37 | % | 1.35 | % | 1.36 | % | 1.39 | % | ||||||||||
Portfolio turnover rate | 494 | % | 350 | % | 275 | % | 162 | % | 205 | % |
Advisor Class | Year Ended March 31, 2015 | Year Ended March 31, 2014 | Year Ended March 28, 2013 | Year Ended March 31, 2012 | Year Ended March 31, 2011 | |||||||||||||||
Per Share Data | ||||||||||||||||||||
Net asset value, beginning of period | $ | 57.89 | $ | 50.72 | $ | 47.64 | $ | 58.97 | $ | 40.50 | ||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||
Net investment income (loss)a | .07 | (.27 | ) | (.25 | ) | (.34 | ) | (.42 | ) | |||||||||||
Net gain (loss) on investments (realized and unrealized) | (21.67 | ) | 7.44 | 3.33 | (10.99 | ) | 18.89 | |||||||||||||
Total from investment operations | (21.60 | ) | 7.17 | 3.08 | (11.33 | ) | 18.47 | |||||||||||||
Net asset value, end of period | $ | 36.29 | $ | 57.89 | $ | 50.72 | $ | 47.64 | $ | 58.97 | ||||||||||
Total Returnb | (37.33 | %) | 14.14 | % | 6.47 | % | (19.21 | %) | 45.61 | % | ||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||
Net assets, end of period (in thousands) | $ | 1,814 | $ | 4,933 | $ | 9,685 | $ | 8,025 | $ | 17,222 | ||||||||||
Ratios to average net assets: | ||||||||||||||||||||
Net investment income (loss) | 0.13 | % | (0.50 | %) | (0.54 | %) | (0.66 | %) | (0.93 | %) | ||||||||||
Total expenses | 1.86 | % | 1.87 | % | 1.85 | % | 1.86 | % | 1.89 | % | ||||||||||
Portfolio turnover rate | 494 | % | 350 | % | 275 | % | 162 | % | 205 | % |
SEE NOTES TO FINANCIAL STATEMENTS. | THE RYDEX FUNDS ANNUAL REPORT | 65 |
ENERGY SERVICES FUND |
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.
A-Class | Year Ended March 31, 2015 | Year Ended March 31, 2014 | Year Ended March 28, 2013 | Year Ended March 31, 2012 | Year Ended March 31, 2011 | |||||||||||||||
Per Share Data | ||||||||||||||||||||
Net asset value, beginning of period | $ | 59.34 | $ | 51.86 | $ | 48.59 | $ | 60.01 | $ | 41.12 | ||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||
Net investment income (loss)a | .25 | (.13 | ) | (.17 | ) | (.25 | ) | (.31 | ) | |||||||||||
Net gain (loss) on investments (realized and unrealized) | (22.27 | ) | 7.61 | 3.44 | (11.17 | ) | 19.20 | |||||||||||||
Total from investment operations | (22.02 | ) | 7.48 | 3.27 | (11.42 | ) | 18.89 | |||||||||||||
Net asset value, end of period | $ | 37.32 | $ | 59.34 | $ | 51.86 | $ | 48.59 | $ | 60.01 | ||||||||||
Total Returnb | (37.11 | %) | 14.42 | % | 6.73 | % | (19.03 | %) | 45.94 | % | ||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||
Net assets, end of period (in thousands) | $ | 3,545 | $ | 7,557 | $ | 5,535 | $ | 7,115 | $ | 24,849 | ||||||||||
Ratios to average net assets: | ||||||||||||||||||||
Net investment income (loss) | 0.47 | % | (0.23 | %) | (0.37 | %) | (0.47 | %) | (0.67 | %) | ||||||||||
Total expenses | 1.60 | % | 1.62 | % | 1.60 | % | 1.61 | % | 1.64 | % | ||||||||||
Portfolio turnover rate | 494 | % | 350 | % | 275 | % | 162 | % | 205 | % |
C-Class | Year Ended March 31, 2015 | Year Ended March 31, 2014 | Year Ended March 28, 2013 | Year Ended March 31, 2012 | Year Ended March 31, 2011 | |||||||||||||||
Per Share Data | ||||||||||||||||||||
Net asset value, beginning of period | $ | 54.92 | $ | 48.37 | $ | 45.66 | $ | 56.81 | $ | 39.22 | ||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||
Net investment income (loss)a | (.12 | ) | (.50 | ) | (.49 | ) | (.54 | ) | (.60 | ) | ||||||||||
Net gain (loss) on investments (realized and unrealized) | (20.52 | ) | 7.05 | 3.20 | (10.61 | ) | 18.19 | |||||||||||||
Total from investment operations | (20.64 | ) | 6.55 | 2.71 | (11.15 | ) | 17.59 | |||||||||||||
Net asset value, end of period | $ | 34.28 | $ | 54.92 | $ | 48.37 | $ | 45.66 | $ | 56.81 | ||||||||||
Total Returnb | (37.58 | %) | 13.54 | % | 5.94 | % | (19.63 | %) | 44.85 | % | ||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||
Net assets, end of period (in thousands) | $ | 3,889 | $ | 8,616 | $ | 8,654 | $ | 10,144 | $ | 15,276 | ||||||||||
Ratios to average net assets: | ||||||||||||||||||||
Net investment income (loss) | (0.24 | %) | (0.97 | %) | (1.11 | %) | (1.13 | %) | (1.43 | %) | ||||||||||
Total expenses | 2.36 | % | 2.37 | % | 2.35 | % | 2.36 | % | 2.39 | % | ||||||||||
Portfolio turnover rate | 494 | % | 350 | % | 275 | % | 162 | % | 205 | % |
a | Net investment income (loss) per share was computed using average shares outstanding throughout the period. |
b | Total return does not reflect the impact of any applicable sales charges. |
66 | THE RYDEX FUNDS ANNUAL REPORT | SEE NOTES TO FINANCIAL STATEMENTS. |
PERFORMANCE REPORT AND FUND PROFILE (Unaudited) | March 31, 2015 |
FINANCIAL SERVICES FUND
OBJECTIVE: Seeks to provide capital appreciation by investing in companies involved in the financial services sector (“financial services companies”).
For the one-year period ended March 31, 2015, Financial Services Fund Investor Class returned 9.17%, while the S&P 500 Financials Index returned 9.96% over the same period. The broader S&P 500 Index returned 12.73%.
The real estate investment trust industry was the largest contributor to return, followed by the insurance industry. The thrifts & mortgage finance industry was the largest detractor from return, followed by the commercial banks industry.
Berkshire Hathaway, Inc. — Class B, Simon Property Group, Inc., and Wells Fargo & Co. were the best-performing holdings in the Fund for the period. The worst-performing holdings for the period were Bank of America Corp., Genworth Financial, Inc. — Class A, and Ocwen Financial Corp.
Performance displayed represents past performance, which is no guarantee of future results.
Holdings Diversification (Market Exposure as % of Net Assets)
![](https://capedge.com/proxy/N-CSR/0001398344-15-003814/rsecf_22.jpg)
“Holdings Diversification (Market Exposure as % of Net Assets)” excludes any temporary cash investments.
Inception Dates: | |
Investor Class | April 2, 1998 |
Advisor Class | April 6, 1998 |
A-Class | September 1, 2004 |
C-Class | April 19, 2001 |
Ten Largest Holdings (% of Total Net Assets) | |
Berkshire Hathaway, Inc. — Class B | 2.5% |
Wells Fargo & Co. | 2.2% |
JPMorgan Chase & Co. | 2.0% |
Bank of America Corp. | 1.7% |
Citigroup, Inc. | 1.6% |
Goldman Sachs Group, Inc. | 1.2% |
American Express Co. | 1.2% |
U.S. Bancorp | 1.2% |
American International Group, Inc. | 1.1% |
Morgan Stanley | 1.1% |
Top Ten Total | 15.8% |
“Ten Largest Holdings” exclude any temporary cash or derivative investments. |
THE RYDEX FUNDS ANNUAL REPORT | 67 |
PERFORMANCE REPORT AND FUND PROFILE (Unaudited)(concluded) | March 31, 2015 |
Cumulative Fund Performance*
![](https://capedge.com/proxy/N-CSR/0001398344-15-003814/rsecf_23.jpg)
![](https://capedge.com/proxy/N-CSR/0001398344-15-003814/rsecf_24.jpg)
Average Annual Returns*
Periods Ended March 31, 2015
1 Year | 5 Year | 10 Year | |
Investor Class Shares | 9.17% | 9.58% | 1.20% |
Advisor Class Shares | 8.63% | 9.04% | 0.68% |
A-Class Shares | 8.89% | 9.31% | 0.95% |
A-Class Shares with sales charge† | 3.72% | 8.25% | 0.46% |
C-Class Shares | 8.08% | 8.51% | 0.21% |
C-Class Shares with CDSC‡ | 7.08% | 8.51% | 0.21% |
S&P 500 Financials Index | 9.96% | 10.53% | 0.58% |
S&P 500 Index | 12.73% | 14.47% | 8.01% |
* | The performance data above represents past performance that is not predictive of future results. The investment return and principal value of an investment in the Fund will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Returns are historical and include changes in principal and reinvested dividends and capital gains and do not reflect the effect of taxes. The S&P 500 Index and the S&P 500 Financials Index are unmanaged indices and, unlike the Fund, have no management fees or operating expenses to reduce their reported returns. The graphs are based on Investor Class shares and A-Class shares only; performance for Advisor Class shares and C-Class shares will vary due to differences in fee structures. |
† | Fund returns are calculated using the maximum sales charge of 4.75%. |
‡ | Fund returns include a CDSC of 1% if redeemed within 12 months of purchase. |
68 | THE RYDEX FUNDS ANNUAL REPORT |
SCHEDULE OF INVESTMENTS | March 31, 2015 |
FINANCIAL SERVICES FUND |
Shares | Value | |||||||
COMMON STOCKS† - 99.6% | ||||||||
DIVERSIFIED BANKING INSTITUTIONS - 8.6% | ||||||||
JPMorgan Chase & Co. | 18,997 | $ | 1,150,839 | |||||
Bank of America Corp. | 62,801 | 966,507 | ||||||
Citigroup, Inc. | 18,543 | 955,335 | ||||||
Goldman Sachs Group, Inc. | 3,866 | 726,692 | ||||||
Morgan Stanley | 17,994 | 642,206 | ||||||
HSBC Holdings plc ADR | 7,224 | 307,670 | ||||||
Deutsche Bank AG | 7,506 | 260,683 | ||||||
Total Diversified Banking Institutions | 5,009,932 | |||||||
SUPER-REGIONAL BANKS-U.S. - 7.5% | ||||||||
Wells Fargo & Co. | 23,606 | 1,284,166 | ||||||
U.S. Bancorp | 15,453 | 674,833 | ||||||
PNC Financial Services Group, Inc. | 5,882 | 548,438 | ||||||
Capital One Financial Corp. | 6,491 | 511,621 | ||||||
SunTrust Banks, Inc. | 8,759 | 359,907 | ||||||
Fifth Third Bancorp | 16,044 | 302,429 | ||||||
KeyCorp | 18,806 | 266,293 | ||||||
Huntington Bancshares, Inc. | 21,013 | 232,194 | ||||||
Comerica, Inc. | 4,954 | 223,574 | ||||||
Total Super-Regional Banks-U.S. | 4,403,455 | |||||||
MULTI-LINE INSURANCE - 6.5% | ||||||||
American International Group, Inc. | 12,161 | 666,301 | ||||||
MetLife, Inc. | 11,351 | 573,793 | ||||||
Allstate Corp. | 6,089 | 433,354 | ||||||
ACE Ltd. | 3,542 | 394,898 | ||||||
Hartford Financial Services Group, Inc. | 7,821 | 327,074 | ||||||
Loews Corp. | 7,599 | 310,267 | ||||||
XL Group plc — Class A | 7,997 | 294,290 | ||||||
Voya Financial, Inc. | 5,500 | 237,105 | ||||||
Cincinnati Financial Corp. | 4,417 | 235,338 | ||||||
Assurant, Inc. | 2,650 | 162,737 | ||||||
Genworth Financial, Inc. — Class A* | 20,072 | 146,726 | ||||||
Total Multi-Line Insurance | 3,781,883 | |||||||
INVESTMENT MANAGEMENT/ADVISORY SERVICES - 5.4% | ||||||||
BlackRock, Inc. — Class A | 1,560 | 570,709 | ||||||
Franklin Resources, Inc. | 8,368 | 429,446 | ||||||
Ameriprise Financial, Inc. | 2,952 | 386,240 | ||||||
T. Rowe Price Group, Inc. | 4,383 | 354,935 | ||||||
Invesco Ltd. | 7,828 | 310,693 | ||||||
Affiliated Managers Group, Inc.* | 1,283 | 275,563 | ||||||
Legg Mason, Inc. | 3,500 | 193,200 | ||||||
Eaton Vance Corp. | 4,098 | 170,641 | ||||||
Waddell & Reed Financial, Inc. — Class A | 3,196 | 158,330 | ||||||
Janus Capital Group, Inc. | 8,215 | 141,216 | ||||||
WisdomTree Investments, Inc. | 6,169 | 132,387 | ||||||
Total Investment Management/Advisory Services | 3,123,360 | |||||||
REITs-DIVERSIFIED - 5.0% | ||||||||
American Tower Corp. — Class A | 5,260 | 495,230 | ||||||
Crown Castle International Corp. | 4,971 | 410,306 | ||||||
Vornado Realty Trust | 3,212 | 359,744 | ||||||
Weyerhaeuser Co. | 9,652 | 319,964 | ||||||
Digital Realty Trust, Inc. | 3,663 | 241,611 | ||||||
Plum Creek Timber Company, Inc. | 5,105 | 221,812 | ||||||
Duke Realty Corp. | 9,819 | 213,760 | ||||||
Lamar Advertising Co. — Class A | 3,100 | 183,737 | ||||||
Liberty Property Trust | 5,130 | 183,141 | ||||||
EPR Properties | 2,500 | 150,075 | ||||||
Rayonier, Inc. | 5,394 | 145,422 | ||||||
Total REITs-Diversified | 2,924,802 | |||||||
COMMERCIAL BANKS-NON-U.S. - 4.7% | ||||||||
Itau Unibanco Holding S.A. ADR | 29,691 | 328,382 | ||||||
ICICI Bank Ltd. ADR | 27,956 | 289,624 | ||||||
Royal Bank of Canada | 4,700 | 283,692 | ||||||
Banco Bradesco S.A. ADR | 30,528 | 283,304 | ||||||
Toronto-Dominion Bank | 6,390 | 273,812 | ||||||
Banco Santander S.A. ADR | 35,727 | 266,166 | ||||||
HDFC Bank Ltd. ADR | 4,509 | 265,535 | ||||||
Credicorp Ltd. | 1,870 | 262,978 | ||||||
Bank of Nova Scotia | 4,800 | 241,104 | ||||||
Bank of Montreal | 4,000 | 239,880 | ||||||
Total Commercial Banks-Non-U.S. | 2,734,477 | |||||||
REINSURANCE - 4.6% | ||||||||
Berkshire Hathaway, Inc. — Class B* | 10,125 | 1,461,239 | ||||||
PartnerRe Ltd. | 2,470 | 282,395 | ||||||
Everest Re Group Ltd. | 1,565 | 272,310 | ||||||
Axis Capital Holdings Ltd. | 4,820 | 248,616 | ||||||
RenaissanceRe Holdings Ltd. | 2,450 | 244,339 | ||||||
Reinsurance Group of America, Inc. — Class A | 2,190 | 204,086 | ||||||
Total Reinsurance | 2,712,985 | |||||||
REITs-APARTMENTS - 3.8% | ||||||||
Equity Residential | 5,337 | 415,539 | ||||||
AvalonBay Communities, Inc. | 2,064 | 359,652 | ||||||
Essex Property Trust, Inc. | 1,301 | 299,100 | ||||||
UDR, Inc. | 6,904 | 234,943 | ||||||
Camden Property Trust | 2,558 | 199,857 | ||||||
Apartment Investment & Management Co. — Class A | 4,940 | 194,438 | ||||||
Mid-America Apartment Communities, Inc. | 2,390 | 184,675 | ||||||
American Campus Communities, Inc. | 4,120 | 176,624 | ||||||
Home Properties, Inc. | 2,300 | 159,367 | ||||||
Total REITs-Apartments | 2,224,195 | |||||||
LIFE/HEALTH INSURANCE - 3.7% | ||||||||
Prudential Financial, Inc. | 5,810 | 466,602 | ||||||
Aflac, Inc. | 6,612 | 423,234 | ||||||
Principal Financial Group, Inc. | 5,897 | 302,929 | ||||||
Lincoln National Corp. | 5,240 | 301,090 |
SEE NOTES TO FINANCIAL STATEMENTS. | THE RYDEX FUNDS ANNUAL REPORT | 69 |
SCHEDULE OF INVESTMENTS (continued) | March 31, 2015 |
FINANCIAL SERVICES FUND |
Shares | Value | |||||||
Manulife Financial Corp. | 13,500 | $ | 229,635 | |||||
Unum Group | 6,793 | 229,128 | ||||||
Torchmark Corp. | 3,770 | 207,048 | ||||||
Total Life/Health Insurance | 2,159,666 | |||||||
PROPERTY & CASUALTY INSURANCE - 3.6% | ||||||||
Travelers Companies, Inc. | 4,164 | 450,252 | ||||||
Chubb Corp. | 3,630 | 366,993 | ||||||
Progressive Corp. | 11,353 | 308,802 | ||||||
Arch Capital Group Ltd.* | 3,760 | 231,616 | ||||||
Alleghany Corp.* | 470 | 228,890 | ||||||
WR Berkley Corp. | 3,811 | 192,494 | ||||||
AmTrust Financial Services, Inc.1 | 3,100 | 176,654 | ||||||
First American Financial Corp. | 4,400 | 156,992 | ||||||
Total Property & Casualty Insurance | 2,112,693 | |||||||
REITs-OFFICE PROPERTY - 3.5% | ||||||||
Boston Properties, Inc. | 2,648 | 371,991 | ||||||
SL Green Realty Corp. | 2,243 | 287,956 | ||||||
American Realty Capital Properties, Inc. | 23,391 | 230,401 | ||||||
Alexandria Real Estate Equities, Inc. | 2,170 | 212,747 | ||||||
Kilroy Realty Corp. | 2,600 | 198,042 | ||||||
BioMed Realty Trust, Inc. | 7,510 | 170,177 | ||||||
Douglas Emmett, Inc. | 5,552 | 165,505 | ||||||
Highwoods Properties, Inc. | 3,590 | 164,350 | ||||||
Brandywine Realty Trust | 8,563 | 136,837 | ||||||
Corporate Office Properties Trust | 4,500 | 132,210 | ||||||
Total REITs-Office Property | 2,070,216 | |||||||
REITs-HEALTH CARE - 2.9% | ||||||||
Health Care REIT, Inc. | 5,381 | 416,274 | ||||||
Ventas, Inc. | 5,385 | 393,213 | ||||||
HCP, Inc. | 8,301 | 358,686 | ||||||
Omega Healthcare Investors, Inc. | 4,662 | 189,137 | ||||||
Senior Housing Properties Trust | 8,046 | 178,541 | ||||||
Medical Properties Trust, Inc. | 9,300 | 137,082 | ||||||
Total REITs-Health Care | 1,672,933 | |||||||
REITs-REGIONAL MALLS - 2.7% | ||||||||
Simon Property Group, Inc. | 3,139 | 614,114 | ||||||
General Growth Properties, Inc. | 13,259 | 391,803 | ||||||
Macerich Co. | 3,252 | 274,241 | ||||||
Taubman Centers, Inc. | 2,290 | 176,628 | ||||||
Tanger Factory Outlet Centers, Inc. | 4,010 | 141,032 | ||||||
Total REITs-Regional Malls | 1,597,818 | |||||||
REITs-SHOPPING CENTERS - 2.7% | ||||||||
Federal Realty Investment Trust | 1,788 | 263,211 | ||||||
Kimco Realty Corp. | 9,648 | 259,049 | ||||||
Brixmor Property Group, Inc. | 8,500 | 225,675 | ||||||
Regency Centers Corp. | 3,040 | 206,842 | ||||||
DDR Corp. | 10,857 | 202,157 | ||||||
Weingarten Realty Investors | 4,620 | 166,228 | ||||||
WP GLIMCHER, Inc. | 8,300 | 138,029 | ||||||
Urban Edge Properties | 5,206 | 123,382 | ||||||
Total REITs-Shopping Centers | 1,584,573 | |||||||
FINANCE-INVESTMENT BANKERS/BROKERS - 2.5% | ||||||||
Charles Schwab Corp. | 16,031 | 487,984 | ||||||
TD Ameritrade Holding Corp. | 9,359 | 348,716 | ||||||
E*TRADE Financial Corp.* | 8,000 | 228,440 | ||||||
Raymond James Financial, Inc. | 3,912 | 222,123 | ||||||
LPL Financial Holdings, Inc. | 3,500 | 153,510 | ||||||
Total Finance-Investment Bankers/Brokers | 1,440,773 | |||||||
COMMERCIAL BANKS-WESTERN U.S. - 2.2% | ||||||||
First Republic Bank | 3,840 | 219,226 | ||||||
SVB Financial Group* | 1,600 | 203,264 | ||||||
East West Bancorp, Inc. | 4,700 | 190,162 | ||||||
Zions Bancorporation | 6,734 | 181,818 | ||||||
City National Corp. | 2,000 | 178,160 | ||||||
PacWest Bancorp | 3,655 | 171,383 | ||||||
Umpqua Holdings Corp. | 8,857 | 152,163 | ||||||
Total Commercial Banks-Western U.S. | 1,296,176 | |||||||
FIDUCIARY BANKS - 2.1% | ||||||||
Bank of New York Mellon Corp. | 12,854 | 517,245 | ||||||
State Street Corp. | 5,830 | 428,680 | ||||||
Northern Trust Corp. | 4,392 | 305,903 | ||||||
Total Fiduciary Banks | 1,251,828 | |||||||
FINANCE-OTHER SERVICES - 2.1% | ||||||||
CME Group, Inc. — Class A | 4,520 | 428,089 | ||||||
Intercontinental Exchange, Inc. | 1,777 | 414,521 | ||||||
NASDAQ OMX Group, Inc. | 4,454 | 226,887 | ||||||
CBOE Holdings, Inc. | 2,980 | 171,067 | ||||||
Total Finance-Other Services | 1,240,564 | |||||||
REITs-STORAGE - 2.1% | ||||||||
Public Storage | 2,418 | 476,685 | ||||||
Extra Space Storage, Inc. | 3,371 | 227,778 | ||||||
Iron Mountain, Inc. | 5,900 | 215,232 | ||||||
CubeSmart | 6,600 | 159,390 | ||||||
Sovran Self Storage, Inc. | 1,600 | 150,304 | ||||||
Total REITs-Storage | 1,229,389 | |||||||
INSURANCE BROKERS - 2.1% | ||||||||
Marsh & McLennan Companies, Inc. | 7,502 | 420,787 | ||||||
Aon plc | 3,743 | 359,777 | ||||||
Willis Group Holdings plc | 4,900 | 236,082 | ||||||
Arthur J Gallagher & Co. | 4,538 | 212,152 | ||||||
Total Insurance Brokers | 1,228,798 | |||||||
REITs-HOTELS - 2.1% | ||||||||
Host Hotels & Resorts, Inc. | 14,704 | 296,726 | ||||||
Hospitality Properties Trust | 5,400 | 178,146 | ||||||
LaSalle Hotel Properties | 4,230 | 164,378 | ||||||
RLJ Lodging Trust | 5,164 | 161,685 |
70 | THE RYDEX FUNDS ANNUAL REPORT | SEE NOTES TO FINANCIAL STATEMENTS. |
SCHEDULE OF INVESTMENTS (continued) | March 31, 2015 |
FINANCIAL SERVICES FUND |
Shares | Value | |||||||
Sunstone Hotel Investors, Inc. | 8,722 | $ | 145,396 | |||||
Strategic Hotels & Resorts, Inc.* | 11,600 | 144,188 | ||||||
DiamondRock Hospitality Co. | 9,204 | 130,053 | ||||||
Total REITs-Hotels | 1,220,572 | |||||||
FINANCE-CREDIT CARD - 1.8% | ||||||||
American Express Co. | 8,833 | 690,034 | ||||||
Discover Financial Services | 6,752 | 380,475 | ||||||
Total Finance-Credit Card | 1,070,509 | |||||||
FINANCE-CONSUMER LOANS - 1.8% | ||||||||
Synchrony Financial* | 12,600 | 382,410 | ||||||
Navient Corp. | 11,070 | 225,053 | ||||||
Santander Consumer USA Holdings, Inc. | 9,500 | 219,830 | ||||||
SLM Corp.* | 16,750 | 155,440 | ||||||
Ocwen Financial Corp.*,1 | 9,847 | 81,238 | ||||||
Total Finance-Consumer Loans | 1,063,971 | |||||||
COMMERCIAL SERVICES - FINANCE - 1.7% | ||||||||
McGraw Hill Financial, Inc. | 3,920 | 405,329 | ||||||
Moody’s Corp. | 3,489 | 362,158 | ||||||
SEI Investments Co. | 4,904 | 216,217 | ||||||
Total Commercial Services - Finance | 983,704 | |||||||
REITs-MORTGAGE - 1.7% | ||||||||
Annaly Capital Management, Inc. | 23,401 | 243,369 | ||||||
American Capital Agency Corp. | 9,981 | 212,895 | ||||||
Starwood Property Trust, Inc. | 7,666 | 186,284 | ||||||
NorthStar Realty Finance Corp. | 9,989 | 181,001 | ||||||
Two Harbors Investment Corp. | 14,517 | 154,171 | ||||||
Total REITs-Mortgage | 977,720 | |||||||
COMMERCIAL BANKS-SOUTHERN U.S. - 1.7% | ||||||||
BB&T Corp. | 10,509 | 409,746 | ||||||
Regions Financial Corp. | 28,745 | 271,640 | ||||||
Synovus Financial Corp. | 5,493 | 153,859 | ||||||
First Horizon National Corp. | 9,900 | 141,471 | ||||||
Total Commercial Banks-Southern U.S. | 976,716 | |||||||
REAL ESTATE MANAGEMENT/SERVICES - 1.6% | ||||||||
CBRE Group, Inc. — Class A* | 7,718 | 298,763 | ||||||
Jones Lang LaSalle, Inc. | 1,374 | 234,130 | ||||||
WP Carey, Inc. | 3,050 | 207,400 | ||||||
Realogy Holdings Corp.* | 4,470 | 203,296 | ||||||
Total Real Estate Management/Services | 943,589 | |||||||
COMMERCIAL BANKS-EASTERN U.S. - 1.6% | ||||||||
M&T Bank Corp. | 2,598 | 329,946 | ||||||
CIT Group, Inc. | 4,971 | 224,292 | ||||||
Signature Bank* | 1,600 | 207,328 | ||||||
Webster Financial Corp. | 4,000 | 148,200 | ||||||
Total Commercial Banks-Eastern U.S. | 909,766 | |||||||
SAVINGS & LOANS/THRIFTS-EASTERN U.S. - 1.5% | ||||||||
New York Community Bancorp, Inc. | 12,637 | 211,417 | ||||||
Hudson City Bancorp, Inc. | 17,636 | 184,825 | ||||||
People’s United Financial, Inc. | 11,055 | 168,036 | ||||||
Investors Bancorp, Inc. | 13,670 | 160,212 | ||||||
First Niagara Financial Group, Inc. | 15,370 | 135,871 | ||||||
Total Savings & Loans/Thrifts-Eastern U.S. | 860,361 | |||||||
REITs-SINGLE TENANT - 1.1% | ||||||||
Realty Income Corp. | 5,274 | 272,138 | ||||||
National Retail Properties, Inc. | 4,455 | 182,521 | ||||||
Spirit Realty Capital, Inc. | 14,509 | 175,269 | ||||||
Total REITs-Single Tenant | 629,928 | |||||||
FINANCIAL GUARANTEE INSURANCE - 0.9% | ||||||||
Assured Guaranty Ltd. | 9,090 | 239,885 | ||||||
Radian Group, Inc. | 8,460 | 142,043 | ||||||
MGIC Investment Corp.* | 14,360 | 138,287 | ||||||
Total Financial Guarantee Insurance | 520,215 | |||||||
REITs-WAREHOUSE/INDUSTRIES - 0.9% | ||||||||
Prologis, Inc. | 8,602 | 374,703 | ||||||
DCT Industrial Trust, Inc. | 3,955 | 137,080 | ||||||
Total REITs-Warehouse/Industries | 511,783 | |||||||
COMMERCIAL BANKS-CENTRAL U.S. - 0.7% | ||||||||
Cullen/Frost Bankers, Inc. | 2,420 | 167,174 | ||||||
Prosperity Bancshares, Inc. | 2,800 | 146,944 | ||||||
Texas Capital Bancshares, Inc.* | 2,500 | 121,625 | ||||||
Total Commercial Banks-Central U.S. | 435,743 | |||||||
INVESTMENT COMPANIES - 0.6% | ||||||||
Ares Capital Corp. | 10,600 | 182,002 | ||||||
American Capital Ltd.* | 10,500 | 155,295 | ||||||
Total Investment Companies | 337,297 | |||||||
FINANCE-AUTO LOANS - 0.4% | ||||||||
Ally Financial, Inc.* | 11,800 | 247,564 | ||||||
DIVERSIFIED OPERATIONS - 0.4% | ||||||||
Leucadia National Corp. | 9,617 | 214,363 | ||||||
FINANCE-MORTGAGE LOAN/BANKER - 0.4% | ||||||||
Home Loan Servicing Solutions Ltd. | 12,900 | 213,366 | ||||||
DECISION SUPPORT SOFTWARE - 0.4% | ||||||||
MSCI, Inc. — Class A | 3,361 | 206,063 | ||||||
Total Common Stocks | ||||||||
(Cost $48,981,939) | 58,123,746 | |||||||
SEE NOTES TO FINANCIAL STATEMENTS. | THE RYDEX FUNDS ANNUAL REPORT | 71 |
SCHEDULE OF INVESTMENTS (concluded) | March 31, 2015 |
FINANCIAL SERVICES FUND |
Face Amount | Value | |||||||
SECURITIES LENDING COLLATERAL††,2 - 0.3% | ||||||||
Repurchase Agreements | ||||||||
HSBC Securities, Inc. issued 03/31/15 at 0.10% due 04/01/15 | $ | 124,304 | $ | 124,304 | ||||
BNP Paribas Securities Corp. issued 03/31/15 at 0.10% due 04/01/15 | 42,760 | 42,760 | ||||||
Barclays Capital, Inc. issued 03/31/15 at 0.10% due 04/01/15 | 22,072 | 22,072 | ||||||
Total Securities Lending Collateral | ||||||||
(Cost $189,136) | 189,136 | |||||||
Total Investments - 99.9% | ||||||||
(Cost $49,171,075) | $ | 58,312,882 | ||||||
Other Assets & Liabilities, net - 0.1% | 51,267 | |||||||
Total Net Assets - 100.0% | $ | 58,364,149 |
* | Non-income producing security. |
† | Value determined based on Level 1 inputs — See Note 4. |
†† | Value determined based on Level 2 inputs — See Note 4. |
1 | All or portion of this security is on loan at March 31, 2015 — See Note 6. |
2 | Securities lending collateral — See Note 6. |
ADR — American Depositary Receipt | |
plc — Public Limited Company | |
REIT — Real Estate Investment Trust |
72 | THE RYDEX FUNDS ANNUAL REPORT | SEE NOTES TO FINANCIAL STATEMENTS. |
FINANCIAL SERVICES FUND |
STATEMENT OF ASSETS AND LIABILITIES
March 31, 2015
Assets: | ||||
Investments, at value - including $187,242 of securities loaned (cost $48,981,939) | $ | 58,123,746 | ||
Repurchase agreements, at value (cost $189,136) | 189,136 | |||
Total investments (cost $49,171,075) | 58,312,882 | |||
Cash | 2,776 | |||
Segregated cash with broker | 2,764 | |||
Receivables: | ||||
Securities sold | 1,093,917 | |||
Dividends | 104,510 | |||
Fund shares sold | 98,504 | |||
Securities lending income | 72 | |||
Total assets | 59,615,425 | |||
Liabilities: | ||||
Line of credit | 557,000 | |||
Payable for: | ||||
Fund shares redeemed | 413,668 | |||
Return of securities loaned | 191,900 | |||
Management fees | 42,150 | |||
Transfer agent and administrative fees | 12,397 | |||
Portfolio accounting fees | 4,959 | |||
Distribution and service fees | 3,847 | |||
Miscellaneous | 25,355 | |||
Total liabilities | 1,251,276 | |||
Commitments and contingent liabilities (Note 10) | — | |||
Net assets | $ | 58,364,149 | ||
Net assets consist of: | ||||
Paid in capital | $ | 53,791,827 | ||
Undistributed net investment income | 277,758 | |||
Accumulated net realized loss on investments | (4,847,243 | ) | ||
Net unrealized appreciation on investments | 9,141,807 | |||
Net assets | $ | 58,364,149 | ||
Investor Class: | ||||
Net assets | $ | 49,897,087 | ||
Capital shares outstanding | 431,753 | |||
Net asset value per share | $ | 115.57 | ||
Advisor Class: | ||||
Net assets | $ | 4,478,509 | ||
Capital shares outstanding | 42,012 | |||
Net asset value per share | $ | 106.60 | ||
A-Class: | ||||
Net assets | $ | 2,733,856 | ||
Capital shares outstanding | 24,932 | |||
Net asset value per share | $ | 109.65 | ||
Maximum offering price per share (Net asset value divided by 95.25%) | $ | 115.12 | ||
C-Class: | ||||
Net assets | $ | 1,254,697 | ||
Capital shares outstanding | 12,512 | |||
Net asset value per share | $ | 100.28 |
STATEMENT OF OPERATIONS
Year Ended March 31, 2015
Investment Income: | ||||
Dividends (net of foreign withholding tax of $2,822) | $ | 884,332 | ||
Income from securities lending, net | 1,614 | |||
Interest | 47 | |||
Total investment income | 885,993 | |||
Expenses: | ||||
Management fees | 352,283 | |||
Transfer agent and administrative fees | 103,612 | |||
Distribution and service fees: | ||||
Advisor Class | 30,258 | |||
A-Class | 8,492 | |||
C-Class | 14,519 | |||
Portfolio accounting fees | 41,445 | |||
Custodian fees | 4,815 | |||
Trustees’ fees* | 1,997 | |||
Line of credit fees | 211 | |||
Tax expense | 85 | |||
Miscellaneous | 50,518 | |||
Total expenses | 608,235 | |||
Net investment income | 277,758 | |||
Net Realized and Unrealized Gain (Loss): | ||||
Net realized gain (loss) on: | ||||
Investments | (151,239 | ) | ||
Net realized loss | (151,239 | ) | ||
Net change in unrealized appreciation (depreciation) on: | ||||
Investments | 2,347,454 | |||
Net change in unrealized appreciation (depreciation) | 2,347,454 | |||
Net realized and unrealized gain | 2,196,215 | |||
Net increase in net assets resulting from operations | $ | 2,473,973 |
* | Relates to Trustees not deemed “interested persons” within the meaning of Section 2(a)(19) of the 1940 Act. |
SEE NOTES TO FINANCIAL STATEMENTS. | THE RYDEX FUNDS ANNUAL REPORT | 73 |
FINANCIAL SERVICES FUND |
STATEMENTS OF CHANGES IN NET ASSETS
Year Ended March 31, 2015 | Year Ended March 31, 2014 | |||||||
Increase (Decrease) in Net Assets from Operations: | ||||||||
Net investment income | $ | 277,758 | $ | 147,974 | ||||
Net realized gain (loss) on investments | (151,239 | ) | 2,155,894 | |||||
Net change in unrealized appreciation (depreciation) on investments | 2,347,454 | 512,726 | ||||||
Net increase in net assets resulting from operations | 2,473,973 | 2,816,594 | ||||||
Distributions to shareholders from: | ||||||||
Net investment income | ||||||||
Investor Class | (124,825 | ) | (79,512 | ) | ||||
Advisor Class | (15,302 | ) | (17,906 | ) | ||||
A-Class | (5,719 | ) | (40,320 | ) | ||||
C-Class | (3,673 | ) | (7,809 | ) | ||||
Total distributions to shareholders | (149,519 | ) | (145,547 | ) | ||||
Capital share transactions: | ||||||||
Proceeds from sale of shares | ||||||||
Investor Class | 142,998,248 | 87,025,488 | ||||||
Advisor Class | 21,042,008 | 9,891,676 | ||||||
A-Class | 16,301,408 | 16,249,371 | ||||||
C-Class | 22,259,319 | 21,219,453 | ||||||
Distributions reinvested | ||||||||
Investor Class | 50,229 | 78,044 | ||||||
Advisor Class | 15,281 | 17,860 | ||||||
A-Class | 4,742 | 35,520 | ||||||
C-Class | 3,317 | 7,710 | ||||||
Cost of shares redeemed | ||||||||
Investor Class | (112,502,368 | ) | (87,847,468 | ) | ||||
Advisor Class | (21,680,719 | ) | (12,957,819 | ) | ||||
A-Class | (21,300,899 | ) | (10,980,642 | ) | ||||
C-Class | (22,171,252 | ) | (21,766,316 | ) | ||||
Net increase from capital share transactions | 25,019,314 | 972,877 | ||||||
Net increase in net assets | 27,343,768 | 3,643,924 | ||||||
Net assets: | ||||||||
Beginning of year | 31,020,381 | 27,376,457 | ||||||
End of year | $ | 58,364,149 | $ | 31,020,381 | ||||
Undistributed net investment income at end of year | $ | 277,758 | $ | 149,519 | ||||
Capital share activity: | ||||||||
Shares sold | ||||||||
Investor Class | 1,279,802 | 880,833 | ||||||
Advisor Class | 203,091 | 107,616 | ||||||
A-Class | 151,873 | 170,038 | ||||||
C-Class | 231,403 | 243,282 | ||||||
Shares issued from reinvestment of distributions | ||||||||
Investor Class | 443 | 774 | ||||||
Advisor Class | 146 | 191 | ||||||
A-Class | 44 | 370 | ||||||
C-Class | 34 | 87 | ||||||
Shares redeemed | ||||||||
Investor Class | (1,015,205 | ) | (902,467 | ) | ||||
Advisor Class | (207,816 | ) | (145,268 | ) | ||||
A-Class | (203,251 | ) | (115,259 | ) | ||||
C-Class | (230,221 | ) | (250,011 | ) | ||||
Net increase (decrease) in shares | 210,343 | (9,814 | ) |
74 | THE RYDEX FUNDS ANNUAL REPORT | SEE NOTES TO FINANCIAL STATEMENTS. |
FINANCIAL SERVICES FUND |
FINANCIAL HIGHLIGHTS
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.
Investor Class | Year Ended March 31, 2015 | Year Ended March 31, 2014 | Year Ended March 28, 2013 | Year Ended March 31, 2012 | Year Ended March 31, 2011 | |||||||||||||||
Per Share Data | ||||||||||||||||||||
Net asset value, beginning of period | $ | 106.10 | $ | 90.67 | $ | 78.47 | $ | 81.18 | $ | 75.23 | ||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||
Net investment income (loss)a | .92 | .78 | .76 | .61 | .15 | |||||||||||||||
Net gain (loss) on investments (realized and unrealized) | 8.81 | 15.21 | 11.99 | (3.29 | ) | 6.75 | ||||||||||||||
Total from investment operations | 9.73 | 15.99 | 12.75 | (2.68 | ) | 6.90 | ||||||||||||||
Less distributions from: | ||||||||||||||||||||
Net investment income | (.26 | ) | (.56 | ) | (.55 | ) | (.03 | ) | (.95 | ) | ||||||||||
Total distributions | (.26 | ) | (.56 | ) | (.55 | ) | (.03 | ) | (.95 | ) | ||||||||||
Net asset value, end of period | $ | 115.57 | $ | 106.10 | $ | 90.67 | $ | 78.47 | $ | 81.18 | ||||||||||
Total Returnb | 9.17 | % | 17.67 | % | 16.37 | % | (3.31 | %) | 9.33 | % | ||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||
Net assets, end of period (in thousands) | $ | 49,897 | $ | 17,688 | $ | 17,007 | $ | 19,973 | $ | 4,885 | ||||||||||
Ratios to average net assets: | ||||||||||||||||||||
Net investment income (loss) | 0.82 | % | 0.81 | % | 0.95 | % | 0.86 | % | 0.19 | % | ||||||||||
Total expenses | 1.34 | % | 1.37 | % | 1.36 | % | 1.34 | % | 1.39 | % | ||||||||||
Portfolio turnover rate | 326 | % | 414 | % | 590 | % | 970 | % | 601 | % |
Advisor Class | Year Ended March 31, 2015 | Year Ended March 31, 2014 | Year Ended March 28, 2013 | Year Ended March 31, 2012 | Year Ended March 31, 2011 | |||||||||||||||
Per Share Data | ||||||||||||||||||||
Net asset value, beginning of period | $ | 98.37 | $ | 84.51 | $ | 73.53 | $ | 76.47 | $ | 71.29 | ||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||
Net investment income (loss)a | .29 | .24 | .22 | .26 | (.14 | ) | ||||||||||||||
Net gain (loss) on investments (realized and unrealized) | 8.20 | 14.18 | 11.31 | (3.17 | ) | 6.27 | ||||||||||||||
Total from investment operations | 8.49 | 14.42 | 11.53 | (2.91 | ) | 6.13 | ||||||||||||||
Less distributions from: | ||||||||||||||||||||
Net investment income | (.26 | ) | (.56 | ) | (.55 | ) | (.03 | ) | (.95 | ) | ||||||||||
Total distributions | (.26 | ) | (.56 | ) | (.55 | ) | (.03 | ) | (.95 | ) | ||||||||||
Net asset value, end of period | $ | 106.60 | $ | 98.37 | $ | 84.51 | $ | 73.53 | $ | 76.47 | ||||||||||
Total Returnb | 8.63 | % | 17.10 | % | 15.80 | % | (3.80 | %) | 8.76 | % | ||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||
Net assets, end of period (in thousands) | $ | 4,479 | $ | 4,583 | $ | 7,103 | $ | 4,243 | $ | 3,634 | ||||||||||
Ratios to average net assets: | ||||||||||||||||||||
Net investment income (loss) | 0.28 | % | 0.26 | % | 0.29 | % | 0.37 | % | (0.20 | %) | ||||||||||
Total expenses | 1.85 | % | 1.87 | % | 1.85 | % | 1.85 | % | 1.89 | % | ||||||||||
Portfolio turnover rate | 326 | % | 414 | % | 590 | % | 970 | % | 601 | % |
SEE NOTES TO FINANCIAL STATEMENTS. | THE RYDEX FUNDS ANNUAL REPORT | 75 |
FINANCIAL SERVICES FUND |
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.
A-Class | Year Ended March 31, 2015 | Year Ended March 31, 2014 | Year Ended March 28, 2013 | Year Ended March 31, 2012 | Year Ended March 31, 2011 | |||||||||||||||
Per Share Data | ||||||||||||||||||||
Net asset value, beginning of period | $ | 100.94 | $ | 86.48 | $ | 75.07 | $ | 77.87 | $ | 72.38 | ||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||
Net investment income (loss)a | .43 | .58 | .51 | .45 | (.01 | ) | ||||||||||||||
Net gain (loss) on investments (realized and unrealized) | 8.54 | 14.44 | 11.45 | (3.22 | ) | 6.45 | ||||||||||||||
Total from investment operations | 8.97 | 15.02 | 11.96 | (2.77 | ) | 6.44 | ||||||||||||||
Less distributions from: | ||||||||||||||||||||
Net investment income | (.26 | ) | (.56 | ) | (.55 | ) | (.03 | ) | (.95 | ) | ||||||||||
Total distributions | (.26 | ) | (.56 | ) | (.55 | ) | (.03 | ) | (.95 | ) | ||||||||||
Net asset value, end of period | $ | 109.65 | $ | 100.94 | $ | 86.48 | $ | 75.07 | $ | 77.87 | ||||||||||
Total Returnb | 8.89 | % | 17.41 | % | 16.06 | % | (3.57 | %) | 9.06 | % | ||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||
Net assets, end of period (in thousands) | $ | 2,734 | $ | 7,698 | $ | 1,826 | $ | 632 | $ | 1,782 | ||||||||||
Ratios to average net assets: | ||||||||||||||||||||
Net investment income (loss) | 0.41 | % | 0.62 | % | 0.66 | % | 0.64 | % | (0.01 | %) | ||||||||||
Total expenses | 1.59 | % | 1.62 | % | 1.61 | % | 1.61 | % | 1.64 | % | ||||||||||
Portfolio turnover rate | 326 | % | 414 | % | 590 | % | 970 | % | 601 | % |
C-Class | Year Ended March 31, 2015 | Year Ended March 31, 2014 | Year Ended March 28, 2013 | Year Ended March 31, 2012 | Year Ended March 31, 2011 | |||||||||||||||
Per Share Data | ||||||||||||||||||||
Net asset value, beginning of period | $ | 93.02 | $ | 80.30 | $ | 70.26 | $ | 73.42 | $ | 68.79 | ||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||
Net investment income (loss)a | (.22 | ) | (.16 | ) | .03 | (.12 | ) | (.49 | ) | |||||||||||
Net gain (loss) on investments (realized and unrealized) | 7.74 | 13.44 | 10.56 | (3.01 | ) | 6.07 | ||||||||||||||
Total from investment operations | 7.52 | 13.28 | 10.59 | (3.13 | ) | 5.58 | ||||||||||||||
Less distributions from: | ||||||||||||||||||||
Net investment income | (.26 | ) | (.56 | ) | (.55 | ) | (.03 | ) | (.95 | ) | ||||||||||
Total distributions | (.26 | ) | (.56 | ) | (.55 | ) | (.03 | ) | (.95 | ) | ||||||||||
Net asset value, end of period | $ | 100.28 | $ | 93.02 | $ | 80.30 | $ | 70.26 | $ | 73.42 | ||||||||||
Total Returnb | 8.08 | % | 16.58 | % | 15.21 | % | (4.27 | %) | 8.28 | % | ||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||
Net assets, end of period (in thousands) | $ | 1,255 | $ | 1,051 | $ | 1,440 | $ | 817 | $ | 1,114 | ||||||||||
Ratios to average net assets: | ||||||||||||||||||||
Net investment income (loss) | (0.23 | %) | (0.18 | %) | 0.04 | % | (0.18 | %) | (0.72 | %) | ||||||||||
Total expenses | 2.35 | % | 2.37 | % | 2.36 | % | 2.36 | % | 2.39 | % | ||||||||||
Portfolio turnover rate | 326 | % | 414 | % | 590 | % | 970 | % | 601 | % |
a | Net investment income (loss) per share was computed using average shares outstanding throughout the period. |
b | Total return does not reflect the impact of any applicable sales charges. |
76 | THE RYDEX FUNDS ANNUAL REPORT | SEE NOTES TO FINANCIAL STATEMENTS. |
PERFORMANCE REPORT AND FUND PROFILE (Unaudited) | March 31, 2015 |
HEALTH CARE FUND
OBJECTIVE: Seeks to provide capital appreciation by investing in companies that are involved in the health care industry (“health care companies”).
For the one-year period ended March 31, 2015, Health Care Fund Investor Class returned 30.51%, compared with a return of 26.19% for the S&P 500 Health Care Index. The broader S&P 500 Index returned 12.73%.
The biggest contributor to Fund performance was biotechnology, followed by pharmaceuticals. The health care technology segment was the largest detractor from return, followed by the electronic equipment instruments & components segment.
The Fund’s top-performing holdings were Allergan, Inc., Celgene Corp., and Gilead Sciences, Inc. The worst-performing holdings in the Fund included athenahealth, Inc., Theravance, Inc., and MannKind Corp.
Performance displayed represents past performance, which is no guarantee of future results.
Holdings Diversification (Market Exposure as % of Net Assets)
![](https://capedge.com/proxy/N-CSR/0001398344-15-003814/rsecf_25.jpg)
“Holdings Diversification (Market Exposure as % of Net Assets)” excludes any temporary cash investments.
Inception Dates: | |
Investor Class | April 17, 1998 |
Advisor Class | May 11, 1998 |
A-Class | September 1, 2004 |
C-Class | March 30, 2001 |
Ten Largest Holdings (% of Total Net Assets) | |
Johnson & Johnson | 2.9% |
Pfizer, Inc. | 2.6% |
Merck & Company, Inc. | 2.2% |
Gilead Sciences, Inc. | 2.1% |
Medtronic plc | 2.0% |
Amgen, Inc. | 1.9% |
UnitedHealth Group, Inc. | 1.8% |
Bristol-Myers Squibb Co. | 1.8% |
Biogen, Inc. | 1.7% |
AbbVie, Inc. | 1.7% |
Top Ten Total | 20.7% |
“Ten Largest Holdings” exclude any temporary cash or derivative investments. |
THE RYDEX FUNDS ANNUAL REPORT | 77 |
PERFORMANCE REPORT AND FUND PROFILE (Unaudited)(concluded) | March 31, 2015 |
Cumulative Fund Performance*
![](https://capedge.com/proxy/N-CSR/0001398344-15-003814/rsecf_26.jpg)
![](https://capedge.com/proxy/N-CSR/0001398344-15-003814/rsecf_27.jpg)
Average Annual Returns*
Periods Ended March 31, 2015
1 Year | 5 Year | 10 Year | |
Investor Class Shares | 30.51% | 19.50% | 11.73% |
Advisor Class Shares | 29.89% | 18.96% | 11.19% |
A-Class Shares | 30.21% | 19.23% | 11.47% |
A-Class Shares with sales charge† | 24.04% | 18.08% | 10.93% |
C-Class Shares | 29.21% | 18.39% | 10.63% |
C-Class Shares with CDSC‡ | 28.21% | 18.39% | 10.63% |
S&P 500 Health Care Index | 26.19% | 20.09% | 11.41% |
S&P 500 Index | 12.73% | 14.47% | 8.01% |
* | The performance data above represents past performance that is not predictive of future results. The investment return and principal value of an investment in the Fund will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Returns are historical and include changes in principal and reinvested dividends and capital gains and do not reflect the effect of taxes. The S&P 500 Index and the S&P 500 Health Care Index are unmanaged indices and, unlike the Fund, have no management fees or operating expenses to reduce their reported returns. The graphs are based on Investor Class shares and A-Class shares only; performance for Advisor Class shares and C-Class shares will vary due to differences in fee structures. |
† | Fund returns are calculated using the maximum sales charge of 4.75%. |
‡ | Fund returns include a CDSC of 1% if redeemed within 12 months of purchase. |
78 | THE RYDEX FUNDS ANNUAL REPORT |
SCHEDULE OF INVESTMENTS | March 31, 2015 |
HEALTH CARE FUND |
Shares | Value | |||||||
COMMON STOCKS† - 99.1% | ||||||||
MEDICAL-DRUGS - 26.3% | ||||||||
Johnson & Johnson | 77,006 | $ | 7,746,803 | |||||
Pfizer, Inc. | 196,537 | 6,837,521 | ||||||
Merck & Company, Inc. | 103,520 | 5,950,329 | ||||||
Bristol-Myers Squibb Co. | 72,546 | 4,679,217 | ||||||
AbbVie, Inc. | 76,164 | 4,458,641 | ||||||
Eli Lilly & Co. | 58,065 | 4,218,422 | ||||||
Abbott Laboratories | 82,375 | 3,816,434 | ||||||
Valeant Pharmaceuticals International, Inc.* | 18,844 | 3,742,795 | ||||||
Endo International plc* | 27,158 | 2,436,073 | ||||||
Zoetis, Inc. | 48,090 | 2,226,086 | ||||||
Novartis AG ADR | 19,851 | 1,957,507 | ||||||
Shire plc ADR | 8,172 | 1,955,478 | ||||||
Mallinckrodt plc* | 14,144 | 1,791,338 | ||||||
OPKO Health, Inc.*,1 | 125,880 | 1,783,720 | ||||||
Jazz Pharmaceuticals plc* | 9,800 | 1,693,342 | ||||||
GlaxoSmithKline plc ADR | 36,497 | 1,684,337 | ||||||
AstraZeneca plc ADR | 24,088 | 1,648,342 | ||||||
Novo Nordisk A/S ADR | 30,300 | 1,617,717 | ||||||
Alkermes plc* | 25,672 | 1,565,222 | ||||||
Salix Pharmaceuticals Ltd.* | 8,986 | 1,552,871 | ||||||
Quintiles Transnational Holdings, Inc.* | 20,139 | 1,348,709 | ||||||
Receptos, Inc.* | 6,800 | 1,121,252 | ||||||
Akorn, Inc.* | 22,835 | 1,084,891 | ||||||
ACADIA Pharmaceuticals, Inc.* | 24,685 | 804,484 | ||||||
Pacira Pharmaceuticals, Inc.* | 8,900 | 790,765 | ||||||
Lannett Company, Inc.* | 11,000 | 744,810 | ||||||
Clovis Oncology, Inc.* | 9,355 | 694,422 | ||||||
Total Medical-Drugs | 69,951,528 | |||||||
MEDICAL-BIOMEDICAL/GENETICS - 21.6% | ||||||||
Gilead Sciences, Inc.* | 56,315 | 5,526,190 | ||||||
Amgen, Inc. | 31,070 | 4,966,539 | ||||||
Biogen, Inc.* | 10,938 | 4,618,461 | ||||||
Celgene Corp.* | 37,643 | 4,339,485 | ||||||
Theravance, Inc.1 | 215,100 | 3,381,372 | ||||||
Regeneron Pharmaceuticals, Inc.* | 6,874 | 3,103,474 | ||||||
Alexion Pharmaceuticals, Inc.* | 15,691 | 2,719,250 | ||||||
Vertex Pharmaceuticals, Inc.* | 20,105 | 2,371,787 | ||||||
Illumina, Inc.* | 12,414 | 2,304,535 | ||||||
BioMarin Pharmaceutical, Inc.* | 16,632 | 2,072,680 | ||||||
Incyte Corp.* | 20,127 | 1,844,841 | ||||||
Medivation, Inc.* | 11,448 | 1,477,593 | ||||||
Alnylam Pharmaceuticals, Inc.* | 12,445 | 1,299,507 | ||||||
United Therapeutics Corp.* | 7,356 | 1,268,432 | ||||||
Puma Biotechnology, Inc.* | 5,200 | 1,227,772 | ||||||
Isis Pharmaceuticals, Inc.* | 18,871 | 1,201,517 | ||||||
Juno Therapeutics, Inc.*,1 | 18,900 | 1,146,474 | ||||||
Intercept Pharmaceuticals, Inc.*,1 | 4,000 | 1,128,080 | ||||||
Intrexon Corp.* | 22,100 | 1,002,677 | ||||||
Seattle Genetics, Inc.*,1 | 26,133 | 923,802 | ||||||
Bluebird Bio, Inc.* | 7,500 | 905,775 | ||||||
Charles River Laboratories International, Inc.* | 11,185 | 886,859 | ||||||
Myriad Genetics, Inc.*,1 | 23,700 | 838,980 | ||||||
Exact Sciences Corp.*,1 | 37,300 | 821,346 | ||||||
Synageva BioPharma Corp.* | 8,400 | 819,252 | ||||||
Celldex Therapeutics, Inc.* | 25,600 | 713,472 | ||||||
Kite Pharma, Inc.*,1 | 12,300 | 709,464 | ||||||
Medicines Co.* | 21,900 | 613,638 | ||||||
Novavax, Inc.* | 74,200 | 613,634 | ||||||
ARIAD Pharmaceuticals, Inc.* | 67,900 | 559,496 | ||||||
Acorda Therapeutics, Inc.* | 16,500 | 549,120 | ||||||
PDL BioPharma, Inc. | 71,141 | 500,477 | ||||||
Achillion Pharmaceuticals, Inc.* | 48,200 | 475,252 | ||||||
ZIOPHARM Oncology, Inc.*,1 | 43,700 | 470,649 | ||||||
Total Medical-Biomedical/Genetics | 57,401,882 | |||||||
MEDICAL-HMO - 7.5% | ||||||||
UnitedHealth Group, Inc. | 41,455 | 4,903,711 | ||||||
Anthem, Inc. | 19,384 | 2,993,083 | ||||||
Aetna, Inc. | 26,537 | 2,826,987 | ||||||
Cigna Corp. | 21,180 | 2,741,539 | ||||||
Humana, Inc. | 13,442 | 2,392,945 | ||||||
Centene Corp.* | 19,320 | 1,365,731 | ||||||
Health Net, Inc.* | 16,696 | 1,009,941 | ||||||
WellCare Health Plans, Inc.* | 10,100 | 923,746 | ||||||
Molina Healthcare, Inc.* | 13,126 | 883,249 | ||||||
Total Medical-HMO | 20,040,932 | |||||||
MEDICAL PRODUCTS - 7.2% | ||||||||
Baxter International, Inc. | 41,397 | 2,835,695 | ||||||
Stryker Corp. | 29,680 | 2,737,980 | ||||||
Becton Dickinson and Co. | 17,234 | 2,474,630 | ||||||
Zimmer Holdings, Inc. | 17,651 | 2,074,346 | ||||||
Henry Schein, Inc.* | 11,390 | 1,590,272 | ||||||
Varian Medical Systems, Inc.* | 15,137 | 1,424,240 | ||||||
Cooper Companies, Inc. | 7,470 | 1,400,027 | ||||||
Sirona Dental Systems, Inc.* | 11,922 | 1,072,861 | ||||||
Teleflex, Inc. | 8,680 | 1,048,804 | ||||||
West Pharmaceutical Services, Inc. | 16,500 | 993,465 | ||||||
ABIOMED, Inc.* | 12,100 | 866,118 | ||||||
Wright Medical Group, Inc.* | 20,300 | 523,740 | ||||||
Total Medical Products | 19,042,178 | |||||||
MEDICAL INSTRUMENTS - 5.6% | ||||||||
Medtronic plc | 67,304 | 5,249,038 | ||||||
Boston Scientific Corp.* | 127,764 | 2,267,811 | ||||||
Intuitive Surgical, Inc.* | 3,918 | 1,978,708 | ||||||
St. Jude Medical, Inc. | 29,938 | 1,957,945 | ||||||
Edwards Lifesciences Corp.* | 12,034 | 1,714,364 | ||||||
DexCom, Inc.* | 16,100 | 1,003,674 | ||||||
Thoratec Corp.* | 16,600 | 695,374 | ||||||
Total Medical Instruments | 14,866,914 |
SEE NOTES TO FINANCIAL STATEMENTS. | THE RYDEX FUNDS ANNUAL REPORT | 79 |
SCHEDULE OF INVESTMENTS (continued) | March 31, 2015 |
HEALTH CARE FUND |
Shares | Value | |||||||
MEDICAL-GENERIC DRUGS - 5.2% | ||||||||
Actavis plc* | 14,099 | $ | 4,196,237 | |||||
Mylan N.V.* | 41,252 | 2,448,306 | ||||||
Teva Pharmaceutical Industries Ltd. ADR | 37,167 | 2,315,504 | ||||||
Perrigo Company plc | 13,194 | 2,184,267 | ||||||
Hospira, Inc.* | 20,653 | 1,814,160 | ||||||
Impax Laboratories, Inc.* | 18,400 | 862,408 | ||||||
Total Medical-Generic Drugs | 13,820,882 | |||||||
MEDICAL - WHOLESALE DRUG DISTRIBUTION - 3.1% | ||||||||
McKesson Corp. | 14,807 | 3,349,343 | ||||||
Cardinal Health, Inc. | 28,032 | 2,530,449 | ||||||
AmerisourceBergen Corp. — Class A | 20,560 | 2,337,055 | ||||||
Total Medical - Wholesale Drug Distribution | 8,216,847 | |||||||
MEDICAL-HOSPITALS - 2.7% | ||||||||
HCA Holdings, Inc.* | 35,217 | 2,649,375 | ||||||
Universal Health Services, Inc. — Class B | 13,576 | 1,598,031 | ||||||
Community Health Systems, Inc.* | 22,185 | 1,159,832 | ||||||
Tenet Healthcare Corp.* | 20,800 | 1,029,808 | ||||||
LifePoint Hospitals, Inc.* | 11,341 | 832,996 | ||||||
Total Medical-Hospitals | 7,270,042 | |||||||
THERAPEUTICS - 2.6% | ||||||||
MannKind Corp.*,1 | 624,500 | 3,247,400 | ||||||
Pharmacyclics, Inc.* | 8,100 | 2,073,195 | ||||||
Agios Pharmaceuticals, Inc.* | 8,800 | 829,840 | ||||||
Neurocrine Biosciences, Inc.* | 20,700 | 821,997 | ||||||
Total Therapeutics | 6,972,432 | |||||||
PHARMACY SERVICES - 2.6% | ||||||||
Express Scripts Holding Co.* | 43,096 | 3,739,439 | ||||||
Catamaran Corp.* | 29,990 | 1,785,605 | ||||||
Omnicare, Inc. | 16,579 | 1,277,578 | ||||||
Total Pharmacy Services | 6,802,622 | |||||||
INSTRUMENTS-SCIENTIFIC - 2.3% | ||||||||
Thermo Fisher Scientific, Inc. | 24,979 | 3,355,678 | ||||||
Waters Corp.* | 11,897 | 1,479,035 | ||||||
PerkinElmer, Inc. | 22,423 | 1,146,712 | ||||||
Total Instruments-Scientific | 5,981,425 | |||||||
MEDICAL INFORMATION SYSTEM - 1.5% | ||||||||
Cerner Corp.* | 32,144 | 2,354,870 | ||||||
athenahealth, Inc.* | 8,180 | 976,610 | ||||||
Allscripts Healthcare Solutions, Inc.* | 58,000 | 693,680 | ||||||
Total Medical Information System | 4,025,160 | |||||||
MEDICAL LABS & TESTING SERVICES - 1.2% | ||||||||
Laboratory Corporation of America Holdings* | 13,163 | 1,659,695 | ||||||
Quest Diagnostics, Inc. | 20,644 | 1,586,491 | ||||||
Total Medical Labs & Testing Services | 3,246,186 | |||||||
DENTAL SUPPLIES & EQUIPMENTS - 1.2% | ||||||||
DENTSPLY International, Inc. | 24,483 | 1,245,941 | ||||||
Patterson Companies, Inc. | 21,227 | 1,035,665 | ||||||
Align Technology, Inc.* | 17,654 | 949,520 | ||||||
Total Dental Supplies & Equipments | 3,231,126 | |||||||
PHYSICAL PRACTICE MANAGEMENT - 0.9% | ||||||||
Envision Healthcare Holdings, Inc.* | 32,900 | 1,261,715 | ||||||
MEDNAX, Inc.* | 17,006 | 1,233,105 | ||||||
Total Physical Practice Management | 2,494,820 | |||||||
DIALYSIS CENTERS - 0.7% | ||||||||
DaVita HealthCare Partners, Inc.* | 24,031 | 1,953,240 | ||||||
ELECTRONIC MEASURING INSTRUMENTS - 0.7% | ||||||||
Agilent Technologies, Inc. | 41,483 | 1,723,619 | ||||||
DISPOSABLE MEDICAL PRODUCTS - 0.6% | ||||||||
CR Bard, Inc. | 9,818 | 1,643,042 | ||||||
RESPIRATORY PRODUCTS - 0.6% | ||||||||
ResMed, Inc. | 20,362 | 1,461,584 | ||||||
X-RAY EQUIPMENT - 0.5% | ||||||||
Hologic, Inc.* | 43,310 | 1,430,313 | ||||||
INSTRUMENTS-CONTROLS - 0.5% | ||||||||
Mettler-Toledo International, Inc.* | 4,350 | 1,429,628 | ||||||
DIAGNOSTIC KITS - 0.5% | ||||||||
IDEXX Laboratories, Inc.* | 8,127 | 1,255,459 | ||||||
RETIREMENT/AGED CARE - 0.5% | ||||||||
Brookdale Senior Living, Inc. — Class A* | 32,331 | 1,220,819 | ||||||
VETERINARY DIAGNOSTICS - 0.4% | ||||||||
VCA, Inc.* | 18,305 | 1,003,480 | ||||||
MEDICAL STERILIZER PRODUCTS - 0.4% | ||||||||
STERIS Corp. | 13,700 | 962,699 | ||||||
HUMAN RESOURCES - 0.4% | ||||||||
Team Health Holdings, Inc.* | 16,400 | 959,564 | ||||||
PHYSICAL THERAPY/REHAB CENTERS - 0.4% | ||||||||
HealthSouth Corp. | 21,100 | 935,996 |
80 | THE RYDEX FUNDS ANNUAL REPORT | SEE NOTES TO FINANCIAL STATEMENTS. |
SCHEDULE OF INVESTMENTS (concluded) | March 31, 2015 |
HEALTH CARE FUND |
Shares | Value | |||||||
DIVERSIFIED OPERATIONS - 0.3% | ||||||||
Horizon Pharma plc* | 35,400 | $ | 919,338 | |||||
DIAGNOSTIC EQUIPMENT - 0.3% | ||||||||
Cepheid* | 16,157 | 919,333 | ||||||
RESEARCH & DEVELOPMENT - 0.3% | ||||||||
PAREXEL International Corp.* | 13,300 | 917,567 | ||||||
MEDICAL-OUTPATIENT/HOME MEDICINE - 0.3% | ||||||||
Amsurg Corp. — Class A* | 13,100 | 805,912 | ||||||
MEDICAL-NURSING HOMES - 0.2% | ||||||||
Kindred Healthcare, Inc. | 26,500 | 630,435 | ||||||
Total Common Stocks | ||||||||
(Cost $185,862,951) | 263,537,004 |
Face Amount | ||||||||
REPURCHASE AGREEMENT††,2 - 0.4% | ||||||||
HSBC Group issued 03/31/15 at 0.03% due 04/01/15 | $ | 1,089,890 | 1,089,890 | |||||
Total Repurchase Agreement | ||||||||
(Cost $1,089,890) | 1,089,890 | |||||||
SECURITIES LENDING COLLATERAL††,3 - 4.4% | ||||||||
Repurchase Agreements | ||||||||
HSBC Securities, Inc. issued 03/31/15 at 0.10% due 04/01/15 | 7,608,349 | 7,608,349 | ||||||
BNP Paribas Securities Corp. issued 03/31/15 at 0.10% due 04/01/15 | 2,617,272 | 2,617,272 | ||||||
Barclays Capital, Inc. issued 03/31/15 at 0.10% due 04/01/15 | 1,350,939 | 1,350,939 | ||||||
Total Securities Lending Collateral | ||||||||
(Cost $11,576,560) | 11,576,560 | |||||||
Total Investments - 103.9% | ||||||||
(Cost $198,529,401) | $ | 276,203,454 | ||||||
Other Assets & Liabilities, net - (3.9)% | (10,416,720 | ) | ||||||
Total Net Assets - 100.0% | $ | 265,786,734 |
* | Non-income producing security. |
† | Value determined based on Level 1 inputs — See Note 4. |
†† | Value determined based on Level 2 inputs — See Note 4. |
1 | All or portion of this security is on loan at March 31, 2015 — See Note 6. |
2 | Repurchase Agreement — See Note 5. |
3 | Securities lending collateral — See Note 6. |
ADR — American Depositary Receipt | |
plc — Public Limited Company |
SEE NOTES TO FINANCIAL STATEMENTS. | THE RYDEX FUNDS ANNUAL REPORT | 81 |
HEALTH CARE FUND |
STATEMENT OF ASSETS AND LIABILITIES
March 31, 2015
Assets: | ||||
Investments, at value - including $10,954,785 of securities loaned (cost $185,862,951) | $ | 263,537,004 | ||
Repurchase agreements, at value (cost $12,666,450) | 12,666,450 | |||
Total investments (cost $198,529,401) | 276,203,454 | |||
Segregated cash with broker | 169,200 | |||
Cash | 18,971 | |||
Receivables: | ||||
Fund shares sold | 2,035,277 | |||
Dividends | 218,778 | |||
Securities lending income | 30,784 | |||
Total assets | 278,676,464 | |||
Liabilities: | ||||
Payable for: | ||||
Return of securities loaned | 11,745,759 | |||
Fund shares redeemed | 741,493 | |||
Management fees | 189,416 | |||
Transfer agent and administrative fees | 55,711 | |||
Distribution and service fees | 37,217 | |||
Portfolio accounting fees | 21,850 | |||
Miscellaneous | 98,284 | |||
Total liabilities | 12,889,730 | |||
Commitments and contingent liabilities (Note 10) | — | |||
Net assets | $ | 265,786,734 | ||
Net assets consist of: | ||||
Paid in capital | $ | 192,785,494 | ||
Undistributed net investment income | — | |||
Accumulated net realized loss on investments | (4,672,813 | ) | ||
Net unrealized appreciation on investments | 77,674,053 | |||
Net assets | $ | 265,786,734 | ||
Investor Class: | ||||
Net assets | $ | 175,397,190 | ||
Capital shares outstanding | 4,894,858 | |||
Net asset value per share | $ | 35.83 | ||
Advisor Class: | ||||
Net assets | $ | 50,134,590 | ||
Capital shares outstanding | 1,532,736 | |||
Net asset value per share | $ | 32.71 | ||
A-Class: | ||||
Net assets | $ | 28,703,656 | ||
Capital shares outstanding | 854,356 | |||
Net asset value per share | $ | 33.60 | ||
Maximum offering price per share (Net asset value divided by 95.25%) | $ | 35.28 | ||
C-Class: | ||||
Net assets | $ | 11,551,298 | ||
Capital shares outstanding | 374,755 | |||
Net asset value per share | $ | 30.82 |
STATEMENT OF OPERATIONS
Year Ended March 31, 2015
Investment Income: | ||||
Dividends | $ | 1,748,487 | ||
Income from securities lending, net | 189,515 | |||
Interest | 195 | |||
Total investment income | 1,938,197 | |||
Expenses: | ||||
Management fees | 1,486,151 | |||
Transfer agent and administrative fees | 437,102 | |||
Distribution and service fees: | ||||
Advisor Class | 195,757 | |||
A-Class | 38,221 | |||
C-Class | 92,354 | |||
Portfolio accounting fees | 174,319 | |||
Custodian fees | 20,349 | |||
Trustees’ fees* | 9,986 | |||
Tax expense | 1,187 | |||
Line of credit fees | 248 | |||
Miscellaneous | 215,535 | |||
Total expenses | 2,671,209 | |||
Net investment loss | (733,012 | ) | ||
Net Realized and Unrealized Gain (Loss): | ||||
Net realized gain (loss) on: | ||||
Investments | 8,068,372 | |||
Net realized gain | 8,068,372 | |||
Net change in unrealized appreciation (depreciation) on: | ||||
Investments | 40,282,429 | |||
Net change in unrealized appreciation (depreciation) | 40,282,429 | |||
Net realized and unrealized gain | 48,350,801 | |||
Net increase in net assets resulting from operations | $ | 47,617,789 |
* | Relates to Trustees not deemed “interested persons” within the meaning of Section 2(a)(19) of the 1940 Act. |
82 | THE RYDEX FUNDS ANNUAL REPORT | SEE NOTES TO FINANCIAL STATEMENTS. |
HEALTH CARE FUND |
STATEMENTS OF CHANGES IN NET ASSETS
Year Ended March 31, 2015 | Year Ended March 31, 2014 | |||||||
Increase (Decrease) in Net Assets from Operations: | ||||||||
Net investment loss | $ | (733,012 | ) | $ | (254,146 | ) | ||
Net realized gain on investments | 8,068,372 | 20,336,238 | ||||||
Net change in unrealized appreciation (depreciation) on investments | 40,282,429 | 7,106,133 | ||||||
Net increase in net assets resulting from operations | 47,617,789 | 27,188,225 | ||||||
Distributions to shareholders from: | ||||||||
Net investment income | ||||||||
Investor Class | — | (89,982 | ) | |||||
Advisor Class | — | (7,552 | ) | |||||
A-Class | — | (7,852 | ) | |||||
C-Class | — | (7,895 | ) | |||||
Net realized gains | ||||||||
Investor Class | (1,752,480 | ) | (3,786,592 | ) | ||||
Advisor Class | (465,325 | ) | (317,778 | ) | ||||
A-Class | (250,757 | ) | (326,428 | ) | ||||
C-Class | (125,703 | ) | (332,239 | ) | ||||
Total distributions to shareholders | (2,594,265 | ) | (4,876,318 | ) | ||||
Capital share transactions: | ||||||||
Proceeds from sale of shares | ||||||||
Investor Class | 349,067,609 | 324,677,607 | ||||||
Advisor Class | 141,454,376 | 76,308,656 | ||||||
A-Class | 42,834,467 | 20,247,591 | ||||||
C-Class | 27,276,806 | 33,842,495 | ||||||
Distributions reinvested | ||||||||
Investor Class | 1,343,589 | 3,851,003 | ||||||
Advisor Class | 464,580 | 323,914 | ||||||
A-Class | 203,075 | 330,789 | ||||||
C-Class | 120,158 | 328,744 | ||||||
Cost of shares redeemed | ||||||||
Investor Class | (302,007,365 | ) | (354,047,641 | ) | ||||
Advisor Class | (139,767,422 | ) | (42,786,393 | ) | ||||
A-Class | (26,627,112 | ) | (17,317,347 | ) | ||||
C-Class | (25,514,379 | ) | (32,535,770 | ) | ||||
Net increase from capital share transactions | 68,848,382 | 13,223,648 | ||||||
Net increase in net assets | 113,871,906 | 35,535,555 | ||||||
Net assets: | ||||||||
Beginning of year | 151,914,828 | 116,379,273 | ||||||
End of year | $ | 265,786,734 | $ | 151,914,828 | ||||
Undistributed net investment income at end of year | $ | — | $ | — |
SEE NOTES TO FINANCIAL STATEMENTS. | THE RYDEX FUNDS ANNUAL REPORT | 83 |
HEALTH CARE FUND |
STATEMENTS OF CHANGES IN NET ASSETS (concluded)
Year Ended March 31, 2015 | Year Ended March 31, 2014 | |||||||
Capital share activity: | ||||||||
Shares sold | ||||||||
Investor Class | 11,255,406 | 12,765,655 | ||||||
Advisor Class | 4,878,949 | 3,036,456 | ||||||
A-Class | 1,476,215 | 823,789 | ||||||
C-Class | 1,010,754 | 1,521,467 | ||||||
Shares issued from reinvestment of distributions | ||||||||
Investor Class | 41,909 | 148,573 | ||||||
Advisor Class | 15,845 | 13,587 | ||||||
A-Class | 6,749 | 13,557 | ||||||
C-Class | 4,361 | 14,527 | ||||||
Shares redeemed | ||||||||
Investor Class | (9,940,130 | ) | (14,053,114 | ) | ||||
Advisor Class | (4,871,552 | ) | (1,714,436 | ) | ||||
A-Class | (931,513 | ) | (707,448 | ) | ||||
C-Class | (943,291 | ) | (1,464,775 | ) | ||||
Net increase in shares | 2,003,702 | 397,838 |
84 | THE RYDEX FUNDS ANNUAL REPORT | SEE NOTES TO FINANCIAL STATEMENTS. |
HEALTH CARE FUND |
FINANCIAL HIGHLIGHTS
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.
Investor Class | Year Ended March 31, 2015 | Year Ended March 31, 2014 | Year Ended March 28, 2013 | Year Ended March 31, 2012 | Year Ended March 31, 2011 | |||||||||||||||
Per Share Data | ||||||||||||||||||||
Net asset value, beginning of period | $ | 27.76 | $ | 22.35 | $ | 18.83 | $ | 17.14 | $ | 15.80 | ||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||
Net investment income (loss)a | (.07 | ) | (.03 | ) | .09 | .01 | (.02 | ) | ||||||||||||
Net gain (loss) on investments (realized and unrealized) | 8.50 | 7.00 | 3.48 | 1.68 | 1.36 | |||||||||||||||
Total from investment operations | 8.43 | 6.97 | 3.57 | 1.69 | 1.34 | |||||||||||||||
Less distributions from: | ||||||||||||||||||||
Net investment income | — | (.03 | ) | (.05 | ) | — | — | |||||||||||||
Net realized gains | (.36 | ) | (1.53 | ) | — | — | — | |||||||||||||
Total distributions | (.36 | ) | (1.56 | ) | (.05 | ) | — | — | ||||||||||||
Net asset value, end of period | $ | 35.83 | $ | 27.76 | $ | 22.35 | $ | 18.83 | $ | 17.14 | ||||||||||
Total Returnb | 30.51 | % | 31.70 | % | 18.98 | % | 9.86 | % | 8.48 | % | ||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||
Net assets, end of period (in thousands) | $ | 175,397 | $ | 98,209 | $ | 104,525 | $ | 39,036 | $ | 19,534 | ||||||||||
Ratios to average net assets: | ||||||||||||||||||||
Net investment income (loss) | (0.23 | %) | (0.12 | %) | 0.45 | % | 0.08 | % | (0.10 | %) | ||||||||||
Total expenses | 1.34 | % | 1.37 | % | 1.35 | % | 1.36 | % | 1.38 | % | ||||||||||
Portfolio turnover rate | 176 | % | 277 | % | 266 | % | 582 | % | 619 | % |
Advisor Class | Year Ended March 31, 2015 | Year Ended March 31, 2014 | Year Ended March 28, 2013 | Year Ended March 31, 2012 | Year Ended March 31, 2011 | |||||||||||||||
Per Share Data | ||||||||||||||||||||
Net asset value, beginning of period | $ | 25.49 | $ | 20.73 | $ | 17.55 | $ | 16.04 | $ | 14.85 | ||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||
Net investment income (loss)a | (.21 | ) | (.15 | ) | (.06 | ) | (.07 | ) | (.05 | ) | ||||||||||
Net gain (loss) on investments (realized and unrealized) | 7.79 | 6.47 | 3.29 | 1.58 | 1.24 | |||||||||||||||
Total from investment operations | 7.58 | 6.32 | 3.23 | 1.51 | 1.19 | |||||||||||||||
Less distributions from: | ||||||||||||||||||||
Net investment income | — | (.03 | ) | (.05 | ) | — | — | |||||||||||||
Net realized gains | (.36 | ) | (1.53 | ) | — | — | — | |||||||||||||
Total distributions | (.36 | ) | (1.56 | ) | (.05 | ) | — | — | ||||||||||||
Net asset value, end of period | $ | 32.71 | $ | 25.49 | $ | 20.73 | $ | 17.55 | $ | 16.04 | ||||||||||
Total Returnb | 29.89 | % | 31.03 | % | 18.43 | % | 9.41 | % | 8.01 | % | ||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||
Net assets, end of period (in thousands) | $ | 50,135 | $ | 38,480 | $ | 3,605 | $ | 4,275 | $ | 2,229 | ||||||||||
Ratios to average net assets: | ||||||||||||||||||||
Net investment income (loss) | (0.73 | %) | (0.62 | %) | (0.31 | %) | (0.44 | %) | (0.36 | %) | ||||||||||
Total expenses | 1.85 | % | 1.87 | % | 1.86 | % | 1.85 | % | 1.88 | % | ||||||||||
Portfolio turnover rate | 176 | % | 277 | % | 266 | % | 582 | % | 619 | % |
SEE NOTES TO FINANCIAL STATEMENTS. | THE RYDEX FUNDS ANNUAL REPORT | 85 |
HEALTH CARE FUND |
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.
A-Class | Year Ended March 31, 2015 | Year Ended March 31, 2014 | Year Ended March 28, 2013 | Year Ended March 31, 2012 | Year Ended March 31, 2011 | |||||||||||||||
Per Share Data | ||||||||||||||||||||
Net asset value, beginning of period | $ | 26.11 | $ | 21.15 | $ | 17.87 | $ | 16.30 | $ | 15.05 | ||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||
Net investment income (loss)a | (.14 | ) | (.09 | ) | .04 | (.02 | ) | (.02 | ) | |||||||||||
Net gain (loss) on investments (realized and unrealized) | 7.99 | 6.61 | 3.29 | 1.59 | 1.27 | |||||||||||||||
Total from investment operations | 7.85 | 6.52 | 3.33 | 1.57 | 1.25 | |||||||||||||||
Less distributions from: | ||||||||||||||||||||
Net investment income | — | (.03 | ) | (.05 | ) | — | — | |||||||||||||
Net realized gains | (.36 | ) | (1.53 | ) | — | — | — | |||||||||||||
Total distributions | (.36 | ) | (1.56 | ) | (.05 | ) | — | — | ||||||||||||
Net asset value, end of period | $ | 33.60 | $ | 26.11 | $ | 21.15 | $ | 17.87 | $ | 16.30 | ||||||||||
Total Returnb | 30.21 | % | 31.36 | % | 18.65 | % | 9.63 | % | 8.31 | % | ||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||
Net assets, end of period (in thousands) | $ | 28,704 | $ | 7,909 | $ | 3,660 | $ | 2,964 | $ | 1,156 | ||||||||||
Ratios to average net assets: | ||||||||||||||||||||
Net investment income (loss) | (0.47 | %) | (0.37 | %) | 0.20 | % | (0.13 | %) | (0.14 | %) | ||||||||||
Total expenses | 1.59 | % | 1.62 | % | 1.60 | % | 1.60 | % | 1.63 | % | ||||||||||
Portfolio turnover rate | 176 | % | 277 | % | 266 | % | 582 | % | 619 | % |
C-Class | Year Ended March 31, 2015 | Year Ended March 31, 2014 | Year Ended March 28, 2013 | Year Ended March 31, 2012 | Year Ended March 31, 2011 | |||||||||||||||
Per Share Data | ||||||||||||||||||||
Net asset value, beginning of period | $ | 24.16 | $ | 19.81 | $ | 16.86 | $ | 15.50 | $ | 14.39 | ||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||
Net investment income (loss)a | (.33 | ) | (.26 | ) | (.09 | ) | (.14 | ) | (.11 | ) | ||||||||||
Net gain (loss) on investments (realized and unrealized) | 7.35 | 6.17 | 3.09 | 1.50 | 1.22 | |||||||||||||||
Total from investment operations | 7.02 | 5.91 | 3.00 | 1.36 | 1.11 | |||||||||||||||
Less distributions from: | ||||||||||||||||||||
Net investment income | — | (.03 | ) | (.05 | ) | — | — | |||||||||||||
Net realized gains | (.36 | ) | (1.53 | ) | — | — | — | |||||||||||||
Total distributions | (.36 | ) | (1.56 | ) | (.05 | ) | — | — | ||||||||||||
Net asset value, end of period | $ | 30.82 | $ | 24.16 | $ | 19.81 | $ | 16.86 | $ | 15.50 | ||||||||||
Total Returnb | 29.21 | % | 30.38 | % | 17.81 | % | 8.77 | % | 7.71 | % | ||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||
Net assets, end of period (in thousands) | $ | 11,551 | $ | 7,318 | $ | 4,589 | $ | 3,468 | $ | 3,870 | ||||||||||
Ratios to average net assets: | ||||||||||||||||||||
Net investment income (loss) | (1.24 | %) | (1.14 | %) | (0.53 | %) | (0.91 | %) | (0.76 | %) | ||||||||||
Total expenses | 2.34 | % | 2.37 | % | 2.35 | % | 2.36 | % | 2.38 | % | ||||||||||
Portfolio turnover rate | 176 | % | 277 | % | 266 | % | 582 | % | 619 | % |
a | Net investment income (loss) per share was computed using average shares outstanding throughout the period. |
b | Total return does not reflect the impact of any applicable sales charges. |
86 | THE RYDEX FUNDS ANNUAL REPORT | SEE NOTES TO FINANCIAL STATEMENTS. |
PERFORMANCE REPORT AND FUND PROFILE (Unaudited) | March 31, 2015 |
INTERNET FUND
OBJECTIVE: Seeks to provide capital appreciation by investing in companies that provide products or services designed for or related to the internet (“internet companies”).
For the one-year period ended March 31, 2015, Internet Fund Investor Class returned 6.40%, compared with 18.11% for the S&P 500 Information Technology Index. The broader S&P 500 Index returned 12.73%.
The internet & catalog retail segment was the largest contributor to return, followed by the communications equipment segment. Contributing least to return was the diversified telecommunication services segment. The only detractor from return was the health care technology segment.
Facebook, Inc. — Class A, Cisco Systems, Inc., and Time Warner, Inc. added the most to Fund performance for the period. Youku Tudou, Inc. ADR, Qihoo 360 Technology Company Ltd. ADR, and Alibaba Group Holding Ltd. ADR detracted most from Fund performance for the period.
Performance displayed represents past performance, which is no guarantee of future results.
Holdings Diversification (Market Exposure as % of Net Assets)
![](https://capedge.com/proxy/N-CSR/0001398344-15-003814/rsecf_28.jpg)
“Holdings Diversification (Market Exposure as % of Net Assets)” excludes any temporary cash investments.
Inception Dates: | |
Investor Class | April 6, 2000 |
Advisor Class | April 6, 2000 |
A-Class | September 1, 2004 |
C-Class | April 19, 2001 |
Ten Largest Holdings (% of Total Net Assets) | |
Facebook, Inc. — Class A | 5.1% |
Amazon.com, Inc. | 4.2% |
Cisco Systems, Inc. | 3.8% |
QUALCOMM, Inc. | 3.4% |
Google, Inc. — Class A | 3.1% |
Google, Inc. — Class C | 3.1% |
Time Warner, Inc. | 2.7% |
eBay, Inc. | 2.7% |
Priceline Group, Inc. | 2.5% |
salesforce.com, Inc. | 2.1% |
Top Ten Total | 32.7% |
“Ten Largest Holdings” exclude any temporary cash or derivative investments. |
THE RYDEX FUNDS ANNUAL REPORT | 87 |
PERFORMANCE REPORT AND FUND PROFILE (Unaudited)(concluded) | March 31, 2015 |
Cumulative Fund Performance*
![](https://capedge.com/proxy/N-CSR/0001398344-15-003814/rsecf_29.jpg)
![](https://capedge.com/proxy/N-CSR/0001398344-15-003814/rsecf_30.jpg)
Average Annual Returns*
Periods Ended March 31, 2015
1 Year | 5 Year | 10 Year | |
Investor Class Shares | 6.40% | 14.54% | 10.07% |
Advisor Class Shares | 5.80% | 13.96% | 9.52% |
A-Class Shares | 6.12% | 14.26% | 9.80% |
A-Class Shares with sales charge† | 1.08% | 13.15% | 9.26% |
C-Class Shares | 5.34% | 13.39% | 8.98% |
C-Class Shares with CDSC‡ | 4.34% | 13.39% | 8.98% |
S&P 500 Information Technology Index | 18.11% | 14.55% | 9.77% |
S&P 500 Index | 12.73% | 14.47% | 8.01% |
* | The performance data above represents past performance that is not predictive of future results. The investment return and principal value of an investment in the Fund will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Returns are historical and include changes in principal and reinvested dividends and capital gains and do not reflect the effect of taxes. The S&P 500 Index and the S&P 500 Information Technology Index are unmanaged indices and, unlike the Fund, have no management fees or operating expenses to reduce their reported returns. The graphs are based on Investor Class shares and A-Class shares only; performance for Advisor Class shares and C-Class shares will vary due to differences in fee structures. |
† | Fund returns are calculated using the maximum sales charge of 4.75%. |
‡ | Fund returns include a CDSC of 1% if redeemed within 12 months of purchase. |
88 | THE RYDEX FUNDS ANNUAL REPORT |
SCHEDULE OF INVESTMENTS | March 31, 2015 |
INTERNET FUND |
Shares | Value | |||||||
COMMON STOCKS† - 99.4% | ||||||||
E-COMMERCE/SERVICES - 14.1% | ||||||||
Priceline Group, Inc.* | 320 | $ | 372,527 | |||||
Netflix, Inc.* | 575 | 239,597 | ||||||
Liberty Ventures* | 5,504 | 231,223 | ||||||
Expedia, Inc. | 1,736 | 163,410 | ||||||
TripAdvisor, Inc.* | 1,961 | 163,096 | ||||||
IAC/InterActiveCorp | 1,680 | 113,350 | ||||||
Zillow Group, Inc. — Class A* | 1,108 | 111,132 | ||||||
Ctrip.com International Ltd. ADR* | 1,836 | 107,626 | ||||||
Groupon, Inc. — Class A* | 13,912 | 100,306 | ||||||
GrubHub, Inc.* | 2,020 | 91,688 | ||||||
SouFun Holdings Ltd. ADR | 13,294 | 79,764 | ||||||
58.com, Inc. ADR* | 1,480 | 78,262 | ||||||
Bitauto Holdings Ltd. ADR* | 1,534 | 78,050 | ||||||
Autohome, Inc. ADR* | 1,650 | 72,551 | ||||||
Orbitz Worldwide, Inc.* | 4,610 | 53,753 | ||||||
Total E-Commerce/Services | 2,056,335 | |||||||
E-COMMERCE/PRODUCTS - 10.6% | ||||||||
Amazon.com, Inc.* | 1,665 | 619,547 | ||||||
eBay, Inc.* | 6,741 | 388,821 | ||||||
Alibaba Group Holding Ltd. ADR* | 1,810 | 150,664 | ||||||
JD.com, Inc. ADR* | 3,250 | 95,485 | ||||||
Vipshop Holdings Ltd. ADR* | 3,193 | 94,002 | ||||||
MercadoLibre, Inc. | 583 | 71,429 | ||||||
zulily, Inc. — Class A* | 4,714 | 61,235 | ||||||
Shutterfly, Inc.* | 1,342 | 60,712 | ||||||
Total E-Commerce/Products | 1,541,895 | |||||||
WEB PORTALS/ISP - 10.4% | ||||||||
Google, Inc. — Class A* | 822 | 455,963 | ||||||
Google, Inc. — Class C* | 832 | 455,936 | ||||||
Yahoo!, Inc.* | 6,918 | 307,401 | ||||||
Baidu, Inc. ADR* | 679 | 141,504 | ||||||
AOL, Inc.* | 2,121 | 84,013 | ||||||
SINA Corp.* | 2,155 | 69,305 | ||||||
Total Web Portals/ISP | 1,514,122 | |||||||
INTERNET CONTENT-ENTERTAINMENT - 8.5% | ||||||||
Facebook, Inc. — Class A* | 9,005 | 740,346 | ||||||
Twitter, Inc.* | 5,623 | 281,600 | ||||||
Pandora Media, Inc.* | 5,648 | 91,554 | ||||||
Shutterstock, Inc.* | 1,120 | 76,910 | ||||||
Youku Tudou, Inc. ADR* | 4,492 | 56,150 | ||||||
Total Internet Content-Entertainment | 1,246,560 | |||||||
NETWORKING PRODUCTS - 7.7% | ||||||||
Cisco Systems, Inc. | 20,048 | 551,820 | ||||||
Palo Alto Networks, Inc.* | 1,124 | 164,194 | ||||||
Arista Networks, Inc.* | 1,420 | 100,153 | ||||||
Infinera Corp.* | 3,850 | 75,730 | ||||||
Telefonaktiebolaget LM Ericsson ADR | 5,383 | 67,557 | ||||||
Polycom, Inc.* | 4,716 | 63,194 | ||||||
LogMeIn, Inc.* | 1,000 | 55,990 | ||||||
Ruckus Wireless, Inc.* | 3,930 | 50,579 | ||||||
Total Networking Products | 1,129,217 | |||||||
APPLICATIONS SOFTWARE - 6.6% | ||||||||
salesforce.com, Inc.* | 4,640 | 309,998 | ||||||
Intuit, Inc. | 2,482 | 240,655 | ||||||
Red Hat, Inc.* | 2,457 | 186,118 | ||||||
Check Point Software Technologies Ltd.* | 990 | 81,150 | ||||||
Demandware, Inc.* | 1,140 | 69,426 | ||||||
Dealertrack Technologies, Inc.* | 1,743 | 67,140 | ||||||
Total Applications Software | 954,487 | |||||||
WIRELESS EQUIPMENT - 5.4% | ||||||||
Motorola Solutions, Inc. | 2,706 | 180,409 | ||||||
Gogo, Inc.*,1 | 9,347 | 178,154 | ||||||
ViaSat, Inc.* | 1,300 | 77,493 | ||||||
Aruba Networks, Inc.* | 3,153 | 77,217 | ||||||
Ubiquiti Networks, Inc. | 2,476 | 73,166 | ||||||
Nokia Oyj ADR | 9,265 | 70,229 | ||||||
Sierra Wireless, Inc.* | 2,080 | 68,827 | ||||||
InterDigital, Inc. | 1,260 | 63,932 | ||||||
Total Wireless Equipment | 789,427 | |||||||
FINANCE-INVESTMENT BANKERS/BROKERS - 4.4% | ||||||||
Charles Schwab Corp. | 9,730 | 296,180 | ||||||
TD Ameritrade Holding Corp. | 5,680 | 211,637 | ||||||
E*TRADE Financial Corp.* | 4,780 | 136,493 | ||||||
Total Finance-Investment Bankers/Brokers | 644,310 | |||||||
TELECOMMUNICATION EQUIPMENT - 4.1% | ||||||||
Harris Corp. | 1,790 | 140,980 | ||||||
Juniper Networks, Inc. | 6,197 | 139,928 | ||||||
CommScope Holding Company, Inc.* | 3,720 | 106,169 | ||||||
ARRIS Group, Inc.* | 3,225 | 93,186 | ||||||
Plantronics, Inc. | 1,310 | 69,365 | ||||||
ADTRAN, Inc. | 2,439 | 45,536 | ||||||
Total Telecommunication Equipment | 595,164 | |||||||
SEMICONDUCTOR COMPONENTS-INTEGRATED CIRCUIT - 3.4% | ||||||||
QUALCOMM, Inc. | 7,215 | 500,287 | ||||||
INTERNET CONTENT-INFORMATION/NETWORK - 3.3% | ||||||||
LinkedIn Corp. — Class A* | 1,036 | 258,855 | ||||||
Yelp, Inc. — Class A* | 1,894 | 89,681 | ||||||
YY, Inc. ADR*,1 | 1,434 | 78,232 | ||||||
WebMD Health Corp. — Class A* | 1,399 | 61,325 | ||||||
Total Internet Content-Information/Network | 488,093 | |||||||
INTERNET SECURITY - 2.8% | ||||||||
Symantec Corp. | 8,003 | 186,990 | ||||||
VeriSign, Inc.* | 2,024 | 135,547 |
SEE NOTES TO FINANCIAL STATEMENTS. | THE RYDEX FUNDS ANNUAL REPORT | 89 |
SCHEDULE OF INVESTMENTS (concluded) | March 31, 2015 |
INTERNET FUND |
Shares | Value | |||||||
Qihoo 360 Technology Company Ltd. ADR* | 1,719 | $ | 88,013 | |||||
Total Internet Security | 410,550 | |||||||
MULTIMEDIA - 2.7% | ||||||||
Time Warner, Inc. | 4,646 | 392,308 | ||||||
COMPUTER SOFTWARE - 2.4% | ||||||||
Akamai Technologies, Inc.* | 2,342 | 166,388 | ||||||
Rackspace Hosting, Inc.* | 2,412 | 124,435 | ||||||
Cornerstone OnDemand, Inc.* | 2,070 | 59,802 | ||||||
Total Computer Software | 350,625 | |||||||
ELECTRONIC COMPONENTS-SEMICONDUCTOR - 1.6% | ||||||||
Broadcom Corp. — Class A | 5,412 | 234,313 | ||||||
COMMERCIAL SERVICES - 1.5% | ||||||||
CoStar Group, Inc.* | 604 | 119,490 | ||||||
Live Nation Entertainment, Inc.* | 4,180 | 105,461 | ||||||
Total Commercial Services | 224,951 | |||||||
TELECOMMUNICATION EQUIPMENT FIBER OPTICS - 1.4% | ||||||||
JDS Uniphase Corp.* | 6,076 | 79,718 | ||||||
Finisar Corp.* | 3,157 | 67,370 | ||||||
Ciena Corp.* | 3,317 | 64,051 | ||||||
Total Telecommunication Equipment Fiber Optics | 211,139 | |||||||
COMPUTERS-INTEGRATED SYSTEMS - 1.4% | ||||||||
Brocade Communications Systems, Inc. | 8,750 | 103,819 | ||||||
Riverbed Technology, Inc.* | 4,945 | 103,400 | ||||||
Total Computers-Integrated Systems | 207,219 | |||||||
WEB HOSTING/DESIGN - 1.2% | ||||||||
Equinix, Inc. | 727 | 169,283 | ||||||
INTERNET INFRASTRUCTURE SOFTWARE - 0.9% | ||||||||
F5 Networks, Inc.* | 1,192 | 137,008 | ||||||
FINANCE-CONSUMER LOANS - 0.9% | ||||||||
LendingClub Corp.* | 6,570 | 129,101 | ||||||
ENTERPRISE SOFTWARE/SERVICES - 0.6% | ||||||||
Veeva Systems, Inc. — Class A* | 3,430 | 87,568 | ||||||
COMPUTER SERVICES INTERNET TELEPHONY - 0.6% | ||||||||
j2 Global, Inc. | 1,260 | 82,757 | ||||||
INTERNET INCUBATORS - 0.5% | ||||||||
HomeAway, Inc.* | 2,592 | 78,201 | ||||||
ENTERTAINMENT SOFTWARE - 0.5% | ||||||||
NetEase, Inc. ADR | 739 | 77,817 | ||||||
PRINTING-COMMERCIAL - 0.5% | ||||||||
Cimpress N.V.* | 834 | 70,373 | ||||||
MEDICAL INFORMATION SYSTEM - 0.5% | ||||||||
Allscripts Healthcare Solutions, Inc.* | 5,880 | 70,325 | ||||||
COMPUTERS - 0.5% | ||||||||
BlackBerry Ltd.* | 7,827 | 69,895 | ||||||
INTERNET CONNECTIVITY SERVICES - 0.4% | ||||||||
Cogent Communications Holdings, Inc. | 1,720 | 60,768 | ||||||
Total Common Stocks | ||||||||
(Cost $8,653,198) | 14,524,098 | |||||||
Face Amount | ||||||||
REPURCHASE AGREEMENT††,2 - 0.5% | ||||||||
HSBC Group issued 03/31/15 at 0.03% due 04/01/15 | $ | 77,876 | 77,876 | |||||
Total Repurchase Agreement | ||||||||
(Cost $77,876) | 77,876 | |||||||
SECURITIES LENDING COLLATERAL††,3 - 1.2% | ||||||||
Repurchase Agreements | ||||||||
HSBC Securities, Inc. issued 03/31/15 at 0.10% due 04/01/15 | 112,397 | 112,397 | ||||||
BNP Paribas Securities Corp. issued 03/31/15 at 0.10% due 04/01/15 | 38,664 | 38,664 | ||||||
Barclays Capital, Inc. issued 03/31/15 at 0.10% due 04/01/15 | 19,957 | 19,957 | ||||||
Total Securities Lending Collateral | ||||||||
(Cost $171,018) | 171,018 | |||||||
Total Investments - 101.1% | ||||||||
(Cost $8,902,092) | $ | 14,772,992 | ||||||
Other Assets & Liabilities, net - (1.1)% | (156,792 | ) | ||||||
Total Net Assets - 100.0% | $ | 14,616,200 |
* | Non-income producing security. |
† | Value determined based on Level 1 inputs — See Note 4. |
†† | Value determined based on Level 2 inputs — See Note 4. |
1 | All or portion of this security is on loan at March 31, 2015 — See Note 6. |
2 | Repurchase Agreement — See Note 5. |
3 | Securities lending collateral — See Note 6. |
ADR — American Depositary Receipt |
90 | THE RYDEX FUNDS ANNUAL REPORT | SEE NOTES TO FINANCIAL STATEMENTS. |
INTERNET FUND |
STATEMENT OF ASSETS AND LIABILITIES
March 31, 2015
Assets: | ||||
Investments, at value - including $169,972 of securities loaned (cost $8,653,198) | $ | 14,524,098 | ||
Repurchase agreements, at value (cost $248,894) | 248,894 | |||
Total investments (cost $8,902,092) | 14,772,992 | |||
Segregated cash with broker | 2,500 | |||
Cash | 2,416 | |||
Receivables: | ||||
Fund shares sold | 150,084 | |||
Dividends | 5,458 | |||
Securities lending income | 846 | |||
Foreign taxes reclaim | 743 | |||
Total assets | 14,935,039 | |||
Liabilities: | ||||
Payable for: | ||||
Return of securities loaned | 173,518 | |||
Securities purchased | 81,065 | |||
Fund shares redeemed | 38,511 | |||
Management fees | 10,336 | |||
Distribution and service fees | 3,544 | |||
Transfer agent and administrative fees | 3,040 | |||
Portfolio accounting fees | 1,216 | |||
Miscellaneous | 7,609 | |||
Total liabilities | 318,839 | |||
Commitments and contingent liabilities (Note 10) | — | |||
Net assets | $ | 14,616,200 | ||
Net assets consist of: | ||||
Paid in capital | $ | 10,675,060 | ||
Undistributed net investment income | — | |||
Accumulated net realized loss on investments | (1,929,760 | ) | ||
Net unrealized appreciation on investments | 5,870,900 | |||
Net assets | $ | 14,616,200 | ||
Investor Class: | ||||
Net assets | $ | 8,328,216 | ||
Capital shares outstanding | 106,948 | |||
Net asset value per share | $ | 77.87 | ||
Advisor Class: | ||||
Net assets | $ | 1,830,003 | ||
Capital shares outstanding | 25,545 | |||
Net asset value per share | $ | 71.64 | ||
A-Class: | ||||
Net assets | $ | 2,021,684 | ||
Capital shares outstanding | 27,427 | |||
Net asset value per share | $ | 73.71 | ||
Maximum offering price per share (Net asset value divided by 95.25%) | $ | 77.39 | ||
C-Class: | ||||
Net assets | $ | 2,436,297 | ||
Capital shares outstanding | 36,271 | |||
Net asset value per share | $ | 67.17 |
STATEMENT OF OPERATIONS
Year Ended March 31, 2015
Investment Income: | ||||
Dividends (net of foreign withholding tax of $4,214) | $ | 131,064 | ||
Income from securities lending, net | 15,390 | |||
Interest | 19 | |||
Total investment income | 146,473 | |||
Expenses: | ||||
Management fees | 174,201 | |||
Transfer agent and administrative fees | 51,236 | |||
Distribution and service fees: | ||||
Advisor Class | 13,133 | |||
A-Class | 8,861 | |||
C-Class | 29,629 | |||
Portfolio accounting fees | 20,494 | |||
Registration fees | 21,679 | |||
Custodian fees | 2,394 | |||
Trustees’ fees* | 2,283 | |||
Line of credit fees | 293 | |||
Miscellaneous | 4,821 | |||
Total expenses | 329,024 | |||
Net investment loss | (182,551 | ) | ||
Net Realized and Unrealized Gain (Loss): | ||||
Net realized gain (loss) on: | ||||
Investments | 3,805,670 | |||
Net realized gain | 3,805,670 | |||
Net change in unrealized appreciation (depreciation) on: | ||||
Investments | (3,557,558 | ) | ||
Net change in unrealized appreciation (depreciation) | (3,557,558 | ) | ||
Net realized and unrealized gain | 248,112 | |||
Net increase in net assets resulting from operations | $ | 65,561 |
* | Relates to Trustees not deemed “interested persons” within the meaning of Section 2(a)(19) of the 1940 Act. |
SEE NOTES TO FINANCIAL STATEMENTS. | THE RYDEX FUNDS ANNUAL REPORT | 91 |
INTERNET FUND |
STATEMENTS OF CHANGES IN NET ASSETS
Year Ended March 31, 2015 | Year Ended March 31, 2014 | |||||||
Increase (Decrease) in Net Assets from Operations: | ||||||||
Net investment loss | $ | (182,551 | ) | $ | (368,149 | ) | ||
Net realized gain (loss) on investments | 3,805,670 | (1,599,042 | ) | |||||
Net change in unrealized appreciation (depreciation) on investments | (3,557,558 | ) | 6,184,558 | |||||
Net increase in net assets resulting from operations | 65,561 | 4,217,367 | ||||||
Distributions to shareholders from: | ||||||||
Net realized gains | ||||||||
Investor Class | (212,285 | ) | (111,377 | ) | ||||
Advisor Class | (44,657 | ) | (17,627 | ) | ||||
A-Class | (66,053 | ) | (40,920 | ) | ||||
C-Class | (76,244 | ) | (15,187 | ) | ||||
Total distributions to shareholders | (399,239 | ) | (185,111 | ) | ||||
Capital share transactions: | ||||||||
Proceeds from sale of shares | ||||||||
Investor Class | 43,138,842 | 137,136,622 | ||||||
Advisor Class | 94,544,871 | 71,839,042 | ||||||
A-Class | 4,055,990 | 18,920,974 | ||||||
C-Class | 11,747,458 | 18,712,886 | ||||||
Distributions reinvested | ||||||||
Investor Class | 205,625 | 108,663 | ||||||
Advisor Class | 44,428 | 17,580 | ||||||
A-Class | 53,517 | 37,431 | ||||||
C-Class | 74,878 | 14,695 | ||||||
Cost of shares redeemed | ||||||||
Investor Class | (61,299,428 | ) | (119,310,474 | ) | ||||
Advisor Class | (105,054,927 | ) | (60,492,721 | ) | ||||
A-Class | (14,360,288 | ) | (8,526,665 | ) | ||||
C-Class | (14,064,904 | ) | (15,590,538 | ) | ||||
Net increase (decrease) from capital share transactions | (40,913,938 | ) | 42,867,495 | |||||
Net increase (decrease) in net assets | (41,247,616 | ) | 46,899,751 | |||||
Net assets: | ||||||||
Beginning of year | 55,863,816 | 8,964,065 | ||||||
End of year | $ | 14,616,200 | $ | 55,863,816 | ||||
Undistributed net investment income at end of year | $ | — | $ | — | ||||
Capital share activity: | ||||||||
Shares sold | ||||||||
Investor Class | 568,304 | 1,953,833 | ||||||
Advisor Class | 1,359,702 | 1,024,297 | ||||||
A-Class | 55,579 | 275,049 | ||||||
C-Class | 177,866 | 314,443 | ||||||
Shares issued from reinvestment of distributions | ||||||||
Investor Class | 2,672 | 1,528 | ||||||
Advisor Class | 626 | 266 | ||||||
A-Class | 734 | 554 | ||||||
C-Class | 1,124 | 236 | ||||||
Shares redeemed | ||||||||
Investor Class | (821,508 | ) | (1,708,029 | ) | ||||
Advisor Class | (1,504,575 | ) | (865,440 | ) | ||||
A-Class | (205,087 | ) | (121,953 | ) | ||||
C-Class | (213,643 | ) | (266,422 | ) | ||||
Net increase (decrease) in shares | (578,206 | ) | 608,362 |
92 | THE RYDEX FUNDS ANNUAL REPORT | SEE NOTES TO FINANCIAL STATEMENTS. |
INTERNET FUND |
FINANCIAL HIGHLIGHTS
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.
Investor Class | Year Ended March 31, 2015 | Year Ended March 31, 2014 | Year Ended March 28, 2013 | Year Ended March 31, 2012 | Year Ended March 31, 2011 | |||||||||||||||
Per Share Data | ||||||||||||||||||||
Net asset value, beginning of period | $ | 75.05 | $ | 55.46 | $ | 51.90 | $ | 52.28 | $ | 41.74 | ||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||
Net investment income (loss)a | (.49 | ) | (.62 | ) | (.44 | ) | (.51 | ) | (.34 | ) | ||||||||||
Net gain (loss) on investments (realized and unrealized) | 5.27 | 20.53 | 5.26 | .13 | 10.88 | |||||||||||||||
Total from investment operations | 4.78 | 19.91 | 4.82 | (.38 | ) | 10.54 | ||||||||||||||
Less distributions from: | ||||||||||||||||||||
Net realized gains | (1.96 | ) | (.32 | ) | (1.26 | ) | — | — | ||||||||||||
Total distributions | (1.96 | ) | (.32 | ) | (1.26 | ) | — | — | ||||||||||||
Net asset value, end of period | $ | 77.87 | $ | 75.05 | $ | 55.46 | $ | 51.90 | $ | 52.28 | ||||||||||
Total Returnb | 6.40 | % | 35.93 | % | 9.65 | % | (0.73 | %) | 25.25 | % | ||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||
Net assets, end of period (in thousands) | $ | 8,328 | $ | 26,828 | $ | 6,109 | $ | 6,206 | $ | 20,589 | ||||||||||
Ratios to average net assets: | ||||||||||||||||||||
Net investment income (loss) | (0.64 | %) | (0.87 | %) | (0.87 | %) | (1.05 | %) | (0.69 | %) | ||||||||||
Total expenses | 1.35 | % | 1.37 | % | 1.35 | % | 1.36 | % | 1.39 | % | ||||||||||
Portfolio turnover rate | 495 | % | 472 | % | 442 | % | 380 | % | 291 | % |
Advisor Class | Year Ended March 31, 2015 | Year Ended March 31, 2014 | Year Ended March 28, 2013 | Year Ended March 31, 2012 | Year Ended March 31, 2011 | |||||||||||||||
Per Share Data | ||||||||||||||||||||
Net asset value, beginning of period | $ | 69.58 | $ | 51.70 | $ | 48.71 | $ | 49.31 | $ | 39.57 | ||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||
Net investment income (loss)a | (.78 | ) | (1.07 | ) | (.64 | ) | (.71 | ) | (.59 | ) | ||||||||||
Net gain (loss) on investments (realized and unrealized) | 4.80 | 19.27 | 4.89 | .11 | 10.33 | |||||||||||||||
Total from investment operations | 4.02 | 18.20 | 4.25 | (.60 | ) | 9.74 | ||||||||||||||
Less distributions from: | ||||||||||||||||||||
Net realized gains | (1.96 | ) | (.32 | ) | (1.26 | ) | — | — | ||||||||||||
Total distributions | (1.96 | ) | (.32 | ) | (1.26 | ) | — | — | ||||||||||||
Net asset value, end of period | $ | 71.64 | $ | 69.58 | $ | 51.70 | $ | 48.71 | $ | 49.31 | ||||||||||
Total Returnb | 5.80 | % | 35.23 | % | 9.13 | % | (1.24 | %) | 24.61 | % | ||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||
Net assets, end of period (in thousands) | $ | 1,830 | $ | 11,814 | $ | 552 | $ | 719 | $ | 2,124 | ||||||||||
Ratios to average net assets: | ||||||||||||||||||||
Net investment income (loss) | (1.12 | %) | (1.53 | %) | (1.36 | %) | (1.58 | %) | (1.32 | %) | ||||||||||
Total expenses | 1.85 | % | 1.87 | % | 1.85 | % | 1.86 | % | 1.89 | % | ||||||||||
Portfolio turnover rate | 495 | % | 472 | % | 442 | % | 380 | % | 291 | % |
SEE NOTES TO FINANCIAL STATEMENTS. | THE RYDEX FUNDS ANNUAL REPORT | 93 |
INTERNET FUND |
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.
A-Class | Year Ended March 31, 2015 | Year Ended March 31, 2014 | Year Ended March 28, 2013 | Year Ended March 31, 2012 | Year Ended March 31, 2011 | |||||||||||||||
Per Share Data | ||||||||||||||||||||
Net asset value, beginning of period | $ | 71.32 | $ | 52.85 | $ | 49.63 | $ | 50.13 | $ | 40.12 | ||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||
Net investment income (loss)a | (.61 | ) | (.79 | ) | (.52 | ) | (.64 | ) | (.46 | ) | ||||||||||
Net gain (loss) on investments (realized and unrealized) | 4.96 | 19.58 | 5.00 | .14 | 10.47 | |||||||||||||||
Total from investment operations | 4.35 | 18.79 | 4.48 | (.50 | ) | 10.01 | ||||||||||||||
Less distributions from: | ||||||||||||||||||||
Net realized gains | (1.96 | ) | (.32 | ) | (1.26 | ) | — | — | ||||||||||||
Total distributions | (1.96 | ) | (.32 | ) | (1.26 | ) | — | — | ||||||||||||
Net asset value, end of period | $ | 73.71 | $ | 71.32 | $ | 52.85 | $ | 49.63 | $ | 50.13 | ||||||||||
Total Returnb | 6.12 | % | 35.58 | % | 9.41 | % | (1.00 | %) | 24.95 | % | ||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||
Net assets, end of period (in thousands) | $ | 2,022 | $ | 12,566 | $ | 1,192 | $ | 828 | $ | 1,101 | ||||||||||
Ratios to average net assets: | ||||||||||||||||||||
Net investment income (loss) | (0.86 | %) | (1.12 | %) | (1.08 | %) | (1.39 | %) | (1.01 | %) | ||||||||||
Total expenses | 1.61 | % | 1.62 | % | 1.60 | % | 1.61 | % | 1.64 | % | ||||||||||
Portfolio turnover rate | 495 | % | 472 | % | 442 | % | 380 | % | 291 | % |
C-Class | Year Ended March 31, 2015 | Year Ended March 31, 2014 | Year Ended March 28, 2013 | Year Ended March 31, 2012 | Year Ended March 31, 2011 | |||||||||||||||
Per Share Data | ||||||||||||||||||||
Net asset value, beginning of period | $ | 65.64 | $ | 49.03 | $ | 46.50 | $ | 47.30 | $ | 38.17 | ||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||
Net investment income (loss)a | (1.11 | ) | (1.16 | ) | (.85 | ) | (.94 | ) | (.83 | ) | ||||||||||
Net gain (loss) on investments (realized and unrealized) | 4.60 | 18.09 | 4.64 | .14 | 9.96 | |||||||||||||||
Total from investment operations | 3.49 | 16.93 | 3.79 | (.80 | ) | 9.13 | ||||||||||||||
Less distributions from: | ||||||||||||||||||||
Net realized gains | (1.96 | ) | (.32 | ) | (1.26 | ) | — | — | ||||||||||||
Total distributions | (1.96 | ) | (.32 | ) | (1.26 | ) | — | — | ||||||||||||
Net asset value, end of period | $ | 67.17 | $ | 65.64 | $ | 49.03 | $ | 46.50 | $ | 47.30 | ||||||||||
Total Returnb | 5.34 | % | 34.56 | % | 8.55 | % | (1.69 | %) | 23.92 | % | ||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||
Net assets, end of period (in thousands) | $ | 2,436 | $ | 4,655 | $ | 1,111 | $ | 643 | $ | 1,770 | ||||||||||
Ratios to average net assets: | ||||||||||||||||||||
Net investment income (loss) | (1.68 | %) | (1.85 | %) | (1.91 | %) | (2.17 | %) | (1.92 | %) | ||||||||||
Total expenses | 2.35 | % | 2.37 | % | 2.35 | % | 2.36 | % | 2.39 | % | ||||||||||
Portfolio turnover rate | 495 | % | 472 | % | 442 | % | 380 | % | 291 | % |
a | Net investment income (loss) per share was computed using average shares outstanding throughout the period. |
b | Total return does not reflect the impact of any applicable sales charges. |
94 | THE RYDEX FUNDS ANNUAL REPORT | SEE NOTES TO FINANCIAL STATEMENTS. |
PERFORMANCE REPORT AND FUND PROFILE (Unaudited) | March 31, 2015 |
LEISURE FUND
OBJECTIVE: Seeks to provide capital appreciation by investing in companies in leisure and entertainment businesses (“leisure companies”).
For the one-year period ended March 31, 2015, Leisure Fund Investor Class returned 11.15%, compared with 18.26% for the S&P 500 Consumer Discretionary Index. The broader S&P 500 Index returned 12.73%.
The media segment was the largest contributor to return, followed by the hotels, restaurants & leisure segment. The leisure products segment was the largest detractor from return, followed by the automobiles segment.
Among the holdings that contributed the most to the Fund’s performance for the period were Walt Disney Co., Altria Group, Inc., and Electronic Arts, Inc. The Fund’s weakest holdings for the period were Melco Crown Entertainment Ltd. ADR, Wynn Resorts Ltd., and Las Vegas Sands Corp.
Performance displayed represents past performance, which is no guarantee of future results.
Holdings Diversification (Market Exposure as % of Net Assets)
![](https://capedge.com/proxy/N-CSR/0001398344-15-003814/rsecf_31.jpg)
“Holdings Diversification (Market Exposure as % of Net Assets)” excludes any temporary cash investments.
Inception Dates: | |
Investor Class | April 1, 1998 |
Advisor Class | June 3, 1998 |
A-Class | September 1, 2004 |
C-Class | May 3, 2001 |
Ten Largest Holdings (% of Total Net Assets) | |
Walt Disney Co. | 3.8% |
Comcast Corp. — Class A | 3.3% |
Philip Morris International, Inc. | 3.1% |
Altria Group, Inc. | 2.8% |
McDonald’s Corp. | 2.8% |
Starbucks Corp. | 2.4% |
Twenty-First Century Fox, Inc. — Class A | 2.4% |
Time Warner, Inc. | 2.4% |
Las Vegas Sands Corp. | 1.9% |
DIRECTV | 1.9% |
Top Ten Total | 26.8% |
“Ten Largest Holdings” exclude any temporary cash or derivative investments. |
THE RYDEX FUNDS ANNUAL REPORT | 95 |
PERFORMANCE REPORT AND FUND PROFILE (Unaudited)(concluded) | March 31, 2015 |
Cumulative Fund Performance*
![](https://capedge.com/proxy/N-CSR/0001398344-15-003814/rsecf_32.jpg)
![](https://capedge.com/proxy/N-CSR/0001398344-15-003814/rsecf_33.jpg)
Average Annual Returns*
Periods Ended March 31, 2015
1 Year | 5 Year | 10 Year | |
Investor Class Shares | 11.15% | 17.82% | 7.42% |
Advisor Class Shares | 10.66% | 17.23% | 6.89% |
A-Class Shares | 10.86% | 17.50% | 7.15% |
A-Class Shares with sales charge† | 5.59% | 16.36% | 6.63% |
C-Class Shares | 10.04% | 16.63% | 6.34% |
C-Class Shares with CDSC‡ | 9.04% | 16.63% | 6.34% |
S&P 500 Consumer Discretionary Index | 18.26% | 20.11% | 10.25% |
S&P 500 Index | 12.73% | 14.47% | 8.01% |
* | The performance data above represents past performance that is not predictive of future results. The investment return and principal value of an investment in the Fund will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Returns are historical and include changes in principal and reinvested dividends and capital gains and do not reflect the effect of taxes. The S&P 500 Index and the S&P 500 Consumer Discretionary Index are unmanaged indices and, unlike the Fund, have no management fees or operating expenses to reduce their reported returns. The graphs are based on Investor Class shares and A-Class shares only; performance for Advisor Class shares and C-Class shares will vary due to differences in the fee structures. |
† | Fund returns are calculated using the maximum sales charge of 4.75%. |
‡ | Fund returns include a CDSC of 1% if redeemed within 12 months of purchase. |
96 | THE RYDEX FUNDS ANNUAL REPORT |
SCHEDULE OF INVESTMENTS | March 31, 2015 |
LEISURE FUND |
Shares | Value | |||||||
COMMON STOCKS† - 99.4% | ||||||||
RETAIL-RESTAURANTS - 18.0% | ||||||||
McDonald’s Corp. | 19,419 | $ | 1,892,186 | |||||
Starbucks Corp. | 17,419 | 1,649,579 | ||||||
Yum! Brands, Inc. | 14,491 | 1,140,732 | ||||||
Chipotle Mexican Grill, Inc. — Class A* | 1,329 | 864,568 | ||||||
Darden Restaurants, Inc. | 8,429 | 584,467 | ||||||
Restaurant Brands International, Inc. | 12,501 | 480,163 | ||||||
Domino’s Pizza, Inc. | 4,614 | 463,938 | ||||||
Dunkin’ Brands Group, Inc. | 8,880 | 422,333 | ||||||
Panera Bread Co. — Class A* | 2,538 | 406,067 | ||||||
Wendy’s Co. | 36,183 | 394,395 | ||||||
Brinker International, Inc. | 6,354 | 391,152 | ||||||
Jack in the Box, Inc. | 3,950 | 378,884 | ||||||
Cracker Barrel Old Country Store, Inc. | 2,470 | 375,786 | ||||||
Buffalo Wild Wings, Inc.* | 1,937 | 351,062 | ||||||
Bloomin’ Brands, Inc. | 13,910 | 338,430 | ||||||
Texas Roadhouse, Inc. — Class A | 8,534 | 310,894 | ||||||
Cheesecake Factory, Inc. | 6,284 | 309,990 | ||||||
Papa John’s International, Inc. | 5,000 | 309,050 | ||||||
DineEquity, Inc. | 2,640 | 282,506 | ||||||
Sonic Corp. | 7,960 | 252,332 | ||||||
Red Robin Gourmet Burgers, Inc.* | 2,600 | 226,200 | ||||||
Bob Evans Farms, Inc. | 4,440 | 205,394 | ||||||
El Pollo Loco Holdings, Inc.*,1 | 7,440 | 190,538 | ||||||
Total Retail-Restaurants | 12,220,646 | |||||||
CABLE/SATELLITE TV - 12.0% | ||||||||
Comcast Corp. — Class A | 40,205 | 2,270,377 | ||||||
DIRECTV* | 14,989 | 1,275,564 | ||||||
Time Warner Cable, Inc. | 8,138 | 1,219,723 | ||||||
DISH Network Corp. — Class A* | 15,536 | 1,088,452 | ||||||
Charter Communications, Inc. — Class A* | 4,750 | 917,273 | ||||||
Liberty Global plc* | 13,559 | 675,374 | ||||||
Cablevision Systems Corp. — Class A | 23,856 | 436,565 | ||||||
Liberty Global plc — Class A* | 6,139 | 315,974 | ||||||
Total Cable/Satellite TV | 8,199,302 | |||||||
MULTIMEDIA - 11.7% | ||||||||
Walt Disney Co. | 24,521 | 2,572,007 | ||||||
Twenty-First Century Fox, Inc. — Class A | 48,249 | 1,632,746 | ||||||
Time Warner, Inc. | 19,132 | 1,615,506 | ||||||
Thomson Reuters Corp. | 27,464 | 1,113,940 | ||||||
Viacom, Inc. — Class B | 14,902 | 1,017,807 | ||||||
Total Multimedia | 7,952,006 | |||||||
TOBACCO - 9.0% | ||||||||
Philip Morris International, Inc. | 27,593 | 2,078,580 | ||||||
Altria Group, Inc. | 37,839 | 1,892,707 | ||||||
Reynolds American, Inc. | 16,885 | 1,163,545 | ||||||
Lorillard, Inc. | 14,262 | 932,022 | ||||||
Total Tobacco | 6,066,854 | |||||||
HOTELS & MOTELS - 6.3% | ||||||||
Hilton Worldwide Holdings, Inc.* | 35,610 | 1,054,769 | ||||||
Marriott International, Inc. — Class A | 11,163 | 896,612 | ||||||
Starwood Hotels & Resorts Worldwide, Inc. | 8,926 | 745,321 | ||||||
Wyndham Worldwide Corp. | 7,151 | 646,951 | ||||||
Hyatt Hotels Corp. — Class A* | 9,810 | 580,948 | ||||||
La Quinta Holdings, Inc.* | 14,700 | 348,096 | ||||||
Total Hotels & Motels | 4,272,697 | |||||||
CASINO HOTELS - 5.3% | ||||||||
Las Vegas Sands Corp. | 23,967 | 1,319,143 | ||||||
Wynn Resorts Ltd. | 5,641 | 710,089 | ||||||
Melco Crown Entertainment Ltd. ADR | 32,373 | 694,725 | ||||||
MGM Resorts International* | 30,790 | 647,514 | ||||||
Boyd Gaming Corp.* | 17,080 | 242,536 | ||||||
Total Casino Hotels | 3,614,007 | |||||||
TELEVISION - 4.5% | ||||||||
CBS Corp. — Class B | 17,415 | 1,055,871 | ||||||
AMC Networks, Inc. — Class A* | 6,230 | 477,467 | ||||||
Tribune Media Co. — Class A* | 7,300 | 443,913 | ||||||
Sinclair Broadcast Group, Inc. — Class A | 11,270 | 353,991 | ||||||
Liberty Media Corp. — Class C* | 9,140 | 349,148 | ||||||
Liberty Media Corp. — Class A* | 9,030 | 348,107 | ||||||
Total Television | 3,028,497 | |||||||
CRUISE LINES - 4.0% | ||||||||
Carnival Corp. | 25,181 | 1,204,659 | ||||||
Royal Caribbean Cruises Ltd. | 10,252 | 839,126 | ||||||
Norwegian Cruise Line Holdings Ltd.* | 12,980 | 701,050 | ||||||
Total Cruise Lines | 2,744,835 | |||||||
BROADCAST SERVICES/PROGRAM - 4.0% | ||||||||
Discovery Communications, Inc. — Class A* | 27,633 | 849,991 | ||||||
Scripps Networks Interactive, Inc. — Class A | 8,344 | 572,065 | ||||||
Grupo Televisa SAB ADR* | 14,670 | 484,257 | ||||||
Discovery Communications, Inc. — Class C* | 14,626 | 431,101 | ||||||
Starz — Class A* | 10,747 | 369,804 | ||||||
Total Broadcast Services/Program | 2,707,218 | |||||||
BREWERY - 3.8% | ||||||||
Anheuser-Busch InBev N.V. ADR | 7,633 | 930,539 | ||||||
Molson Coors Brewing Co. — Class B | 9,814 | 730,652 | ||||||
Ambev S.A. ADR | 94,860 | 546,394 | ||||||
Boston Beer Company, Inc. — Class A* | 1,400 | 374,360 | ||||||
Total Brewery | 2,581,945 | |||||||
BEVERAGES-WINE/SPIRITS - 3.3% | ||||||||
Constellation Brands, Inc. — Class A* | 8,041 | 934,445 | ||||||
Brown-Forman Corp. — Class B | 9,423 | 851,368 | ||||||
Diageo plc ADR | 4,290 | 474,345 | ||||||
Total Beverages-Wine/Spirits | 2,260,158 |
SEE NOTES TO FINANCIAL STATEMENTS. | THE RYDEX FUNDS ANNUAL REPORT | 97 |
SCHEDULE OF INVESTMENTS (continued) | March 31, 2015 |
LEISURE FUND |
Shares | Value | |||||||
ENTERTAINMENT SOFTWARE - 2.8% | ||||||||
Electronic Arts, Inc.* | 14,557 | $ | 856,170 | |||||
Activision Blizzard, Inc. | 34,511 | 784,262 | ||||||
Take-Two Interactive Software, Inc.* | 11,164 | 284,180 | ||||||
Total Entertainment Software | 1,924,612 | |||||||
PUBLISHING-NEWSPAPERS - 1.7% | ||||||||
News Corp. — Class A* | 36,004 | 576,424 | ||||||
Gannett Company, Inc. | 15,339 | 568,770 | ||||||
Total Publishing-Newspapers | 1,145,194 | |||||||
RESORTS/THEME PARKS - 1.6% | ||||||||
Six Flags Entertainment Corp. | 9,100 | 440,531 | ||||||
Vail Resorts, Inc. | 3,690 | 381,620 | ||||||
SeaWorld Entertainment, Inc. | 13,400 | 258,352 | ||||||
Total Resorts/Theme Parks | 1,080,503 | |||||||
TOYS - 1.6% | ||||||||
Hasbro, Inc. | 8,732 | 552,211 | ||||||
Mattel, Inc. | 22,809 | 521,186 | ||||||
Total Toys | 1,073,397 | |||||||
RECREATIONAL VEHICLES - 1.5% | ||||||||
Polaris Industries, Inc. | 4,170 | 588,387 | ||||||
Brunswick Corp. | 8,157 | 419,678 | ||||||
Total Recreational Vehicles | 1,008,065 | |||||||
COMMERCIAL SERVICES - 1.4% | ||||||||
Aramark | 16,700 | 528,221 | ||||||
Live Nation Entertainment, Inc.* | 17,312 | 436,782 | ||||||
Total Commercial Services | 965,003 | |||||||
THEATERS - 1.2% | ||||||||
Cinemark Holdings, Inc. | 10,066 | 453,675 | ||||||
Regal Entertainment Group — Class A | 16,260 | 371,378 | ||||||
Total Theaters | 825,053 | |||||||
MOTION PICTURES & SERVICES - 1.1% | ||||||||
Lions Gate Entertainment Corp. | 12,487 | 423,559 | ||||||
DreamWorks Animation SKG, Inc. — Class A*,1 | 12,065 | 291,973 | ||||||
Total Motion Pictures & Services | 715,532 | |||||||
MOTORCYCLE/MOTOR SCOOTER - 1.0% | ||||||||
Harley-Davidson, Inc. | 11,721 | 711,934 | ||||||
PROFESSIONAL SPORTS - 0.8% | ||||||||
Madison Square Garden Co. — Class A* | 6,210 | 525,677 | ||||||
CASINO SERVICES - 0.6% | ||||||||
International Game Technology | 23,274 | 405,200 | ||||||
RECREATIONAL CENTERS - 0.5% | ||||||||
Life Time Fitness, Inc.* | 4,549 | 322,797 | ||||||
RETAIL-SPORTING GOODS - 0.5% | ||||||||
Vista Outdoor, Inc.* | 7,500 | 321,150 | ||||||
PUBLISHING-PERIODICALS - 0.5% | ||||||||
Time, Inc. | 13,635 | 305,969 | ||||||
GAMBLING (NON-HOTEL) - 0.4% | ||||||||
Pinnacle Entertainment, Inc.* | 8,086 | 291,824 | ||||||
RACETRACKS - 0.3% | ||||||||
Penn National Gaming, Inc.* | 13,700 | 214,542 | ||||||
Total Common Stocks | ||||||||
(Cost $59,964,877) | 67,484,617 |
98 | THE RYDEX FUNDS ANNUAL REPORT | SEE NOTES TO FINANCIAL STATEMENTS. |
SCHEDULE OF INVESTMENTS (concluded) | March 31, 2015 |
LEISURE FUND |
Face Amount | Value | |||||||
REPURCHASE AGREEMENT††,2 - 0.4% | ||||||||
HSBC Group issued 03/31/15 at 0.03% due 04/01/15 | $ | 242,050 | $ | 242,050 | ||||
Total Repurchase Agreement | ||||||||
(Cost $242,050) | 242,050 | |||||||
SECURITIES LENDING COLLATERAL††,3 - 0.5% | ||||||||
Repurchase Agreements | ||||||||
HSBC Securities, Inc. issued 03/31/15 at 0.10% due 04/01/15 | 215,232 | 215,232 | ||||||
BNP Paribas Securities Corp. issued 03/31/15 at 0.10% due 04/01/15 | 74,040 | 74,040 | ||||||
Barclays Capital, Inc. issued 03/31/15 at 0.10% due 04/01/15 | 38,216 | 38,216 | ||||||
Total Securities Lending Collateral | ||||||||
(Cost $327,488) | 327,488 | |||||||
Total Investments - 100.3% | ||||||||
(Cost $60,534,415) | $ | 68,054,155 | ||||||
Other Assets & Liabilities, net - (0.3)% | (193,603 | ) | ||||||
Total Net Assets - 100.0% | $ | 67,860,552 |
* | Non-income producing security. |
† | Value determined based on Level 1 inputs — See Note 4. |
†† | Value determined based on Level 2 inputs — See Note 4. |
1 | All or portion of this security is on loan at March 31, 2015 — See Note 6. |
2 | Repurchase Agreement — See Note 5. |
3 | Securities lending collateral — See Note 6. |
ADR — American Depositary Receipt | |
plc — Public Limited Company |
SEE NOTES TO FINANCIAL STATEMENTS. | THE RYDEX FUNDS ANNUAL REPORT | 99 |
LEISURE FUND |
STATEMENT OF ASSETS AND LIABILITIES
March 31, 2015
Assets: | ||||
Investments, at value - including $323,506 of securities loaned (cost $59,964,877) | $ | 67,484,617 | ||
Repurchase agreements, at value (cost $569,538) | 569,538 | |||
Total investments (cost $60,534,415) | 68,054,155 | |||
Segregated cash with broker | 4,787 | |||
Receivables: | ||||
Securities sold | 971,884 | |||
Fund shares sold | 463,036 | |||
Dividends | 179,944 | |||
Securities lending income | 1,654 | |||
Foreign taxes reclaim | 415 | |||
Total assets | 69,675,875 | |||
Liabilities: | ||||
Payable for: | ||||
Fund shares redeemed | 1,385,994 | |||
Return of securities loaned | 332,275 | |||
Management fees | 49,120 | |||
Transfer agent and administrative fees | 14,447 | |||
Distribution and service fees | 7,058 | |||
Portfolio accounting fees | 5,779 | |||
Miscellaneous | 20,650 | |||
Total liabilities | 1,815,323 | |||
Commitments and contingent liabilities (Note 10) | — | |||
Net assets | $ | 67,860,552 | ||
Net assets consist of: | ||||
Paid in capital | $ | 61,974,363 | ||
Undistributed net investment income | 285,529 | |||
Accumulated net realized loss on investments | (1,919,080 | ) | ||
Net unrealized appreciation on investments | 7,519,740 | |||
Net assets | $ | 67,860,552 | ||
Investor Class: | ||||
Net assets | $ | 48,494,346 | ||
Capital shares outstanding | 798,255 | |||
Net asset value per share | $ | 60.75 | ||
Advisor Class: | ||||
Net assets | $ | 7,073,710 | ||
Capital shares outstanding | 127,463 | |||
Net asset value per share | $ | 55.50 | ||
A-Class: | ||||
Net assets | $ | 10,702,824 | ||
Capital shares outstanding | 188,152 | |||
Net asset value per share | $ | 56.88 | ||
Maximum offering price per share (Net asset value divided by 95.25%) | $ | 59.72 | ||
C-Class: | ||||
Net assets | $ | 1,589,672 | ||
Capital shares outstanding | 30,154 | |||
Net asset value per share | $ | 52.72 |
STATEMENT OF OPERATIONS
Year Ended March 31, 2015
Investment Income: | ||||
Dividends (net of foreign withholding tax of $5,773) | $ | 761,308 | ||
Income from securities lending, net | 31,579 | |||
Interest | 38 | |||
Total investment income | 792,925 | |||
Expenses: | ||||
Management fees | 301,172 | |||
Transfer agent and administrative fees | 88,580 | |||
Distribution and service fees: | ||||
Advisor Class | 12,784 | |||
A-Class | 8,605 | |||
C-Class | 12,255 | |||
Portfolio accounting fees | 35,431 | |||
Custodian fees | 4,114 | |||
Trustees’ fees* | 2,101 | |||
Line of credit fees | 116 | |||
Tax expense | 85 | |||
Miscellaneous | 42,153 | |||
Total expenses | 507,396 | |||
Net investment income | 285,529 | |||
Net Realized and Unrealized Gain (Loss): | ||||
Net realized gain (loss) on: | ||||
Investments | 5,468,270 | |||
Net realized gain | 5,468,270 | |||
Net change in unrealized appreciation (depreciation) on: | ||||
Investments | (1,903,716 | ) | ||
Net change in unrealized appreciation (depreciation) | (1,903,716 | ) | ||
Net realized and unrealized gain | 3,564,554 | |||
Net increase in net assets resulting from operations | $ | 3,850,083 |
* | Relates to Trustees not deemed “interested persons” within the meaning of Section 2(a)(19) of the 1940 Act. |
100 | THE RYDEX FUNDS ANNUAL REPORT | SEE NOTES TO FINANCIAL STATEMENTS. |
LEISURE FUND |
STATEMENTS OF CHANGES IN NET ASSETS
Year Ended March 31, 2015 | Year Ended March 31, 2014 | |||||||
Increase (Decrease) in Net Assets from Operations: | ||||||||
Net investment income | $ | 285,529 | $ | 94,646 | ||||
Net realized gain on investments | 5,468,270 | 3,028,207 | ||||||
Net change in unrealized appreciation (depreciation) on investments | (1,903,716 | ) | 2,702,964 | |||||
Net increase in net assets resulting from operations | 3,850,083 | 5,825,817 | ||||||
Distributions to shareholders from: | ||||||||
Net investment income | ||||||||
Investor Class | (86,741 | ) | (167,161 | ) | ||||
Advisor Class | (2,421 | ) | (17,486 | ) | ||||
A-Class | (3,222 | ) | (8,764 | ) | ||||
C-Class | (2,262 | ) | (6,684 | ) | ||||
Net realized gains | ||||||||
Investor Class | (819,251 | ) | — | |||||
Advisor Class | (22,866 | ) | — | |||||
A-Class | (30,437 | ) | — | |||||
C-Class | (21,361 | ) | — | |||||
Total distributions to shareholders | (988,561 | ) | (200,095 | ) | ||||
Capital share transactions: | ||||||||
Proceeds from sale of shares | ||||||||
Investor Class | 66,551,897 | 71,016,096 | ||||||
Advisor Class | 92,571,748 | 18,567,120 | ||||||
A-Class | 16,562,062 | 6,654,372 | ||||||
C-Class | 3,107,048 | 1,632,199 | ||||||
Distributions reinvested | ||||||||
Investor Class | 233,102 | 166,413 | ||||||
Advisor Class | 25,054 | 17,418 | ||||||
A-Class | 32,921 | 8,624 | ||||||
C-Class | 22,369 | 6,192 | ||||||
Cost of shares redeemed | ||||||||
Investor Class | (44,791,384 | ) | �� | (73,669,092 | ) | |||
Advisor Class | (88,739,965 | ) | (17,145,281 | ) | ||||
A-Class | (7,989,563 | ) | (6,623,023 | ) | ||||
C-Class | (3,077,948 | ) | (1,347,238 | ) | ||||
Net increase (decrease) from capital share transactions | 34,507,341 | (716,200 | ) | |||||
Net increase in net assets | 37,368,863 | 4,909,522 | ||||||
Net assets: | ||||||||
Beginning of year | 30,491,689 | 25,582,167 | ||||||
End of year | $ | 67,860,552 | $ | 30,491,689 | ||||
Undistributed net investment income at end of year | $ | 285,529 | $ | 94,646 |
SEE NOTES TO FINANCIAL STATEMENTS. | THE RYDEX FUNDS ANNUAL REPORT | 101 |
LEISURE FUND |
STATEMENTS OF CHANGES IN NET ASSETS (concluded)
Year Ended March 31, 2015 | Year Ended March 31, 2014 | |||||||
Capital share activity: | ||||||||
Shares sold | ||||||||
Investor Class | 1,133,061 | 1,384,928 | ||||||
Advisor Class | 1,731,706 | 385,324 | ||||||
A-Class | 301,170 | 134,495 | ||||||
C-Class | 61,845 | 36,131 | ||||||
Shares issued from reinvestment of distributions | ||||||||
Investor Class | 4,036 | 3,093 | ||||||
Advisor Class | 474 | 351 | ||||||
A-Class | 608 | 170 | ||||||
C-Class | 445 | 130 | ||||||
Shares redeemed | ||||||||
Investor Class | (771,348 | ) | (1,445,332 | ) | ||||
Advisor Class | (1,665,419 | ) | (354,839 | ) | ||||
A-Class | (147,523 | ) | (134,028 | ) | ||||
C-Class | (61,892 | ) | (29,738 | ) | ||||
Net increase (decrease) in shares | 587,163 | (19,315 | ) |
102 | THE RYDEX FUNDS ANNUAL REPORT | SEE NOTES TO FINANCIAL STATEMENTS. |
LEISURE FUND |
FINANCIAL HIGHLIGHTS
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.
Investor Class | Year Ended March 31, 2015 | Year Ended March 31, 2014 | Year Ended March 28, 2013 | Year Ended March 31, 2012 | Year Ended March 31, 2011 | |||||||||||||||
Per Share Data | ||||||||||||||||||||
Net asset value, beginning of period | $ | 55.81 | $ | 44.93 | $ | 36.94 | $ | 33.50 | $ | 27.48 | ||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||
Net investment income (loss)a | .52 | .20 | .36 | .17 | (.02 | ) | ||||||||||||||
Net gain (loss) on investments (realized and unrealized) | 5.64 | 10.95 | 7.66 | 3.27 | 6.04 | |||||||||||||||
Total from investment operations | 6.16 | 11.15 | 8.02 | 3.44 | 6.02 | |||||||||||||||
Less distributions from: | ||||||||||||||||||||
Net investment income | (.12 | ) | (.27 | ) | (.03 | ) | — | — | ||||||||||||
Net realized gains | (1.10 | ) | — | — | — | — | ||||||||||||||
Total distributions | (1.22 | ) | (.27 | ) | (.03 | ) | — | — | ||||||||||||
Net asset value, end of period | $ | 60.75 | $ | 55.81 | $ | 44.93 | $ | 36.94 | $ | 33.50 | ||||||||||
Total Returnb | 11.15 | % | 24.83 | % | 21.74 | % | 10.27 | % | 21.91 | % | ||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||
Net assets, end of period (in thousands) | $ | 48,494 | $ | 24,139 | $ | 22,005 | $ | 12,687 | $ | 2,141 | ||||||||||
Ratios to average net assets: | ||||||||||||||||||||
Net investment income (loss) | 0.89 | % | 0.39 | % | 0.92 | % | 0.49 | % | (0.07 | %) | ||||||||||
Total expenses | 1.34 | % | 1.37 | % | 1.35 | % | 1.35 | % | 1.39 | % | ||||||||||
Portfolio turnover rate | 343 | % | 265 | % | 517 | % | 797 | % | 963 | % |
Advisor Class | Year Ended March 31, 2015 | Year Ended March 31, 2014 | Year Ended March 28, 2013 | Year Ended March 31, 2012 | Year Ended March 31, 2011 | |||||||||||||||
Per Share Data | ||||||||||||||||||||
Net asset value, beginning of period | $ | 51.31 | $ | 41.54 | $ | 34.33 | $ | 31.29 | $ | 25.81 | ||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||
Net investment income (loss)a | .30 | (.11 | ) | .29 | (.01 | ) | (.16 | ) | ||||||||||||
Net gain (loss) on investments (realized and unrealized) | 5.11 | 10.15 | 6.95 | 3.05 | 5.64 | |||||||||||||||
Total from investment operations | 5.41 | 10.04 | 7.24 | 3.04 | 5.48 | |||||||||||||||
Less distributions from: | ||||||||||||||||||||
Net investment income | (.12 | ) | (.27 | ) | (.03 | ) | — | — | ||||||||||||
Net realized gains | (1.10 | ) | — | — | — | — | ||||||||||||||
Total distributions | (1.22 | ) | (.27 | ) | (.03 | ) | — | — | ||||||||||||
Net asset value, end of period | $ | 55.50 | $ | 51.31 | $ | 41.54 | $ | 34.33 | $ | 31.29 | ||||||||||
Total Returnb | 10.66 | % | 24.18 | % | 21.12 | % | 9.72 | % | 21.23 | % | ||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||
Net assets, end of period (in thousands) | $ | 7,074 | $ | 3,115 | $ | 1,241 | $ | 1,379 | $ | 582 | ||||||||||
Ratios to average net assets: | ||||||||||||||||||||
Net investment income (loss) | 0.55 | % | (0.23 | %) | 0.80 | % | (0.03 | %) | (0.61 | %) | ||||||||||
Total expenses | 1.83 | % | 1.87 | % | 1.85 | % | 1.86 | % | 1.89 | % | ||||||||||
Portfolio turnover rate | 343 | % | 265 | % | 517 | % | 797 | % | 963 | % |
SEE NOTES TO FINANCIAL STATEMENTS. | THE RYDEX FUNDS ANNUAL REPORT | 103 |
LEISURE FUND |
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.
A-Class | Year Ended March 31, 2015 | Year Ended March 31, 2014 | Year Ended March 28, 2013 | Year Ended March 31, 2012 | Year Ended March 31, 2011 | |||||||||||||||
Per Share Data | ||||||||||||||||||||
Net asset value, beginning of period | $ | 52.46 | $ | 42.35 | $ | 34.91 | $ | 31.75 | $ | 26.13 | ||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||
Net investment income (loss)a | .38 | .04 | .29 | .07 | (.05 | ) | ||||||||||||||
Net gain (loss) on investments (realized and unrealized) | 5.26 | 10.34 | 7.18 | 3.09 | 5.67 | |||||||||||||||
Total from investment operations | 5.64 | 10.38 | 7.47 | 3.16 | 5.62 | |||||||||||||||
Less distributions from: | ||||||||||||||||||||
Net investment income | (.12 | ) | (.27 | ) | (.03 | ) | — | — | ||||||||||||
Net realized gains | (1.10 | ) | — | — | — | — | ||||||||||||||
Total distributions | (1.22 | ) | (.27 | ) | (.03 | ) | — | — | ||||||||||||
Net asset value, end of period | $ | 56.88 | $ | 52.46 | $ | 42.35 | $ | 34.91 | $ | 31.75 | ||||||||||
Total Returnb | 10.86 | % | 24.53 | % | 21.42 | % | 9.95 | % | 21.51 | % | ||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||
Net assets, end of period (in thousands) | $ | 10,703 | $ | 1,778 | $ | 1,409 | $ | 448 | $ | 1,157 | ||||||||||
Ratios to average net assets: | ||||||||||||||||||||
Net investment income (loss) | 0.69 | % | 0.09 | % | 0.80 | % | 0.23 | % | (0.18 | %) | ||||||||||
Total expenses | 1.58 | % | 1.62 | % | 1.60 | % | 1.60 | % | 1.63 | % | ||||||||||
Portfolio turnover rate | 343 | % | 265 | % | 517 | % | 797 | % | 963 | % |
C-Class | Year Ended March 31, 2015 | Year Ended March 31, 2014 | Year Ended March 28, 2013 | Year Ended March 31, 2012 | Year Ended March 31, 2011 | |||||||||||||||
Per Share Data | ||||||||||||||||||||
Net asset value, beginning of period | $ | 49.07 | $ | 39.92 | $ | 33.16 | $ | 30.36 | $ | 25.19 | ||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||
Net investment income (loss)a | (.19 | ) | (.27 | ) | .01 | (.15 | ) | (.30 | ) | |||||||||||
Net gain (loss) on investments (realized and unrealized) | 5.06 | 9.69 | 6.78 | 2.95 | 5.47 | |||||||||||||||
Total from investment operations | 4.87 | 9.42 | 6.79 | 2.80 | 5.17 | |||||||||||||||
Less distributions from: | ||||||||||||||||||||
Net investment income | (.12 | ) | (.27 | ) | (.03 | ) | — | — | ||||||||||||
Net realized gains | (1.10 | ) | — | — | — | — | ||||||||||||||
Total distributions | (1.22 | ) | (.27 | ) | (.03 | ) | — | — | ||||||||||||
Net asset value, end of period | $ | 52.72 | $ | 49.07 | $ | 39.92 | $ | 33.16 | $ | 30.36 | ||||||||||
Total Returnb | 10.04 | % | 23.61 | % | 20.54 | % | 9.19 | % | 20.52 | % | ||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||
Net assets, end of period (in thousands) | $ | 1,590 | $ | 1,460 | $ | 928 | $ | 1,345 | $ | 828 | ||||||||||
Ratios to average net assets: | ||||||||||||||||||||
Net investment income (loss) | (0.37 | %) | (0.59 | %) | 0.03 | % | (0.50 | %) | (1.13 | %) | ||||||||||
Total expenses | 2.35 | % | 2.37 | % | 2.35 | % | 2.35 | % | 2.39 | % | ||||||||||
Portfolio turnover rate | 343 | % | 265 | % | 517 | % | 797 | % | 963 | % |
a | Net investment income (loss) per share was computed using average shares outstanding throughout the period. |
b | Total return does not reflect the impact of any applicable sales charges. |
104 | THE RYDEX FUNDS ANNUAL REPORT | SEE NOTES TO FINANCIAL STATEMENTS. |
PERFORMANCE REPORT AND FUND PROFILE (Unaudited) | March 31, 2015 |
PRECIOUS METALS FUND
OBJECTIVE: Seeks to provide capital appreciation by investing in U.S. and foreign companies that are involved in the precious metals sector, including exploration, mining, production and development, and other precious metals-related services (“precious metals companies”).
For the one-year period ended March 31, 2015, Precious Metals Fund Investor Class returned -27.88%, compared with 4.97% for the S&P 500 Materials Index. The broader S&P 500 Index returned 12.73%.
All segments detracted from return for the period. The gold mining segment was the main detractor from return, followed by the silver mining segment. The precious metals & minerals segment contributed least to return.
The leading contributors to return were RTI International Metals, Inc., Dominion Diamond Corp., and Gold Fields Ltd. ADR. The leading detractors were Yamana Gold, Inc., Barrick Gold Corp., and Freeport-McMoRan, Inc.
Performance displayed represents past performance, which is no guarantee of future results.
Holdings Diversification (Market Exposure as % of Net Assets)
![](https://capedge.com/proxy/N-CSR/0001398344-15-003814/rsecf_34.jpg)
“Holdings Diversification (Market Exposure as % of Net Assets)” excludes any temporary cash investments.
Inception Dates: | |
Investor Class | December 1, 1993 |
Advisor Class | August 1, 2003 |
A-Class | September 1, 2004 |
C-Class | April 27, 2001 |
Ten Largest Holdings (% of Total Net Assets) | |
Goldcorp, Inc. | 6.9% |
Newmont Mining Corp. | 6.7% |
Barrick Gold Corp. | 6.5% |
Agnico Eagle Mines Ltd. | 5.0% |
Silver Wheaton Corp. | 5.0% |
Franco-Nevada Corp. | 4.9% |
Randgold Resources Ltd. ADR | 4.5% |
Freeport-McMoRan, Inc. | 4.2% |
Market Vectors Junior Gold Miners ETF | 4.1% |
Royal Gold, Inc. | 3.8% |
Top Ten Total | 51.6% |
“Ten Largest Holdings” exclude any temporary cash or derivative investments. |
THE RYDEX FUNDS ANNUAL REPORT | 105 |
PERFORMANCE REPORT AND FUND PROFILE (Unaudited)(concluded) | March 31, 2015 |
Cumulative Fund Performance*
![](https://capedge.com/proxy/N-CSR/0001398344-15-003814/rsecf_35.jpg)
![](https://capedge.com/proxy/N-CSR/0001398344-15-003814/rsecf_36.jpg)
Average Annual Returns*
Periods Ended March 31, 2015
1 Year | 5 Year | 10 Year | |
Investor Class Shares | -27.88% | -15.25% | -2.72% |
Advisor Class Shares | -28.24% | -15.67% | -3.20% |
A-Class Shares | -28.13% | -15.48% | -2.96% |
A-Class Shares with sales charge† | -31.54% | -16.30% | -3.44% |
C-Class Shares | -28.64% | -16.10% | -3.70% |
C-Class Shares with CDSC‡ | -29.34% | -16.10% | -3.70% |
S&P 500 Materials Index | 4.97% | 10.82% | 7.55% |
S&P 500 Index | 12.73% | 14.47% | 8.01% |
* | The performance data above represents past performance that is not predictive of future results. The investment return and principal value of an investment in the Fund will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Returns are historical and include changes in principal and reinvested dividends and capital gains and do not reflect the effect of taxes. The S&P 500 Index and the S&P 500 Materials Index are unmanaged indices and, unlike the Fund, have no management fees or operating expenses to reduce their reported returns. The graphs are based on Investor Class shares and A-Class shares only; performance for Advisor Class shares and C-Class shares will vary due to differences in fee structures. |
† | Fund returns are calculated using the maximum sales charge of 4.75%. |
‡ | Fund returns include a CDSC of 1% if redeemed within 12 months of purchase. |
106 | THE RYDEX FUNDS ANNUAL REPORT |
SCHEDULE OF INVESTMENTS | March 31, 2015 |
PRECIOUS METALS FUND |
Shares | Value | |||||||
COMMON STOCKS† - 95.5% | ||||||||
GOLD MINING - 70.3% | ||||||||
Goldcorp, Inc. | 187,853 | $ | 3,403,896 | |||||
Newmont Mining Corp. | 151,488 | 3,288,805 | ||||||
Barrick Gold Corp. | 291,742 | 3,197,492 | ||||||
Agnico Eagle Mines Ltd. | 89,350 | 2,496,439 | ||||||
Franco-Nevada Corp. | 49,775 | 2,416,079 | ||||||
Randgold Resources Ltd. ADR | 31,997 | 2,216,432 | ||||||
Royal Gold, Inc. | 29,913 | 1,887,809 | ||||||
AngloGold Ashanti Ltd. ADR* | 185,184 | 1,729,619 | ||||||
Eldorado Gold Corp. | 323,340 | 1,484,131 | ||||||
Cia de Minas Buenaventura S.A.A. ADR | 138,679 | 1,404,818 | ||||||
Gold Fields Ltd. ADR | 339,858 | 1,362,831 | ||||||
Yamana Gold, Inc. | 376,131 | 1,350,310 | ||||||
Kinross Gold Corp.* | 524,639 | 1,175,191 | ||||||
Sibanye Gold Ltd. ADR | 133,235 | 1,136,495 | ||||||
New Gold, Inc.* | 291,859 | 989,402 | ||||||
NOVAGOLD Resources, Inc.*,1 | 261,160 | 773,034 | ||||||
Alamos Gold, Inc.1 | 120,404 | 705,567 | ||||||
Harmony Gold Mining Company Ltd. ADR*,1 | 383,499 | 667,288 | ||||||
Pretium Resources, Inc.*,1 | 130,575 | 658,098 | ||||||
IAMGOLD Corp.* | 346,031 | 647,078 | ||||||
AuRico Gold, Inc. | 230,859 | 639,479 | ||||||
Sandstorm Gold Ltd.*,1 | 162,095 | 531,672 | ||||||
Seabridge Gold, Inc.*,1 | 80,883 | 444,048 | ||||||
Gold Resource Corp. | 20,310 | 64,789 | ||||||
McEwen Mining, Inc.* | 59,510 | 60,700 | ||||||
B2Gold Corp.* | 34,720 | 52,774 | ||||||
Total Gold Mining | 34,784,276 | |||||||
SILVER MINING - 11.5% | ||||||||
Silver Wheaton Corp. | 128,696 | 2,447,798 | ||||||
Pan American Silver Corp. | 114,898 | 1,007,655 | ||||||
Hecla Mining Co.1 | 274,307 | 817,435 | ||||||
First Majestic Silver Corp.* | 140,573 | 760,500 | ||||||
Silver Standard Resources, Inc.*,1 | 127,608 | 578,064 | ||||||
Endeavour Silver Corp.* | 27,570 | 52,383 | ||||||
Total Silver Mining | 5,663,835 | |||||||
METAL-COPPER - 4.7% | ||||||||
Freeport-McMoRan, Inc. | 110,516 | 2,094,278 | ||||||
Southern Copper Corp. | 8,040 | 234,607 | ||||||
Total Metal-Copper | 2,328,885 | |||||||
PRECIOUS METALS - 4.6% | ||||||||
Tahoe Resources, Inc. | 95,313 | 1,044,631 | ||||||
Coeur Mining, Inc.*,1 | 131,302 | 618,432 | ||||||
Primero Mining Corp.*,1 | 177,763 | 609,727 | ||||||
Total Precious Metals | 2,272,790 | |||||||
PLATINUM - 2.5% | ||||||||
Stillwater Mining Co.* | 95,854 | 1,238,434 | ||||||
METAL PROCESSORS & FABRICATIONS - 1.8% | ||||||||
RTI International Metals, Inc.* | 24,686 | 886,474 | ||||||
DIAMONDS/PRECIOUS STONES - 0.1% | ||||||||
Dominion Diamond Corp.* | 3,390 | 57,935 | ||||||
Total Common Stocks | ||||||||
(Cost $37,145,474) | 47,232,629 | |||||||
EXCHANGE-TRADED FUNDS† - 4.1% | ||||||||
Market Vectors Junior Gold Miners ETF | 88,153 | 2,004,599 | ||||||
Total Exchange-Traded Funds | ||||||||
(Cost $2,058,006) | 2,004,599 | |||||||
Face Amount | ||||||||
REPURCHASE AGREEMENT††,2 - 0.6% | ||||||||
HSBC Group issued 03/31/15 at 0.03% due 04/01/15 | $ | 321,629 | 321,629 | |||||
Total Repurchase Agreement | ||||||||
(Cost $321,629) | 321,629 |
SEE NOTES TO FINANCIAL STATEMENTS. | THE RYDEX FUNDS ANNUAL REPORT | 107 |
SCHEDULE OF INVESTMENTS (concluded) | March 31, 2015 |
PRECIOUS METALS FUND |
Face Amount | Value | |||||||
SECURITIES LENDING COLLATERAL††,3 - 5.5% | ||||||||
Repurchase Agreements | ||||||||
HSBC Securities, Inc. issued 03/31/15 at 0.10% due 04/01/15 | $ | 1,789,709 | $ | 1,789,709 | ||||
BNP Paribas Securities Corp. issued 03/31/15 at 0.10% due 04/01/15 | 615,660 | 615,660 | ||||||
Barclays Capital, Inc. issued 03/31/15 at 0.10% due 04/01/15 | 317,781 | 317,781 | ||||||
Total Securities Lending Collateral | ||||||||
(Cost $2,723,150) | 2,723,150 | |||||||
Total Investments - 105.7% | ||||||||
(Cost $42,248,259) | $ | 52,282,007 | ||||||
Other Assets & Liabilities, net - (5.7)% | (2,836,237 | ) | ||||||
Total Net Assets - 100.0% | $ | 49,445,770 |
* | Non-income producing security. |
† | Value determined based on Level 1 inputs — See Note 4. |
†† | Value determined based on Level 2 inputs — See Note 4. |
1 | All or portion of this security is on loan at March 31, 2015 — See Note 6. |
2 | Repurchase Agreement — See Note 5. |
3 | Securities lending collateral — See Note 6. |
ADR — American Depositary Receipt |
108 | THE RYDEX FUNDS ANNUAL REPORT | SEE NOTES TO FINANCIAL STATEMENTS. |
PRECIOUS METALS FUND |
STATEMENT OF ASSETS AND LIABILITIES
March 31, 2015
Assets: | ||||
Investments, at value - including $2,546,558 of securities loaned (cost $39,203,480) | $ | 49,237,228 | ||
Repurchase agreements, at value (cost $3,044,779) | 3,044,779 | |||
Total investments (cost $42,248,259) | 52,282,007 | |||
Segregated cash with broker | 39,801 | |||
Receivables: | ||||
Fund shares sold | 9,096,132 | |||
Dividends | 38,292 | |||
Securities lending income | 5,395 | |||
Total assets | 61,461,627 | |||
Liabilities: | ||||
Payable for: | ||||
Securities purchased | 6,909,333 | |||
Return of securities loaned | 2,762,950 | |||
Fund shares redeemed | 2,273,469 | |||
Management fees | 26,641 | |||
Transfer agent and administrative fees | 8,881 | |||
Distribution and service fees | 7,074 | |||
Portfolio accounting fees | 3,552 | |||
Miscellaneous | 23,957 | |||
Total liabilities | 12,015,857 | |||
Commitments and contingent liabilities (Note 10) | — | |||
Net assets | $ | 49,445,770 | ||
Net assets consist of: | ||||
Paid in capital | $ | 93,338,410 | ||
Accumulated net investment loss | (249,582 | ) | ||
Accumulated net realized loss on investments | (53,676,804 | ) | ||
Net unrealized appreciation on investments | 10,033,746 | |||
Net assets | $ | 49,445,770 | ||
Investor Class: | ||||
Net assets | $ | 30,527,636 | ||
Capital shares outstanding | 1,215,855 | |||
Net asset value per share | $ | 25.11 | ||
Advisor Class: | ||||
Net assets | $ | 8,400,225 | ||
Capital shares outstanding | 355,373 | |||
Net asset value per share | $ | 23.64 | ||
A-Class: | ||||
Net assets | $ | 4,927,551 | ||
Capital shares outstanding | 202,927 | |||
Net asset value per share | $ | 24.28 | ||
Maximum offering price per share (Net asset value divided by 95.25%) | $ | 25.49 | ||
C-Class: | ||||
Net assets | $ | 5,590,358 | ||
Capital shares outstanding | 257,918 | |||
Net asset value per share | $ | 21.67 |
STATEMENT OF OPERATIONS
Year Ended March 31, 2015
Investment Income: | ||||
Dividends (net of foreign withholding tax of $50,032) | $ | 630,055 | ||
Income from securities lending, net | 106,545 | |||
Interest | 59 | |||
Total investment income | 736,659 | |||
Expenses: | ||||
Management fees | 432,300 | |||
Transfer agent and administrative fees | 144,100 | |||
Distribution and service fees: | ||||
Advisor Class | 18,999 | |||
A-Class | 13,077 | |||
C-Class | 83,580 | |||
Portfolio accounting fees | 57,640 | |||
Registration fees | 47,118 | |||
Custodian fees | 6,730 | |||
Trustees’ fees* | 4,937 | |||
Line of credit fees | 253 | |||
Miscellaneous | 28,172 | |||
Total expenses | 836,906 | |||
Net investment loss | (100,247 | ) | ||
Net Realized and Unrealized Gain (Loss): | ||||
Net realized gain (loss) on: | ||||
Investments | (4,218,177 | ) | ||
Foreign currency | (8 | ) | ||
Net realized loss | (4,218,185 | ) | ||
Net change in unrealized appreciation (depreciation) on: | ||||
Investments | (12,927,538 | ) | ||
Foreign currency | 2 | |||
Net change in unrealized appreciation (depreciation) | (12,927,536 | ) | ||
Net realized and unrealized loss | (17,145,721 | ) | ||
Net decrease in net assets resulting from operations | $ | (17,245,968 | ) |
* | Relates to Trustees not deemed “interested persons” within the meaning of Section 2(a)(19) of the 1940 Act. |
SEE NOTES TO FINANCIAL STATEMENTS. | THE RYDEX FUNDS ANNUAL REPORT | 109 |
PRECIOUS METALS FUND |
STATEMENTS OF CHANGES IN NET ASSETS
Year Ended March 31, 2015 | Year Ended March 31, 2014 | |||||||
Increase (Decrease) in Net Assets from Operations: | ||||||||
Net investment income (loss) | $ | (100,247 | ) | $ | 531,727 | |||
Net realized loss on investments | (4,218,185 | ) | (21,811,865 | ) | ||||
Net change in unrealized appreciation (depreciation) on investments | (12,927,536 | ) | (18,958,806 | ) | ||||
Net decrease in net assets resulting from operations | (17,245,968 | ) | (40,238,944 | ) | ||||
Distributions to shareholders from: | ||||||||
Net investment income | ||||||||
Investor Class | (942,983 | ) | (214,700 | ) | ||||
Advisor Class | (77,995 | ) | (17,921 | ) | ||||
A-Class | (81,766 | ) | (18,796 | ) | ||||
C-Class | (226,581 | ) | (51,914 | ) | ||||
Total distributions to shareholders | (1,329,325 | ) | (303,331 | ) | ||||
Capital share transactions: | ||||||||
Proceeds from sale of shares | ||||||||
Investor Class | 228,681,951 | 338,664,021 | ||||||
Advisor Class | 81,461,920 | 73,664,880 | ||||||
A-Class | 34,559,485 | 8,057,501 | ||||||
C-Class | 19,812,912 | 25,324,298 | ||||||
Distributions reinvested | ||||||||
Investor Class | 884,145 | 205,735 | ||||||
Advisor Class | 77,943 | 17,782 | ||||||
A-Class | 67,165 | 15,489 | ||||||
C-Class | 219,239 | 49,648 | ||||||
Cost of shares redeemed | ||||||||
Investor Class | (228,926,568 | ) | (336,034,319 | ) | ||||
Advisor Class | (76,224,107 | ) | (71,421,958 | ) | ||||
A-Class | (33,136,533 | ) | (6,716,766 | ) | ||||
C-Class | (20,795,740 | ) | (29,074,122 | ) | ||||
Net increase from capital share transactions | 6,681,812 | 2,752,189 | ||||||
Net decrease in net assets | (11,893,481 | ) | (37,790,086 | ) | ||||
Net assets: | ||||||||
Beginning of year | 61,339,251 | 99,129,337 | ||||||
End of year | $ | 49,445,770 | $ | 61,339,251 | ||||
(Accumulated net investment loss)/Undistributed net investment income at end of year | $ | (249,582 | ) | $ | 741,411 | |||
Capital share activity: | ||||||||
Shares sold | ||||||||
Investor Class | 7,016,300 | 8,791,258 | ||||||
Advisor Class | 2,837,152 | 2,073,315 | ||||||
A-Class | 1,168,449 | 216,466 | ||||||
C-Class | 697,217 | 747,420 | ||||||
Shares issued from reinvestment of distributions | ||||||||
Investor Class | 30,498 | 6,301 | ||||||
Advisor Class | 2,851 | 574 | ||||||
A-Class | 2,392 | 488 | ||||||
C-Class | 8,684 | 1,730 | ||||||
Shares redeemed | ||||||||
Investor Class | (7,028,380 | ) | (8,982,178 | ) | ||||
Advisor Class | (2,602,821 | ) | (2,019,696 | ) | ||||
A-Class | (1,118,576 | ) | (185,372 | ) | ||||
C-Class | (743,130 | ) | (860,994 | ) | ||||
Net increase (decrease) in shares | 270,636 | (210,688 | ) |
110 | THE RYDEX FUNDS ANNUAL REPORT | SEE NOTES TO FINANCIAL STATEMENTS. |
PRECIOUS METALS FUND |
FINANCIAL HIGHLIGHTS
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.
Investor Class | Year Ended March 31, 2015 | Year Ended March 31, 2014 | Year Ended March 28, 2013 | Year Ended March 31, 2012 | Year Ended March 31, 2011 | |||||||||||||||
Per Share Data | ||||||||||||||||||||
Net asset value, beginning of period | $ | 35.78 | $ | 51.65 | $ | 65.73 | $ | 86.74 | $ | 61.73 | ||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||
Net investment income (loss)a | .01 | .36 | .34 | (.02 | ) | (.28 | ) | |||||||||||||
Net gain (loss) on investments (realized and unrealized) | (9.88 | ) | (16.06 | ) | (12.12 | ) | (20.70 | ) | 25.32 | |||||||||||
Total from investment operations | (9.87 | ) | (15.70 | ) | (11.78 | ) | (20.72 | ) | 25.04 | |||||||||||
Less distributions from: | ||||||||||||||||||||
Net investment income | (.80 | ) | (.17 | ) | (.10 | ) | (.29 | ) | (.03 | ) | ||||||||||
Net realized gains | — | — | (2.20 | ) | — | — | ||||||||||||||
Total distributions | (.80 | ) | (.17 | ) | (2.30 | ) | (.29 | ) | (.03 | ) | ||||||||||
Net asset value, end of period | $ | 25.11 | $ | 35.78 | $ | 51.65 | $ | 65.73 | $ | 86.74 | ||||||||||
Total Returnb | (27.88 | %) | (30.37 | %) | (18.60 | %) | (23.91 | %) | 40.57 | % | ||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||
Net assets, end of period (in thousands) | $ | 30,528 | $ | 42,846 | $ | 71,386 | $ | 79,637 | $ | 141,798 | ||||||||||
Ratios to average net assets: | ||||||||||||||||||||
Net investment income (loss) | 0.04 | % | 0.96 | % | 0.55 | % | (0.03 | %) | (0.37 | %) | ||||||||||
Total expensesc | 1.25 | % | 1.27 | % | 1.25 | % | 1.26 | % | 1.28 | % | ||||||||||
Portfolio turnover rate | 371 | % | 348 | % | 206 | % | 235 | % | 322 | % |
Advisor Class | Year Ended March 31, 2015 | Year Ended March 31, 2014 | Year Ended March 28, 2013 | Year Ended March 31, 2012 | Year Ended March 31, 2011 | |||||||||||||||
Per Share Data | ||||||||||||||||||||
Net asset value, beginning of period | $ | 33.92 | $ | 49.20 | $ | 63.02 | $ | 83.59 | $ | 59.79 | ||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||
Net investment income (loss)a | (.14 | ) | .12 | (.02 | ) | (.44 | ) | (.61 | ) | |||||||||||
Net gain (loss) on investments (realized and unrealized) | (9.34 | ) | (15.23 | ) | (11.50 | ) | (19.84 | ) | 24.44 | |||||||||||
Total from investment operations | (9.48 | ) | (15.11 | ) | (11.52 | ) | (20.28 | ) | 23.83 | |||||||||||
Less distributions from: | ||||||||||||||||||||
Net investment income | (.80 | ) | (.17 | ) | (.10 | ) | (.29 | ) | (.03 | ) | ||||||||||
Net realized gains | — | — | (2.20 | ) | — | — | ||||||||||||||
Total distributions | (.80 | ) | (.17 | ) | (2.30 | ) | (.29 | ) | (.03 | ) | ||||||||||
Net asset value, end of period | $ | 23.64 | $ | 33.92 | $ | 49.20 | $ | 63.02 | $ | 83.59 | ||||||||||
Total Returnb | (28.24 | %) | (30.71 | %) | (18.99 | %) | (24.29 | %) | 39.87 | % | ||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||
Net assets, end of period (in thousands) | $ | 8,400 | $ | 4,009 | $ | 3,148 | $ | 9,610 | $ | 30,418 | ||||||||||
Ratios to average net assets: | ||||||||||||||||||||
Net investment income (loss) | (0.45 | %) | 0.34 | % | (0.04 | %) | (0.59 | %) | (0.86 | %) | ||||||||||
Total expensesc | 1.75 | % | 1.77 | % | 1.75 | % | 1.76 | % | 1.78 | % | ||||||||||
Portfolio turnover rate | 371 | % | 348 | % | 206 | % | 235 | % | 322 | % |
SEE NOTES TO FINANCIAL STATEMENTS. | THE RYDEX FUNDS ANNUAL REPORT | 111 |
PRECIOUS METALS FUND |
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.
A-Class | Year Ended March 31, 2015 | Year Ended March 31, 2014 | Year Ended March 28, 2013 | Year Ended March 31, 2012 | Year Ended March 31, 2011 | |||||||||||||||
Per Share Data | ||||||||||||||||||||
Net asset value, beginning of period | $ | 34.75 | $ | 50.28 | $ | 64.21 | $ | 84.97 | $ | 60.63 | ||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||
Net investment income (loss)a | (.10 | ) | .16 | .21 | (.22 | ) | (.45 | ) | ||||||||||||
Net gain (loss) on investments (realized and unrealized) | (9.57 | ) | (15.52 | ) | (11.84 | ) | (20.25 | ) | 24.82 | |||||||||||
Total from investment operations | (9.67 | ) | (15.36 | ) | (11.63 | ) | (20.47 | ) | 24.37 | |||||||||||
Less distributions from: | ||||||||||||||||||||
Net investment income | (.80 | ) | (.17 | ) | (.10 | ) | (.29 | ) | (.03 | ) | ||||||||||
Net realized gains | — | — | (2.20 | ) | — | — | ||||||||||||||
Total distributions | (.80 | ) | (.17 | ) | (2.30 | ) | (.29 | ) | (.03 | ) | ||||||||||
Net asset value, end of period | $ | 24.28 | $ | 34.75 | $ | 50.28 | $ | 64.21 | $ | 84.97 | ||||||||||
Total Returnb | (28.13 | %) | (30.52 | %) | (18.80 | %) | (24.13 | %) | 40.21 | % | ||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||
Net assets, end of period (in thousands) | $ | 4,928 | $ | 5,235 | $ | 5,988 | $ | 6,412 | $ | 14,919 | ||||||||||
Ratios to average net assets: | ||||||||||||||||||||
Net investment income (loss) | (0.29 | %) | 0.45 | % | 0.35 | % | (0.30 | %) | (0.63 | %) | ||||||||||
Total expensesc | 1.50 | % | 1.52 | % | 1.50 | % | 1.51 | % | 1.53 | % | ||||||||||
Portfolio turnover rate | 371 | % | 348 | % | 206 | % | 235 | % | 322 | % |
C-Class | Year Ended March 31, 2015 | Year Ended March 31, 2014 | Year Ended March 28, 2013 | Year Ended March 31, 2012 | Year Ended March 31, 2011 | |||||||||||||||
Per Share Data | ||||||||||||||||||||
Net asset value, beginning of period | $ | 31.34 | $ | 45.72 | $ | 59.02 | $ | 78.70 | $ | 56.58 | ||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||
Net investment income (loss)a | (.29 | ) | (.07 | ) | (.23 | ) | (.72 | ) | (.94 | ) | ||||||||||
Net gain (loss) on investments (realized and unrealized) | (8.58 | ) | (14.14 | ) | (10.77 | ) | (18.67 | ) | 23.09 | |||||||||||
Total from investment operations | (8.87 | ) | (14.21 | ) | (11.00 | ) | (19.39 | ) | 22.15 | |||||||||||
Less distributions from: | ||||||||||||||||||||
Net investment income | (.80 | ) | (.17 | ) | (.10 | ) | (.29 | ) | (.03 | ) | ||||||||||
Net realized gains | — | — | (2.20 | ) | — | — | ||||||||||||||
Total distributions | (.80 | ) | (.17 | ) | (2.30 | ) | (.29 | ) | (.03 | ) | ||||||||||
Net asset value, end of period | $ | 21.67 | $ | 31.34 | $ | 45.72 | $ | 59.02 | $ | 78.70 | ||||||||||
Total Returnb | (28.64 | %) | (31.05 | %) | (19.39 | %) | (24.68 | %) | 39.18 | % | ||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||
Net assets, end of period (in thousands) | $ | 5,590 | $ | 9,250 | $ | 18,608 | $ | 26,533 | $ | 39,650 | ||||||||||
Ratios to average net assets: | ||||||||||||||||||||
Net investment income (loss) | (0.99 | %) | (0.22 | %) | (0.42 | %) | (1.04 | %) | (1.37 | %) | ||||||||||
Total expensesc | 2.25 | % | 2.27 | % | 2.25 | % | 2.26 | % | 2.28 | % | ||||||||||
Portfolio turnover rate | 371 | % | 348 | % | 206 | % | 235 | % | 322 | % |
a | Net investment income (loss) per share was computed using average shares outstanding throughout the period. |
b | Total return does not reflect the impact of any applicable sales charges. |
c | Does not include expenses of the underlying funds in which the Fund invests. |
112 | THE RYDEX FUNDS ANNUAL REPORT | SEE NOTES TO FINANCIAL STATEMENTS. |
PERFORMANCE REPORT AND FUND PROFILE (Unaudited) | March 31, 2015 |
REAL ESTATE FUND
OBJECTIVE: Seeks to provide capital appreciation by investing in companies that are involved in the real estate industry, including real estate investment trusts (“REITs”) (collectively, “real estate companies”).
For the one-year period ended March 31, 2015, Real Estate Fund H-Class returned 15.55%, compared to a return of 24.17% for the MSCI U.S. REIT Index. The broader S&P 500 Index returned 12.73%.
Retail REITs contributed most to the performance of the Fund, followed by residential REITs. The real estate services segment was the largest detractor from performance, followed by the specialty chemicals segment.
The strongest performing holdings included Simon Property Group, Inc., Equity Residential, and General Growth Properties, Inc. The main detractors were American Realty Capital Properties, Inc., E-House China Holdings Ltd. ADR, and Altisource Portfolio Solutions S.A.
Performance displayed represents past performance, which is no guarantee of future results.
Holdings Diversification (Market Exposure as % of Net Assets)
![](https://capedge.com/proxy/N-CSR/0001398344-15-003814/rsecf_37.jpg)
“Holdings Diversification (Market Exposure as % of Net Assets)” excludes any temporary cash investments.
Inception Dates: | |
A-Class | September 1, 2004 |
C-Class | February 20, 2004 |
H-Class | February 20, 2004 |
Ten Largest Holdings (% of Total Net Assets) | |
Simon Property Group, Inc. | 2.4% |
American Tower Corp. — Class A | 1.8% |
Public Storage | 1.7% |
Health Care REIT, Inc. | 1.5% |
Equity Residential | 1.5% |
Crown Castle International Corp. | 1.5% |
General Growth Properties, Inc. | 1.5% |
Ventas, Inc. | 1.4% |
AvalonBay Communities, Inc. | 1.4% |
Prologis, Inc. | 1.4% |
Top Ten Total | 16.1% |
“Ten Largest Holdings” exclude any temporary cash or derivative investments. |
THE RYDEX FUNDS ANNUAL REPORT | 113 |
PERFORMANCE REPORT AND FUND PROFILE (Unaudited)(concluded) | March 31, 2015 |
Cumulative Fund Performance*
![](https://capedge.com/proxy/N-CSR/0001398344-15-003814/rsecf_38.jpg)
![](https://capedge.com/proxy/N-CSR/0001398344-15-003814/rsecf_39.jpg)
Average Annual Returns*
Periods Ended March 31, 2015
1 Year | 5 Year | 10 Year | |
A-Class Shares | 15.58% | 12.06% | 5.30% |
A-Class Shares with sales charge† | 10.08% | 10.98% | 4.79% |
C-Class Shares | 14.73% | 11.16% | 4.48% |
C-Class Shares with CDSC‡ | 13.73% | 11.16% | 4.48% |
H-Class Shares | 15.55% | 12.03% | 5.27% |
MSCI U.S. REIT Index | 24.17% | 15.89% | 9.66% |
S&P 500 Index | 12.73% | 14.47% | 8.01% |
* | The performance data above represents past performance that is not predictive of future results. The investment return and principal value of an investment in the Fund will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Returns are historical and include changes in principal and reinvested dividends and capital gains and do not reflect the effect of taxes. The S&P 500 Index and the MSCI U.S. REIT Index are unmanaged indices and, unlike the Fund, have no management fees or operating expenses to reduce their reported returns. The graphs are based on A-Class shares and H-Class shares only; performance for C-Class shares will vary due to differences in fee structures. |
† | Fund returns are calculated using the maximum sales charge of 4.75%. |
‡ | Fund returns include a CDSC of 1% if redeemed within 12 months of purchase. |
114 | THE RYDEX FUNDS ANNUAL REPORT |
SCHEDULE OF INVESTMENTS | March 31, 2015 |
REAL ESTATE FUND |
Shares | Value | |||||||
COMMON STOCKS† - 99.6% | ||||||||
REITs - 90.5% | ||||||||
REITs-DIVERSIFIED - 17.2% | ||||||||
American Tower Corp. — Class A | 9,032 | $ | 850,362 | |||||
Crown Castle International Corp. | 8,420 | 694,987 | ||||||
Vornado Realty Trust | 5,801 | 649,712 | ||||||
Weyerhaeuser Co. | 16,785 | 556,423 | ||||||
Digital Realty Trust, Inc. | 6,318 | 416,735 | ||||||
Plum Creek Timber Company, Inc. | 8,680 | 377,146 | ||||||
Duke Realty Corp. | 17,150 | 373,356 | ||||||
Lamar Advertising Co. — Class A | 5,580 | 330,727 | ||||||
Liberty Property Trust | 8,746 | 312,232 | ||||||
Corrections Corporation of America | 7,317 | 294,582 | ||||||
Outfront Media, Inc. | 9,180 | 274,665 | ||||||
Retail Properties of America, Inc. — Class A | 16,636 | 266,675 | ||||||
EPR Properties | 4,289 | 257,469 | ||||||
GEO Group, Inc. | 5,780 | 252,817 | ||||||
Rayonier, Inc. | 9,218 | 248,517 | ||||||
PS Business Parks, Inc. | 2,560 | 212,582 | ||||||
Cousins Properties, Inc. | 19,629 | 208,067 | ||||||
Lexington Realty Trust | 20,941 | 205,850 | ||||||
DuPont Fabros Technology, Inc. | 6,239 | 203,891 | ||||||
New Residential Investment Corp. | 13,050 | 196,142 | ||||||
Washington Real Estate Investment Trust | 6,950 | 192,029 | ||||||
American Assets Trust, Inc. | 4,420 | 191,298 | ||||||
Potlatch Corp. | 4,419 | 176,937 | ||||||
STAG Industrial, Inc. | 7,200 | 169,344 | ||||||
Gramercy Property Trust, Inc. | 5,720 | 160,560 | ||||||
Total REITs-Diversified | 8,073,105 | |||||||
REITs-OFFICE PROPERTY - 12.3% | ||||||||
Boston Properties, Inc. | 4,616 | 648,455 | ||||||
SL Green Realty Corp. | 3,856 | 495,033 | ||||||
American Realty Capital Properties, Inc. | 40,790 | 401,782 | ||||||
Alexandria Real Estate Equities, Inc. | 3,761 | 368,728 | ||||||
Kilroy Realty Corp. | 4,706 | 358,456 | ||||||
BioMed Realty Trust, Inc. | 13,068 | 296,121 | ||||||
Highwoods Properties, Inc. | 6,360 | 291,161 | ||||||
Douglas Emmett, Inc. | 9,714 | 289,574 | ||||||
Paramount Group, Inc. | 14,050 | 271,165 | ||||||
Equity Commonwealth* | 9,672 | 256,792 | ||||||
Columbia Property Trust, Inc. | 9,310 | 251,556 | ||||||
Brandywine Realty Trust | 14,621 | 233,644 | ||||||
Piedmont Office Realty Trust, Inc. — Class A | 12,516 | 232,923 | ||||||
Hudson Pacific Properties, Inc. | 6,886 | 228,546 | ||||||
Corporate Office Properties Trust | 7,654 | 224,875 | ||||||
Empire State Realty Trust, Inc. — Class A | 10,530 | 198,069 | ||||||
Parkway Properties, Inc. | 10,954 | 190,052 | ||||||
New York REIT, Inc. | 17,220 | 180,466 | ||||||
Mack-Cali Realty Corp. | 9,171 | 176,817 | ||||||
Government Properties Income Trust | 7,565 | 172,860 | ||||||
Total REITs-Office Property | 5,767,075 | |||||||
REITs-APARTMENTS - 10.4% | ||||||||
Equity Residential | 9,110 | 709,304 | ||||||
AvalonBay Communities, Inc. | 3,795 | 661,278 | ||||||
Essex Property Trust, Inc. | 2,310 | 531,069 | ||||||
UDR, Inc. | 11,764 | 400,329 | ||||||
Camden Property Trust | 4,640 | 362,523 | ||||||
Mid-America Apartment Communities, Inc. | 4,354 | 336,434 | ||||||
Apartment Investment & Management Co. — Class A | 8,484 | 333,930 | ||||||
American Campus Communities, Inc. | 7,133 | 305,792 | ||||||
Home Properties, Inc. | 3,999 | 277,091 | ||||||
American Homes 4 Rent — Class A | 15,363 | 254,258 | ||||||
Post Properties, Inc. | 4,315 | 245,653 | ||||||
Education Realty Trust, Inc. | 5,111 | 180,827 | ||||||
Associated Estates Realty Corp. | 6,740 | 166,343 | ||||||
Starwood Waypoint Residential Trust | 5,262 | 136,023 | ||||||
Total REITs-Apartments | 4,900,854 | |||||||
REITs-HEALTH CARE - 9.2% | ||||||||
Health Care REIT, Inc. | 9,224 | 713,568 | ||||||
Ventas, Inc. | 9,244 | 674,997 | ||||||
HCP, Inc. | 14,405 | 622,440 | ||||||
Omega Healthcare Investors, Inc. | 8,026 | 325,615 | ||||||
Senior Housing Properties Trust | 14,008 | 310,838 | ||||||
Healthcare Trust of America, Inc. — Class A | 9,166 | 255,365 | ||||||
Medical Properties Trust, Inc. | 16,259 | 239,658 | ||||||
Healthcare Realty Trust, Inc. | 8,253 | 229,268 | ||||||
National Health Investors, Inc. | 3,200 | 227,232 | ||||||
Sabra Health Care REIT, Inc. | 5,970 | 197,906 | ||||||
Aviv REIT, Inc. | 5,120 | 186,880 | ||||||
LTC Properties, Inc. | 3,964 | 182,344 | ||||||
Physicians Realty Trust | 8,710 | 153,383 | ||||||
Total REITs-Health Care | 4,319,494 | |||||||
REITs-SHOPPING CENTERS - 8.0% | ||||||||
Kimco Realty Corp. | 16,836 | 452,046 | ||||||
Federal Realty Investment Trust | 3,055 | 449,727 | ||||||
Brixmor Property Group, Inc. | 14,520 | 385,506 | ||||||
Regency Centers Corp. | 5,185 | 352,787 | ||||||
DDR Corp. | 18,934 | 352,551 | ||||||
Weingarten Realty Investors | 7,923 | 285,070 | ||||||
Equity One, Inc. | 9,204 | 245,655 | ||||||
WP GLIMCHER, Inc. | 14,185 | 235,897 | ||||||
Acadia Realty Trust | 6,140 | 214,163 | ||||||
Kite Realty Group Trust | 7,460 | 210,148 | ||||||
Urban Edge Properties | 8,853 | 209,816 | ||||||
Retail Opportunity Investments Corp. | 9,810 | 179,523 | ||||||
Ramco-Gershenson Properties Trust | 8,710 | 162,006 | ||||||
Total REITs-Shopping Centers | 3,734,895 | |||||||
REITs-MORTGAGE - 7.3% | ||||||||
Annaly Capital Management, Inc. | 40,688 | 423,156 | ||||||
American Capital Agency Corp. | 17,303 | 369,073 | ||||||
Starwood Property Trust, Inc. | 13,130 | 319,059 |
SEE NOTES TO FINANCIAL STATEMENTS. | THE RYDEX FUNDS ANNUAL REPORT | 115 |
SCHEDULE OF INVESTMENTS (continued) | March 31, 2015 |
REAL ESTATE FUND |
Shares | Value | |||||||
NorthStar Realty Finance Corp. | 17,438 | $ | 315,977 | |||||
Two Harbors Investment Corp. | 25,268 | 268,346 | ||||||
MFA Financial, Inc. | 29,331 | 230,542 | ||||||
Colony Capital, Inc. — Class A | 8,860 | 229,651 | ||||||
Invesco Mortgage Capital, Inc. | 12,034 | 186,888 | ||||||
Hatteras Financial Corp. | 9,917 | 180,093 | ||||||
PennyMac Mortgage Investment Trust | 8,081 | 172,044 | ||||||
Redwood Trust, Inc. | 9,120 | 162,974 | ||||||
CYS Investments, Inc. | 18,153 | 161,743 | ||||||
Capstead Mortgage Corp. | 12,195 | 143,535 | ||||||
iStar Financial, Inc.* | 11,040 | 143,520 | ||||||
Western Asset Mortgage Capital Corp.1 | 7,140 | 107,671 | ||||||
Total REITs-Mortgage | 3,414,272 | |||||||
REITs-HOTELS - 7.2% | ||||||||
Host Hotels & Resorts, Inc. | 25,614 | 516,890 | ||||||
Hospitality Properties Trust | 9,203 | 303,607 | ||||||
LaSalle Hotel Properties | 7,186 | 279,248 | ||||||
RLJ Lodging Trust | 8,768 | 274,526 | ||||||
Sunstone Hotel Investors, Inc. | 15,119 | 252,034 | ||||||
Pebblebrook Hotel Trust | 5,400 | 251,478 | ||||||
Strategic Hotels & Resorts, Inc.* | 20,218 | 251,310 | ||||||
Ryman Hospitality Properties, Inc. | 3,940 | 239,985 | ||||||
DiamondRock Hospitality Co. | 15,943 | 225,275 | ||||||
Chesapeake Lodging Trust | 5,640 | 190,801 | ||||||
Hersha Hospitality Trust | 23,593 | 152,647 | ||||||
Summit Hotel Properties, Inc. | 10,800 | 151,956 | ||||||
Chatham Lodging Trust | 5,030 | 147,932 | ||||||
Ashford Hospitality Trust, Inc. | 13,710 | 131,890 | ||||||
Total REITs-Hotels | 3,369,579 | |||||||
REITs-REGIONAL MALLS - 6.9% | ||||||||
Simon Property Group, Inc. | 5,641 | 1,103,605 | ||||||
General Growth Properties, Inc. | 23,097 | 682,516 | ||||||
Macerich Co. | 5,650 | 476,465 | ||||||
Taubman Centers, Inc. | 3,893 | 300,267 | ||||||
Tanger Factory Outlet Centers, Inc. | 7,206 | 253,435 | ||||||
CBL & Associates Properties, Inc. | 12,711 | 251,678 | ||||||
Pennsylvania Real Estate Investment Trust | 7,569 | 175,828 | ||||||
Total REITs-Regional Malls | 3,243,794 | |||||||
REITs-STORAGE - 4.5% | ||||||||
Public Storage | 4,153 | 818,722 | ||||||
Extra Space Storage, Inc. | 5,859 | 395,893 | ||||||
Iron Mountain, Inc. | 10,040 | 366,259 | ||||||
CubeSmart | 11,287 | 272,581 | ||||||
Sovran Self Storage, Inc. | 2,755 | 258,805 | ||||||
Total REITs-Storage | 2,112,260 | |||||||
REITs-WAREHOUSE/INDUSTRIES - 3.5% | ||||||||
Prologis, Inc. | 14,918 | 649,828 | ||||||
DCT Industrial Trust, Inc. | 6,990 | 242,273 | ||||||
First Industrial Realty Trust, Inc. | 9,886 | 211,857 | ||||||
EastGroup Properties, Inc. | 3,240 | 194,854 | ||||||
Chambers Street Properties | 23,768 | 187,292 | ||||||
CyrusOne, Inc. | 4,750 | 147,820 | ||||||
Total REITs-Warehouse/Industries | 1,633,924 | |||||||
REITs-SINGLE TENANT - 2.8% | ||||||||
Realty Income Corp. | 8,999 | 464,348 | ||||||
National Retail Properties, Inc. | 7,781 | 318,788 | ||||||
Spirit Realty Capital, Inc. | 25,142 | 303,715 | ||||||
Select Income REIT | 8,120 | 202,919 | ||||||
Total REITs-Single Tenant | 1,289,770 | |||||||
REITs-MANUFACTURED HOMES - 1.2% | ||||||||
Equity LifeStyle Properties, Inc. | 5,362 | 294,642 | ||||||
Sun Communities, Inc. | 3,901 | 260,275 | ||||||
Total REITs-Manufactured Homes | 554,917 | |||||||
Total REITs | 42,413,939 | |||||||
REAL ESTATE - 8.0% | ||||||||
REAL ESTATE MANAGEMENT/SERVICES - 5.1% | ||||||||
CBRE Group, Inc. — Class A* | 13,144 | 508,804 | ||||||
Jones Lang LaSalle, Inc. | 2,333 | 397,543 | ||||||
WP Carey, Inc. | 5,422 | 368,696 | ||||||
Realogy Holdings Corp.* | 7,704 | 350,378 | ||||||
Altisource Residential Corp. | 14,800 | 308,728 | ||||||
E-House China Holdings Ltd. ADR | 51,070 | 277,310 | ||||||
Kennedy-Wilson Holdings, Inc. | 8,126 | 212,414 | ||||||
Total Real Estate Management/Services | 2,423,873 | |||||||
REAL ESTATE OPERATIONS/DEVELOPMENT - 2.9% | ||||||||
Howard Hughes Corp.* | 2,292 | 355,306 | ||||||
Brookfield Asset Management, Inc. — Class A | 6,120 | 328,093 | ||||||
Forest City Enterprises, Inc. — Class A* | 12,072 | 308,077 | ||||||
Alexander & Baldwin, Inc. | 4,820 | 208,128 | ||||||
St. Joe Co.* | 9,915 | 184,022 | ||||||
Total Real Estate Operations/Development | 1,383,626 | |||||||
Total Real Estate | 3,807,499 | |||||||
ENTERTAINMENT - 0.6% | ||||||||
CASINO SERVICES - 0.6% | ||||||||
Gaming and Leisure Properties, Inc. | 7,613 | 280,691 | ||||||
DIVERSIFIED FINANCIAL SERVICES - 0.5% | ||||||||
INVESTMENT MANAGEMENT/ADVISORY SERVICES - 0.5% | ||||||||
Altisource Portfolio Solutions S.A.*,1 | 17,856 | 229,807 | ||||||
Total Common Stocks | ||||||||
(Cost $38,309,427) | 46,731,936 | |||||||
116 | THE RYDEX FUNDS ANNUAL REPORT | SEE NOTES TO FINANCIAL STATEMENTS. |
SCHEDULE OF INVESTMENTS (concluded) | March 31, 2015 |
REAL ESTATE FUND |
Face Amount | Value | |||||||
REPURCHASE AGREEMENT††,2 - 0.3% | ||||||||
HSBC Group issued 03/31/15 at 0.03% due 04/01/15 | $ | 127,316 | $ | 127,316 | ||||
Total Repurchase Agreement | ||||||||
(Cost $127,316) | 127,316 | |||||||
SECURITIES LENDING COLLATERAL††,3 - 0.3% | ||||||||
Repurchase Agreements | ||||||||
HSBC Securities, Inc. issued 03/31/15 at 0.10% due 04/01/15 | 88,936 | 88,936 | ||||||
BNP Paribas Securities Corp. issued 03/31/15 at 0.10% due 04/01/15 | 30,594 | 30,594 | ||||||
Barclays Capital, Inc. issued 03/31/15 at 0.10% due 04/01/15 | 15,792 | 15,792 | ||||||
Total Securities Lending Collateral | ||||||||
(Cost $135,322) | 135,322 | |||||||
Total Investments - 100.2% | ||||||||
(Cost $38,572,065) | $ | 46,994,574 | ||||||
Other Assets & Liabilities, net - (0.2)% | (103,144 | ) | ||||||
Total Net Assets - 100.0% | $ | 46,891,430 |
* | Non-income producing security. |
† | Value determined based on Level 1 inputs — See Note 4. |
†† | Value determined based on Level 2 inputs — See Note 4. |
1 | All or portion of this security is on loan at March 31, 2015 — See Note 6. |
2 | Repurchase Agreement — See Note 5. |
3 | Securities lending collateral — See Note 6. |
ADR — American Depositary Receipt | |
REIT — Real Estate Investment Trust |
SEE NOTES TO FINANCIAL STATEMENTS. | THE RYDEX FUNDS ANNUAL REPORT | 117 |
REAL ESTATE FUND |
STATEMENT OF ASSETS AND LIABILITIES
March 31, 2015
Assets: | ||||
Investments, at value - including $132,470 of securities loaned (cost $38,309,427) | $ | 46,731,936 | ||
Repurchase agreements, at value (cost $262,638) | 262,638 | |||
Total investments (cost $38,572,065) | 46,994,574 | |||
Segregated cash with broker | 1,978 | |||
Cash | 1,043 | |||
Receivables: | ||||
Securities sold | 668,646 | |||
Dividends | 209,473 | |||
Fund shares sold | 177,316 | |||
Securities lending income | 2,325 | |||
Total assets | 48,055,355 | |||
Liabilities: | ||||
Payable for: | ||||
Fund shares redeemed | 939,079 | |||
Return of securities loaned | 137,300 | |||
Management fees | 36,896 | |||
Distribution and service fees | 12,766 | |||
Transfer agent and administrative fees | 10,852 | |||
Portfolio accounting fees | 4,341 | |||
Miscellaneous | 22,691 | |||
Total liabilities | 1,163,925 | |||
Commitments and contingent liabilities (Note 10) | — | |||
Net assets | $ | 46,891,430 | ||
Net assets consist of: | ||||
Paid in capital | $ | 56,366,707 | ||
Undistributed net investment income | 344,392 | |||
Accumulated net realized loss on investments | (18,242,178 | ) | ||
Net unrealized appreciation on investments | 8,422,509 | |||
Net assets | $ | 46,891,430 | ||
A-Class: | ||||
Net assets | $ | 6,329,314 | ||
Capital shares outstanding | 165,085 | |||
Net asset value per share | $ | 38.34 | ||
Maximum offering price per share (Net asset value divided by 95.25%) | $ | 40.25 | ||
C-Class: | ||||
Net assets | $ | 2,937,409 | ||
Capital shares outstanding | 84,392 | |||
Net asset value per share | $ | 34.81 | ||
H-Class: | ||||
Net assets | $ | 37,624,707 | ||
Capital shares outstanding | 983,618 | |||
Net asset value per share | $ | 38.25 |
STATEMENT OF OPERATIONS
Year Ended March 31, 2015
Investment Income: | ||||
Dividends (net of foreign withholding tax of $1,787) | $ | 1,252,359 | ||
Income from securities lending, net | 9,547 | |||
Interest | 40 | |||
Total investment income | 1,261,946 | |||
Expenses: | ||||
Management fees | 370,479 | |||
Transfer agent and administrative fees | 108,964 | |||
Distribution and service fees: | ||||
A-Class | 15,658 | |||
C-Class | 27,819 | |||
H-Class | 86,351 | |||
Portfolio accounting fees | 43,586 | |||
Custodian fees | 5,073 | |||
Trustees’ fees* | 2,422 | |||
Tax expense | 1,794 | |||
Line of credit fees | 373 | |||
Miscellaneous | 54,500 | |||
Total expenses | 717,019 | |||
Net investment income | 544,927 | |||
Net Realized and Unrealized Gain (Loss): | ||||
Net realized gain (loss) on: | ||||
Investments | (1,017,396 | ) | ||
Net realized loss | (1,017,396 | ) | ||
Net change in unrealized appreciation (depreciation) on: | ||||
Investments | 4,374,041 | |||
Net change in unrealized appreciation (depreciation) | 4,374,041 | |||
Net realized and unrealized gain | 3,356,645 | |||
Net increase in net assets resulting from operations | $ | 3,901,572 |
* | Relates to Trustees not deemed “interested persons” within the meaning of Section 2(a)(19) of the 1940 Act. |
118 | THE RYDEX FUNDS ANNUAL REPORT | SEE NOTES TO FINANCIAL STATEMENTS. |
REAL ESTATE FUND |
STATEMENTS OF CHANGES IN NET ASSETS
Year Ended March 31, 2015 | Year Ended March 31, 2014 | |||||||
Increase (Decrease) in Net Assets from Operations: | ||||||||
Net investment income | $ | 544,927 | $ | 260,925 | ||||
Net realized gain (loss) on investments | (1,017,396 | ) | 2,653,853 | |||||
Net change in unrealized appreciation (depreciation) on investments | 4,374,041 | (2,954,093 | ) | |||||
Net increase (decrease) in net assets resulting from operations | 3,901,572 | (39,315 | ) | |||||
Distributions to shareholders from: | ||||||||
Net investment income | ||||||||
A-Class | (70,427 | ) | (69,328 | ) | ||||
C-Class | (29,231 | ) | (67,311 | ) | ||||
H-Class | (291,502 | ) | (200,042 | ) | ||||
Total distributions to shareholders | (391,160 | ) | (336,681 | ) | ||||
Capital share transactions: | ||||||||
Proceeds from sale of shares | ||||||||
A-Class | 33,310,377 | 12,878,425 | ||||||
C-Class | 30,598,523 | 28,309,538 | ||||||
H-Class | 323,711,905 | 154,735,643 | ||||||
Distributions reinvested | ||||||||
A-Class | 55,690 | 64,436 | ||||||
C-Class | 28,740 | 64,791 | ||||||
H-Class | 288,471 | 198,562 | ||||||
Cost of shares redeemed | ||||||||
A-Class | (32,058,111 | ) | (21,614,347 | ) | ||||
C-Class | (30,472,287 | ) | (28,623,424 | ) | ||||
H-Class | (308,456,378 | ) | (144,941,887 | ) | ||||
Net increase from capital share transactions | 17,006,930 | 1,071,737 | ||||||
Net increase in net assets | 20,517,342 | 695,741 | ||||||
Net assets: | ||||||||
Beginning of year | 26,374,088 | 25,678,347 | ||||||
End of year | $ | 46,891,430 | $ | 26,374,088 | ||||
Undistributed net investment income at end of year | $ | 344,392 | $ | 179,827 | ||||
Capital share activity: | ||||||||
Shares sold | ||||||||
A-Class | 907,893 | 388,565 | ||||||
C-Class | 928,450 | 923,737 | ||||||
H-Class | 8,887,538 | 4,583,841 | ||||||
Shares issued from reinvestment of distributions | ||||||||
A-Class | 1,534 | 2,095 | ||||||
C-Class | 870 | 2,296 | ||||||
H-Class | 7,964 | 6,468 | ||||||
Shares redeemed | ||||||||
A-Class | (867,549 | ) | (630,360 | ) | ||||
C-Class | (926,436 | ) | (935,775 | ) | ||||
H-Class | (8,503,320 | ) | (4,297,722 | ) | ||||
Net increase in shares | 436,944 | 43,145 |
SEE NOTES TO FINANCIAL STATEMENTS. | THE RYDEX FUNDS ANNUAL REPORT | 119 |
REAL ESTATE FUND |
FINANCIAL HIGHLIGHTS
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.
A-Class | Year Ended March 31, 2015 | Year Ended March 31, 2014 | Year Ended March 28, 2013 | Year Ended March 31, 2012 | Year Ended March 31, 2011 | |||||||||||||||
Per Share Data | ||||||||||||||||||||
Net asset value, beginning of period | $ | 33.47 | $ | 34.43 | $ | 30.27 | $ | 29.06 | $ | 24.24 | ||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||
Net investment income (loss)a | .42 | .65 | .58 | .45 | .27 | |||||||||||||||
Net gain (loss) on investments (realized and unrealized) | 4.77 | (.14 | ) | 4.18 | 1.07 | 5.17 | ||||||||||||||
Total from investment operations | 5.19 | .51 | 4.76 | 1.52 | 5.44 | |||||||||||||||
Less distributions from: | ||||||||||||||||||||
Net investment income | (.32 | ) | (1.47 | ) | (.60 | ) | (.31 | ) | (.62 | ) | ||||||||||
Total distributions | (.32 | ) | (1.47 | ) | (.60 | ) | (.31 | ) | (.62 | ) | ||||||||||
Net asset value, end of period | $ | 38.34 | $ | 33.47 | $ | 34.43 | $ | 30.27 | $ | 29.06 | ||||||||||
Total Returnb | 15.58 | % | 1.86 | % | 16.03 | % | 5.42 | % | 22.72 | % | ||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||
Net assets, end of period (in thousands) | $ | 6,329 | $ | 4,124 | $ | 12,495 | $ | 2,364 | $ | 3,991 | ||||||||||
Ratios to average net assets: | ||||||||||||||||||||
Net investment income (loss) | 1.13 | % | 1.92 | % | 1.82 | % | 1.59 | % | 1.07 | % | ||||||||||
Total expenses | 1.60 | % | 1.65 | % | 1.61 | % | 1.61 | % | 1.63 | % | ||||||||||
Portfolio turnover rate | 599 | % | 788 | % | 699 | % | 974 | % | 485 | % |
C-Class | Year Ended March 31, 2015 | Year Ended March 31, 2014 | Year Ended March 28, 2013 | Year Ended March 31, 2012 | Year Ended March 31, 2011 | |||||||||||||||
Per Share Data | ||||||||||||||||||||
Net asset value, beginning of period | $ | 30.64 | $ | 31.89 | $ | 28.29 | $ | 27.41 | $ | 23.11 | ||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||
Net investment income (loss)a | .23 | .29 | .27 | .22 | .10 | |||||||||||||||
Net gain (loss) on investments (realized and unrealized) | 4.26 | (.07 | ) | 3.93 | .97 | 4.82 | ||||||||||||||
Total from investment operations | 4.49 | .22 | 4.20 | 1.19 | 4.92 | |||||||||||||||
Less distributions from: | ||||||||||||||||||||
Net investment income | (.32 | ) | (1.47 | ) | (.60 | ) | (.31 | ) | (.62 | ) | ||||||||||
Total distributions | (.32 | ) | (1.47 | ) | (.60 | ) | (.31 | ) | (.62 | ) | ||||||||||
Net asset value, end of period | $ | 34.81 | $ | 30.64 | $ | 31.89 | $ | 28.29 | $ | 27.41 | ||||||||||
Total Returnb | 14.73 | % | 1.09 | % | 15.12 | % | 4.57 | % | 21.58 | % | ||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||
Net assets, end of period (in thousands) | $ | 2,937 | $ | 2,497 | $ | 2,910 | $ | 1,798 | $ | 2,356 | ||||||||||
Ratios to average net assets: | ||||||||||||||||||||
Net investment income (loss) | 0.70 | % | 0.93 | % | 0.92 | % | 0.83 | % | 0.42 | % | ||||||||||
Total expenses | 2.35 | % | 2.38 | % | 2.35 | % | 2.36 | % | 2.39 | % | ||||||||||
Portfolio turnover rate | 599 | % | 788 | % | 699 | % | 974 | % | 485 | % |
120 | THE RYDEX FUNDS ANNUAL REPORT | SEE NOTES TO FINANCIAL STATEMENTS. |
REAL ESTATE FUND |
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.
H-Class | Year Ended March 31, 2015 | Year Ended March 31, 2014 | Year Ended March 28, 2013 | Year Ended March 31, 2012 | Year Ended March 31, 2011 | |||||||||||||||
Per Share Data | ||||||||||||||||||||
Net asset value, beginning of period | $ | 33.40 | $ | 34.38 | $ | 30.23 | $ | 29.02 | $ | 24.22 | ||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||
Net investment income (loss)a | .48 | .52 | .46 | .42 | .29 | |||||||||||||||
Net gain (loss) on investments (realized and unrealized) | 4.69 | (.03 | ) | 4.29 | 1.10 | 5.13 | ||||||||||||||
Total from investment operations | 5.17 | .49 | 4.75 | 1.52 | 5.42 | |||||||||||||||
Less distributions from: | ||||||||||||||||||||
Net investment income | (.32 | ) | (1.47 | ) | (.60 | ) | (.31 | ) | (.62 | ) | ||||||||||
Total distributions | (.32 | ) | (1.47 | ) | (.60 | ) | (.31 | ) | (.62 | ) | ||||||||||
Net asset value, end of period | $ | 38.25 | $ | 33.40 | $ | 34.38 | $ | 30.23 | $ | 29.02 | ||||||||||
Total Returnb | 15.55 | % | 1.84 | % | 15.95 | % | 5.42 | % | 22.70 | % | ||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||
Net assets, end of period (in thousands) | $ | 37,625 | $ | 19,753 | $ | 10,273 | $ | 13,511 | $ | 22,045 | ||||||||||
Ratios to average net assets: | ||||||||||||||||||||
Net investment income (loss) | 1.32 | % | 1.52 | % | 1.45 | % | 1.48 | % | 1.13 | % | ||||||||||
Total expenses | 1.60 | % | 1.64 | % | 1.60 | % | 1.61 | % | 1.63 | % | ||||||||||
Portfolio turnover rate | 599 | % | 788 | % | 699 | % | 974 | % | 485 | % |
a | Net investment income (loss) per share was computed using average shares outstanding throughout the period. |
b | Total return does not reflect the impact of any applicable sales charges. |
SEE NOTES TO FINANCIAL STATEMENTS. | THE RYDEX FUNDS ANNUAL REPORT | 121 |
PERFORMANCE REPORT AND FUND PROFILE (Unaudited) | March 31, 2015 |
RETAILING FUND
OBJECTIVE: Seeks to provide capital appreciation by investing in companies engaged in merchandising finished goods and services, including department stores, mail-order operations, and other companies involved in selling products to consumers (“retailing companies”).
For the one-year period ended March 31, 2015, Retailing Fund Investor Class returned 19.50%, compared with 18.26% for the S&P 500 Consumer Discretionary Index. The broader S&P 500 Index returned 12.73%.
The specialty retail segment contributed most to Fund performance, followed by the multiline retail segment. The internet software & services industry was the leading detractor from return. The distributors segment contributed least.
Fund performance for the period benefited most from Home Depot, Inc., Lowe’s Companies, Inc., and CVS Health Corp. Abercrombie & Fitch Co. — Class A, Lumber Liquidators Holdings, Inc., and Zulilly, Inc. — Class A were the largest detractors from the Fund’s performance for the period.
Performance displayed represents past performance, which is no guarantee of future results.
Holdings Diversification (Market Exposure as % of Net Assets)
![](https://capedge.com/proxy/N-CSR/0001398344-15-003814/rsecf_40.jpg)
“Holdings Diversification (Market Exposure as % of Net Assets)” excludes any temporary cash investments.
Inception Dates: | |
Investor Class | April 1, 1998 |
Advisor Class | April 21, 1998 |
A-Class | September 1, 2004 |
C-Class | May 9, 2001 |
Ten Largest Holdings (% of Total Net Assets) | |
Wal-Mart Stores, Inc. | 5.0% |
Amazon.com, Inc. | 4.0% |
Home Depot, Inc. | 3.7% |
CVS Health Corp. | 3.3% |
Walgreens Boots Alliance, Inc. | 2.9% |
Lowe’s Companies, Inc. | 2.6% |
Costco Wholesale Corp. | 2.5% |
Priceline Group, Inc. | 2.4% |
Target Corp. | 2.2% |
TJX Companies, Inc. | 2.2% |
Top Ten Total | 30.8% |
“Ten Largest Holdings” exclude any temporary cash or derivative investments. |
122 | THE RYDEX FUNDS ANNUAL REPORT |
PERFORMANCE REPORT AND FUND PROFILE (Unaudited)(concluded) | March 31, 2015 |
Cumulative Fund Performance*
![](https://capedge.com/proxy/N-CSR/0001398344-15-003814/rsecf_41.jpg)
![](https://capedge.com/proxy/N-CSR/0001398344-15-003814/rsecf_42.jpg)
Average Annual Returns*
Periods Ended March 31, 2015
1 Year | 5 Year | 10 Year | |
Investor Class Shares | 19.50% | 17.21% | 8.65% |
Advisor Class Shares | 19.18% | 16.72% | 8.17% |
A-Class Shares | 19.44% | 16.95% | 8.41% |
A-Class Shares with sales charge† | 13.77% | 15.82% | 7.88% |
C-Class Shares | 18.51% | 16.06% | 7.60% |
C-Class Shares with CDSC‡ | 17.51% | 16.06% | 7.60% |
S&P 500 Consumer Discretionary Index | 18.26% | 20.11% | 10.25% |
S&P 500 Index | 12.73% | 14.47% | 8.01% |
* | The performance data above represents past performance that is not predictive of future results. The investment return and principal value of an investment in the Fund will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Returns are historical and include changes in principal and reinvested dividends and capital gains and do not reflect the effect of taxes. The S&P 500 Index and the S&P 500 Consumer Discretionary Index are unmanaged indices and, unlike the Fund, have no management fees or operating expenses to reduce their reported returns. The graphs are based on Investor Class shares and A-Class shares only; performance for Advisor Class shares and C-Class shares will vary due to differences in fee structures. |
† | Fund returns are calculated using the maximum sales charge of 4.75%. |
‡ | Fund returns include a CDSC of 1% if redeemed within 12 months of purchase. |
THE RYDEX FUNDS ANNUAL REPORT | 123 |
SCHEDULE OF INVESTMENTS | March 31, 2015 |
RETAILING FUND |
Shares | Value | |||||||
COMMON STOCKS† - 99.6% | ||||||||
RETAIL-DISCOUNT - 14.3% | ||||||||
Wal-Mart Stores, Inc. | 47,089 | $ | 3,873,070 | |||||
Costco Wholesale Corp. | 13,087 | 1,982,615 | ||||||
Target Corp. | 21,414 | 1,757,447 | ||||||
Dollar General Corp. | 15,191 | 1,145,098 | ||||||
Dollar Tree, Inc.* | 11,879 | 963,921 | ||||||
Family Dollar Stores, Inc. | 9,020 | 714,745 | ||||||
HSN, Inc. | 6,687 | 456,254 | ||||||
Big Lots, Inc. | 7,918 | 380,302 | ||||||
Total Retail-Discount | 11,273,452 | |||||||
RETAIL-APPAREL/SHOE - 12.9% | ||||||||
L Brands, Inc. | 13,477 | 1,270,747 | ||||||
Ross Stores, Inc. | 10,670 | 1,124,191 | ||||||
The Gap, Inc. | 24,443 | 1,059,115 | ||||||
Foot Locker, Inc. | 11,737 | 739,431 | ||||||
Urban Outfitters, Inc.* | 13,129 | 599,339 | ||||||
Burlington Stores, Inc.* | 8,810 | 523,490 | ||||||
DSW, Inc. — Class A | 11,910 | 439,241 | ||||||
American Eagle Outfitters, Inc. | 25,690 | 438,785 | ||||||
Chico’s FAS, Inc. | 22,317 | 394,788 | ||||||
Men’s Wearhouse, Inc. | 7,321 | 382,156 | ||||||
Ascena Retail Group, Inc.* | 26,186 | 379,959 | ||||||
Buckle, Inc.1 | 7,406 | 378,373 | ||||||
Guess?, Inc. | 17,520 | 325,697 | ||||||
ANN, Inc.* | 7,873 | 323,029 | ||||||
Genesco, Inc.* | 4,467 | 318,184 | ||||||
Abercrombie & Fitch Co. — Class A | 14,156 | 311,998 | ||||||
Brown Shoe Company, Inc. | 9,140 | 299,792 | ||||||
Children’s Place, Inc. | 4,401 | 282,500 | ||||||
Express, Inc.* | 16,990 | 280,845 | ||||||
Finish Line, Inc. — Class A | 10,846 | 265,944 | ||||||
Total Retail-Apparel/Shoe | 10,137,604 | |||||||
E-COMMERCE/SERVICES - 10.6% | ||||||||
Priceline Group, Inc.* | 1,578 | 1,837,028 | ||||||
Netflix, Inc.* | 2,911 | 1,212,985 | ||||||
Liberty Interactive Corp. — Class A* | 30,993 | 904,686 | ||||||
Ctrip.com International Ltd. ADR* | 15,040 | 881,645 | ||||||
TripAdvisor, Inc.* | 9,986 | 830,536 | ||||||
Expedia, Inc. | 8,765 | 825,049 | ||||||
Liberty Ventures* | 14,027 | 589,274 | ||||||
Groupon, Inc. — Class A*,1 | 70,742 | 510,050 | ||||||
Wayfair, Inc. — Class A*,1 | 12,200 | 391,864 | ||||||
Orbitz Worldwide, Inc.* | 23,400 | 272,844 | ||||||
Total E-Commerce/Services | 8,255,961 | |||||||
E-COMMERCE/PRODUCTS - 7.3% | ||||||||
Amazon.com, Inc.* | 8,422 | 3,133,826 | ||||||
JD.com, Inc. ADR* | 30,170 | 886,395 | ||||||
Vipshop Holdings Ltd. ADR* | 26,085 | 767,942 | ||||||
zulily, Inc. — Class A* | 23,976 | 311,448 | ||||||
Shutterfly, Inc.* | 6,788 | 307,089 | ||||||
Lands’ End, Inc.* | 7,360 | 264,077 | ||||||
Total E-Commerce/Products | 5,670,777 | |||||||
RETAIL-DRUG STORE - 7.1% | ||||||||
CVS Health Corp. | 24,882 | 2,568,072 | ||||||
Walgreens Boots Alliance, Inc. | 26,536 | 2,247,068 | ||||||
Rite Aid Corp.* | 87,497 | 760,349 | ||||||
Total Retail-Drug Store | 5,575,489 | |||||||
RETAIL-BUILDING PRODUCTS - 6.6% | ||||||||
Home Depot, Inc. | 25,495 | 2,896,486 | ||||||
Lowe’s Companies, Inc. | 27,187 | 2,022,441 | ||||||
Lumber Liquidators Holdings, Inc.*,1 | 7,270 | 223,771 | ||||||
Total Retail-Building Products | 5,142,698 | |||||||
RETAIL-MAJOR DEPARTMENT STORES - 4.6% | ||||||||
TJX Companies, Inc. | 24,172 | 1,693,248 | ||||||
Nordstrom, Inc. | 11,755 | 944,162 | ||||||
Sears Holdings Corp.*,1 | 12,661 | 523,912 | ||||||
JC Penney Company, Inc.*,1 | 47,497 | 399,450 | ||||||
Total Retail-Major Department Stores | 3,560,772 | |||||||
RETAIL-AUTOMOBILE - 4.2% | ||||||||
CarMax, Inc.* | 13,687 | 944,540 | ||||||
AutoNation, Inc.* | 10,124 | 651,277 | ||||||
Penske Automotive Group, Inc. | 10,150 | 522,624 | ||||||
Lithia Motors, Inc. — Class A | 4,020 | 399,628 | ||||||
Asbury Automotive Group, Inc.* | 4,490 | 373,119 | ||||||
Group 1 Automotive, Inc. | 4,207 | 363,190 | ||||||
Total Retail-Automobile | 3,254,378 | |||||||
RETAIL-AUTO PARTS - 3.9% | ||||||||
O’Reilly Automotive, Inc.* | 5,233 | 1,131,584 | ||||||
AutoZone, Inc.* | 1,650 | 1,125,564 | ||||||
Advance Auto Parts, Inc. | 5,316 | 795,752 | ||||||
Total Retail-Auto Parts | 3,052,900 | |||||||
RETAIL-REGIONAL DEPARTMENT STORES - 3.7% | ||||||||
Macy’s, Inc. | 17,628 | 1,144,234 | ||||||
Kohl’s Corp. | 12,625 | 987,906 | ||||||
Dillard’s, Inc. — Class A | 4,239 | 578,666 | ||||||
Stage Stores, Inc. | 9,000 | 206,280 | ||||||
Total Retail-Regional Department Stores | 2,917,086 | |||||||
124 | THE RYDEX FUNDS ANNUAL REPORT | SEE NOTES TO FINANCIAL STATEMENTS. |
SCHEDULE OF INVESTMENTS (continued) | March 31, 2015 |
RETAILING FUND |
Shares | Value | |||||||
DISTRIBUTION/WHOLESALE - 2.6% | ||||||||
Genuine Parts Co. | 9,573 | $ | 892,108 | |||||
LKQ Corp.* | 26,643 | 680,995 | ||||||
Pool Corp. | 6,050 | 422,048 | ||||||
Total Distribution/Wholesale | 1,995,151 | |||||||
RETAIL-MISCELLANEOUS/DIVERSIFIED - 2.3% | ||||||||
Sally Beauty Holdings, Inc.* | 16,616 | 571,092 | ||||||
CST Brands, Inc. | 10,123 | 443,691 | ||||||
PriceSmart, Inc. | 4,650 | 395,157 | ||||||
Five Below, Inc.* | 10,210 | 363,170 | ||||||
Total Retail-Miscellaneous/Diversified | 1,773,110 | |||||||
RETAIL-JEWELRY - 2.0% | ||||||||
Tiffany & Co. | 9,295 | 818,053 | ||||||
Signet Jewelers Ltd. | 5,293 | 734,615 | ||||||
Total Retail-Jewelry | 1,552,668 | |||||||
RETAIL-SPORTING GOODS - 1.8% | ||||||||
Dick’s Sporting Goods, Inc. | 11,057 | 630,139 | ||||||
Cabela’s, Inc.* | 8,404 | 470,456 | ||||||
Hibbett Sports, Inc.* | 5,590 | 274,245 | ||||||
Total Retail-Sporting Goods | 1,374,840 | |||||||
RETAIL-OFFICE SUPPLIES - 1.7% | ||||||||
Staples, Inc. | 48,157 | 784,237 | ||||||
Office Depot, Inc.* | 58,209 | 535,523 | ||||||
Total Retail-Office Supplies | 1,319,760 | |||||||
RETAIL-BEDDING - 1.7% | ||||||||
Bed Bath & Beyond, Inc.* | 11,768 | 903,488 | ||||||
Mattress Firm Holding Corp.* | 5,570 | 387,895 | ||||||
Total Retail-Bedding | 1,291,383 | |||||||
RETAIL-CONSUMER ELECTRONICS - 1.1% | ||||||||
Best Buy Company, Inc. | 21,855 | 825,900 | ||||||
RETAIL-GARDENING PRODUCTS - 1.0% | ||||||||
Tractor Supply Co. | 9,352 | 795,481 | ||||||
RETAIL-VITAMINS/NUTRITIONAL SUPPLEMENTS - 1.0% | ||||||||
GNC Holdings, Inc. — Class A | 10,601 | 520,191 | ||||||
Vitamin Shoppe, Inc.* | 6,461 | 266,129 | ||||||
Total Retail-Vitamins/Nutritional Supplements | 786,320 | |||||||
RETAIL-HOME FURNISHINGS - 1.0% | ||||||||
Restoration Hardware Holdings, Inc.* | 4,970 | 492,974 | ||||||
Pier 1 Imports, Inc. | 19,718 | 275,658 | ||||||
Total Retail-Home Furnishings | 768,632 | |||||||
RETAIL-PERFUME & COSMETICS - 1.0% | ||||||||
Ulta Salon Cosmetics & Fragrance, Inc.* | 5,035 | 759,530 | ||||||
RETAIL-MAIL ORDER - 0.8% | ||||||||
Williams-Sonoma, Inc. | 7,962 | 634,651 | ||||||
RENTAL AUTO/EQUIPMENT - 0.8% | ||||||||
Aaron’s, Inc. | 12,241 | 346,542 | ||||||
Rent-A-Center, Inc. | 10,439 | 286,446 | ||||||
Total Rental Auto/Equipment | 632,988 | |||||||
TRAVEL SERVICES - 0.7% | ||||||||
Qunar Cayman Islands Ltd. ADR* | 14,000 | 577,500 | ||||||
RETAIL-COMPUTER EQUIPMENT - 0.7% | ||||||||
GameStop Corp. — Class A1 | 14,218 | 539,715 | ||||||
RETAIL-ARTS & CRAFTS - 0.7% | ||||||||
Michaels Companies, Inc.* | 19,800 | 535,788 | ||||||
OIL REFINING & MARKETING - 0.6% | ||||||||
Murphy USA, Inc.* | 6,101 | 441,529 | ||||||
FOOD-RETAIL - 0.5% | ||||||||
Cia Brasileira de Distribuicao ADR | 13,800 | 411,516 | ||||||
DIVERSIFIED OPERATIONS - 0.5% | ||||||||
Liberty TripAdvisor Holdings, Inc. — Class A* | 11,870 | 377,347 | ||||||
AUTO REPAIR CENTERS - 0.4% | ||||||||
Monro Muffler Brake, Inc. | 5,350 | 348,018 | ||||||
HOME FURNISHINGS - 0.4% | ||||||||
Select Comfort Corp.* | 9,582 | 330,292 | ||||||
RETAIL-BOOKSTORE - 0.4% | ||||||||
Barnes & Noble, Inc.* | 12,735 | 302,456 | ||||||
RETAIL-VIDEO RENTAL - 0.4% | ||||||||
Outerwall, Inc.1 | 4,220 | 279,026 | ||||||
RETAIL-APPLIANCES - 0.3% | ||||||||
Conn’s, Inc.*,1 | 8,840 | 267,675 | ||||||
Total Common Stocks | ||||||||
(Cost $65,108,296) | 77,762,393 | |||||||
SEE NOTES TO FINANCIAL STATEMENTS. | THE RYDEX FUNDS ANNUAL REPORT | 125 |
SCHEDULE OF INVESTMENTS (concluded) | March 31, 2015 |
RETAILING FUND |
Face Amount | Value | |||||||
REPURCHASE AGREEMENT††,2 - 0.9% | ||||||||
HSBC Group issued 03/31/15 at 0.03% due 04/01/15 | $ | 723,263 | $ | 723,263 | ||||
Total Repurchase Agreement | ||||||||
(Cost $723,263) | 723,263 | |||||||
SECURITIES LENDING COLLATERAL††,3 - 2.9% | ||||||||
Repurchase Agreements | ||||||||
HSBC Securities, Inc. issued 03/31/15 at 0.10% due 04/01/15 | 1,471,340 | 1,471,340 | ||||||
BNP Paribas Securities Corp. issued 03/31/15 at 0.10% due 04/01/15 | 506,141 | 506,141 | ||||||
Barclays Capital, Inc. issued 03/31/15 at 0.10% due 04/01/15 | 261,251 | 261,251 | ||||||
Total Securities Lending Collateral | ||||||||
(Cost $2,238,732) | 2,238,732 | |||||||
Total Investments - 103.4% | ||||||||
(Cost $68,070,291) | $ | 80,724,388 | ||||||
Other Assets & Liabilities, net - (3.4)% | (2,613,913 | ) | ||||||
Total Net Assets - 100.0% | $ | 78,110,475 |
* | Non-income producing security. |
† | Value determined based on Level 1 inputs — See Note 4. |
†† | Value determined based on Level 2 inputs — See Note 4. |
1 | All or portion of this security is on loan at March 31, 2015 — See Note 6. |
2 | Repurchase Agreement — See Note 5. |
3 | Securities lending collateral — See Note 6. |
ADR — American Depositary Receipt |
126 | THE RYDEX FUNDS ANNUAL REPORT | SEE NOTES TO FINANCIAL STATEMENTS. |
RETAILING FUND |
STATEMENT OF ASSETS AND LIABILITIES
March 31, 2015
Assets: | ||||
Investments, at value - including $2,216,055 of securities loaned (cost $65,108,296) | $ | 77,762,393 | ||
Repurchase agreements, at value (cost $2,961,995) | 2,961,995 | |||
Total investments (cost $68,070,291) | 80,724,388 | |||
Segregated cash with broker | 32,721 | |||
Receivables: | ||||
Fund shares sold | 740,321 | |||
Dividends | 69,939 | |||
Securities lending income | 6,049 | |||
Total assets | 81,573,418 | |||
Liabilities: | ||||
Payable for: | ||||
Return of securities loaned | 2,271,453 | |||
Securities purchased | 769,758 | |||
Fund shares redeemed | 317,616 | |||
Management fees | 52,626 | |||
Transfer agent and administrative fees | 15,478 | |||
Distribution and service fees | 10,304 | |||
Portfolio accounting fees | 6,191 | |||
Miscellaneous | 19,517 | |||
Total liabilities | 3,462,943 | |||
Commitments and contingent liabilities (Note 10) | — | |||
Net assets | $ | 78,110,475 | ||
Net assets consist of: | ||||
Paid in capital | $ | 72,110,951 | ||
Undistributed net investment income | 32,233 | |||
Accumulated net realized loss on investments | (6,686,806 | ) | ||
Net unrealized appreciation on investments | 12,654,097 | |||
Net assets | $ | 78,110,475 | ||
Investor Class: | ||||
Net assets | $ | 46,282,839 | ||
Capital shares outstanding | 1,645,568 | |||
Net asset value per share | $ | 28.13 | ||
Advisor Class: | ||||
Net assets | $ | 8,870,622 | ||
Capital shares outstanding | 338,254 | |||
Net asset value per share | $ | 26.22 | ||
A-Class: | ||||
Net assets | $ | 19,501,936 | ||
Capital shares outstanding | 726,355 | |||
Net asset value per share | $ | 26.85 | ||
Maximum offering price per share (Net asset value divided by 95.25%) | $ | 28.19 | ||
C-Class: | ||||
Net assets | $ | 3,455,078 | ||
Capital shares outstanding | 141,241 | |||
Net asset value per share | $ | 24.46 |
STATEMENT OF OPERATIONS
Year Ended March 31, 2015
Investment Income: | ||||
Dividends (net of foreign withholding tax of $176) | $ | 492,935 | ||
Income from securities lending, net | 27,608 | |||
Interest | 40 | |||
Total investment income | 520,583 | |||
Expenses: | ||||
Management fees | 251,067 | |||
Transfer agent and administrative fees | 73,843 | |||
Distribution and service fees: | ||||
Advisor Class | 20,021 | |||
A-Class | 14,997 | |||
C-Class | 24,539 | |||
Portfolio accounting fees | 29,537 | |||
Custodian fees | 3,428 | |||
Trustees’ fees* | 1,590 | |||
Line of credit fees | 300 | |||
Miscellaneous | 32,869 | |||
Total expenses | 452,191 | |||
Net investment income | 68,392 | |||
Net Realized and Unrealized Gain (Loss): | ||||
Net realized gain (loss) on: | ||||
Investments | 1,805,839 | |||
Net realized gain | 1,805,839 | |||
Net change in unrealized appreciation (depreciation) on: | ||||
Investments | 5,758,303 | |||
Net change in unrealized appreciation (depreciation) | 5,758,303 | |||
Net realized and unrealized gain | 7,564,142 | |||
Net increase in net assets resulting from operations | $ | 7,632,534 |
* | Relates to Trustees not deemed “interested persons” within the meaning of Section 2(a)(19) of the 1940 Act. |
SEE NOTES TO FINANCIAL STATEMENTS. | THE RYDEX FUNDS ANNUAL REPORT | 127 |
RETAILING FUND |
STATEMENTS OF CHANGES IN NET ASSETS
Year Ended March 31, 2015 | Year Ended March 31, 2014 | |||||||
Increase (Decrease) in Net Assets from Operations: | ||||||||
Net investment income (loss) | $ | 68,392 | $ | (67,490 | ) | |||
Net realized gain (loss) on investments | 1,805,839 | (2,783,052 | ) | |||||
Net change in unrealized appreciation (depreciation) on investments | 5,758,303 | 558,351 | ||||||
Net increase (decrease) in net assets resulting from operations | 7,632,534 | (2,292,191 | ) | |||||
Capital share transactions: | ||||||||
Proceeds from sale of shares | ||||||||
Investor Class | 60,134,467 | 246,351,051 | ||||||
Advisor Class | 46,492,511 | 32,015,902 | ||||||
A-Class | 35,188,984 | 16,192,814 | ||||||
C-Class | 23,269,330 | 25,676,530 | ||||||
Cost of shares redeemed | ||||||||
Investor Class | (83,827,188 | ) | (192,663,560 | ) | ||||
Advisor Class | (44,004,920 | ) | (29,499,902 | ) | ||||
A-Class | (19,080,379 | ) | (15,667,077 | ) | ||||
C-Class | (22,833,190 | ) | (25,431,108 | ) | ||||
Net increase (decrease) from capital share transactions | (4,660,385 | ) | 56,974,650 | |||||
Net increase in net assets | 2,972,149 | 54,682,459 | ||||||
Net assets: | ||||||||
Beginning of year | 75,138,326 | 20,455,867 | ||||||
End of year | $ | 78,110,475 | $ | 75,138,326 | ||||
Undistributed net investment income/(Accumulated net investment loss) at end of year | $ | 32,233 | $ | (36,159 | ) | |||
Capital share activity: | ||||||||
Shares sold | ||||||||
Investor Class | 2,329,184 | 10,597,354 | ||||||
Advisor Class | 1,959,097 | 1,535,340 | ||||||
A-Class | 1,439,831 | 747,562 | ||||||
C-Class | 1,069,690 | 1,307,238 | ||||||
Shares redeemed | ||||||||
Investor Class | (3,453,617 | ) | (8,575,213 | ) | ||||
Advisor Class | (1,865,868 | ) | (1,423,331 | ) | ||||
A-Class | (804,635 | ) | (736,239 | ) | ||||
C-Class | (1,049,685 | ) | (1,291,235 | ) | ||||
Net increase (decrease) in shares | (376,003 | ) | 2,161,476 |
128 | THE RYDEX FUNDS ANNUAL REPORT | SEE NOTES TO FINANCIAL STATEMENTS. |
RETAILING FUND |
FINANCIAL HIGHLIGHTS
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.
Investor Class | Year Ended March 31, 2015 | Year Ended March 31, 2014 | Year Ended March 28, 2013 | Year Ended March 31, 2012 | Year Ended March 31, 2011 | |||||||||||||||
Per Share Data | ||||||||||||||||||||
Net asset value, beginning of period | $ | 23.54 | $ | 19.62 | $ | 17.45 | $ | 14.66 | $ | 12.75 | ||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||
Net investment income (loss)a | .11 | — | b | .09 | .01 | .05 | ||||||||||||||
Net gain (loss) on investments (realized and unrealized) | 4.48 | 3.92 | 2.08 | 2.79 | 1.89 | |||||||||||||||
Total from investment operations | 4.59 | 3.92 | 2.17 | 2.80 | 1.94 | |||||||||||||||
Less distributions from: | ||||||||||||||||||||
Net investment income | — | — | — | (.01 | ) | (.03 | ) | |||||||||||||
Total distributions | — | — | — | (.01 | ) | (.03 | ) | |||||||||||||
Net asset value, end of period | $ | 28.13 | $ | 23.54 | $ | 19.62 | $ | 17.45 | $ | 14.66 | ||||||||||
Total Returnc | 19.50 | % | 19.98 | % | 12.44 | % | 19.14 | % | 15.20 | % | ||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||
Net assets, end of period (in thousands) | $ | 46,283 | $ | 65,195 | $ | 14,671 | $ | 34,802 | $ | 3,776 | ||||||||||
Ratios to average net assets: | ||||||||||||||||||||
Net investment income (loss) | 0.42 | % | 0.01 | % | 0.51 | % | 0.04 | % | 0.34 | % | ||||||||||
Total expenses | 1.33 | % | 1.37 | % | 1.35 | % | 1.34 | % | 1.39 | % | ||||||||||
Portfolio turnover rate | 395 | % | 671 | % | 472 | % | 822 | % | 1,062 | % |
Advisor Class | Year Ended March 31, 2015 | Year Ended March 31, 2014 | Year Ended March 28, 2013 | Year Ended March 31, 2012 | Year Ended March 31, 2011 | |||||||||||||||
Per Share Data | ||||||||||||||||||||
Net asset value, beginning of period | $ | 22.00 | $ | 18.45 | $ | 16.45 | $ | 13.91 | $ | 12.14 | ||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||
Net investment income (loss)a | .01 | (.14 | ) | (.01 | ) | (.09 | ) | (.07 | ) | |||||||||||
Net gain (loss) on investments (realized and unrealized) | 4.21 | 3.69 | 2.01 | 2.64 | 1.87 | |||||||||||||||
Total from investment operations | 4.22 | 3.55 | 2.00 | 2.55 | 1.80 | |||||||||||||||
Less distributions from: | ||||||||||||||||||||
Net investment income | — | — | — | (.01 | ) | (.03 | ) | |||||||||||||
Total distributions | — | — | — | (.01 | ) | (.03 | ) | |||||||||||||
Net asset value, end of period | $ | 26.22 | $ | 22.00 | $ | 18.45 | $ | 16.45 | $ | 13.91 | ||||||||||
Total Returnc | 19.18 | % | 19.24 | % | 12.16 | % | 18.38 | % | 14.81 | % | ||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||
Net assets, end of period (in thousands) | $ | 8,871 | $ | 5,391 | $ | 2,454 | $ | 3,979 | $ | 1,583 | ||||||||||
Ratios to average net assets: | ||||||||||||||||||||
Net investment income (loss) | 0.05 | % | (0.64 | %) | (0.05 | %) | (0.66 | %) | (0.58 | %) | ||||||||||
Total expenses | 1.83 | % | 1.87 | % | 1.85 | % | 1.84 | % | 1.89 | % | ||||||||||
Portfolio turnover rate | 395 | % | 671 | % | 472 | % | 822 | % | 1,062 | % |
SEE NOTES TO FINANCIAL STATEMENTS. | THE RYDEX FUNDS ANNUAL REPORT | 129 |
RETAILING FUND |
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.
A-Class | Year Ended March 31, 2015 | Year Ended March 31, 2014 | Year Ended March 28, 2013 | Year Ended March 31, 2012 | Year Ended March 31, 2011 | |||||||||||||||
Per Share Data | ||||||||||||||||||||
Net asset value, beginning of period | $ | 22.48 | $ | 18.79 | $ | 16.77 | $ | 14.14 | $ | 12.31 | ||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||
Net investment income (loss)a | .06 | (.09 | ) | .03 | (.03 | ) | .18 | |||||||||||||
Net gain (loss) on investments (realized and unrealized) | 4.31 | 3.78 | 1.99 | 2.67 | 1.68 | |||||||||||||||
Total from investment operations | 4.37 | 3.69 | 2.02 | 2.64 | 1.86 | |||||||||||||||
Less distributions from: | ||||||||||||||||||||
Net investment income | — | — | — | (.01 | ) | (.03 | ) | |||||||||||||
Total distributions | — | — | — | (.01 | ) | (.03 | ) | |||||||||||||
Net asset value, end of period | $ | 26.85 | $ | 22.48 | $ | 18.79 | $ | 16.77 | $ | 14.14 | ||||||||||
Total Returnc | 19.44 | % | 19.64 | % | 12.05 | % | 18.71 | % | 15.09 | % | ||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||
Net assets, end of period (in thousands) | $ | 19,502 | $ | 2,049 | $ | 1,500 | $ | 5,697 | $ | 517 | ||||||||||
Ratios to average net assets: | ||||||||||||||||||||
Net investment income (loss) | 0.25 | % | (0.42 | %) | 0.20 | % | (0.18 | %) | 1.42 | % | ||||||||||
Total expenses | 1.58 | % | 1.62 | % | 1.59 | % | 1.58 | % | 1.64 | % | ||||||||||
Portfolio turnover rate | 395 | % | 671 | % | 472 | % | 822 | % | 1,062 | % |
C-Class | Year Ended March 31, 2015 | Year Ended March 31, 2014 | Year Ended March 28, 2013 | Year Ended March 31, 2012 | Year Ended March 31, 2011 | |||||||||||||||
Per Share Data | ||||||||||||||||||||
Net asset value, beginning of period | $ | 20.64 | $ | 17.40 | $ | 15.62 | $ | 13.27 | $ | 11.65 | ||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||
Net investment income (loss)a | (.19 | ) | (.23 | ) | (.06 | ) | (.13 | ) | (.11 | ) | ||||||||||
Net gain (loss) on investments (realized and unrealized) | 4.01 | 3.47 | 1.84 | 2.49 | 1.76 | |||||||||||||||
Total from investment operations | 3.82 | 3.24 | 1.78 | 2.36 | 1.65 | |||||||||||||||
Less distributions from: | ||||||||||||||||||||
Net investment income | — | — | — | (.01 | ) | (.03 | ) | |||||||||||||
Total distributions | — | — | — | (.01 | ) | (.03 | ) | |||||||||||||
Net asset value, end of period | $ | 24.46 | $ | 20.64 | $ | 17.40 | $ | 15.62 | $ | 13.27 | ||||||||||
Total Returnc | 18.51 | % | 18.62 | % | 11.40 | % | 17.83 | % | 14.14 | % | ||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||
Net assets, end of period (in thousands) | $ | 3,455 | $ | 2,503 | $ | 1,831 | $ | 2,603 | $ | 2,705 | ||||||||||
Ratios to average net assets: | ||||||||||||||||||||
Net investment income (loss) | (0.88 | %) | (1.16 | %) | (0.39 | %) | (0.96 | %) | (0.96 | %) | ||||||||||
Total expenses | 2.34 | % | 2.37 | % | 2.35 | % | 2.35 | % | 2.39 | % | ||||||||||
Portfolio turnover rate | 395 | % | 671 | % | 472 | % | 822 | % | 1,062 | % |
a | Net investment income (loss) per share was computed using average shares outstanding throughout the period. |
b | Net investment income is less than $0.01 per share. |
c | Total return does not reflect the impact of any applicable sales charges. |
130 | THE RYDEX FUNDS ANNUAL REPORT | SEE NOTES TO FINANCIAL STATEMENTS. |
PERFORMANCE REPORT AND FUND PROFILE (Unaudited) | March 31, 2015 |
TECHNOLOGY FUND
OBJECTIVE: Seeks to provide capital appreciation by investing in companies that are involved in the technology sector, including computer software and service companies, semiconductor manufacturers, networking and telecommunications equipment manufacturers, and PC hardware and peripherals companies (“technology companies”).
For the one-year period ended March 31, 2015, Technology Fund Investor Class returned 9.53%, compared with 18.11% for the S&P 500 Information Technology Index. The broader S&P 500 Index returned 12.73%.
The semiconductors & semiconductor equipment industry was the largest contributor to return, followed by the software industry. The internet software & services segment detracted most from return, followed by the media segment.
Top contributing holdings were Apple, Inc., Facebook, Inc. — Class A, and Skyworks Solutions, Inc. SINA Corp., Qihoo 360 Technology Company Ltd. ADR, and SouFun Holdings Ltd. ADR were the holdings detracting most from performance for the period.
Performance displayed represents past performance, which is no guarantee of future results.
Holdings Diversification (Market Exposure as % of Net Assets)
![](https://capedge.com/proxy/N-CSR/0001398344-15-003814/rsecf_43.jpg)
“Holdings Diversification (Market Exposure as % of Net Assets)” excludes any temporary cash investments.
Inception Dates: | |
Investor Class | April 14, 1998 |
Advisor Class | April 29, 1998 |
A-Class | September 1, 2004 |
C-Class | April 18, 2001 |
Ten Largest Holdings (% of Total Net Assets) | |
Apple, Inc. | 3.9% |
Microsoft Corp. | 2.6% |
Facebook, Inc. — Class A | 2.3% |
Oracle Corp. | 2.0% |
International Business Machines Corp. | 1.8% |
Intel Corp. | 1.8% |
Cisco Systems, Inc. | 1.7% |
QUALCOMM, Inc. | 1.5% |
Google, Inc. — Class C | 1.5% |
Google, Inc. — Class A | 1.5% |
Top Ten Total | 20.6% |
“Ten Largest Holdings” exclude any temporary cash or derivative investments. |
THE RYDEX FUNDS ANNUAL REPORT | 131 |
PERFORMANCE REPORT AND FUND PROFILE (Unaudited)(concluded) | March 31, 2015 |
Cumulative Fund Performance*
![](https://capedge.com/proxy/N-CSR/0001398344-15-003814/rsecf_44.jpg)
![](https://capedge.com/proxy/N-CSR/0001398344-15-003814/rsecf_45.jpg)
Average Annual Returns*
Periods Ended March 31, 2015
1 Year | 5 Year | 10 Year | |
Investor Class Shares | 9.53% | 11.15% | 7.06% |
Advisor Class Shares | 9.00% | 10.60% | 6.52% |
A-Class Shares | 9.28% | 10.85% | 6.72% |
A-Class Shares with sales charge† | 4.10% | 9.78% | 6.21% |
C-Class Shares | 8.52% | 10.05% | 5.99% |
C-Class Shares with CDSC‡ | 7.52% | 10.05% | 5.99% |
S&P 500 Information Technology Index | 18.11% | 14.55% | 9.77% |
S&P 500 Index | 12.73% | 14.47% | 8.01% |
* | The performance data above represents past performance that is not predictive of future results. The investment return and principal value of an investment in the Fund will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Returns are historical and include changes in principal and reinvested dividends and capital gains and do not reflect the effect of taxes. The S&P 500 Index and the S&P 500 Information Technology Index are unmanaged indices and, unlike the Fund, have no management fees or operating expenses to reduce their reported returns. The graphs are based on Investor Class shares and A-Class shares only; performance for Advisor Class shares and C-Class shares will vary due to differences in fee structures. |
† | Fund returns are calculated using the maximum sales charge of 4.75%. |
‡ | Fund returns include a CDSC of 1% if redeemed within 12 months of purchase. |
132 | THE RYDEX FUNDS ANNUAL REPORT |
SCHEDULE OF INVESTMENTS | March 31, 2015 |
TECHNOLOGY FUND |
Shares | Value | |||||||
COMMON STOCKS† - 99.7% | ||||||||
ELECTRONIC COMPONENTS-SEMICONDUCTOR - 10.2% | ||||||||
Intel Corp. | 20,254 | $ | 633,342 | |||||
Texas Instruments, Inc. | 6,976 | 398,923 | ||||||
Micron Technology, Inc.* | 10,264 | 278,462 | ||||||
Avago Technologies Ltd. | 2,112 | 268,182 | ||||||
Broadcom Corp. — Class A | 5,993 | 259,467 | ||||||
Skyworks Solutions, Inc. | 2,289 | 224,986 | ||||||
Altera Corp. | 4,770 | 204,681 | ||||||
ARM Holdings plc ADR | 4,140 | 204,102 | ||||||
Freescale Semiconductor Ltd.* | 4,470 | 182,197 | ||||||
Xilinx, Inc. | 4,088 | 172,922 | ||||||
NVIDIA Corp. | 8,093 | 169,346 | ||||||
Microchip Technology, Inc. | 3,291 | 160,930 | ||||||
IPG Photonics Corp.* | 1,270 | 117,729 | ||||||
ON Semiconductor Corp.* | 9,534 | 115,457 | ||||||
Cavium, Inc.* | 1,540 | 109,063 | ||||||
Cree, Inc.* | 2,865 | 101,679 | ||||||
Ambarella, Inc.*,1 | 1,150 | 87,067 | ||||||
Total Electronic Components-Semiconductor | 3,688,535 | |||||||
APPLICATIONS SOFTWARE - 7.8% | ||||||||
Microsoft Corp. | 22,867 | 929,657 | ||||||
salesforce.com, Inc.* | 5,124 | 342,334 | ||||||
Intuit, Inc. | 2,746 | 266,252 | ||||||
Check Point Software Technologies Ltd.* | 2,800 | 229,516 | ||||||
Red Hat, Inc.* | 2,717 | 205,813 | ||||||
ServiceNow, Inc.* | 2,270 | 178,831 | ||||||
Citrix Systems, Inc.* | 2,641 | 168,681 | ||||||
NetSuite, Inc.* | 1,580 | 146,561 | ||||||
Tableau Software, Inc. — Class A* | 1,510 | 139,705 | ||||||
Nuance Communications, Inc.* | 8,060 | 115,661 | ||||||
PTC, Inc.* | 3,003 | 108,619 | ||||||
Total Applications Software | 2,831,630 | |||||||
SEMICONDUCTOR COMPONENTS-INTEGRATED CIRCUIT - 6.1% | ||||||||
QUALCOMM, Inc. | 7,998 | 554,580 | ||||||
NXP Semiconductor N.V.* | 2,639 | 264,850 | ||||||
Taiwan Semiconductor Manufacturing Company Ltd. ADR | 10,537 | 247,409 | ||||||
Analog Devices, Inc. | 3,780 | 238,140 | ||||||
Marvell Technology Group Ltd. | 15,020 | 220,794 | ||||||
Linear Technology Corp. | 3,696 | 172,973 | ||||||
Maxim Integrated Products, Inc. | 4,586 | 159,639 | ||||||
Cypress Semiconductor Corp. | 7,570 | 106,813 | ||||||
Atmel Corp. | 11,405 | 93,863 | ||||||
Integrated Device Technology, Inc.* | 4,453 | 89,149 | ||||||
Cirrus Logic, Inc.* | 2,210 | 73,505 | ||||||
Total Semiconductor Components-Integrated Circuit | 2,221,715 | |||||||
COMPUTER SERVICES - 6.0% | ||||||||
International Business Machines Corp. | 4,128 | 662,544 | ||||||
Cognizant Technology Solutions Corp. — Class A* | 5,170 | 322,556 | ||||||
Accenture plc — Class A | 3,197 | 299,527 | ||||||
Infosys Ltd. ADR | 6,374 | 223,600 | ||||||
Computer Sciences Corp. | 2,396 | 156,411 | ||||||
Amdocs Ltd. | 2,860 | 155,584 | ||||||
Teradata Corp.* | 3,075 | 135,731 | ||||||
DST Systems, Inc. | 1,030 | 114,031 | ||||||
MAXIMUS, Inc. | 1,420 | 94,799 | ||||||
Total Computer Services | 2,164,783 | |||||||
COMPUTERS - 5.6% | ||||||||
Apple, Inc. | 11,302 | 1,406,308 | ||||||
Hewlett-Packard Co. | 12,475 | 388,721 | ||||||
BlackBerry Ltd.* | 22,588 | 201,711 | ||||||
Total Computers | 1,996,740 | |||||||
WEB PORTALS/ISP - 5.6% | ||||||||
Google, Inc. — Class C* | 971 | 532,107 | ||||||
Google, Inc. — Class A* | 951 | 527,520 | ||||||
Yahoo!, Inc.* | 7,660 | 340,372 | ||||||
Baidu, Inc. ADR* | 1,326 | 276,338 | ||||||
SINA Corp.* | 6,611 | 212,610 | ||||||
AOL, Inc.* | 2,350 | 93,084 | ||||||
Total Web Portals/ISP | 1,982,031 | |||||||
COMMERCIAL SERVICES-FINANCE - 4.9% | ||||||||
MasterCard, Inc. — Class A | 5,974 | 516,094 | ||||||
Automatic Data Processing, Inc. | 3,843 | 329,115 | ||||||
FleetCor Technologies, Inc.* | 1,370 | 206,760 | ||||||
Western Union Co. | 8,561 | 178,154 | ||||||
Vantiv, Inc. — Class A* | 3,690 | 139,113 | ||||||
Total System Services, Inc. | 3,620 | 138,103 | ||||||
Global Payments, Inc. | 1,500 | 137,520 | ||||||
WEX, Inc.* | 1,070 | 114,875 | ||||||
Total Commercial Services-Finance | 1,759,734 | |||||||
ENTERPRISE SOFTWARE/SERVICES - 4.8% | ||||||||
Oracle Corp. | 16,535 | 713,485 | ||||||
SAP SE ADR | 3,148 | 227,191 | ||||||
Workday, Inc. — Class A* | 2,460 | 207,649 | ||||||
CA, Inc. | 6,252 | 203,878 | ||||||
Ultimate Software Group, Inc.* | 712 | 121,008 | ||||||
Informatica Corp.* | 2,608 | 114,374 | ||||||
Qlik Technologies, Inc.* | 2,830 | 88,098 | ||||||
Advent Software, Inc. | 1,540 | 67,929 | ||||||
Total Enterprise Software/Services | 1,743,612 | |||||||
INTERNET CONTENT-ENTERTAINMENT - 3.5% | ||||||||
Facebook, Inc. — Class A* | 9,980 | 820,507 | ||||||
Twitter, Inc.* | 6,230 | 311,998 |
SEE NOTES TO FINANCIAL STATEMENTS. | THE RYDEX FUNDS ANNUAL REPORT | 133 |
SCHEDULE OF INVESTMENTS (continued) | March 31, 2015 |
TECHNOLOGY FUND |
Shares | Value | |||||||
Pandora Media, Inc.* | 6,264 | $ | 101,539 | |||||
Total Internet Content-Entertainment | 1,234,044 | |||||||
COMPUTERS-MEMORY DEVICES - 3.2% | ||||||||
EMC Corp. | 14,455 | 369,470 | ||||||
Western Digital Corp. | 2,530 | 230,255 | ||||||
Seagate Technology plc | 4,023 | 209,317 | ||||||
NetApp, Inc. | 4,790 | 169,853 | ||||||
SanDisk Corp. | 2,647 | 168,402 | ||||||
Total Computers-Memory Devices | 1,147,297 | |||||||
E-COMMERCE/PRODUCTS - 2.6% | ||||||||
eBay, Inc.* | 7,474 | 431,100 | ||||||
Alibaba Group Holding Ltd. ADR* | 4,050 | 337,122 | ||||||
MercadoLibre, Inc. | 1,477 | 180,962 | ||||||
Total E-Commerce/Products | 949,184 | |||||||
NETWORKING PRODUCTS - 2.5% | ||||||||
Cisco Systems, Inc. | 21,764 | 599,054 | ||||||
Palo Alto Networks, Inc.* | 1,310 | 191,365 | ||||||
Fortinet, Inc.* | 3,647 | 127,463 | ||||||
Total Networking Products | 917,882 | |||||||
SEMICONDUCTOR EQUIPMENT - 2.5% | ||||||||
Applied Materials, Inc. | 11,687 | 263,659 | ||||||
ASML Holding N.V. — Class G | 2,048 | 206,909 | ||||||
Lam Research Corp. | 2,324 | 163,226 | ||||||
KLA-Tencor Corp. | 2,668 | 155,518 | ||||||
Teradyne, Inc. | 5,443 | 102,601 | ||||||
Total Semiconductor Equipment | 891,913 | |||||||
DATA PROCESSING/MANAGEMENT - 2.4% | ||||||||
Fidelity National Information Services, Inc. | 3,394 | 230,995 | ||||||
Fiserv, Inc.* | 2,866 | 227,560 | ||||||
Paychex, Inc. | 4,383 | 217,463 | ||||||
Broadridge Financial Solutions, Inc. | 2,480 | 136,425 | ||||||
CommVault Systems, Inc.* | 1,400 | 61,180 | ||||||
Total Data Processing/Management | 873,623 | |||||||
ELECTRONIC COMPONENTS-MISCELLANEOUS - 2.4% | ||||||||
Corning, Inc. | 12,001 | 272,182 | ||||||
TE Connectivity Ltd. | 3,417 | 244,726 | ||||||
Flextronics International Ltd.* | 11,441 | 145,015 | ||||||
Jabil Circuit, Inc. | 4,840 | 113,159 | ||||||
Knowles Corp.*,1 | 3,340 | 64,362 | ||||||
Total Electronic Components-Miscellaneous | 839,444 | |||||||
E-COMMERCE/SERVICES - 2.2% | ||||||||
SouFun Holdings Ltd. ADR | 39,830 | 238,979 | ||||||
Bitauto Holdings Ltd. ADR* | 4,600 | 234,048 | ||||||
Zillow Group, Inc. — Class A* | 1,290 | 129,387 | ||||||
IAC/InterActiveCorp | 1,580 | 106,603 | ||||||
GrubHub, Inc.* | 2,240 | 101,674 | ||||||
Total E-Commerce/Services | 810,691 | |||||||
ENTERTAINMENT SOFTWARE - 2.1% | ||||||||
NetEase, Inc. ADR | 2,210 | 232,714 | ||||||
Electronic Arts, Inc.* | 3,891 | 228,849 | ||||||
Activision Blizzard, Inc. | 9,253 | 210,274 | ||||||
Take-Two Interactive Software, Inc.* | 2,980 | 75,856 | ||||||
Total Entertainment Software | 747,693 | |||||||
INTERNET SECURITY - 2.0% | ||||||||
Qihoo 360 Technology Company Ltd. ADR* | 4,940 | 252,927 | ||||||
Symantec Corp. | 8,868 | 207,201 | ||||||
VeriSign, Inc.* | 2,233 | 149,544 | ||||||
FireEye, Inc.* | 3,170 | 124,423 | ||||||
Total Internet Security | 734,095 | |||||||
INTERNET CONTENT-INFORMATION/NETWORK - 1.8% | ||||||||
LinkedIn Corp. — Class A* | 1,215 | 303,580 | ||||||
YY, Inc. ADR*,1 | 4,260 | 232,404 | ||||||
Yelp, Inc. — Class A* | 2,090 | 98,962 | ||||||
Total Internet Content-Information/Network | 634,946 | |||||||
TELECOMMUNICATION EQUIPMENT - 1.4% | ||||||||
Juniper Networks, Inc. | 6,873 | 155,193 | ||||||
Harris Corp. | 1,690 | 133,104 | ||||||
CommScope Holding Company, Inc.* | 4,110 | 117,299 | ||||||
ARRIS Group, Inc.* | 3,560 | 102,866 | ||||||
Total Telecommunication Equipment | 508,462 | |||||||
WIRELESS EQUIPMENT - 1.4% | ||||||||
Nokia Oyj ADR | 27,452 | 208,087 | ||||||
Motorola Solutions, Inc. | 2,990 | 199,343 | ||||||
Aruba Networks, Inc.* | 3,482 | 85,274 | ||||||
Total Wireless Equipment | 492,704 | |||||||
COMPUTERS-INTEGRATED SYSTEMS - 1.2% | ||||||||
NCR Corp.* | 3,980 | 117,449 | ||||||
Brocade Communications Systems, Inc. | 9,698 | 115,067 | ||||||
Jack Henry & Associates, Inc. | 1,540 | 107,631 | ||||||
VeriFone Systems, Inc.* | 2,910 | 101,530 | ||||||
Total Computers-Integrated Systems | 441,677 | |||||||
COMPUTER AIDED DESIGN - 1.1% | ||||||||
Autodesk, Inc.* | 3,167 | 185,713 | ||||||
ANSYS, Inc.* | 1,440 | 126,994 | ||||||
Aspen Technology, Inc.* | 2,570 | 98,919 | ||||||
Total Computer Aided Design | 411,626 | |||||||
ELECTRONIC MEASURING INSTRUMENTS - 1.0% | ||||||||
Trimble Navigation Ltd.* | 5,283 | 133,132 | ||||||
Keysight Technologies, Inc.* | 3,460 | 128,539 | ||||||
FLIR Systems, Inc. | 3,400 | 106,352 | ||||||
Total Electronic Measuring Instruments | 368,023 |
134 | THE RYDEX FUNDS ANNUAL REPORT | SEE NOTES TO FINANCIAL STATEMENTS. |
SCHEDULE OF INVESTMENTS (continued) | March 31, 2015 |
TECHNOLOGY FUND |
Shares | Value | |||||||
POWER CONVERTER/SUPPLY EQUIPMENT - 0.9% | ||||||||
Canadian Solar, Inc.* | 6,930 | $ | 231,393 | |||||
SunPower Corp. — Class A* | 3,330 | 104,262 | ||||||
Total Power Converter/Supply Equipment | 335,655 | |||||||
COMPUTER SOFTWARE - 0.9% | ||||||||
Akamai Technologies, Inc.* | 2,595 | 184,362 | ||||||
Rackspace Hosting, Inc.* | 2,673 | 137,900 | ||||||
Total Computer Software | 322,262 | |||||||
SOFTWARE TOOLS - 0.9% | ||||||||
VMware, Inc. — Class A* | 3,796 | 311,310 | ||||||
ELECTRONIC FORMS - 0.9% | ||||||||
Adobe Systems, Inc.* | 4,178 | 308,921 | ||||||
ENERGY-ALTERNATE SOURCES - 0.7% | ||||||||
SunEdison, Inc.* | 5,522 | 132,528 | ||||||
First Solar, Inc.* | 2,152 | 128,668 | ||||||
Total Energy-Alternate Sources | 261,196 | |||||||
ELECTRONIC DESIGN AUTOMATIC - 0.7% | ||||||||
Synopsys, Inc.* | 3,000 | 138,960 | ||||||
Cadence Design Systems, Inc.* | 6,544 | 120,671 | ||||||
Total Electronic Design Automatic | 259,631 | |||||||
ELECTRONIC PARTS DISTRIBUTION - 0.7% | ||||||||
Avnet, Inc. | 2,874 | 127,893 | ||||||
Arrow Electronics, Inc.* | 2,066 | 126,336 | ||||||
Total Electronic Parts Distribution | 254,229 | |||||||
COMPUTER GRAPHICS - 0.7% | ||||||||
CyberArk Software Ltd.* | 4,330 | 240,618 | ||||||
ADVERTISING AGENCIES - 0.7% | ||||||||
Alliance Data Systems Corp.* | 809 | 239,666 | ||||||
CONSULTING SERVICES - 0.6% | ||||||||
Gartner, Inc.* | 1,470 | 123,260 | ||||||
Booz Allen Hamilton Holding Corp. | 3,730 | 107,946 | ||||||
Total Consulting Services | 231,206 | |||||||
ELECTRIC PRODUCTS-MISCELLANEOUS - 0.6% | ||||||||
Mobileye N.V.* | 5,400 | 226,962 | ||||||
ELECTRONIC CONNECTORS - 0.6% | ||||||||
Amphenol Corp. — Class A | 3,751 | 221,046 | ||||||
OFFICE AUTOMATION & EQUIPMENTS - 0.5% | ||||||||
Xerox Corp. | 15,373 | 197,543 | ||||||
WEB HOSTING/DESIGN - 0.5% | ||||||||
Equinix, Inc. | 846 | 196,991 | ||||||
COMPUTERS-OTHER - 0.5% | ||||||||
3D Systems Corp.*,1 | 4,171 | 114,369 | ||||||
Stratasys Ltd.*,1 | 1,330 | 70,197 | ||||||
Total Computers-Other | 184,566 | |||||||
COMPUTERS-PERIPHERAL EQUIPMENT - 0.5% | ||||||||
Synaptics, Inc.* | 1,158 | 94,151 | ||||||
Lexmark International, Inc. — Class A | 2,040 | 86,374 | ||||||
Total Computers-Peripheral Equipment | 180,525 | |||||||
TELECOMMUNICATION SERVICES - 0.5% | ||||||||
Qorvo, Inc.* | 2,257 | 179,883 | ||||||
FINANCE-CREDIT CARD - 0.4% | ||||||||
Visa, Inc. — Class A | 2,484 | 162,478 | ||||||
INTERNET INFRASTRUCTURE SOFTWARE - 0.4% | ||||||||
F5 Networks, Inc.* | 1,398 | 160,686 | ||||||
TELECOMMUNICATION EQUIPMENTS FIBER OPTICS - 0.4% | ||||||||
JDS Uniphase Corp.* | 6,709 | 88,022 | ||||||
Ciena Corp.* | 3,671 | 70,887 | ||||||
Total Telecommunication Equipments Fiber Optics | 158,909 | |||||||
MULTIMEDIA - 0.4% | ||||||||
FactSet Research Systems, Inc. | 900 | 143,280 | ||||||
COMMERCIAL SERVICES - 0.4% | ||||||||
CDK Global, Inc. | 3,024 | 141,402 | ||||||
INTERNET APPLICATION SOFTWARE - 0.4% | ||||||||
Splunk, Inc.* | 2,330 | 137,936 | ||||||
MACHINERY-GENERAL INDUSTRY - 0.3% | ||||||||
Zebra Technologies Corp. — Class A* | 1,320 | 119,744 | ||||||
DISTRIBUTION/WHOLESALE - 0.3% | ||||||||
Ingram Micro, Inc. — Class A* | 4,210 | 105,755 | ||||||
COMMUNICATIONS SOFTWARE - 0.3% | ||||||||
SolarWinds, Inc.* | 2,050 | 105,042 | ||||||
INSTRUMENTS-SCIENTIFIC - 0.3% | ||||||||
FEI Co. | 1,280 | 97,715 | ||||||
INTERNET INCUBATORS - 0.2% | ||||||||
HomeAway, Inc.* | 2,870 | 86,588 | ||||||
TRANSACTIONAL SOFTWARE - 0.2% | ||||||||
Solera Holdings, Inc. | 1,610 | 83,173 | ||||||
Total Common Stocks | ||||||||
(Cost $23,124,938) | 36,047,002 |
SEE NOTES TO FINANCIAL STATEMENTS. | THE RYDEX FUNDS ANNUAL REPORT | 135 |
SCHEDULE OF INVESTMENTS (concluded) | March 31, 2015 |
TECHNOLOGY FUND |
Face Amount | Value | |||||||
SECURITIES LENDING COLLATERAL††,2 - 1.1% | ||||||||
Repurchase Agreements | ||||||||
HSBC Securities, Inc. issued 03/31/15 at 0.10% due 04/01/15 | $ | 268,727 | $ | 268,727 | ||||
BNP Paribas Securities Corp. issued 03/31/15 at 0.10% due 04/01/15 | 92,443 | 92,443 | ||||||
Barclays Capital, Inc. issued 03/31/15 at 0.10% due 04/01/15 | 47,716 | 47,716 | ||||||
Total Securities Lending Collateral | ||||||||
(Cost $408,886) | 408,886 | |||||||
Total Investments - 100.8% | ||||||||
(Cost $23,533,824) | $ | 36,455,888 | ||||||
Other Assets & Liabilities, net - (0.8)% | (296,854 | ) | ||||||
Total Net Assets - 100.0% | $ | 36,159,034 |
* | Non-income producing security. |
† | Value determined based on Level 1 inputs — See Note 4. |
†† | Value determined based on Level 2 inputs — See Note 4. |
1 | All or portion of this security is on loan at March 31, 2015 — See Note 6. |
2 | Securities lending collateral — See Note 6. |
ADR — American Depositary Receipt | |
plc — Public Limited Company |
136 | THE RYDEX FUNDS ANNUAL REPORT | SEE NOTES TO FINANCIAL STATEMENTS. |
TECHNOLOGY FUND |
STATEMENT OF ASSETS AND LIABILITIES
March 31, 2015
Assets: | ||||
Investments, at value - including $407,651 of securities loaned (cost $23,124,938) | $ | 36,047,002 | ||
Repurchase agreements, at value (cost $408,886) | 408,886 | |||
Total investments (cost $23,533,824) | 36,455,888 | |||
Segregated cash with broker | 5,976 | |||
Cash | 5,942 | |||
Receivables: | ||||
Securities sold | 402,528 | |||
Fund shares sold | 105,555 | |||
Dividends | 20,817 | |||
Securities lending income | 1,608 | |||
Total assets | 36,998,314 | |||
Liabilities: | ||||
Line of credit | 260,000 | |||
Payable for: | ||||
Return of securities loaned | 414,863 | |||
Fund shares redeemed | 104,245 | |||
Management fees | 26,661 | |||
Transfer agent and administrative fees | 7,841 | |||
Distribution and service fees | 5,573 | |||
Portfolio accounting fees | 3,136 | |||
Miscellaneous | 16,961 | |||
Total liabilities | 839,280 | |||
Commitments and contingent liabilities (Note 10) | — | |||
Net assets | $ | 36,159,034 | ||
Net assets consist of: | ||||
Paid in capital | $ | 30,833,231 | ||
Accumulated net investment loss | (178,794 | ) | ||
Accumulated net realized loss on investments | (7,417,467 | ) | ||
Net unrealized appreciation on investments | 12,922,064 | |||
Net assets | $ | 36,159,034 | ||
Investor Class: | ||||
Net assets | $ | 20,458,431 | ||
Capital shares outstanding | 334,110 | |||
Net asset value per share | $ | 61.23 | ||
Advisor Class: | ||||
Net assets | $ | 2,831,064 | ||
Capital shares outstanding | 50,068 | |||
Net asset value per share | $ | 56.54 | ||
A-Class: | ||||
Net assets | $ | 9,959,635 | ||
Capital shares outstanding | 172,651 | |||
Net asset value per share | $ | 57.69 | ||
Maximum offering price per share (Net asset value divided by 95.25%) | $ | 60.57 | ||
C-Class: | ||||
Net assets | $ | 2,909,904 | ||
Capital shares outstanding | 54,393 | |||
Net asset value per share | $ | 53.50 |
STATEMENT OF OPERATIONS
Year Ended March 31, 2015
Investment Income: | ||||
Dividends (net of foreign withholding tax of $6,073) | $ | 400,532 | ||
Income from securities lending, net | 23,663 | |||
Interest | 46 | |||
Total investment income | 424,241 | |||
Expenses: | ||||
Management fees | 305,477 | |||
Transfer agent and administrative fees | 89,846 | |||
Distribution and service fees: | ||||
Advisor Class | 25,712 | |||
A-Class | 10,624 | |||
C-Class | 23,398 | |||
Portfolio accounting fees | 35,938 | |||
Custodian fees | 4,192 | |||
Trustees’ fees* | 2,757 | |||
Line of credit fees | 195 | |||
Tax expense | 85 | |||
Miscellaneous | 46,283 | |||
Total expenses | 544,507 | |||
Net investment loss | (120,266 | ) | ||
Net Realized and Unrealized Gain (Loss): | ||||
Net realized gain (loss) on: | ||||
Investments | 848,143 | |||
Net realized gain | 848,143 | |||
Net change in unrealized appreciation (depreciation) on: | ||||
Investments | 516,435 | |||
Net change in unrealized appreciation (depreciation) | 516,435 | |||
Net realized and unrealized gain | 1,364,578 | |||
Net increase in net assets resulting from operations | $ | 1,244,312 |
* | Relates to Trustees not deemed “interested persons” within the meaning of Section 2(a)(19) of the 1940 Act. |
SEE NOTES TO FINANCIAL STATEMENTS. | THE RYDEX FUNDS ANNUAL REPORT | 137 |
TECHNOLOGY FUND |
STATEMENTS OF CHANGES IN NET ASSETS
Year Ended March 31, 2015 | Year Ended March 31, 2014 | |||||||
Increase (Decrease) in Net Assets from Operations: | ||||||||
Net investment loss | $ | (120,266 | ) | $ | (99,486 | ) | ||
Net realized gain on investments | 848,143 | 1,519,835 | ||||||
Net change in unrealized appreciation (depreciation) on investments | 516,435 | 5,854,636 | ||||||
Net increase in net assets resulting from operations | 1,244,312 | 7,274,985 | ||||||
Capital share transactions: | ||||||||
Proceeds from sale of shares | ||||||||
Investor Class | 78,754,571 | 90,386,817 | ||||||
Advisor Class | 30,346,789 | 19,872,814 | ||||||
A-Class | 18,659,402 | 17,950,430 | ||||||
C-Class | 21,038,252 | 25,610,311 | ||||||
Cost of shares redeemed | ||||||||
Investor Class | (92,812,678 | ) | (70,456,671 | ) | ||||
Advisor Class | (34,217,663 | ) | (15,430,118 | ) | ||||
A-Class | (14,187,804 | ) | (15,058,469 | ) | ||||
C-Class | (21,139,205 | ) | (25,000,548 | ) | ||||
Net increase (decrease) from capital share transactions | (13,558,336 | ) | 27,874,566 | |||||
Net increase (decrease) in net assets | (12,314,024 | ) | 35,149,551 | |||||
Net assets: | ||||||||
Beginning of year | 48,473,058 | 13,323,507 | ||||||
End of year | $ | 36,159,034 | $ | 48,473,058 | ||||
Accumulated net investment loss at end of year | $ | (178,794 | ) | $ | (58,528 | ) | ||
Capital share activity: | ||||||||
Shares sold | ||||||||
Investor Class | 1,362,713 | 1,785,118 | * | |||||
Advisor Class | 573,554 | 400,929 | * | |||||
A-Class | 328,301 | 363,346 | * | |||||
C-Class | 413,675 | 589,677 | * | |||||
Shares redeemed | ||||||||
Investor Class | (1,616,398 | ) | (1,388,328 | )* | ||||
Advisor Class | (656,798 | ) | (299,244 | )* | ||||
A-Class | (266,905 | ) | (300,472 | )* | ||||
C-Class | (416,613 | ) | (576,511 | )* | ||||
Net increase (decrease) in shares | (278,471 | ) | 574,515 | * |
* | Capital share activity for the periods presented through February 7, 2014 has been restated to reflect a 1:3 reverse share split effective February 7, 2014. See Note 9 in Notes to Financial Statements. |
138 | THE RYDEX FUNDS ANNUAL REPORT | SEE NOTES TO FINANCIAL STATEMENTS. |
TECHNOLOGY FUND |
FINANCIAL HIGHLIGHTS
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.
Investor Class | Year Ended March 31, 2015 | Year Ended March 31, 2014c | Year Ended March 28, 2013 c | Year Ended March 31, 2012 c | Year Ended March 31, 2011 c | |||||||||||||||
Per Share Data | ||||||||||||||||||||
Net asset value, beginning of period | $ | 55.90 | $ | 43.58 | $ | 42.92 | $ | 41.81 | $ | 36.10 | ||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||
Net investment income (loss)a | (.10 | ) | (.09 | ) | .03 | (.03 | ) | (.18 | ) | |||||||||||
Net gain (loss) on investments (realized and unrealized) | 5.43 | 12.41 | .63 | 1.14 | 5.89 | |||||||||||||||
Total from investment operations | 5.33 | 12.32 | .66 | 1.11 | 5.71 | |||||||||||||||
Net asset value, end of period | $ | 61.23 | $ | 55.90 | $ | 43.58 | $ | 42.92 | $ | 41.81 | ||||||||||
Total Returnb | 9.53 | % | 28.24 | % | 1.54 | % | 2.65 | % | 15.88 | % | ||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||
Net assets, end of period (in thousands) | $ | 20,458 | $ | 32,858 | $ | 8,325 | $ | 19,985 | $ | 35,408 | ||||||||||
Ratios to average net assets: | ||||||||||||||||||||
Net investment income (loss) | (0.17 | %) | (0.18 | %) | 0.10 | % | (0.10 | %) | (0.48 | %) | ||||||||||
Total expenses | 1.35 | % | 1.37 | % | 1.35 | % | 1.36 | % | 1.39 | % | ||||||||||
Portfolio turnover rate | 280 | % | 321 | % | 324 | % | 487 | % | 393 | % |
Advisor Class | Year Ended March 31, 2015 | Year Ended March 31, 2014 c | Year Ended March 28, 2013 c | Year Ended March 31, 2012 c | Year Ended March 31, 2011 c | |||||||||||||||
Per Share Data | ||||||||||||||||||||
Net asset value, beginning of period | $ | 51.87 | $ | 40.65 | $ | 40.22 | $ | 39.39 | $ | 34.18 | ||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||
Net investment income (loss)a | (.37 | ) | (.27 | ) | (.12 | ) | (.33 | ) | (.33 | ) | ||||||||||
Net gain (loss) on investments (realized and unrealized) | 5.04 | 11.49 | .55 | 1.16 | 5.54 | |||||||||||||||
Total from investment operations | 4.67 | 11.22 | .43 | .83 | 5.21 | |||||||||||||||
Net asset value, end of period | $ | 56.54 | $ | 51.87 | $ | 40.65 | $ | 40.22 | $ | 39.39 | ||||||||||
Total Returnb | 9.00 | % | 27.60 | % | 1.04 | % | 2.13 | % | 15.28 | % | ||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||
Net assets, end of period (in thousands) | $ | 2,831 | $ | 6,915 | $ | 1,286 | $ | 2,361 | $ | 6,565 | ||||||||||
Ratios to average net assets: | ||||||||||||||||||||
Net investment income (loss) | (0.69 | %) | (0.54 | %) | (0.33 | %) | (0.87 | %) | (0.94 | %) | ||||||||||
Total expenses | 1.85 | % | 1.87 | % | 1.85 | % | 1.85 | % | 1.88 | % | ||||||||||
Portfolio turnover rate | 280 | % | 321 | % | 324 | % | 487 | % | 393 | % |
SEE NOTES TO FINANCIAL STATEMENTS. | THE RYDEX FUNDS ANNUAL REPORT | 139 |
TECHNOLOGY FUND |
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.
A-Class | Year Ended March 31, 2015 | Year Ended March 31, 2014 c | Year Ended March 28, 2013 c | Year Ended March 31, 2012 c | Year Ended March 31, 2011 c | |||||||||||||||
Per Share Data | ||||||||||||||||||||
Net asset value, beginning of period | $ | 52.79 | $ | 41.30 | $ | 40.76 | $ | 39.83 | $ | 34.47 | ||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||
Net investment income (loss)a | (.21 | ) | (.23 | ) | (.09 | ) | (.30 | ) | (.27 | ) | ||||||||||
Net gain (loss) on investments (realized and unrealized) | 5.11 | 11.72 | .63 | 1.23 | 5.63 | |||||||||||||||
Total from investment operations | 4.90 | 11.49 | .54 | .93 | 5.36 | |||||||||||||||
Net asset value, end of period | $ | 57.69 | $ | 52.79 | $ | 41.30 | $ | 40.76 | $ | 39.83 | ||||||||||
Total Returnb | 9.28 | % | 27.79 | % | 1.32 | % | 2.33 | % | 15.58 | % | ||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||
Net assets, end of period (in thousands) | $ | 9,960 | $ | 5,873 | $ | 1,998 | $ | 7,367 | $ | 1,725 | ||||||||||
Ratios to average net assets: | ||||||||||||||||||||
Net investment income (loss) | (0.39 | %) | (0.47 | %) | (0.27 | %) | (0.76 | %) | (0.73 | %) | ||||||||||
Total expenses | 1.59 | % | 1.62 | % | 1.59 | % | 1.59 | % | 1.64 | % | ||||||||||
Portfolio turnover rate | 280 | % | 321 | % | 324 | % | 487 | % | 393 | % |
C-Class | Year Ended March 31, 2015 | Year Ended March 31, 2014 c | Year Ended March 28, 2013 c | Year Ended March 31, 2012 c | Year Ended March 31, 2011 c | |||||||||||||||
Per Share Data | ||||||||||||||||||||
Net asset value, beginning of period | $ | 49.30 | $ | 38.84 | $ | 38.65 | $ | 38.07 | $ | 33.15 | ||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||
Net investment income (loss)a | (.58 | ) | (.50 | ) | (.33 | ) | (.51 | ) | (.51 | ) | ||||||||||
Net gain (loss) on investments (realized and unrealized) | 4.78 | 10.96 | .52 | 1.09 | 5.43 | |||||||||||||||
Total from investment operations | 4.20 | 10.46 | .19 | .58 | 4.92 | |||||||||||||||
Net asset value, end of period | $ | 53.50 | $ | 49.30 | $ | 38.84 | $ | 38.65 | $ | 38.07 | ||||||||||
Total Returnb | 8.52 | % | 26.90 | % | 0.54 | % | 1.50 | % | 14.84 | % | ||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||
Net assets, end of period (in thousands) | $ | 2,910 | $ | 2,827 | $ | 1,715 | $ | 2,743 | $ | 2,618 | ||||||||||
Ratios to average net assets: | ||||||||||||||||||||
Net investment income (loss) | (1.13 | %) | (1.13 | %) | (0.90 | %) | (1.45 | %) | (1.53 | %) | ||||||||||
Total expenses | 2.35 | % | 2.37 | % | 2.35 | % | 2.36 | % | 2.39 | % | ||||||||||
Portfolio turnover rate | 280 | % | 321 | % | 324 | % | 487 | % | 393 | % |
a | Net investment income (loss) per share was computed using average shares outstanding throughout the period. |
b | Total return does not reflect the impact of any applicable sales charges. |
c | Reverse share split — Per share amounts for the periods presented through February 7, 2014 have been restated to reflect a 1:3 reverse share split effective February 7, 2014. See Note 9 in Notes to Financial Statements. |
140 | THE RYDEX FUNDS ANNUAL REPORT | SEE NOTES TO FINANCIAL STATEMENTS. |
PERFORMANCE REPORT AND FUND PROFILE (Unaudited) | March 31, 2015 |
TELECOMMUNICATIONS FUND
OBJECTIVE: Seeks to provide capital appreciation by investing in companies engaged in the development, manufacture, or sale of communications services or communications equipment (“telecommunications companies”).
For the one-year period ended March 31, 2015, Telecommunications Fund Investor Class returned 2.93%, compared with 4.09% for the S&P 500 Telecommunications Services Index. The broader S&P 500 Index returned 12.73%.
Communications equipment contributed most to the Fund’s return, followed by diversified telecommunication services. The wireless telecommunication services industry was the only detractor from return.
Cisco Systems, Inc., Palo Alto Networks, Inc., and Level 3 Communications, Inc. were the strongest performers for the period. VimpelCom Ltd. ADR, QUALCOMM, Inc., and Sprint Corp. detracted most from performance during the period.
Performance displayed represents past performance, which is no guarantee of future results.
Holdings Diversification (Market Exposure as % of Net Assets)
![](https://capedge.com/proxy/N-CSR/0001398344-15-003814/rsecf_46.jpg)
“Holdings Diversification (Market Exposure as % of Net Assets)” excludes any temporary cash investments.
Inception Dates: | |
Investor Class | April 1, 1998 |
Advisor Class | April 1, 1998 |
A-Class | September 1, 2004 |
C-Class | April 18, 2001 |
Ten Largest Holdings (% of Total Net Assets) | |
Verizon Communications, Inc. | 8.6% |
AT&T, Inc. | 7.9% |
Cisco Systems, Inc. | 7.1% |
QUALCOMM, Inc. | 6.4% |
Crown Castle International Corp. | 3.1% |
T-Mobile US, Inc. | 3.0% |
CenturyLink, Inc. | 2.7% |
Level 3 Communications, Inc. | 2.6% |
Sprint Corp. | 2.5% |
SBA Communications Corp. — Class A | 2.4% |
Top Ten Total | 46.3% |
“Ten Largest Holdings” exclude any temporary cash or derivative investments. |
THE RYDEX FUNDS ANNUAL REPORT | 141 |
PERFORMANCE REPORT AND FUND PROFILE (Unaudited)(concluded) | March 31, 2015 |
Cumulative Fund Performance*
![](https://capedge.com/proxy/N-CSR/0001398344-15-003814/rsecf_47.jpg)
![](https://capedge.com/proxy/N-CSR/0001398344-15-003814/rsecf_48.jpg)
Average Annual Returns*
Periods Ended March 31, 2015
1 Year | 5 Year | 10 Year | |
Investor Class Shares | 2.93% | 4.20% | 2.58% |
Advisor Class Shares | 2.42% | 3.71% | 2.10% |
A-Class Shares | 2.75% | 3.97% | 2.31% |
A-Class Shares with sales charge† | -2.13% | 2.97% | 1.82% |
C-Class Shares | 1.86% | 3.39% | 1.66% |
C-Class Shares with CDSC‡ | 0.87% | 3.39% | 1.66% |
S&P 500 Telecommunication Services Index | 4.09% | 12.75% | 7.54% |
S&P 500 Index | 12.73% | 14.47% | 8.01% |
* | The performance data above represents past performance that is not predictive of future results. The investment return and principal value of an investment in the Fund will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Returns are historical and include changes in principal and reinvested dividends and capital gains and do not reflect the effect of taxes. The S&P 500 Index and the S&P 500 Telecommunication Services Index are unmanaged indices and, unlike the Fund, have no management fees or operating expenses to reduce their reported returns. The graphs are based on Investor Class shares and A-Class shares only; performance for Advisor Class shares and C-Class shares will vary due to differences in fee structures. |
† | Fund returns are calculated using the maximum sales charge of 4.75%. |
‡ | Fund returns include a CDSC of 1% if redeemed within 12 months of purchase. |
142 | THE RYDEX FUNDS ANNUAL REPORT |
SCHEDULE OF INVESTMENTS | March 31, 2015 |
TELECOMMUNICATIONS FUND |
Shares | Value | |||||||
COMMON STOCKS† - 98.9% | ||||||||
TELEPHONE-INTEGRATED - 25.3% | ||||||||
Verizon Communications, Inc. | 4,280 | $ | 208,136 | |||||
AT&T, Inc. | 5,838 | 190,611 | ||||||
CenturyLink, Inc. | 1,895 | 65,472 | ||||||
Frontier Communications Corp. | 5,433 | 38,303 | ||||||
Windstream Holdings, Inc. | 4,160 | 30,784 | ||||||
Telefonica Brasil S.A. ADR | 1,849 | 28,271 | ||||||
Telefonica S.A. ADR | 1,922 | 27,581 | ||||||
Telephone & Data Systems, Inc. | 949 | 23,630 | ||||||
Total Telephone-Integrated | 612,788 | |||||||
NETWORKING PRODUCTS - 14.8% | ||||||||
Cisco Systems, Inc. | 6,246 | 171,920 | ||||||
Palo Alto Networks, Inc.* | 350 | 51,128 | ||||||
Arista Networks, Inc.* | 443 | 31,245 | ||||||
Telefonaktiebolaget LM Ericsson ADR | 2,272 | 28,514 | ||||||
Infinera Corp.* | 1,200 | 23,604 | ||||||
Polycom, Inc.* | 1,467 | 19,658 | ||||||
Ruckus Wireless, Inc.* | 1,225 | 15,766 | ||||||
NETGEAR, Inc.* | 478 | 15,717 | ||||||
Total Networking Products | 357,552 | |||||||
CELLULAR TELECOMMUNICATIONS - 13.8% | ||||||||
T-Mobile US, Inc.* | 2,320 | �� | 73,521 | |||||
Sprint Corp.* | 12,938 | 61,326 | ||||||
Vodafone Group plc ADR | 1,251 | 40,883 | ||||||
America Movil SAB de C.V. — Class L ADR | 1,970 | 40,306 | ||||||
China Mobile Ltd. ADR | 552 | 35,897 | ||||||
SK Telecom Company Ltd. ADR | 1,097 | 29,849 | ||||||
Rogers Communications, Inc. — Class B | 790 | 26,449 | ||||||
Tim Participacoes S.A. ADR | 1,497 | 24,820 | ||||||
Total Cellular Telecommunications | 333,051 | |||||||
WIRELESS EQUIPMENT - 10.9% | ||||||||
SBA Communications Corp. — Class A* | 489 | 57,262 | ||||||
Motorola Solutions, Inc. | 842 | 56,135 | ||||||
Nokia Oyj ADR | 4,072 | 30,866 | ||||||
Sierra Wireless, Inc.* | 860 | 28,457 | ||||||
ViaSat, Inc.* | 405 | 24,142 | ||||||
Aruba Networks, Inc.* | 983 | 24,074 | ||||||
Ubiquiti Networks, Inc. | 772 | 22,813 | ||||||
InterDigital, Inc. | 393 | 19,941 | ||||||
Total Wireless Equipment | 263,690 | |||||||
TELECOMMUNICATION EQUIPMENT - 7.7% | ||||||||
Harris Corp. | 557 | 43,869 | ||||||
Juniper Networks, Inc. | 1,932 | 43,625 | ||||||
CommScope Holding Company, Inc.* | 1,159 | 33,078 | ||||||
ARRIS Group, Inc.* | 1,005 | 29,039 | ||||||
Plantronics, Inc. | 409 | 21,657 | ||||||
ADTRAN, Inc. | 760 | 14,189 | ||||||
Total Telecommunication Equipment | 185,457 | |||||||
SEMICONDUCTOR COMPONENTS-INTEGRATED CIRCUIT - 6.4% | ||||||||
QUALCOMM, Inc. | 2,250 | 156,015 | ||||||
TELECOMMUNICATION SERVICES - 5.6% | ||||||||
Level 3 Communications, Inc.* | 1,176 | 63,315 | ||||||
BCE, Inc. | 752 | 31,855 | ||||||
VimpelCom Ltd. ADR | 5,169 | 27,086 | ||||||
Consolidated Communications Holdings, Inc. | 717 | 14,627 | ||||||
Total Telecommunication Services | 136,883 | |||||||
REITs-DIVERSIFIED - 3.1% | ||||||||
Crown Castle International Corp. | 918 | 75,772 | ||||||
COMPUTERS-INTEGRATED SYSTEMS - 2.8% | ||||||||
Riverbed Technology, Inc.* | 1,654 | 34,585 | ||||||
Brocade Communications Systems, Inc. | 2,727 | 32,356 | ||||||
Total Computers-Integrated Systems | 66,941 | |||||||
TELECOMMUNICATION EQUIPMENT FIBER OPTICS - 2.7% | ||||||||
JDS Uniphase Corp.* | 1,892 | 24,823 | ||||||
Finisar Corp.* | 983 | 20,977 | ||||||
Ciena Corp.* | 1,034 | 19,967 | ||||||
Total Telecommunication Equipment Fiber Optics | 65,767 | |||||||
SATELLITE TELECOMMUNICATIONS - 1.9% | ||||||||
EchoStar Corp. — Class A* | 623 | 32,222 | ||||||
Iridium Communications, Inc.* | 1,468 | 14,254 | ||||||
Total Satellite Telecommunications | 46,476 | |||||||
INTERNET INFRASTRUCTURE SOFTWARE - 1.8% | ||||||||
F5 Networks, Inc.* | 372 | 42,758 | ||||||
COMPUTERS - 1.3% | ||||||||
BlackBerry Ltd.* | 3,653 | 32,621 | ||||||
INTERNET CONNECTIVITY SERVICES - 0.8% | ||||||||
Cogent Communications Holdings, Inc. | 534 | 18,866 | ||||||
Total Common Stocks | ||||||||
(Cost $1,469,130) | 2,394,637 | |||||||
RIGHTS† - 0.2% | ||||||||
Leap Wireless International, Inc. | ||||||||
Expires 09/17/15††† | 1,848 | 4,657 | ||||||
Telefonica S.A. | ||||||||
Expires 04/12/15 | 1,626 | 262 | ||||||
Total Rights | ||||||||
(Cost $4,544) | 4,919 |
SEE NOTES TO FINANCIAL STATEMENTS. | THE RYDEX FUNDS ANNUAL REPORT | 143 |
SCHEDULE OF INVESTMENTS (concluded) | March 31, 2015 |
TELECOMMUNICATIONS FUND |
Face Amount | Value | |||||||
REPURCHASE AGREEMENT††,1 - 0.2% | ||||||||
HSBC Group issued 03/31/15 at 0.03% due 04/01/15 | $ | 5,514 | $ | 5,514 | ||||
Total Repurchase Agreement | ||||||||
(Cost $5,514) | 5,514 | |||||||
Total Investments - 99.3% | ||||||||
(Cost $1,479,188) | $ | 2,405,070 | ||||||
Other Assets & Liabilities, net - 0.7% | 15,939 | |||||||
Total Net Assets - 100.0% | $ | 2,421,009 |
* | Non-income producing security. |
† | Value determined based on Level 1 inputs, unless otherwise noted — See Note 4. |
†† | Value determined based on Level 2 inputs — See Note 4. |
††† | Value determined based on Level 3 inputs — See Note 4. |
1 | Repurchase Agreement — See Note 5. |
ADR — American Depositary Receipt | |
plc — Public Limited Company |
144 | THE RYDEX FUNDS ANNUAL REPORT | SEE NOTES TO FINANCIAL STATEMENTS. |
TELECOMMUNICATIONS FUND |
STATEMENT OF ASSETS AND LIABILITIES
March 31, 2015
Assets: | ||||
Investments, at value (cost $1,473,674) | $ | 2,399,556 | ||
Repurchase agreements, at value (cost $5,514) | 5,514 | |||
Total investments (cost $1,479,188) | 2,405,070 | |||
Cash | 479 | |||
Receivables: | ||||
Fund shares sold | 376,431 | |||
Dividends | 5,212 | |||
Securities lending income | 17 | |||
Total assets | 2,787,209 | |||
Liabilities: | ||||
Payable for: | ||||
Securities purchased | 213,923 | |||
Fund shares redeemed | 146,797 | |||
Management fees | 2,048 | |||
Distribution and service fees | 720 | |||
Transfer agent and administrative fees | 602 | |||
Portfolio accounting fees | 241 | |||
Miscellaneous | 1,869 | |||
Total liabilities | 366,200 | |||
Commitments and contingent liabilities (Note 10) | — | |||
Net assets | $ | 2,421,009 | ||
Net assets consist of: | ||||
Paid in capital | $ | 6,391,061 | ||
Undistributed net investment income | 80,748 | |||
Accumulated net realized loss on investments | (4,976,682 | ) | ||
Net unrealized appreciation on investments | 925,882 | |||
Net assets | $ | 2,421,009 | ||
Investor Class: | ||||
Net assets | $ | 1,316,405 | ||
Capital shares outstanding | 28,894 | |||
Net asset value per share | $ | 45.56 | ||
Advisor Class: | ||||
Net assets | $ | 151,052 | ||
Capital shares outstanding | 3,632 | |||
Net asset value per share | $ | 41.59 | ||
A-Class: | ||||
Net assets | $ | 454,478 | ||
Capital shares outstanding | 10,662 | |||
Net asset value per share | $ | 42.63 | ||
Maximum offering price per share (Net asset value divided by 95.25%) | $ | 44.76 | ||
C-Class: | ||||
Net assets | $ | 499,074 | ||
Capital shares outstanding | 12,682 | |||
Net asset value per share | $ | 39.35 |
STATEMENT OF OPERATIONS
Year Ended March 31, 2015
Investment Income: | ||||
Dividends (net of foreign withholding tax of $4,863) | $ | 178,334 | ||
Income from securities lending, net | 2,142 | |||
Interest | 4 | |||
Total investment income | 180,480 | |||
Expenses: | ||||
Management fees | 51,014 | |||
Transfer agent and administrative fees | 15,004 | |||
Distribution and service fees: | ||||
Advisor Class | 10,477 | |||
A-Class | 2,931 | |||
C-Class | 4,802 | |||
Portfolio accounting fees | 6,002 | |||
Custodian fees | 704 | |||
Trustees’ fees* | 495 | |||
Tax expense | 85 | |||
Line of credit fees | 48 | |||
Miscellaneous | 8,170 | |||
Total expenses | 99,732 | |||
Net investment income | 80,748 | |||
Net Realized and Unrealized Gain (Loss): | ||||
Net realized gain (loss) on: | ||||
Investments | 204,448 | |||
Net realized gain | 204,448 | |||
Net change in unrealized appreciation (depreciation) on: | ||||
Investments | (310,801 | ) | ||
Net change in unrealized appreciation (depreciation) | (310,801 | ) | ||
Net realized and unrealized loss | (106,353 | ) | ||
Net decrease in net assets resulting from operations | $ | (25,605 | ) |
* | Relates to Trustees not deemed “interested persons” within the meaning of Section 2(a)(19) of the 1940 Act. |
SEE NOTES TO FINANCIAL STATEMENTS. | THE RYDEX FUNDS ANNUAL REPORT | 145 |
TELECOMMUNICATIONS FUND |
STATEMENTS OF CHANGES IN NET ASSETS
Year Ended March 31, 2015 | Year Ended March 31, 2014 | |||||||
Increase (Decrease) in Net Assets from Operations: | ||||||||
Net investment income | $ | 80,748 | $ | 98,119 | ||||
Net realized gain (loss) on investments | 204,448 | (73,912 | ) | |||||
Net change in unrealized appreciation (depreciation) on investments | (310,801 | ) | 134,687 | |||||
Net increase (decrease) in net assets resulting from operations | (25,605 | ) | 158,894 | |||||
Distributions to shareholders from: | ||||||||
Net investment income | ||||||||
Investor Class | (45,635 | ) | (77,513 | ) | ||||
Advisor Class | (14,600 | ) | (7,191 | ) | ||||
A-Class | (16,000 | ) | (8,359 | ) | ||||
C-Class | (21,884 | ) | (4,990 | ) | ||||
Total distributions to shareholders | (98,119 | ) | (98,053 | ) | ||||
Capital share transactions: | ||||||||
Proceeds from sale of shares | ||||||||
Investor Class | 18,075,159 | 40,052,105 | ||||||
Advisor Class | 12,552,746 | 2,201,898 | ||||||
A-Class | 4,615,685 | 7,692,352 | ||||||
C-Class | 24,640,143 | 28,694,832 | ||||||
Distributions reinvested | ||||||||
Investor Class | 44,841 | 76,714 | ||||||
Advisor Class | 14,600 | 6,218 | ||||||
A-Class | 16,000 | 8,202 | ||||||
C-Class | 19,446 | 4,877 | ||||||
Cost of shares redeemed | ||||||||
Investor Class | (19,374,802 | ) | (40,533,973 | ) | ||||
Advisor Class | (12,596,170 | ) | (2,014,866 | ) | ||||
A-Class | (6,763,959 | ) | (5,702,771 | ) | ||||
C-Class | (24,414,344 | ) | (29,271,944 | ) | ||||
Net increase (decrease) from capital share transactions | (3,170,655 | ) | 1,213,644 | |||||
Net increase (decrease) in net assets | (3,294,379 | ) | 1,274,485 | |||||
Net assets: | ||||||||
Beginning of year | 5,715,388 | 4,440,903 | ||||||
End of year | $ | 2,421,009 | $ | 5,715,388 | ||||
Undistributed net investment income at end of year | $ | 80,748 | $ | 98,119 | ||||
Capital share activity: | ||||||||
Shares sold | ||||||||
Investor Class | 392,906 | 934,805 | * | |||||
Advisor Class | 294,638 | 55,119 | * | |||||
A-Class | 105,986 | 186,923 | * | |||||
C-Class | 611,975 | 759,823 | * | |||||
Shares issued from reinvestment of distributions | ||||||||
Investor Class | 971 | 1,788 | * | |||||
Advisor Class | 346 | 157 | * | |||||
A-Class | 370 | 203 | * | |||||
C-Class | 486 | 129 | * | |||||
Shares redeemed | ||||||||
Investor Class | (419,860 | ) | (954,582 | )* | ||||
Advisor Class | (298,908 | ) | (51,252 | )* | ||||
A-Class | (157,255 | ) | (139,957 | )* | ||||
C-Class | (606,562 | ) | (774,952 | )* | ||||
Net increase (decrease) in shares | (74,907 | ) | 18,204 | * |
* | Capital share activity for the periods presented through February 7, 2014 has been restated to reflect a 1:3 reverse share split effective February 7, 2014. See Note 9 in Notes to Financial Statements. |
146 | THE RYDEX FUNDS ANNUAL REPORT | SEE NOTES TO FINANCIAL STATEMENTS. |
TELECOMMUNICATIONS FUND |
FINANCIAL HIGHLIGHTS
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.
Investor Class | Year Ended March 31, 2015 | Year Ended March 31, 2014c | Year Ended March 28, 2013c | Year Ended March 31, 2012c | Year Ended March 31, 2011c | |||||||||||||||
Per Share Data | ||||||||||||||||||||
Net asset value, beginning of period | $ | 45.51 | $ | 40.76 | $ | 41.52 | $ | 47.13 | $ | 41.18 | ||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||
Net investment income (loss)a | .72 | 1.06 | .81 | 1.23 | .30 | |||||||||||||||
Net gain (loss) on investments (realized and unrealized) | .63 | 4.26 | (.67 | ) | (5.52 | ) | 5.89 | |||||||||||||
Total from investment operations | 1.35 | 5.32 | .14 | (4.29 | ) | 6.19 | ||||||||||||||
Less distributions from: | ||||||||||||||||||||
Net investment income | (1.30 | ) | (.57 | ) | (.90 | ) | (1.32 | ) | (.24 | ) | ||||||||||
Total distributions | (1.30 | ) | (.57 | ) | (.90 | ) | (1.32 | ) | (.24 | ) | ||||||||||
Net asset value, end of period | $ | 45.56 | $ | 45.51 | $ | 40.76 | $ | 41.52 | $ | 47.13 | ||||||||||
Total Returnb | 2.93 | % | 13.12 | % | 0.50 | % | (8.77 | %) | 15.06 | % | ||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||
Net assets, end of period (in thousands) | $ | 1,316 | $ | 2,497 | $ | 2,970 | $ | 7,028 | $ | 48,089 | ||||||||||
Ratios to average net assets: | ||||||||||||||||||||
Net investment income (loss) | 1.55 | % | 2.47 | % | 2.06 | % | 2.86 | % | 0.73 | % | ||||||||||
Total expenses | 1.36 | % | 1.38 | % | 1.35 | % | 1.36 | % | 1.39 | % | ||||||||||
Portfolio turnover rate | 804 | % | 1,271 | % | 1,550 | % | 793 | % | 1,008 | % |
Advisor Class | Year Ended March 31, 2015 | Year Ended March 31, 2014c | Year Ended March 28, 2013c | Year Ended March 31, 2012c | Year Ended March 31, 2011c | |||||||||||||||
Per Share Data | ||||||||||||||||||||
Net asset value, beginning of period | $ | 41.86 | $ | 37.75 | $ | 38.69 | $ | 44.21 | $ | 38.82 | ||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||
Net investment income (loss)a | .60 | .29 | .57 | .66 | .09 | |||||||||||||||
Net gain (loss) on investments (realized and unrealized) | .43 | 4.39 | (.61 | ) | (4.86 | ) | 5.54 | |||||||||||||
Total from investment operations | 1.03 | 4.68 | (.04 | ) | (4.20 | ) | 5.63 | |||||||||||||
Less distributions from: | ||||||||||||||||||||
Net investment income | (1.30 | ) | (.57 | ) | (.90 | ) | (1.32 | ) | (.24 | ) | ||||||||||
Total distributions | (1.30 | ) | (.57 | ) | (.90 | ) | (1.32 | ) | (.24 | ) | ||||||||||
Net asset value, end of period | $ | 41.59 | $ | 41.86 | $ | 37.75 | $ | 38.69 | $ | 44.21 | ||||||||||
Total Returnb | 2.42 | % | 12.53 | % | (0.01 | %) | (9.15 | %) | 14.59 | % | ||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||
Net assets, end of period (in thousands) | $ | 151 | $ | 316 | $ | 133 | $ | 200 | $ | 695 | ||||||||||
Ratios to average net assets: | ||||||||||||||||||||
Net investment income (loss) | 1.40 | % | 0.74 | % | 1.59 | % | 1.65 | % | 0.25 | % | ||||||||||
Total expenses | 1.86 | % | 1.88 | % | 1.86 | % | 1.85 | % | 1.88 | % | ||||||||||
Portfolio turnover rate | 804 | % | 1,271 | % | 1,550 | % | 793 | % | 1,008 | % |
SEE NOTES TO FINANCIAL STATEMENTS. | THE RYDEX FUNDS ANNUAL REPORT | 147 |
TELECOMMUNICATIONS FUND |
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.
A-Class | Year Ended March 31, 2015 | Year Ended March 31, 2014c | Year Ended March 28, 2013c | Year Ended March 31, 2012c | Year Ended March 31, 2011c | |||||||||||||||
Per Share Data | ||||||||||||||||||||
Net asset value, beginning of period | $ | 42.74 | $ | 38.44 | $ | 39.27 | $ | 44.72 | $ | 39.21 | ||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||
Net investment income (loss)a | .58 | .72 | .72 | .54 | .42 | |||||||||||||||
Net gain (loss) on investments (realized and unrealized) | .61 | 4.15 | (.65 | ) | (4.67 | ) | 5.33 | |||||||||||||
Total from investment operations | 1.19 | 4.87 | .07 | (4.13 | ) | 5.75 | ||||||||||||||
Less distributions from: | ||||||||||||||||||||
Net investment income | (1.30 | ) | (.57 | ) | (.90 | ) | (1.32 | ) | (.24 | ) | ||||||||||
Total distributions | (1.30 | ) | (.57 | ) | (.90 | ) | (1.32 | ) | (.24 | ) | ||||||||||
Net asset value, end of period | $ | 42.63 | $ | 42.74 | $ | 38.44 | $ | 39.27 | $ | 44.72 | ||||||||||
Total Returnb | 2.75 | % | 12.80 | % | 0.30 | % | (8.91 | %) | 14.75 | % | ||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||
Net assets, end of period (in thousands) | $ | 454 | $ | 2,631 | $ | 553 | $ | 1,566 | $ | 699 | ||||||||||
Ratios to average net assets: | ||||||||||||||||||||
Net investment income (loss) | 1.35 | % | 1.79 | % | 1.98 | % | 1.41 | % | 1.01 | % | ||||||||||
Total expenses | 1.60 | % | 1.63 | % | 1.61 | % | 1.60 | % | 1.64 | % | ||||||||||
Portfolio turnover rate | 804 | % | 1,271 | % | 1,550 | % | 793 | % | 1,008 | % |
C-Class | Year Ended March 31, 2015 | Year Ended March 31, 2014c | Year Ended March 28, 2013c | Year Ended March 31, 2012c | Year Ended March 31, 2011c | |||||||||||||||
Per Share Data | ||||||||||||||||||||
Net asset value, beginning of period | $ | 39.89 | $ | 36.00 | $ | 37.04 | $ | 42.57 | $ | 37.49 | ||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||
Net investment income (loss)a | .06 | .54 | .48 | .15 | (.03 | ) | ||||||||||||||
Net gain (loss) on investments (realized and unrealized) | .70 | 3.92 | (.62 | ) | (4.36 | ) | 5.35 | |||||||||||||
Total from investment operations | .76 | 4.46 | (.14 | ) | (4.21 | ) | 5.32 | |||||||||||||
Less distributions from: | ||||||||||||||||||||
Net investment income | (1.30 | ) | (.57 | ) | (.90 | ) | (1.32 | ) | (.24 | ) | ||||||||||
Total distributions | (1.30 | ) | (.57 | ) | (.90 | ) | (1.32 | ) | (.24 | ) | ||||||||||
Net asset value, end of period | $ | 39.35 | $ | 39.89 | $ | 36.00 | $ | 37.04 | $ | 42.57 | ||||||||||
Total Returnb | 1.86 | % | 12.49 | % | (0.24 | %) | (9.52 | %) | 14.22 | % | ||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||
Net assets, end of period (in thousands) | $ | 499 | $ | 271 | $ | 784 | $ | 672 | $ | 2,896 | ||||||||||
Ratios to average net assets: | ||||||||||||||||||||
Net investment income (loss) | 0.14 | % | 1.42 | % | 1.41 | % | 0.39 | % | (0.07 | %) | ||||||||||
Total expenses | 2.35 | % | 2.38 | % | 2.36 | % | 2.36 | % | 2.39 | % | ||||||||||
Portfolio turnover rate | 804 | % | 1,271 | % | 1,550 | % | 793 | % | 1,008 | % |
a | Net investment income (loss) per share was computed using average shares outstanding throughout the period. |
b | Total return does not reflect the impact of any applicable sales charges. |
c | Reverse share split — Per share amounts for the periods presented through February 7, 2014 have been restated to reflect a 1:3 reverse share split reflective February 7, 2014. See Note 9 in Notes to Financial Statements. |
148 | THE RYDEX FUNDS ANNUAL REPORT | SEE NOTES TO FINANCIAL STATEMENTS. |
PERFORMANCE REPORT AND FUND PROFILE (Unaudited) | March 31, 2015 |
TRANSPORTATION FUND
OBJECTIVE: Seeks to provide capital appreciation by investing in companies engaged in providing transportation services or companies engaged in the design, manufacture, distribution, or sale of transportation equipment (“transportation companies”).
For the one-year period ended March 31, 2015, Transportation Fund Investor Class returned 16.65%, compared with 8.73% for the S&P 500 Industrials Index. The broader S&P 500 Index returned 12.73%.
The airlines segment was the largest contributor to return, followed by the road & rail segment. The marine industry contributed least.
Southwest Airlines Co., American Airlines Group, Inc., and United Continental Holdings, Inc. were the biggest contributors to performance for the period. Hertz Global Holdings, Inc., Kandi Technologies Group, Inc., and Copa Holdings S.A. — Class A detracted most from performance during the period.
Performance displayed represents past performance, which is no guarantee of future results.
Holdings Diversification (Market Exposure as % of Net Assets)
![](https://capedge.com/proxy/N-CSR/0001398344-15-003814/rsecf_49.jpg)
“Holdings Diversification (Market Exposure as % of Net Assets)” excludes any temporary cash investments.
Inception Dates: | |
Investor Class | April 2, 1998 |
Advisor Class | June 9, 1998 |
A-Class | September 1, 2004 |
C-Class | May 14, 2001 |
Ten Largest Holdings (% of Total Net Assets) | |
Union Pacific Corp. | 4.6% |
United Parcel Service, Inc. — Class B | 4.5% |
Ford Motor Co. | 3.9% |
General Motors Co. | 3.7% |
FedEx Corp. | 3.2% |
American Airlines Group, Inc. | 3.0% |
Delta Air Lines, Inc. | 2.9% |
Johnson Controls, Inc. | 2.8% |
CSX Corp. | 2.7% |
Norfolk Southern Corp. | 2.6% |
Top Ten Total | 33.9% |
“Ten Largest Holdings” exclude any temporary cash or derivative investments. |
THE RYDEX FUNDS ANNUAL REPORT | 149 |
PERFORMANCE REPORT AND FUND PROFILE (Unaudited)(concluded) | March 31, 2015 |
Cumulative Fund Performance*
![](https://capedge.com/proxy/N-CSR/0001398344-15-003814/rsecf_50.jpg)
![](https://capedge.com/proxy/N-CSR/0001398344-15-003814/rsecf_51.jpg)
Average Annual Returns*
Periods Ended March 31, 2015
1 Year | 5 Year | 10 Year | |
Investor Class Shares | 16.65% | 16.96% | 8.86% |
Advisor Class Shares | 16.03% | 16.40% | 8.33% |
A-Class Shares | 16.34% | 16.70% | 8.61% |
A-Class Shares with sales charge† | 10.80% | 15.56% | 8.09% |
C-Class Shares | 15.46% | 15.85% | 7.79% |
C-Class Shares with CDSC‡ | 14.46% | 15.85% | 7.79% |
S&P 500 Industrials Index | 8.73% | 14.51% | 7.87% |
S&P 500 Index | 12.73% | 14.47% | 8.01% |
* | The performance data above represents past performance that is not predictive of future results. The investment return and principal value of an investment in the Fund will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Returns are historical and include changes in principal and reinvested dividends and capital gains and do not reflect the effect of taxes. The S&P 500 Index and the S&P 500 Industrial Index are unmanaged indices and, unlike the Fund, have no management fees or operating expenses to reduce their reported return. The graphs are based on Investor Class shares and A-Class shares only; performance for Advisor Class shares and C-Class shares will vary due to differences in fee structures. |
† | Fund returns are calculated using the maximum sales charge of 4.75%. |
‡ | Fund returns include a CDSC of 1% if redeemed within 12 months of purchase. |
150 | THE RYDEX FUNDS ANNUAL REPORT |
SCHEDULE OF INVESTMENTS | March 31, 2015 |
TRANSPORTATION FUND |
Shares | Value | |||||||
COMMON STOCKS† - 99.9% | ||||||||
AIRLINES - 18.8% | ||||||||
American Airlines Group, Inc. | 40,744 | $ | 2,150,468 | |||||
Delta Air Lines, Inc. | 46,305 | 2,081,873 | ||||||
Southwest Airlines Co. | 42,076 | 1,863,967 | ||||||
United Continental Holdings, Inc.* | 26,210 | 1,762,622 | ||||||
Alaska Air Group, Inc. | 15,327 | 1,014,341 | ||||||
JetBlue Airways Corp.* | 44,344 | 853,622 | ||||||
Copa Holdings S.A. — Class A | 8,262 | 834,214 | ||||||
Spirit Airlines, Inc.* | 10,570 | 817,695 | ||||||
Ryanair Holdings plc ADR | 11,100 | 741,147 | ||||||
Allegiant Travel Co. — Class A | 2,399 | 461,304 | ||||||
Hawaiian Holdings, Inc.* | 18,400 | 405,260 | ||||||
Virgin America, Inc.* | 12,600 | 383,040 | ||||||
Total Airlines | 13,369,553 | |||||||
AUTO/TRUCK PARTS & EQUIPMENT - 17.3% | ||||||||
Johnson Controls, Inc. | 39,767 | 2,005,848 | ||||||
Delphi Automotive plc | 18,000 | 1,435,320 | ||||||
BorgWarner, Inc. | 21,227 | 1,283,809 | ||||||
TRW Automotive Holdings Corp.* | 11,640 | 1,220,454 | ||||||
Lear Corp. | 9,311 | 1,031,845 | ||||||
Autoliv, Inc. | 7,583 | 893,050 | ||||||
Magna International, Inc. | 16,380 | 878,951 | ||||||
Visteon Corp.* | 7,541 | 726,952 | ||||||
Tenneco, Inc.* | 11,510 | 660,904 | ||||||
Dana Holding Corp. | 30,740 | 650,458 | ||||||
American Axle & Manufacturing Holdings, Inc.* | 19,030 | 491,545 | ||||||
Gentherm, Inc.* | 9,615 | 485,654 | ||||||
Dorman Products, Inc.* | 9,690 | 482,078 | ||||||
Total Auto/Truck Parts & Equipment | 12,246,868 | |||||||
TRANSPORT-RAIL - 15.3% | ||||||||
Union Pacific Corp. | 30,007 | 3,250,057 | ||||||
CSX Corp. | 58,630 | 1,941,826 | ||||||
Norfolk Southern Corp. | 18,226 | 1,875,820 | ||||||
Kansas City Southern | 10,769 | 1,099,300 | ||||||
Canadian Pacific Railway Ltd. | 5,968 | 1,090,354 | ||||||
Canadian National Railway Co. | 13,000 | 869,310 | ||||||
Genesee & Wyoming, Inc. — Class A* | 7,866 | 758,597 | ||||||
Total Transport-Rail | 10,885,264 | |||||||
TRANSPORT-SERVICES - 14.6% | ||||||||
United Parcel Service, Inc. — Class B | 32,813 | 3,180,893 | ||||||
FedEx Corp. | 13,767 | 2,277,750 | ||||||
CH Robinson Worldwide, Inc. | 15,182 | 1,111,626 | ||||||
Expeditors International of Washington, Inc. | 21,629 | 1,042,085 | ||||||
Ryder System, Inc. | 8,214 | 779,426 | ||||||
XPO Logistics, Inc.* | 14,500 | 659,315 | ||||||
Matson, Inc. | 11,500 | 484,840 | ||||||
Hub Group, Inc. — Class A* | 10,630 | 417,653 | ||||||
UTI Worldwide, Inc.* | 31,320 | 385,236 | ||||||
Total Transport-Services | 10,338,824 | |||||||
AUTO-CARS/LIGHT TRUCKS - 14.4% | ||||||||
Ford Motor Co. | 169,576 | 2,736,958 | ||||||
General Motors Co. | 70,894 | 2,658,525 | ||||||
Tesla Motors, Inc.*,1 | 8,687 | 1,639,845 | ||||||
Toyota Motor Corp. ADR1 | 6,190 | 865,919 | ||||||
Tata Motors Ltd. ADR | 18,882 | 850,823 | ||||||
Fiat Chrysler Automobiles N.V.* | 47,700 | 777,987 | ||||||
Honda Motor Company Ltd. ADR | 21,390 | 700,736 | ||||||
Total Auto-Cars/Light Trucks | 10,230,793 | |||||||
TRANSPORT-TRUCK - 8.4% | ||||||||
J.B. Hunt Transport Services, Inc. | 12,398 | 1,058,726 | ||||||
Old Dominion Freight Line, Inc.* | 11,501 | 889,027 | ||||||
Swift Transportation Co. — Class A* | 24,580 | 639,572 | ||||||
Landstar System, Inc. | 8,948 | 593,252 | ||||||
Con-way, Inc. | 12,482 | 550,831 | ||||||
Knight Transportation, Inc. | 16,930 | 545,993 | ||||||
Werner Enterprises, Inc. | 16,349 | 513,522 | ||||||
Heartland Express, Inc. | 20,900 | 496,584 | ||||||
Saia, Inc.* | 8,200 | 363,260 | ||||||
ArcBest Corp. | 8,903 | 337,335 | ||||||
Total Transport-Truck | 5,988,102 | |||||||
RENTAL AUTO/EQUIPMENT - 2.8% | ||||||||
Hertz Global Holdings, Inc.* | 50,288 | 1,090,244 | ||||||
Avis Budget Group, Inc.* | 14,874 | 877,789 | ||||||
Total Rental Auto/Equipment | 1,968,033 | |||||||
RUBBER-TIRES - 2.2% | ||||||||
Goodyear Tire & Rubber Co. | 35,996 | 974,771 | ||||||
Cooper Tire & Rubber Co. | 13,470 | 577,055 | ||||||
Total Rubber-Tires | 1,551,826 | |||||||
MOTORCYCLE/MOTOR SCOOTER - 1.8% | ||||||||
Harley-Davidson, Inc. | 20,761 | 1,261,023 | ||||||
COMMERCIAL SERVICES - 1.3% | ||||||||
Macquarie Infrastructure Company LLC | 10,800 | 888,732 | ||||||
ELECTRONIC COMPONENTS-MISCELLANEOUS - 1.1% | ||||||||
Gentex Corp. | 44,229 | 809,391 | ||||||
TRANSPORT-MARINE - 1.0% | ||||||||
Kirby Corp.* | 9,449 | 709,147 | ||||||
BUILDING-MOBILE HOME/MANUFACTURED HOUSE - 0.9% | ||||||||
Thor Industries, Inc. | 10,226 | 646,385 | ||||||
Total Common Stocks | ||||||||
(Cost $42,720,644) | 70,893,941 |
SEE NOTES TO FINANCIAL STATEMENTS. | THE RYDEX FUNDS ANNUAL REPORT | 151 |
SCHEDULE OF INVESTMENTS (concluded) | March 31, 2015 |
TRANSPORTATION FUND |
Face Amount | Value | |||||||
REPURCHASE AGREEMENT††,2 - 0.9% | ||||||||
HSBC Group issued 03/31/15 at 0.03% due 04/01/15 | $ | 610,654 | $ | 610,654 | ||||
Total Repurchase Agreement | ||||||||
(Cost $610,654) | 610,654 | |||||||
SECURITIES LENDING COLLATERAL††,3 - 3.0% | ||||||||
Repurchase Agreements | ||||||||
HSBC Securities, Inc. issued 03/31/15 at 0.10% due 04/01/15 | 1,390,758 | 1,390,758 | ||||||
BNP Paribas Securities Corp. issued 03/31/15 at 0.10% due 04/01/15 | 478,421 | 478,421 | ||||||
Barclays Capital, Inc. issued 03/31/15 at 0.10% due 04/01/15 | 246,943 | 246,943 | ||||||
Total Securities Lending Collateral | ||||||||
(Cost $2,116,122) | 2,116,122 | |||||||
Total Investments - 103.8% | ||||||||
(Cost $45,447,420) | $ | 73,620,717 | ||||||
Other Assets & Liabilities, net - (3.8)% | (2,660,424 | ) | ||||||
Total Net Assets - 100.0% | $ | 70,960,293 |
* | Non-income producing security. |
† | Value determined based on Level 1 inputs — See Note 4. |
†† | Value determined based on Level 2 inputs — See Note 4. |
1 | All or portion of this security is on loan at March 31, 2015 — See Note 6. |
2 | Repurchase Agreement — See Note 5. |
3 | Securities lending collateral — See Note 6. |
ADR — American Depositary Receipt | |
plc — Public Limited Company |
152 | THE RYDEX FUNDS ANNUAL REPORT | SEE NOTES TO FINANCIAL STATEMENTS. |
TRANSPORTATION FUND |
STATEMENT OF ASSETS AND LIABILITIES
March 31, 2015
Assets: | ||||
Investments, at value - including $2,076,173 of securities loaned (cost $42,720,644) | $ | 70,893,941 | ||
Repurchase agreements, at value (cost $2,726,776) | 2,726,776 | |||
Total investments (cost $45,447,420) | 73,620,717 | |||
Segregated cash with broker | 30,929 | |||
Cash | 3,264 | |||
Receivables: | ||||
Fund shares sold | 478,107 | |||
Securities lending income | 35,696 | |||
Dividends | 23,240 | |||
Total assets | 74,191,953 | |||
Liabilities: | ||||
Payable for: | ||||
Return of securities loaned | 2,147,050 | |||
Fund shares redeemed | 946,560 | |||
Management fees | 58,248 | |||
Transfer agent and administrative fees | 17,132 | |||
Distribution and service fees | 13,121 | |||
Portfolio accounting fees | 6,853 | |||
Miscellaneous | 42,696 | |||
Total liabilities | 3,231,660 | |||
Commitments and contingent liabilities (Note 10) | — | |||
Net assets | $ | 70,960,293 | ||
Net assets consist of: | ||||
Paid in capital | $ | 63,855,070 | ||
Undistributed net investment income | 132,339 | |||
Accumulated net realized loss on investments | (21,200,413 | ) | ||
Net unrealized appreciation on investments | 28,173,297 | |||
Net assets | $ | 70,960,293 | ||
Investor Class: | ||||
Net assets | $ | 42,946,710 | ||
Capital shares outstanding | 825,017 | |||
Net asset value per share | $ | 52.06 | ||
Advisor Class: | ||||
Net assets | $ | 6,249,183 | ||
Capital shares outstanding | 132,609 | |||
Net asset value per share | $ | 47.12 | ||
A-Class: | ||||
Net assets | $ | 15,358,983 | ||
Capital shares outstanding | 317,256 | |||
Net asset value per share | $ | 48.41 | ||
Maximum offering price per share (Net asset value divided by 95.25%) | $ | 50.82 | ||
C-Class: | ||||
Net assets | $ | 6,405,417 | ||
Capital shares outstanding | 140,368 | |||
Net asset value per share | $ | 45.63 |
STATEMENT OF OPERATIONS
Year Ended March 31, 2015
Investment Income: | ||||
Dividends (net of foreign withholding tax of $12,567) | $ | 1,125,794 | ||
Income from securities lending, net | 394,520 | |||
Interest | 106 | |||
Total investment income | 1,520,420 | |||
Expenses: | ||||
Management fees | 755,304 | |||
Transfer agent and administrative fees | 222,148 | |||
Distribution and service fees: | ||||
Advisor Class | 33,336 | |||
A-Class | 43,131 | |||
C-Class | 59,488 | |||
Portfolio accounting fees | 88,858 | |||
Custodian fees | 10,358 | |||
Trustees’ fees* | 6,015 | |||
Line of credit fees | 549 | |||
Miscellaneous | 115,237 | |||
Total expenses | 1,334,424 | |||
Net investment income | 185,996 | |||
Net Realized and Unrealized Gain (Loss): | ||||
Net realized gain (loss) on: | ||||
Investments | 618,158 | |||
Net realized gain | 618,158 | |||
Net change in unrealized appreciation (depreciation) on: | ||||
Investments | 8,404,635 | |||
Net change in unrealized appreciation (depreciation) | 8,404,635 | |||
Net realized and unrealized gain | 9,022,793 | |||
Net increase in net assets resulting from operations | $ | 9,208,789 |
* | Relates to Trustees not deemed “interested persons” within the meaning of Section 2(a)(19) of the 1940 Act. |
SEE NOTES TO FINANCIAL STATEMENTS. | THE RYDEX FUNDS ANNUAL REPORT | 153 |
TRANSPORTATION FUND |
STATEMENTS OF CHANGES IN NET ASSETS
Year Ended March 31, 2015 | Year Ended March 31, 2014 | |||||||
Increase (Decrease) in Net Assets from Operations: | ||||||||
Net investment income (loss) | $ | 185,996 | $ | (121,576 | ) | |||
Net realized gain on investments | 618,158 | 2,214,194 | ||||||
Net change in unrealized appreciation (depreciation) on investments | 8,404,635 | 12,043,472 | ||||||
Net increase in net assets resulting from operations | 9,208,789 | 14,136,090 | ||||||
Capital share transactions: | ||||||||
Proceeds from sale of shares | ||||||||
Investor Class | 225,561,497 | 442,197,154 | ||||||
Advisor Class | 41,190,056 | 15,406,895 | ||||||
A-Class | 41,341,080 | 35,299,972 | ||||||
C-Class | 28,834,797 | 20,204,027 | ||||||
Cost of shares redeemed | ||||||||
Investor Class | (232,830,435 | ) | (486,392,760 | ) | ||||
Advisor Class | (37,870,325 | ) | (18,129,650 | ) | ||||
A-Class | (40,894,730 | ) | (29,905,841 | ) | ||||
C-Class | (26,857,147 | ) | (19,951,182 | ) | ||||
Net decrease from capital share transactions | (1,525,207 | ) | (41,271,385 | ) | ||||
Net increase (decrease) in net assets | 7,683,582 | (27,135,295 | ) | |||||
Net assets: | ||||||||
Beginning of year | 63,276,711 | 90,412,006 | ||||||
End of year | $ | 70,960,293 | $ | 63,276,711 | ||||
Undistributed net investment income/(Accumulated net investment loss) at end of year | $ | 132,339 | $ | (53,657 | ) | |||
Capital share activity: | ||||||||
Shares sold | ||||||||
Investor Class | 4,633,899 | 11,397,922 | ||||||
Advisor Class | 922,719 | 430,435 | ||||||
A-Class | 919,079 | 957,561 | ||||||
C-Class | 671,966 | 587,228 | ||||||
Shares redeemed | ||||||||
Investor Class | (4,795,289 | ) | (12,864,102 | ) | ||||
Advisor Class | (853,724 | ) | (519,741 | ) | ||||
A-Class | (912,772 | ) | (798,761 | ) | ||||
C-Class | (626,094 | ) | (587,841 | ) | ||||
Net decrease in shares | (40,216 | ) | (1,397,299 | ) |
154 | THE RYDEX FUNDS ANNUAL REPORT | SEE NOTES TO FINANCIAL STATEMENTS. |
TRANSPORTATION FUND |
FINANCIAL HIGHLIGHTS
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.
Investor Class | Year Ended March 31, 2015 | Year Ended March 31, 2014 | Year Ended March 28, 2013 | Year Ended March 31, 2012 | Year Ended March 31, 2011 | |||||||||||||||
Per Share Data | ||||||||||||||||||||
Net asset value, beginning of period | $ | 44.63 | $ | 32.07 | $ | 26.96 | $ | 27.85 | $ | 23.79 | ||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||
Net investment income (loss)a | .18 | (.04 | ) | (.07 | ) | (.06 | ) | — | b | |||||||||||
Net gain (loss) on investments (realized and unrealized) | 7.25 | 12.60 | 5.18 | (.83 | ) | 4.06 | ||||||||||||||
Total from investment operations | 7.43 | 12.56 | 5.11 | (.89 | ) | 4.06 | ||||||||||||||
Net asset value, end of period | $ | 52.06 | $ | 44.63 | $ | 32.07 | $ | 26.96 | $ | 27.85 | ||||||||||
Total Returnc | 16.65 | % | 39.16 | % | 18.95 | % | (3.20 | %) | 17.07 | % | ||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||
Net assets, end of period (in thousands) | $ | 42,947 | $ | 44 | $ | 78,644 | $ | 8,031 | $ | 5,320 | ||||||||||
Ratios to average net assets: | ||||||||||||||||||||
Net investment income (loss) | 0.37 | % | (0.09 | %) | (0.25 | %) | (0.22 | %) | 0.02 | % | ||||||||||
Total expenses | 1.35 | % | 1.37 | % | 1.37 | % | 1.35 | % | 1.38 | % | ||||||||||
Portfolio turnover rate | 247 | % | 593 | % | 737 | % | 1,082 | % | 1,217 | % |
Advisor Class | Year Ended March 31, 2015 | Year Ended March 31, 2014 | Year Ended March 28, 2013 | Year Ended March 31, 2012 | Year Ended March 31, 2011 | |||||||||||||||
Per Share Data | ||||||||||||||||||||
Net asset value, beginning of period | $ | 40.61 | $ | 29.32 | $ | 24.76 | $ | 25.70 | $ | 22.05 | ||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||
Net investment income (loss)a | (.10 | ) | (.18 | ) | (.15 | ) | (.14 | ) | (.17 | ) | ||||||||||
Net gain (loss) on investments (realized and unrealized) | 6.61 | 11.47 | 4.71 | (.80 | ) | 3.82 | ||||||||||||||
Total from investment operations | 6.51 | 11.29 | 4.56 | (.94 | ) | 3.65 | ||||||||||||||
Net asset value, end of period | $ | 47.12 | $ | 40.61 | $ | 29.32 | $ | 24.76 | $ | 25.70 | ||||||||||
Total Returnc | 16.03 | % | 38.51 | % | 18.42 | % | (3.66 | %) | 16.55 | % | ||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||
Net assets, end of period (in thousands) | $ | 6,249 | $ | 2,583 | $ | 4,483 | $ | 2,355 | $ | 2,902 | ||||||||||
Ratios to average net assets: | ||||||||||||||||||||
Net investment income (loss) | (0.22 | %) | (0.50 | %) | (0.57 | %) | (0.55 | %) | (0.74 | %) | ||||||||||
Total expenses | 1.85 | % | 1.87 | % | 1.86 | % | 1.86 | % | 1.89 | % | ||||||||||
Portfolio turnover rate | 247 | % | 593 | % | 737 | % | 1,082 | % | 1,217 | % |
SEE NOTES TO FINANCIAL STATEMENTS. | THE RYDEX FUNDS ANNUAL REPORT | 155 |
TRANSPORTATION FUND |
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.
A-Class | Year Ended March 31, 2015 | Year Ended March 31, 2014 | Year Ended March 28, 2013 | Year Ended March 31, 2012 | Year Ended March 31, 2011 | |||||||||||||||
Per Share Data | ||||||||||||||||||||
Net asset value, beginning of period | $ | 41.61 | $ | 29.96 | $ | 25.25 | $ | 26.15 | $ | 22.37 | ||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||
Net investment income (loss)a | .05 | (.11 | ) | (.01 | ) | (.12 | ) | (.10 | ) | |||||||||||
Net gain (loss) on investments (realized and unrealized) | 6.75 | 11.76 | 4.72 | (.78 | ) | 3.88 | ||||||||||||||
Total from investment operations | 6.80 | 11.65 | 4.71 | (.90 | ) | 3.78 | ||||||||||||||
Net asset value, end of period | $ | 48.41 | $ | 41.61 | $ | 29.96 | $ | 25.25 | $ | 26.15 | ||||||||||
Total Returnc | 16.34 | % | 38.89 | % | 18.70 | % | (3.48 | %) | 16.90 | % | ||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||
Net assets, end of period (in thousands) | $ | 15,359 | $ | 12,938 | $ | 4,558 | $ | 1,600 | $ | 1,239 | ||||||||||
Ratios to average net assets: | ||||||||||||||||||||
Net investment income (loss) | 0.12 | % | (0.28 | %) | (0.05 | %) | (0.51 | %) | (0.42 | %) | ||||||||||
Total expenses | 1.60 | % | 1.62 | % | 1.60 | % | 1.61 | % | 1.64 | % | ||||||||||
Portfolio turnover rate | 247 | % | 593 | % | 737 | % | 1,082 | % | 1,217 | % |
C-Class | Year Ended March 31, 2015 | Year Ended March 31, 2014 | Year Ended March 28, 2013 | Year Ended March 31, 2012 | Year Ended March 31, 2011 | |||||||||||||||
Per Share Data | ||||||||||||||||||||
Net asset value, beginning of period | $ | 39.52 | $ | 28.67 | $ | 24.34 | $ | 25.38 | $ | 21.87 | ||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||
Net investment income (loss)a | (.27 | ) | (.37 | ) | (.26 | ) | (.29 | ) | (.24 | ) | ||||||||||
Net gain (loss) on investments (realized and unrealized) | 6.38 | 11.22 | 4.59 | (.75 | ) | 3.75 | ||||||||||||||
Total from investment operations | 6.11 | 10.85 | 4.33 | (1.04 | ) | 3.51 | ||||||||||||||
Net asset value, end of period | $ | 45.63 | $ | 39.52 | $ | 28.67 | $ | 24.34 | $ | 25.38 | ||||||||||
Total Returnc | 15.46 | % | 37.84 | % | 17.79 | % | (4.10 | %) | 16.05 | % | ||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||
Net assets, end of period (in thousands) | $ | 6,405 | $ | 3,734 | $ | 2,727 | $ | 2,729 | $ | 2,069 | ||||||||||
Ratios to average net assets: | ||||||||||||||||||||
Net investment income (loss) | (0.62 | %) | (1.07 | %) | (1.06 | %) | (1.24 | %) | (1.04 | %) | ||||||||||
Total expenses | 2.35 | % | 2.37 | % | 2.35 | % | 2.35 | % | 2.39 | % | ||||||||||
Portfolio turnover rate | 247 | % | 593 | % | 737 | % | 1,082 | % | 1,217 | % |
a | Net investment income (loss) per share was computed using average shares outstanding throughout the period. |
b | Net investment income is less than $0.01 per share. |
c | Total return does not reflect the impact of any applicable sales charges. |
156 | THE RYDEX FUNDS ANNUAL REPORT | SEE NOTES TO FINANCIAL STATEMENTS. |
PERFORMANCE REPORT AND FUND PROFILE (Unaudited) | March 31, 2015 |
UTILITIES FUND
OBJECTIVE: Seeks to provide capital appreciation by investing in companies that operate public utilities (“utilities companies”).
For the one-year period ended March 31, 2015, Utilities Fund Investor Class returned 9.12%, compared with 11.09% for the S&P 500 Utilities Index. The broader S&P 500 Index returned 12.73%.
The electric utilities segment provided the largest contribution to return, followed by the multi-utilities segment. The oil, gas & consumable fuels industry contributed least to return. No industry detracted.
PG&E Corp., Duke Energy Corp., and NiSource, Inc. were the best-performing holdings over the period, while NRG Energy, Inc., Cia de Saneamento Basico do Estado de Sao Paulo ADR, and MDU Resources Group, Inc. were the main detractors.
Performance displayed represents past performance, which is no guarantee of future results.
Holdings Diversification (Market Exposure as % of Net Assets)
![](https://capedge.com/proxy/N-CSR/0001398344-15-003814/rsecf_52.jpg)
“Holdings Diversification (Market Exposure as % of Net Assets)” excludes any temporary cash investments.
Inception Dates: | |
Investor Class | April 3, 2000 |
Advisor Class | April 3, 2000 |
A-Class | September 1, 2004 |
C-Class | April 27, 2001 |
Ten Largest Holdings (% of Total Net Assets) | |
Duke Energy Corp. | 3.6% |
NextEra Energy, Inc. | 3.3% |
Dominion Resources, Inc. | 3.2% |
Southern Co. | 3.1% |
Exelon Corp. | 2.7% |
American Electric Power Company, Inc. | 2.6% |
Sempra Energy | 2.6% |
PG&E Corp. | 2.4% |
PPL Corp. | 2.4% |
Public Service Enterprise Group, Inc. | 2.3% |
Top Ten Total | 28.2% |
“Ten Largest Holdings” exclude any temporary cash or derivative investments. |
THE RYDEX FUNDS ANNUAL REPORT | 157 |
PERFORMANCE REPORT AND FUND PROFILE (Unaudited)(concluded) | March 31, 2015 |
Cumulative Fund Performance*
![](https://capedge.com/proxy/N-CSR/0001398344-15-003814/rsecf_53.jpg)
![](https://capedge.com/proxy/N-CSR/0001398344-15-003814/rsecf_54.jpg)
Average Annual Returns*
Periods Ended March 31, 2015
1 Year | 5 Year | 10 Year | |
Investor Class Shares | 9.12% | 11.97% | 7.49% |
Advisor Class Shares | 8.53% | 11.42% | 6.96% |
A-Class Shares | 8.78% | 11.69% | 7.23% |
A-Class Shares with sales charge† | 3.60% | 10.61% | 6.70% |
C-Class Shares | 7.99% | 10.85% | 6.41% |
C-Class Shares with CDSC‡ | 6.99% | 10.85% | 6.41% |
S&P 500 Utilities Index | 11.09% | 12.95% | 8.48% |
S&P 500 Index | 12.73% | 14.47% | 8.01% |
* | The performance data above represents past performance that is not predictive of future results. The investment return and principal value of an investment in the Fund will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Returns are historical and include changes in principal and reinvested dividends and capital gains and do not reflect the effect of taxes. The S&P 500 Index and S&P 500 Utilities Index are unmanaged indices and, unlike the Fund, have no management fees or operating expenses to reduce their reported returns. The graphs are based on Investor Class shares and A-Class shares only; performance for Advisor Class shares and C-Class shares will vary due to differences in fee structures. |
† | Fund returns are calculated using the maximum sales charge of 4.75%. |
‡ | Fund returns include a CDSC of 1% if redeemed within 12 months of purchase. |
158 | THE RYDEX FUNDS ANNUAL REPORT |
SCHEDULE OF INVESTMENTS | March 31, 2015 |
UTILITIES FUND |
Shares | Value | |||||||
COMMON STOCKS† - 99.6% | ||||||||
ELECTRIC-INTEGRATED - 66.1% | ||||||||
Duke Energy Corp. | 41,306 | $ | 3,171,475 | |||||
NextEra Energy, Inc. | 27,936 | 2,906,742 | ||||||
Dominion Resources, Inc. | 39,159 | 2,775,198 | ||||||
Southern Co. | 61,056 | 2,703,560 | ||||||
Exelon Corp. | 69,558 | 2,337,844 | ||||||
American Electric Power Company, Inc. | 39,894 | 2,244,038 | ||||||
PG&E Corp. | 40,009 | 2,123,278 | ||||||
PPL Corp. | 61,459 | 2,068,710 | ||||||
Public Service Enterprise Group, Inc. | 47,299 | 1,982,774 | ||||||
Edison International | 30,423 | 1,900,525 | ||||||
Xcel Energy, Inc. | 52,010 | 1,810,468 | ||||||
Consolidated Edison, Inc. | 29,513 | 1,800,293 | ||||||
Eversource Energy | 34,198 | 1,727,683 | ||||||
FirstEnergy Corp. | 46,857 | 1,642,806 | ||||||
DTE Energy Co. | 20,356 | 1,642,526 | ||||||
Entergy Corp. | 20,781 | 1,610,320 | ||||||
Wisconsin Energy Corp. | 29,004 | 1,435,698 | ||||||
Ameren Corp. | 32,496 | 1,371,331 | ||||||
CMS Energy Corp. | 38,254 | 1,335,447 | ||||||
SCANA Corp. | 22,034 | 1,211,650 | ||||||
Alliant Energy Corp. | 18,046 | 1,136,898 | ||||||
Pinnacle West Capital Corp. | 17,824 | 1,136,280 | ||||||
Pepco Holdings, Inc. | 41,664 | 1,117,845 | ||||||
OGE Energy Corp. | 34,182 | 1,080,493 | ||||||
Integrys Energy Group, Inc. | 14,208 | 1,023,260 | ||||||
Westar Energy, Inc. | 25,327 | 981,675 | ||||||
TECO Energy, Inc. | 47,435 | 920,239 | ||||||
MDU Resources Group, Inc. | 41,153 | 878,205 | ||||||
Great Plains Energy, Inc. | 32,467 | 866,220 | ||||||
Cleco Corp. | 14,347 | 782,198 | ||||||
Korea Electric Power Corp. ADR* | 37,900 | 776,950 | ||||||
Hawaiian Electric Industries, Inc. | 23,951 | 769,306 | ||||||
IDACORP, Inc. | 12,182 | 765,882 | ||||||
UIL Holdings Corp. | 14,610 | 751,246 | ||||||
Portland General Electric Co. | 20,063 | 744,137 | ||||||
NorthWestern Corp. | 12,952 | 696,688 | ||||||
PNM Resources, Inc. | 22,637 | 661,000 | ||||||
ALLETE, Inc. | 12,499 | 659,447 | ||||||
Black Hills Corp. | 12,860 | 648,658 | ||||||
Avista Corp. | 18,619 | 636,397 | ||||||
El Paso Electric Co. | 14,230 | 549,847 | ||||||
Total Electric-Integrated | 57,385,237 | |||||||
GAS-DISTRIBUTION - 19.0% | ||||||||
Sempra Energy | 20,327 | 2,216,049 | ||||||
NiSource, Inc. | 37,169 | 1,641,382 | ||||||
CenterPoint Energy, Inc. | 61,815 | 1,261,644 | ||||||
AGL Resources, Inc. | 21,320 | 1,058,538 | ||||||
Atmos Energy Corp. | 18,456 | 1,020,617 | ||||||
UGI Corp. | 31,288 | 1,019,676 | ||||||
National Fuel Gas Co. | 16,101 | 971,373 | ||||||
Questar Corp. | 37,339 | 890,909 | ||||||
Vectren Corp. | 18,687 | 824,844 | ||||||
National Grid plc ADR | 12,190 | 787,596 | ||||||
Piedmont Natural Gas Company, Inc. | 20,005 | 738,385 | ||||||
WGL Holdings, Inc. | 13,034 | 735,118 | ||||||
New Jersey Resources Corp. | 23,008 | 714,628 | ||||||
Southwest Gas Corp. | 12,260 | 713,164 | ||||||
ONE Gas, Inc. | 15,037 | 650,050 | ||||||
Laclede Group, Inc. | 12,632 | 647,011 | ||||||
South Jersey Industries, Inc. | 10,809 | 586,713 | ||||||
Total Gas-Distribution | 16,477,697 | |||||||
INDEPENDENT POWER PRODUCER - 5.9% | ||||||||
Calpine Corp.* | 57,843 | 1,322,869 | ||||||
NRG Energy, Inc. | 50,992 | 1,284,488 | ||||||
Dynegy, Inc.* | 28,975 | 910,684 | ||||||
NRG Yield, Inc. — Class A1 | 16,950 | 859,874 | ||||||
Abengoa Yield plc | 23,029 | 777,920 | ||||||
Total Independent Power Producer | 5,155,835 | |||||||
WATER - 4.1% | ||||||||
American Water Works Company, Inc. | 24,997 | 1,355,088 | ||||||
Aqua America, Inc. | 35,120 | 925,412 | ||||||
Cia de Saneamento Basico do Estado de Sao Paulo ADR | 139,620 | 756,740 | ||||||
American States Water Co. | 13,200 | 526,548 | ||||||
Total Water | 3,563,788 | |||||||
ENERGY-ALTERNATE SOURCES - 1.8% | ||||||||
TerraForm Power, Inc. — Class A | 25,769 | 940,826 | ||||||
Pattern Energy Group, Inc. | 21,740 | 615,677 | ||||||
Total Energy-Alternate Sources | 1,556,503 | |||||||
ELECTRIC-GENERATION - 1.5% | ||||||||
AES Corp. | 103,805 | 1,333,894 | ||||||
ELECTRIC-TRANSMISSION - 1.2% | ||||||||
ITC Holdings Corp. | 27,975 | 1,047,104 | ||||||
PIPELINES - 0.0% | ||||||||
Kinder Morgan, Inc. | 1 | 42 | ||||||
Total Common Stocks | ||||||||
(Cost $70,706,523) | 86,520,100 |
SEE NOTES TO FINANCIAL STATEMENTS. | THE RYDEX FUNDS ANNUAL REPORT | 159 |
SCHEDULE OF INVESTMENTS (concluded) | March 31, 2015 |
UTILITIES FUND |
Face Amount | Value | |||||||
REPURCHASE AGREEMENT††,2 - 0.4% | ||||||||
HSBC Group issued 03/31/15 at 0.03% due 04/01/15 | $ | 355,487 | $ | 355,487 | ||||
Total Repurchase Agreement | ||||||||
(Cost $355,487) | 355,487 | |||||||
SECURITIES LENDING COLLATERAL††,3 - 0.7% | ||||||||
Repurchase Agreements | ||||||||
HSBC Securities, Inc. issued 03/31/15 at 0.10% due 04/01/15 | 402,254 | 402,254 | ||||||
BNP Paribas Securities Corp. issued 03/31/15 at 0.10% due 04/01/15 | 138,376 | 138,376 | ||||||
Barclays Capital, Inc. issued 03/31/15 at 0.10% due 04/01/15 | 71,424 | 71,424 | ||||||
Total Securities Lending Collateral | ||||||||
(Cost $612,054) | 612,054 | |||||||
Total Investments - 100.7% | ||||||||
(Cost $71,674,064) | $ | 87,487,641 | ||||||
Other Assets & Liabilities, net - (0.7)% | (586,161 | ) | ||||||
Total Net Assets - 100.0% | $ | 86,901,480 |
* | Non-income producing security. |
† | Value determined based on Level 1 inputs — See Note 4. |
†† | Value determined based on Level 2 inputs — See Note 4. |
1 | All or portion of this security is on loan at March 31, 2015— See Note 6. |
2 | Repurchase Agreement — See Note 5. |
3 | Securities lending collateral — See Note 6. |
ADR — American Depositary Receipt | |
plc — Public Limited Company |
160 | THE RYDEX FUNDS ANNUAL REPORT | SEE NOTES TO FINANCIAL STATEMENTS. |
UTILITIES FUND |
STATEMENT OF ASSETS AND LIABILITIES
March 31, 2015
Assets: | ||||
Investments, at value - including $608,760 of securities loaned (cost $70,706,523) | $ | 86,520,100 | ||
Repurchase agreements, at value (cost $967,541) | 967,541 | |||
Total investments (cost $71,674,064) | 87,487,641 | |||
Segregated cash with broker | 8,946 | |||
Receivables: | ||||
Fund shares sold | 2,870,159 | |||
Dividends | 184,173 | |||
Securities lending income | 758 | |||
Total assets | 90,551,677 | |||
Liabilities: | ||||
Overdraft due to custodian bank | 418 | |||
Payable for: | ||||
Securities purchased | 2,638,614 | |||
Return of securities loaned | 621,000 | |||
Fund shares redeemed | 245,069 | |||
Management fees | 60,164 | |||
Transfer agent and administrative fees | 17,695 | |||
Distribution and service fees | 13,675 | |||
Portfolio accounting fees | 7,078 | |||
Miscellaneous | 46,484 | |||
Total liabilities | 3,650,197 | |||
Commitments and contingent liabilities (Note 10) | — | |||
Net assets | $ | 86,901,480 | ||
Net assets consist of: | ||||
Paid in capital | $ | 78,241,428 | ||
Undistributed net investment income | — | |||
Accumulated net realized loss on investments | (7,153,525 | ) | ||
Net unrealized appreciation on investments | 15,813,577 | |||
Net assets | $ | 86,901,480 | ||
Investor Class: | ||||
Net assets | $ | 55,156,324 | ||
Capital shares outstanding | 1,491,659 | |||
Net asset value per share | $ | 36.98 | ||
Advisor Class: | ||||
Net assets | $ | 13,545,752 | ||
Capital shares outstanding | 402,987 | |||
Net asset value per share | $ | 33.61 | ||
A-Class: | ||||
Net assets | $ | 9,782,242 | ||
Capital shares outstanding | 281,891 | |||
Net asset value per share | $ | 34.70 | ||
Maximum offering price per share (Net asset value divided by 95.25%) | $ | 36.43 | ||
C-Class: | ||||
Net assets | $ | 8,417,162 | ||
Capital shares outstanding | 274,190 | |||
Net asset value per share | $ | 30.70 |
STATEMENT OF OPERATIONS
Year Ended March 31, 2015
Investment Income: | ||||
Dividends (net of foreign withholding tax of $20,619) | $ | 3,404,551 | ||
Income from securities lending, net | 8,896 | |||
Interest | 85 | |||
Total investment income | 3,413,532 | |||
Expenses: | ||||
Management fees | 799,938 | |||
Transfer agent and administrative fees | 235,275 | |||
Distribution and service fees: | ||||
Advisor Class | 53,324 | |||
A-Class | 25,020 | |||
C-Class | 93,662 | |||
Portfolio accounting fees | 94,110 | |||
Custodian fees | 10,931 | |||
Trustees’ fees* | 5,637 | |||
Tax expense | 3,490 | |||
Line of credit fees | 1,247 | |||
Miscellaneous | 118,023 | |||
Total expenses | 1,440,657 | |||
Net investment income | 1,972,875 | |||
Net Realized and Unrealized Gain (Loss): | ||||
Net realized gain (loss) on: | ||||
Investments | (770,439 | ) | ||
Net realized loss | (770,439 | ) | ||
Net change in unrealized appreciation (depreciation) on: | ||||
Investments | 2,118,506 | |||
Net change in unrealized appreciation (depreciation) | 2,118,506 | |||
Net realized and unrealized gain | 1,348,067 | |||
Net increase in net assets resulting from operations | $ | 3,320,942 |
* | Relates to Trustees not deemed “interested persons” within the meaning of Section 2(a)(19) of the 1940 Act. |
SEE NOTES TO FINANCIAL STATEMENTS. | THE RYDEX FUNDS ANNUAL REPORT | 161 |
UTILITIES FUND |
STATEMENTS OF CHANGES IN NET ASSETS
Year Ended March 31, 2015 | Year Ended March 31, 2014 | |||||||
Increase (Decrease) in Net Assets from Operations: | ||||||||
Net investment income | $ | 1,972,875 | $ | 1,150,415 | ||||
Net realized gain (loss) on investments | (770,439 | ) | 3,726,063 | |||||
Net change in unrealized appreciation (depreciation) on investments | 2,118,506 | (345,635 | ) | |||||
Net increase in net assets resulting from operations | 3,320,942 | 4,530,843 | ||||||
Distributions to shareholders from: | ||||||||
Net investment income | ||||||||
Investor Class | (272,237 | ) | (653,403 | ) | ||||
Advisor Class | (76,869 | ) | (166,669 | ) | ||||
A-Class | (26,090 | ) | (161,160 | ) | ||||
C-Class | (39,413 | ) | (302,460 | ) | ||||
Total distributions to shareholders | (414,609 | ) | (1,283,692 | ) | ||||
Capital share transactions: | ||||||||
Proceeds from sale of shares | ||||||||
Investor Class | 270,237,495 | 273,458,616 | ||||||
Advisor Class | 237,983,954 | 89,095,236 | ||||||
A-Class | 49,228,912 | 23,091,679 | ||||||
C-Class | 34,705,230 | 36,830,999 | ||||||
Distributions reinvested | ||||||||
Investor Class | 144,586 | 639,026 | ||||||
Advisor Class | 76,768 | 162,897 | ||||||
A-Class | 22,710 | 143,241 | ||||||
C-Class | 35,206 | 277,036 | ||||||
Cost of shares redeemed | ||||||||
Investor Class | (313,431,370 | ) | (224,424,635 | ) | ||||
Advisor Class | (226,632,966 | ) | (91,124,222 | ) | ||||
A-Class | (51,074,156 | ) | (19,091,917 | ) | ||||
C-Class | (35,228,923 | ) | (36,035,250 | ) | ||||
Net increase (decrease) from capital share transactions | (33,932,554 | ) | 53,022,706 | |||||
Net increase (decrease) in net assets | (31,026,221 | ) | 56,269,857 | |||||
Net assets: | ||||||||
Beginning of year | 117,927,701 | 61,657,844 | ||||||
End of year | $ | 86,901,480 | $ | 117,927,701 | ||||
Undistributed net investment income at end of year | $ | — | $ | 414,609 | ||||
Capital share activity: | ||||||||
Shares sold | ||||||||
Investor Class | 7,335,372 | 8,321,501 | ||||||
Advisor Class | 7,128,509 | 2,982,830 | ||||||
A-Class | 1,412,405 | 747,486 | ||||||
C-Class | 1,145,355 | 1,344,893 | ||||||
Shares issued from reinvestment of distributions | ||||||||
Investor Class | 3,887 | 20,594 | ||||||
Advisor Class | 2,266 | 5,732 | ||||||
A-Class | 650 | 4,900 | ||||||
C-Class | 1,130 | 10,603 | ||||||
Shares redeemed | ||||||||
Investor Class | (8,665,636 | ) | (6,835,762 | ) | ||||
Advisor Class | (6,800,787 | ) | (3,074,956 | ) | ||||
A-Class | (1,487,751 | ) | (619,975 | ) | ||||
C-Class | (1,166,095 | ) | (1,312,120 | ) | ||||
Net increase (decrease) in shares | (1,090,695 | ) | 1,595,726 |
162 | THE RYDEX FUNDS ANNUAL REPORT | SEE NOTES TO FINANCIAL STATEMENTS. |
UTILITIES FUND |
FINANCIAL HIGHLIGHTS
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.
Investor Class | Year Ended March 31, 2015 | Year Ended March 31, 2014 | Year Ended March 28, 2013 | Year Ended March 31, 2012 | Year Ended March 31, 2011 | |||||||||||||||
Per Share Data | ||||||||||||||||||||
Net asset value, beginning of period | $ | 34.01 | $ | 32.71 | $ | 29.13 | $ | 27.00 | $ | 24.80 | ||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||
Net investment income (loss)a | .84 | .78 | .74 | .73 | .86 | |||||||||||||||
Net gain (loss) on investments (realized and unrealized) | 2.26 | 1.98 | 3.96 | 1.80 | 2.96 | |||||||||||||||
Total from investment operations | 3.10 | 2.76 | 4.70 | 2.53 | 3.82 | |||||||||||||||
Less distributions from: | ||||||||||||||||||||
Net investment income | (.13 | ) | (1.46 | ) | (1.12 | ) | (.40 | ) | (1.62 | ) | ||||||||||
Total distributions | (.13 | ) | (1.46 | ) | (1.12 | ) | (.40 | ) | (1.62 | ) | ||||||||||
Net asset value, end of period | $ | 36.98 | $ | 34.01 | $ | 32.71 | $ | 29.13 | $ | 27.00 | ||||||||||
Total Returnb | 9.12 | % | 8.88 | % | 16.75 | % | 9.44 | % | 15.94 | % | ||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||
Net assets, end of period (in thousands) | $ | 55,156 | $ | 95,854 | $ | 42,907 | $ | 37,469 | $ | 9,328 | ||||||||||
Ratios to average net assets: | ||||||||||||||||||||
Net investment income (loss) | 2.31 | % | 2.38 | % | 2.45 | % | 2.59 | % | 3.35 | % | ||||||||||
Total expenses | 1.35 | % | 1.40 | % | 1.35 | % | 1.35 | % | 1.37 | % | ||||||||||
Portfolio turnover rate | 384 | % | 508 | % | 534 | % | 549 | % | 800 | % |
Advisor Class | Year Ended March 31, 2015 | Year Ended March 31, 2014 | Year Ended March 28, 2013 | Year Ended March 31, 2012 | Year Ended March 31, 2011 | |||||||||||||||
Per Share Data | ||||||||||||||||||||
Net asset value, beginning of period | $ | 31.09 | $ | 30.19 | $ | 27.10 | $ | 25.26 | $ | 23.40 | ||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||
Net investment income (loss)a | .60 | .69 | .48 | .56 | .62 | |||||||||||||||
Net gain (loss) on investments (realized and unrealized) | 2.05 | 1.67 | 3.73 | 1.68 | 2.86 | |||||||||||||||
Total from investment operations | 2.65 | 2.36 | 4.21 | 2.24 | 3.48 | |||||||||||||||
Less distributions from: | ||||||||||||||||||||
Net investment income | (.13 | ) | (1.46 | ) | (1.12 | ) | (.40 | ) | (1.62 | ) | ||||||||||
Total distributions | (.13 | ) | (1.46 | ) | (1.12 | ) | (.40 | ) | (1.62 | ) | ||||||||||
Net asset value, end of period | $ | 33.61 | $ | 31.09 | $ | 30.19 | $ | 27.10 | $ | 25.26 | ||||||||||
Total Returnb | 8.53 | % | 8.29 | % | 16.23 | % | 8.90 | % | 15.43 | % | ||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||
Net assets, end of period (in thousands) | $ | 13,546 | $ | 2,269 | $ | 4,812 | $ | 8,036 | $ | 1,240 | ||||||||||
Ratios to average net assets: | ||||||||||||||||||||
Net investment income (loss) | 1.79 | % | 2.32 | % | 1.70 | % | 2.11 | % | 2.53 | % | ||||||||||
Total expenses | 1.84 | % | 1.88 | % | 1.85 | % | 1.84 | % | 1.87 | % | ||||||||||
Portfolio turnover rate | 384 | % | 508 | % | 534 | % | 549 | % | 800 | % |
SEE NOTES TO FINANCIAL STATEMENTS. | THE RYDEX FUNDS ANNUAL REPORT | 163 |
UTILITIES FUND |
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.
A-Class | Year Ended March 31, 2015 | Year Ended March 31, 2014 | Year Ended March 28, 2013 | Year Ended March 31, 2012 | Year Ended March 31, 2011 | |||||||||||||||
Per Share Data | ||||||||||||||||||||
Net asset value, beginning of period | $ | 32.02 | $ | 30.95 | $ | 27.69 | $ | 25.75 | $ | 23.77 | ||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||
Net investment income (loss)a | .66 | .63 | .65 | .67 | .54 | |||||||||||||||
Net gain (loss) on investments (realized and unrealized) | 2.15 | 1.90 | 3.73 | 1.67 | 3.06 | |||||||||||||||
Total from investment operations | 2.81 | 2.53 | 4.38 | 2.34 | 3.60 | |||||||||||||||
Less distributions from: | ||||||||||||||||||||
Net investment income | (.13 | ) | (1.46 | ) | (1.12 | ) | (.40 | ) | (1.62 | ) | ||||||||||
Total distributions | (.13 | ) | (1.46 | ) | (1.12 | ) | (.40 | ) | (1.62 | ) | ||||||||||
Net asset value, end of period | $ | 34.70 | $ | 32.02 | $ | 30.95 | $ | 27.69 | $ | 25.75 | ||||||||||
Total Returnb | 8.78 | % | 8.64 | % | 16.46 | % | 9.16 | % | 15.70 | % | ||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||
Net assets, end of period (in thousands) | $ | 9,782 | $ | 11 | $ | 6,938 | $ | 7,912 | $ | 3,289 | ||||||||||
Ratios to average net assets: | ||||||||||||||||||||
Net investment income (loss) | 1.93 | % | 2.05 | % | 2.26 | % | 2.47 | % | 2.23 | % | ||||||||||
Total expenses | 1.60 | % | 1.63 | % | 1.61 | % | 1.60 | % | 1.63 | % | ||||||||||
Portfolio turnover rate | 384 | % | 508 | % | 534 | % | 549 | % | 800 | % |
C-Class | Year Ended March 31, 2015 | Year Ended March 31, 2014 | Year Ended March 28, 2013 | Year Ended March 31, 2012 | Year Ended March 31, 2011 | |||||||||||||||
Per Share Data | ||||||||||||||||||||
Net asset value, beginning of period | $ | 28.55 | $ | 27.96 | $ | 25.31 | $ | 23.76 | $ | 22.21 | ||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||
Net investment income (loss)a | .36 | .34 | .42 | .42 | .39 | |||||||||||||||
Net gain (loss) on investments (realized and unrealized) | 1.92 | 1.71 | 3.35 | 1.53 | 2.78 | |||||||||||||||
Total from investment operations | 2.28 | 2.05 | 3.77 | 1.95 | 3.17 | |||||||||||||||
Less distributions from: | ||||||||||||||||||||
Net investment income | (.13 | ) | (1.46 | ) | (1.12 | ) | (.40 | ) | (1.62 | ) | ||||||||||
Total distributions | (.13 | ) | (1.46 | ) | (1.12 | ) | (.40 | ) | (1.62 | ) | ||||||||||
Net asset value, end of period | $ | 30.70 | $ | 28.55 | $ | 27.96 | $ | 25.31 | $ | 23.76 | ||||||||||
Total Returnb | 7.99 | % | 7.83 | % | 15.58 | % | 8.28 | % | 14.85 | % | ||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||
Net assets, end of period (in thousands) | $ | 8,417 | $ | 8,387 | $ | 7,001 | $ | 6,961 | $ | 4,751 | ||||||||||
Ratios to average net assets: | ||||||||||||||||||||
Net investment income (loss) | 1.18 | % | 1.22 | % | 1.62 | % | 1.70 | % | 1.72 | % | ||||||||||
Total expenses | 2.35 | % | 2.38 | % | 2.36 | % | 2.35 | % | 2.38 | % | ||||||||||
Portfolio turnover rate | 384 | % | 508 | % | 534 | % | 549 | % | 800 | % |
a | Net investment income (loss) per share was computed using average shares outstanding throughout the period. |
b | Total return does not reflect the impact of any applicable sales charges. |
164 | THE RYDEX FUNDS ANNUAL REPORT | SEE NOTES TO FINANCIAL STATEMENTS. |
NOTES TO FINANCIAL STATEMENTS
1. Organization and Significant Accounting Policies
Organization
The Rydex Series Funds (the “Trust”), a Delaware business trust, is registered with the SEC under the Investment Company Act of 1940 (”1940 Act”), as a non-diversified, open-ended investment company of the series type. Each series, in effect, is representing a separate Fund. The Trust is authorized to issue an unlimited number of no par value shares. The Trust accounts for the assets of each fund separately.
The Trust offers a combination of eight separate classes of shares: Investor Class shares, Advisor Class shares, A-Class shares, C-Class shares, H-Class shares, Y-Class shares, Institutional Class shares and Money Market Class shares. Sales of shares of each Class are made without a front-end sales charge at the net asset value per share (“NAV”), with the exception of A-Class shares. A-Class shares are sold at the NAV, plus the applicable front-end sales charge. The sales charge varies depending on the amount purchased, but will not exceed 4.75%. A-Class share purchases of $1 million or more are exempt from the front-end sales charge but have a 1% contingent deferred sales charge (“CDSC”) if shares are redeemed within 12 months of purchase. C-Class shares have a 1% CDSC if shares are redeemed within 12 months of purchase. Institutional Class shares are offered primarily for direct investment by institutions such as pension and profit sharing plans, endowments, foundations and corporations. Institutional Class shares have a minimum initial investment of $2 million and a minimum account balance of $1 million. Institutional Class shares are offered without a front-end sales charge or CDSC. At March 31, 2015, the Trust consisted of fifty-two funds.
This report covers 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, Real Estate Fund, Retailing Fund, Technology Fund, Telecommunications Fund, Transportation Fund and Utilities Fund (the “Funds”). Only Investor Class, Advisor Class, A-Class, C-Class and H-Class had been issued by the Funds.
The Funds invest in a specific industry sector. To the extent that investments are concentrated in a single sector, the Funds are subject to legislative or regulatory changes, adverse market conditions and/or increased competition affecting such sector.
The Funds seek capital appreciation and invest substantially all of their assets in equity securities of companies involved in their sector.
The Funds are designed and operated to accommodate frequent trading by shareholders and, unlike most mutual funds, offer unlimited exchange privileges with no minimum holding periods or transactions fees, which may cause the Funds to experience high portfolio turnover.
Guggenheim Investments (“GI”) provides advisory services, and Rydex Fund Services, LLC (“RFS”) provides transfer agent, administrative and accounting services to the Trust. Guggenheim Funds Distributors, LLC (“GFD”) acts as principal underwriter for the Trust. GI, RFS and GFD are affiliated entities.
Significant Accounting Policies
The Funds operate as investment companies and accordingly follow the investment company accounting and reporting guidance of the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification Topic 946 Financial Services – Investment Companies.
The following significant accounting policies are in conformity with U.S. generally accepted accounting principles (“U.S. GAAP”) and are consistently followed by the Trust. This requires management to make estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates. All time references are based on Eastern Time.
The NAV of each Class of the Funds is calculated by dividing the market value of the Fund’s securities and other assets, less all liabilities, attributable to the Class by the number of outstanding shares of the Class.
A. The Board of Trustees of the Funds (the “Board”) has adopted policies and procedures for the valuation of the Funds’ investments (the “Valuation Procedures”). Pursuant to the Valuation Procedures, the Board has delegated to a valuation committee, consisting of representatives from Guggenheim’s investment management, fund administration, legal and compliance departments (the “Valuation Committee”), the day-to-day responsibility for implementing the Valuation
THE RYDEX FUNDS ANNUAL REPORT | 165 |
NOTES TO FINANCIAL STATEMENTS (continued)
Procedures, including, under most circumstances, the responsibility for determining the fair value of the Funds’ securities or other assets.
Valuations of the Funds’ securities are supplied primarily by pricing services appointed pursuant to the processes set forth in the Valuation Procedures. The Valuation Committee convenes monthly, or more frequently as needed and will review the valuation of all assets which have been fair valued for reasonableness. The Funds’ officers, through the Valuation Committee and consistent with the monitoring and review responsibilities set forth in the Valuation Procedures, regularly review procedures used by, and valuations provided by, the pricing services.
If the pricing service cannot or does not provide a valuation for a particular investment or such valuation is deemed unreliable, such investment is fair valued by the Valuation Committee.
Equity securities listed on an exchange (New York Stock Exchange (“NYSE”) or American Stock Exchange) are valued at the last quoted sales price as of the close of business on the NYSE, usually 4:00 p.m. on the valuation date. Equity securities listed on the NASDAQ market system are valued at the NASDAQ Official Closing Price on the valuation date, which may not necessarily represent the last sale price. If there has been no sale on such exchange or NASDAQ on a given day, the security is valued at the closing bid price on that day.
Open-end investment companies (“Mutual Funds”) are valued at their NAV as of the close of business, on the valuation date. Exchange-traded funds (“ETFs”) and closed-end investment companies (“CEFs”) are valued at the last quoted sales price.
Repurchase agreements are valued at amortized cost, which approximates market value.
Investments for which market quotations are not readily available are fair valued as determined in good faith by GI under the direction of the Board of Trustees using methods established or ratified by the Board of Trustees.
Valuations in accordance with these methods are intended to reflect each security’s (or asset’s) “fair value.” Each such determination is based on a consideration of all relevant factors, which are likely to vary from one pricing context to another. Examples of such factors may include, but are not limited to: (i) the type of security, (ii) the initial cost of the security, (iii) the existence of any contractual restrictions on the security’s disposition, (iv) the price and extent of public trading in similar securities of the issuer or of comparable companies, (v) quotations or evaluated prices from broker-dealers and/or pricing services, (vi) information obtained from the issuer, analysts, and/or the appropriate stock exchange (for exchange-traded securities), (vii) an analysis of the company’s financial statements, and (viii) an evaluation of the forces that influence the issuer of pending merger activity, public offerings or tender offers that might affect the value of the security).
B. Security transactions are recorded on the trade date for financial reporting purposes. Realized gains and losses from securities transactions are recorded using the identified cost basis. Proceeds from lawsuits related to investment holdings are recorded as realized gains in the respective Fund. Dividend income is recorded on the ex-dividend date, net of applicable taxes withheld by foreign countries. Taxable non-cash dividends are recorded as dividend income. Interest income, including amortization of premiums and accretion of discounts, is accrued on a daily basis. Dividend income from REITs is recorded based on the income included in the distributions received from the REIT investments using published REIT classifications, including some management estimates when actual amounts are not available. Distributions received in excess of this estimated amount are recorded as a reduction of the cost of investments or reclassified to capital gains. The actual amounts of income, return of capital, and capital gains are only determined by each REIT after its fiscal year-end, and may differ from the estimated amounts.
C. Distributions of net investment income and net realized gains, if any, are declared and paid at least annually. Dividends are reinvested in additional shares unless shareholders request payment in cash. Distributions are recorded on the ex-dividend date and are determined in accordance with income tax regulations which may differ from U.S. GAAP.
D. Interest and dividend income, most expenses, all realized gains and losses, and all unrealized gains and losses are allocated to the classes based upon the value of the outstanding shares in each Class. Certain costs, such as distribution and service fees are charged directly to specific classes. In addition, certain expenses have been allocated to the individual Funds in the Trust on a pro rata basis upon the respective aggregate net assets of each Fund included in the Trust.
166 | THE RYDEX FUNDS ANNUAL REPORT |
NOTES TO FINANCIAL STATEMENTS (continued)
E. The Funds may leave cash overnight in their cash account with the custodian. Periodically, a Fund may have cash due to the custodian bank as an overdraft balance. A fee is incurred on this overdraft, calculated by multiplying the overdraft by a rate based on the federal funds rate.
F. Under the Funds’ organizational documents, their Trustees and Officers are indemnified against certain liabilities arising out of the performance of their duties to the Trust. In addition, throughout the normal course of business, the Funds enter into contracts that contain a variety of representations and warranties which provide general indemnifications. The Funds’ maximum exposure under these arrangements is unknown, as this would involve future claims that may be made against the Funds and/or their affiliates that have not yet occurred. However, based on experience, the Funds expect the risk of loss to be remote.
2. Fees and Other Transactions with Affiliates
Under the terms of an investment advisory contract, the Funds pay GI investment advisory fees calculated at their annualized rates below, based on the average daily net assets of the Funds:
Fund | Management Fees (as a % of Net Assets) |
Banking Fund | 0.85% |
Basic Materials Fund | 0.85% |
Biotechnology Fund | 0.85% |
Consumer Products Fund | 0.85% |
Electronics Fund | 0.85% |
Energy Fund | 0.85% |
Energy Services Fund | 0.85% |
Financial Services Fund | 0.85% |
Health Care Fund | 0.85% |
Internet Fund | 0.85% |
Leisure Fund | 0.85% |
Precious Metals Fund | 0.75% |
Real Estate Fund | 0.85% |
Retailing Fund | 0.85% |
Technology Fund | 0.85% |
Telecommunications Fund | 0.85% |
Transportation Fund | 0.85% |
Utilities Fund | 0.85% |
RFS provides transfer agent and administrative services to the Funds for fees calculated at the annualized rate of 0.25% based on the average daily net assets of each Fund.
RFS also provides accounting services to the Funds for fees calculated at annualized rates below, based on the average daily net assets of each Fund.
Fund Accounting Fees | (as a % of Net Assets) |
On the first $250 million | 0.10% |
On the next $250 million | 0.075% |
On the next $250 million | 0.05% |
Over $750 million | 0.03% |
RFS engages external service providers to perform other necessary services for the Trust, such as audit and accounting related services, legal services, custody, printing and mailing, etc., on a pass-through basis. Such expenses are allocated to various Funds within the complex based on relative net assets.
The Trust has adopted a Distribution and Shareholder Services Plan applicable to its Advisor Class shares and a Distribution Plan applicable to A-Class shares and H-Class shares for which GFD and other firms that provide distribution and/or shareholder services (“Service Providers”) may receive compensation. If a Service Provider provides distribution services, the Funds will pay distribution fees to GFD at an annual rate not to exceed 0.25% of average daily net assets, pursuant to Rule 12b-1 of the 1940 Act. GFD, in turn, will pay the Service Provider out of its fees. GFD may, at its discretion, retain a portion of such payments to compensate itself for distribution services. With regard to Advisor Class shares only, if a Service Provider provides shareholder services, GFD will receive shareholder servicing fees from the Funds at an annual rate not to exceed 0.25% of average daily net assets. GFD, in turn, will compensate Service Providers for providing such services, while retaining a portion of such payments to compensate itself for shareholder services it performs.
The Trust has adopted a separate Distribution and Shareholder Services Plan applicable to its C-Class shares that allows the Funds to pay annual distribution and service fees of 1.00% of the Funds’ C-Class shares average daily net assets. The annual 0.25% service fee compensates a shareholder’s financial adviser for providing ongoing services to the shareholder. The annual distribution fee of 0.75% reimburses GFD for paying the shareholder’s financial adviser an ongoing sales commission. GFD advances the first year’s service and distribution fees to the financial adviser. GFD retains the service and distribution fees on accounts with no authorized dealer of record.
THE RYDEX FUNDS ANNUAL REPORT | 167 |
NOTES TO FINANCIAL STATEMENTS (continued)
For the year ended March 31, 2015, GFD retained sales charges of $360,571 relating to sales of A-Class shares of the Trust.
Certain trustees and officers of the Trust are also officers of GI, RFS and GFD.
3. Federal Income Tax Information
The Funds intend to comply with the provisions of Subchapter M of the Internal Revenue Code applicable to regulated investment companies and will distribute substantially all taxable net investment income and capital gains sufficient to relieve the Funds from all, or substantially all, federal income, excise and state income taxes. Therefore, no provision for federal or state income tax is required.
Tax positions taken or expected to be taken in the course of preparing the Funds’ tax returns are evaluated 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. Management has analyzed the Funds' tax positions taken, or to be taken, on Federal income tax returns for all open tax years, and has concluded that no provision for income tax is required in the Funds' financial statements. The Funds’ federal tax returns are subject to examination by the Internal Revenue Service for a period of three years after they are filed.
Tax basis capital losses in excess of capital gains are carried forward to offset future net capital gains. For the year ended March 31, 2015, the following capital loss carryforward amounts were expired or used:
Fund | Amount | |||
Basic Materials Fund | $ | 1,525,433 | ||
Electronics Fund | 5,495,145 | |||
Energy Fund | 3,472,546 | |||
Energy Services Fund | 1,541,919 | |||
Financial Services Fund | 1,081,486 | |||
Leisure Fund | 1,238,160 | |||
Real Estate Fund | 2,162,377 | |||
Retailing Fund | 1,675,233 | |||
Technology Fund | 1,136,122 | |||
Transportation Fund | 1,487,487 | |||
Utilities Fund | 1,369,019 |
The tax character of distributions paid during the year ended March 31, 2015 was as follows:
Fund | Ordinary Income | Long-Term Capital Gain | Total Distributions | |||||||||
Banking Fund | $ | 104,722 | $ | — | $ | 104,722 | ||||||
Basic Materials Fund | 232,153 | — | 232,153 | |||||||||
Biotechnology Fund | 16,555,696 | 3,761,283 | 20,316,979 | |||||||||
Consumer Products Fund | 4,013,864 | — | 4,013,864 | |||||||||
Electronics Fund | — | — | — | |||||||||
Energy Fund | 200,733 | — | 200,733 | |||||||||
Energy Services Fund | — | — | — | |||||||||
Financial Services Fund | 149,519 | — | 149,519 | |||||||||
Health Care Fund | 498,400 | 2,095,865 | 2,594,265 | |||||||||
Internet Fund | 399,239 | — | 399,239 | |||||||||
Leisure Fund | 94,646 | 893,915 | 988,561 | |||||||||
Precious Metals Fund | 1,329,325 | — | 1,329,325 | |||||||||
Real Estate Fund | 391,160 | — | 391,160 | |||||||||
Retailing Fund | — | — | — | |||||||||
Technology Fund | — | — | — | |||||||||
Telecommunications Fund | 98,119 | — | 98,119 | |||||||||
Transportation Fund | — | — | — | |||||||||
Utilities Fund | 414,609 | — | 414,609 |
168 | THE RYDEX FUNDS ANNUAL REPORT |
NOTES TO FINANCIAL STATEMENTS (continued)
The tax character of distributions paid during the year ended March 31, 2014 was as follows:
Fund | Ordinary Income | Long-Term Capital Gain | Total Distributions | |||||||||
Banking Fund | $ | 206,728 | $ | — | $ | 206,728 | ||||||
Basic Materials Fund | 299,181 | — | 299,181 | |||||||||
Biotechnology Fund | — | — | — | |||||||||
Consumer Products Fund | 1,720,103 | 5,668,936 | 7,389,039 | |||||||||
Electronics Fund | 2,979 | — | 2,979 | |||||||||
Energy Fund | — | — | — | |||||||||
Energy Services Fund | — | — | — | |||||||||
Financial Services Fund | 145,547 | — | 145,547 | |||||||||
Health Care Fund | 113,186 | 4,763,132 | 4,876,318 | |||||||||
Internet Fund | — | 185,111 | 185,111 | |||||||||
Leisure Fund | 200,095 | — | 200,095 | |||||||||
Precious Metals Fund | 303,331 | — | 303,331 | |||||||||
Real Estate Fund | 336,681 | — | 336,681 | |||||||||
Retailing Fund | — | — | — | |||||||||
Technology Fund | — | — | — | |||||||||
Telecommunications Fund | 98,053 | — | 98,053 | |||||||||
Transportation Fund | — | — | — | |||||||||
Utilities Fund | 1,283,692 | — | 1,283,692 |
Note: For federal income tax purposes, short-term capital gain distributions are treated as ordinary income distributions.
The tax character of distributable earnings/(accumulated losses) at March 31, 2015 was as follows:
Fund | Undistributed Ordinary Income | Undistributed Long-Term Capital Gain | Net Unrealized Appreciation/ (Depreciation) | Capital Loss Carryforward & Other Losses | ||||||||||||
Banking Fund | $ | 84,494 | $ | — | $ | (186,951 | ) | $ | (21,412,209 | ) | ||||||
Basic Materials Fund | 252,786 | — | 4,142,106 | (16,213,579 | ) | |||||||||||
Biotechnology Fund | 9,120,813 | — | 291,512,176 | — | ||||||||||||
Consumer Products Fund | 3,082,889 | — | 66,693,444 | — | ||||||||||||
Electronics Fund | 42,413 | — | 3,183,353 | (12,987,326 | ) | |||||||||||
Energy Fund | 334,376 | 369,647 | 5,892,529 | — | ||||||||||||
Energy Services Fund | 231,483 | — | 515,158 | (23,626,434 | ) | |||||||||||
Financial Services Fund | 277,773 | 141,563 | 4,152,986 | — | ||||||||||||
Health Care Fund | 4,516,377 | 2,057,091 | 66,427,772 | — | ||||||||||||
Internet Fund | 142,232 | 88,617 | 3,710,291 | — | ||||||||||||
Leisure Fund | 285,529 | 96,180 | 5,504,480 | — | ||||||||||||
Precious Metals Fund | 183,913 | — | (16,830,803 | ) | (27,245,750 | ) | ||||||||||
Real Estate Fund | 344,392 | — | 2,342,260 | (12,161,929 | ) | |||||||||||
Retailing Fund | 32,233 | — | 9,930,358 | (3,963,067 | ) | |||||||||||
Technology Fund | — | — | 9,445,665 | (4,119,862 | ) | |||||||||||
Telecommunications Fund | 80,748 | — | 175,325 | (4,226,125 | ) | |||||||||||
Transportation Fund | 132,339 | — | 23,269,619 | (16,296,735 | ) | |||||||||||
Utilities Fund | — | — | 8,660,052 | — |
Capital Loss Carryforward amounts may be limited due to Federal income tax regulations.
For Federal income tax purposes, capital loss carryforwards represent realized losses of the Funds that may be carried forward and applied against future capital gains. For taxable years beginning on or before December 22, 2010, such capital losses may be carried forward for a maximum of eight years. Under the RIC Modernization Act of 2010, the Funds are permitted to carry forward capital losses incurred in taxable years beginning after December 22, 2010 for an unlimited period. However, any losses incurred during those taxable years must be utilized prior to the losses incurred in pre-enactment taxable years. As a result of this ordering rule, pre-enactment capital loss carryforwards may be more likely
THE RYDEX FUNDS ANNUAL REPORT | 169 |
NOTES TO FINANCIAL STATEMENTS (continued)
to expire unused. Additionally, post-enactment capital losses that are carried forward will retain their character as either short-term or long-term capital losses rather than being considered all short-term as under previous law. As of March 31, 2015, capital loss carryforwards for the Funds were as follows:
Expires in | Expires in | Expires in | Expires in | Unlimited | Total Capital Loss | |||||||||||||||||||||||
Fund | 2016 | 2017 | 2018 | 2019 | Short-Term | Long-Term | Carryforward | |||||||||||||||||||||
Banking Fund | $ | (311,892 | ) | $ | (1,809,926 | ) | $ | (16,385,824 | ) | $ | (912,723 | ) | $ | (1,524,659 | ) | $ | (467,185 | ) | $ | (21,412,209 | ) | |||||||
Basic Materials Fund | — | (6,151,760 | ) | (8,009,421 | ) | — | (2,052,398 | ) | — | (16,213,579 | ) | |||||||||||||||||
Biotechnology Fund | — | — | — | — | — | — | — | |||||||||||||||||||||
Consumer Products Fund | — | — | — | — | — | — | — | |||||||||||||||||||||
Electronics Fund | (1,900,883 | ) | (6,118,835 | ) | — | (3,055,204 | ) | (1,733,388 | ) | (179,016 | ) | (12,987,326 | ) | |||||||||||||||
Energy Fund | — | — | — | — | — | — | — | |||||||||||||||||||||
Energy Services Fund | — | (16,789,802 | ) | (5,702,829 | ) | — | — | — | (22,492,631 | ) | ||||||||||||||||||
Financial Services Fund | — | — | — | — | — | — | — | |||||||||||||||||||||
Health Care Fund | — | — | — | — | — | — | — | |||||||||||||||||||||
Internet Fund | — | — | — | — | — | — | — | |||||||||||||||||||||
Leisure Fund | — | — | — | — | — | — | — | |||||||||||||||||||||
Precious Metals Fund | — | — | — | — | (6,090,469 | ) | (21,155,281 | ) | (27,245,750 | ) | ||||||||||||||||||
Real Estate Fund | — | (2,247,435 | ) | (4,305,317 | ) | — | (5,609,177 | ) | — | (12,161,929 | ) | |||||||||||||||||
Retailing Fund | — | (1,564,877 | ) | — | — | (2,398,190 | ) | — | (3,963,067 | ) | ||||||||||||||||||
Technology Fund | — | (3,941,068 | ) | — | — | — | — | (3,941,068 | ) | |||||||||||||||||||
Telecommunications Fund | — | (1,745,552 | ) | — | — | (1,763,826 | ) | (716,747 | ) | (4,226,125 | ) | |||||||||||||||||
Transportation Fund | — | — | (9,430,280 | ) | (6,866,455 | ) | — | — | (16,296,735 | ) | ||||||||||||||||||
Utilities Fund | — | — | — | — | — | — | — |
Net investment income and net realized gains (losses) may differ for financial statement and tax purposes because of temporary or permanent book/tax differences. These differences are typically due to post-October losses, losses deferred due to wash sales, utilization of earnings and profits on shareholder redemptions, and the “mark-to-market of certain passive foreign investment companies (PFICs) for tax purposes. Additional differences may result from tax treatment of net investment losses and expired expired capital loss carryforwards. To the extent these differences are permanent, reclassifications are made to the appropriate equity accounts in the period that the differences arise. These reclassifications have no effect on the net assets or NAV per share.
On the Statements of Assets and Liabilities the following adjustments were made for permanent book/tax differences:
Fund | Paid In Capital | Undistributed Net Investment Income | Accumulated Net Realized Gain/(Loss) | |||||||||
Banking Fund | $ | — | $ | — | $ | — | ||||||
Basic Materials Fund | (2,029 | ) | 43,965 | (41,936 | ) | |||||||
Biotechnology Fund | 22,005,007 | 2,286,392 | (24,291,399 | ) | ||||||||
Consumer Products Fund | 5,367,327 | 4,085 | (5,371,412 | ) | ||||||||
Electronics Fund | (5,495,145 | ) | — | 5,495,145 | ||||||||
Energy Fund | 738,104 | 1,169 | (739,273 | ) | ||||||||
Energy Services Fund | — | — | — | |||||||||
Financial Services Fund | 42,471 | — | (42,471 | ) | ||||||||
Health Care Fund | 3,146,358 | 733,012 | (3,879,370 | ) | ||||||||
Internet Fund | 1,008,905 | 182,551 | (1,191,456 | ) | ||||||||
Leisure Fund | 3,786,003 | — | (3,786,003 | ) | ||||||||
Precious Metals Fund | — | 438,579 | (438,579 | ) | ||||||||
Real Estate Fund | (10,798 | ) | 10,798 | — | ||||||||
Retailing Fund | — | — | — | |||||||||
Technology Fund | — | — | — | |||||||||
Telecommunications Fund | — | — | — | |||||||||
Transportation Fund | — | — | — | |||||||||
Utilities Fund | 2,849,391 | (1,972,875 | ) | (876,516 | ) |
170 | THE RYDEX FUNDS ANNUAL REPORT |
NOTES TO FINANCIAL STATEMENTS (continued)
At March 31, 2015, 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:
Fund | Tax Cost | Tax Unrealized Gain | Tax Unrealized Loss | Net Unrealized Gain/(Loss) | ||||||||||||
Banking Fund | $ | 49,664,288 | $ | 911,335 | $ | (1,098,286 | ) | $ | (186,951 | ) | ||||||
Basic Materials Fund | 56,710,244 | 5,648,610 | (1,506,504 | ) | 4,142,106 | |||||||||||
Biotechnology Fund | 486,653,716 | 299,044,252 | (7,532,077 | ) | 291,512,175 | |||||||||||
Consumer Products Fund | 263,375,888 | 71,340,374 | (4,646,930 | ) | 66,693,444 | |||||||||||
Electronics Fund | 25,663,105 | 3,381,563 | (198,210 | ) | 3,183,353 | |||||||||||
Energy Fund | 42,253,238 | 6,977,992 | (1,085,463 | ) | 5,892,529 | |||||||||||
Energy Services Fund | 26,916,155 | 846,495 | (331,337 | ) | 515,158 | |||||||||||
Financial Services Fund | 54,159,896 | 5,018,435 | (865,449 | ) | 4,152,986 | |||||||||||
Health Care Fund | 209,775,682 | 68,919,609 | (2,491,837 | ) | 66,427,772 | |||||||||||
Internet Fund | 11,062,701 | 3,841,858 | (131,567 | ) | 3,710,291 | |||||||||||
Leisure Fund | 62,549,675 | 6,723,810 | (1,219,330 | ) | 5,504,480 | |||||||||||
Precious Metals Fund | 69,112,808 | — | (16,830,801 | ) | (16,830,801 | ) | ||||||||||
Real Estate Fund | 44,652,314 | 2,491,570 | (149,310 | ) | 2,342,260 | |||||||||||
Retailing Fund | 70,794,030 | 10,835,352 | (904,994 | ) | 9,930,358 | |||||||||||
Technology Fund | 27,010,223 | 10,153,919 | (708,254 | ) | 9,445,665 | |||||||||||
Telecommunications Fund | 2,229,745 | 189,452 | (14,127 | ) | 175,325 | |||||||||||
Transportation Fund | 50,351,098 | 23,387,723 | (118,104 | ) | 23,269,619 | |||||||||||
Utilities Fund | 78,827,589 | 9,332,845 | (672,793 | ) | 8,660,052 |
Pursuant to Federal income tax regulations applicable to investment companies, the Funds have elected to treat net capital losses and certain ordinary losses realized between November 1 and March 31 of each year as occurring on the first day of the following tax year. The Funds have also elected to treat certain ordinary losses realized between January 1 and March 31 of each year as occurring on the first day of the following tax year. For the year ended March 31, 2015, the following losses reflected in the accompanying financial statements were deferred for Federal income tax purposes until April 1, 2015:
Fund | Ordinary | Capital | ||||||
Energy Services Fund | $ | — | $ | (1,133,803 | ) | |||
Technology Fund | (178,794 | ) | — |
4. Fair Value Measurement
In accordance with U.S. GAAP, fair value is defined as the price that the Funds would receive to sell an investment or pay to transfer a liability in an orderly transaction with an independent buyer in the principal market, or in the absence of a principal market, the most advantageous market for the investment or liability. U.S. GAAP establishes a three-tier fair value hierarchy based on the types of inputs used to value assets and liabilities and requires corresponding disclosure. The hierarchy and the corresponding inputs are summarized below:
Level 1 — quoted prices in active markets for identical assets or liabilities.
Level 2 — significant other observable inputs (for example quoted prices for securities that are similar based on characteristics such as interest rates, prepayment speeds, credit risk, etc.).
Level 3 — significant unobservable inputs based on the best information available under the circumstances, to the extent observable inputs are not available, which may include assumptions.
The types of inputs available depend on a variety of factors, such as the type of security and the characteristics of the markets in which it trades, if any. Fair valuation determinations that rely on fewer or no observable inputs require greater judgment. Accordingly, fair value determinations for Level 3 securities require the greatest amount of judgment.
THE RYDEX FUNDS ANNUAL REPORT | 171 |
NOTES TO FINANCIAL STATEMENTS (continued)
The following table summarizes the inputs used to value the Funds’ investments at March 31, 2015:
Level 1 Investments In Securities | Level 2 Investments In Securities | Level 3 Investments In Securities | Total | |||||||||||||
Assets | ||||||||||||||||
Banking Fund | $ | 49,124,246 | $ | 353,091 | $ | — | $ | 49,477,337 | ||||||||
Basic Materials Fund | 57,598,223 | 3,254,127 | — | 60,852,350 | ||||||||||||
Biotechnology Fund | 688,043,864 | 90,100,931 | 21,096 | 778,165,891 | ||||||||||||
Consumer Products Fund | 319,933,812 | 10,114,892 | 20,628 | 330,069,332 | ||||||||||||
Electronics Fund | 27,196,340 | 1,650,118 | — | 28,846,458 | ||||||||||||
Energy Fund | 45,850,602 | 2,295,165 | — | 48,145,767 | ||||||||||||
Energy Services Fund | 25,228,264 | 2,203,049 | — | 27,431,313 | ||||||||||||
Financial Services Fund | 58,123,746 | 189,136 | — | 58,312,882 | ||||||||||||
Health Care Fund | 263,537,004 | 12,666,450 | — | 276,203,454 | ||||||||||||
Internet Fund | 14,524,098 | 248,894 | — | 14,772,992 | ||||||||||||
Leisure Fund | 67,484,617 | 569,538 | — | 68,054,155 | ||||||||||||
Precious Metals Fund | 49,237,228 | 3,044,779 | — | 52,282,007 | ||||||||||||
Real Estate Fund | 46,731,936 | 262,638 | — | 46,994,574 | ||||||||||||
Retailing Fund | 77,762,393 | 2,961,995 | — | 80,724,388 | ||||||||||||
Technology Fund | 36,047,002 | 408,886 | — | 36,455,888 | ||||||||||||
Telecommunications Fund | 2,394,899 | 5,514 | 4,657 | 2,405,070 | ||||||||||||
Transportation Fund | 70,893,941 | 2,726,776 | — | 73,620,717 | ||||||||||||
Utilities Fund | 86,520,100 | 967,541 | — | 87,487,641 |
Transfers between investment levels may occur as the markets fluctuate and/or the availability of data used in the investment’s valuation changes. The Funds recognize transfers between the levels as of the beginning of the period. As of March 31, 2015, Telecommunications Fund had securities with a total value of $4,657, transfer from Level 2 to Level 3 based on a change in availability of market information.
The inputs or methodologies used for valuing securities are not necessarily an indication of the risk associated with investing in those securities. The suitability of the techniques and sources employed to determine fair valuation are regularly monitored and subject to change.
5. Repurchase Agreements
The Funds transfer 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 Funds’ custodian and is evaluated to ensure that its market value exceeds, at a minimum, 102% of the original face amount of the repurchase agreements. Each Fund holds a pro rata share of the collateral based on the dollar amount of the repurchase agreement entered into by each Fund.
At March 31, 2015, the repurchase agreements in the joint account were as follows:
Counterparty and Terms of Agreement | Face Value | Repurchase Price | Collateral | Par Value | Fair Value | |||||||||||||||
HSBC Group | U.S. Treasury Strips | |||||||||||||||||||
0.03% | 0.00% | |||||||||||||||||||
Due 04/01/15 | $ | 15,774,664 | $ 15,774,677 | 11/15/22 | $ | 18,558,500 | $ | 16,090,220 |
In the event of counterparty default, the Funds have the right to collect the collateral to offset losses incurred. There is potential loss to the Funds in the event the Funds are delayed or prevented from exercising their 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 Funds seek to assert their rights. The Funds’ investment adviser, acting under the supervision of the Board of Trustees, reviews the value of the collateral and the creditworthiness of those banks and dealers with which the Funds enter into repurchase agreements to evaluate potential risks.
172 | THE RYDEX FUNDS ANNUAL REPORT |
NOTES TO FINANCIAL STATEMENTS (continued)
6. Portfolio Securities Loaned
The Funds may lend their securities to approved brokers to earn additional income. Security lending income shown on the Statements of Operations is shown net of rebates paid to the borrowers and earnings on cash collateral investments shared with the lending agent. Within this arrangement, the Funds act as the lender, Credit Suisse acts as the lending agent, and other approved registered broker dealers act as the borrowers. The Funds receive cash collateral, valued at 102% of the value of the securities on loan. Under the terms of the Funds’ securities lending agreement with Credit Suisse, cash collateral is invested in one or more joint repurchase agreements collateralized by obligations of the U.S. Treasury or Government Agencies and cash. The Funds bear the risk of loss on cash collateral investments. 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 Funds the next business day. Although the collateral mitigates the risk, the Funds 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 Funds have the right under the securities lending agreement to recover the securities from the borrower on demand.
At March 31, 2015, the Funds participated in securities lending as follows:
Fund | Value of Securities Loaned | Cash Collateral Received | ||||||
Banking Fund | $ | 171,368 | $ | 181,350 | ||||
Basic Materials Fund | 2,849,049 | 2,999,050 | ||||||
Biotechnology Fund | 79,529,180 | 83,608,806 | ||||||
Consumer Products Fund | 8,624,874 | 8,837,396 | ||||||
Electronics Fund | 1,377,165 | 1,425,325 | ||||||
Energy Fund | 2,013,020 | 2,091,600 | ||||||
Energy Services Fund | 2,024,426 | 2,095,500 | ||||||
Financial Services Fund | 187,242 | 191,900 | ||||||
Health Care Fund | 10,954,785 | 11,745,759 | ||||||
Internet Fund | 169,972 | 173,518 | ||||||
Leisure Fund | 323,506 | 332,275 | ||||||
Precious Metals Fund | 2,546,558 | 2,762,950 | ||||||
Real Estate Fund | 132,470 | 137,300 | ||||||
Retailing Fund | 2,216,055 | 2,271,453 | ||||||
Technology Fund | 407,651 | 414,863 | ||||||
Transportation Fund | 2,076,173 | 2,147,050 | ||||||
Utilities Fund | 608,760 | 621,000 |
THE RYDEX FUNDS ANNUAL REPORT | 173 |
NOTES TO FINANCIAL STATEMENTS (continued)
Cash collateral received was invested in the following joint repurchase agreements at March 31, 2015:
Counterparty and Terms of Agreement | Face Value | Repurchase Price | Collateral | Par Value | Fair Value | |||||
HSBC Securities, Inc. | Fannie Mae Strips | |||||||||
0.10% | 0.00% | |||||||||
Due 04/01/15 | $ | 79,049,877 | $ | 79,050,097 | 11/15/17 - 07/15/37 | $ | 88,174,397 | $ | 60,687,161 | |
Federal Farm Credit Bank | ||||||||||
0.19% | ||||||||||
06/12/17 | 19,951,092 | 19,953,750 | ||||||||
BNP Paribas Securities Corp. | U.S. Treasury Note | |||||||||
0.10% | 2.13% | |||||||||
Due 04/01/15 | 27,193,159 | 27,193,235 | 12/31/21 | 12,501,039 | 12,885,473 | |||||
U.S. Treasury Bond | ||||||||||
4.38% | ||||||||||
05/15/41 | 10,788,895 | 14,854,435 | ||||||||
Barclays Capital Corp. | U.S. Treasury Strips | |||||||||
0.10% | 0.00% | |||||||||
Due 04/01/15 | 14,036,097 | 14,036,136 | 05/15/20 - 05/15/44 | 21,715,762 | 12,902,275 | |||||
U.S. Treasury Bond | ||||||||||
4.75% | ||||||||||
02/15/41 | 985,316 | 1,416,081 |
There is also $1,757,962 in segregated cash held as collateral.
7. Securities Transactions
For the year ended March 31, 2015, the cost of purchases and proceeds from sales of investment securities, excluding government securities, short-term investments and derivatives, were as follows:
Fund | Purchases | Sales | ||||||
Banking Fund | $ | 135,946,530 | $ | 108,340,149 | ||||
Basic Materials Fund | 200,119,765 | 194,143,266 | ||||||
Biotechnology Fund | 611,639,225 | 520,960,890 | ||||||
Consumer Products Fund | 346,285,232 | 223,825,308 | ||||||
Electronics Fund | 160,176,965 | 152,855,827 | ||||||
Energy Fund | 279,180,603 | 278,416,963 | ||||||
Energy Services Fund | 216,265,966 | 225,371,504 | ||||||
Financial Services Fund | 160,654,349 | 135,362,342 | ||||||
Health Care Fund | 374,084,671 | 310,722,642 | ||||||
Internet Fund | 110,052,345 | 151,315,640 | ||||||
Leisure Fund | 155,263,174 | 121,627,373 | ||||||
Precious Metals Fund | 216,481,995 | 211,473,003 | ||||||
Real Estate Fund | 275,117,133 | 257,426,152 | ||||||
Retailing Fund | 138,363,362 | 142,920,592 | ||||||
Technology Fund | 103,419,562 | 117,071,746 | ||||||
Telecommunications Fund | 48,004,904 | 51,178,819 | ||||||
Transportation Fund | 218,510,025 | 219,921,665 | ||||||
Utilities Fund | 367,917,354 | 400,036,847 |
174 | THE RYDEX FUNDS ANNUAL REPORT |
NOTES TO FINANCIAL STATEMENTS (continued)
8. Line of Credit
The Trust, along with other affiliated trusts, secured an uncommitted, $75,000,000 line of credit from U.S. Bank, N.A., which expires June 13, 2015. This line of credit is reserved for emergency or temporary purposes. Borrowings, if any, under this arrangement bear interest equal to the Prime Rate, minus 2%, which shall be paid monthly, averaging 1.25% for the year ended March 31, 2015. On March 31, 2015, the Financial Services Fund and Technology Fund borrowed $557,000 and $260,000, respectively, under this agreement. The Funds did not have any other borrowings under this agreement at March 31, 2015.
The average daily balances borrowed for the year ended March 31, 2015, were as follows:
Fund | Average Daily Balance | |||
Banking Fund | $ | 11,630 | ||
Basic Materials Fund | 7,706 | |||
Biotechnology Fund | 417,893 | |||
Consumer Products Fund | 18,134 | |||
Electronics Fund | 23,079 | |||
Energy Fund | 14,944 | |||
Energy Services Fund | 25,436 | |||
Financial Services Fund | 18,157 | |||
Health Care Fund | 19,592 | |||
Internet Fund | 23,123 | |||
Leisure Fund | 9,128 | |||
Precious Metals Fund | 19,996 | |||
Real Estate Fund | 29,421 | |||
Retailing Fund | 23,655 | |||
Technology Fund | 16,097 | |||
Telecommunications Fund | 3,748 | |||
Transportation Fund | 40,928 | |||
Utilities Fund | 98,347 |
9. Reverse Share Splits
A reverse share split occurred for the following Funds at the close of business:
Fund | Effective Date | Split Type |
Technology Fund | February 7, 2014 | One-for-Three-Reverse Split |
Telecommunications Fund | February 7, 2014 | One-for-Three-Reverse Split |
The effect of these transactions was to divide the number of outstanding shares of the Funds by the respective split ratio, resulting in a corresponding increase in the NAV. The share transactions presented in the statements of changes in net assets and the per share data in the financial highlights for each of the periods presented through February 7, 2014 have been restated to reflect these reverse share splits. There were no changes in net assets, results of operations or total return as a result of these transactions.
THE RYDEX FUNDS ANNUAL REPORT | 175 |
NOTES TO FINANCIAL STATEMENTS (continued)
10. Legal Proceedings
Tribune Company
Rydex Series Funds has been named as a defendant and a putative member of the proposed defendant class of shareholders in the case entitled Kirschner v. FitzSimons, No. 12-2652 (S.D.N.Y.) (formerly Official Committee of Unsecured Creditors of Tribune Co. v. FitzSimons, Adv. Pro. No. 10-54010 (Bankr. D. Del.)) (the “FitzSimons action”), as a result of ownership by certain series of the Rydex Series Funds of shares in the Tribune Company (“Tribune”) in 2007, when Tribune effected a leveraged buyout transaction (“LBO”) by which Tribune converted to a privately-held company. In his complaint, the plaintiff has alleged that, in connection with the LBO, Tribune insiders and shareholders were overpaid for their Tribune stock using financing that the insiders knew would, and ultimately did, leave the Tribune Company insolvent. The plaintiff has asserted claims against certain insiders, major shareholders, professional advisers, and others involved in the LBO. The plaintiff is also attempting to obtain from former Tribune shareholders, including the Rydex Series Funds, the proceeds they received in connection with the LBO.
In June 2011, a group of Tribune creditors filed multiple actions against former Tribune shareholders involving state law constructive fraudulent conveyance claims arising out of the 2007 LBO (the “SLCFC actions”). Rydex Series Funds has been named as a defendant in one of the SLCFC actions: Deutsche Bank Trust Co. Americas v. McGurn, No. 11-1510 (S.D.N.Y.). In those actions, the creditors seek to recover from Tribune’s former shareholders the proceeds received in connection with the 2007 LBO.
The FitzSimons action and the SLCFC actions have been consolidated with the majority of the other Tribune LBO-related lawsuits in a multidistrict litigation proceeding captioned In re Tribune Company Fraudulent Conveyance Litig., No. 11-md-2696 (S.D.N.Y.) (the “MDL Proceeding”).
On September 23, 2013, the District Court granted the defendants’ omnibus motion to dismiss the SLCFC actions, on the basis that the creditors lacked standing. On September 30, 2013, the creditors filed a notice of appeal of the September 23 order. On October 28, 2013, the defendants filed a joint notice of cross-appeal of that same order.
The SLCFC appeals have been fully briefed, and oral argument in front of the U.S. Court of Appeals for the Second Circuit occurred on November 5, 2014. The Court has not yet issued a decision on the appeals.
On May 23, 2014, the defendants filed motions to dismiss the FitzSimons action, including a global motion to dismiss Count I, which is the claim brought against former Tribune shareholders for intentional fraudulent conveyance under U.S. federal law. The Court has not yet issued a decision on any of these motions.
None of these lawsuits alleges any wrongdoing on the part of Rydex Series Funds. The following series of Rydex Series Funds held shares of Tribune and tendered these shares as part of Tribune’s LBO: Nova Fund, S&P 500® Pure Value Fund, Multi-Cap Core Equity Fund, S&P 500® Fund, Multi-Hedge Strategies Fund and Hedged Equity Fund (the “Funds”). The value of the proceeds received by the foregoing Funds was $28,220, $109,242, $9,860, $3,400, $1,181,160, and $10,880, respectively. At this stage of the proceedings, Rydex Series Funds is not able to make a reliable predication as to the outcome of these lawsuits or the effect, if any, on a Fund’s net asset value.
Lyondell Chemical Company
In December 2011, Rydex Series Funds was named as a defendant in Weisfelner, as Trustee of the LB Creditor Trust, v. Fund 1 (In re Lyondell Chemical Co.), Adv. Pro. No. 10-4609 (Bankr. S.D.N.Y.) (the “Creditor Trust action”).
Similar to the claims made in the Tribune matter, the Weisfelner complaint seeks to have set aside and recovered as fraudulent transfers from former Lyondell Chemical Company (“Lyondell”) shareholders the consideration paid to them pursuant to the cash out merger of Lyondell shareholders in connection with the combination of Lyondell and Basell AF in 2007. Lyondell filed for bankruptcy in 2008.
176 | THE RYDEX FUNDS ANNUAL REPORT |
NOTES TO FINANCIAL STATEMENTS (concluded)
On April 7, 2014, the plaintiff filed a Third Amended Complaint. In the related action entitled Weisfelner, as Trustee of the LB Litigation Trust v. A. Holmes & H. Holmes TTEE (In re Lyondell Co.), Adversary Proceeding No. 10-5525 (Bankr. S.D.N.Y.) (the “Litigation Trust action”), the plaintiff also filed a Second Amended Complaint that alleges a claim against the former Lyondell shareholders under federal law for intentional fraudulent transfer. A third related action against the former Lyondell shareholders, Weisfelner, as Trustee of the LB Creditor Trust v. Reichman, Adversary Proceeding No. 12-1570 (Bankr. S.D.N.Y.) (the “Reichman action”), is pending as well.
On May 8, 2014, the plaintiff in the Litigation Trust action filed a motion to certify a defendant class generally comprised of all former Lyondell shareholders that received proceeds in exchange for their shares in the 2007 merger transaction.
On July 30, 2014, the defendants filed a motion to dismiss these lawsuits. The Court held oral argument on the motions to dismiss and on the motion for class certification on January 14 and January 15, 2015. The Court has not yet issued decisions on these motions. Discovery has commenced in these lawsuits.
These lawsuits do not allege any wrongdoing on the part of Rydex Series Funds. The following series of Rydex Series Funds received cash proceeds from the cash out merger in the following amounts: Basic Materials Fund - $1,725,168; Long Short Equity Fund f/k/a U.S. Long Short Momentum Fund - $2,193,600; Global 130/30 Strategy Fund - $37,920; Hedged Equity Fund - $1,440; and Multi-Hedge Strategies Fund - $1,116,480. At this stage of the proceedings, Rydex Series Funds is not able to make a reliable predication as to the outcome of these lawsuits or the effect, if any, on a Fund’s net asset value.
THE RYDEX FUNDS ANNUAL REPORT | 177 |
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Board of Trustees and Shareholders
of Rydex Series Funds:
of Rydex Series Funds:
We have audited the accompanying statements of assets and liabilities, including the schedules of investments, of 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, Real Estate Fund, Retailing Fund, Technology Fund, Telecommunications Fund, Transportation Fund and Utilities Fund (eighteen of the series constituting the Rydex Series Funds) (the “Funds”) as of March 31, 2015, and the related statements of operations for the year then ended, the statements of changes in 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. These financial statements and financial highlights are the responsibility of the Funds’ management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. We were not engaged to perform an audit of the Funds’ internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Funds’ internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements and financial highlights, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of March 31, 2015, by correspondence with the custodian and brokers or by other appropriate auditing procedures where replies from brokers were not received. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of the above listed Funds (eighteen of the series constituting the Rydex Series Funds) at March 31, 2015, the results of their operations for the year then ended, the changes in their net assets for each of the two years in the period then ended, and their financial highlights for each of the five years in the period then ended, in conformity with U.S. generally accepted accounting principles.
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McLean, Virginia
May 21, 2015
178 | THE RYDEX FUNDS ANNUAL REPORT |
OTHER INFORMATION (Unaudited)
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 taxable ordinary income distributions paid during the fiscal year ending March 31, 2015, the following funds had the corresponding percentages qualify for the dividends received deduction for corporations:
Fund | % Qualifying |
Banking Fund | 100.00% |
Basic Materials Fund | 100.00% |
Consumer Products Fund | 65.82% |
Energy Fund | 100.00% |
Financial Services Fund | 100.00% |
Health Care Fund | 100.00% |
Internet Fund | 11.55% |
Leisure Fund | 100.00% |
Precious Metals Fund | 74.97% |
Real Estate Fund | 1.75% |
Telecommunications Fund | 100.00% |
Utilities Fund | 100.00% |
Additionally, the following amounts of taxable ordinary income dividends paid during the fiscal year qualified for the lower income tax rate available to individuals under the Jobs and Growth Tax Relief Reconciliation Act of 2003:
Fund | % Qualifying |
Banking Fund | 100.00% |
Basic Materials Fund | 100.00% |
Consumer Products Fund | 59.55% |
Energy Fund | 100.00% |
Financial Services Fund | 100.00% |
Health Care Fund | 100.00% |
Internet Fund | 7.55% |
Leisure Fund | 100.00% |
Precious Metals Fund | 97.79% |
Real Estate Fund | 0.11% |
Telecommunications Fund | 100.00% |
Utilities Fund | 100.00% |
Additionally, of the taxable ordinary income distributions paid during the fiscal year ending March 31, 2015, the following funds had the corresponding percentages qualify as interest related dividends and qualified short-term capital gains as permitted by IRC Section 871(k)(1) and IRC Section 871(k)(2), respectively:
Fund | % Qualifying | % STCG Qualifying |
Biotechnology Fund | 0.00% | 100.00% |
Consumer Products Fund | 0.00% | 100.00% |
Health Care Fund | 0.00% | 100.00% |
Internet Fund | 0.00% | 100.00% |
THE RYDEX FUNDS ANNUAL REPORT | 179 |
OTHER INFORMATION (Unaudited)(concluded)
With respect to the taxable year ended March 31, 2015, the Funds hereby designate as capital gain dividends the amounts listed below, or, if subsequently determined to be different, the net capital gain of such year:
Fund | From long-term capital gains, subject to the 15% rate gains category: | From long-term capital gains, using proceeds from shareholder redemptions: | ||||||
Biotechnology Fund | $ | 3,761,283 | $ | 18,139,533 | ||||
Consumer Products Fund | — | 2,853,980 | ||||||
Energy Fund | — | 739,273 | ||||||
Financial Services Fund | — | 42,471 | ||||||
Health Care Fund | 2,095,865 | 3,146,358 | ||||||
Internet Fund | — | 1,008,905 | ||||||
Leisure Fund | 893,915 | 3,786,003 |
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 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 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 are 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 800-SEC-0330. Copies of the portfolio holdings are also available to shareholders, without charge and upon request, by calling 800.820.0888.
180 | THE RYDEX FUNDS ANNUAL REPORT |
INFORMATION ON BOARD OF TRUSTEES AND OFFICERS (Unaudited)
A Board of Trustees oversees the Trust, as well as other trusts of GI, 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 800.820.0888.
Name, Address* and Year of Birth of Trustee | Position(s) Held with the Trust, Term of Office and Length of Time Served | Principal Occupation(s) During Past 5 Years | Number of Portfolios in Fund Complex Overseen by Trustee*** | Other Directorships Held by Trustee | ||||
INTERESTED TRUSTEE | ||||||||
Donald C. Cacciapaglia** (1951) | Trustee from 2012 to present. | Current: President and CEO, certain other funds in the Fund Complex (2012-present); Vice Chairman, Guggenheim Investments (2010-present). Former: Chairman and CEO, Channel Capital Group, Inc. (2002-2010). | 221 | Clear Spring Life Insurance Company (2015-present); Guggenheim Partners Japan, Ltd. (2014-present); Delaware Life (2013-present); Guggenheim Life and Annuity Company (2011-present); Paragon Life Insurance Company of Indiana (2011-present). | ||||
INDEPENDENT TRUSTEES | ||||||||
Corey A. Colehour (1945) | Trustee and Member of the Audit, Governance, Nominating, and Investment and Performance Committees from 1998 to present. | Retired. | 133 | None. | ||||
J. Kenneth Dalton (1941) | Trustee, Member and Chairman of the Audit Committee, and Member of the Governance and Nominating Committees from 1998 to present; and Member of the Risk Oversight Committee from 2010 to present. | Retired. | 133 | Epiphany Funds (4) (2009-present). | ||||
John O. Demaret (1940) | Vice Chairman of the Board of Trustees from 2014 to present; Trustee from 1998 to present and Chairman of the Board from 2006 to 2014; Member and Chairman of the Audit Committee from 1998 to present; and Member of the Risk Oversight Committee from 2010 to present. | Retired. | 133 | None. |
THE RYDEX FUNDS ANNUAL REPORT | 181 |
INFORMATION ON BOARD OF TRUSTEES AND OFFICERS (Unaudited)(continued)
Name, Address* and Year of Birth of Trustee | Position(s) Held with the Trust, Term of Office and Length of Time Served | Principal Occupation(s) During Past 5 Years | Number of Portfolios in Fund Complex Overseen by Trustee*** | Other Directorships Held by Trustee | ||||
INDEPENDENT TRUSTEES - concluded | ||||||||
Werner E. Keller (1940) | Chairman of the Board from 2014 to present; Vice Chairman of the Board of Trustees from 2010 to 2014; Trustee and Member of the Audit, Governance, and Nominating Committees from 2005 to present; and Chairman and Member of the Risk Oversight Committee from 2010 to present. | Current: Founder and President, Keller Partners, LLC (investment research firm) (2005-present). | 133 | None. | ||||
Thomas F. Lydon, Jr. (1960) | Trustee and Member of the Audit, Governance, and Nominating Committees from 2005 to present. | Current: President, Global Trends Investments (registered investment adviser) (1996-present). | 133 | US Global Investors (GROW) (1995-present). | ||||
Patrick T. McCarville (1942) | Trustee, Member of the Audit Committee, and Chairman and Member of the Governance and Nominating Committees from 1998 to present. | Retired. Former: Chief Executive Officer, Par Industries, Inc., d/b/a Par Leasing (1977-2010). | 133 | None. |
Name, Address* and Year of Birth | Position(s) Held with the Trust, Term of Office and Length of Time Served | Principal Occupation(s) During Past 5 Years | ||
OFFICERS | ||||
Donald C. Cacciapaglia (1951) | President (2012-present). | Current: President and CEO, certain other funds in the Fund Complex (2012-present); Vice Chairman, Guggenheim Investments (2010-present). Former: Chairman and CEO, Channel Capital Group Inc. (2002-2010). | ||
Michael P. Byrum (1970) | Vice President (1999-present). | Current: Senior Vice President, Security Investors, LLC (2010-present); President and Chief Investment Officer, Rydex Holdings, LLC (2008-present); Director and Chairman, Advisory Research Center, Inc. (2006-present); Manager, Guggenheim Specialized Products, LLC (2005-present). Former: Vice President, Guggenheim Distributors, LLC (2009); Director (2009-2010) and Secretary (2002-2010), Rydex Fund Services, LLC; Director (2008-2010), Chief Investment Officer (2006-2010), President (2004-2010) and Secretary (2002-2010), Rydex Advisors, LLC; Director (2008-2010), Chief Investment Officer (2006-2010), President (2004-2010) and Secretary (2002-2010), Rydex Advisors II, LLC. |
182 | THE RYDEX FUNDS ANNUAL REPORT |
INFORMATION ON BOARD OF TRUSTEES AND OFFICERS (Unaudited)(concluded)
Name, Address* and Year of Birth | Position(s) Held with the Trust, Term of Office and Length of Time Served | Principal Occupation(s) During Past 5 Years | ||
OFFICERS - concluded | ||||
Nikolaos Bonos (1963) | Vice President and Treasurer (2003-present). | Current: Senior Vice President, Security Investors, LLC (2010-present); Chief Executive Officer, Guggenheim Specialized Products, LLC (2009-present); Chief Executive Officer & President, Rydex Fund Services, LLC (2009-present); Vice President, Rydex Holdings, LLC (2008-present). Former: Senior Vice President, Security Global Investors, LLC (2010-2011); and Senior Vice President, Rydex Advisors, LLC and Rydex Advisors II, LLC (2006-2011). | ||
Elisabeth Miller (1968) | Chief Compliance Officer (2012-present). | Current: CCO, certain other funds in the Fund Complex (2012-present); CCO, Security Investors, LLC (2012-present); CCO, Guggenheim Funds Investment Advisors, LLC (2012-present); Managing Director, Guggenheim Investments (2012-present); Vice President, Guggenheim Funds Distributors, LLC (March 2014-present). Former: CCO, Guggenheim Distributors, LLC (2009-March 2014); Senior Manager, Security Investors, LLC (2004-2009); Senior Manager, Guggenheim Distributors, LLC (2004-2009). | ||
Joseph M. Arruda (1966) | Assistant Treasurer (2006-present). | Current: Assistant Treasurer, certain other funds in the Fund Complex (2006-present); Vice President, Security Investors, LLC (2010-present); CFO and Manager, Guggenheim Specialized Products, LLC (2009-present). Former: Vice President, Security Global Investors, LLC (2010-2011); Vice President, Rydex Advisors, LLC (2010); Vice President, Rydex Advisors II, LLC (2010). | ||
Paul J. Davio (1972) | Assistant Treasurer (2014-present). | Current: Assistant Treasurer, certain other funds in the Fund Complex (2014-present); Director, Guggenheim Investments (2006-present). Former: Manager, Mutual Fund Administration, Guggenheim Investments (2003-2006). | ||
Amy J. Lee (1961) | Vice President (2009-present) and Secretary (2012-present). | Current: Chief Legal Officer, certain other funds in the Fund Complex (2013-present); Senior Managing Director, Guggenheim Investments (2012-present). Former: Vice President, Associate General Counsel and Assistant Secretary, Security Benefit Life Insurance Company and Security Benefit Corporation (2004-2012). |
* | All Trustees and Officers may be reached c/o Guggenheim Investments, 805 King Farm Boulevard, Suite 600, Rockville, MD 20850. |
** | Mr. Cacciapaglia is an “interested” person of the Trust, as that term is defined in the 1940 Act by virtue of his affiliation with the Adviser’s parent company. |
*** | The “Fund Complex” includes all closed-end and open-end funds (including all of their portfolios) advised by the Adviser and any funds that have an investment adviser or servicing agent that is an affiliated person of the Adviser. Information provided is as of the date of this report. |
THE RYDEX FUNDS ANNUAL REPORT | 183 |
GUGGENHEIM INVESTMENTS PRIVACY POLICIES (Unaudited)
Rydex Funds, Guggenheim Funds, Rydex Investments, Guggenheim Funds Distributors, LLC, Security Investors, LLC, Security Distributors, Inc., Guggenheim Partners Investment Managers, LLC, and Rydex Advisory Services (Collectively “Guggenheim Investments”).
Our Commitment to You
When you become a Guggenheim Investments investor, you entrust us with not only your hard-earned money but also with personal and financial information about you. We recognize that your relationship with us is based on trust and that you expect us to act responsibly and in your best interests. Because we have access to this private information about you, we hold ourselves to the highest standards in its safekeeping and use. This means, most importantly, that we do not sell client information to anyone—whether it is your personal information or if you are a current or former Guggenheim Investments client.
The Information We Collect About You
In the course of doing business with shareholders and investors, we collect nonpublic personal information about you. You typically provide personal information when you complete a Guggenheim Investments account application or when you request a transaction that involves Rydex and Guggenheim Investments funds or one of the Guggenheim Investments affiliated companies. “Nonpublic personal information” is personally identifiable private information about you. For example, it includes information regarding your name and address, Social Security or taxpayer identification number, assets, income, account balance, bank account information and investment activity (e.g., purchase and redemption history).
How We Handle Your Personal Information
As emphasized above, we do not sell information about current or former clients or their accounts to third parties. Nor do we share such information, except when necessary to complete transactions at your request or to make you aware of related investment products and services that we offer. Additional details about how we handle your personal information are provided below. To complete certain transactions or account changes that you direct, it may be necessary to provide identifying information to companies, individuals or groups that are not affiliated with Guggenheim Investments. For example, if you ask to transfer assets from another financial institution to Guggenheim Investments, we will need to provide certain information about you to that company to complete the transaction. To alert you to other Guggenheim Investments investment products and services, we may share your information within the Guggenheim Investments family of affiliated companies. This would include, for example, sharing your information within Guggenheim Investments so we can make you aware of new Rydex and Guggenheim Investments funds or the services offered through another Guggenheim Investments affiliated company. In certain instances, we may contract with nonaffiliated companies to perform services for us. Where necessary, we will disclose information we have about you to these third parties. In all such cases, we provide the third party with only the information necessary to carry out its assigned responsibilities and only for that purpose. And we require these third parties to treat your private information with the same high degree of confidentiality that we do. In certain instances, we may share information with other financial institutions regarding individuals and entities in response to the U.S.A. Patriot Act. Finally, we will release information about you if you direct us to do so, if we are compelled by law to do so or in other circumstances permitted by law.
Opt Out Provisions
We do not sell your personal information to anyone. The law allows you to “opt out” of only certain kinds of information sharing with third parties. The firm does not share personal information about you with any third parties that triggers this opt-out right. This means YOU ARE ALREADY OPTED OUT.
184 | THE RYDEX FUNDS ANNUAL REPORT |
GUGGENHEIM INVESTMENTS PRIVACY POLICIES (Unaudited)(concluded)
How We Protect Privacy Online
Our concern for the privacy of our shareholders also extends to those who use our web site, guggenheiminvestments.com. Our web site uses some of the most secure forms of online communication available, including encryption technology, Secure Socket Layer (SSL) protocol, firewalls and user names and passwords. These technologies provide a high level of security and privacy when you access your account information or initiate online transactions. The Guggenheim Investments web site offers customized features that require our use of “http cookies”—tiny pieces of information that we ask your browser to store. However, we make very limited use of these cookies. We only use cookies for session management and security features on the Guggenheim Investments web site. We do not use them to pull data from your hard drive, to learn your email address, or to view data in cookies created by other web sites. We will not share the information in our cookies or give others access to it. See the legal information area on our web site for more details about web site security and privacy features.
How We Safeguard Your Personal Information
We restrict access to nonpublic personal information about shareholders to our employees and in some cases to third parties (for example, the service providers described above) as permitted by law. We maintain strict physical, electronic and procedural safeguards that comply with federal standards to guard your nonpublic personal information.
We’ll Keep You Informed
As required by federal law, we will notify shareholders of our privacy policy annually. We reserve the right to modify this policy at any time, but rest assured that if we do change it, we will tell you promptly. You will also be able to access our privacy policy from our web site at guggenheiminvestments.com. Should you have any questions regarding our privacy policy, contact us at 800.820.0888 or 301.296.5100.
THE RYDEX FUNDS ANNUAL REPORT | 185 |
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Rydex Funds Annual Report
Domestic Equity Funds |
Nova Fund |
S&P 500® Fund |
Inverse S&P 500® Strategy Fund |
Monthly Rebalance NASDAQ-100® 2x Strategy Fund |
Inverse NASDAQ-100® Strategy Fund |
Mid-Cap 1.5x Strategy Fund |
Inverse Mid-Cap Strategy Fund |
Russell 2000® 1.5x Strategy Fund |
Russell 2000® Fund |
Inverse Russell 2000® Strategy Fund |
Fixed Income Funds |
Government Long Bond 1.2x Strategy Fund |
Inverse Government Long Bond Strategy Fund |
High Yield Strategy Fund |
Inverse High Yield Strategy Fund |
Money Market Fund |
U.S. Government Money Market Fund |
RTB1-ANN-0315x0316 | guggenheiminvestments.com |
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TABLE OF CONTENTS |
DEAR SHAREHOLDER | 2 |
ECONOMIC AND MARKET OVERVIEW | 4 |
A BRIEF NOTE ON THE COMPOUNDING OF RETURNS | 6 |
ABOUT SHAREHOLDERS’ FUND EXPENSES | 7 |
NOVA FUND | 12 |
S&P 500® FUND | 27 |
INVERSE S&P 500® STRATEGY FUND | 39 |
MONTHLY REBALANCE NASDAQ-100® 2x STRATEGY FUND | 47 |
INVERSE NASDAQ-100® STRATEGY FUND | 56 |
MID-CAP 1.5x STRATEGY FUND | 65 |
INVERSE MID-CAP STRATEGY FUND | 76 |
RUSSELL 2000® 1.5x STRATEGY FUND | 83 |
RUSSELL 2000® FUND | 110 |
INVERSE RUSSELL 2000® STRATEGY FUND | 136 |
GOVERNMENT LONG BOND 1.2x STRATEGY FUND | 143 |
INVERSE GOVERNMENT LONG BOND STRATEGY FUND | 153 |
HIGH YIELD STRATEGY FUND | 163 |
INVERSE HIGH YIELD STRATEGY FUND | 170 |
U.S. GOVERNMENT MONEY MARKET FUND | 177 |
NOTES TO FINANCIAL STATEMENTS | 182 |
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM | 203 |
OTHER INFORMATION | 204 |
INFORMATION ON BOARD OF TRUSTEES AND OFFICERS | 207 |
GUGGENHEIM INVESTMENTS PRIVACY POLICIES | 210 |
THE RYDEX FUNDS ANNUAL REPORT | 1 |
March 31, 2015
Dear Shareholder:
Security Investors, LLC (the “Investment Adviser”) is pleased to present the annual shareholder report for a selection of our Funds (the “Funds”) for the one-year period ended March 31, 2015.
The Investment Adviser is part of Guggenheim Investments, which represents the investment management businesses of Guggenheim Partners, LLC (“Guggenheim”), a global, diversified financial services firm.
Guggenheim Funds Distributors, LLC is the distributor of the Funds. Guggenheim Funds Distributors, LLC is affiliated with Guggenheim Partners, LLC, and Security Investors, LLC.
We encourage you to read the Economic and Market Overview section of the report, which follows this letter, and then the Performance Report and Fund Profile for each Fund.
We are committed to providing innovative investment solutions and appreciate the trust you place in us.
Sincerely,
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Donald C. Cacciapaglia
President
April 30, 2015
Read a prospectus and summary prospectus (if available) carefully before investing. It contains the investment objectives, risks, charges, expenses, and other information, which should be considered carefully before investing. Obtain a prospectus and summary prospectus (if available) at guggenheiminvestments.com or call 800.820.0888.
Inverse and leveraged Funds are not suitable for all investors. • These Funds should be utilized only by investors who (a) understand the risks associated with the use of leverage, (b) understand the consequences of seeking daily leveraged investment results, (c) understand the risk of shorting, and (d) intend to actively monitor and manage their investments. • The more a Fund invests in leveraged instruments, the more the leverage will magnify any gains or losses on those investments. • Inverse Funds involve certain risks, which include increased volatility due to the Funds’ possible use of short sales of securities and derivatives, such as options and futures. • The Funds’ use of derivatives, such as futures, options, and swap agreements, may expose the Funds’ shareholders to additional risks that they would not be subject to if they invested directly in the securities underlying those derivatives. • Short-selling involves increased risks and costs. You risk paying more for a security than you received from its sale. • Leveraged and inverse Funds seek to provide investment results that match the performance of a specific benchmark, before fees and expenses, on a daily basis. Because the Funds seek to track the performance of their benchmark on a daily basis, mathematical compounding, especially with respect to those Funds that use leverage as part of their investment strategy, may prevent a Fund from correlating with the monthly, quarterly, annual, or other period performance of its benchmark. Due to the compounding of daily returns, leveraged and inverse Funds’ returns over periods other than one day will likely differ in amount and possibly direction from the benchmark return for the same period. For those Funds that consistently apply leverage, the value of the Fund’s shares will tend to increase or decrease more than the value of any increase or decrease in its benchmark index. The Funds rebalance their portfolios on a daily basis, increasing exposure in response to that day’s gains or reducing exposure in response to that day’s losses. Daily rebalancing will impair a Fund’s performance if the benchmark experiences volatility. Investors should monitor their leveraged and inverse Funds’ holdings consistent with their strategies, as frequently as daily. • For more on these and other risks, please read the prospectus.
The Fixed Income Funds may not be suitable for all investors. • Fixed income investments are subject to credit, liquidity, interest rate, and, depending on the instrument, counterparty risk. These risks may be increased to the extent fixed income investments are concentrated in any one issuer, industry, region, or country. The market value of fixed income investments generally will fluctuate with, among other things, the financial condition of the obligors on the underlying debt obligations, general economic conditions, the condition of certain financial markets, political events, developments or trends in any particular industry, and changes in prevailing interest rates. In general, any interest rate increases can cause the price of a debt security to decrease and vice versa.
2 | THE RYDEX FUNDS ANNUAL REPORT |
March 31, 2015
The High Yield Strategy Fund and Inverse High Yield Strategy Fund may not be suitable for all investors. • The use of derivatives such as futures, options and swap agreements will expose the fund to additional risks that they would not be subject to if it invested directly in the securities underlying those derivatives. • A highly liquid secondary market may not exist for the credit default swaps the funds invests in, and there can be no assurance that a highly liquid secondary market will develop. • The funds’ market value will change in response to interest rate changes and market conditions among other factors. • You may have a gain or loss when you sell your shares. • In general, bond prices rise when interest rates fall, and vice versa. The funds’ exposure to the high yield bond market may subject the fund to greater volatility because (i) the fund will be affected by the ability of high yield security issuers’ ability to make principal and interest payments and (ii) the prices of derivatives linked to high yield bonds may fluctuate unpredictably and not necessarily in relation to interest rates. • It is important to note that the funds are not guaranteed by the U.S. government. The funds are subject to active trading risks that may increase volatility and impact its ability to achieve its investment objective. • Investing in the Inverse High Yield Strategy Fund involves certain risks, which include volatility due to the Fund’s possible use of short sales of security and derivatives such as options and futures.
Monthly leveraged funds are not suitable for all investors. • These funds should be utilized only by investors who (a) understand the risks associated with the use of leverage, (b) understand the consequences of seeking monthly leveraged investment results, and (c) intend to actively monitor and manage their investments. • The more a fund invests in leveraged instruments, the more the leverage will magnify any gains or losses on those investments. • The funds’ use of derivatives, such as futures, options, and swap agreements, may expose the funds’ shareholders to additional risks that they would not be subject to if they invested directly in the securities underlying those derivatives. • Monthly leveraged funds seek to provide investment results that match the performance of a specific benchmark, before fees and expenses, on a monthly basis. Because monthly leveraged funds seek to track the performance of their benchmark on a monthly basis, mathematical compounding, especially with respect to those funds that use leverage as part of their investment strategy, may prevent a fund from correlating with the quarterly, annual or other period performance of its benchmark. Due to the compounding of monthly returns, leveraged funds’ returns over periods other than one calendar month will likely differ in amount and possibly direction from the benchmark return for the same period. For those funds that consistently apply leverage, the value of the funds’ shares will tend to increase or decrease more than the value of any increase or decrease in its benchmark index. Monthly leveraged funds rebalance their portfolios on a monthly basis on the last day of each calendar month, increasing exposure in response to that month’s gains or reducing exposure in response to that month’s losses. • Throughout the month, the amount of leverage that a monthly leveraged fund provides is allowed to float. Purchasing monthly leveraged funds on any day other than the last day of each calendar month will likely mean that the monthly leveraged fund’s actual leverage is different from its monthly leverage target. Investors should monitor their monthly leveraged funds’ holdings consistent with their strategies, as frequently as daily. • For more on these and other risks, please read the monthly leveraged funds’ prospectus.
The U.S. Government Money Market Fund may not be suitable for all investors. • An investment in the U.S. Government Money Market Fund is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Although the fund seeks to preserve the value of your investment at $1.00 per share, it is possible to lose money by investing in the Fund.
THE RYDEX FUNDS ANNUAL REPORT | 3 |
ECONOMIC AND MARKET OVERVIEW (Unaudited) | March 31, 2015 |
The U.S. continued to enjoy a self-sustaining economic expansion for the 12-month period ended March 31, 2015, although winter weather was likely to distort first-quarter economic data. In addition, U.S. companies scaled back hiring in the last month of the period, adding to evidence that the domestic economy has lost some momentum since the turn of the year. The March increase in payrolls was the smallest since December 2013 and broke a 12-month run of gains above 200,000.
Despite this short-term dislocation, the economy remains on track. Indeed, many other labor market indicators, such as initial jobless claims and the job openings rate, suggest that the U.S. labor market remains quite strong, supporting the conclusion that March’s payroll report was just a temporary blip, similar to the one witnessed last winter. As soon as temporary seasonal factors have dissipated, economic data is likely to bounce back. The labor market has improved over the past year, as subdued mortgage rates and tight housing inventory continue to point to fairly stable appreciation in the housing market, which is key to the ongoing recovery. Consumers are also being helped by lower fuel prices, which are acting as a tax cut for U.S. consumers, freeing up discretionary spending in other areas and acting as a support for consumption.
In Europe, economic data has been surprisingly good and should continue along that path on the back of the European Central Bank’s program of quantitative easing and depreciation of the euro. Japan’s economy remains weak and, without more structural reform, continued monetary accommodation could lead to stagflation. China’s policymakers appear likely to continue the supply of credit and do whatever else is necessary to maintain growth there at an acceptable pace for the near term.
Given weakness overseas and the effect of a stronger U.S. dollar on international earnings, some stocks could face a more challenging environment in the near term, but our research shows that equity markets tend to perform quite well in the periods leading up to a U.S. Federal Reserve (the “Fed”) rate increase. The yield on the 10-year Treasury note declined in January by more than 50 basis points before rebounding in February, echoing the pattern since 2009—Treasury yields decline and a sell-off ensues, driving rates higher. Then conditions stabilize, and rates test their previous lows. Liquidity from foreign central banks and comparatively attractive U.S. yields continue to push global investors to U.S. Treasuries, which should hold down U.S. interest rates in the near term.
Against this backdrop, the U.S. central bank feels pressure to raise its key rate above zero, but insists the decision will be data-dependent and not occur prematurely. With a secular inflation increase unlikely in the near term, slack in the economy, and disinflation being imported from abroad, the Fed may not hike rates until later in the year. The Fed for now appears to be focused on wage growth, which is key for sustaining the expansion but also an indicator of inflationary pressure. The lack of sustained wage growth has been a topic that has confounded the Fed lately. Given the strengthening employment numbers and the apparent reduction in labor market slack, wages should start to increase more steadily across the board. This is one of the most important data points at the moment for the Fed.
The underlying U.S. economy remains strong and investors should avoid being panicked by seasonal setbacks. Indeed, considering the strength of the economy and the wave of liquidity emanating from various central banks around the world, the general investment environment should remain attractive.
For the 12 months ended March 31, 2015, the Standard & Poor’s 500® (“S&P 500”) Index* returned 12.73%. The Morgan Stanley Capital International (“MSCI”) Europe-Australasia-Far East (“EAFE”) Index* returned -0.92%. The return of the MSCI Emerging Markets Index* was 0.44%.
In the bond market, the Barclays U.S. Aggregate Bond Index* posted a 5.72% return for the period, while the Barclays U.S. Corporate High Yield Index* returned 2.00%. The return of the Bank of America Merrill Lynch 3-Month U.S. Treasury Bill Index* was 0.03% for the 12-month period.
The opinions and forecasts expressed may not actually come to pass. This information is subject to change at any time, based on market and other conditions, and should not be construed as a recommendation of any specific security or strategy.
4 | THE RYDEX FUNDS ANNUAL REPORT |
ECONOMIC AND MARKET OVERVIEW (Unaudited)(concluded) | March 31, 2015 |
*Index Definitions:
The following indices are referenced throughout this report. Indices are unmanaged and not available for direct investment. Index performance does not reflect transaction costs, fees, or expenses.
Barclays U.S. Aggregate Bond Index is a broad-based benchmark that measures the investment grade, U.S. dollar-denominated, fixed-rate taxable bond market, including U.S. Treasuries, government-related and corporate securities, MBS (agency fixed-rate and hybrid ARM pass-throughs), ABS, and CMBS.
Barclays U.S. Corporate High Yield Index measures the market of U.S. dollar-denominated, non-investment grade, fixed-rate, taxable corporate bonds. Securities are classified as high yield if the middle rating of Moody’s, Fitch, and S&P is Ba1/BB+/BB+ or below.
Barclays Long Treasury Bond Index includes all publicly issued, U.S. Treasury securities that have a remaining maturity of 10 or more years, are rated investment grade, and have $250 million or more of outstanding face value. In addition, the securities must be denominated in U.S. dollars and must be fixed rate and non convertible. The Long U.S. Treasury Index is market-capitalization weighted and the securities in the index are updated on the last business day of each month.
Bank of America (“BofA”) Merrill Lynch 3-Month U.S. Treasury Bill Index is an unmanaged market index of U.S. Treasury securities maturing in 90 days that assumes reinvestment of all income.
MSCI EAFE Index is a free float-adjusted market capitalization index that is designed to measure the equity market performance of developed markets, excluding the U.S. & Canada.
MSCI Emerging Markets Index is a free float-adjusted market capitalization weighted index that is designed to measure equity market performance in the global emerging markets.
NASDAQ-100® Index includes 100 of the largest domestic and international non-financial securities listed on The Nasdaq Stock Market based on market capitalization. The index reflects companies across major industry groups including computer hardware and software, telecommunications, retail/wholesale trade, and biotechnology. It does not contain securities of financial companies including investment companies.
Russell 2000® Index measures the performance of the small-cap value segment of the U.S. equity universe.
S&P 500® Index is a capitalization-weighted index of 500 stocks designed to measure the performance of the broad economy, representing all major industries and is considered a representation of the U.S. stock market.
S&P MidCap 400® Index provides investors with a benchmark for mid-sized companies. The index covers approximately 7% of the U.S. equity market, and seeks to remain an accurate measure of mid-sized companies, reflecting the risk and return characteristics of the broader mid-cap universe on an on-going basis.
THE RYDEX FUNDS ANNUAL REPORT | 5 |
A BRIEF NOTE ON THE COMPOUNDING OF RETURNS (Unaudited)
Many of the Funds described in this report are benchmarked daily to leveraged and/or inverse leveraged versions of published indices. To properly evaluate the performance of these funds, it is essential to understand the effect of mathematical compounding on their respective returns.
Because of the nonlinear effects of leverage applied over time, it is possible for a fund to perform in line with its benchmark for several individual periods in a row, yet seem to trail the benchmark over the entire period. It is also possible that a fund that performs in-line with its benchmark on a daily basis may seem to outperform its benchmark over longer periods.
An Example of Compounding
For example, consider a hypothetical fund that is designed to produce returns that correspond to 150% of an index. On the first day of a period, the index rises from a level of 100 to a level of 106, producing a 6.0% gain and an expectation that the fund will rise by 9.0%. On the same day, the fund’s net asset value per share (“NAV”) increases from $10.00 to $10.90 for a gain of 9.0% — in line with its benchmark.
On day two, assume the index falls from 106 to 99 for a loss of about 6.6%. The fund, as expected, falls 9.9% to a price of $9.82. On each day, the fund performed exactly in line with its benchmark, but for the two-day period, the fund was down 1.8%, while the index was down only 1.0%. Without taking into account the daily compounding of returns, one would expect the fund to lose 1.5% and would see the fund as trailing by 0.3% when in fact it had performed perfectly. This example is summarized in the table below.
Index Level | Index Performance | Fund Expectation | Fund NAV | Fund Performance | Assessment | |
Start | 100 | $10.00 | ||||
Day 1 | 106 | 6.0% | 9.0% | $10.90 | 9.0% | In line |
Day 2 | 99 | -6.6% | -9.9% | $9.82 | -9.9% | In line |
Cumulative | -1.0% | -1.5% | -1.8% | -0.3% |
As illustrated by this simple example, the effect of leverage can make it difficult to form expectations or judgments about fund performance given only the returns of the unleveraged index.
Because certain funds seek to track the performance of their benchmark on a daily basis, mathematical compounding, especially with respect to those funds that use leverage as part of their investment strategy, may prevent a fund from correlating with the monthly, quarterly, annual or other period performance of its benchmark. Due to the compounding of daily returns, leveraged and inverse funds’ returns over periods other than one day will likely differ in amount and possibly direction from the benchmark return for the same period. Investors should monitor their leveraged and inverse funds’ holdings consistent with their strategies, as frequently as daily. For those funds that consistently apply leverage, the value of the fund’s shares will tend to increase or decrease more than the value of any increase or decrease in its benchmark index. For more on correlation, leverage and other risks, please read the prospectus.
In general, any change in direction in an index will produce compounding that seems to work against an investor. Were the index to move in the same direction (either up or down) for two or more periods in a row, the compounding of those returns would work in an investor’s favor, causing the fund to seemingly beat its benchmark.
As a general rule of thumb, more leverage in a fund will magnify the compounding effect, while less leverage will generally produce results that are more in line with expectations. In addition, periods of high volatility in an underlying index will also cause the effects of compounding to be more pronounced, while lower volatility will produce a more muted effect.
6 | THE RYDEX FUNDS 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; 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 September 30, 2014 and ending March 31, 2015.
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 illustrated 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.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads) on purchase payments, and contingent deferred sales charges (“CDSC”) on redemptions, if any. Therefore, the second table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
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 FUNDS ANNUAL REPORT | 7 |
ABOUT SHAREHOLDERS’ FUND EXPENSES (Unaudited)(continued)
Expense Ratio1 | Fund Return | Beginning Account Value September 30, 2014 | Ending Account Value March 31, 2015 | Expenses Paid During Period2 | |
Table 1. Based on actual Fund return3 | |||||
Nova Fund | |||||
Investor Class | 1.25% | 7.92% | $1,000.00 | $1,079.20 | $6.48 |
Advisor Class | 1.76% | 7.65% | 1,000.00 | 1,076.50 | 9.11 |
A-Class | 1.50% | 7.79% | 1,000.00 | 1,077.90 | 7.77 |
C-Class | 2.25% | 7.39% | 1,000.00 | 1,073.90 | 11.63 |
H-Class | 1.51% | 7.79% | 1,000.00 | 1,077.90 | 7.82 |
S&P 500® Fund | |||||
A-Class | 1.57% | 5.06% | 1,000.00 | 1,050.60 | 8.03 |
C-Class | 2.31% | 4.65% | 1,000.00 | 1,046.50 | 11.79 |
H-Class | 1.56% | 5.03% | 1,000.00 | 1,050.30 | 7.97 |
Inverse S&P 500® Strategy Fund | |||||
Investor Class | 1.39% | (6.83%) | 1,000.00 | 931.70 | 6.69 |
Advisor Class | 1.89% | (6.94%) | 1,000.00 | 930.60 | 9.10 |
A-Class | 1.64% | (6.98%) | 1,000.00 | 930.20 | 7.89 |
C-Class | 2.39% | (7.31%) | 1,000.00 | 926.90 | 11.48 |
H-Class | 1.60% | (7.05%) | 1,000.00 | 929.50 | 7.70 |
Monthly Rebalance NASDAQ-100® 2x Strategy Fund4 | |||||
A-Class | 1.35% | 3.36% | 1,000.00 | 1,033.60 | 4.55 |
C-Class | 2.13% | 3.10% | 1,000.00 | 1,031.00 | 7.17 |
H-Class | 1.35% | 3.14% | 1,000.00 | 1,031.40 | 4.55 |
Inverse NASDAQ-100® Strategy Fund | |||||
Investor Class | 1.44% | (8.44%) | 1,000.00 | 915.60 | 6.88 |
Advisor Class | 1.93% | (8.74%) | 1,000.00 | 912.60 | 9.20 |
A-Class | 1.71% | (8.55%) | 1,000.00 | 914.50 | 8.16 |
C-Class | 2.44% | (8.91%) | 1,000.00 | 910.90 | 11.62 |
H-Class | 1.68% | (8.52%) | 1,000.00 | 914.80 | 8.02 |
Mid-Cap 1.5x Strategy Fund | |||||
A-Class | 1.62% | 16.77% | 1,000.00 | 1,167.70 | 8.76 |
C-Class | 2.39% | 16.35% | 1,000.00 | 1,163.50 | 12.89 |
H-Class | 1.66% | 16.86% | 1,000.00 | 1,168.60 | 8.98 |
Inverse Mid-Cap Strategy Fund | |||||
A-Class | 1.65% | (12.14%) | 1,000.00 | 878.60 | 7.73 |
C-Class | 2.39% | (12.44%) | 1,000.00 | 875.60 | 11.18 |
H-Class | 1.64% | (12.11%) | 1,000.00 | 878.90 | 7.68 |
Russell 2000® 1.5x Strategy Fund | |||||
A-Class | 1.69% | 20.80% | 1,000.00 | 1,208.00 | 9.30 |
C-Class | 2.44% | 20.33% | 1,000.00 | 1,203.30 | 13.40 |
H-Class | 1.69% | 20.80% | 1,000.00 | 1,208.00 | 9.30 |
8 | THE RYDEX FUNDS ANNUAL REPORT |
ABOUT SHAREHOLDERS’ FUND EXPENSES (Unaudited)(continued)
Expense Ratio1 | Fund Return | Beginning Account Value September 30, 2014 | Ending Account Value March 31, 2015 | Expenses Paid During Period2 | |
Russell 2000® Fund | |||||
A-Class | 1.56% | 13.41% | $1,000.00 | $1,134.10 | $8.30 |
C-Class | 2.64% | 12.95% | 1,000.00 | 1,129.50 | 14.02 |
H-Class | 1.56% | 13.38% | 1,000.00 | 1,133.80 | 8.30 |
Inverse Russell 2000® Strategy Fund | |||||
A-Class | 1.71% | (14.59%) | 1,000.00 | 854.10 | 7.90 |
C-Class | 2.44% | (14.95%) | 1,000.00 | 850.50 | 11.26 |
H-Class | 1.70% | (14.60%) | 1,000.00 | 854.00 | 7.86 |
Government Long Bond 1.2x Strategy Fund | |||||
Investor Class | 0.94% | 18.22% | 1,000.00 | 1,182.20 | 5.11 |
Advisor Class | 1.45% | 17.93% | 1,000.00 | 1,179.30 | 7.88 |
A-Class | 1.19% | 18.11% | 1,000.00 | 1,181.10 | 6.47 |
C-Class | 1.94% | 17.65% | 1,000.00 | 1,176.50 | 10.53 |
H-Class | 1.18% | 18.07% | 1,000.00 | 1,180.70 | 6.42 |
Inverse Government Long Bond Strategy Fund | |||||
Investor Class | 3.08% | (14.52%) | 1,000.00 | 854.80 | 14.24 |
Advisor Class | 3.58% | (14.70%) | 1,000.00 | 853.00 | 16.54 |
A-Class | 3.34% | (14.61%) | 1,000.00 | 853.90 | 15.44 |
C-Class | 4.08% | (14.95%) | 1,000.00 | 850.50 | 18.82 |
H-Class | 3.07% | (14.56%) | 1,000.00 | 854.40 | 14.19 |
High Yield Strategy Fund | |||||
A-Class | 1.49% | 4.01% | 1,000.00 | 1,040.10 | 7.58 |
C-Class | 2.23% | 3.67% | 1,000.00 | 1,036.70 | 11.32 |
H-Class | 1.44% | 4.05% | 1,000.00 | 1,040.50 | 7.33 |
Inverse High Yield Strategy Fund | |||||
A-Class | 1.50% | (7.64%) | 1,000.00 | 923.60 | 7.19 |
C-Class | 2.23% | (7.15%) | 1,000.00 | 928.50 | 10.72 |
H-Class | 1.50% | (6.84%) | 1,000.00 | 931.60 | 7.22 |
U.S. Government Money Market Fund | |||||
Money Market Class | 0.21% | 0.00% | 1,000.00 | 1,000.00 | 1.05 |
THE RYDEX FUNDS ANNUAL REPORT | 9 |
ABOUT SHAREHOLDERS’ FUND EXPENSES (Unaudited)(continued)
Expense Ratio1 | Fund Return | Beginning Account Value September 30, 2014 | Ending Account Value March 31, 2015 | Expenses Paid During Period2 | |
Table 2. Based on hypothetical 5% return (before expenses) | |||||
Nova Fund | |||||
Investor Class | 1.25% | 5.00% | $1,000.00 | $1,018.70 | $6.29 |
Advisor Class | 1.76% | 5.00% | 1,000.00 | 1,016.16 | 8.85 |
A-Class | 1.50% | 5.00% | 1,000.00 | 1,017.45 | 7.54 |
C-Class | 2.25% | 5.00% | 1,000.00 | 1,013.71 | 11.30 |
H-Class | 1.51% | 5.00% | 1,000.00 | 1,017.40 | 7.59 |
S&P 500® Fund | |||||
A-Class | 1.57% | 5.00% | 1,000.00 | 1,017.10 | 7.90 |
C-Class | 2.31% | 5.00% | 1,000.00 | 1,013.41 | 11.60 |
H-Class | 1.56% | 5.00% | 1,000.00 | 1,017.15 | 7.85 |
Inverse S&P 500® Strategy Fund | |||||
Investor Class | 1.39% | 5.00% | 1,000.00 | 1,018.00 | 6.99 |
Advisor Class | 1.89% | 5.00% | 1,000.00 | 1,015.51 | 9.50 |
A-Class | 1.64% | 5.00% | 1,000.00 | 1,016.75 | 8.25 |
C-Class | 2.39% | 5.00% | 1,000.00 | 1,013.01 | 11.99 |
H-Class | 1.60% | 5.00% | 1,000.00 | 1,016.95 | 8.05 |
Monthly Rebalance NASDAQ-100® 2x Strategy Fund4 | |||||
A-Class | 1.35% | 5.00% | 1,000.00 | 1,018.20 | 6.79 |
C-Class | 2.13% | 5.00% | 1,000.00 | 1,014.26 | 10.70 |
H-Class | 1.35% | 5.00% | 1,000.00 | 1,018.20 | 6.79 |
Inverse NASDAQ-100® Strategy Fund | |||||
Investor Class | 1.44% | 5.00% | 1,000.00 | 1,017.75 | 7.24 |
Advisor Class | 1.93% | 5.00% | 1,000.00 | 1,015.31 | 9.70 |
A-Class | 1.71% | 5.00% | 1,000.00 | 1,016.40 | 8.60 |
C-Class | 2.44% | 5.00% | 1,000.00 | 1,012.76 | 12.24 |
H-Class | 1.68% | 5.00% | 1,000.00 | 1,016.55 | 8.45 |
Mid-Cap 1.5x Strategy Fund | |||||
A-Class | 1.62% | 5.00% | 1,000.00 | 1,016.85 | 8.15 |
C-Class | 2.39% | 5.00% | 1,000.00 | 1,013.01 | 11.99 |
H-Class | 1.66% | 5.00% | 1,000.00 | 1,016.65 | 8.35 |
Inverse Mid-Cap Strategy Fund | |||||
A-Class | 1.65% | 5.00% | 1,000.00 | 1,016.70 | 8.30 |
C-Class | 2.39% | 5.00% | 1,000.00 | 1,013.01 | 11.99 |
H-Class | 1.64% | 5.00% | 1,000.00 | 1,016.75 | 8.25 |
Russell 2000® 1.5x Strategy Fund | |||||
A-Class | 1.69% | 5.00% | 1,000.00 | 1,016.50 | 8.50 |
C-Class | 2.44% | 5.00% | 1,000.00 | 1,012.76 | 12.24 |
H-Class | 1.69% | 5.00% | 1,000.00 | 1,016.50 | 8.50 |
10 | THE RYDEX FUNDS ANNUAL REPORT |
ABOUT SHAREHOLDERS’ FUND EXPENSES (Unaudited)(concluded)
Expense Ratio1 | Fund Return | Beginning Account Value September 30, 2014 | Ending Account Value March 31, 2015 | Expenses Paid During Period2 | |
Russell 2000® Fund | |||||
A-Class | 1.56% | 5.00% | $1,000.00 | $1,017.15 | $7.85 |
C-Class | 2.64% | 5.00% | 1,000.00 | 1,011.77 | 13.24 |
H-Class | 1.56% | 5.00% | 1,000.00 | 1,017.15 | 7.85 |
Inverse Russell 2000® Strategy Fund | |||||
A-Class | 1.71% | 5.00% | 1,000.00 | 1,016.40 | 8.60 |
C-Class | 2.44% | 5.00% | 1,000.00 | 1,012.76 | 12.24 |
H-Class | 1.70% | 5.00% | 1,000.00 | 1,016.45 | 8.55 |
Government Long Bond 1.2x Strategy Fund | |||||
Investor Class | 0.94% | 5.00% | 1,000.00 | 1,020.24 | 4.73 |
Advisor Class | 1.45% | 5.00% | 1,000.00 | 1,017.70 | 7.29 |
A-Class | 1.19% | 5.00% | 1,000.00 | 1,019.00 | 5.99 |
C-Class | 1.94% | 5.00% | 1,000.00 | 1,015.26 | 9.75 |
H-Class | 1.18% | 5.00% | 1,000.00 | 1,019.05 | 5.94 |
Inverse Government Long Bond Strategy Fund | |||||
Investor Class | 3.08% | 5.00% | 1,000.00 | 1,009.57 | 15.43 |
Advisor Class | 3.58% | 5.00% | 1,000.00 | 1,007.08 | 17.91 |
A-Class | 3.34% | 5.00% | 1,000.00 | 1,008.28 | 16.72 |
C-Class | 4.08% | 5.00% | 1,000.00 | 1,004.59 | 20.39 |
H-Class | 3.07% | 5.00% | 1,000.00 | 1,009.62 | 15.38 |
High Yield Strategy Fund | |||||
A-Class | 1.49% | 5.00% | 1,000.00 | 1,017.50 | 7.49 |
C-Class | 2.23% | 5.00% | 1,000.00 | 1,013.81 | 11.20 |
H-Class | 1.44% | 5.00% | 1,000.00 | 1,017.75 | 7.24 |
Inverse High Yield Strategy Fund | |||||
A-Class | 1.50% | 5.00% | 1,000.00 | 1,017.45 | 7.54 |
C-Class | 2.23% | 5.00% | 1,000.00 | 1,013.81 | 11.20 |
H-Class | 1.50% | 5.00% | 1,000.00 | 1,017.45 | 7.54 |
U.S. Government Money Market Fund | |||||
Money Market Class | 0.21% | 5.00% | 1,000.00 | 1,023.88 | 1.06 |
1 | This ratio represents annualized Net Expenses, which include interest expense related to securities sold short. Excluding short interest expense, the operating expense ratio of the Inverse Government Long Bond Strategy Fund would be 1.40%, 1.90%, 1.65%, 2.40% and 1.60% for the Investor Class, Advisor Class, A-Class, C-Class and H-Class, respectively. Excludes expenses of the underlying funds in which the Funds invest. |
2 | Expenses are equal to the Fund's annualized expense ratio, net of any applicable fee waivers, multiplied by the average account value over the period, multiplied by 182/365 (to reflect the one-half year period). |
3 | Actual cumulative return at net asset value for the period September 30, 2014 to March 31, 2015. |
4 | Since commencement of operations: November 28, 2014. Expenses paid based on actual fund return are calculated using 121 days from the commencement of operations. Expenses paid based on hypothetical 5% return are calculated using 182 days. |
THE RYDEX FUNDS ANNUAL REPORT | 11 |
PERFORMANCE REPORT AND FUND PROFILE (Unaudited) | March 31, 2015 |
NOVA FUND
OBJECTIVE: Seeks to provide investment results that match, before fees and expenses, the performance of a specific benchmark on a daily basis. The Fund’s current benchmark is 150% of the performance of the S&P 500® Index (the “underlying index”). The Fund does not seek to achieve its investment objective over a period of time greater than one day.
For the one-year period ended March 31, 2015, Nova Fund maintained a daily correlation of over 99% to its benchmark of 150% of the daily price movement of the S&P 500 Index. Nova Fund Investor Class returned 17.36%, while the S&P 500 Index returned 12.73% over the same period.
Sectors that contributed most to performance of the underlying index were Health Care and Information Technology. The sector that contributed least was Telecommunication Services, followed by Materials. Energy was the only sector that detracted from return.
Apple, Inc., Home Depot, Inc., and Gilead Sciences, Inc., were the holdings that contributed most to performance of the underlying index for the period. Bank of America Corp., International Business Machines Corp., and Exxon Mobil Corp. detracted the most from performance of the underlying index for the period.
Derivatives in the Fund were used to help provide exposure to the composition of the benchmark in the highest efficient manner and to provide leverage, not for hedging purposes. The results of derivatives use during the period were within our expectations and contributed to the Fund’s performance.
Due to the compounding of daily returns, leveraged and inverse funds’ returns over periods other than one day will likely differ in amount and possibly direction from the benchmark return for the same period. Investors should monitor their leveraged and inverse funds’ holdings to ensure that they are consistent with their strategies, as frequently as daily.
The effects of compounding may cause the longer-term correlation of the Fund to its benchmark to diminish. The apparent discrepancy between the leveraged and unleveraged indices is the result of compounding, which is described briefly on page 6 of this report.
The Fund invests excess cash into the Guggenheim Strategy Funds which, in turn, invest in a diversified portfolio of debt securities and financial instruments providing exposure to fixed-income markets. The investment objective of the Guggenheim Strategy Funds is to seek a high level of income consistent with the preservation of capital. For the one year period ended March 31,2015, investment in the Guggenheim Strategy Funds benefited Fund performance relative to investing in other short-term investments such as overnight repurchase agreements.
Performance displayed represents past performance, which is no guarantee of future results.
Holdings Diversification (Market Exposure as % of Net Assets)
![](https://capedge.com/proxy/N-CSR/0001398344-15-003814/rtb1_01.jpg)
“Holdings Diversification (Market Exposure as % of Net Assets)” excludes any temporary cash investments or investments in Guggenheim Strategy Funds Trust mutual funds. Investments in those Funds do not provide “market exposure” to meet the fund’s investment objective, but will significantly increase the portfolio’s exposure to certain other asset categories (and their associated risks), which may cause the Fund to deviate from its principal investment strategy, including: (i) high yield, high risk debt securities rated below the top four long-term rating categories by a nationally recognized statistical rating organization (also known as “junk bonds”); (ii) securities issued by the U.S. government or its agencies and instrumentalities; (iii) CLOs and similar investments; and (iv) other short-term fixed income securities.
12 | THE RYDEX FUNDS ANNUAL REPORT |
PERFORMANCE REPORT AND FUND PROFILE (Unaudited)(concluded) | March 31, 2015 |
Inception Dates: | |
Investor Class | July 12, 1993 |
Advisor Class | October 15, 1998 |
A-Class | March 31, 2004 |
C-Class | March 14, 2001 |
H-Class | September 18, 2014 |
Cumulative Fund Performance*
![](https://capedge.com/proxy/N-CSR/0001398344-15-003814/rtb1_02.jpg)
![](https://capedge.com/proxy/N-CSR/0001398344-15-003814/rtb1_03.jpg)
Ten Largest Holdings (% of Total Net Assets) | |
Guggenheim Strategy Fund I | 6.3% |
Apple, Inc. | 3.3% |
Exxon Mobil Corp. | 1.6% |
Microsoft Corp. | 1.5% |
Johnson & Johnson | 1.3% |
Berkshire Hathaway, Inc. — Class B | 1.2% |
Wells Fargo & Co. | 1.2% |
General Electric Co. | 1.1% |
JPMorgan Chase & Co. | 1.0% |
Procter & Gamble Co. | 1.0% |
Top Ten Total | 19.5% |
“Ten Largest Holdings” exclude any temporary cash or derivative investments. |
Average Annual Returns*
Periods Ended March 31, 2015
1 Year | 5 Year | 10 Year | |
Investor Class Shares | 17.36% | 19.57% | 8.07% |
Advisor Class Shares | 16.79% | 18.98% | 7.52% |
A-Class Shares | 17.09% | 19.28% | 7.79% |
A-Class Shares with sales charge† | 11.52% | 18.12% | 7.27% |
C-Class Shares | 16.19% | 18.40% | 7.00% |
C-Class Shares with CDSC‡ | 15.19% | 18.40% | 7.00% |
S&P 500 Index | 12.73% | 14.47% | 8.01% |
Since Inception (09/18/14) | |||
H-Class Shares | 4.61% | ||
S&P 500 Index | 3.92% |
* | The performance data above represents past performance that is not predictive of future results. The investment return and principal value of an investment in the Fund will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Returns are historical and include changes in principal and reinvested dividends and capital gains and do not reflect the effect of taxes. The S&P 500 Index is an unmanaged index and, unlike the Fund, has no management fees or operating expenses to reduce its reported return. The graphs are based on Investor Class shares and A-Class shares only; performance for Advisor Class shares, C-Class shares, and H-Class shares will vary due to differences in fee structures. |
† | Fund returns are calculated using the maximum sales charge of 4.75%. |
‡ | Fund returns include a CDSC of 1% if redeemed within 12 months of purchase. |
THE RYDEX FUNDS ANNUAL REPORT | 13 |
SCHEDULE OF INVESTMENTS | March 31, 2015 |
NOVA FUND |
Shares | Value | |||||||
COMMON STOCKS† - 83.3% | ||||||||
CONSUMER, NON-CYCLICAL - 19.5% | ||||||||
Johnson & Johnson | 20,013 | $ | 2,013,309 | |||||
Procter & Gamble Co. | 19,437 | 1,592,667 | ||||||
Pfizer, Inc. | 44,112 | 1,534,656 | ||||||
Merck & Company, Inc. | 20,428 | 1,174,201 | ||||||
Coca-Cola Co. | 28,284 | 1,146,917 | ||||||
Gilead Sciences, Inc.* | 10,720 | 1,051,953 | ||||||
PepsiCo, Inc. | 10,670 | 1,020,265 | ||||||
Amgen, Inc. | 5,462 | 873,101 | ||||||
Philip Morris International, Inc. | 11,134 | 838,725 | ||||||
Actavis plc* | 2,812 | 836,808 | ||||||
UnitedHealth Group, Inc. | 6,864 | 811,943 | ||||||
Medtronic plc | 10,257 | 799,942 | ||||||
Bristol-Myers Squibb Co. | 11,963 | 771,614 | ||||||
Biogen, Inc.* | 1,689 | 713,163 | ||||||
Altria Group, Inc. | 14,174 | 708,983 | ||||||
AbbVie, Inc. | 11,472 | 671,571 | ||||||
Celgene Corp.* | 5,762 | 664,243 | ||||||
MasterCard, Inc. — Class A | 7,026 | 606,976 | ||||||
Eli Lilly & Co. | 7,038 | 511,311 | ||||||
Abbott Laboratories | 10,861 | 503,190 | ||||||
Express Scripts Holding Co.* | 5,232 | 453,981 | ||||||
Mondelez International, Inc. — Class A | 11,872 | 428,459 | ||||||
Colgate-Palmolive Co. | 6,137 | 425,540 | ||||||
McKesson Corp. | 1,676 | 379,112 | ||||||
Kraft Foods Group, Inc. | 4,232 | 368,671 | ||||||
Anthem, Inc. | 1,920 | 296,467 | ||||||
Automatic Data Processing, Inc. | 3,421 | 292,974 | ||||||
Kimberly-Clark Corp. | 2,630 | 281,699 | ||||||
Kroger Co. | 3,536 | 271,070 | ||||||
Aetna, Inc. | 2,531 | 269,627 | ||||||
Baxter International, Inc. | 3,905 | 267,493 | ||||||
Alexion Pharmaceuticals, Inc.* | 1,455 | 252,152 | ||||||
General Mills, Inc. | 4,345 | 245,927 | ||||||
Cigna Corp. | 1,860 | 240,758 | ||||||
Regeneron Pharmaceuticals, Inc.* | 531 | 239,736 | ||||||
Archer-Daniels-Midland Co. | 4,565 | 216,381 | ||||||
Becton Dickinson and Co. | 1,503 | 215,828 | ||||||
Cardinal Health, Inc. | 2,376 | 214,482 | ||||||
Vertex Pharmaceuticals, Inc.* | 1,742 | 205,504 | ||||||
McGraw Hill Financial, Inc. | 1,969 | 203,595 | ||||||
Stryker Corp. | 2,154 | 198,707 | ||||||
Humana, Inc. | 1,078 | 191,906 | ||||||
AmerisourceBergen Corp. — Class A | 1,502 | 170,732 | ||||||
Boston Scientific Corp.* | 9,576 | 169,974 | ||||||
Lorillard, Inc. | 2,591 | 169,322 | ||||||
Perrigo Company plc | 1,014 | 167,868 | ||||||
Zoetis, Inc. | 3,604 | 166,829 | ||||||
Sysco Corp. | 4,263 | 160,843 | ||||||
HCA Holdings, Inc.* | 2,119 | 159,413 | ||||||
Mylan N.V.* | 2,685 | 159,355 | ||||||
Reynolds American, Inc. | 2,218 | 152,842 | ||||||
Mead Johnson Nutrition Co. — Class A | 1,456 | 146,372 | ||||||
Monster Beverage Corp.* | 1,053 | 145,730 | ||||||
Zimmer Holdings, Inc. | 1,223 | 143,727 | ||||||
Constellation Brands, Inc. — Class A* | 1,212 | 140,846 | ||||||
Whole Foods Market, Inc. | 2,597 | 135,252 | ||||||
Estee Lauder Companies, Inc. — Class A | 1,605 | 133,472 | ||||||
Moody’s Corp. | 1,280 | 132,864 | ||||||
Intuitive Surgical, Inc.* | 263 | 132,823 | ||||||
St. Jude Medical, Inc. | 2,025 | 132,435 | ||||||
Kellogg Co. | 1,823 | 120,227 | ||||||
Endo International plc* | 1,279 | 114,726 | ||||||
ConAgra Foods, Inc. | 3,067 | 112,038 | ||||||
Edwards Lifesciences Corp.* | 776 | 110,549 | ||||||
Dr Pepper Snapple Group, Inc. | 1,390 | 109,087 | ||||||
Hospira, Inc.* | 1,234 | 108,395 | ||||||
Hershey Co. | 1,065 | 107,469 | ||||||
Mallinckrodt plc* | 839 | 106,259 | ||||||
Clorox Co. | 945 | 104,319 | ||||||
Brown-Forman Corp. — Class B | 1,122 | 101,373 | ||||||
DaVita HealthCare Partners, Inc.* | 1,243 | 101,031 | ||||||
Keurig Green Mountain, Inc. | 873 | 97,540 | ||||||
Laboratory Corporation of America Holdings* | 722 | 91,037 | ||||||
CR Bard, Inc. | 535 | 89,532 | ||||||
Molson Coors Brewing Co. — Class B | 1,151 | 85,692 | ||||||
JM Smucker Co. | 732 | 84,714 | ||||||
Henry Schein, Inc.* | 604 | 84,330 | ||||||
Tyson Foods, Inc. — Class A | 2,103 | 80,545 | ||||||
Equifax, Inc. | 860 | 79,980 | ||||||
Quest Diagnostics, Inc. | 1,039 | 79,847 | ||||||
Western Union Co. | 3,754 | 78,121 | ||||||
Universal Health Services, Inc. — Class B | 655 | 77,100 | ||||||
McCormick & Company, Inc. | 923 | 71,173 | ||||||
Coca-Cola Enterprises, Inc. | 1,562 | 69,040 | ||||||
Varian Medical Systems, Inc.* | 720 | 67,745 | ||||||
H&R Block, Inc. | 1,981 | 63,531 | ||||||
United Rentals, Inc.* | 696 | 63,447 | ||||||
Campbell Soup Co. | 1,279 | 59,537 | ||||||
Robert Half International, Inc. | 974 | 58,946 | ||||||
Cintas Corp. | 702 | 57,304 | ||||||
Hormel Foods Corp. | 970 | 55,145 | ||||||
DENTSPLY International, Inc. | 1,010 | 51,399 | ||||||
ADT Corp. | 1,232 | 51,153 | ||||||
Total System Services, Inc. | 1,186 | 45,246 | ||||||
Quanta Services, Inc.* | 1,522 | 43,423 | ||||||
Tenet Healthcare Corp.* | 710 | 35,152 | ||||||
Avery Dennison Corp. | 651 | 34,444 | ||||||
Patterson Companies, Inc. | 617 | 30,103 | ||||||
Total Consumer, Non-cyclical | 30,707,005 | |||||||
FINANCIAL - 13.8% | ||||||||
Berkshire Hathaway, Inc. — Class B* | 13,126 | 1,894,345 | ||||||
Wells Fargo & Co. | 33,746 | 1,835,782 | ||||||
JPMorgan Chase & Co. | 26,834 | 1,625,605 | ||||||
Bank of America Corp. | 75,714 | 1,165,238 |
14 | THE RYDEX FUNDS ANNUAL REPORT | SEE NOTES TO FINANCIAL STATEMENTS. |
SCHEDULE OF INVESTMENTS (continued) | March 31, 2015 |
NOVA FUND |
Shares | Value | |||||||
Citigroup, Inc. | 21,836 | $ | 1,124,991 | |||||
Visa, Inc. — Class A | 13,962 | 913,254 | ||||||
U.S. Bancorp | 12,821 | 559,893 | ||||||
Goldman Sachs Group, Inc. | 2,916 | 548,121 | ||||||
American International Group, Inc. | 9,879 | 541,270 | ||||||
American Express Co. | 6,308 | 492,782 | ||||||
Simon Property Group, Inc. | 2,237 | 437,646 | ||||||
MetLife, Inc. | 8,043 | 406,573 | ||||||
Morgan Stanley | 11,098 | 396,088 | ||||||
PNC Financial Services Group, Inc. | 3,748 | 349,464 | ||||||
BlackRock, Inc. — Class A | 914 | 334,378 | ||||||
Bank of New York Mellon Corp. | 8,017 | 322,604 | ||||||
Capital One Financial Corp. | 3,970 | 312,915 | ||||||
American Tower Corp. — Class A | 3,041 | 286,310 | ||||||
ACE Ltd. | 2,356 | 262,670 | ||||||
Prudential Financial, Inc. | 3,268 | 262,453 | ||||||
Charles Schwab Corp. | 8,305 | 252,804 | ||||||
Travelers Companies, Inc. | 2,314 | 250,213 | ||||||
State Street Corp. | 2,967 | 218,164 | ||||||
Marsh & McLennan Companies, Inc. | 3,878 | 217,517 | ||||||
CME Group, Inc. — Class A | 2,282 | 216,128 | ||||||
Allstate Corp. | 2,997 | 213,296 | ||||||
Public Storage | 1,045 | 206,011 | ||||||
Equity Residential | 2,618 | 203,837 | ||||||
BB&T Corp. | 5,188 | 202,280 | ||||||
Aflac, Inc. | 3,159 | 202,208 | ||||||
Crown Castle International Corp. | 2,404 | 198,426 | ||||||
Health Care REIT, Inc. | 2,515 | 194,560 | ||||||
Aon plc | 2,017 | 193,874 | ||||||
Intercontinental Exchange, Inc. | 806 | 188,016 | ||||||
Discover Financial Services | 3,220 | 181,447 | ||||||
Ventas, Inc. | 2,381 | 173,861 | ||||||
Ameriprise Financial, Inc. | 1,315 | 172,055 | ||||||
Chubb Corp. | 1,662 | 168,028 | ||||||
AvalonBay Communities, Inc. | 950 | 165,538 | ||||||
Prologis, Inc. | 3,686 | 160,562 | ||||||
SunTrust Banks, Inc. | 3,775 | 155,115 | ||||||
Boston Properties, Inc. | 1,103 | 154,949 | ||||||
T. Rowe Price Group, Inc. | 1,877 | 151,999 | ||||||
Franklin Resources, Inc. | 2,820 | 144,722 | ||||||
HCP, Inc. | 3,317 | 143,328 | ||||||
Vornado Realty Trust | 1,258 | 140,896 | ||||||
General Growth Properties, Inc. | 4,523 | 133,655 | ||||||
Hartford Financial Services Group, Inc. | 3,030 | 126,715 | ||||||
Weyerhaeuser Co. | 3,779 | 125,274 | ||||||
Invesco Ltd. | 3,089 | 122,602 | ||||||
M&T Bank Corp. | 957 | 121,539 | ||||||
Fifth Third Bancorp | 5,864 | 110,536 | ||||||
Northern Trust Corp. | 1,580 | 110,047 | ||||||
Host Hotels & Resorts, Inc. | 5,452 | 110,021 | ||||||
Essex Property Trust, Inc. | 469 | 107,823 | ||||||
Lincoln National Corp. | 1,845 | 106,014 | ||||||
Progressive Corp. | 3,858 | 104,938 | ||||||
Principal Financial Group, Inc. | 1,970 | 101,199 | ||||||
Regions Financial Corp. | 9,665 | 91,334 | ||||||
SL Green Realty Corp. | 710 | 91,150 | ||||||
Loews Corp. | 2,149 | 87,744 | ||||||
KeyCorp | 6,156 | 87,169 | ||||||
Macerich Co. | 1,013 | 85,426 | ||||||
Affiliated Managers Group, Inc.* | 394 | 84,623 | ||||||
Kimco Realty Corp. | 2,970 | 79,745 | ||||||
CBRE Group, Inc. — Class A* | 2,013 | 77,923 | ||||||
XL Group plc — Class A | 1,837 | 67,602 | ||||||
Huntington Bancshares, Inc. | 5,831 | 64,433 | ||||||
Unum Group | 1,810 | 61,051 | ||||||
E*TRADE Financial Corp.* | 2,080 | 59,394 | ||||||
Navient Corp. | 2,889 | 58,733 | ||||||
Comerica, Inc. | 1,284 | 57,947 | ||||||
Cincinnati Financial Corp. | 1,064 | 56,690 | ||||||
Plum Creek Timber Company, Inc. | 1,267 | 55,051 | ||||||
Torchmark Corp. | 915 | 50,252 | ||||||
Iron Mountain, Inc. | 1,346 | 49,102 | ||||||
Apartment Investment & Management Co. — Class A | 1,126 | 44,319 | ||||||
NASDAQ OMX Group, Inc. | 851 | 43,350 | ||||||
Zions Bancorporation | 1,461 | 39,447 | ||||||
Legg Mason, Inc. | 714 | 39,413 | ||||||
Hudson City Bancorp, Inc. | 3,464 | 36,303 | ||||||
People’s United Financial, Inc. | 2,219 | 33,729 | ||||||
Assurant, Inc. | 496 | 30,459 | ||||||
Genworth Financial, Inc. — Class A* | 3,575 | 26,133 | ||||||
Total Financial | 21,881,101 | |||||||
TECHNOLOGY - 11.2% | ||||||||
Apple, Inc. | 41,924 | 5,216,604 | ||||||
Microsoft Corp. | 59,046 | 2,400,515 | ||||||
Intel Corp. | 34,087 | 1,065,901 | ||||||
International Business Machines Corp. | 6,616 | 1,061,868 | ||||||
Oracle Corp. | 23,073 | 995,600 | ||||||
QUALCOMM, Inc. | 11,873 | 823,274 | ||||||
Texas Instruments, Inc. | 7,537 | 431,004 | ||||||
Accenture plc — Class A | 4,522 | 423,667 | ||||||
Hewlett-Packard Co. | 13,082 | 407,635 | ||||||
EMC Corp. | 14,309 | 365,738 | ||||||
salesforce.com, Inc.* | 4,356 | 291,024 | ||||||
Cognizant Technology Solutions Corp. — Class A* | 4,388 | 273,767 | ||||||
Adobe Systems, Inc.* | 3,425 | 253,245 | ||||||
Avago Technologies Ltd. | 1,847 | 234,532 | ||||||
Micron Technology, Inc.* | 7,754 | 210,366 | ||||||
Applied Materials, Inc. | 8,843 | 199,497 | ||||||
Intuit, Inc. | 1,992 | 193,144 | ||||||
Broadcom Corp. — Class A | 3,923 | 169,846 | ||||||
Cerner Corp.* | 2,195 | 160,806 | ||||||
Western Digital Corp. | 1,563 | 142,249 | ||||||
Analog Devices, Inc. | 2,243 | 141,309 | ||||||
Fidelity National Information Services, Inc. | 2,052 | 139,659 |
SEE NOTES TO FINANCIAL STATEMENTS. | THE RYDEX FUNDS ANNUAL REPORT | 15 |
SCHEDULE OF INVESTMENTS (continued) | March 31, 2015 |
NOVA FUND |
Shares | Value | |||||||
Fiserv, Inc.* | 1,719 | $ | 136,489 | |||||
Skyworks Solutions, Inc. | 1,374 | 135,050 | ||||||
Electronic Arts, Inc.* | 2,238 | 131,628 | ||||||
Seagate Technology plc | 2,364 | 122,999 | ||||||
Paychex, Inc. | 2,353 | 116,744 | ||||||
Red Hat, Inc.* | 1,320 | 99,990 | ||||||
SanDisk Corp. | 1,533 | 97,529 | ||||||
Xerox Corp. | 7,524 | 96,683 | ||||||
Autodesk, Inc.* | 1,632 | 95,700 | ||||||
Altera Corp. | 2,166 | 92,943 | ||||||
Akamai Technologies, Inc.* | 1,288 | 91,506 | ||||||
Linear Technology Corp. | 1,723 | 80,636 | ||||||
Lam Research Corp. | 1,147 | 80,560 | ||||||
Xilinx, Inc. | 1,882 | 79,609 | ||||||
NetApp, Inc. | 2,244 | 79,572 | ||||||
NVIDIA Corp. | 3,717 | 77,778 | ||||||
CA, Inc. | 2,295 | 74,840 | ||||||
Citrix Systems, Inc.* | 1,150 | 73,451 | ||||||
Microchip Technology, Inc. | 1,450 | 70,905 | ||||||
KLA-Tencor Corp. | 1,171 | 68,258 | ||||||
Computer Sciences Corp. | 1,015 | 66,259 | ||||||
Teradata Corp.* | 1,045 | 46,126 | ||||||
Pitney Bowes, Inc. | 1,451 | 33,837 | ||||||
Dun & Bradstreet Corp. | 259 | 33,245 | ||||||
Total Technology | 17,683,587 | |||||||
COMMUNICATIONS - 9.8% | ||||||||
Verizon Communications, Inc. | 29,909 | 1,454,475 | ||||||
Facebook, Inc. — Class A* | 15,110 | 1,242,268 | ||||||
AT&T, Inc. | 37,356 | 1,219,673 | ||||||
Walt Disney Co. | 11,255 | 1,180,537 | ||||||
Google, Inc. — Class A* | 2,056 | 1,140,463 | ||||||
Google, Inc. — Class C* | 2,060 | 1,128,880 | ||||||
Comcast Corp. — Class A | 18,289 | 1,032,779 | ||||||
Amazon.com, Inc.* | 2,742 | 1,020,298 | ||||||
Cisco Systems, Inc. | 36,741 | 1,011,296 | ||||||
Time Warner, Inc. | 5,978 | 504,782 | ||||||
eBay, Inc.* | 7,925 | 457,114 | ||||||
Twenty-First Century Fox, Inc. — Class A | 13,160 | 445,334 | ||||||
Priceline Group, Inc.* | 374 | 435,392 | ||||||
DIRECTV* | 3,619 | 307,977 | ||||||
Time Warner Cable, Inc. | 2,023 | 303,207 | ||||||
Yahoo!, Inc.* | 6,266 | 278,430 | ||||||
CBS Corp. — Class B | 3,293 | 199,655 | ||||||
Netflix, Inc.* | 436 | 181,677 | ||||||
Viacom, Inc. — Class B | 2,629 | 179,561 | ||||||
CenturyLink, Inc. | 4,077 | 140,860 | ||||||
Omnicom Group, Inc. | 1,776 | 138,493 | ||||||
Alliance Data Systems Corp.* | 452 | 133,905 | ||||||
Symantec Corp. | 4,912 | 114,769 | ||||||
Level 3 Communications, Inc.* | 2,064 | 111,126 | ||||||
Nielsen N.V. | 2,272 | 101,263 | ||||||
Equinix, Inc. | 406 | 94,537 | ||||||
Motorola Solutions, Inc. | 1,373 | 91,538 | ||||||
Expedia, Inc. | 712 | 67,021 | ||||||
TripAdvisor, Inc.* | 802 | 66,702 | ||||||
Interpublic Group of Companies, Inc. | 2,968 | 65,652 | ||||||
Gannett Company, Inc. | 1,634 | 60,589 | ||||||
F5 Networks, Inc.* | 519 | 59,654 | ||||||
Harris Corp. | 750 | 59,070 | ||||||
Juniper Networks, Inc. | 2,607 | 58,866 | ||||||
News Corp. — Class A* | 3,595 | 57,556 | ||||||
Discovery Communications, Inc. — Class C* | 1,946 | 57,358 | ||||||
Frontier Communications Corp. | 7,215 | 50,866 | ||||||
VeriSign, Inc.* | 757 | 50,696 | ||||||
Scripps Networks Interactive, Inc. — Class A | 701 | 48,061 | ||||||
Discovery Communications, Inc. — Class A* | 1,071 | 32,944 | ||||||
Windstream Holdings, Inc. | 4,337 | 32,094 | ||||||
Cablevision Systems Corp. — Class A | 1,579 | 28,896 | ||||||
Total Communications | 15,446,314 | |||||||
CONSUMER, CYCLICAL - 8.8% | ||||||||
Home Depot, Inc. | 9,486 | 1,077,704 | ||||||
Wal-Mart Stores, Inc. | 11,367 | 934,935 | ||||||
CVS Health Corp. | 8,100 | 836,001 | ||||||
McDonald’s Corp. | 6,918 | 674,089 | ||||||
Walgreens Boots Alliance, Inc. | 6,276 | 531,452 | ||||||
Lowe’s Companies, Inc. | 7,002 | 520,879 | ||||||
Starbucks Corp. | 5,397 | 511,096 | ||||||
NIKE, Inc. — Class B | 5,037 | 505,362 | ||||||
Costco Wholesale Corp. | 3,167 | 479,785 | ||||||
Ford Motor Co. | 28,473 | 459,554 | ||||||
Target Corp. | 4,584 | 376,209 | ||||||
General Motors Co. | 9,736 | 365,100 | ||||||
TJX Companies, Inc. | 4,915 | 344,297 | ||||||
American Airlines Group, Inc. | 5,162 | 272,450 | ||||||
Delta Air Lines, Inc. | 5,933 | 266,748 | ||||||
Yum! Brands, Inc. | 3,118 | 245,449 | ||||||
Johnson Controls, Inc. | 4,731 | 238,632 | ||||||
Southwest Airlines Co. | 4,866 | 215,564 | ||||||
VF Corp. | 2,464 | 185,563 | ||||||
L Brands, Inc. | 1,770 | 166,893 | ||||||
Delphi Automotive plc | 2,089 | 166,577 | ||||||
Dollar General Corp. | 2,184 | 164,630 | ||||||
PACCAR, Inc. | 2,552 | 161,133 | ||||||
Macy’s, Inc. | 2,451 | 159,094 | ||||||
O’Reilly Automotive, Inc.* | 732 | 158,288 | ||||||
AutoZone, Inc.* | 231 | 157,579 | ||||||
Ross Stores, Inc. | 1,490 | 156,986 | ||||||
Carnival Corp. | 3,242 | 155,098 | ||||||
Chipotle Mexican Grill, Inc. — Class A* | 223 | 145,070 | ||||||
Dollar Tree, Inc.* | 1,481 | 120,176 | ||||||
Marriott International, Inc. — Class A | 1,493 | 119,918 | ||||||
Kohl’s Corp. | 1,454 | 113,776 | ||||||
Whirlpool Corp. | 563 | 113,760 | ||||||
CarMax, Inc.* | 1,512 | 104,343 | ||||||
Starwood Hotels & Resorts Worldwide, Inc. | 1,236 | 103,206 | ||||||
Bed Bath & Beyond, Inc.* | 1,336 | 102,571 |
16 | THE RYDEX FUNDS ANNUAL REPORT | SEE NOTES TO FINANCIAL STATEMENTS. |
SCHEDULE OF INVESTMENTS (continued) | March 31, 2015 |
NOVA FUND |
Shares | Value | |||||||
Genuine Parts Co. | 1,099 | $ | 102,416 | |||||
WW Grainger, Inc. | 433 | 102,106 | ||||||
BorgWarner, Inc. | 1,630 | 98,582 | ||||||
Royal Caribbean Cruises Ltd. | 1,186 | 97,074 | ||||||
Under Armour, Inc. — Class A* | 1,201 | 96,981 | ||||||
Hanesbrands, Inc. | 2,885 | 96,676 | ||||||
Michael Kors Holdings Ltd.* | 1,445 | 95,009 | ||||||
Harley-Davidson, Inc. | 1,523 | 92,507 | ||||||
Tractor Supply Co. | 980 | 83,359 | ||||||
Mohawk Industries, Inc.* | 447 | 83,030 | ||||||
The Gap, Inc. | 1,910 | 82,760 | ||||||
Coach, Inc. | 1,985 | 82,239 | ||||||
Nordstrom, Inc. | 1,013 | 81,364 | ||||||
Fastenal Co. | 1,957 | 81,088 | ||||||
Best Buy Company, Inc. | 2,096 | 79,208 | ||||||
Wyndham Worldwide Corp. | 869 | 78,618 | ||||||
Newell Rubbermaid, Inc. | 1,952 | 76,265 | ||||||
Staples, Inc. | 4,611 | 75,090 | ||||||
Wynn Resorts Ltd. | 584 | 73,514 | ||||||
Tiffany & Co. | 810 | 71,288 | ||||||
DR Horton, Inc. | 2,393 | 68,152 | ||||||
Lennar Corp. — Class A | 1,286 | 66,628 | ||||||
Harman International Industries, Inc. | 494 | 66,013 | ||||||
PVH Corp. | 593 | 63,190 | ||||||
Darden Restaurants, Inc. | 893 | 61,921 | ||||||
Ralph Lauren Corp. — Class A | 434 | 57,071 | ||||||
Mattel, Inc. | 2,435 | 55,640 | ||||||
Family Dollar Stores, Inc. | 692 | 54,834 | ||||||
PulteGroup, Inc. | 2,385 | 53,019 | ||||||
Goodyear Tire & Rubber Co. | 1,941 | 52,562 | ||||||
Hasbro, Inc. | 805 | 50,908 | ||||||
Leggett & Platt, Inc. | 996 | 45,906 | ||||||
AutoNation, Inc.* | 540 | 34,738 | ||||||
Urban Outfitters, Inc.* | 720 | 32,868 | ||||||
GameStop Corp. — Class A1 | 782 | 29,685 | ||||||
Fossil Group, Inc.* | 319 | 26,302 | ||||||
Total Consumer, Cyclical | 13,958,578 | |||||||
INDUSTRIAL - 8.6% | ||||||||
General Electric Co. | 72,442 | 1,797,287 | ||||||
3M Co. | 4,569 | 753,657 | ||||||
Boeing Co. | 4,715 | 707,627 | ||||||
United Technologies Corp. | 5,948 | 697,106 | ||||||
Union Pacific Corp. | 6,343 | 687,010 | ||||||
Honeywell International, Inc. | 5,634 | 587,683 | ||||||
United Parcel Service, Inc. — Class B | 5,002 | 484,894 | ||||||
Lockheed Martin Corp. | 1,931 | 391,916 | ||||||
Thermo Fisher Scientific, Inc. | 2,856 | 383,675 | ||||||
Danaher Corp. | 4,419 | 375,173 | ||||||
Caterpillar, Inc. | 4,363 | 349,170 | ||||||
FedEx Corp. | 1,896 | 313,693 | ||||||
General Dynamics Corp. | 2,268 | 307,836 | ||||||
Emerson Electric Co. | 4,932 | 279,251 | ||||||
Illinois Tool Works, Inc. | 2,513 | 244,113 | ||||||
Raytheon Co. | 2,213 | 241,770 | ||||||
CSX Corp. | 7,130 | 236,146 | ||||||
Eaton Corporation plc | 3,416 | 232,083 | ||||||
Northrop Grumman Corp. | 1,429 | 230,012 | ||||||
Norfolk Southern Corp. | 2,214 | 227,865 | ||||||
Deere & Co. | 2,443 | 214,227 | ||||||
Precision Castparts Corp. | 1,020 | 214,200 | ||||||
TE Connectivity Ltd. | 2,924 | 209,417 | ||||||
Corning, Inc. | 9,151 | 207,544 | ||||||
Cummins, Inc. | 1,212 | 168,032 | ||||||
Waste Management, Inc. | 3,073 | 166,649 | ||||||
Amphenol Corp. — Class A | 2,233 | 131,591 | ||||||
Tyco International plc | 3,024 | 130,213 | ||||||
Ingersoll-Rand plc | 1,896 | 129,080 | ||||||
Roper Industries, Inc. | 723 | 124,356 | ||||||
Parker-Hannifin Corp. | 1,025 | 121,750 | ||||||
Rockwell Automation, Inc. | 975 | 113,090 | ||||||
Stanley Black & Decker, Inc. | 1,133 | 108,043 | ||||||
Agilent Technologies, Inc. | 2,417 | 100,426 | ||||||
Rockwell Collins, Inc. | 957 | 92,398 | ||||||
AMETEK, Inc. | 1,736 | 91,209 | ||||||
Textron, Inc. | 1,992 | 88,305 | ||||||
Stericycle, Inc.* | 611 | 85,803 | ||||||
Pentair plc | 1,314 | 82,637 | ||||||
Kansas City Southern | 795 | 81,154 | ||||||
Dover Corp. | 1,174 | 81,147 | ||||||
Vulcan Materials Co. | 951 | 80,169 | ||||||
CH Robinson Worldwide, Inc. | 1,054 | 77,174 | ||||||
Pall Corp. | 768 | 77,100 | ||||||
L-3 Communications Holdings, Inc. | 595 | 74,845 | ||||||
Waters Corp.* | 598 | 74,343 | ||||||
Republic Services, Inc. — Class A | 1,804 | 73,170 | ||||||
Ball Corp. | 989 | 69,863 | ||||||
Sealed Air Corp. | 1,513 | 68,932 | ||||||
Masco Corp. | 2,516 | 67,177 | ||||||
Expeditors International of Washington, Inc. | 1,380 | 66,488 | ||||||
Martin Marietta Materials, Inc. | 445 | 62,211 | ||||||
Snap-on, Inc. | 419 | 61,618 | ||||||
Fluor Corp. | 1,064 | 60,818 | ||||||
MeadWestvaco Corp. | 1,205 | 60,093 | ||||||
Flowserve Corp. | 970 | 54,795 | ||||||
Xylem, Inc. | 1,313 | 45,981 | ||||||
Allegion plc | 692 | 42,330 | ||||||
Jacobs Engineering Group, Inc.* | 924 | 41,728 | ||||||
PerkinElmer, Inc. | 814 | 41,628 | ||||||
Garmin Ltd. | 870 | 41,342 | ||||||
Ryder System, Inc. | 381 | 36,153 | ||||||
FLIR Systems, Inc. | 1,007 | 31,499 | ||||||
Owens-Illinois, Inc.* | 1,182 | 27,564 | ||||||
Joy Global, Inc. | 701 | 27,465 | ||||||
Total Industrial | 13,633,724 |
SEE NOTES TO FINANCIAL STATEMENTS. | THE RYDEX FUNDS ANNUAL REPORT | 17 |
SCHEDULE OF INVESTMENTS (continued) | March 31, 2015 |
NOVA FUND |
Shares | Value | |||||||
ENERGY - 6.7% | ||||||||
Exxon Mobil Corp. | 30,191 | $ | 2,566,234 | |||||
Chevron Corp. | 13,533 | 1,420,694 | ||||||
Schlumberger Ltd. | 9,179 | 765,896 | ||||||
ConocoPhillips | 8,864 | 551,873 | ||||||
Kinder Morgan, Inc. | 12,265 | 515,866 | ||||||
Occidental Petroleum Corp. | 5,546 | 404,858 | ||||||
EOG Resources, Inc. | 3,947 | 361,900 | ||||||
Phillips 66 | 3,912 | 307,483 | ||||||
Anadarko Petroleum Corp. | 3,647 | 302,008 | ||||||
Halliburton Co. | 6,116 | 268,370 | ||||||
Williams Companies, Inc. | 4,845 | 245,109 | ||||||
Valero Energy Corp. | 3,706 | 235,776 | ||||||
Marathon Petroleum Corp. | 1,966 | 201,299 | ||||||
Baker Hughes, Inc. | 3,127 | 198,815 | ||||||
Pioneer Natural Resources Co. | 1,073 | 175,446 | ||||||
Spectra Energy Corp. | 4,830 | 174,701 | ||||||
Devon Energy Corp. | 2,782 | 167,782 | ||||||
Apache Corp. | 2,712 | 163,615 | ||||||
National Oilwell Varco, Inc. | 2,951 | 147,520 | ||||||
Noble Energy, Inc. | 2,784 | 136,138 | ||||||
Marathon Oil Corp. | 4,859 | 126,868 | ||||||
Hess Corp. | 1,749 | 118,705 | ||||||
Equities Corp. | 1,093 | 90,577 | ||||||
Cabot Oil & Gas Corp. — Class A | 2,974 | 87,822 | ||||||
Tesoro Corp. | 899 | 82,070 | ||||||
Cimarex Energy Co. | 630 | 72,507 | ||||||
ONEOK, Inc. | 1,501 | 72,408 | ||||||
Southwestern Energy Co.* | 2,768 | 64,190 | ||||||
Cameron International Corp.* | 1,395 | 62,942 | ||||||
Range Resources Corp. | 1,194 | 62,136 | ||||||
FMC Technologies, Inc.* | 1,666 | 61,659 | ||||||
Murphy Oil Corp. | 1,201 | 55,967 | ||||||
Helmerich & Payne, Inc. | 775 | 52,755 | ||||||
Chesapeake Energy Corp. | 3,725 | 52,746 | ||||||
CONSOL Energy, Inc. | 1,658 | 46,242 | ||||||
Newfield Exploration Co.* | 1,157 | 40,599 | ||||||
Transocean Ltd.1 | 2,452 | 35,971 | ||||||
Ensco plc — Class A | 1,686 | 35,524 | ||||||
First Solar, Inc.* | 542 | 32,406 | ||||||
Noble Corporation plc | 1,741 | 24,861 | ||||||
QEP Resources, Inc. | 1,163 | 24,249 | ||||||
Diamond Offshore Drilling, Inc. | 484 | 12,966 | ||||||
Total Energy | 10,627,553 | |||||||
UTILITIES - 2.5% | ||||||||
Duke Energy Corp. | 5,093 | 391,040 | ||||||
NextEra Energy, Inc. | 3,192 | 332,127 | ||||||
Dominion Resources, Inc. | 4,233 | 299,993 | ||||||
Southern Co. | 6,549 | 289,990 | ||||||
Exelon Corp. | 6,189 | 208,012 | ||||||
American Electric Power Company, Inc. | 3,525 | 198,281 | ||||||
PG&E Corp. | 3,429 | 181,977 | ||||||
Sempra Energy | 1,667 | 181,736 | ||||||
PPL Corp. | 4,800 | 161,568 | ||||||
Public Service Enterprise Group, Inc. | 3,643 | 152,715 | ||||||
Edison International | 2,346 | 146,555 | ||||||
Consolidated Edison, Inc. | 2,109 | 128,649 | ||||||
Xcel Energy, Inc. | 3,642 | 126,778 | ||||||
Eversource Energy | 2,281 | 115,236 | ||||||
FirstEnergy Corp. | 3,032 | 106,302 | ||||||
DTE Energy Co. | 1,276 | 102,960 | ||||||
Entergy Corp. | 1,299 | 100,660 | ||||||
NiSource, Inc. | 2,276 | 100,508 | ||||||
Wisconsin Energy Corp. | 1,624 | 80,388 | ||||||
Ameren Corp. | 1,746 | 73,681 | ||||||
CMS Energy Corp. | 1,983 | 69,227 | ||||||
CenterPoint Energy, Inc. | 3,094 | 63,149 | ||||||
NRG Energy, Inc. | 2,432 | 61,262 | ||||||
AES Corp. | 4,653 | 59,791 | ||||||
SCANA Corp. | 1,029 | 56,585 | ||||||
Pinnacle West Capital Corp. | 796 | 50,745 | ||||||
Pepco Holdings, Inc. | 1,820 | 48,831 | ||||||
AGL Resources, Inc. | 861 | 42,749 | ||||||
Integrys Energy Group, Inc. | 573 | 41,267 | ||||||
TECO Energy, Inc. | 1,695 | 32,883 | ||||||
Total Utilities | 4,005,645 | |||||||
BASIC MATERIALS - 2.4% | ||||||||
EI du Pont de Nemours & Co. | 6,518 | 465,841 | ||||||
Monsanto Co. | 3,478 | 391,414 | ||||||
Dow Chemical Co. | 7,833 | 375,827 | ||||||
Praxair, Inc. | 2,079 | 251,018 | ||||||
LyondellBasell Industries N.V. — Class A | 2,850 | 250,230 | ||||||
Ecolab, Inc. | 1,939 | 221,783 | ||||||
PPG Industries, Inc. | 979 | 220,804 | ||||||
Air Products & Chemicals, Inc. | 1,388 | 209,977 | ||||||
International Paper Co. | 3,043 | 168,856 | ||||||
Sherwin-Williams Co. | 581 | 165,295 | ||||||
Freeport-McMoRan, Inc. | 7,484 | 141,822 | ||||||
Sigma-Aldrich Corp. | 860 | 118,895 | ||||||
Alcoa, Inc. | 8,797 | 113,657 | ||||||
Nucor Corp. | 2,296 | 109,129 | ||||||
Mosaic Co. | 2,238 | 103,082 | ||||||
CF Industries Holdings, Inc. | 345 | 97,870 | ||||||
Newmont Mining Corp. | 3,590 | 77,939 | ||||||
Eastman Chemical Co. | 1,071 | 74,177 | ||||||
International Flavors & Fragrances, Inc. | 581 | 68,209 | ||||||
FMC Corp. | 960 | 54,960 | ||||||
Airgas, Inc. | 487 | 51,676 | ||||||
Allegheny Technologies, Inc. | 783 | 23,498 | ||||||
Total Basic Materials | 3,755,959 | |||||||
DIVERSIFIED - 0.0% | ||||||||
Leucadia National Corp. | 2,270 | 50,598 |
18 | THE RYDEX FUNDS ANNUAL REPORT | SEE NOTES TO FINANCIAL STATEMENTS. |
SCHEDULE OF INVESTMENTS (concluded) | March 31, 2015 |
NOVA FUND |
Shares | Value | |||||||
Total Common Stocks | ||||||||
(Cost $99,857,034) | $ | 131,750,064 | ||||||
MUTUAL FUNDS† - 6.3% | ||||||||
Guggenheim Strategy Fund I2 | 402,097 | 10,012,215 | ||||||
Total Mutual Funds | ||||||||
(Cost $9,995,235) | 10,012,215 | |||||||
Face Amount | ||||||||
REPURCHASE AGREEMENTS††,3 - 3.6% | ||||||||
HSBC Group issued 03/31/15 at 0.03% due 04/01/15 | $ | 4,458,421 | 4,458,421 | |||||
RBC Capital Markets issued 03/31/15 at 0.05% due 04/01/15 | 681,341 | 681,341 | ||||||
UMB Financial Corp. issued 03/31/15 at 0.03% due 04/01/15 | 546,888 | 546,888 | ||||||
Total Repurchase Agreements | ||||||||
(Cost $5,686,650) | 5,686,650 | |||||||
SECURITIES LENDING COLLATERAL††,4 - 0.0% | ||||||||
Repurchase Agreements | ||||||||
HSBC Securities, Inc. issued 03/31/15 at 0.10% due 04/01/15 | 20,372 | 20,372 | ||||||
BNP Paribas Securities Corp. issued 03/31/15 at 0.10% due 04/01/15 | 7,008 | 7,008 |
Barclays Capital, Inc. issued 03/31/15 at 0.10% due 04/01/15 | 3,617 | 3,617 | ||||||
Total Securities Lending Collateral | ||||||||
(Cost $30,997) | 30,997 | |||||||
Total Investments - 93.2% | ||||||||
(Cost $115,569,916) | $ | 147,479,926 | ||||||
Other Assets & Liabilities, net - 6.8% | 10,791,931 | |||||||
Total Net Assets - 100.0% | $ | 158,271,857 | ||||||
Contracts | Unrealized Gain | |||||||
EQUITY FUTURES CONTRACTS PURCHASED† | ||||||||
June 2015 S&P 500 Index Mini Futures Contracts (Aggregate Value of Contracts $25,743,750) | 250 | $ | 51,181 | |||||
Units | ||||||||
OTC EQUITY INDEX SWAP AGREEMENTS†† | ||||||||
Barclays Bank plc April 2015 S&P 500 Index Swap, Terminating 04/30/155 (Notional Value $77,397,405) | 37,428 | $ | 270,194 | |||||
Credit Suisse Capital, LLC April 2015 S&P 500 Index Swap, Terminating 04/28/155 (Notional Value $1,446,763) | 700 | 9,976 | ||||||
Goldman Sachs International April 2015 S&P 500 Index Swap, Terminating 04/28/155 (Notional Value $1,060,149) | 513 | 7,287 | ||||||
(Total Notional Value $79,904,317) | $ | 287,457 |
* | Non-income producing security. |
† | Value determined based on Level 1 inputs — See Note 4. |
†† | Value determined based on Level 2 inputs — See Note 4. |
1 | All or portion of this security is on loan at March 31, 2015 — See Note 6. |
2 | Investment in a product that is managed by and/or pays a management fee to a party related to the Adviser — See Note 12. |
3 | Repurchase Agreements — See Note 5. |
4 | Securities lending collateral — See Note 6. |
5 | Total Return based on S&P 500 Index +/- financing at a variable rate. |
plc — Public Limited Company | |
REIT — Real Estate Investment Trust |
SEE NOTES TO FINANCIAL STATEMENTS. | THE RYDEX FUNDS ANNUAL REPORT | 19 |
NOVA FUND |
STATEMENT OF ASSETS AND LIABILITIES |
March 31, 2015 |
Assets: | ||||
Investments, at value - including $30,716 of securities loaned (cost $109,852,269) | $ | 141,762,279 | ||
Repurchase agreements, at value (cost $5,717,647) | 5,717,647 | |||
Total investments (cost $115,569,916) | 147,479,926 | |||
Segregated cash with broker | 8,618,647 | |||
Unrealized appreciation on swap agreements | 287,457 | |||
Cash | 1,313 | |||
Receivables: | ||||
Securities sold | 13,926,440 | |||
Fund shares sold | 7,139,282 | |||
Dividends | 161,960 | |||
Swap settlement | 25,646 | |||
Securities lending income | 163 | |||
Interest | 5 | |||
Total assets | 177,640,839 | |||
Liabilities: | ||||
Payable for: | ||||
Fund shares redeemed | 18,822,042 | |||
Variation margin | 201,250 | |||
Management fees | 103,900 | |||
Transfer agent and administrative fees | 34,633 | |||
Return of securities loaned | 31,450 | |||
Securities purchased | 28,740 | |||
Distribution and service fees | 13,873 | |||
Portfolio accounting fees | 13,853 | |||
Miscellaneous | 119,241 | |||
Total liabilities | 19,368,982 | |||
Commitments and contingent liabilities (Note 15) | — | |||
Net assets | $ | 158,271,857 | ||
Net assets consist of: | ||||
Paid in capital | $ | 133,676,112 | ||
Undistributed net investment income | 261,033 | |||
Accumulated net realized loss on investments | (7,913,936 | ) | ||
Net unrealized appreciation on investments | 32,248,648 | |||
Net assets | $ | 158,271,857 | ||
Investor Class: | ||||
Net assets | $ | 136,799,599 | ||
Capital shares outstanding | 2,768,120 | |||
Net asset value per share | $ | 49.42 | ||
Advisor Class: | ||||
Net assets | $ | 3,857,079 | ||
Capital shares outstanding | 85,565 | |||
Net asset value per share | $ | 45.08 | ||
A-Class: | ||||
Net assets | $ | 3,930,328 | ||
Capital shares outstanding | 84,707 | |||
Net asset value per share | $ | 46.40 | ||
Maximum offering price per share (Net asset value divided by 95.25%) | $ | 48.71 | ||
C-Class: | ||||
Net assets | $ | 11,992,519 | ||
Capital shares outstanding | 282,183 | |||
Net asset value per share | $ | 42.50 | ||
H-Class: | ||||
Net assets | $ | 1,692,332 | ||
Capital shares outstanding | 36,469 | |||
Net asset value per share | $ | 46.40 |
20 | THE RYDEX FUNDS ANNUAL REPORT | SEE NOTES TO FINANCIAL STATEMENTS. |
NOVA FUND |
STATEMENT OF OPERATIONS
Year Ended March 31, 2015
Investment Income: | ||||
Dividends (net of foreign withholding tax of $361) | $ | 2,323,941 | ||
Interest | 3,529 | |||
Income from securities lending, net | 968 | |||
Total investment income | 2,328,438 | |||
Expenses: | ||||
Management fees | 1,107,899 | |||
Transfer agent and administrative fees | 369,300 | |||
Distribution and service fees: | ||||
Advisor Class | 69,750 | |||
A-Class | 7,096 | |||
C-Class | 109,207 | |||
H-Class** | 5,403 | |||
Portfolio accounting fees | 147,719 | |||
Custodian fees | 17,267 | |||
Trustees’ fees* | 9,177 | |||
Line of credit fees | 566 | |||
Miscellaneous | 224,021 | |||
Total expenses | 2,067,405 | |||
Net investment income | 261,033 | |||
Net Realized and Unrealized Gain (Loss): | ||||
Net realized gain (loss) on: | ||||
Investments | $ | 4,837,548 | ||
Swap agreements | 5,057,830 | |||
Futures contracts | 5,670,134 | |||
Net realized gain | 15,565,512 | |||
Net change in unrealized appreciation (depreciation) on: | ||||
Investments | 5,411,522 | |||
Swap agreements | (49,146 | ) | ||
Futures contracts | (221,076 | ) | ||
Net change in unrealized appreciation (depreciation) | 5,141,300 | |||
Net realized and unrealized gain | 20,706,812 | |||
Net increase in net assets resulting from operations | $ | 20,967,845 |
* | Relates to Trustees not deemed “interested persons” within the meaning of Section 2(a)(19) of the 1940 Act. |
** | Since commencement of operations: September 18, 2014. |
SEE NOTES TO FINANCIAL STATEMENTS. | THE RYDEX FUNDS ANNUAL REPORT | 21 |
NOVA FUND |
STATEMENTS OF CHANGES IN NET ASSETS
Year Ended March 31, 2015 | Year Ended March 31, 2014 | |||||||
Increase (Decrease) in Net Assets from Operations: | ||||||||
Net investment income | $ | 261,033 | $ | 179,996 | ||||
Net realized gain on investments | 15,565,512 | 11,012,089 | ||||||
Net change in unrealized appreciation (depreciation) on investments | 5,141,300 | 11,266,770 | ||||||
Net increase in net assets resulting from operations | 20,967,845 | 22,458,855 | ||||||
Distributions to shareholders from: | ||||||||
Net investment income | ||||||||
Investor Class | (127,360 | ) | — | |||||
Advisor Class | (24,443 | ) | — | |||||
A-Class | (4,698 | ) | — | |||||
C-Class | (12,406 | ) | — | |||||
H-Class* | (244 | ) | — | |||||
Total distributions to shareholders | (169,151 | ) | — | |||||
Capital share transactions: | ||||||||
Proceeds from sale of shares | ||||||||
Investor Class | 608,271,001 | 498,203,037 | ||||||
Advisor Class | 251,879,413 | 225,410,140 | ||||||
A-Class | 6,568,419 | 1,020,317 | ||||||
C-Class | 5,111,829 | 2,942,771 | ||||||
H-Class* | 88,621,421 | — | ||||||
Distributions reinvested | ||||||||
Investor Class | 122,980 | — | ||||||
Advisor Class | 24,400 | — | ||||||
A-Class | 4,554 | — | ||||||
C-Class | 11,924 | — | ||||||
H-Class* | 244 | — | ||||||
Cost of shares redeemed | ||||||||
Investor Class | (590,801,336 | ) | (464,394,553 | ) | ||||
Advisor Class | (259,841,399 | ) | (232,200,336 | ) | ||||
A-Class | (4,276,469 | ) | (1,333,344 | ) | ||||
C-Class | (5,079,311 | ) | (3,860,568 | ) | ||||
H-Class* | (86,211,806 | ) | — | |||||
Net increase from capital share transactions | 14,405,864 | 25,787,464 | ||||||
Net increase in net assets | 35,204,558 | 48,246,319 | ||||||
Net assets: | ||||||||
Beginning of year | 123,067,299 | 74,820,980 | ||||||
End of year | $ | 158,271,857 | $ | 123,067,299 | ||||
Undistributed net investment income at end of year | $ | 261,033 | $ | 169,151 |
22 | THE RYDEX FUNDS ANNUAL REPORT | SEE NOTES TO FINANCIAL STATEMENTS. |
NOVA FUND |
STATEMENTS OF CHANGES IN NET ASSETS (concluded)
Year Ended March 31, 2015 | Year Ended March 31, 2014 | |||||||
Capital share activity: | ||||||||
Shares sold | ||||||||
Investor Class | 13,070,082 | 13,162,417 | ||||||
Advisor Class | 6,029,241 | 6,534,602 | ||||||
A-Class | 148,884 | 29,025 | ||||||
C-Class | 126,849 | 92,387 | ||||||
H-Class* | 1,938,918 | — | ||||||
Shares issued from reinvestment of distributions | ||||||||
Investor Class | 2,527 | — | ||||||
Advisor Class | 549 | — | ||||||
A-Class | 100 | — | ||||||
C-Class | 284 | — | ||||||
H-Class* | 5 | — | ||||||
Shares redeemed | ||||||||
Investor Class | (12,754,141 | ) | (12,359,847 | ) | ||||
Advisor Class | (6,156,017 | ) | (6,734,244 | ) | ||||
A-Class | (95,445 | ) | (37,200 | ) | ||||
C-Class | (128,803 | ) | (118,184 | ) | ||||
H-Class* | (1,902,454 | ) | — | |||||
Net increase in shares | 280,579 | 568,956 |
* | Since commencement of operations: September 18, 2014. |
SEE NOTES TO FINANCIAL STATEMENTS. | THE RYDEX FUNDS ANNUAL REPORT | 23 |
NOVA FUND |
FINANCIAL HIGHLIGHTS
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.
Investor Class | Year Ended March 31, 2015 | Year Ended March 31, 2014 | Year Ended March 28, 2013 | Year Ended March 31, 2012 | Year Ended March 31, 2011 | |||||||||||||||
Per Share Data | ||||||||||||||||||||
Net asset value, beginning of period | $ | 42.15 | $ | 32.05 | $ | 26.82 | $ | 24.59 | $ | 20.28 | ||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||
Net investment income (loss)a | .14 | .14 | .05 | .08 | .02 | |||||||||||||||
Net gain (loss) on investments (realized and unrealized) | 7.18 | 9.96 | 5.21 | 2.15 | 4.31 | |||||||||||||||
Total from investment operations | 7.32 | 10.10 | 5.26 | 2.23 | 4.33 | |||||||||||||||
Less distributions from: | ||||||||||||||||||||
Net investment income | (.05 | ) | — | (.03 | ) | — | (.02 | ) | ||||||||||||
Total distributions | (.05 | ) | — | (.03 | ) | — | (.02 | ) | ||||||||||||
Net asset value, end of period | $ | 49.42 | $ | 42.15 | $ | 32.05 | $ | 26.82 | $ | 24.59 | ||||||||||
Total Returnb | 17.36 | % | 31.51 | % | 19.62 | % | 9.07 | % | 21.38 | % | ||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||
Net assets, end of period (in thousands) | $ | 136,800 | $ | 103,254 | $ | 52,785 | $ | 54,598 | $ | 65,102 | ||||||||||
Ratios to average net assets: | ||||||||||||||||||||
Net investment income (loss) | 0.31 | % | 0.37 | % | 0.20 | % | 0.36 | % | 0.11 | % | ||||||||||
Total expensesc | 1.27 | % | 1.28 | % | 1.26 | % | 1.26 | % | 1.29 | % | ||||||||||
Portfolio turnover rate | 403 | % | 259 | % | 137 | % | 116 | % | 53 | % |
Advisor Class | Year Ended March 31, 2015 | Year Ended March 31, 2014 | Year Ended March 28, 2013 | Year Ended March 31, 2012 | Year Ended March 31, 2011 | |||||||||||||||
Per Share Data | ||||||||||||||||||||
Net asset value, beginning of period | $ | 38.64 | $ | 29.51 | $ | 24.85 | $ | 22.88 | $ | 18.97 | ||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||
Net investment income (loss)a | (.10 | ) | (.04 | ) | (.11 | ) | (.04 | ) | (.07 | ) | ||||||||||
Net gain (loss) on investments (realized and unrealized) | 6.59 | 9.17 | 4.80 | 2.01 | 4.00 | |||||||||||||||
Total from investment operations | 6.49 | 9.13 | 4.69 | 1.97 | 3.93 | |||||||||||||||
Less distributions from: | ||||||||||||||||||||
Net investment income | (.05 | ) | — | (.03 | ) | — | (.02 | ) | ||||||||||||
Total distributions | (.05 | ) | — | (.03 | ) | — | (.02 | ) | ||||||||||||
Net asset value, end of period | $ | 45.08 | $ | 38.64 | $ | 29.51 | $ | 24.85 | $ | 22.88 | ||||||||||
Total Returnb | 16.79 | % | 30.94 | % | 18.93 | % | 8.57 | % | 20.75 | % | ||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||
Net assets, end of period (in thousands) | $ | 3,857 | $ | 8,183 | $ | 12,141 | $ | 11,112 | $ | 6,318 | ||||||||||
Ratios to average net assets: | ||||||||||||||||||||
Net investment income (loss) | (0.23 | %) | (0.12 | %) | (0.43 | %) | (0.18 | %) | (0.37 | %) | ||||||||||
Total expensesc | 1.78 | % | 1.78 | % | 1.75 | % | 1.75 | % | 1.79 | % | ||||||||||
Portfolio turnover rate | 403 | % | 259 | % | 137 | % | 116 | % | 53 | % |
24 | THE RYDEX FUNDS ANNUAL REPORT | SEE NOTES TO FINANCIAL STATEMENTS. |
NOVA FUND |
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.
A-Class | Year Ended March 31, 2015 | Year Ended March 31, 2014 | Year Ended March 28, 2013 | Year Ended March 31, 2012 | Year Ended March 31, 2011 | |||||||||||||||
Per Share Data | ||||||||||||||||||||
Net asset value, beginning of period | $ | 39.67 | $ | 30.23 | $ | 25.38 | $ | 23.32 | $ | 19.28 | ||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||
Net investment income (loss)a | .02 | .05 | (.01 | ) | .01 | (.02 | ) | |||||||||||||
Net gain (loss) on investments (realized and unrealized) | 6.76 | 9.39 | 4.89 | 2.05 | 4.08 | |||||||||||||||
Total from investment operations | 6.78 | 9.44 | 4.88 | 2.06 | 4.06 | |||||||||||||||
Less distributions from: | ||||||||||||||||||||
Net investment income | (.05 | ) | — | (.03 | ) | — | (.02 | ) | ||||||||||||
Total distributions | (.05 | ) | — | (.03 | ) | — | (.02 | ) | ||||||||||||
Net asset value, end of period | $ | 46.40 | $ | 39.67 | $ | 30.23 | $ | 25.38 | $ | 23.32 | ||||||||||
Total Returnb | 17.09 | % | 31.23 | % | 19.28 | % | 8.79 | % | 21.09 | % | ||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||
Net assets, end of period (in thousands) | $ | 3,930 | $ | 1,237 | $ | 1,189 | $ | 1,472 | $ | 5,843 | ||||||||||
Ratios to average net assets: | ||||||||||||||||||||
Net investment income (loss) | 0.05 | % | 0.14 | % | (0.04 | %) | 0.06 | % | (0.11 | %) | ||||||||||
Total expensesc | 1.52 | % | 1.53 | % | 1.50 | % | 1.51 | % | 1.54 | % | ||||||||||
Portfolio turnover rate | 403 | % | 259 | % | 137 | % | 116 | % | 53 | % |
C-Class | Year Ended March 31, 2015 | Year Ended March 31, 2014 | Year Ended March 28, 2013 | Year Ended March 31, 2012 | Year Ended March 31, 2011 | |||||||||||||||
Per Share Data | ||||||||||||||||||||
Net asset value, beginning of period | $ | 36.62 | $ | 28.11 | $ | 23.77 | $ | 22.01 | $ | 18.33 | ||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||
Net investment income (loss)a | (.28 | ) | (.20 | ) | (.19 | ) | (.13 | ) | (.16 | ) | ||||||||||
Net gain (loss) on investments (realized and unrealized) | 6.21 | 8.71 | 4.56 | 1.89 | 3.86 | |||||||||||||||
Total from investment operations | 5.93 | 8.51 | 4.37 | 1.76 | 3.70 | |||||||||||||||
Less distributions from: | ||||||||||||||||||||
Net investment income | (.05 | ) | — | (.03 | ) | — | (.02 | ) | ||||||||||||
Total distributions | (.05 | ) | — | (.03 | ) | — | (.02 | ) | ||||||||||||
Net asset value, end of period | $ | 42.50 | $ | 36.62 | $ | 28.11 | $ | 23.77 | $ | 22.01 | ||||||||||
Total Returnb | 16.19 | % | 30.27 | % | 18.39 | % | 8.00 | % | 20.22 | % | ||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||
Net assets, end of period (in thousands) | $ | 11,993 | $ | 10,394 | $ | 8,705 | $ | 8,829 | $ | 10,461 | ||||||||||
Ratios to average net assets: | ||||||||||||||||||||
Net investment income (loss) | (0.70 | %) | (0.62 | %) | (0.79 | %) | (0.62 | %) | (0.85 | %) | ||||||||||
Total expensesc | 2.27 | % | 2.28 | % | 2.25 | % | 2.26 | % | 2.29 | % | ||||||||||
Portfolio turnover rate | 403 | % | 259 | % | 137 | % | 116 | % | 53 | % |
SEE NOTES TO FINANCIAL STATEMENTS. | THE RYDEX FUNDS ANNUAL REPORT | 25 |
NOVA FUND |
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.
H-Class | Period Ended March 31, 2015d | |||
Per Share Data | ||||
Net asset value, beginning of period | $ | 44.40 | ||
Income (loss) from investment operations: | ||||
Net investment income (loss)a | .02 | |||
Net gain (loss) on investments (realized and unrealized) | 2.03 | |||
Total from investment operations | 2.05 | |||
Less distributions from: | ||||
Net investment income | (.05 | ) | ||
Total distributions | (.05 | ) | ||
Net asset value, end of period | $ | 46.40 | ||
Total Returnb | 4.61 | % | ||
Ratios/Supplemental Data | ||||
Net assets, end of period (in thousands) | $ | 1,692 | ||
Ratios to average net assets: | ||||
Net investment income (loss) | 0.08 | % | ||
Total expensesc | 1.51 | % | ||
Portfolio turnover rate | 403 | % |
a | Net investment income (loss) per share was computed using average shares outstanding throughout the period. |
b | Total return does not reflect the impact of any applicable sales charges. |
c | Does not include expenses of the underlying funds in which the Fund invests. |
d | Since commencement of operations: September 18, 2014. Percentage amounts for the period, except total return and portfolio turnover rate, have been annualized. The portfolio turnover rate stated is for the entire period of the Fund, not since commencement of operations of the Class. |
26 | THE RYDEX FUNDS ANNUAL REPORT | SEE NOTES TO FINANCIAL STATEMENTS. |
PERFORMANCE REPORT AND FUND PROFILE (Unaudited) | March 31, 2015 |
S&P 500® FUND
OBJECTIVE: Seeks to provide investment results that match, before fees and expenses, the performance of a specific benchmark on a daily basis. The Fund’s current benchmark is the S&P 500® Index (the “underlying index”).
The broad-market S&P 500 Index returned 12.73% for the one-year period ended March 31, 2015, while the S&P 500® Fund H-Class returned 10.90% for the same period. The Fund maintained a daily correlation of over 99% to its benchmark of the daily price movement of the S&P 500 Index.
Sectors that contributed most to performance of the underlying index were Health Care and Information Technology. The sector that contributed least was Telecommunication Services, followed by Materials. Energy was the only sector that detracted from return.
Apple, Inc., Home Depot, Inc., and Gilead Sciences, Inc., were the holdings that contributed most to performance of the underlying index for the period. Bank of America Corp., International Business Machines Corp., and Exxon Mobil Corp. detracted the most from performance of the underlying index for the period.
Derivatives in the Fund were used to help provide exposure to the composition of the benchmark in the highest efficient manner and not for hedging purposes. The results of derivatives use during the period were within our expectations and contributed to the Fund’s performance.
Performance displayed represents past performance, which is no guarantee of future results.
Holdings Diversification (Market Exposure as % of Net Assets)
![](https://capedge.com/proxy/N-CSR/0001398344-15-003814/rtb1_04.jpg)
”Holdings Diversification (Market Exposure as % of Net Assets)” excludes any temporary cash investments.
Inception Dates: | |
A-Class | May 31, 2006 |
C-Class | May 31, 2006 |
H-Class | May 31, 2006 |
Ten Largest Holdings (% of Total Net Assets) | |
Apple, Inc. | 3.5% |
Exxon Mobil Corp. | 1.7% |
Microsoft Corp. | 1.6% |
Johnson & Johnson | 1.4% |
Berkshire Hathaway, Inc. — Class B | 1.3% |
Wells Fargo & Co. | 1.2% |
General Electric Co. | 1.2% |
JPMorgan Chase & Co. | 1.1% |
Procter & Gamble Co. | 1.1% |
Pfizer, Inc. | 1.0% |
Top Ten Total | 15.1% |
“Ten Largest Holdings” exclude any temporary cash or derivative investments. |
THE RYDEX FUNDS ANNUAL REPORT | 27 |
PERFORMANCE REPORT AND FUND PROFILE (Unaudited)(concluded) | March 31, 2015 |
Cumulative Fund Performance*
![](https://capedge.com/proxy/N-CSR/0001398344-15-003814/rtb1_05.jpg)
![](https://capedge.com/proxy/N-CSR/0001398344-15-003814/rtb1_06.jpg)
Average Annual Returns*
Periods Ended March 31, 2015
1 Year | 5 Year | Since Inception (05/31/06) | |
A-Class Shares | 10.90% | 12.65% | 6.43% |
A-Class Shares with sales charge† | 5.64% | 11.55% | 5.84% |
C-Class Shares | 10.04% | 11.76% | 5.60% |
C-Class Shares with CDSC‡ | 9.04% | 11.76% | 5.60% |
H-Class Shares | 10.90% | 12.66% | 6.43% |
S&P 500 Index | 12.73% | 14.47% | 7.95% |
* | The performance data above represents past performance that is not predictive of future results. The investment return and principal value of an investment in the Fund will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Returns are historical and include changes in principal and reinvested dividends and capital gains and do not reflect the effect of taxes. The S&P 500 Index is an unmanaged index and, unlike the Fund, has no management fees or operating expenses to reduce its reported return. The graphs are based on A-Class shares and H-Class shares only; performance for C-Class shares will vary due to differences in fee structures. |
† | Fund returns are calculated using the maximum sales charge of 4.75%. |
‡ | Fund returns include a CDSC of 1% if redeemed within 12 months of purchase. |
28 | THE RYDEX FUNDS ANNUAL REPORT |
SCHEDULE OF INVESTMENTS | March 31, 2015 |
S&P 500® FUND |
Shares | Value | |||||||
COMMON STOCKS† - 88.5% | ||||||||
CONSUMER, NON-CYCLICAL - 20.6% | ||||||||
Johnson & Johnson | 40,805 | $ | 4,104,983 | |||||
Procter & Gamble Co. | 39,631 | 3,247,364 | ||||||
Pfizer, Inc. | 89,943 | 3,129,117 | ||||||
Merck & Company, Inc. | 41,652 | 2,394,157 | ||||||
Coca-Cola Co. | 57,669 | 2,338,478 | ||||||
Gilead Sciences, Inc.* | 21,858 | 2,144,926 | ||||||
PepsiCo, Inc. | 21,754 | 2,080,117 | ||||||
Amgen, Inc. | 11,137 | 1,780,249 | ||||||
Philip Morris International, Inc. | 22,702 | 1,710,142 | ||||||
Actavis plc* | 5,730 | 1,705,366 | ||||||
UnitedHealth Group, Inc. | 13,995 | 1,655,469 | ||||||
Medtronic plc | 20,913 | 1,631,004 | ||||||
Bristol-Myers Squibb Co. | 24,392 | 1,573,284 | ||||||
Biogen, Inc.* | 3,443 | 1,453,772 | ||||||
Altria Group, Inc. | 28,900 | 1,445,578 | ||||||
AbbVie, Inc. | 23,391 | 1,369,309 | ||||||
Celgene Corp.* | 11,749 | 1,354,425 | ||||||
MasterCard, Inc. — Class A | 14,326 | 1,237,623 | ||||||
Eli Lilly & Co. | 14,349 | 1,042,455 | ||||||
Abbott Laboratories | 22,145 | 1,025,978 | ||||||
Express Scripts Holding Co.* | 10,667 | 925,576 | ||||||
Mondelez International, Inc. — Class A | 24,207 | 873,630 | ||||||
Colgate-Palmolive Co. | 12,513 | 867,651 | ||||||
McKesson Corp. | 3,417 | 772,925 | ||||||
Kraft Foods Group, Inc. | 8,629 | 751,715 | ||||||
Anthem, Inc. | 3,915 | 604,515 | ||||||
Automatic Data Processing, Inc. | 6,973 | 597,168 | ||||||
Kimberly-Clark Corp. | 5,363 | 574,431 | ||||||
Kroger Co. | 7,210 | 552,718 | ||||||
Aetna, Inc. | 5,161 | 549,801 | ||||||
Baxter International, Inc. | 7,962 | 545,397 | ||||||
Alexion Pharmaceuticals, Inc.* | 2,967 | 514,181 | ||||||
General Mills, Inc. | 8,860 | 501,476 | ||||||
Cigna Corp. | 3,793 | 490,966 | ||||||
Regeneron Pharmaceuticals, Inc.* | 1,083 | 488,953 | ||||||
Archer-Daniels-Midland Co. | 9,308 | 441,199 | ||||||
Becton Dickinson and Co. | 3,065 | 440,075 | ||||||
Cardinal Health, Inc. | 4,845 | 437,358 | ||||||
Vertex Pharmaceuticals, Inc.* | 3,553 | 419,147 | ||||||
McGraw Hill Financial, Inc. | 4,014 | 415,048 | ||||||
Stryker Corp. | 4,390 | 404,978 | ||||||
Humana, Inc. | 2,196 | 390,932 | ||||||
AmerisourceBergen Corp. — Class A | 3,061 | 347,944 | ||||||
Boston Scientific Corp.* | 19,526 | 346,587 | ||||||
Lorillard, Inc. | 5,284 | 345,309 | ||||||
Perrigo Company plc | 2,066 | 342,026 | ||||||
Zoetis, Inc. | 7,349 | 340,185 | ||||||
Sysco Corp. | 8,693 | 327,987 | ||||||
HCA Holdings, Inc.* | 4,320 | 324,993 | ||||||
Mylan N.V.* | 5,472 | 324,763 | ||||||
Reynolds American, Inc. | 4,522 | 311,611 | ||||||
Mead Johnson Nutrition Co. — Class A | 2,969 | 298,474 | ||||||
Monster Beverage Corp.* | 2,146 | 296,996 | ||||||
Zimmer Holdings, Inc. | 2,493 | 292,977 | ||||||
Constellation Brands, Inc. — Class A* | 2,470 | 287,039 | ||||||
Whole Foods Market, Inc. | 5,294 | 275,712 | ||||||
Estee Lauder Companies, Inc. — Class A | 3,274 | 272,266 | ||||||
Intuitive Surgical, Inc.* | 537 | 271,201 | ||||||
Moody’s Corp. | 2,609 | 270,814 | ||||||
St. Jude Medical, Inc. | 4,128 | 269,971 | ||||||
Kellogg Co. | 3,715 | 245,004 | ||||||
Endo International plc* | 2,605 | 233,669 | ||||||
ConAgra Foods, Inc. | 6,250 | 228,313 | ||||||
Edwards Lifesciences Corp.* | 1,583 | 225,514 | ||||||
Dr Pepper Snapple Group, Inc. | 2,832 | 222,255 | ||||||
Hospira, Inc.* | 2,515 | 220,918 | ||||||
Hershey Co. | 2,171 | 219,076 | ||||||
Mallinckrodt plc* | 1,709 | 216,445 | ||||||
Clorox Co. | 1,925 | 212,501 | ||||||
Brown-Forman Corp. — Class B | 2,287 | 206,630 | ||||||
DaVita HealthCare Partners, Inc.* | 2,534 | 205,964 | ||||||
Keurig Green Mountain, Inc. | 1,779 | 198,768 | ||||||
Laboratory Corporation of America Holdings* | 1,472 | 185,604 | ||||||
CR Bard, Inc. | 1,090 | 182,412 | ||||||
Molson Coors Brewing Co. — Class B | 2,346 | 174,660 | ||||||
JM Smucker Co. | 1,493 | 172,785 | ||||||
Henry Schein, Inc.* | 1,230 | 171,733 | ||||||
Tyson Foods, Inc. — Class A | 4,288 | 164,230 | ||||||
Equifax, Inc. | 1,754 | 163,122 | ||||||
Quest Diagnostics, Inc. | 2,118 | 162,768 | ||||||
Western Union Co. | 7,652 | 159,238 | ||||||
Universal Health Services, Inc. — Class B | 1,336 | 157,261 | ||||||
McCormick & Company, Inc. | 1,882 | 145,121 | ||||||
Coca-Cola Enterprises, Inc. | 3,184 | 140,733 | ||||||
Varian Medical Systems, Inc.* | 1,469 | 138,218 | ||||||
H&R Block, Inc. | 4,039 | 129,531 | ||||||
United Rentals, Inc.* | 1,416 | 129,083 | ||||||
Campbell Soup Co. | 2,608 | 121,402 | ||||||
Robert Half International, Inc. | 1,983 | 120,011 | ||||||
Cintas Corp. | 1,429 | 116,649 | ||||||
Hormel Foods Corp. | 1,976 | 112,336 | ||||||
DENTSPLY International, Inc. | 2,060 | 104,833 | ||||||
ADT Corp. | 2,512 | 104,298 | ||||||
Total System Services, Inc. | 2,417 | 92,209 | ||||||
Quanta Services, Inc.* | 3,103 | 88,529 | ||||||
Tenet Healthcare Corp.* | 1,445 | 71,542 | ||||||
Avery Dennison Corp. | 1,328 | 70,264 | ||||||
Patterson Companies, Inc. | 1,257 | 61,329 | ||||||
Total Consumer, Non-cyclical | 62,605,449 | |||||||
FINANCIAL - 14.7% | ||||||||
Berkshire Hathaway, Inc. — Class B* | 26,763 | 3,862,436 | ||||||
Wells Fargo & Co. | 68,807 | 3,743,101 | ||||||
JPMorgan Chase & Co. | 54,714 | 3,314,574 | ||||||
Bank of America Corp. | 154,378 | 2,375,877 |
SEE NOTES TO FINANCIAL STATEMENTS. | THE RYDEX FUNDS ANNUAL REPORT | 29 |
SCHEDULE OF INVESTMENTS (continued) | March 31, 2015 |
S&P 500® FUND |
Shares | Value | |||||||
Citigroup, Inc. | 44,523 | $ | 2,293,825 | |||||
Visa, Inc. — Class A | 28,469 | 1,862,157 | ||||||
U.S. Bancorp | 26,140 | 1,141,534 | ||||||
Goldman Sachs Group, Inc. | 5,945 | 1,117,481 | ||||||
American International Group, Inc. | 20,141 | 1,103,525 | ||||||
American Express Co. | 12,863 | 1,004,858 | ||||||
Simon Property Group, Inc. | 4,562 | 892,509 | ||||||
MetLife, Inc. | 16,398 | 828,919 | ||||||
Morgan Stanley | 22,626 | 807,522 | ||||||
PNC Financial Services Group, Inc. | 7,641 | 712,448 | ||||||
BlackRock, Inc. — Class A | 1,862 | 681,194 | ||||||
Bank of New York Mellon Corp. | 16,347 | 657,803 | ||||||
Capital One Financial Corp. | 8,095 | 638,048 | ||||||
American Tower Corp. — Class A | 6,201 | 583,825 | ||||||
ACE Ltd. | 4,804 | 535,598 | ||||||
Prudential Financial, Inc. | 6,662 | 535,025 | ||||||
Charles Schwab Corp. | 16,931 | 515,380 | ||||||
Travelers Companies, Inc. | 4,716 | 509,941 | ||||||
State Street Corp. | 6,049 | 444,783 | ||||||
Marsh & McLennan Companies, Inc. | 7,907 | 443,503 | ||||||
CME Group, Inc. — Class A | 4,654 | 440,780 | ||||||
Allstate Corp. | 6,111 | 434,920 | ||||||
Public Storage | 2,130 | 419,908 | ||||||
Equity Residential | 5,339 | 415,695 | ||||||
BB&T Corp. | 10,578 | 412,436 | ||||||
Aflac, Inc. | 6,441 | 412,288 | ||||||
Crown Castle International Corp. | 4,899 | 404,363 | ||||||
Health Care REIT, Inc. | 5,128 | 396,702 | ||||||
Aon plc | 4,113 | 395,342 | ||||||
Intercontinental Exchange, Inc. | 1,644 | 383,496 | ||||||
Discover Financial Services | 6,563 | 369,825 | ||||||
Ventas, Inc. | 4,855 | 354,512 | ||||||
Ameriprise Financial, Inc. | 2,678 | 350,390 | ||||||
Chubb Corp. | 3,388 | 342,527 | ||||||
AvalonBay Communities, Inc. | 1,938 | 337,697 | ||||||
Prologis, Inc. | 7,516 | 327,397 | ||||||
SunTrust Banks, Inc. | 7,698 | 316,311 | ||||||
Boston Properties, Inc. | 2,248 | 315,799 | ||||||
T. Rowe Price Group, Inc. | 3,826 | 309,829 | ||||||
Franklin Resources, Inc. | 5,749 | 295,039 | ||||||
HCP, Inc. | 6,762 | 292,186 | ||||||
Vornado Realty Trust | 2,564 | 287,168 | ||||||
General Growth Properties, Inc. | 9,220 | 272,451 | ||||||
Hartford Financial Services Group, Inc. | 6,178 | 258,364 | ||||||
Weyerhaeuser Co. | 7,704 | 255,388 | ||||||
Invesco Ltd. | 6,299 | 250,007 | ||||||
M&T Bank Corp. | 1,950 | 247,650 | ||||||
Fifth Third Bancorp | 11,957 | 225,389 | ||||||
Northern Trust Corp. | 3,221 | 224,343 | ||||||
Host Hotels & Resorts, Inc. | 11,117 | 224,341 | ||||||
Essex Property Trust, Inc. | 956 | 219,784 | ||||||
Lincoln National Corp. | 3,763 | 216,222 | ||||||
Progressive Corp. | 7,865 | 213,928 | ||||||
Principal Financial Group, Inc. | 4,014 | 206,199 | ||||||
Regions Financial Corp. | 19,707 | 186,231 | ||||||
SL Green Realty Corp. | 1,447 | 185,766 | ||||||
Loews Corp. | 4,381 | 178,876 | ||||||
KeyCorp | 12,552 | 177,736 | ||||||
Macerich Co. | 2,066 | 174,226 | ||||||
Affiliated Managers Group, Inc.* | 801 | 172,039 | ||||||
Kimco Realty Corp. | 6,055 | 162,577 | ||||||
CBRE Group, Inc. — Class A* | 4,105 | 158,905 | ||||||
XL Group plc — Class A | 3,746 | 137,853 | ||||||
Huntington Bancshares, Inc. | 11,887 | 131,351 | ||||||
Unum Group | 3,690 | 124,464 | ||||||
E*TRADE Financial Corp.* | 4,238 | 121,016 | ||||||
Navient Corp. | 5,892 | 119,784 | ||||||
Comerica, Inc. | 2,617 | 118,105 | ||||||
Cincinnati Financial Corp. | 2,168 | 115,511 | ||||||
Plum Creek Timber Company, Inc. | 2,584 | 112,275 | ||||||
Torchmark Corp. | 1,865 | 102,426 | ||||||
Iron Mountain, Inc. | 2,744 | 100,101 | ||||||
Apartment Investment & Management Co. — Class A | 2,293 | 90,252 | ||||||
NASDAQ OMX Group, Inc. | 1,734 | 88,330 | ||||||
Zions Bancorporation | 2,978 | 80,406 | ||||||
Legg Mason, Inc. | 1,455 | 80,316 | ||||||
Hudson City Bancorp, Inc. | 7,064 | 74,030 | ||||||
People’s United Financial, Inc. | 4,523 | 68,750 | ||||||
Assurant, Inc. | 1,011 | 62,086 | ||||||
Genworth Financial, Inc. — Class A* | 7,289 | 53,283 | ||||||
Total Financial | 44,611,237 | |||||||
TECHNOLOGY - 11.9% | ||||||||
Apple, Inc. | 85,480 | 10,636,275 | ||||||
Microsoft Corp. | 120,394 | 4,894,618 | ||||||
Intel Corp. | 69,503 | 2,173,358 | ||||||
International Business Machines Corp. | 13,490 | 2,165,145 | ||||||
Oracle Corp. | 47,045 | 2,029,992 | ||||||
QUALCOMM, Inc. | 24,208 | 1,678,583 | ||||||
Texas Instruments, Inc. | 15,367 | 878,762 | ||||||
Accenture plc — Class A | 9,218 | 863,634 | ||||||
Hewlett-Packard Co. | 26,673 | 831,131 | ||||||
EMC Corp. | 29,176 | 745,738 | ||||||
salesforce.com, Inc.* | 8,879 | 593,206 | ||||||
Cognizant Technology Solutions Corp. — Class A* | 8,946 | 558,141 | ||||||
Adobe Systems, Inc.* | 6,984 | 516,397 | ||||||
Avago Technologies Ltd. | 3,766 | 478,207 | ||||||
Micron Technology, Inc.* | 15,810 | 428,925 | ||||||
Applied Materials, Inc. | 18,032 | 406,803 | ||||||
Intuit, Inc. | 4,061 | 393,755 | ||||||
Broadcom Corp. — Class A | 7,999 | 346,317 | ||||||
Cerner Corp.* | 4,475 | 327,839 | ||||||
Western Digital Corp. | 3,187 | 290,049 | ||||||
Analog Devices, Inc. | 4,573 | 288,099 | ||||||
Fidelity National Information Services, Inc. | 4,183 | 284,694 |
30 | THE RYDEX FUNDS ANNUAL REPORT | SEE NOTES TO FINANCIAL STATEMENTS. |
SCHEDULE OF INVESTMENTS (continued) | March 31, 2015 |
S&P 500® FUND |
Shares | Value | |||||||
Fiserv, Inc.* | 3,503 | $ | 278,138 | |||||
Skyworks Solutions, Inc. | 2,800 | 275,212 | ||||||
Electronic Arts, Inc.* | 4,563 | 268,373 | ||||||
Seagate Technology plc | 4,818 | 250,681 | ||||||
Paychex, Inc. | 4,796 | 237,954 | ||||||
Red Hat, Inc.* | 2,692 | 203,919 | ||||||
SanDisk Corp. | 3,126 | 198,876 | ||||||
Xerox Corp. | 15,342 | 197,145 | ||||||
Autodesk, Inc.* | 3,327 | 195,095 | ||||||
Altera Corp. | 4,416 | 189,491 | ||||||
Akamai Technologies, Inc.* | 2,624 | 186,422 | ||||||
Linear Technology Corp. | 3,510 | 164,268 | ||||||
Lam Research Corp. | 2,338 | 164,209 | ||||||
Xilinx, Inc. | 3,836 | 162,263 | ||||||
NetApp, Inc. | 4,575 | 162,230 | ||||||
NVIDIA Corp. | 7,578 | 158,570 | ||||||
CA, Inc. | 4,679 | 152,582 | ||||||
Citrix Systems, Inc.* | 2,346 | 149,839 | ||||||
Microchip Technology, Inc. | 2,956 | 144,548 | ||||||
KLA-Tencor Corp. | 2,387 | 139,138 | ||||||
Computer Sciences Corp. | 2,070 | 135,130 | ||||||
Teradata Corp.* | 2,130 | 94,018 | ||||||
Pitney Bowes, Inc. | 2,959 | 69,004 | ||||||
Dun & Bradstreet Corp. | 528 | 67,774 | ||||||
Total Technology | 36,054,547 | |||||||
COMMUNICATIONS - 10.4% | ||||||||
Verizon Communications, Inc. | 60,982 | 2,965,554 | ||||||
Facebook, Inc. — Class A* | 30,807 | 2,532,797 | ||||||
AT&T, Inc. | 76,168 | 2,486,884 | ||||||
Walt Disney Co. | 22,946 | 2,406,805 | ||||||
Google, Inc. — Class A* | 4,191 | 2,324,747 | ||||||
Google, Inc. — Class C* | 4,199 | 2,301,051 | ||||||
Comcast Corp. — Class A | 37,291 | 2,105,823 | ||||||
Amazon.com, Inc.* | 5,588 | 2,079,295 | ||||||
Cisco Systems, Inc. | 74,914 | 2,062,009 | ||||||
Time Warner, Inc. | 12,188 | 1,029,155 | ||||||
eBay, Inc.* | 16,160 | 932,109 | ||||||
Twenty-First Century Fox, Inc. — Class A | 26,834 | 908,063 | ||||||
Priceline Group, Inc.* | 762 | 887,082 | ||||||
DIRECTV* | 7,379 | 627,953 | ||||||
Time Warner Cable, Inc. | 4,122 | 617,805 | ||||||
Yahoo!, Inc.* | 12,776 | 567,702 | ||||||
CBS Corp. — Class B | 6,714 | 407,069 | ||||||
Netflix, Inc.* | 888 | 370,021 | ||||||
Viacom, Inc. — Class B | 5,359 | 366,020 | ||||||
CenturyLink, Inc. | 8,313 | 287,214 | ||||||
Omnicom Group, Inc. | 3,621 | 282,366 | ||||||
Alliance Data Systems Corp.* | 922 | 273,143 | ||||||
Symantec Corp. | 10,014 | 233,977 | ||||||
Level 3 Communications, Inc.* | 4,209 | 226,613 | ||||||
Nielsen N.V. | 4,631 | 206,404 | ||||||
Equinix, Inc. | 829 | 193,033 | ||||||
Motorola Solutions, Inc. | 2,798 | 186,543 | ||||||
Expedia, Inc. | 1,451 | 136,583 | ||||||
TripAdvisor, Inc.* | 1,636 | 136,066 | ||||||
Interpublic Group of Companies, Inc. | 6,051 | 133,848 | ||||||
Gannett Company, Inc. | 3,329 | 123,439 | ||||||
F5 Networks, Inc.* | 1,059 | 121,721 | ||||||
Harris Corp. | 1,528 | 120,345 | ||||||
Juniper Networks, Inc. | 5,316 | 120,035 | ||||||
News Corp. — Class A* | 7,328 | 117,321 | ||||||
Discovery Communications, Inc. — Class C* | 3,966 | 116,898 | ||||||
Frontier Communications Corp.1 | 14,712 | 103,720 | ||||||
VeriSign, Inc.* | 1,544 | 103,402 | ||||||
Scripps Networks Interactive, Inc. — Class A | 1,430 | 98,041 | ||||||
Discovery Communications, Inc. — Class A* | 2,181 | 67,088 | ||||||
Windstream Holdings, Inc.1 | 8,844 | 65,446 | ||||||
Cablevision Systems Corp. — Class A | 3,219 | 58,908 | ||||||
Total Communications | 31,490,098 | |||||||
CONSUMER, CYCLICAL - 9.4% | ||||||||
Home Depot, Inc. | 19,340 | 2,197,218 | ||||||
Wal-Mart Stores, Inc. | 23,178 | 1,906,391 | ||||||
CVS Health Corp. | 16,513 | 1,704,307 | ||||||
McDonald’s Corp. | 14,105 | 1,374,392 | ||||||
Walgreens Boots Alliance, Inc. | 12,797 | 1,083,650 | ||||||
Lowe’s Companies, Inc. | 14,278 | 1,062,140 | ||||||
Starbucks Corp. | 11,004 | 1,042,079 | ||||||
NIKE, Inc. — Class B | 10,270 | 1,030,389 | ||||||
Costco Wholesale Corp. | 6,457 | 978,203 | ||||||
Ford Motor Co. | 58,055 | 937,007 | ||||||
Target Corp. | 9,348 | 767,190 | ||||||
General Motors Co. | 19,851 | 744,413 | ||||||
TJX Companies, Inc. | 10,019 | 701,832 | ||||||
American Airlines Group, Inc. | 10,526 | 555,562 | ||||||
Delta Air Lines, Inc. | 12,096 | 543,836 | ||||||
Yum! Brands, Inc. | 6,356 | 500,344 | ||||||
Johnson Controls, Inc. | 9,646 | 486,545 | ||||||
Southwest Airlines Co. | 9,920 | 439,456 | ||||||
VF Corp. | 5,024 | 378,356 | ||||||
L Brands, Inc. | 3,608 | 340,198 | ||||||
Delphi Automotive plc | 4,260 | 339,692 | ||||||
Dollar General Corp. | 4,453 | 335,667 | ||||||
PACCAR, Inc. | 5,203 | 328,517 | ||||||
Macy’s, Inc. | 4,998 | 324,421 | ||||||
O’Reilly Automotive, Inc.* | 1,492 | 322,630 | ||||||
Ross Stores, Inc. | 3,038 | 320,084 | ||||||
AutoZone, Inc.* | 468 | 319,251 | ||||||
Carnival Corp. | 6,610 | 316,223 | ||||||
Chipotle Mexican Grill, Inc. — Class A* | 455 | 295,996 | ||||||
Dollar Tree, Inc.* | 3,018 | 244,896 | ||||||
Marriott International, Inc. — Class A | 3,044 | 244,494 | ||||||
Kohl’s Corp. | 2,965 | 232,011 | ||||||
Whirlpool Corp. | 1,146 | 231,561 | ||||||
CarMax, Inc.* | 3,082 | 212,689 | ||||||
Starwood Hotels & Resorts Worldwide, Inc. | 2,520 | 210,420 | ||||||
Bed Bath & Beyond, Inc.* | 2,724 | 209,135 |
SEE NOTES TO FINANCIAL STATEMENTS. | THE RYDEX FUNDS ANNUAL REPORT | 31 |
SCHEDULE OF INVESTMENTS (continued) | March 31, 2015 |
S&P 500® FUND |
Shares | Value | |||||||
Genuine Parts Co. | 2,241 | $ | 208,839 | |||||
WW Grainger, Inc. | 881 | 207,748 | ||||||
BorgWarner, Inc. | 3,323 | 200,975 | ||||||
Royal Caribbean Cruises Ltd. | 2,417 | 197,831 | ||||||
Under Armour, Inc. — Class A* | 2,449 | 197,757 | ||||||
Hanesbrands, Inc. | 5,882 | 197,106 | ||||||
Michael Kors Holdings Ltd.* | 2,946 | 193,700 | ||||||
Harley-Davidson, Inc. | 3,104 | 188,537 | ||||||
Tractor Supply Co. | 1,999 | 170,034 | ||||||
Mohawk Industries, Inc.* | 911 | 169,218 | ||||||
The Gap, Inc. | 3,892 | 168,640 | ||||||
Coach, Inc. | 4,048 | 167,709 | ||||||
Nordstrom, Inc. | 2,064 | 165,780 | ||||||
Fastenal Co. | 3,990 | 165,326 | ||||||
Best Buy Company, Inc. | 4,272 | 161,439 | ||||||
Wyndham Worldwide Corp. | 1,769 | 160,041 | ||||||
Newell Rubbermaid, Inc. | 3,978 | 155,420 | ||||||
Staples, Inc. | 9,399 | 153,063 | ||||||
Wynn Resorts Ltd. | 1,189 | 149,671 | ||||||
Tiffany & Co. | 1,651 | 145,305 | ||||||
DR Horton, Inc. | 4,880 | 138,983 | ||||||
Lennar Corp. — Class A | 2,620 | 135,742 | ||||||
Harman International Industries, Inc. | 1,007 | 134,565 | ||||||
PVH Corp. | 1,210 | 128,938 | ||||||
Darden Restaurants, Inc. | 1,820 | 126,199 | ||||||
Ralph Lauren Corp. — Class A | 884 | 116,246 | ||||||
Mattel, Inc. | 4,964 | 113,427 | ||||||
Family Dollar Stores, Inc. | 1,411 | 111,808 | ||||||
PulteGroup, Inc. | 4,863 | 108,104 | ||||||
Goodyear Tire & Rubber Co. | 3,956 | 107,128 | ||||||
Hasbro, Inc. | 1,642 | 103,840 | ||||||
Leggett & Platt, Inc. | 2,030 | 93,563 | ||||||
AutoNation, Inc.* | 1,100 | 70,763 | ||||||
Urban Outfitters, Inc.* | 1,468 | 67,014 | ||||||
GameStop Corp. — Class A1 | 1,592 | 60,432 | ||||||
Fossil Group, Inc.* | 651 | 53,675 | ||||||
Total Consumer, Cyclical | 28,455,761 | |||||||
INDUSTRIAL - 9.2% | ||||||||
General Electric Co. | 147,706 | 3,664,586 | ||||||
3M Co. | 9,315 | 1,536,509 | ||||||
Boeing Co. | 9,614 | 1,442,868 | ||||||
United Technologies Corp. | 12,127 | 1,421,283 | ||||||
Union Pacific Corp. | 12,933 | 1,400,773 | ||||||
Honeywell International, Inc. | 11,486 | 1,198,104 | ||||||
United Parcel Service, Inc. — Class B | 10,198 | 988,594 | ||||||
Lockheed Martin Corp. | 3,937 | 799,054 | ||||||
Thermo Fisher Scientific, Inc. | 5,823 | 782,262 | ||||||
Danaher Corp. | 9,011 | 765,034 | ||||||
Caterpillar, Inc. | 8,896 | 711,947 | ||||||
FedEx Corp. | 3,867 | 639,795 | ||||||
General Dynamics Corp. | 4,624 | 627,616 | ||||||
Emerson Electric Co. | 10,056 | 569,370 | ||||||
Illinois Tool Works, Inc. | 5,122 | 497,551 | ||||||
Raytheon Co. | 4,510 | 492,718 | ||||||
CSX Corp. | 14,537 | 481,465 | ||||||
Eaton Corporation plc | 6,965 | 473,202 | ||||||
Northrop Grumman Corp. | 2,912 | 468,716 | ||||||
Norfolk Southern Corp. | 4,511 | 464,272 | ||||||
Deere & Co. | 4,982 | 436,872 | ||||||
Precision Castparts Corp. | 2,080 | 436,800 | ||||||
TE Connectivity Ltd. | 5,961 | 426,927 | ||||||
Corning, Inc. | 18,657 | 423,141 | ||||||
Cummins, Inc. | 2,472 | 342,718 | ||||||
Waste Management, Inc. | 6,266 | 339,806 | ||||||
Amphenol Corp. — Class A | 4,552 | 268,249 | ||||||
Tyco International plc | 6,164 | 265,422 | ||||||
Ingersoll-Rand plc | 3,864 | 263,061 | ||||||
Roper Industries, Inc. | 1,473 | 253,356 | ||||||
Parker-Hannifin Corp. | 2,091 | 248,369 | ||||||
Rockwell Automation, Inc. | 1,989 | 230,704 | ||||||
Stanley Black & Decker, Inc. | 2,310 | 220,282 | ||||||
Agilent Technologies, Inc. | 4,928 | 204,758 | ||||||
Rockwell Collins, Inc. | 1,951 | 188,369 | ||||||
AMETEK, Inc. | 3,538 | 185,887 | ||||||
Textron, Inc. | 4,063 | 180,113 | ||||||
Stericycle, Inc.* | 1,247 | 175,116 | ||||||
Pentair plc | 2,677 | 168,357 | ||||||
Dover Corp. | 2,393 | 165,404 | ||||||
Kansas City Southern | 1,620 | 165,370 | ||||||
Vulcan Materials Co. | 1,939 | 163,457 | ||||||
CH Robinson Worldwide, Inc. | 2,147 | 157,203 | ||||||
Pall Corp. | 1,565 | 157,110 | ||||||
L-3 Communications Holdings, Inc. | 1,211 | 152,332 | ||||||
Waters Corp.* | 1,218 | 151,422 | ||||||
Republic Services, Inc. — Class A | 3,679 | 149,220 | ||||||
Ball Corp. | 2,015 | 142,340 | ||||||
Sealed Air Corp. | 3,084 | 140,507 | ||||||
Masco Corp. | 5,130 | 136,971 | ||||||
Expeditors International of Washington, Inc. | 2,814 | 135,579 | ||||||
Martin Marietta Materials, Inc. | 907 | 126,799 | ||||||
Snap-on, Inc. | 853 | 125,442 | ||||||
Fluor Corp. | 2,169 | 123,980 | ||||||
MeadWestvaco Corp. | 2,457 | 122,531 | ||||||
Flowserve Corp. | 1,977 | 111,681 | ||||||
Xylem, Inc. | 2,675 | 93,679 | ||||||
Allegion plc | 1,409 | 86,189 | ||||||
Jacobs Engineering Group, Inc.* | 1,883 | 85,036 | ||||||
PerkinElmer, Inc. | 1,659 | 84,841 | ||||||
Garmin Ltd. | 1,773 | 84,253 | ||||||
Ryder System, Inc. | 778 | 73,824 | ||||||
FLIR Systems, Inc. | 2,052 | 64,187 | ||||||
Owens-Illinois, Inc.* | 2,410 | 56,201 | ||||||
Joy Global, Inc. | 1,429 | 55,988 | ||||||
Total Industrial | 27,795,572 | |||||||
32 | THE RYDEX FUNDS ANNUAL REPORT | SEE NOTES TO FINANCIAL STATEMENTS. |
SCHEDULE OF INVESTMENTS (continued) | March 31, 2015 |
S&P 500® FUND |
Shares | Value | |||||||
ENERGY - 7.1% | ||||||||
Exxon Mobil Corp. | 61,559 | $ | 5,232,515 | |||||
Chevron Corp. | 27,592 | 2,896,608 | ||||||
Schlumberger Ltd. | 18,716 | 1,561,662 | ||||||
ConocoPhillips | 18,072 | 1,125,163 | ||||||
Kinder Morgan, Inc. | 25,007 | 1,051,795 | ||||||
Occidental Petroleum Corp. | 11,308 | 825,484 | ||||||
EOG Resources, Inc. | 8,049 | 738,013 | ||||||
Phillips 66 | 7,976 | 626,913 | ||||||
Anadarko Petroleum Corp. | 7,434 | 615,610 | ||||||
Halliburton Co. | 12,469 | 547,140 | ||||||
Williams Companies, Inc. | 9,878 | 499,728 | ||||||
Valero Energy Corp. | 7,556 | 480,713 | ||||||
Marathon Petroleum Corp. | 4,007 | 410,277 | ||||||
Baker Hughes, Inc. | 6,377 | 405,450 | ||||||
Pioneer Natural Resources Co. | 2,186 | 357,433 | ||||||
Spectra Energy Corp. | 9,848 | 356,202 | ||||||
Devon Energy Corp. | 5,671 | 342,018 | ||||||
Apache Corp. | 5,530 | 333,625 | ||||||
National Oilwell Varco, Inc. | 6,016 | 300,740 | ||||||
Noble Energy, Inc. | 5,676 | 277,556 | ||||||
Marathon Oil Corp. | 9,905 | 258,620 | ||||||
Hess Corp. | 3,566 | 242,024 | ||||||
Equities Corp. | 2,229 | 184,717 | ||||||
Cabot Oil & Gas Corp. — Class A | 6,063 | 179,040 | ||||||
Tesoro Corp. | 1,833 | 167,335 | ||||||
Cimarex Energy Co. | 1,285 | 147,891 | ||||||
ONEOK, Inc. | 3,058 | 147,518 | ||||||
Southwestern Energy Co.* | 5,642 | 130,838 | ||||||
Cameron International Corp.* | 2,843 | 128,276 | ||||||
Range Resources Corp. | 2,434 | 126,665 | ||||||
FMC Technologies, Inc.* | 3,397 | 125,723 | ||||||
Murphy Oil Corp. | 2,449 | 114,123 | ||||||
Helmerich & Payne, Inc. | 1,580 | 107,550 | ||||||
Chesapeake Energy Corp.1 | 7,593 | 107,517 | ||||||
CONSOL Energy, Inc. | 3,379 | 94,240 | ||||||
Newfield Exploration Co.* | 2,360 | 82,812 | ||||||
Transocean Ltd.1 | 4,998 | 73,321 | ||||||
Ensco plc — Class A | 3,439 | 72,460 | ||||||
First Solar, Inc.* | 1,104 | 66,008 | ||||||
Noble Corporation plc | 3,551 | 50,708 | ||||||
QEP Resources, Inc. | 2,370 | 49,415 | ||||||
Diamond Offshore Drilling, Inc. | 986 | 26,415 | ||||||
Total Energy | 21,667,861 | |||||||
UTILITIES - 2.7% | ||||||||
Duke Energy Corp. | 10,384 | 797,285 | ||||||
NextEra Energy, Inc. | 6,507 | 677,053 | ||||||
Dominion Resources, Inc. | 8,631 | 611,680 | ||||||
Southern Co. | 13,353 | 591,271 | ||||||
Exelon Corp. | 12,618 | 424,091 | ||||||
American Electric Power Company, Inc. | 7,185 | 404,156 | ||||||
PG&E Corp. | 6,991 | 371,012 | ||||||
Sempra Energy | 3,398 | 370,450 | ||||||
PPL Corp. | 9,788 | 329,464 | ||||||
Public Service Enterprise Group, Inc. | 7,428 | 311,382 | ||||||
Edison International | 4,781 | 298,669 | ||||||
Consolidated Edison, Inc. | 4,298 | 262,178 | ||||||
Xcel Energy, Inc. | 7,425 | 258,464 | ||||||
Eversource Energy | 4,649 | 234,867 | ||||||
FirstEnergy Corp. | 6,181 | 216,706 | ||||||
DTE Energy Co. | 2,601 | 209,875 | ||||||
Entergy Corp. | 2,649 | 205,271 | ||||||
NiSource, Inc. | 4,641 | 204,947 | ||||||
Wisconsin Energy Corp. | 3,309 | 163,796 | ||||||
Ameren Corp. | 3,561 | 150,274 | ||||||
CMS Energy Corp. | 4,042 | 141,106 | ||||||
CenterPoint Energy, Inc. | 6,308 | 128,746 | ||||||
NRG Energy, Inc. | 4,956 | 124,842 | ||||||
AES Corp. | 9,486 | 121,895 | ||||||
SCANA Corp. | 2,097 | 115,314 | ||||||
Pinnacle West Capital Corp. | 1,623 | 103,466 | ||||||
Pepco Holdings, Inc. | 3,710 | 99,539 | ||||||
AGL Resources, Inc. | 1,756 | 87,185 | ||||||
Integrys Energy Group, Inc. | 1,167 | 84,047 | ||||||
TECO Energy, Inc. | 3,456 | 67,046 | ||||||
Total Utilities | 8,166,077 | |||||||
BASIC MATERIALS - 2.5% | ||||||||
EI du Pont de Nemours & Co. | 13,287 | 949,622 | ||||||
Monsanto Co. | 7,092 | 798,134 | ||||||
Dow Chemical Co. | 15,970 | 766,241 | ||||||
Praxair, Inc. | 4,238 | 511,697 | ||||||
LyondellBasell Industries N.V. — Class A | 5,812 | 510,294 | ||||||
Ecolab, Inc. | 3,952 | 452,030 | ||||||
PPG Industries, Inc. | 1,997 | 450,403 | ||||||
Air Products & Chemicals, Inc. | 2,830 | 428,122 | ||||||
International Paper Co. | 6,205 | 344,315 | ||||||
Sherwin-Williams Co. | 1,184 | 336,848 | ||||||
Freeport-McMoRan, Inc. | 15,260 | 289,177 | ||||||
Sigma-Aldrich Corp. | 1,753 | 242,352 | ||||||
Alcoa, Inc. | 17,937 | 231,746 | ||||||
Nucor Corp. | 4,682 | 222,535 | ||||||
Mosaic Co. | 4,564 | 210,218 | ||||||
CF Industries Holdings, Inc. | 702 | 199,143 | ||||||
Newmont Mining Corp. | 7,321 | 158,939 | ||||||
Eastman Chemical Co. | 2,181 | 151,056 | ||||||
International Flavors & Fragrances, Inc. | 1,185 | 139,119 | ||||||
FMC Corp. | 1,956 | 111,981 | ||||||
Airgas, Inc. | 992 | 105,261 | ||||||
Allegheny Technologies, Inc. | 1,594 | 47,836 | ||||||
Total Basic Materials | 7,657,069 | |||||||
SEE NOTES TO FINANCIAL STATEMENTS. | THE RYDEX FUNDS ANNUAL REPORT | 33 |
SCHEDULE OF INVESTMENTS (concluded) | March 31, 2015 |
S&P 500® FUND |
Shares | Value | |||||||
DIVERSIFIED - 0.0% | ||||||||
Leucadia National Corp. | 4,627 | $ | 103,136 | |||||
Total Common Stocks | ||||||||
(Cost $170,328,869) | 268,606,807 | |||||||
Face Amount | ||||||||
REPURCHASE AGREEMENTS††,2 - 8.7% | ||||||||
HSBC Group issued 03/31/15 at 0.03% due 04/01/15 | $ | 20,742,090 | 20,742,090 | |||||
RBC Capital Markets issued 03/31/15 at 0.05% due 04/01/15 | 3,169,831 | 3,169,831 | ||||||
UMB Financial Corp. issued 03/31/15 at 0.03% due 04/01/15 | 2,544,311 | 2,544,311 | ||||||
Total Repurchase Agreements | ||||||||
(Cost $26,456,232) | 26,456,232 | |||||||
SECURITIES LENDING COLLATERAL††,3 - 0.1% | ||||||||
Repurchase Agreements | ||||||||
HSBC Securities, Inc. issued 03/31/15 at 0.10% due 04/01/15 | 198,293 | 198,293 | ||||||
BNP Paribas Securities Corp. issued 03/31/15 at 0.10% due 04/01/15 | 68,213 | 68,213 | ||||||
Barclays Capital, Inc. issued 03/31/15 at 0.10% due 04/01/15 | 35,209 | 35,209 | ||||||
Total Securities Lending Collateral | ||||||||
(Cost $301,715) | 301,715 | |||||||
Total Investments - 97.3% | ||||||||
(Cost $197,086,816) | $ | 295,364,754 | ||||||
Other Assets & Liabilities, net - 2.7% | 8,244,756 | |||||||
Total Net Assets - 100.0% | $ | 303,609,510 | ||||||
Contracts | Unrealized Gain (Loss) | |||||||
EQUITY FUTURES CONTRACTS PURCHASED† | ||||||||
June 2015 S&P 500 Index Mini Futures Contracts (Aggregate Value of Contracts $20,800,950) | 202 | $ | 41,574 | |||||
Units | ||||||||
OTC EQUITY INDEX SWAP AGREEMENTS†† | ||||||||
Goldman Sachs International April 2015 S&P 500 Index Swap, Terminating 04/28/154 (Notional Value $1,173,849) | 568 | $ | 7,629 | |||||
Credit Suisse Capital, LLC April 2015 S&P 500 Index Swap, Terminating 04/28/154 (Notional Value $10,722,847) | 5,185 | (9,046 | ) | |||||
Barclays Bank plc April 2015 S&P 500 Index Swap, Terminating 04/30/154 (Notional Value $3,224,558) | 1,559 | (13,083 | ) | |||||
(Total Notional Value $15,121,254) | $ | (14,500 | ) |
* | Non-income producing security. |
† | Value determined based on Level 1 inputs — See Note 4. |
†† | Value determined based on Level 2 inputs — See Note 4. |
1 | All or portion of this security is on loan at March 31, 2015 — See Note 6. |
2 | Repurchase Agreements — See Note 5. |
3 | Securities lending collateral — See Note 6. |
4 | Total Return based on S&P 500 Index +/- financing at a variable rate. |
plc — Public Limited Company | |
REIT — Real Estate Investment Trust |
34 | THE RYDEX FUNDS ANNUAL REPORT | SEE NOTES TO FINANCIAL STATEMENTS. |
S&P 500® FUND |
STATEMENT OF ASSETS AND LIABILITIES |
March 31, 2015 |
Assets: | ||||
Investments, at value - including $296,079 of securities loaned (cost $170,328,869) | $ | 268,606,807 | ||
Repurchase agreements, at value (cost $26,757,947) | 26,757,947 | |||
Total investments (cost $197,086,816) | 295,364,754 | |||
Segregated cash with broker | 1,621,135 | |||
Unrealized appreciation on swap agreements | 7,629 | |||
Cash | 5,012 | |||
Receivables: | ||||
Fund shares sold | 10,550,973 | |||
Dividends | 369,214 | |||
Swap settlement | 21,921 | |||
Securities lending income | 684 | |||
Interest | 24 | |||
Total assets | 307,941,346 | |||
Liabilities: | ||||
Unrealized depreciation on swap agreements | 22,129 | |||
Payable for: | ||||
Securities purchased | 1,989,356 | |||
Fund shares redeemed | 1,160,210 | |||
Return of securities loaned | 306,125 | |||
Management fees | 213,922 | |||
Variation margin | 122,283 | |||
Distribution and service fees | 84,750 | |||
Transfer agent and administrative fees | 71,307 | |||
Portfolio accounting fees | 42,785 | |||
Miscellaneous | 318,969 | |||
Total liabilities | 4,331,836 | |||
Commitments and contingent liabilities (Note 15) | — | |||
Net assets | $ | 303,609,510 | ||
Net assets consist of: | ||||
Paid in capital | $ | 231,385,116 | ||
Undistributed net investment income | 84,598 | |||
Accumulated net realized loss on investments | (26,165,216 | ) | ||
Net unrealized appreciation on investments | 98,305,012 | |||
Net assets | $ | 303,609,510 | ||
A-Class: | ||||
Net assets | $ | 28,022,281 | ||
Capital shares outstanding | 676,947 | |||
Net asset value per share | $ | 41.40 | ||
Maximum offering price per share (Net asset value divided by 95.25%) | $ | 43.46 | ||
C-Class: | ||||
Net assets | $ | 20,977,179 | ||
Capital shares outstanding | 543,753 | |||
Net asset value per share | $ | 38.58 | ||
H-Class: | ||||
Net assets | $ | 254,610,050 | ||
Capital shares outstanding | 6,150,310 | |||
Net asset value per share | $ | 41.40 |
STATEMENT OF OPERATIONS |
Year Ended March 31, 2015 | ||||
Investment Income: | ||||
Dividends (net of foreign withholding tax of $1,144 ) | $ | 5,560,542 | ||
Interest | 11,111 | |||
Income from securities lending, net | 4,089 | |||
Total investment income | 5,575,742 | |||
Expenses: | ||||
Management fees | 2,452,479 | |||
Transfer agent and administrative fees | 817,494 | |||
Distribution and service fees: | ||||
A-Class | 70,488 | |||
C-Class | 190,400 | |||
H-Class | 699,409 | |||
Portfolio accounting fees | 490,500 | |||
Custodian fees | 38,082 | |||
Trustees’ fees* | 22,708 | |||
Line of credit fees | 634 | |||
Tax expense | 18 | |||
Miscellaneous | 532,237 | |||
Total expenses | 5,314,449 | |||
Net investment income | 261,293 | |||
Net Realized and Unrealized Gain (Loss): | ||||
Net realized gain (loss) on: | ||||
Investments | 1,664,161 | |||
Swap agreements | 3,929,346 | |||
Futures contracts | 1,578,529 | |||
Net realized gain | 7,172,036 | |||
Net change in unrealized appreciation (depreciation) on: | ||||
Investments | 20,228,311 | |||
Swap agreements | (624,866 | ) | ||
Futures contracts | (433,297 | ) | ||
Net change in unrealized appreciation (depreciation) | 19,170,148 | |||
Net realized and unrealized gain | 26,342,184 | |||
Net increase in net assets resulting from operations | $ | 26,603,477 |
* | Relates to Trustees not deemed “interested persons” within the meaning of Section 2(a)(19) of the 1940 Act. |
SEE NOTES TO FINANCIAL STATEMENTS. | THE RYDEX FUNDS ANNUAL REPORT | 35 |
S&P 500® FUND |
STATEMENTS OF CHANGES IN NET ASSETS |
Year Ended March 31, 2015 | Year Ended March 31, 2014 | |||||||
Increase (Decrease) in Net Assets from Operations: | ||||||||
Net investment income | $ | 261,293 | $ | 386,849 | ||||
Net realized gain on investments | 7,172,036 | 26,564,556 | ||||||
Net change in unrealized appreciation (depreciation) on investments | 19,170,148 | 13,292,846 | ||||||
Net increase in net assets resulting from operations | 26,603,477 | 40,244,251 | ||||||
Distributions to shareholders from: | ||||||||
Net investment income | ||||||||
A-Class | (17,679 | ) | (27,498 | ) | ||||
C-Class | (8,817 | ) | (17,900 | ) | ||||
H-Class | (133,918 | ) | (356,867 | ) | ||||
Net realized gains | ||||||||
A-Class | (487,372 | ) | — | |||||
C-Class | (243,055 | ) | — | |||||
H-Class | (3,691,790 | ) | — | |||||
Total distributions to shareholders | (4,582,631 | ) | (402,265 | ) | ||||
Capital share transactions: | ||||||||
Proceeds from sale of shares | ||||||||
A-Class | 119,690,602 | 67,031,023 | ||||||
C-Class | 50,549,094 | 69,955,990 | ||||||
H-Class | 1,614,367,735 | 1,826,152,142 | ||||||
Distributions reinvested | ||||||||
A-Class | 468,300 | 20,158 | ||||||
C-Class | 244,609 | 17,263 | ||||||
H-Class | 3,424,733 | 258,190 | ||||||
Cost of shares redeemed | ||||||||
A-Class | (121,906,600 | ) | (54,708,718 | ) | ||||
C-Class | (47,582,225 | ) | (66,380,612 | ) | ||||
H-Class | (1,637,788,549 | ) | (1,869,669,239 | ) | ||||
Net decrease from capital share transactions | (18,532,301 | ) | (27,323,803 | ) | ||||
Net increase in net assets | 3,488,545 | 12,518,183 | ||||||
Net assets: | ||||||||
Beginning of year | 300,120,965 | 287,602,782 | ||||||
End of year | $ | 303,609,510 | $ | 300,120,965 | ||||
Undistributed net investment income/(Accumulated net investment loss) at end of year | $ | 84,598 | $ | (16,281 | ) | |||
Capital share activity: | ||||||||
Shares sold | ||||||||
A-Class | 2,973,303 | 1,949,686 | ||||||
C-Class | 1,356,402 | 2,155,638 | ||||||
H-Class | 40,239,115 | 52,445,747 | ||||||
Shares issued from reinvestment of distributions | ||||||||
A-Class | 11,383 | 563 | ||||||
C-Class | 6,365 | 512 | ||||||
H-Class | 83,226 | 7,212 | ||||||
Shares redeemed | ||||||||
A-Class | (3,049,603 | ) | (1,589,203 | ) | ||||
C-Class | (1,274,767 | ) | (2,042,904 | ) | ||||
H-Class | (40,944,917 | ) | (54,091,461 | ) | ||||
Net decrease in shares | (599,493 | ) | (1,164,210 | ) |
36 | THE RYDEX FUNDS ANNUAL REPORT | SEE NOTES TO FINANCIAL STATEMENTS. |
S&P 500® FUND |
FINANCIAL HIGHLIGHTS
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.
A-Class | Year Ended March 31, 2015 | Year Ended March 31, 2014 | Year Ended March 28, 2013 | Year Ended March 31, 2012 | Year Ended March 31, 2011 | |||||||||||||||
Per Share Data | ||||||||||||||||||||
Net asset value, beginning of period | $ | 37.78 | $ | 31.55 | $ | 28.20 | $ | 26.41 | $ | 23.18 | ||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||
Net investment income (loss)a | .04 | .07 | .06 | .01 | (.06 | ) | ||||||||||||||
Net gain (loss) on investments (realized and unrealized) | 4.08 | 6.20 | 3.36 | 1.78 | 3.29 | |||||||||||||||
Total from investment operations | 4.12 | 6.27 | 3.42 | 1.79 | 3.23 | |||||||||||||||
Less distributions from: | ||||||||||||||||||||
Net investment income | (.02 | ) | (.04 | ) | (.07 | ) | — | (— | )c | |||||||||||
Net realized gains | (.48 | ) | — | — | — | — | ||||||||||||||
Total distributions | (.50 | ) | (.04 | ) | (.07 | ) | — | (— | )c | |||||||||||
Net asset value, end of period | $ | 41.40 | $ | 37.78 | $ | 31.55 | $ | 28.20 | $ | 26.41 | ||||||||||
Total Returnb | 10.90 | % | 19.87 | % | 12.16 | % | 6.78 | % | 13.94 | % | ||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||
Net assets, end of period (in thousands) | $ | 28,022 | $ | 28,028 | $ | 12,014 | $ | 13,413 | $ | 10,288 | ||||||||||
Ratios to average net assets: | ||||||||||||||||||||
Net investment income (loss) | 0.11 | % | 0.19 | % | 0.22 | % | 0.05 | % | (0.25 | %) | ||||||||||
Total expenses | 1.59 | % | 1.57 | % | 1.50 | % | 1.51 | % | 1.54 | % | ||||||||||
Portfolio turnover rate | 256 | % | 157 | % | 76 | % | 196 | % | 202 | % |
C-Class | Year Ended March 31, 2015 | Year Ended March 31, 2014 | Year Ended March 28, 2013 | Year Ended March 31, 2012 | Year Ended March 31, 2011 | |||||||||||||||
Per Share Data | ||||||||||||||||||||
Net asset value, beginning of period | $ | 35.51 | $ | 29.87 | $ | 26.91 | $ | 25.41 | $ | 22.50 | ||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||
Net investment income (loss)a | (.23 | ) | (.19 | ) | (.14 | ) | (.20 | ) | (.27 | ) | ||||||||||
Net gain (loss) on investments (realized and unrealized) | 3.80 | 5.87 | 3.17 | 1.70 | 3.18 | |||||||||||||||
Total from investment operations | 3.57 | 5.68 | 3.03 | 1.50 | 2.91 | |||||||||||||||
Less distributions from: | ||||||||||||||||||||
Net investment income | (.02 | ) | (.04 | ) | (.07 | ) | — | (— | )c | |||||||||||
Net realized gains | (.48 | ) | — | — | — | — | ||||||||||||||
Total distributions | (.50 | ) | (.04 | ) | (.07 | ) | — | (— | )c | |||||||||||
Net asset value, end of period | $ | 38.58 | $ | 35.51 | $ | 29.87 | $ | 26.91 | $ | 25.41 | ||||||||||
Total Returnb | 10.04 | % | 19.01 | % | 11.29 | % | 5.90 | % | 12.93 | % | ||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||
Net assets, end of period (in thousands) | $ | 20,977 | $ | 16,182 | $ | 10,231 | $ | 10,110 | $ | 10,032 | ||||||||||
Ratios to average net assets: | ||||||||||||||||||||
Net investment income (loss) | (0.62 | %) | (0.59 | %) | (0.52 | %) | (0.80 | %) | (1.11 | %) | ||||||||||
Total expenses | 2.34 | % | 2.32 | % | 2.28 | % | 2.26 | % | 2.29 | % | ||||||||||
Portfolio turnover rate | 256 | % | 157 | % | 76 | % | 196 | % | 202 | % |
SEE NOTES TO FINANCIAL STATEMENTS. | THE RYDEX FUNDS ANNUAL REPORT | 37 |
S&P 500® FUND |
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.
H-Class | Year Ended March 31, 2015 | Year Ended March 31, 2014 | Year Ended March 28, 2013 | Year Ended March 31, 2012 | Year Ended March 31, 2011 | |||||||||||||||
Per Share Data | ||||||||||||||||||||
Net asset value, beginning of period | $ | 37.78 | $ | 31.55 | $ | 28.20 | $ | 26.39 | $ | 23.17 | ||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||
Net investment income (loss)a | .05 | .05 | .07 | (.02 | ) | (.09 | ) | |||||||||||||
Net gain (loss) on investments (realized and unrealized) | 4.07 | 6.22 | 3.35 | 1.83 | 3.31 | |||||||||||||||
Total from investment operations | 4.12 | 6.27 | 3.42 | 1.81 | 3.22 | |||||||||||||||
Less distributions from: | ||||||||||||||||||||
Net investment income | (.02 | ) | (.04 | ) | (.07 | ) | — | (— | )c | |||||||||||
Net realized gains | (.48 | ) | — | — | — | — | ||||||||||||||
Total distributions | (.50 | ) | (.04 | ) | (.07 | ) | — | (— | )c | |||||||||||
Net asset value, end of period | $ | 41.40 | $ | 37.78 | $ | 31.55 | $ | 28.20 | $ | 26.39 | ||||||||||
Total Returnb | 10.90 | % | 19.87 | % | 12.16 | % | 6.86 | % | 13.90 | % | ||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||
Net assets, end of period (in thousands) | $ | 254,610 | $ | 255,912 | $ | 265,358 | $ | 240,847 | $ | 249,090 | ||||||||||
Ratios to average net assets: | ||||||||||||||||||||
Net investment income (loss) | 0.12 | % | 0.15 | % | 0.24 | % | (0.07 | %) | (0.37 | %) | ||||||||||
Total expenses | 1.58 | % | 1.56 | % | 1.50 | % | 1.50 | % | 1.54 | % | ||||||||||
Portfolio turnover rate | 256 | % | 157 | % | 76 | % | 196 | % | 202 | % |
a | Net investment income (loss) per share was computed using average shares outstanding throughout the period. |
b | Total return does not reflect the impact of any applicable sales charges. |
c | Less than $0.01 per share. |
38 | THE RYDEX FUNDS ANNUAL REPORT | SEE NOTES TO FINANCIAL STATEMENTS. |
PERFORMANCE REPORT AND FUND PROFILE (Unaudited) | March 31, 2015 |
INVERSE S&P 500® STRATEGY FUND
OBJECTIVE: Seeks to provide investment results that match, before fees and expenses, the performance of a specific benchmark on a daily basis. The Fund’s current benchmark is the inverse (opposite) of the performance of the S&P 500® Index (the “underlying index”). The Fund does not seek to achieve its investment objective over a period of time greater than one day.
For the one-year period ended March 31, 2015, Inverse S&P 500® Strategy Fund maintained a daily correlation of over 99% to its benchmark of -100% of the daily price movement of the S&P 500 Index. Inverse S&P 500® Strategy Fund Investor Class returned -13.26%, while the S&P 500 Index returned 12.73% over the same period.
Sectors that contributed most to performance of the underlying index were Health Care and Information Technology. The sector that contributed least was Telecommunication Services, followed by Materials. Energy was the only sector that detracted from return.
Apple, Inc., Home Depot, Inc., and Gilead Sciences, Inc., were the holdings that contributed most to performance of the underlying index for the period. Bank of America Corp., International Business Machines Corp., and Exxon Mobil Corp. detracted the most from performance of the underlying index for the period.
Derivatives in the Fund were used to help provide exposure to the composition of the benchmark in the highest efficient manner and not for hedging purposes. The results of derivatives use during the period were within our expectations and contributed to the Fund’s performance.
Due to the compounding of daily returns, leveraged and inverse funds’ returns over periods other than one day will likely differ in amount and possibly direction from the benchmark return for the same period. Investors should monitor their leveraged and inverse funds’ holdings to ensure that they are consistent with their strategies, as frequently as daily.
The effects of compounding may cause the longer-term correlation of the Fund to its benchmark to diminish. The apparent discrepancy between the leveraged and unleveraged indices is the result of compounding, which is described briefly on page 6 of this report.
The Fund invests excess cash into the Guggenheim Strategy Funds which, in turn, invest in a diversified portfolio of debt securities and financial instruments providing exposure to fixed-income markets. The investment objective of the Guggenheim Strategy Funds is to seek a high level of income consistent with the preservation of capital. For the one year period ended March 31,2015, investment in the Guggenheim Strategy Funds benefited Fund performance relative to investing in other short-term investments such as overnight repurchase agreements.
Performance displayed represents past performance, which is no guarantee of future results.
Holdings Diversification (Market Exposure as % of Net Assets)
![](https://capedge.com/proxy/N-CSR/0001398344-15-003814/rtb1_07.jpg)
“Holdings Diversification (Market Exposure as % of Net Assets)” excludes any temporary cash investments or investments in Guggenheim Strategy Funds Trust mutual funds. Investments in those Funds do not provide “market exposure” to meet the fund’s investment objective, but will significantly increase the portfolio’s exposure to certain other asset categories (and their associated risks), which may cause the Fund to deviate from its principal investment strategy, including: (i) high yield, high risk debt securities rated below the top four long-term rating categories by a nationally recognized statistical rating organization (also known as “junk bonds”); (ii) securities issued by the U.S. government or its agencies and instrumentalities; (iii) CLOs and similar investments; and (iv) other short-term fixed income securities.
THE RYDEX FUNDS ANNUAL REPORT | 39 |
PERFORMANCE REPORT AND FUND PROFILE (Unaudited)(concluded) | March 31, 2015 |
Inception Dates: | |
Investor Class | January 7, 1994 |
Advisor Class | August 5, 1998 |
A-Class | March 31, 2004 |
C-Class | March 15, 2001 |
H-Class | September 18, 2014 |
The Fund invests principally in derivative investments such as swap agreements and futures contracts.
Largest Holding (% of Total Net Assets) | |
Guggenheim Strategy Fund I | 25.1% |
Total | 25.1% |
“Largest Holding” excludes any temporary cash or derivative instruments. |
Cumulative Fund Performance*
![](https://capedge.com/proxy/N-CSR/0001398344-15-003814/rtb1_08.jpg)
![](https://capedge.com/proxy/N-CSR/0001398344-15-003814/rtb1_09.jpg)
Average Annual Returns*
Periods Ended March 31, 2015
1 Year | 5 Year | 10 Year | |
Investor Class Shares | -13.26% | -15.75% | -9.40% |
Advisor Class Shares | -13.54% | -16.16% | -9.85% |
A-Class Shares | -13.49% | -15.97% | -9.66% |
A-Class Shares with sales charge† | -17.59% | -16.78% | -10.10% |
C-Class Shares | -14.09% | -16.60% | -10.31% |
C-Class Shares with CDSC‡ | -14.95% | -16.60% | -10.31% |
S&P 500 Index | 12.73% | 14.47% | 8.01% |
Since Inception (09/18/14) | |||
H-Class Shares | -5.30% | ||
S&P 500 Index | 3.92% |
* | The performance data above represents past performance that is not predictive of future results. The investment return and principal value of an investment in the Fund will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Returns are historical and include changes in principal and reinvested dividends and capital gains and do not reflect the effect of taxes. The S&P 500 Index is an unmanaged index and, unlike the Fund, has no management fees or operating expenses to reduce its reported return. The graphs are based on Investor Class shares and A-Class shares only; performance for Advisor Class shares, C-Class shares, and H-Class shares will vary due to differences in fee structures. |
† | Fund returns are calculated using the maximum sales charge of 4.75%. |
‡ | Fund returns include a CDSC of 1% if redeemed within 12 months of purchase. |
40 | THE RYDEX FUNDS ANNUAL REPORT |
SCHEDULE OF INVESTMENTS | March 31, 2015 |
INVERSE S&P 500® STRATEGY FUND |
Shares | Value | |||||||
MUTUAL FUNDS† - 25.1% | ||||||||
Guggenheim Strategy Fund I1 | 864,990 | $ | 21,538,257 | |||||
Total Mutual Funds | ||||||||
(Cost $21,531,129) | 21,538,257 | |||||||
Face Amount | ||||||||
FEDERAL AGENCY DISCOUNT NOTES†† - 40.8% | ||||||||
Farmer Mac2 | ||||||||
0.08% due 04/01/15 | $ | 15,000,000 | 15,000,000 | |||||
0.11% due 04/02/15 | 10,000,000 | 9,999,969 | ||||||
Total Farmer Mac | 24,999,969 | |||||||
Federal Farm Credit2 | ||||||||
0.20% due 11/20/15 | 10,000,000 | 9,988,671 | ||||||
Total Federal Agency Discount Notes | ||||||||
(Cost $34,987,025) | 34,988,640 | |||||||
REPURCHASE AGREEMENTS††,3 - 20.5% | ||||||||
HSBC Group issued 03/31/15 at 0.03% due 04/01/15 | 13,775,659 | 13,775,659 | ||||||
RBC Capital Markets issued 03/31/15 at 0.05% due 04/01/15 | 2,105,213 | 2,105,213 | ||||||
UMB Financial Corp. issued 03/31/15 at 0.03% due 04/01/15 | 1,689,780 | 1,689,780 | ||||||
Total Repurchase Agreements | ||||||||
(Cost $17,570,652) | 17,570,652 | |||||||
Total Investments - 86.4% | ||||||||
(Cost $74,088,806) | $ | 74,097,549 | ||||||
Other Assets & Liabilities, net - 13.6% | 11,681,257 | |||||||
Total Net Assets - 100.0% | $ | 85,778,806 | ||||||
Contracts | Unrealized Gain (Loss) | |||||||
EQUITY FUTURES CONTRACTS SOLD SHORT† | ||||||||
June 2015 S&P 500 Index Mini Futures Contracts (Aggregate Value of Contracts $6,281,475) | 61 | $ | 123,544 | |||||
Units | ||||||||
OTC EQUITY INDEX SWAP AGREEMENTS SOLD SHORT†† | ||||||||
Barclays Bank plc April 2015 S&P 500 Index Swap, Terminating 04/30/154 (Notional Value $1,110,217) | 537 | $ | (246 | ) | ||||
Goldman Sachs International April 2015 S&P 500 Index Swap, Terminating 04/28/154 (Notional Value $11,870,656) | 5,741 | (71,197 | ) | |||||
Credit Suisse Capital, LLC April 2015 S&P 500 Index Swap, Terminating 04/28/154 (Notional Value $66,290,216) | 32,057 | (369,106 | ) | |||||
(Total Notional Value $79,271,089) | $ | (440,549 | ) |
† | Value determined based on Level 1 inputs — See Note 4. |
†† | Value determined based on Level 2 inputs — See Note 4. |
1 | Investment in a product that is managed by and/or pays a management fee to a party related to the Adviser — See Note 12. |
2 | The issuer operates under a Congressional charter; its securities are neither issued nor guaranteed by the U.S. Government. |
3 | Repurchase Agreements — See Note 5. |
4 | Total Return based on S&P 500 Index +/- financing at a variable rate. |
plc — Public Limited Company |
SEE NOTES TO FINANCIAL STATEMENTS. | THE RYDEX FUNDS ANNUAL REPORT | 41 |
INVERSE S&P 500® STRATEGY FUND |
STATEMENT OF ASSETS AND LIABILITIES
March 31, 2015
Assets: | ||||
Investments, at value (cost $56,518,154) | $ | 56,526,897 | ||
Repurchase agreements, at value (cost $17,570,652) | 17,570,652 | |||
Total investments (cost $74,088,806) | 74,097,549 | |||
Segregated cash with broker | 12,427,984 | |||
Receivables: | ||||
Fund shares sold | 250,260 | |||
Variation margin | 81,366 | |||
Dividends | 21,555 | |||
Interest | 16 | |||
Total assets | 86,878,730 | |||
Liabilities: | ||||
Unrealized depreciation on swap agreements | 440,549 | |||
Payable for: | ||||
Fund shares redeemed | 460,559 | |||
Management fees | 60,012 | |||
Swap settlement | 31,243 | |||
Securities purchased | 21,555 | |||
Transfer agent and administrative fees | 16,670 | |||
Distribution and service fees | 8,390 | |||
Portfolio accounting fees | 6,668 | |||
Miscellaneous | 54,278 | |||
Total liabilities | 1,099,924 | |||
Commitments and contingent liabilities (Note 15) | — | |||
Net assets | $ | 85,778,806 | ||
Net assets consist of: | ||||
Paid in capital | $ | 406,605,606 | ||
Undistributed net investment income | — | |||
Accumulated net realized loss on investments | (320,518,538 | ) | ||
Net unrealized depreciation on investments | (308,262 | ) | ||
Net assets | $ | 85,778,806 | ||
Investor Class: | ||||
Net assets | $ | 60,744,833 | ||
Capital shares outstanding | 4,163,556 | |||
Net asset value per share | $ | 14.59 | ||
Advisor Class: | ||||
Net assets | $ | 2,069,174 | ||
Capital shares outstanding | 155,814 | |||
Net asset value per share | $ | 13.28 | ||
A-Class: | ||||
Net assets | $ | 4,758,320 | ||
Capital shares outstanding | 350,145 | |||
Net asset value per share | $ | 13.59 | ||
Maximum offering price per share (Net asset value divided by 95.25%) | $ | 14.27 | ||
C-Class: | ||||
Net assets | $ | 5,121,278 | ||
Capital shares outstanding | 407,880 | |||
Net asset value per share | $ | 12.56 | ||
H-Class: | ||||
Net assets | $ | 13,085,201 | ||
Capital shares outstanding | 962,821 | |||
Net asset value per share | $ | 13.59 |
STATEMENT OF OPERATIONS
Year Ended March 31, 2015
Investment Income: | ||||
Dividends | $ | 258,685 | ||
Interest | 35,611 | |||
Total investment income | 294,296 | |||
Expenses: | ||||
Management fees | 789,769 | |||
Transfer agent and administrative fees | 219,380 | |||
Distribution and service fees: | ||||
Advisor Class | 24,264 | |||
A-Class | 13,557 | |||
C-Class | 57,065 | |||
H-Class** | 1,084 | |||
Portfolio accounting fees | 87,752 | |||
Registration fees | 76,280 | |||
Custodian fees | 10,243 | |||
Trustees’ fees* | 7,474 | |||
Line of credit fees | 1,065 | |||
Miscellaneous | 42,283 | |||
Total expenses | 1,330,216 | |||
Net investment loss | (1,035,920 | ) | ||
Net Realized and Unrealized Gain (Loss): | ||||
Net realized gain (loss) on: | ||||
Investments in unaffiliated issuers | (90,926 | ) | ||
Swap agreements | (15,580,972 | ) | ||
Futures contracts | (797,822 | ) | ||
Net realized loss | (16,469,720 | ) | ||
Net change in unrealized appreciation (depreciation) on: | ||||
Investments in unaffiliated issuers | 1,680 | |||
Investments in affiliated issuers | 9,200 | |||
Swap agreements | 148,570 | |||
Futures contracts | 186,535 | |||
Net change in unrealized appreciation (depreciation) | 345,985 | |||
Net realized and unrealized loss | (16,123,735 | ) | ||
Net decrease in net assets resulting from operations | $ | (17,159,655 | ) |
* | Relates to Trustees not deemed “interested persons” within the meaning of Section 2(a)(19) of the 1940 Act. |
** | Since commencement of operations: September 18, 2014. |
42 | THE RYDEX FUNDS ANNUAL REPORT | SEE NOTES TO FINANCIAL STATEMENTS. |
INVERSE S&P 500® STRATEGY FUND |
STATEMENTS OF CHANGES IN NET ASSETS
Year Ended March 31, 2015 | Year Ended March 31, 2014 | |||||||
Increase (Decrease) in Net Assets from Operations: | ||||||||
Net investment loss | $ | (1,035,920 | ) | $ | (2,280,355 | ) | ||
Net realized loss on investments | (16,469,720 | ) | (37,250,140 | ) | ||||
Net change in unrealized appreciation (depreciation) on investments | 345,985 | (23,921 | ) | |||||
Net decrease in net assets resulting from operations | (17,159,655 | ) | (39,554,416 | ) | ||||
Capital share transactions: | ||||||||
Proceeds from sale of shares | ||||||||
Investor Class | 189,117,714 | 396,150,082 | ||||||
Advisor Class | 77,331,876 | 43,312,714 | ||||||
A-Class | 20,249,187 | 24,186,917 | ||||||
C-Class | 8,073,633 | 13,040,917 | ||||||
H-Class* | 17,542,838 | — | ||||||
Cost of shares redeemed | ||||||||
Investor Class | (194,157,539 | ) | (388,967,563 | ) | ||||
Advisor Class | (76,596,721 | ) | (47,807,585 | ) | ||||
A-Class | (19,772,383 | ) | (23,182,304 | ) | ||||
C-Class | (8,221,994 | ) | (12,185,135 | ) | ||||
H-Class* | (4,506,875 | ) | — | |||||
Net increase from capital share transactions | 9,059,736 | 4,548,043 | ||||||
Net decrease in net assets | (8,099,919 | ) | (35,006,373 | ) | ||||
Net assets: | ||||||||
Beginning of year | 93,878,725 | 128,885,098 | ||||||
End of year | $ | 85,778,806 | $ | 93,878,725 | ||||
Undistributed net investment income/(Accumulated net investment loss) at end of year | $ | — | $ | (382,578 | ) | |||
Capital share activity: | ||||||||
Shares sold | ||||||||
Investor Class | 12,003,414 | 20,629,628 | ||||||
Advisor Class | 5,473,674 | 2,483,798 | ||||||
A-Class | 1,363,582 | 1,354,080 | ||||||
C-Class | 595,844 | 790,782 | ||||||
H-Class* | 1,281,317 | — | ||||||
Shares redeemed | ||||||||
Investor Class | (12,547,719 | ) | (20,970,317 | ) | ||||
Advisor Class | (5,517,118 | ) | (2,790,831 | ) | ||||
A-Class | (1,361,454 | ) | (1,306,326 | ) | ||||
C-Class | (610,462 | ) | (749,635 | ) | ||||
H-Class* | (318,496 | ) | — | |||||
Net increase (decrease) in shares | 362,582 | (558,821 | ) |
* | Since commencement of operations: September 18, 2014. |
SEE NOTES TO FINANCIAL STATEMENTS. | THE RYDEX FUNDS ANNUAL REPORT | 43 |
INVERSE S&P 500® STRATEGY FUND |
FINANCIAL HIGHLIGHTS
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.
Investor Class | Year Ended March 31, 2015 | Year Ended March 31, 2014 | Year Ended March 28, 2013 | Year Ended March 31, 2012 | Year Ended March 31, 2011 | |||||||||||||||
Per Share Data | ||||||||||||||||||||
Net asset value, beginning of period | $ | 16.82 | $ | 21.03 | $ | 24.61 | $ | 28.50 | $ | 34.38 | ||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||
Net investment income (loss)a | (.17 | ) | (.25 | ) | (.30 | ) | (.38 | ) | (.41 | ) | ||||||||||
Net gain (loss) on investments (realized and unrealized) | (2.06 | ) | (3.96 | ) | (3.28 | ) | (3.51 | ) | (5.47 | ) | ||||||||||
Total from investment operations | (2.23 | ) | (4.21 | ) | (3.58 | ) | (3.89 | ) | (5.88 | ) | ||||||||||
Net asset value, end of period | $ | 14.59 | $ | 16.82 | $ | 21.03 | $ | 24.61 | $ | 28.50 | ||||||||||
Total Returnb | (13.26 | %) | (20.02 | %) | (14.55 | %) | (13.65 | %) | (17.10 | %) | ||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||
Net assets, end of period (in thousands) | $ | 60,745 | $ | 79,172 | $ | 106,158 | $ | 112,334 | $ | 118,410 | ||||||||||
Ratios to average net assets: | ||||||||||||||||||||
Net investment income (loss) | (1.07 | %) | (1.35 | %) | (1.27 | %) | (1.31 | %) | (1.22 | %) | ||||||||||
Total expensesc | 1.41 | % | 1.42 | % | 1.41 | % | 1.41 | % | 1.44 | % | ||||||||||
Portfolio turnover rate | 103 | % | — | — | — | — |
Advisor Class | Year Ended March 31, 2015 | Year Ended March 31, 2014 | Year Ended March 28, 2013 | Year Ended March 31, 2012 | Year Ended March 31, 2011 | |||||||||||||||
Per Share Data | ||||||||||||||||||||
Net asset value, beginning of period | $ | 15.36 | $ | 19.31 | $ | 22.71 | $ | 26.44 | $ | 32.06 | ||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||
Net investment income (loss)a | (.22 | ) | (.32 | ) | (.39 | ) | (.48 | ) | (.54 | ) | ||||||||||
Net gain (loss) on investments (realized and unrealized) | (1.86 | ) | (3.63 | ) | (3.01 | ) | (3.25 | ) | (5.08 | ) | ||||||||||
Total from investment operations | (2.08 | ) | (3.95 | ) | (3.40 | ) | (3.73 | ) | (5.62 | ) | ||||||||||
Net asset value, end of period | $ | 13.28 | $ | 15.36 | $ | 19.31 | $ | 22.71 | $ | 26.44 | ||||||||||
Total Returnb | (13.54 | %) | (20.46 | %) | (14.97 | %) | (14.11 | %) | (17.53 | %) | ||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||
Net assets, end of period (in thousands) | $ | 2,069 | $ | 3,061 | $ | 9,775 | $ | 5,978 | $ | 6,434 | ||||||||||
Ratios to average net assets: | ||||||||||||||||||||
Net investment income (loss) | (1.58 | %) | (1.85 | %) | (1.77 | %) | (1.81 | %) | (1.72 | %) | ||||||||||
Total expensesc | 1.91 | % | 1.93 | % | 1.90 | % | 1.91 | % | 1.93 | % | ||||||||||
Portfolio turnover rate | 103 | % | — | — | — | — |
44 | THE RYDEX FUNDS ANNUAL REPORT | SEE NOTES TO FINANCIAL STATEMENTS. |
INVERSE S&P 500® STRATEGY FUND |
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.
A-Class | Year Ended March 31, 2015 | Year Ended March 31, 2014 | Year Ended March 28, 2013 | Year Ended March 31, 2012 | Year Ended March 31, 2011 | |||||||||||||||
Per Share Data | ||||||||||||||||||||
Net asset value, beginning of period | $ | 15.71 | $ | 19.69 | $ | 23.10 | $ | 26.82 | $ | 32.43 | ||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||
Net investment income (loss)a | (.19 | ) | (.28 | ) | (.34 | ) | (.42 | ) | (.48 | ) | ||||||||||
Net gain (loss) on investments (realized and unrealized) | (1.93 | ) | (3.70 | ) | (3.07 | ) | (3.30 | ) | (5.13 | ) | ||||||||||
Total from investment operations | (2.12 | ) | (3.98 | ) | (3.41 | ) | (3.72 | ) | (5.61 | ) | ||||||||||
Net asset value, end of period | $ | 13.59 | $ | 15.71 | $ | 19.69 | $ | 23.10 | $ | 26.82 | ||||||||||
Total Returnb | (13.49 | %) | (20.21 | %) | (14.76 | %) | (13.87 | %) | (17.30 | %) | ||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||
Net assets, end of period (in thousands) | $ | 4,758 | $ | 5,468 | $ | 5,912 | $ | 7,915 | $ | 5,029 | ||||||||||
Ratios to average net assets: | ||||||||||||||||||||
Net investment income (loss) | (1.32 | %) | (1.58 | %) | (1.52 | %) | (1.56 | %) | (1.47 | %) | ||||||||||
Total expensesc | 1.66 | % | 1.68 | % | 1.65 | % | 1.66 | % | 1.68 | % | ||||||||||
Portfolio turnover rate | 103 | % | — | — | — | — |
C-Class | Year Ended March 31, 2015 | Year Ended March 31, 2014 | Year Ended March 28, 2013 | Year Ended March 31, 2012 | Year Ended March 31, 2011 | |||||||||||||||
Per Share Data | ||||||||||||||||||||
Net asset value, beginning of period | $ | 14.62 | $ | 18.46 | $ | 21.83 | $ | 25.53 | $ | 31.12 | ||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||
Net investment income (loss)a | (.28 | ) | (.38 | ) | (.48 | ) | (.59 | ) | (.67 | ) | ||||||||||
Net gain (loss) on investments (realized and unrealized) | (1.78 | ) | (3.46 | ) | (2.89 | ) | (3.11 | ) | (4.92 | ) | ||||||||||
Total from investment operations | (2.06 | ) | (3.84 | ) | (3.37 | ) | (3.70 | ) | (5.59 | ) | ||||||||||
Net asset value, end of period | $ | 12.56 | $ | 14.62 | $ | 18.46 | $ | 21.83 | $ | 25.53 | ||||||||||
Total Returnb | (14.09 | %) | (20.80 | %) | (15.44 | %) | (14.49 | %) | (17.96 | %) | ||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||
Net assets, end of period (in thousands) | $ | 5,121 | $ | 6,177 | $ | 7,041 | $ | 7,870 | $ | 11,817 | ||||||||||
Ratios to average net assets: | ||||||||||||||||||||
Net investment income (loss) | (2.07 | %) | (2.34 | %) | (2.27 | %) | (2.31 | %) | (2.23 | %) | ||||||||||
Total expensesc | 2.41 | % | 2.42 | % | 2.40 | % | 2.42 | % | 2.44 | % | ||||||||||
Portfolio turnover rate | 103 | % | — | — | — | — |
SEE NOTES TO FINANCIAL STATEMENTS. | THE RYDEX FUNDS ANNUAL REPORT | 45 |
INVERSE S&P 500® STRATEGY FUND |
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.
H-Class | Period Ended March 31, 2015d | |||
Per Share Data | ||||
Net asset value, beginning of period | $ | 14.35 | ||
Income (loss) from investment operations: | ||||
Net investment income (loss)a | (.09 | ) | ||
Net gain (loss) on investments (realized and unrealized) | (.67 | ) | ||
Total from investment operations | (.76 | ) | ||
Net asset value, end of period | $ | 13.59 | ||
Total Returnb | (5.30 | %) | ||
Ratios/Supplemental Data | ||||
Net assets, end of period (in thousands) | $ | 13,085 | ||
Ratios to average net assets: | ||||
Net investment income (loss) | (1.27 | %) | ||
Total expensesc | 1.60 | % | ||
Portfolio turnover rate | 103 | % |
a | Net investment income (loss) per share was computed using average shares outstanding throughout the period. |
b | Total return does not reflect the impact of any applicable sales charges. |
c | Does not include expenses of the underlying funds in which the Fund invests. |
d | Since commencement of operations: September 18, 2014. Percentage amounts for the period, except total return and portfolio turnover rate, have been annualized. The portfolio turnover rate stated is for the entire period of the Fund, not since commencement of operations of the Class. |
46 | THE RYDEX FUNDS ANNUAL REPORT | SEE NOTES TO FINANCIAL STATEMENTS. |
PERFORMANCE REPORT AND FUND PROFILE (Unaudited) | March 31, 2015 |
MONTHLY REBALANCE NASDAQ-100® 2x STRATEGY FUND
OBJECTIVE: Seeks to provide investment results that match, before fees and expenses, the performance of a specific benchmark on a calendar month basis. The Fund’s current benchmark is 200% of the performance of the NASDAQ-100 Index® (the “underlying index”). The Fund does not seek to achieve its investment objective over a period of time different than a full calendar month.
The inception date for the Fund was November 28, 2014. For the abbreviated annual period ended March 31, 2015, the Monthly Rebalance NASDAQ-100® 2x Strategy Fund H-Class returned 3.14%, while the NASDAQ-100 Index returned 0.26% over the same period.
The Health Care sector contributed most to performance of the underlying index, followed by the Consumer Discretionary and Consumer Staples sectors. Information Technology detracted from performance. No other sectors contributed meaningfully to performance.
Apple Inc., Biogen Inc., and Kraft Foods Group Inc. were the holdings contributing most to performance of the underlying index for the period. Microsoft Corp., Intel Corp., and Baidu Inc. detracted most from performance of the underlying index for the period.
The Fund employs a strategy that seeks to magnify the index’s exposure 200% on a monthly basis, providing enhanced exposure to an underlying benchmark per dollar invested. It is intended for investors who expect the NASDAQ-100® Index to go up and want accelerated investment gains when it does so. However, there is an increased risk of accelerated losses if the market declines.
The Fund is rebalanced on a monthly basis to maintain its 200% exposure to the NASDAQ-100 Index. Because the Fund is rebalanced on a monthly basis, the beta “floats” or will deviate on a daily basis from a 2x exposure. If the index moves in a positive direction, the Fund’s exposure level—and risk—will be lower than 200%. Conversely, if the index moves in a negative direction, the Fund’s exposure level—and risk—will be higher than 200%. An investor who purchases the Fund on a day other than the rebalance day will have a beta exposure that differs from the 2x exposure. An investment purchased on a day other than the rebalance day will maintain its exposure level until the next Fund rebalance, which takes place on the last trading day of the month.
Derivatives in the Fund were used to help provide exposure to the composition of the benchmark in the highest efficient manner and not for hedging purposes. The results of derivatives use during the period were within our expectations and contributed to the Fund’s performance.
Due to the compounding of daily returns, leveraged and inverse funds’ returns over periods other than one day will likely differ in amount and possibly direction from the benchmark return for the same period. Investors should monitor their leveraged and inverse funds’ holdings to ensure that they are consistent with their strategies, as frequently as daily.
The effects of compounding may cause the longer-term correlation of the Fund to its benchmark to diminish. The apparent discrepancy between the leveraged and unleveraged indices is the result of compounding, which is described briefly on page 6 of this report.
The Fund invests excess cash into the Guggenheim Strategy Funds which, in turn, invest in a diversified portfolio of debt securities and financial instruments providing exposure to fixed-income markets. The investment objective of the Guggenheim Strategy Funds is to seek a high level of income consistent with the preservation of capital. For the one year period ended March 31,2015, investment in the Guggenheim Strategy Funds benefited Fund performance relative to investing in other short-term investments such as overnight repurchase agreements.
Performance displayed represents past performance which is no guarantee of future results.
THE RYDEX FUNDS ANNUAL REPORT | 47 |
PERFORMANCE REPORT AND FUND PROFILE (Unaudited)(continued) | March 31, 2015 |
Holdings Diversification (Market Exposure as % of Net Assets)
![](https://capedge.com/proxy/N-CSR/0001398344-15-003814/rtb1_10.jpg)
“Holdings Diversification (Market Exposure as % of Net Assets)” excludes any temporary cash investments or investments in Guggenheim Strategy Funds Trust mutual funds. Investments in those Funds do not provide “market exposure” to meet the fund’s investment objective, but will significantly increase the portfolio’s exposure to certain other asset categories (and their associated risks), which may cause the Fund to deviate from its principal investment strategy, including: (i) high yield, high risk debt securities rated below the top four long-term rating categories by a nationally recognized statistical rating organization (also known as “junk bonds”); (ii) securities issued by the U.S. government or its agencies and instrumentalities; (iii) CLOs and similar investments; and (iv) other short-term fixed income securities.
Inception Dates: | |
A-Class | November 28, 2014 |
C-Class | November 28, 2014 |
H-Class | November 28, 2014 |
Ten Largest Holdings (% of Total Net Assets) | |
Apple, Inc. | 10.7% |
Guggenheim Strategy Fund I | 10.5% |
Microsoft Corp. | 4.9% |
Google, Inc. — Class C | 2.8% |
Facebook, Inc. — Class A | 2.7% |
Amazon.com, Inc. | 2.6% |
Google, Inc. — Class A | 2.4% |
Intel Corp. | 2.2% |
Gilead Sciences, Inc. | 2.2% |
Cisco Systems, Inc. | 2.1% |
Top Ten Total | 43.1% |
“Ten Largest Holdings” exclude any temporary cash or derivative investments. |
48 | THE RYDEX FUNDS ANNUAL REPORT |
PERFORMANCE REPORT AND FUND PROFILE (Unaudited)(concluded) | March 31, 2015 |
Cumulative Fund Performance*
![](https://capedge.com/proxy/N-CSR/0001398344-15-003814/rtb1_11.jpg)
![](https://capedge.com/proxy/N-CSR/0001398344-15-003814/rtb1_12.jpg)
Cumulative Annual Returns*
Periods Ended March 31, 2015
Since Inception (11/28/14) | |
C-Class Shares | 3.10% |
C-Class Shares with CDSC† | 2.10% |
A-Class Shares | 3.36% |
A-Class Shares with sales charge‡ | -1.54% |
H-Class Shares | 3.14% |
NASDAQ-100 Index | 0.26% |
* | The performance data above represents past performance that is not predictive of future results. The investment return and principal value of an investment in the Fund will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Returns are historical and include changes in principal and reinvested dividends and capital gains and do not reflect the effect of taxes. The NASDAQ-100 Index is an unmanaged index and, unlike the Fund, has no management fees or operating expenses to reduce its reported return. The graphs are based on A-Class shares and H-Class shares only; performance for C-Class shares will vary due to differences in fee structures. |
† | Fund returns include a CDSC of 1% if redeemed within 12 months of purchase. |
‡ | Fund returns are calculated using the maximum sales charge of 4.75%. |
SEE NOTES TO FINANCIAL STATEMENTS. | THE RYDEX FUNDS ANNUAL REPORT | 49 |
SCHEDULE OF INVESTMENTS | March 31, 2015 |
MONTHLY REBALANCE NASDAQ-100® 2x STRATEGY FUND |
Shares | Value | |||||||
COMMON STOCKS† - 74.0% | ||||||||
TECHNOLOGY - 28.7% | ||||||||
Apple, Inc. | 296,330 | $ | 36,872,342 | |||||
Microsoft Corp. | 417,039 | 16,954,720 | ||||||
Intel Corp. | 240,754 | 7,528,378 | ||||||
QUALCOMM, Inc. | 83,855 | 5,814,506 | ||||||
Texas Instruments, Inc. | 53,231 | 3,044,015 | ||||||
Cognizant Technology Solutions Corp. — Class A* | 30,990 | 1,933,466 | ||||||
Adobe Systems, Inc.* | 25,464 | 1,882,808 | ||||||
Avago Technologies Ltd. | 13,032 | 1,654,803 | ||||||
Micron Technology, Inc.* | 54,765 | 1,485,774 | ||||||
Applied Materials, Inc. | 62,461 | 1,409,120 | ||||||
Intuit, Inc. | 14,067 | 1,363,936 | ||||||
Cerner Corp.* | 17,415 | 1,275,823 | ||||||
Broadcom Corp. — Class A | 27,959 | 1,210,485 | ||||||
NXP Semiconductor N.V.* | 11,730 | 1,177,223 | ||||||
Western Digital Corp. | 11,744 | 1,068,822 | ||||||
Analog Devices, Inc. | 15,842 | 998,046 | ||||||
Fiserv, Inc.* | 12,134 | 963,439 | ||||||
Electronic Arts, Inc.* | 15,761 | 926,983 | ||||||
Paychex, Inc. | 18,461 | 915,943 | ||||||
Seagate Technology plc | 16,691 | 868,433 | ||||||
Activision Blizzard, Inc. | 36,749 | 835,121 | ||||||
Check Point Software Technologies Ltd.* | 9,343 | 765,846 | ||||||
CA, Inc. | 22,510 | 734,051 | ||||||
SanDisk Corp. | 10,828 | 688,877 | ||||||
Autodesk, Inc.* | 11,566 | 678,230 | ||||||
Altera Corp. | 15,296 | 656,351 | ||||||
Akamai Technologies, Inc.* | 9,049 | 642,886 | ||||||
NVIDIA Corp. | 27,631 | 578,179 | ||||||
Linear Technology Corp. | 12,159 | 569,041 | ||||||
Lam Research Corp. | 8,099 | 568,833 | ||||||
Xilinx, Inc. | 13,290 | 562,167 | ||||||
NetApp, Inc. | 15,848 | 561,970 | ||||||
Citrix Systems, Inc.* | 8,125 | 518,944 | ||||||
KLA-Tencor Corp. | 8,269 | 482,000 | ||||||
Total Technology | 98,191,561 | |||||||
COMMUNICATIONS - 23.4% | ||||||||
Google, Inc. — Class C* | 17,318 | 9,490,264 | ||||||
Facebook, Inc. — Class A* | 113,684 | 9,346,530 | ||||||
Amazon.com, Inc.* | 23,607 | 8,784,165 | ||||||
Google, Inc. — Class A* | 14,586 | 8,090,854 | ||||||
Cisco Systems, Inc. | 259,499 | 7,142,710 | ||||||
Comcast Corp. — Class A | 108,336 | 6,117,735 | ||||||
eBay, Inc.* | 61,512 | 3,548,012 | ||||||
Priceline Group, Inc.* | 2,640 | 3,073,356 | ||||||
Baidu, Inc. ADR* | 14,084 | 2,935,106 | ||||||
Twenty-First Century Fox, Inc. — Class A | 67,489 | 2,283,828 | ||||||
DIRECTV* | 25,560 | 2,175,156 | ||||||
Yahoo!, Inc.* | 47,587 | 2,114,528 | ||||||
Liberty Global plc* | 31,809 | 1,584,406 | ||||||
Twenty-First Century Fox, Inc. — Class B | 40,593 | 1,334,698 | ||||||
Netflix, Inc.* | 3,075 | 1,281,322 | ||||||
Viacom, Inc. — Class B | 18,054 | 1,233,088 | ||||||
Comcast Corp. — Class A | 20,359 | 1,141,427 | ||||||
Charter Communications, Inc. — Class A* | 5,693 | 1,099,375 | ||||||
Sirius XM Holdings, Inc.* | 283,732 | 1,083,856 | ||||||
Symantec Corp. | 34,689 | 810,508 | ||||||
DISH Network Corp. — Class A* | 11,356 | 795,601 | ||||||
Vodafone Group plc ADR | 21,914 | 716,150 | ||||||
Liberty Interactive Corp. — Class A* | 22,648 | 661,095 | ||||||
Liberty Global plc — Class A* | 12,774 | 657,478 | ||||||
TripAdvisor, Inc.* | 6,615 | 550,170 | ||||||
VimpelCom Ltd. ADR | 89,303 | 467,948 | ||||||
Liberty Media Corp. — Class C* | 11,605 | 443,311 | ||||||
Discovery Communications, Inc. — Class C* | 14,441 | 425,648 | ||||||
Liberty Ventures* | 6,839 | 287,306 | ||||||
Discovery Communications, Inc. — Class A* | 7,556 | 232,423 | ||||||
Liberty Media Corp. — Class A* | 5,313 | 204,816 | ||||||
Total Communications | 80,112,870 | |||||||
CONSUMER, NON-CYCLICAL - 14.0% | ||||||||
Gilead Sciences, Inc.* | 75,713 | 7,429,717 | ||||||
Amgen, Inc. | 38,577 | 6,166,533 | ||||||
Biogen, Inc.* | 11,927 | 5,036,056 | ||||||
Celgene Corp.* | 40,698 | 4,691,665 | ||||||
Express Scripts Holding Co.* | 36,952 | 3,206,325 | ||||||
Mondelez International, Inc. — Class A | 83,851 | 3,026,183 | ||||||
Kraft Foods Group, Inc. | 29,890 | 2,603,867 | ||||||
Regeneron Pharmaceuticals, Inc.* | 5,116 | 2,309,772 | ||||||
Automatic Data Processing, Inc. | 24,154 | 2,068,549 | ||||||
Alexion Pharmaceuticals, Inc.* | 10,276 | 1,780,831 | ||||||
Vertex Pharmaceuticals, Inc.* | 12,307 | 1,451,857 | ||||||
Illumina, Inc.* | 7,310 | 1,357,028 | ||||||
Monster Beverage Corp.* | 8,526 | 1,179,956 | ||||||
Mylan N.V.* | 19,065 | 1,131,508 | ||||||
Whole Foods Market, Inc. | 18,339 | 955,095 | ||||||
Intuitive Surgical, Inc.* | 1,861 | 939,861 | ||||||
Keurig Green Mountain, Inc. | 8,219 | 918,309 | ||||||
Catamaran Corp.* | 10,548 | 628,028 | ||||||
Henry Schein, Inc.* | 4,260 | 594,781 | ||||||
Verisk Analytics, Inc. — Class A* | 8,037 | 573,842 | ||||||
Total Consumer, Non-cyclical | 48,049,763 | |||||||
CONSUMER, CYCLICAL - 6.9% | ||||||||
Walgreens Boots Alliance, Inc. | 55,409 | 4,692,034 | ||||||
Starbucks Corp. | 38,116 | 3,609,585 | ||||||
Costco Wholesale Corp. | 22,393 | 3,392,427 | ||||||
American Airlines Group, Inc. | 35,414 | 1,869,151 | ||||||
Tesla Motors, Inc.* | 6,393 | 1,206,807 | ||||||
PACCAR, Inc. | 18,022 | 1,137,909 | ||||||
Marriott International, Inc. — Class A | 14,058 | 1,129,139 | ||||||
O’Reilly Automotive, Inc.* | 5,167 | 1,117,312 | ||||||
Ross Stores, Inc. | 10,598 | 1,116,605 | ||||||
Dollar Tree, Inc.* | 10,454 | 848,290 |
50 | THE RYDEX FUNDS ANNUAL REPORT | SEE NOTES TO FINANCIAL STATEMENTS. |
SCHEDULE OF INVESTMENTS (concluded) | March 31, 2015 |
MONTHLY REBALANCE NASDAQ-100® 2x STRATEGY FUND |
Shares | Value | |||||||
Bed Bath & Beyond, Inc.* | 9,435 | $ | 724,372 | |||||
Wynn Resorts Ltd. | 5,161 | 649,667 | ||||||
Fastenal Co. | 15,021 | 622,395 | ||||||
Tractor Supply Co. | 6,923 | 588,870 | ||||||
Staples, Inc. | 32,551 | 530,093 | ||||||
Mattel, Inc. | 17,195 | 392,906 | ||||||
Total Consumer, Cyclical | 23,627,562 | |||||||
INDUSTRIAL - 0.8% | ||||||||
SBA Communications Corp. — Class A* | 6,565 | 768,762 | ||||||
Stericycle, Inc.* | 4,317 | 606,236 | ||||||
CH Robinson Worldwide, Inc. | 7,445 | 545,122 | ||||||
Expeditors International of Washington, Inc. | 9,748 | 469,659 | ||||||
Garmin Ltd. | 9,751 | 463,368 | ||||||
Total Industrial | 2,853,147 | |||||||
BASIC MATERIALS - 0.2% | ||||||||
Sigma-Aldrich Corp. | 6,071 | 839,316 | ||||||
Total Common Stocks | ||||||||
(Cost $256,565,847) | 253,674,219 | |||||||
MUTUAL FUNDS† - 10.5% | ||||||||
Guggenheim Strategy Fund I1 | 1,452,643 | 36,170,811 | ||||||
Total Mutual Funds | ||||||||
(Cost $36,098,257) | 36,170,811 |
Face Amount | ||||||||
REPURCHASE AGREEMENTS††,2 - 3.5% | ||||||||
HSBC Group issued 03/31/15 at 0.03% due 04/01/15 | $ | 9,417,866 | 9,417,866 | |||||
RBC Capital Markets issued 03/31/15 at 0.05% due 04/01/15 | 1,439,249 | 1,439,249 | ||||||
UMB Financial Corp. issued 03/31/15 at 0.03% due 04/01/15 | 1,155,235 | 1,155,235 | ||||||
Total Repurchase Agreements | ||||||||
(Cost $12,012,350) | 12,012,350 | |||||||
Total Investments - 88.0% | ||||||||
(Cost $304,676,454) | $ | 301,857,380 | ||||||
Other Assets & Liabilities, net - 12.0% | 41,279,784 | |||||||
Total Net Assets - 100.0% | $ | 343,137,164 | ||||||
Contracts | Unrealized Gain | |||||||
EQUITY FUTURES CONTRACTS PURCHASED† | ||||||||
June 2015 NASDAQ-100 Index Mini Futures Contracts (Aggregate Value of Contracts $63,625,275) | 735 | $ | 392,662 | |||||
Units | ||||||||
OTC EQUITY INDEX SWAP AGREEMENTS†† | ||||||||
Barclays Bank plc April 2015 NASDAQ-100 Index Swap, Terminating 04/30/153 (Notional Value $365,813,020) | 84,411 | $ | 136,982 | |||||
Goldman Sachs International April 2015 NASDAQ-100 Index Swap, Terminating 04/28/153 (Notional Value $2,964,995) | 684 | 16,821 | ||||||
(Total Notional Value $368,778,015) | $ | 153,803 |
* | Non-income producing security. |
† | Value determined based on Level 1 inputs — See Note 4. |
†† | Value determined based on Level 2 inputs — See Note 4. |
1 | Investment in a product that is managed by and/or pays a management fee to a party related to the Adviser — See Note 12. |
2 | Repurchase Agreements — See Note 5. |
3 | Total Return based on NASDAQ-100 index +/- financing at a variable rate. |
ADR — American Depositary Receipt | |
plc — Public Limited Company |
SEE NOTES TO FINANCIAL STATEMENTS. | THE RYDEX FUNDS ANNUAL REPORT | 51 |
MONTHLY REBALANCE NASDAQ-100® 2x STRATEGY FUND |
STATEMENT OF ASSETS AND LIABILITIES
March 31, 2015
Assets: | ||||
Investments, at value (cost $292,664,104) | $ | 289,845,030 | ||
Repurchase agreements, at value (cost $12,012,350) | 12,012,350 | |||
Total investments (cost $304,676,454) | 301,857,380 | |||
Segregated cash with broker | 38,329,020 | |||
Unrealized appreciation on swap agreements | 153,803 | |||
Cash | 8,590 | |||
Receivables: | ||||
Securities sold | 3,947,071 | |||
Dividends | 203,861 | |||
Investment adviser | 77,140 | |||
Swap settlement | 44,046 | |||
Fund shares sold | 11,000 | |||
Interest | 11 | |||
Total assets | 344,631,922 | |||
Liabilities: | ||||
Payable for: | ||||
Variation margin | 650,475 | |||
Fund shares redeemed | 301,460 | |||
Management fees | 256,886 | |||
Distribution and service fees | 71,366 | |||
Transfer agent and administrative fees | 71,357 | |||
Securities purchased | 45,641 | |||
Portfolio accounting fees | 26,544 | |||
Miscellaneous | 71,029 | |||
Total liabilities | 1,494,758 | |||
Commitments and contingent liabilities (Note 15) | — | |||
Net assets | $ | 343,137,164 | ||
Net assets consist of: | ||||
Paid in capital | $ | 362,651,524 | ||
Undistributed net investment income | — | |||
Accumulated net realized loss on investments | (17,241,751 | ) | ||
Net unrealized depreciation on investments | (2,272,609 | ) | ||
Net assets | $ | 343,137,164 | ||
A-Class: | ||||
Net assets | $ | 465,052 | ||
Capital shares outstanding | 8,998 | |||
Net asset value per share | $ | 51.68 | ||
Maximum offering price per share (Net asset value divided by 95.25%) | $ | 54.26 | ||
C-Class: | ||||
Net assets | $ | 14,073 | ||
Capital shares outstanding | 273 | |||
Net asset value per share | $ | 51.55 | ||
H-Class: | ||||
Net assets | $ | 342,658,039 | ||
Capital shares outstanding | 6,644,014 | |||
Net asset value per share | $ | 51.57 |
STATEMENT OF OPERATIONS
Period Ended March 31, 2015**
Investment Income: | ||||
Dividends (net foreign withholding tax of $1,952) | $ | 423,648 | ||
Interest | 582 | |||
Total investment income | 424,230 | |||
Expenses: | ||||
Management fees | 509,467 | |||
Transfer agent and administrative fees | 141,519 | |||
Distribution and service fees: | ||||
A-Class | 64 | |||
C-Class | 36 | |||
H-Class | 141,446 | |||
Portfolio accounting fees | 53,834 | |||
Custodian fees | 7,214 | |||
Trustees’ fees* | 517 | |||
Miscellaneous | 75,746 | |||
Total expenses | 929,843 | |||
Less: | ||||
Expenses waived by Adviser | (165,270 | ) | ||
Net expenses | 764,573 | |||
Net investment loss | (340,343 | ) | ||
Net Realized and Unrealized Gain (Loss): | ||||
Net realized gain (loss) on: | ||||
Investments | (3,911,794 | ) | ||
Swap agreements | (11,312,459 | ) | ||
Futures contracts | (2,017,498 | ) | ||
Net realized loss | (17,241,751 | ) | ||
Net change in unrealized appreciation (depreciation) on: | ||||
Investments | (2,819,074 | ) | ||
Swap agreements | 153,803 | |||
Futures contracts | 392,662 | |||
Net change in unrealized appreciation (depreciation) | (2,272,609 | ) | ||
Net realized and unrealized loss | (19,514,360 | ) | ||
Net decrease in net assets resulting from operations | $ | (19,854,703 | ) |
* | Relates to Trustees not deemed “interested persons” within the meaning of Section 2(a)(19) of the 1940 Act. |
** | Since commencement of operations: November 28, 2014. |
52 | THE RYDEX FUNDS ANNUAL REPORT | SEE NOTES TO FINANCIAL STATEMENTS. |
MONTHLY REBALANCE NASDAQ-100® 2x STRATEGY FUND |
STATEMENT OF CHANGES IN NET ASSETS
Period Ended March 31, 2015a | ||||
Increase (Decrease) in Net Assets from Operations: | ||||
Net investment loss | $ | (340,343 | ) | |
Net realized loss on investments | (17,241,751 | ) | ||
Net change in unrealized appreciation (depreciation) on investments | (2,272,609 | ) | ||
Net decrease in net assets resulting from operations | (19,854,703 | ) | ||
Capital share transactions: | ||||
Proceeds from sale of shares | ||||
A-Class | 485,374 | |||
C-Class | 14,050 | |||
H-Class | 541,099,792 | |||
Cost of shares redeemed | ||||
A-Class | (11,481 | ) | ||
C-Class | (50 | ) | ||
H-Class | (178,595,818 | ) | ||
Net increase from capital share transactions | 362,991,867 | |||
Net increase in net assets | 343,137,164 | |||
Net assets: | ||||
Beginning of period | — | |||
End of period | $ | 343,137,164 | ||
Undistributed net investment income at end of period | $ | — | ||
Capital share activity: | ||||
Shares sold | ||||
A-Class | 9,226 | |||
C-Class | 274 | |||
H-Class | 10,481,242 | |||
Shares redeemed | ||||
A-Class | (228 | ) | ||
C-Class | (1 | ) | ||
H-Class | (3,837,228 | ) | ||
Net increase in shares | 6,653,285 |
a | Since commencement of operations: November 28, 2014. |
SEE NOTES TO FINANCIAL STATEMENTS. | THE RYDEX FUNDS ANNUAL REPORT | 53 |
MONTHLY REBALANCE NASDAQ-100® 2x STRATEGY FUND |
FINANCIAL HIGHLIGHTS
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.
A-Class | Period Ended March 31, 2015a | |||
Per Share Data | ||||
Net asset value, beginning of period | $ | 50.00 | ||
Income (loss) from investment operations: | ||||
Net investment income (loss)b | (.07 | ) | ||
Net gain (loss) on investments (realized and unrealized) | 1.75 | |||
Total from investment operations | 1.68 | |||
Net asset value, end of period | $ | 51.68 | ||
Total Returnc | 3.36 | % | ||
Ratios/Supplemental Data | ||||
Net assets, end of period (in thousands) | $ | 465 | ||
Ratios to average net assets: | ||||
Net investment income (loss) | (0.39 | %) | ||
Total expensesd | 1.63 | % | ||
Net expensese,f | 1.35 | % | ||
Portfolio turnover rate | 84 | % |
C-Class | Period Ended March 31, 2015a | |||
Per Share Data | ||||
Net asset value, beginning of period | $ | 50.00 | ||
Income (loss) from investment operations: | ||||
Net investment income (loss)b | (.19 | ) | ||
Net gain (loss) on investments (realized and unrealized) | 1.74 | |||
Total from investment operations | 1.55 | |||
Net asset value, end of period | $ | 51.55 | ||
Total Returnc | 3.10 | % | ||
Ratios/Supplemental Data | ||||
Net assets, end of period (in thousands) | $ | 14 | ||
Ratios to average net assets: | ||||
Net investment income (loss) | (1.13 | %) | ||
Total expensesd | 2.43 | % | ||
Net expensese,f | 2.13 | % | ||
Portfolio turnover rate | 84 | % |
54 | THE RYDEX FUNDS ANNUAL REPORT | SEE NOTES TO FINANCIAL STATEMENTS. |
MONTHLY REBALANCE NASDAQ-100® 2x STRATEGY FUND |
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.
H-Class | Period Ended March 31, 2015a | |||
Per Share Data | ||||
Net asset value, beginning of period | $ | 50.00 | ||
Income (loss) from investment operations: | ||||
Net investment income (loss)b | (.10 | ) | ||
Net gain (loss) on investments (realized and unrealized) | 1.67 | |||
Total from investment operations | 1.57 | |||
Net asset value, end of period | $ | 51.57 | ||
Total Returnc | 3.14 | % | ||
Ratios/Supplemental Data | ||||
Net assets, end of period (in thousands) | $ | 342,658 | ||
Ratios to average net assets: | ||||
Net investment income (loss) | (0.60 | %) | ||
Total expensesd | 1.64 | % | ||
Net expensese,f | 1.35 | % | ||
Portfolio turnover rate | 84 | % |
a | Since commencement of operations: November 28, 2014. Percentage amounts for the period, except total return and portfolio turnover rate, have been annualized. |
b | Net investment income (loss) per share was computed using average shares outstanding throughout the period. |
c | Total return does not reflect the impact of any applicable sales charge and has not been annualized. |
d | Does not include expenses of the underlying funds in which the Fund invests. |
e | Net expense information reflects the expense ratios after expense waivers. |
f | Net expenses may include expenses that are excluded from the expense limitation agreement. Excluding these expenses, the operating expense ratios for the period presented would be: |
03/31/15 | |
A-Class | 1.35% |
C-Class | 2.10% |
H-Class | 1.35% |
SEE NOTES TO FINANCIAL STATEMENTS. | THE RYDEX FUNDS ANNUAL REPORT | 55 |
PERFORMANCE REPORT AND FUND PROFILE (Unaudited) | March 31, 2015 |
INVERSE NASDAQ-100® STRATEGY FUND
OBJECTIVE: Seeks to provide investment results that match, before fees and expenses, the performance of a specific benchmark on a daily basis. The Fund’s current benchmark is the inverse (opposite) of the performance of the NASDAQ-100® Index (the “underlying index”). The Fund does not seek to achieve its investment objective over a period of time greater than one day.
For the one-year period ended March 31, 2015, with the NASDAQ-100 Index returning 22.03%, the Inverse NASDAQ-100® Fund Investor Class returned -20.31%. For the one-year period ended March 31, 2015, Inverse NASDAQ-100® Fund maintained a daily correlation of over 99% to its benchmark of -100% of the daily price movement of the NASDAQ-100 Index.
The Information Technology sector contributed most to performance of the underlying index, followed by the Health Care sector. The Telecommunications Services sector was the only one that detracted from performance. The Materials sector contributed least, followed by the Industrials sector.
Apple, Inc., Gilead Sciences, Inc., and Facebook, Inc. Class A were the holdings contributing most to performance of the underlying index for the year. Wynn Resorts Ltd., Google, Inc. Class C and QUALCOMM, Inc. detracted most from performance of the underlying index for the year.
Derivatives in the Fund were used to help provide exposure to the composition of the benchmark in the highest efficient manner and not for hedging purposes. The results of derivatives use during the period were within our expectations and contributed to the Fund’s performance.
Due to the compounding of daily returns, leveraged and inverse funds’ returns over periods other than one day will likely differ in amount and possibly direction from the benchmark return for the same period. Investors should monitor their leveraged and inverse funds’ holdings to ensure that they are consistent with their strategies, as frequently as daily.
The effects of compounding may cause the longer-term correlation of the Fund to its benchmark to diminish. The apparent discrepancy between the leveraged and unleveraged indices is the result of compounding, which is described briefly on page 6 of this report.
The Fund invests excess cash into the Guggenheim Strategy Funds which, in turn, invest in a diversified portfolio of debt securities and financial instruments providing exposure to fixed-income markets. The investment objective of the Guggenheim Strategy Funds is to seek a high level of income consistent with the preservation of capital. For the one year period ended March 31,2015, investment in the Guggenheim Strategy Funds benefited Fund performance relative to investing in other short-term investments such as overnight repurchase agreements.
Performance displayed represents past performance, which is no guarantee of future results.
Holdings Diversification (Market Exposure as % of Net Assets)
![](https://capedge.com/proxy/N-CSR/0001398344-15-003814/rtb1_13.jpg)
“Holdings Diversification (Market Exposure as % of Net Assets)” excludes any temporary cash investments or investments in Guggenheim Strategy Funds Trust mutual funds. Investments in those Funds do not provide “market exposure” to meet the fund’s investment objective, but will significantly increase the portfolio’s exposure to certain other asset categories (and their associated risks), which may cause the Fund to deviate from its principal investment strategy, including: (i) high yield, high risk debt securities rated below the top four long-term rating categories by a nationally recognized statistical rating organization (also known as “junk bonds”); (ii) securities issued by the U.S. government or its agencies and instrumentalities; (iii) CLOs and similar investments; and (iv) other short-term fixed income securities.
56 | THE RYDEX FUNDS ANNUAL REPORT |
PERFORMANCE REPORT AND FUND PROFILE (Unaudited)(concluded) | March 31, 2015 |
Inception Dates: | |
Investor Class | September 3, 1998 |
Advisor Class | August 1, 2003 |
A-Class | March 31, 2004 |
C-Class | March 7, 2001 |
H-Class | September 18, 2014 |
The Fund invests principally in derivative investments such as swap agreements and futures contracts.
Largest Holding (% of Total Net Assets) | |
Guggenheim Strategy Fund I | 22.0% |
Total | 22.0% |
“Largest Holding” excludes any temporary cash or derivative instruments. |
Cumulative Fund Performance*
![](https://capedge.com/proxy/N-CSR/0001398344-15-003814/rtb1_14.jpg)
![](https://capedge.com/proxy/N-CSR/0001398344-15-003814/rtb1_15.jpg)
Average Annual Returns*
Periods Ended March 31, 2015
1 Year | 5 Year | 10 Year | |
Investor Class Shares | -20.31% | -18.94% | -13.47% |
Advisor Class Shares | -20.86% | -19.39% | -13.93% |
A-Class Shares | -20.50% | -19.21% | -13.71% |
A-Class Shares with sales charge† | -24.29% | -19.99% | -14.13% |
C-Class Shares | -21.13% | -19.81% | -14.36% |
C-Class Shares with CDSC‡ | -21.92% | -19.81% | -14.36% |
NASDAQ-100 Index | 22.03% | 18.59% | 12.27% |
Since Inception (09/18/14) | |||
H-Class Shares | -7.49% | ||
NASDAQ-100 Index | 5.62% |
* | The performance data above represents past performance that is not predictive of future results. The investment return and principal value of an investment in the Fund will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Returns are historical and include changes in principal and reinvested dividends and capital gains and do not reflect the effect of taxes. The NASDAQ-100 Index is an unmanaged index and, unlike the Fund, has no management fees or operating expenses to reduce its reported return. The graphs are based on Investor Class shares and A-Class shares only; performance for Advisor Class shares, C-Class shares and H-Class shares will vary due to differences in fee structures. |
† | Fund returns are calculated using the maximum sales charge of 4.75%. |
‡ | Fund returns include a CDSC of 1% if redeemed within 12 months of purchase. |
THE RYDEX FUNDS ANNUAL REPORT | 57 |
SCHEDULE OF INVESTMENTS | March 31, 2015 |
INVERSE NASDAQ-100® STRATEGY FUND |
Shares | Value | |||||||
MUTUAL FUNDS† - 22.0% | ||||||||
Guggenheim Strategy Fund I1 | 77,277 | $ | 1,924,197 | |||||
Total Mutual Funds | ||||||||
(Cost $1,923,966) | 1,924,197 | |||||||
Face Amount | ||||||||
REPURCHASE AGREEMENTS††,2 - 68.6% | ||||||||
HSBC Group issued 03/31/15 at 0.03% due 04/01/15 | $ | 4,724,985 | 4,724,985 | |||||
RBC Capital Markets issued 03/31/15 at 0.05% due 04/01/15 | 722,079 | 722,079 | ||||||
UMB Financial Corp. issued 03/31/15 at 0.03% due 04/01/15 | 579,586 | 579,586 | ||||||
Total Repurchase Agreements | ||||||||
(Cost $6,026,650) | 6,026,650 | |||||||
Total Investments - 90.6% | ||||||||
(Cost $7,950,616) | $ | 7,950,847 | ||||||
Other Assets & Liabilities, net - 9.4% | 828,228 | |||||||
Total Net Assets - 100.0% | $ | 8,779,075 | ||||||
Contracts | Unrealized Gain (Loss) | |||||||
EQUITY FUTURES CONTRACTS SOLD SHORT† | ||||||||
June 2015 NASDAQ-100 Index Mini Futures Contracts (Aggregate Value of Contracts $1,990,995) | 23 | $ | 4,490 | |||||
Units | ||||||||
OTC EQUITY INDEX SWAP AGREEMENTS SOLD SHORT†† | ||||||||
Barclays Bank plc April 2015 NASDAQ-100 Index Swap, Terminating 04/30/153 (Notional Value $981,531) | 226 | $ | (612 | ) | ||||
Goldman Sachs International April 2015 NASDAQ-100 Index Swap, Terminating 04/28/153 (Notional Value $892,847) | 206 | (4,197 | ) | |||||
Credit Suisse Capital, LLC April 2015 NASDAQ-100 Index Swap, Terminating 04/28/153 (Notional Value $4,898,372) | 1,130 | (22,583 | ) | |||||
(Total Notional Value $6,772,750) | $ | (27,392 | ) |
† | Value determined based on Level 1 inputs — See Note 4. |
†† | Value determined based on Level 2 inputs — See Note 4. |
1 | Investment in a product that is managed by and/or pays a management fee to a party related to the Adviser — See Note 12. |
2 | Repurchase Agreements — See Note 5. |
3 | Total Return based on NASDAQ-100 Index +/- financing at a variable rate. |
plc — Public Limited Company |
58 | THE RYDEX FUNDS ANNUAL REPORT | SEE NOTES TO FINANCIAL STATEMENTS. |
INVERSE NASDAQ-100® STRATEGY FUND |
STATEMENT OF ASSETS AND LIABILITIES
March 31, 2015
Assets: | ||||
Investments, at value (cost $1,923,966) | $ | 1,924,197 | ||
Repurchase agreements, at value (cost $6,026,650) | 6,026,650 | |||
Total investments (cost $7,950,616) | 7,950,847 | |||
Segregated cash with broker | 1,145,896 | |||
Receivables: | ||||
Variation margin | 20,355 | |||
Fund shares sold | 16,523 | |||
Dividends | 2,294 | |||
Interest | 5 | |||
Total assets | 9,135,920 | |||
Liabilities: | ||||
Unrealized depreciation on swap agreements | 27,392 | |||
Payable for: | ||||
Fund shares redeemed | 304,026 | |||
Management fees | 6,370 | |||
Swap settlement | 5,502 | |||
Securities purchased | 2,294 | |||
Transfer agent and administrative fees | 1,769 | |||
Distribution and service fees | 1,019 | |||
Portfolio accounting fees | 708 | |||
Miscellaneous | 7,765 | |||
Total liabilities | 356,845 | |||
Commitments and contingent liabilities (Note 15) | — | |||
Net assets | $ | 8,779,075 | ||
Net assets consist of: | ||||
Paid in capital | $ | 60,736,716 | ||
Accumulated net investment loss | (30,748 | ) | ||
Accumulated net realized loss on investments | (51,904,222 | ) | ||
Net unrealized depreciation on investments | (22,671 | ) | ||
Net assets | $ | 8,779,075 | ||
Investor Class: | ||||
Net assets | $ | 6,820,535 | ||
Capital shares outstanding | 258,681 | |||
Net asset value per share | $ | 26.37 | ||
Advisor Class: | ||||
Net assets | $ | 55,928 | ||
Capital shares outstanding | 2,260 | |||
Net asset value per share | $ | 24.75 | ||
A-Class: | ||||
Net assets | $ | 570,126 | ||
Capital shares outstanding | 22,410 | |||
Net asset value per share | $ | 25.44 | ||
Maximum offering price per share (Net asset value divided by 95.25%) | $ | 26.71 | ||
C-Class: | ||||
Net assets | $ | 997,559 | ||
Capital shares outstanding | 44,177 | |||
Net asset value per share | $ | 22.58 | ||
H-Class: | ||||
Net assets | $ | 334,927 | ||
Capital shares outstanding | 13,166 | |||
Net asset value per share | $ | 25.44 |
SEE NOTES TO FINANCIAL STATEMENTS. | THE RYDEX FUNDS ANNUAL REPORT | 59 |
INVERSE NASDAQ-100® STRATEGY FUND |
STATEMENT OF OPERATIONS
Year Ended March 31, 2015
Investment Income: | ||||
Dividends | $ | 35,303 | ||
Interest | 1,428 | |||
Total investment income | 36,731 | |||
Expenses: | ||||
Management fees | 102,138 | |||
Transfer agent and administrative fees | 28,372 | |||
Distribution and service fees: | ||||
Advisor Class | 2,570 | |||
A-Class | 5,408 | |||
C-Class | 9,919 | |||
H-Class** | 41 | |||
Portfolio accounting fees | 11,349 | |||
Custodian fees | 1,324 | |||
Trustees’ fees* | 826 | |||
Miscellaneous | 21,275 | |||
Total expenses | 183,222 | |||
Net investment loss | (146,491 | ) | ||
Net Realized and Unrealized Gain (Loss): | ||||
Net realized gain (loss) on: | ||||
Investments | $ | (11,338 | ) | |
Swap agreements | (3,013,781 | ) | ||
Futures contracts | 206,203 | |||
Net realized loss | (2,818,916 | ) | ||
Net change in unrealized appreciation (depreciation) on: | ||||
Investments | 231 | |||
Swap agreements | (47,717 | ) | ||
Futures contracts | 4,490 | |||
Net change in unrealized appreciation (depreciation) | (42,996 | ) | ||
Net realized and unrealized loss | (2,861,912 | ) | ||
Net decrease in net assets resulting from operations | $ | (3,008,403 | ) |
* | Relates to Trustees not deemed “interested persons” within the meaning of Section 2(a)(19) of the 1940 Act. |
** | Since commencement of operations: September 18, 2014. |
60 | THE RYDEX FUNDS ANNUAL REPORT | SEE NOTES TO FINANCIAL STATEMENTS. |
INVERSE NASDAQ-100® STRATEGY FUND |
STATEMENTS OF CHANGES IN NET ASSETS
Year Ended March 31, 2015 | Year Ended March 31, 2014 | |||||||
Increase (Decrease) in Net Assets from Operations: | ||||||||
Net investment loss | $ | (146,491 | ) | $ | (179,288 | ) | ||
Net realized loss on investments | (2,818,916 | ) | (3,424,508 | ) | ||||
Net change in unrealized appreciation (depreciation) on investments | (42,996 | ) | 65,013 | |||||
Net decrease in net assets resulting from operations | (3,008,403 | ) | (3,538,783 | ) | ||||
Capital share transactions: | ||||||||
Proceeds from sale of shares | ||||||||
Investor Class | 125,263,815 | 152,933,607 | ||||||
Advisor Class | 22,352,580 | 38,354,968 | ||||||
A-Class | 10,300,215 | 646,006 | ||||||
C-Class | 6,446,046 | 1,338,850 | ||||||
H-Class** | 700,911 | — | ||||||
Cost of shares redeemed | ||||||||
Investor Class | (123,319,554 | ) | (150,997,216 | ) | ||||
Advisor Class | (22,218,407 | ) | (39,937,666 | ) | ||||
A-Class | (9,553,897 | ) | (371,971 | ) | ||||
C-Class | (5,751,807 | ) | (1,253,224 | ) | ||||
H-Class** | (348,024 | ) | — | |||||
Net increase from capital share transactions | 3,871,878 | 713,354 | ||||||
Net increase (decrease) in net assets | 863,475 | (2,825,429 | ) | |||||
Net assets: | ||||||||
Beginning of year | 7,915,600 | 10,741,029 | ||||||
End of year | $ | 8,779,075 | $ | 7,915,600 | ||||
Accumulated net investment loss at end of year | $ | (30,748 | ) | $ | — | |||
Capital share activity: | ||||||||
Shares sold | ||||||||
Investor Class | 4,196,223 | 4,127,092 | * | |||||
Advisor Class | 816,404 | 1,099,075 | * | |||||
A-Class | 374,065 | 17,551 | * | |||||
C-Class | 266,428 | 37,993 | * | |||||
H-Class** | 25,422 | — | ||||||
Shares redeemed | ||||||||
Investor Class | (4,144,984 | ) | (4,095,216 | )* | ||||
Advisor Class | (817,928 | ) | (1,147,177 | )* | ||||
A-Class | (363,273 | ) | (10,220 | )* | ||||
C-Class | (241,845 | ) | (36,051 | )* | ||||
H-Class** | (12,256 | ) | — | |||||
Net increase (decrease) in shares | 98,256 | (6,953 | )* |
* | Capital share activity for the period presented through February 21, 2014 has been restated to reflect a 1:5 reverse share split effective February 21, 2014. See Note 14 in Notes to Financial Statements. |
** | Since commencement of operations: September 18, 2014. |
SEE NOTES TO FINANCIAL STATEMENTS. | THE RYDEX FUNDS ANNUAL REPORT | 61 |
INVERSE NASDAQ-100® STRATEGY FUND |
FINANCIAL HIGHLIGHTS
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.
Investor Class | Year Ended March 31, 2015 | Year Ended March 31, 2014d | Year Ended March 28, 2013d | Year Ended March 31, 2012d | Year Ended March 31, 2011d | |||||||||||||||
Per Share Data | ||||||||||||||||||||
Net asset value, beginning of period | $ | 33.09 | $ | 43.91 | $ | 46.95 | $ | 59.62 | $ | 75.34 | ||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||
Net investment income (loss)a | (.33 | ) | (.54 | ) | (.60 | ) | (.80 | ) | (.90 | ) | ||||||||||
Net gain (loss) on investments (realized and unrealized) | (6.39 | ) | (10.28 | ) | (2.44 | ) | (11.87 | ) | (14.82 | ) | ||||||||||
Total from investment operations | (6.72 | ) | (10.82 | ) | (3.04 | ) | (12.67 | ) | (15.72 | ) | ||||||||||
Net asset value, end of period | $ | 26.37 | $ | 33.09 | $ | 43.91 | $ | 46.95 | $ | 59.62 | ||||||||||
Total Returnb | (20.31 | %) | (24.62 | %) | (6.50 | %) | (21.22 | %) | (20.90 | %) | ||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||
Net assets, end of period (in thousands) | $ | 6,821 | $ | 6,865 | $ | 7,709 | $ | 8,792 | $ | 32,978 | ||||||||||
Ratios to average net assets: | ||||||||||||||||||||
Net investment income (loss) | (1.14 | %) | (1.44 | %) | (1.32 | %) | (1.38 | %) | (1.30 | %) | ||||||||||
Total expensesc | 1.46 | % | 1.46 | % | 1.44 | % | 1.45 | % | 1.47 | % | ||||||||||
Portfolio turnover rate | 149 | % | — | — | — | — |
Advisor Class | Year Ended March 31, 2015 | Year Ended March 31, 2014d | Year Ended March 28, 2013d | Year Ended March 31, 2012d | Year Ended March 31, 2011d | |||||||||||||||
Per Share Data | ||||||||||||||||||||
Net asset value, beginning of period | $ | 31.26 | $ | 41.85 | $ | 45.01 | $ | 57.15 | $ | 72.70 | ||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||
Net investment income (loss)a | (.48 | ) | (.73 | ) | (.80 | ) | (1.05 | ) | (1.20 | ) | ||||||||||
Net gain (loss) on investments (realized and unrealized) | (6.03 | ) | (9.86 | ) | (2.36 | ) | (11.09 | ) | (14.35 | ) | ||||||||||
Total from investment operations | (6.51 | ) | (10.59 | ) | (3.16 | ) | (12.14 | ) | (15.55 | ) | ||||||||||
Net asset value, end of period | $ | 24.75 | $ | 31.26 | $ | 41.85 | $ | 45.01 | $ | 57.15 | ||||||||||
Total Returnb | (20.86 | %) | (25.30 | %) | (7.00 | %) | (21.26 | %) | (21.39 | %) | ||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||
Net assets, end of period (in thousands) | $ | 56 | $ | 118 | $ | 2,171 | $ | 207 | $ | 642 | ||||||||||
Ratios to average net assets: | ||||||||||||||||||||
Net investment income (loss) | (1.68 | %) | (1.93 | %) | (1.83 | %) | (1.91 | %) | (1.80 | %) | ||||||||||
Total expensesc | 1.96 | % | 1.96 | % | 1.95 | % | 1.95 | % | 1.97 | % | ||||||||||
Portfolio turnover rate | 149 | % | — | — | — | — |
62 | THE RYDEX FUNDS ANNUAL REPORT | SEE NOTES TO FINANCIAL STATEMENTS. |
INVERSE NASDAQ-100® STRATEGY FUND |
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.
A-Class | Year Ended March 31, 2015 | Year Ended March 31, 2014d | Year Ended March 28, 2013d | Year Ended March 31, 2012d | Year Ended March 31, 2011d | |||||||||||||||
Per Share Data | ||||||||||||||||||||
Net asset value, beginning of period | $ | 32.00 | $ | 42.61 | $ | 45.77 | $ | 58.30 | $ | 73.88 | ||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||
Net investment income (loss)a | (.37 | ) | (.60 | ) | (.70 | ) | (.90 | ) | (1.05 | ) | ||||||||||
Net gain (loss) on investments (realized and unrealized) | (6.19 | ) | (10.01 | ) | (2.46 | ) | (11.63 | ) | (14.53 | ) | ||||||||||
Total from investment operations | (6.56 | ) | (10.61 | ) | (3.16 | ) | (12.53 | ) | (15.58 | ) | ||||||||||
Net asset value, end of period | $ | 25.44 | $ | 32.00 | $ | 42.61 | $ | 45.77 | $ | 58.30 | ||||||||||
Total Returnb | (20.50 | %) | (24.88 | %) | (6.89 | %) | (21.53 | %) | (21.11 | %) | ||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||
Net assets, end of period (in thousands) | $ | 570 | $ | 372 | $ | 183 | $ | 474 | $ | 946 | ||||||||||
Ratios to average net assets: | ||||||||||||||||||||
Net investment income (loss) | (1.35 | %) | (1.69 | %) | (1.56 | %) | (1.62 | %) | (1.54 | %) | ||||||||||
Total expensesc | 1.71 | % | 1.71 | % | 1.68 | % | 1.69 | % | 1.72 | % | ||||||||||
Portfolio turnover rate | 149 | % | — | — | — | — |
C-Class | Year Ended March 31, 2015 | Year Ended March 31, 2014d | Year Ended March 28, 2013d | Year Ended March 31, 2012d | Year Ended March 31, 2011d | |||||||||||||||
Per Share Data | ||||||||||||||||||||
Net asset value, beginning of period | $ | 28.63 | $ | 38.42 | $ | 41.58 | $ | 53.34 | $ | 68.10 | ||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||
Net investment income (loss)a | (.53 | ) | (.80 | ) | (.95 | ) | (1.20 | ) | (1.45 | ) | ||||||||||
Net gain (loss) on investments (realized and unrealized) | (5.52 | ) | (8.99 | ) | (2.21 | ) | (10.56 | ) | (13.31 | ) | ||||||||||
Total from investment operations | (6.05 | ) | (9.79 | ) | (3.16 | ) | (11.76 | ) | (14.76 | ) | ||||||||||
Net asset value, end of period | $ | 22.58 | $ | 28.63 | $ | 38.42 | $ | 41.58 | $ | 53.34 | ||||||||||
Total Returnb | (21.13 | %) | (25.44 | %) | (7.58 | %) | (22.12 | %) | (21.66 | %) | ||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||
Net assets, end of period (in thousands) | $ | 998 | $ | 561 | $ | 678 | $ | 752 | $ | 2,435 | ||||||||||
Ratios to average net assets: | ||||||||||||||||||||
Net investment income (loss) | (2.12 | %) | (2.44 | %) | (2.32 | %) | (2.37 | %) | (2.29 | %) | ||||||||||
Total expensesc | 2.46 | % | 2.46 | % | 2.44 | % | 2.45 | % | 2.47 | % | ||||||||||
Portfolio turnover rate | 149 | % | — | — | — | — |
SEE NOTES TO FINANCIAL STATEMENTS. | THE RYDEX FUNDS ANNUAL REPORT | 63 |
INVERSE NASDAQ-100® STRATEGY FUND |
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.
H-Class | Period Ended March 31, 2015e | |||
Per Share Data | ||||
Net asset value, beginning of period | $ | 27.50 | ||
Income (loss) from investment operations: | ||||
Net investment income (loss)a | (.20 | ) | ||
Net gain (loss) on investments (realized and unrealized) | (1.86 | ) | ||
Total from investment operations | (2.06 | ) | ||
Net asset value, end of period | $ | 25.44 | ||
Total Returnb | (7.49 | %) | ||
Ratios/Supplemental Data | ||||
Net assets, end of period (in thousands) | $ | 335 | ||
Ratios to average net assets: | ||||
Net investment income (loss) | (1.35 | %) | ||
Total expensesc | 1.68 | % | ||
Portfolio turnover rate | 149 | % |
a | Net investment income (loss) per share was computed using average shares outstanding throughout the period. |
b | Total return does not reflect the impact of any applicable sales charges. |
c | Does not include expenses of the underlying funds in which the Fund invests. |
d | Reverse share split — Per share amounts for the periods presented through February 21, 2014 have been restated to reflect a 1:5 reverse share split effective February 21, 2014. See Note 14 in Notes to Financial Statements. |
e | Since commencement of operations: September 18, 2014. Percentage amounts for the period, except total return and portfolio turnover rate, have been annualized. The portfolio turnover rate stated is for the entire period of the Fund, not since the commencement of operations of the Class. |
64 | THE RYDEX FUNDS ANNUAL REPORT | SEE NOTES TO FINANCIAL STATEMENTS. |
PERFORMANCE REPORT AND FUND PROFILE (Unaudited) | March 31, 2015 |
MID-CAP 1.5x STRATEGY FUND
OBJECTIVE: Seeks to provide investment results that correlate, before fees and expenses, to the performance of a specific benchmark for mid-cap securities on a daily basis. The Fund’s current benchmark is 150% of the performance of the S&P MidCap 400® Index (the “underlying index”). The Fund does not seek to achieve its investment objective over a period of time greater than one day.
For the one-year period ended March 31, 2015, the Mid-Cap 1.5x Strategy Fund H-Class returned 15.56%. Over the same period, its benchmark, the S&P MidCap 400 Index, returned 12.19%. The Fund had a correlation of more than 99% to its benchmark of 150% of the daily price movement of the S&P MidCap 400 Index.
Financials and Health Care contributed most performance of the underlying index during the period. Energy was the only sector that detracted. Telecommunications Services and Materials contributed least to the performance of the underlying index.
Skyworks Solutions, Inc., Hanesbrands, Inc., and Qorvo, Inc., contributed most performance to the underlying index for the period. Cree, Inc., 3D Systems Corp. and Trimble Navigation Ltd. were the largest detractors from performance of the underlying index for the period.
Derivatives in the Fund were used to help provide exposure to the composition of the benchmark in the highest efficient manner and to provide leverage, not for hedging purposes. The results of derivatives use during the period were within our expectations and contributed to the Fund’s performance.
Due to the compounding of daily returns, leveraged and inverse funds’ returns over periods other than one day will likely differ in amount and possibly direction from the benchmark return for the same period. Investors should monitor their leveraged and inverse funds’ holdings to ensure that they are consistent with their strategies, as frequently as daily.
The effects of compounding may cause the longer-term correlation of the Fund to its benchmark to diminish. The apparent discrepancy between the leveraged and unleveraged indices is the result of compounding, which is described briefly on page 6 of this report.
The Fund invests excess cash into the Guggenheim Strategy Funds which, in turn, invest in a diversified portfolio of debt securities and financial instruments providing exposure to fixed-income markets. The investment objective of the Guggenheim Strategy Funds is to seek a high level of income consistent with the preservation of capital. For the one year period ended March 31,2015, investment in the Guggenheim Strategy Funds benefited Fund performance relative to investing in other short-term investments such as overnight repurchase agreements.
Performance displayed represents past performance, which is no guarantee of future results.
Holdings Diversification (Market Exposure as % of Net Assets)
![](https://capedge.com/proxy/N-CSR/0001398344-15-003814/rtb1_16.jpg)
“Holdings Diversification (Market Exposure as % of Net Assets)” excludes any temporary cash investments or investments in Guggenheim Strategy Funds Trust mutual funds. Investments in those Funds do not provide “market exposure” to meet the fund’s investment objective, but will significantly increase the portfolio’s exposure to certain other asset categories (and their associated risks), which may cause the Fund to deviate from its principal investment strategy, including: (i) high yield, high risk debt securities rated below the top four long-term rating categories by a nationally recognized statistical rating organization (also known as “junk bonds”); (ii) securities issued by the U.S. government or its agencies and instrumentalities; (iii) CLOs and similar investments; and (iv) other short-term fixed income securities.
THE RYDEX FUNDS ANNUAL REPORT | 65 |
PERFORMANCE REPORT AND FUND PROFILE (Unaudited)(concluded) | March 31, 2015 |
Inception Dates: | |
A-Class | March 31, 2004 |
C-Class | August 20, 2001 |
H-Class | August 16, 2001 |
Cumulative Fund Performance*
![](https://capedge.com/proxy/N-CSR/0001398344-15-003814/rtb1_17.jpg)
![](https://capedge.com/proxy/N-CSR/0001398344-15-003814/rtb1_18.jpg)
Ten Largest Holdings (% of Total Net Assets) | |
Guggenheim Strategy Fund I | 11.0% |
Qorvo, Inc. | 0.3% |
Realty Income Corp. | 0.3% |
Church & Dwight Company, Inc. | 0.3% |
Signet Jewelers Ltd. | 0.3% |
Salix Pharmaceuticals Ltd. | 0.3% |
Advance Auto Parts, Inc. | 0.3% |
Federal Realty Investment Trust | 0.3% |
ResMed, Inc. | 0.3% |
Jarden Corp. | 0.3% |
Top Ten Total | 13.7% |
“Ten Largest Holdings” exclude any temporary cash or derivative investments. |
Average Annual Returns*
Periods Ended March 31, 2015
1 Year | 5 Year | 10 Year | |
A-Class Shares | 15.50% | 20.23% | 9.84% |
A-Class Shares with sales charge† | 10.00% | 19.06% | 9.31% |
C-Class Shares | 14.63% | 19.35% | 9.03% |
C-Class Shares with CDSC‡ | 13.63% | 19.35% | 9.03% |
H-Class Shares | 15.56% | 20.27% | 9.86% |
S&P MidCap 400 Index | 12.19% | 15.72% | 10.32% |
* | The performance data above represents past performance that is not predictive of future results. The investment return and principal value of an investment in the Fund will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Returns are historical and include changes in principal and reinvested dividends and capital gains and do not reflect the effect of taxes. The S&P MidCap 400 Index is an unmanaged index and, unlike the Fund, has no management fees or operating expenses to reduce its reported return. The graphs are based on A-Class shares and H-Class shares only; performance for C-Class shares will vary due to differences in fee structures. |
† | Fund returns are calculated using the maximum sales charge of 4.75%. |
‡ | Fund returns include a CDSC of 1% if redeemed within 12 months of purchase. |
66 | THE RYDEX FUNDS ANNUAL REPORT |
SCHEDULE OF INVESTMENTS | March 31, 2015 |
MID-CAP 1.5x STRATEGY FUND |
Shares | Value | |||||||
COMMON STOCKS† - 46.2% | ||||||||
FINANCIAL - 10.7% | ||||||||
Realty Income Corp. | 1,660 | $ | 85,657 | |||||
Federal Realty Investment Trust | 506 | 74,488 | ||||||
UDR, Inc. | 1,908 | 64,929 | ||||||
Alleghany Corp.* | 118 | 57,465 | ||||||
Everest Re Group Ltd. | 330 | 57,420 | ||||||
Arthur J Gallagher & Co. | 1,215 | 56,802 | ||||||
Jones Lang LaSalle, Inc. | 331 | 56,402 | ||||||
Duke Realty Corp. | 2,542 | 55,340 | ||||||
Extra Space Storage, Inc. | 815 | 55,069 | ||||||
New York Community Bancorp, Inc. | 3,264 | 54,607 | ||||||
Raymond James Financial, Inc. | 937 | 53,203 | ||||||
Alexandria Real Estate Equities, Inc. | 531 | 52,060 | ||||||
Camden Property Trust | 640 | 50,003 | ||||||
Kilroy Realty Corp. | 637 | 48,520 | ||||||
Signature Bank* | 371 | 48,075 | ||||||
SVB Financial Group* | 376 | 47,768 | ||||||
Reinsurance Group of America, Inc. — Class A | 507 | 47,247 | ||||||
Regency Centers Corp. | 694 | 47,220 | ||||||
Mid-America Apartment Communities, Inc. | 555 | 42,885 | ||||||
East West Bancorp, Inc. | 1,059 | 42,847 | ||||||
Omega Healthcare Investors, Inc. | 1,022 | 41,463 | ||||||
HCC Insurance Holdings, Inc. | 712 | 40,349 | ||||||
National Retail Properties, Inc. | 975 | 39,946 | ||||||
Liberty Property Trust | 1,098 | 39,199 | ||||||
Senior Housing Properties Trust | 1,733 | 38,455 | ||||||
WR Berkley Corp. | 742 | 37,478 | ||||||
Hospitality Properties Trust | 1,106 | 36,487 | ||||||
Eaton Vance Corp. | 873 | 36,351 | ||||||
Taubman Centers, Inc. | 467 | 36,020 | ||||||
CBOE Holdings, Inc. | 619 | 35,534 | ||||||
American Campus Communities, Inc. | 827 | 35,453 | ||||||
Lamar Advertising Co. — Class A | 592 | 35,088 | ||||||
American Financial Group, Inc. | 541 | 34,705 | ||||||
Corrections Corporation of America | 861 | 34,664 | ||||||
BioMed Realty Trust, Inc. | 1,485 | 33,650 | ||||||
RenaissanceRe Holdings Ltd. | 337 | 33,609 | ||||||
PacWest Bancorp | 714 | 33,479 | ||||||
LaSalle Hotel Properties | 833 | 32,370 | ||||||
City National Corp. | 355 | 31,623 | ||||||
Highwoods Properties, Inc. | 685 | 31,359 | ||||||
Waddell & Reed Financial, Inc. — Class A | 616 | 30,517 | ||||||
Weingarten Realty Investors | 831 | 29,899 | ||||||
Home Properties, Inc. | 426 | 29,518 | ||||||
SLM Corp.* | 3,123 | 28,981 | ||||||
Brown & Brown, Inc. | 868 | 28,739 | ||||||
First American Financial Corp. | 795 | 28,366 | ||||||
Synovus Financial Corp. | 1,004 | 28,122 | ||||||
Cullen/Frost Bankers, Inc. | 405 | 27,977 | ||||||
Umpqua Holdings Corp. | 1,625 | 27,918 | ||||||
Stifel Financial Corp.* | 489 | 27,262 | ||||||
Old Republic International Corp. | 1,776 | 26,533 | ||||||
Commerce Bancshares, Inc. | 612 | 25,900 | ||||||
Rayonier, Inc. | 934 | 25,181 | ||||||
Webster Financial Corp. | 668 | 24,749 | ||||||
First Horizon National Corp. | 1,727 | 24,679 | ||||||
Tanger Factory Outlet Centers, Inc. | 696 | 24,478 | ||||||
Federated Investors, Inc. — Class B | 703 | 23,825 | ||||||
Hanover Insurance Group, Inc. | 327 | 23,734 | ||||||
CoreLogic, Inc.* | 662 | 23,349 | ||||||
Prosperity Bancshares, Inc. | 444 | 23,301 | ||||||
FirstMerit Corp. | 1,220 | 23,253 | ||||||
First Niagara Financial Group, Inc. | 2,610 | 23,072 | ||||||
WP GLIMCHER, Inc. | 1,365 | 22,700 | ||||||
Aspen Insurance Holdings Ltd. | 459 | 21,679 | ||||||
StanCorp Financial Group, Inc. | 311 | 21,334 | ||||||
Associated Banc-Corp. | 1,097 | 20,404 | ||||||
Corporate Office Properties Trust | 682 | 20,037 | ||||||
Bank of Hawaii Corp. | 322 | 19,710 | ||||||
Primerica, Inc. | 385 | 19,597 | ||||||
TCF Financial Corp. | 1,214 | 19,084 | ||||||
Janus Capital Group, Inc. | 1,091 | 18,754 | ||||||
Hancock Holding Co. | 593 | 17,707 | ||||||
Fulton Financial Corp. | 1,320 | 16,289 | ||||||
Washington Federal, Inc. | 723 | 15,765 | ||||||
Cathay General Bancorp | 547 | 15,562 | ||||||
Mercury General Corp. | 268 | 15,477 | ||||||
Valley National Bancorp | 1,629 | 15,378 | ||||||
Urban Edge Properties | 645 | 15,287 | ||||||
Equity One, Inc. | 571 | 15,240 | ||||||
BancorpSouth, Inc. | 632 | 14,675 | ||||||
Alexander & Baldwin, Inc. | 335 | 14,465 | ||||||
Kemper Corp. | 369 | 14,376 | ||||||
Trustmark Corp. | 498 | 12,091 | ||||||
Potlatch Corp. | 299 | 11,972 | ||||||
Mack-Cali Realty Corp. | 618 | 11,915 | ||||||
International Bancshares Corp. | 426 | 11,089 | ||||||
Total Financial | 2,795,229 | |||||||
INDUSTRIAL - 8.8% | ||||||||
Mettler-Toledo International, Inc.* | 207 | 68,031 | ||||||
Wabtec Corp. | 711 | 67,552 | ||||||
Rock-Tenn Co. — Class A | 1,032 | 66,564 | ||||||
Energizer Holdings, Inc. | 458 | 63,227 | ||||||
J.B. Hunt Transport Services, Inc. | 679 | 57,984 | ||||||
Packaging Corporation of America | 726 | 56,766 | ||||||
Fortune Brands Home & Security, Inc. | 1,170 | 55,552 | ||||||
Acuity Brands, Inc. | 320 | 53,811 | ||||||
Huntington Ingalls Industries, Inc. | 356 | 49,893 | ||||||
B/E Aerospace, Inc. | 781 | 49,687 | ||||||
Trimble Navigation Ltd.* | 1,911 | 48,157 | ||||||
Avnet, Inc. | 1,006 | 44,767 | ||||||
Carlisle Companies, Inc. | 481 | 44,555 | ||||||
Waste Connections, Inc. | 914 | 44,000 | ||||||
IDEX Corp. | 577 | 43,753 | ||||||
Hubbell, Inc. — Class B | 397 | 43,519 |
SEE NOTES TO FINANCIAL STATEMENTS. | THE RYDEX FUNDS ANNUAL REPORT | 67 |
SCHEDULE OF INVESTMENTS (continued) | March 31, 2015 |
MID-CAP 1.5x STRATEGY FUND |
Shares | Value | |||||||
Arrow Electronics, Inc.* | 705 | $ | 43,111 | |||||
Trinity Industries, Inc. | 1,148 | 40,765 | ||||||
Gentex Corp. | 2,178 | 39,857 | ||||||
Old Dominion Freight Line, Inc.* | 501 | 38,727 | ||||||
Lincoln Electric Holdings, Inc. | 573 | 37,468 | ||||||
Genesee & Wyoming, Inc. — Class A* | 378 | 36,454 | ||||||
AO Smith Corp. | 554 | 36,376 | ||||||
AECOM* | 1,147 | 35,350 | ||||||
Donaldson Company, Inc. | 936 | 35,297 | ||||||
Zebra Technologies Corp. — Class A* | 376 | 34,109 | ||||||
Lennox International, Inc. | 303 | 33,842 | ||||||
Sonoco Products Co. | 743 | 33,777 | ||||||
Exelis, Inc. | 1,375 | 33,509 | ||||||
Orbital ATK, Inc. | 437 | 33,487 | ||||||
Jabil Circuit, Inc. | 1,425 | 33,317 | ||||||
Bemis Company, Inc. | 719 | 33,297 | ||||||
Nordson Corp. | 422 | 33,059 | ||||||
Cognex Corp.* | 638 | 31,638 | ||||||
Graco, Inc. | 435 | 31,390 | ||||||
Eagle Materials, Inc. | 371 | 31,001 | ||||||
Kirby Corp.* | 411 | 30,846 | ||||||
Belden, Inc. | 314 | 29,378 | ||||||
AptarGroup, Inc. | 460 | 29,219 | ||||||
AGCO Corp. | 593 | 28,251 | ||||||
Oshkosh Corp. | 576 | 28,103 | ||||||
Teledyne Technologies, Inc.* | 260 | 27,750 | ||||||
ITT Corp. | 671 | 26,780 | ||||||
Regal-Beloit Corp. | 330 | 26,374 | ||||||
Esterline Technologies Corp.* | 229 | 26,202 | ||||||
SPX Corp. | 302 | 25,640 | ||||||
CLARCOR, Inc. | 370 | 24,442 | ||||||
National Instruments Corp. | 747 | 23,934 | ||||||
FEI Co. | 308 | 23,513 | ||||||
Timken Co. | 549 | 23,135 | ||||||
Crane Co. | 360 | 22,468 | ||||||
Clean Harbors, Inc.* | 395 | 22,428 | ||||||
Triumph Group, Inc. | 372 | 22,216 | ||||||
Landstar System, Inc. | 330 | 21,879 | ||||||
Woodward, Inc. | 427 | 21,781 | ||||||
Valmont Industries, Inc. | 177 | 21,750 | ||||||
Terex Corp. | 783 | 20,820 | ||||||
Kennametal, Inc. | 584 | 19,675 | ||||||
GATX Corp. | 327 | 18,959 | ||||||
Con-way, Inc. | 425 | 18,755 | ||||||
Silgan Holdings, Inc. | 307 | 17,846 | ||||||
Louisiana-Pacific Corp.* | 1,050 | 17,336 | ||||||
Tech Data Corp.* | 282 | 16,291 | ||||||
KBR, Inc. | 1,068 | 15,465 | ||||||
KLX, Inc.* | 387 | 14,915 | ||||||
Vishay Intertechnology, Inc. | 1,001 | 13,834 | ||||||
Knowles Corp.* | 627 | 12,082 | ||||||
MSA Safety, Inc. | 232 | 11,572 | ||||||
Werner Enterprises, Inc. | 330 | 10,365 | ||||||
Itron, Inc.* | 282 | 10,296 | ||||||
Harsco Corp. | 591 | 10,201 | ||||||
Greif, Inc. — Class A | 250 | 9,818 | ||||||
Granite Construction, Inc. | 266 | 9,347 | ||||||
TimkenSteel Corp. | 277 | 7,332 | ||||||
Tidewater, Inc. | 346 | 6,622 | ||||||
Total Industrial | 2,331,269 | |||||||
CONSUMER, NON-CYCLICAL - 7.7% | ||||||||
Church & Dwight Company, Inc. | 963 | 82,259 | ||||||
Salix Pharmaceuticals Ltd.* | 470 | 81,221 | ||||||
ResMed, Inc. | 1,037 | 74,435 | ||||||
Towers Watson & Co. — Class A | 513 | 67,810 | ||||||
Cooper Companies, Inc. | 356 | 66,721 | ||||||
Centene Corp.* | 876 | 61,924 | ||||||
United Therapeutics Corp.* | 344 | 59,318 | ||||||
Hologic, Inc.* | 1,796 | 59,313 | ||||||
WhiteWave Foods Co. — Class A* | 1,286 | 57,021 | ||||||
CDK Global, Inc. | 1,187 | 55,504 | ||||||
Omnicare, Inc. | 716 | 55,175 | ||||||
Gartner, Inc.* | 645 | 54,083 | ||||||
IDEXX Laboratories, Inc.* | 348 | 53,759 | ||||||
MEDNAX, Inc.* | 709 | 51,410 | ||||||
ManpowerGroup, Inc. | 577 | 49,709 | ||||||
Hain Celestial Group, Inc.* | 750 | 48,038 | ||||||
Global Payments, Inc. | 495 | 45,382 | ||||||
Community Health Systems, Inc.* | 861 | 45,013 | ||||||
SEI Investments Co. | 960 | 42,326 | ||||||
Ingredion, Inc. | 527 | 41,011 | ||||||
Service Corporation International | 1,496 | 38,971 | ||||||
Teleflex, Inc. | 306 | 36,974 | ||||||
Sirona Dental Systems, Inc.* | 410 | 36,896 | ||||||
Graham Holdings Co. — Class B | 33 | 34,638 | ||||||
Health Net, Inc.* | 567 | 34,298 | ||||||
VCA, Inc.* | 605 | 33,166 | ||||||
Flowers Foods, Inc. | 1,359 | 30,904 | ||||||
STERIS Corp. | 439 | 30,849 | ||||||
WEX, Inc.* | 286 | 30,705 | ||||||
WellCare Health Plans, Inc.* | 324 | 29,633 | ||||||
Align Technology, Inc.* | 536 | 28,829 | ||||||
United Natural Foods, Inc.* | 369 | 28,428 | ||||||
RR Donnelley & Sons Co. | 1,474 | 28,286 | ||||||
Charles River Laboratories International, Inc.* | 349 | 27,673 | ||||||
Live Nation Entertainment, Inc.* | 1,070 | 26,996 | ||||||
TreeHouse Foods, Inc.* | 316 | 26,866 | ||||||
Akorn, Inc.* | 549 | 26,083 | ||||||
Avon Products, Inc. | 3,206 | 25,616 | ||||||
Deluxe Corp. | 368 | 25,495 | ||||||
LifePoint Hospitals, Inc.* | 326 | 23,945 | ||||||
Bio-Rad Laboratories, Inc. — Class A* | 152 | 20,547 | ||||||
Hill-Rom Holdings, Inc. | 417 | 20,433 | ||||||
Corporate Executive Board Co. | 247 | 19,726 | ||||||
Sotheby’s | 453 | 19,144 | ||||||
Post Holdings, Inc.* | 386 | 18,080 |
68 | THE RYDEX FUNDS ANNUAL REPORT | SEE NOTES TO FINANCIAL STATEMENTS. |
SCHEDULE OF INVESTMENTS (continued) | March 31, 2015 |
MID-CAP 1.5x STRATEGY FUND |
Shares | Value | |||||||
Boston Beer Company, Inc. — Class A* | 67 | $ | 17,916 | |||||
SUPERVALU, Inc.* | 1,522 | 17,701 | ||||||
Rollins, Inc. | 710 | 17,558 | ||||||
Thoratec Corp.* | 399 | 16,714 | ||||||
Owens & Minor, Inc. | 465 | 15,736 | ||||||
DeVry Education Group, Inc. | 423 | 14,111 | ||||||
Lancaster Colony Corp. | 143 | 13,609 | ||||||
Aaron’s, Inc. | 476 | 13,476 | ||||||
Apollo Education Group, Inc. — Class A* | 712 | 13,471 | ||||||
Dean Foods Co. | 694 | 11,472 | ||||||
FTI Consulting, Inc.* | 305 | 11,425 | ||||||
Rent-A-Center, Inc. | 390 | 10,702 | ||||||
HMS Holdings Corp.* | 652 | 10,073 | ||||||
Tootsie Roll Industries, Inc. | 152 | 5,146 | ||||||
Total Consumer, Non-cyclical | 2,043,723 | |||||||
CONSUMER, CYCLICAL - 6.1% | ||||||||
Signet Jewelers Ltd. | 591 | 82,026 | ||||||
Advance Auto Parts, Inc. | 539 | 80,683 | ||||||
Jarden Corp.* | 1,323 | 69,987 | ||||||
Foot Locker, Inc. | 1,048 | 66,023 | ||||||
Alaska Air Group, Inc. | 968 | 64,062 | ||||||
Polaris Industries, Inc. | 450 | 63,495 | ||||||
LKQ Corp.* | 2,242 | 57,306 | ||||||
Williams-Sonoma, Inc. | 632 | 50,377 | ||||||
Toll Brothers, Inc.* | 1,179 | 46,382 | ||||||
Dick’s Sporting Goods, Inc. | 724 | 41,261 | ||||||
Domino’s Pizza, Inc. | 410 | 41,225 | ||||||
NVR, Inc.* | 28 | 37,202 | ||||||
JetBlue Airways Corp.* | 1,926 | 37,076 | ||||||
Carter’s, Inc. | 389 | 35,970 | ||||||
Brunswick Corp. | 685 | 35,243 | ||||||
Cinemark Holdings, Inc. | 768 | 34,614 | ||||||
Office Depot, Inc.* | 3,620 | 33,304 | ||||||
International Game Technology | 1,824 | 31,756 | ||||||
Copart, Inc.* | 839 | 31,521 | ||||||
Kate Spade & Co.* | 940 | 31,387 | ||||||
World Fuel Services Corp. | 532 | 30,579 | ||||||
Panera Bread Co. — Class A* | 188 | 30,079 | ||||||
Ingram Micro, Inc. — Class A* | 1,152 | 28,938 | ||||||
Brinker International, Inc. | 465 | 28,625 | ||||||
MSC Industrial Direct Company, Inc. — Class A | 374 | 27,003 | ||||||
Tempur Sealy International, Inc.* | 449 | 25,925 | ||||||
Dana Holding Corp. | 1,215 | 25,709 | ||||||
Watsco, Inc. | 202 | 25,391 | ||||||
Buffalo Wild Wings, Inc.* | 140 | 25,374 | ||||||
Tupperware Brands Corp. | 367 | 25,330 | ||||||
CST Brands, Inc. | 569 | 24,939 | ||||||
Wendy’s Co. | 2,033 | 22,160 | ||||||
American Eagle Outfitters, Inc. | 1,294 | 22,102 | ||||||
Scotts Miracle-Gro Co. — Class A | 328 | 22,032 | ||||||
Thor Industries, Inc. | 343 | 21,681 | ||||||
Chico’s FAS, Inc. | 1,137 | 20,114 | ||||||
Cabela’s, Inc.* | 352 | 19,705 | ||||||
Big Lots, Inc. | 394 | 18,924 | ||||||
JC Penney Company, Inc.* | 2,249 | 18,914 | ||||||
Life Time Fitness, Inc.* | 265 | 18,804 | ||||||
Deckers Outdoor Corp.* | 255 | 18,582 | ||||||
HNI Corp. | 326 | 17,985 | ||||||
Cheesecake Factory, Inc. | 343 | 16,920 | ||||||
HSN, Inc. | 240 | 16,375 | ||||||
Ascena Retail Group, Inc.* | 972 | 14,104 | ||||||
ANN, Inc.* | 337 | 13,827 | ||||||
DreamWorks Animation SKG, Inc. — Class A*,1 | 534 | 12,923 | ||||||
Herman Miller, Inc. | 439 | 12,187 | ||||||
Abercrombie & Fitch Co. — Class A | 511 | 11,262 | ||||||
KB Home | 671 | 10,481 | ||||||
Guess?, Inc. | 471 | 8,756 | ||||||
MDC Holdings, Inc. | 288 | 8,208 | ||||||
International Speedway Corp. — Class A | 206 | 6,718 | ||||||
Total Consumer, Cyclical | 1,621,556 | |||||||
TECHNOLOGY - 4.3% | ||||||||
ANSYS, Inc.* | 664 | 58,557 | ||||||
Synopsys, Inc.* | 1,133 | 52,480 | ||||||
MSCI, Inc. — Class A | 829 | 50,826 | ||||||
Broadridge Financial Solutions, Inc. | 891 | 49,014 | ||||||
Rackspace Hosting, Inc.* | 866 | 44,677 | ||||||
Jack Henry & Associates, Inc. | 603 | 42,144 | ||||||
Cadence Design Systems, Inc.* | 2,156 | 39,757 | ||||||
NCR Corp.* | 1,244 | 36,711 | ||||||
Ultimate Software Group, Inc.* | 211 | 35,861 | ||||||
Informatica Corp.* | 807 | 35,391 | ||||||
Cypress Semiconductor Corp. | 2,344 | 33,074 | ||||||
MAXIMUS, Inc. | 486 | 32,445 | ||||||
PTC, Inc.* | 848 | 30,672 | ||||||
Teradyne, Inc. | 1,606 | 30,273 | ||||||
Tyler Technologies, Inc.* | 248 | 29,891 | ||||||
VeriFone Systems, Inc.* | 839 | 29,273 | ||||||
Cree, Inc.* | 823 | 29,208 | ||||||
Solera Holdings, Inc. | 496 | 25,623 | ||||||
Atmel Corp. | 3,070 | 25,266 | ||||||
SolarWinds, Inc.* | 489 | 25,056 | ||||||
IPG Photonics Corp.* | 263 | 24,380 | ||||||
Riverbed Technology, Inc.* | 1,144 | 23,921 | ||||||
DST Systems, Inc. | 211 | 23,360 | ||||||
Integrated Device Technology, Inc.* | 1,094 | 21,902 | ||||||
3D Systems Corp.*,1 | 771 | 21,141 | ||||||
Fair Isaac Corp. | 232 | 20,583 | ||||||
Leidos Holdings, Inc. | 459 | 19,260 | ||||||
Lexmark International, Inc. — Class A | 448 | 18,968 | ||||||
ACI Worldwide, Inc.* | 855 | 18,519 | ||||||
Mentor Graphics Corp. | 722 | 17,350 | ||||||
Diebold, Inc. | 477 | 16,914 | ||||||
Convergys Corp. | 730 | 16,695 | ||||||
Fairchild Semiconductor International, Inc. — Class A* | 864 | 15,708 | ||||||
Allscripts Healthcare Solutions, Inc.* | 1,251 | 14,962 |
SEE NOTES TO FINANCIAL STATEMENTS. | THE RYDEX FUNDS ANNUAL REPORT | 69 |
SCHEDULE OF INVESTMENTS (continued) | March 31, 2015 |
MID-CAP 1.5x STRATEGY FUND |
Shares | Value | |||||||
Science Applications International Corp. | 290 | $ | 14,892 | |||||
Silicon Laboratories, Inc.* | 289 | 14,673 | ||||||
Advent Software, Inc. | 332 | 14,645 | ||||||
Intersil Corp. — Class A | 962 | 13,776 | ||||||
CommVault Systems, Inc.* | 311 | 13,591 | ||||||
Semtech Corp.* | 492 | 13,109 | ||||||
Advanced Micro Devices, Inc.* | 4,643 | 12,443 | ||||||
Rovi Corp.* | 678 | 12,346 | ||||||
Acxiom Corp.* | 570 | 10,539 | ||||||
Total Technology | 1,129,876 | |||||||
BASIC MATERIALS - 2.2% | ||||||||
Ashland, Inc. | 470 | 59,836 | ||||||
RPM International, Inc. | 986 | 47,317 | ||||||
Valspar Corp. | 551 | 46,301 | ||||||
Albemarle Corp. | 827 | 43,699 | ||||||
NewMarket Corp. | 78 | 37,268 | ||||||
Steel Dynamics, Inc. | 1,781 | 35,798 | ||||||
Reliance Steel & Aluminum Co. | 572 | 34,938 | ||||||
Royal Gold, Inc. | 481 | 30,356 | ||||||
Cytec Industries, Inc. | 526 | 28,425 | ||||||
United States Steel Corp. | 1,074 | 26,206 | ||||||
PolyOne Corp. | 657 | 24,539 | ||||||
Sensient Technologies Corp. | 350 | 24,108 | ||||||
Compass Minerals International, Inc. | 248 | 23,116 | ||||||
Domtar Corp. | 470 | 21,723 | ||||||
Cabot Corp. | 470 | 21,150 | ||||||
Minerals Technologies, Inc. | 256 | 18,714 | ||||||
Olin Corp. | 571 | 18,295 | ||||||
Carpenter Technology Corp. | 388 | 15,085 | ||||||
Commercial Metals Co. | 866 | 14,021 | ||||||
Worthington Industries, Inc. | 371 | 9,872 | ||||||
Cliffs Natural Resources, Inc. | 1,130 | 5,435 | ||||||
Total Basic Materials | 586,202 | |||||||
ENERGY - 2.2% | ||||||||
HollyFrontier Corp. | 1,446 | 58,231 | ||||||
Dresser-Rand Group, Inc.* | 565 | 45,397 | ||||||
SunEdison, Inc.* | 1,858 | 44,592 | ||||||
Oceaneering International, Inc. | 735 | 39,639 | ||||||
Energen Corp. | 538 | 35,508 | ||||||
Nabors Industries Ltd. | 2,134 | 29,129 | ||||||
Gulfport Energy Corp.* | 632 | 29,014 | ||||||
SM Energy Co. | 498 | 25,737 | ||||||
Western Refining, Inc. | 521 | 25,732 | ||||||
Superior Energy Services, Inc. | 1,122 | 25,065 | ||||||
Murphy USA, Inc.* | 317 | 22,941 | ||||||
Patterson-UTI Energy, Inc. | 1,080 | 20,277 | ||||||
Dril-Quip, Inc.* | 286 | 19,560 | ||||||
Denbury Resources, Inc. | 2,606 | 18,998 | ||||||
California Resources Corp. | 2,275 | 17,313 | ||||||
NOW, Inc.*,1 | 790 | 17,096 | ||||||
WPX Energy, Inc.* | 1,504 | 16,439 | ||||||
Rowan Companies plc — Class A | 919 | 16,275 | ||||||
Oil States International, Inc.* | 379 | 15,073 | ||||||
Atwood Oceanics, Inc. | 443 | 12,453 | ||||||
Helix Energy Solutions Group, Inc.* | 726 | 10,861 | ||||||
Peabody Energy Corp. | 2,027 | 9,973 | ||||||
Unit Corp.* | 342 | 9,569 | ||||||
Rosetta Resources, Inc.* | 543 | 9,242 | ||||||
Total Energy | 574,114 | |||||||
UTILITIES - 2.1% | ||||||||
Alliant Energy Corp. | 818 | 51,534 | ||||||
OGE Energy Corp. | 1,471 | 46,498 | ||||||
UGI Corp. | 1,274 | 41,519 | ||||||
Atmos Energy Corp. | 743 | 41,088 | ||||||
Westar Energy, Inc. | 974 | 37,752 | ||||||
National Fuel Gas Co. | 621 | 37,465 | ||||||
Aqua America, Inc. | 1,304 | 34,360 | ||||||
Questar Corp. | 1,294 | 30,875 | ||||||
MDU Resources Group, Inc. | 1,434 | 30,602 | ||||||
Great Plains Energy, Inc. | 1,137 | 30,335 | ||||||
Vectren Corp. | 609 | 26,881 | ||||||
Cleco Corp. | 446 | 24,316 | ||||||
Hawaiian Electric Industries, Inc. | 757 | 24,315 | ||||||
IDACORP, Inc. | 371 | 23,325 | ||||||
WGL Holdings, Inc. | 367 | 20,699 | ||||||
PNM Resources, Inc. | 587 | 17,140 | ||||||
ONE Gas, Inc. | 385 | 16,644 | ||||||
Black Hills Corp. | 329 | 16,595 | ||||||
Total Utilities | 551,943 | |||||||
COMMUNICATIONS - 1.6% | ||||||||
Qorvo, Inc.* | 1,095 | 87,271 | ||||||
FactSet Research Systems, Inc. | 286 | 45,531 | ||||||
Fortinet, Inc.* | 1,046 | 36,558 | ||||||
AMC Networks, Inc. — Class A* | 436 | 33,415 | ||||||
ARRIS Group, Inc.* | 974 | 28,144 | ||||||
AOL, Inc.* | 578 | 22,895 | ||||||
JDS Uniphase Corp.* | 1,716 | 22,514 | ||||||
John Wiley & Sons, Inc. — Class A | 342 | 20,910 | ||||||
Time, Inc. | 807 | 18,109 | ||||||
Telephone & Data Systems, Inc. | 724 | 18,028 | ||||||
Plantronics, Inc. | 317 | 16,785 | ||||||
Ciena Corp.* | 798 | 15,409 | ||||||
Meredith Corp. | 269 | 15,002 | ||||||
InterDigital, Inc. | 274 | 13,903 | ||||||
New York Times Co. — Class A | 970 | 13,347 | ||||||
Polycom, Inc.* | 990 | 13,266 | ||||||
NeuStar, Inc. — Class A*,1 | 411 | 10,119 | ||||||
Total Communications | 431,206 | |||||||
INFORMATION TECHNOLOGY - 0.2% | ||||||||
Keysight Technologies, Inc.* | 1,242 | 46,140 | ||||||
70 | THE RYDEX FUNDS ANNUAL REPORT | SEE NOTES TO FINANCIAL STATEMENTS. |
SCHEDULE OF INVESTMENTS (continued) | March 31, 2015 |
MID-CAP 1.5x STRATEGY FUND |
Shares | Value | |||||||
HEALTH CARE - 0.2% | ||||||||
Bio-Techne Corp. | 274 | $ | 27,479 | |||||
Halyard Health, Inc.* | 343 | 16,876 | ||||||
Total Health Care | 44,355 | |||||||
CONSUMER DISCRETIONARY - 0.1% | ||||||||
Vista Outdoor, Inc.* | 470 | 20,125 | ||||||
Total Common Stocks | ||||||||
(Cost $6,998,588) | 12,175,738 | |||||||
MUTUAL FUNDS† - 11.0% | ||||||||
Guggenheim Strategy Fund I2 | 116,856 | 2,909,723 | ||||||
Total Mutual Funds | ||||||||
(Cost $2,906,503) | 2,909,723 | |||||||
Face Amount | ||||||||
REPURCHASE AGREEMENTS††,3 - 28.0% | ||||||||
HSBC Group issued 03/31/15 at 0.03% due 04/01/15 | $ | 5,790,944 | 5,790,944 | |||||
RBC Capital Markets issued 03/31/15 at 0.05% due 04/01/15 | 884,979 | 884,979 | ||||||
UMB Financial Corp. issued 03/31/15 at 0.03% due 04/01/15 | 710,341 | 710,341 | ||||||
Total Repurchase Agreements | ||||||||
(Cost $7,386,264) | 7,386,264 | |||||||
SECURITIES LENDING COLLATERAL††,4 - 0.1% | ||||||||
Repurchase Agreements | ||||||||
HSBC Securities, Inc. issued 03/31/15 at 0.10% due 04/01/15 | 16,031 | 16,031 | ||||||
BNP Paribas Securities Corp. issued 03/31/15 at 0.10% due 04/01/15 | 5,515 | 5,515 |
Barclays Capital, Inc. issued 03/31/15 at 0.10% due 04/01/15 | 2,847 | 2,847 | ||||||
Total Securities Lending Collateral | ||||||||
(Cost $24,393) | 24,393 | |||||||
Total Investments - 85.3% | ||||||||
(Cost $17,315,748) | $ | 22,496,118 | ||||||
Other Assets & Liabilities, net - 14.7% | 3,882,697 | |||||||
Total Net Assets - 100.0% | $ | 26,378,815 | ||||||
Contracts | Unrealized Gain | |||||||
EQUITY FUTURES CONTRACTS PURCHASED† | ||||||||
June 2015 S&P MidCap 400 Index Mini Futures Contracts (Aggregate Value of Contracts $1,520,200) | 10 | $ | 518 | |||||
Units | ||||||||
OTC EQUITY INDEX SWAP AGREEMENTS†† | ||||||||
Barclays Bank plc April 2015 S&P MidCap 400 Index Swap, Terminating 04/30/155 (Notional Value $23,885,312) | 15,672 | $ | 245,895 | |||||
Credit Suisse Capital, LLC April 2015 S&P MidCap 400 Index Swap, Terminating 04/28/155 (Notional Value $1,313,217) | 862 | 19,737 | ||||||
Goldman Sachs International April 2015 S&P MidCap 400 Index Swap, Terminating 04/28/155 (Notional Value $677,082) | 444 | 10,181 | ||||||
(Total Notional Value $25,875,611) | $ | 275,813 |
* | Non-income producing security. |
† | Value determined based on Level 1 inputs — See Note 4. |
†† | Value determined based on Level 2 inputs — See Note 4. |
1 | All or portion of this security is on loan at March 31, 2015 — See Note 6. |
2 | Investment in a product that is managed by and/or pays a management fee to a party related to the Adviser — See Note 12. |
3 | Repurchase Agreements — See Note 5. |
4 | Securities lending collateral — See Note 6. |
5 | Total Return based on S&P MidCap 400 Index +/- financing at a variable rate. |
plc — Public Limited Company |
SEE NOTES TO FINANCIAL STATEMENTS. | THE RYDEX FUNDS ANNUAL REPORT | 71 |
MID-CAP 1.5x STRATEGY FUND |
STATEMENT OF ASSETS AND LIABILITIES
March 31, 2015
Assets: | ||||
Investments, at value - including $24,184 of securities loaned (cost $9,905,091) | $ | 15,085,461 | ||
Repurchase agreements, at value (cost $7,410,657) | 7,410,657 | |||
Total investments (cost $17,315,748) | 22,496,118 | |||
Segregated cash with broker | 2,323,969 | |||
Unrealized appreciation on swap agreements | 275,813 | |||
Cash | 83 | |||
Receivables: | ||||
Fund shares sold | 1,396,980 | |||
Dividends | 13,528 | |||
Swap settlement | 7,078 | |||
Variation margin | 1,481 | |||
Securities lending income | 155 | |||
Interest | 7 | |||
Total assets | 26,515,212 | |||
Liabilities: | ||||
Payable for: | ||||
Fund shares redeemed | 40,227 | |||
Return of securities loaned | 24,750 | |||
Management fees | 18,405 | |||
Distribution and service fees | 7,910 | |||
Transfer agent and administrative fees | 5,113 | |||
Securities purchased | 3,469 | |||
Portfolio accounting fees | 2,045 | |||
Miscellaneous | 34,478 | |||
Total liabilities | 136,397 | |||
Commitment and contingent liabilities (Note 15) | — | |||
Net assets | $ | 26,378,815 | ||
Net assets consist of: | ||||
Paid in capital | $ | 20,274,526 | ||
Undistributed net investment income | — | |||
Accumulated net realized gain on investments | 647,588 | |||
Net unrealized appreciation on investments | 5,456,701 | |||
Net assets | $ | 26,378,815 | ||
A-Class: | ||||
Net assets | $ | 5,330,430 | ||
Capital shares outstanding | 79,177 | |||
Net asset value per share | $ | 67.32 | ||
Maximum offering price per share (Net asset value divided by 95.25%) | $ | 70.68 | ||
C-Class: | ||||
Net assets | $ | 4,615,368 | ||
Capital shares outstanding | 76,577 | |||
Net asset value per share | $ | 60.27 | ||
H-Class: | ||||
Net assets | $ | 16,433,017 | ||
Capital shares outstanding | 243,635 | |||
Net asset value per share | $ | 67.45 |
STATEMENT OF OPERATIONS
Year Ended March 31, 2015
Investment Income: | ||||
Dividends | $ | 550,242 | ||
Income from securities lending, net | 7,493 | |||
Interest | 1,765 | |||
Total investment income | 559,500 | |||
Expenses: | ||||
Management fees | 431,170 | |||
Transfer agent and administrative fees | 119,770 | |||
Distribution and service fees: | ||||
A-Class | 5,237 | |||
C-Class | 44,613 | |||
H-Class | 103,379 | |||
Portfolio accounting fees | 47,907 | |||
Custodian fees | 5,546 | |||
Trustees’ fees* | 3,097 | |||
Line of credit fees | 780 | |||
Miscellaneous | 66,932 | |||
Total expenses | 828,431 | |||
Net investment loss | (268,931 | ) | ||
Net Realized and Unrealized Gain (Loss): | ||||
Net realized gain (loss) on: | ||||
Investments | 5,691,463 | |||
Swap agreements | 4,069,403 | |||
Futures contracts | 3,137,237 | |||
Net realized gain | 12,898,103 | |||
Net change in unrealized appreciation (depreciation) on: | ||||
Investments | (1,909,732 | ) | ||
Swap agreements | 127,516 | |||
Futures contracts | (54,360 | ) | ||
Net change in unrealized appreciation (depreciation) | (1,836,576 | ) | ||
Net realized and unrealized gain | 11,061,527 | |||
Net increase in net assets resulting from operations | $ | 10,792,596 |
* | Relates to Trustees not deemed “interested persons” within the meaning of Section 2(a)(19) of the 1940 Act. |
72 | THE RYDEX FUNDS ANNUAL REPORT | SEE NOTES TO FINANCIAL STATEMENTS. |
MID-CAP 1.5x STRATEGY FUND |
STATEMENTS OF CHANGES IN NET ASSETS
Year Ended March 31, 2015 | Year Ended March 31, 2014 | |||||||
Increase (Decrease) in Net Assets from Operations: | ||||||||
Net investment loss | $ | (268,931 | ) | $ | (349,121 | ) | ||
Net realized gain on investments | 12,898,103 | 11,514,098 | ||||||
Net change in unrealized appreciation (depreciation) on investments | (1,836,576 | ) | (2,648,721 | ) | ||||
Net increase in net assets resulting from operations | 10,792,596 | 8,516,256 | ||||||
Distributions to shareholders from: | ||||||||
Net realized gains | ||||||||
A-Class | (7,007 | ) | — | |||||
C-Class | (16,371 | ) | — | |||||
H-Class | (613,785 | ) | — | |||||
Total distributions to shareholders | (637,163 | ) | — | |||||
Capital share transactions: | ||||||||
Proceeds from sale of shares | ||||||||
A-Class | 4,910,310 | 5,147,333 | ||||||
C-Class | 1,521,171 | 2,786,279 | ||||||
H-Class | 529,535,828 | 351,619,280 | ||||||
Distributions reinvested | ||||||||
A-Class | 6,996 | — | ||||||
C-Class | 15,357 | — | ||||||
H-Class | 344,886 | — | ||||||
Cost of shares redeemed | ||||||||
A-Class | (2,478,109 | ) | (5,193,473 | ) | ||||
C-Class | (2,066,363 | ) | (4,325,407 | ) | ||||
H-Class | (542,160,150 | ) | (396,329,575 | ) | ||||
Net decrease from capital share transactions | (10,370,074 | ) | (46,295,563 | ) | ||||
Net decrease in net assets | (214,641 | ) | (37,779,307 | ) | ||||
Net assets: | ||||||||
Beginning of year | 26,593,456 | 64,372,763 | ||||||
End of year | $ | 26,378,815 | $ | 26,593,456 | ||||
Undistributed net investment income/(Accumulated net investment loss) at end of year | $ | — | $ | (68,833 | ) | |||
Capital share activity: | ||||||||
Shares sold | ||||||||
A-Class | 76,447 | 98,241 | ||||||
C-Class | 28,166 | 61,396 | ||||||
H-Class | 8,717,857 | 6,703,452 | ||||||
Shares issued from reinvestment of distributions | ||||||||
A-Class | 114 | — | ||||||
C-Class | 278 | — | ||||||
H-Class | 5,604 | — | ||||||
Shares redeemed | ||||||||
A-Class | (42,389 | ) | (102,024 | ) | ||||
C-Class | (38,071 | ) | (99,832 | ) | ||||
H-Class | (8,811,347 | ) | (7,636,463 | ) | ||||
Net decrease in shares | (63,341 | ) | (975,230 | ) |
SEE NOTES TO FINANCIAL STATEMENTS. | THE RYDEX FUNDS ANNUAL REPORT | 73 |
MID-CAP 1.5x STRATEGY FUND |
FINANCIAL HIGHLIGHTS
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.
A-Class | Year Ended March 31, 2015 | Year Ended March 31, 2014 | Year Ended March 28, 2013 | Year Ended March 31, 2012 | Year Ended March 31, 2011 | |||||||||||||||
Per Share Data | ||||||||||||||||||||
Net asset value, beginning of period | $ | 58.48 | $ | 45.07 | $ | 36.23 | $ | 37.14 | $ | 26.89 | ||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||
Net investment income (loss)a | (.41 | ) | (.35 | ) | (.16 | ) | (.23 | ) | (.26 | ) | ||||||||||
Net gain (loss) on investments (realized and unrealized) | 9.45 | 13.76 | 9.00 | (.68 | ) | 10.51 | ||||||||||||||
Total from investment operations | 9.04 | 13.41 | 8.84 | (.91 | ) | 10.25 | ||||||||||||||
Less distributions from: | ||||||||||||||||||||
Net realized gains | (.20 | ) | — | — | — | — | ||||||||||||||
Total distributions | (.20 | ) | — | — | — | — | ||||||||||||||
Net asset value, end of period | $ | 67.32 | $ | 58.48 | $ | 45.07 | $ | 36.23 | $ | 37.14 | ||||||||||
Total Returnb | 15.50 | % | 29.75 | % | 24.40 | % | (2.45 | %) | 38.12 | % | ||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||
Net assets, end of period (in thousands) | $ | 5,330 | $ | 2,632 | $ | 2,199 | $ | 1,997 | $ | 1,877 | ||||||||||
Ratios to average net assets: | ||||||||||||||||||||
Net investment income (loss) | (0.66 | %) | (0.68 | %) | (0.43 | %) | (0.68 | %) | (0.88 | %) | ||||||||||
Total expensesc | 1.64 | % | 1.67 | % | 1.66 | % | 1.66 | % | 1.70 | % | ||||||||||
Portfolio turnover rate | 598 | % | 563 | % | 447 | % | 141 | % | 211 | % |
C-Class | Year Ended March 31, 2015 | Year Ended March 31, 2014 | Year Ended March 28, 2013 | Year Ended March 31, 2012 | Year Ended March 31, 2011 | |||||||||||||||
Per Share Data | ||||||||||||||||||||
Net asset value, beginning of period | $ | 52.77 | $ | 40.97 | $ | 33.18 | $ | 34.26 | $ | 24.98 | ||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||
Net investment income (loss)a | (.76 | ) | (.64 | ) | (.41 | ) | (.43 | ) | (.43 | ) | ||||||||||
Net gain (loss) on investments (realized and unrealized) | 8.46 | 12.44 | 8.20 | (.65 | ) | 9.71 | ||||||||||||||
Total from investment operations | 7.70 | 11.80 | 7.79 | (1.08 | ) | 9.28 | ||||||||||||||
Less distributions from: | ||||||||||||||||||||
Net realized gains | (.20 | ) | — | — | — | — | ||||||||||||||
Total distributions | (.20 | ) | — | — | — | — | ||||||||||||||
Net asset value, end of period | $ | 60.27 | $ | 52.77 | $ | 40.97 | $ | 33.18 | $ | 34.26 | ||||||||||
Total Returnb | 14.63 | % | 28.80 | % | 23.48 | % | (3.15 | %) | 37.15 | % | ||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||
Net assets, end of period (in thousands) | $ | 4,615 | $ | 4,549 | $ | 5,107 | $ | 4,815 | $ | 6,045 | ||||||||||
Ratios to average net assets: | ||||||||||||||||||||
Net investment income (loss) | (1.39 | %) | (1.40 | %) | (1.23 | %) | (1.42 | %) | (1.59 | %) | ||||||||||
Total expensesc | 2.40 | % | 2.42 | % | 2.40 | % | 2.41 | % | 2.44 | % | ||||||||||
Portfolio turnover rate | 598 | % | 563 | % | 447 | % | 141 | % | 211 | % |
74 | THE RYDEX FUNDS ANNUAL REPORT | SEE NOTES TO FINANCIAL STATEMENTS. |
MID-CAP 1.5x STRATEGY FUND |
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.
H-Class | Year Ended March 31, 2015 | Year Ended March 31, 2014 | Year Ended March 28, 2013 | Year Ended March 31, 2012 | Year Ended March 31, 2011 | |||||||||||||||
Per Share Data | ||||||||||||||||||||
Net asset value, beginning of period | $ | 58.56 | $ | 45.13 | $ | 36.27 | $ | 37.12 | $ | 26.89 | ||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||
Net investment income (loss)a | (.29 | ) | (.34 | ) | (.15 | ) | (.24 | ) | (.28 | ) | ||||||||||
Net gain (loss) on investments (realized and unrealized) | 9.38 | 13.77 | 9.01 | (.61 | ) | 10.51 | ||||||||||||||
Total from investment operations | 9.09 | 13.43 | 8.86 | (.85 | ) | 10.23 | ||||||||||||||
Less distributions from: | ||||||||||||||||||||
Net realized gains | (.20 | ) | — | — | — | — | ||||||||||||||
Total distributions | (.20 | ) | — | — | — | — | ||||||||||||||
Net asset value, end of period | $ | 67.45 | $ | 58.56 | $ | 45.13 | $ | 36.27 | $ | 37.12 | ||||||||||
Total Returnb | 15.56 | % | 29.76 | % | 24.43 | % | (2.29 | %) | 38.04 | % | ||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||
Net assets, end of period (in thousands) | $ | 16,433 | $ | 19,413 | $ | 57,067 | $ | 16,974 | $ | 42,647 | ||||||||||
Ratios to average net assets: | ||||||||||||||||||||
Net investment income (loss) | (0.47 | %) | (0.66 | %) | (0.41 | %) | (0.72 | %) | (0.91 | %) | ||||||||||
Total expensesc | 1.66 | % | 1.68 | % | 1.67 | % | 1.66 | % | 1.70 | % | ||||||||||
Portfolio turnover rate | 598 | % | 563 | % | 447 | % | 141 | % | 211 | % |
a | Net investment income (loss) per share was computed using average shares outstanding throughout the period. |
b | Total return does not reflect the impact of any applicable sales charges. |
c | Does not include expenses of the underlying funds in which the Fund invests. |
SEE NOTES TO FINANCIAL STATEMENTS. | THE RYDEX FUNDS ANNUAL REPORT | 75 |
PERFORMANCE REPORT AND FUND PROFILE (Unaudited) | March 31, 2015 |
INVERSE MID-CAP STRATEGY FUND
OBJECTIVE: Seeks to provide investment results that match, before fees and expenses, the performance of a specific benchmark on a daily basis. The Fund’s current benchmark is the inverse (opposite) of the performance of the S&P MidCap 400 Index (the “underlying index”). The Fund does not seek to achieve its investment objective over a period of time greater than one day.
For the one year ended March 31, 2015, Inverse Mid-Cap Strategy Fund H-Class returned -13.47%. Over the same period, its benchmark, the S&P MidCap 400 Index, returned 12.19%. Inverse Mid-Cap Strategy Fund achieved a daily correlation of 99% to its benchmark of -100% of the daily price movement of the S&P MidCap 400 Index.
Financials and Health Care contributed most performance of the underlying index during the period. Energy was the only sector that detracted. Telecommunications Services and Materials contributed least to the performance of the underlying index.
Skyworks Solutions, Inc., Hanesbrands, Inc., and Qorvo, Inc., contributed most performance to the underlying index for the period. Cree, Inc., 3D Systems Corp. and Trimble Navigation Ltd. were the largest detractors from performance of the underlying index for the period.
Derivatives in the Fund were used to help provide exposure to the composition of the benchmark in the highest efficient manner and not for hedging purposes. The results of derivatives use during the period were within our expectations and contributed to the Fund’s performance.
Due to the compounding of daily returns, leveraged and inverse funds’ returns over periods other than one day will likely differ in amount and possibly direction from the benchmark return for the same period. Investors should monitor their leveraged and inverse funds’ holdings to ensure that they are consistent with their strategies, as frequently as daily.
The effects of compounding may cause the longer-term correlation of the Fund to its benchmark to diminish. The apparent discrepancy between the leveraged and unleveraged indices is the result of compounding, which is described briefly on page 6 of this report.
The Fund invests excess cash into the Guggenheim Strategy Funds which, in turn, invest in a diversified portfolio of debt securities and financial instruments providing exposure to fixed-income markets. The investment objective of the Guggenheim Strategy Funds is to seek a high level of income consistent with the preservation of capital. For the one year period ended March 31,2015, investment in the Guggenheim Strategy Funds benefited Fund performance relative to investing in other short-term investments such as overnight repurchase agreements.
Performance displayed represents past performance, which is no guarantee of future results.
Holdings Diversification (Market Exposure as % of Net Assets)
![](https://capedge.com/proxy/N-CSR/0001398344-15-003814/rtb1_19.jpg)
“Holdings Diversification (Market Exposure as % of Net Assets)” excludes any temporary cash investments or investments in Guggenheim Strategy Funds Trust mutual funds. Investments in those Funds do not provide “market exposure” to meet the fund’s investment objective, but will significantly increase the portfolio’s exposure to certain other asset categories (and their associated risks), which may cause the Fund to deviate from its principal investment strategy, including: (i) high yield, high risk debt securities rated below the top four long-term rating categories by a nationally recognized statistical rating organization (also known as “junk bonds”); (ii) securities issued by the U.S. government or its agencies and instrumentalities; (iii) CLOs and similar investments; and (iv) other short-term fixed income securities.
76 | THE RYDEX FUNDS ANNUAL REPORT |
PERFORMANCE REPORT AND FUND PROFILE (Unaudited)(concluded) | March 31, 2015 |
Inception Dates: | |
A-Class | March 31, 2004 |
C-Class | February 20, 2004 |
H-Class | February 20, 2004 |
The Fund invests principally in derivative investments such as swap agreements and futures contracts.
Largest Holding (% of Total Net Assets) | |
Guggenheim Strategy Fund I | 22.5% |
Total | 22.5% |
“Largest Holding” excludes any temporary cash or derivative instruments. |
Cumulative Fund Performance*
![](https://capedge.com/proxy/N-CSR/0001398344-15-003814/rtb1_20.jpg)
![](https://capedge.com/proxy/N-CSR/0001398344-15-003814/rtb1_21.jpg)
Average Annual Returns*
Periods Ended March 31, 2015
1 Year | 5 Year | 10 Year | |
A-Class Shares | -13.47% | -17.83% | -12.56% |
A-Class Shares with sales charge† | -17.58% | -18.62% | -12.98% |
C-Class Shares | -14.09% | -18.45% | -13.23% |
C-Class Shares with CDSC‡ | -14.95% | -18.45% | -13.23% |
H-Class Shares | -13.47% | -17.84% | -12.58% |
S&P MidCap 400 Index | 12.19% | 15.72% | 10.32% |
* | The performance data above represents past performance that is not predictive of future results. The investment return and principal value of an investment in the Fund will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Returns are historical and include changes in principal and reinvested dividends and capital gains and do not reflect the effect of taxes. The S&P MidCap 400 Index is an unmanaged index and, unlike the Fund, has no management fees or operating expenses to reduce its reported return. The graphs are based on A-Class shares and H-Class shares only; performance for C-Class shares will vary due to differences in fee structures. |
† | Fund returns are calculated using the maximum sales charge of 4.75%. |
‡ | Fund returns include a CDSC of 1% if redeemed within 12 months of purchase. |
THE RYDEX FUNDS ANNUAL REPORT | 77 |
SCHEDULE OF INVESTMENTS | March 31, 2015 |
INVERSE MID-CAP STRATEGY FUND |
Shares | Value | |||||||
MUTUAL FUNDS† - 22.5% | ||||||||
Guggenheim Strategy Fund I1 | 28,422 | $ | 707,700 | |||||
Total Mutual Funds | ||||||||
(Cost $708,770) | 707,700 | |||||||
Face Amount | ||||||||
REPURCHASE AGREEMENTS††,2 - 93.9% | ||||||||
HSBC Group issued 03/31/15 at 0.03% due 04/01/15 | $ | 2,320,800 | 2,320,800 | |||||
RBC Capital Markets issued 03/31/15 at 0.05% due 04/01/15 | 354,668 | 354,668 | ||||||
UMB Financial Corp. issued 03/31/15 at 0.03% due 04/01/15 | 284,679 | 284,679 | ||||||
Total Repurchase Agreements | ||||||||
(Cost $2,960,147) | 2,960,147 | |||||||
Total Investments - 116.4% | ||||||||
(Cost $3,668,917) | $ | 3,667,847 | ||||||
Other Assets & Liabilities, net - (16.4)% | (516,713 | ) | ||||||
Total Net Assets - 100.0% | $ | 3,151,134 | ||||||
Units | Unrealized Loss | |||||||
OTC EQUITY INDEX SWAP AGREEMENTS SOLD SHORT†† | ||||||||
Barclays Bank plc April 2015 S&P MidCap 400 Index Swap, Terminating 04/30/153 (Notional Value $633,312) | 416 | $ | (6,721 | ) | ||||
Goldman Sachs International April 2015 S&P MidCap 400 Index Swap, Terminating 04/28/153 (Notional Value $649,917) | �� | 426 | (9,785 | ) | ||||
Credit Suisse Capital, LLC April 2015 S&P MidCap 400 Index Swap, Terminating 04/28/153 (Notional Value $1,864,745) | 1,224 | (28,026 | ) | |||||
(Total Notional Value $3,147,974) | $ | (44,532 | ) |
† | Value determined based on Level 1 inputs — See Note 4. |
†† | Value determined based on Level 2 inputs — See Note 4. |
1 | Investment in a product that is managed by and/or pays a management fee to a party related to the Adviser — See Note 12. |
2 | Repurchase Agreements — See Note 5. |
3 | Total Return based on S&P MidCap 400 Index +/- financing at a variable rate. |
plc — Public Limited Company |
78 | THE RYDEX FUNDS ANNUAL REPORT | SEE NOTES TO FINANCIAL STATEMENTS. |
INVERSE MID-CAP STRATEGY FUND |
STATEMENT OF ASSETS AND LIABILITIES
March 31, 2015
Assets: | ||||
Investments, at value (cost $708,770) | $ | 707,700 | ||
Repurchase agreements, at value (cost $2,960,147) | 2,960,147 | |||
Total investments (cost $3,668,917) | 3,667,847 | |||
Segregated cash with broker | 605,986 | |||
Receivables: | ||||
Fund shares sold | 20,198 | |||
Variation margin | 1,445 | |||
Dividends | 844 | |||
Interest | 3 | |||
Total assets | 4,296,323 | |||
Liabilities: | ||||
Unrealized depreciation on swap agreements | 44,532 | |||
Payable for: | ||||
Fund shares redeemed | 1,084,754 | |||
Swap settlement | 8,065 | |||
Management fees | 2,808 | |||
Securities purchased | 844 | |||
Distribution and service fees | 836 | |||
Transfer agent and administrative fees | 780 | |||
Portfolio accounting fees | 312 | |||
Miscellaneous | 2,258 | |||
Total liabilities | 1,145,189 | |||
Commitments and contingent liabilities (Note 15) | — | |||
Net assets | $ | 3,151,134 | ||
Net assets consist of: | ||||
Paid in capital | $ | 16,611,368 | ||
Accumulated net investment loss | (13,602 | ) | ||
Accumulated net realized loss on investments | (13,401,030 | ) | ||
Net unrealized depreciation on investments | (45,602 | ) | ||
Net assets | $ | 3,151,134 | ||
A-Class: | ||||
Net assets | $ | 47,180 | ||
Capital shares outstanding | 1,534 | |||
Net asset value per share | $ | 30.76 | ||
Maximum offering price per share (Net asset value divided by 95.25%) | $ | 32.29 | ||
C-Class: | ||||
Net assets | $ | 89,072 | ||
Capital shares outstanding | 3,163 | |||
Net asset value per share | $ | 28.16 | ||
H-Class: | ||||
Net assets | $ | 3,014,882 | ||
Capital shares outstanding | 98,191 | |||
Net asset value per share | $ | 30.70 |
STATEMENT OF OPERATIONS
Year Ended March 31, 2015
Investment Income:
Dividends | $ | 9,691 | ||
Interest | 529 | |||
Total investment income | 10,220 | |||
Expenses: | ||||
Management fees | 34,349 | |||
Transfer agent and administrative fees | 9,541 | |||
Distribution and service fees: | ||||
A-Class | 380 | |||
C-Class | 1,239 | |||
H-Class | 8,852 | |||
Portfolio accounting fees | 3,816 | |||
Custodian fees | 445 | |||
Trustees’ fees* | 279 | |||
Miscellaneous | 5,121 | |||
Total expenses | 64,022 | |||
Net investment loss | (53,802 | ) | ||
Net Realized and Unrealized Gain (Loss): | ||||
Net realized gain (loss) on: | ||||
Investments | (922 | ) | ||
Swap agreements | (318,367 | ) | ||
Futures contracts | (64,785 | ) | ||
Net realized loss | (384,074 | ) | ||
Net change in unrealized appreciation (depreciation) on: | ||||
Investments | (1,070 | ) | ||
Swap agreements | 8,735 | |||
Net change in unrealized appreciation (depreciation) | 7,665 | |||
Net realized and unrealized loss | (376,409 | ) | ||
Net decrease in net assets resulting from operations | $ | (430,211 | ) |
* | Relates to Trustees not deemed “interested persons” within the meaning of Section 2(a)(19) of the 1940 Act. |
SEE NOTES TO FINANCIAL STATEMENTS. | THE RYDEX FUNDS ANNUAL REPORT | 79 |
INVERSE MID-CAP STRATEGY FUND |
STATEMENTS OF CHANGES IN NET ASSETS
Year Ended March 31, 2015 | Year Ended March 31, 2014 | |||||||
Increase (Decrease) in Net Assets from Operations: | ||||||||
Net investment loss | $ | (53,802 | ) | $ | (65,876 | ) | ||
Net realized loss on investments | (384,074 | ) | (1,019,261 | ) | ||||
Net change in unrealized appreciation (depreciation) on investments | 7,665 | (18,278 | ) | |||||
Net decrease in net assets resulting from operations | (430,211 | ) | (1,103,415 | ) | ||||
Capital share transactions: | ||||||||
Proceeds from sale of shares | ||||||||
A-Class | 718,727 | 581,605 | ||||||
C-Class | 110,445 | 465,260 | ||||||
H-Class | 22,439,039 | 36,107,700 | ||||||
Cost of shares redeemed | ||||||||
A-Class | (734,756 | ) | (499,127 | ) | ||||
C-Class | (134,631 | ) | (494,432 | ) | ||||
H-Class | (22,866,538 | ) | (32,658,493 | ) | ||||
Net increase (decrease) from capital share transactions | (467,714 | ) | 3,502,513 | |||||
Net increase (decrease) in net assets | (897,925 | ) | 2,399,098 | |||||
Net assets: | ||||||||
Beginning of year | 4,049,059 | 1,649,961 | ||||||
End of year | $ | 3,151,134 | $ | 4,049,059 | ||||
Accumulated net investment loss at end of year | $ | (13,602 | ) | $ | (15,573 | ) | ||
Capital share activity: | ||||||||
Shares sold | ||||||||
A-Class | 20,062 | 15,265 | * | |||||
C-Class | 3,394 | 11,703 | * | |||||
H-Class | 668,274 | 900,020 | * | |||||
Shares redeemed | ||||||||
A-Class | (21,136 | ) | (13,229 | )* | ||||
C-Class | (4,230 | ) | (12,899 | )* | ||||
H-Class | (677,878 | ) | (823,824 | )* | ||||
Net increase (decrease) in shares | (11,514 | ) | 77,036 | * |
* | Capital share activity for the period presented through February 7, 2014 has been restated to reflect a 1:3 reverse share split effective February 7, 2014. See Note 14 in Notes to Financial Statements. |
80 | THE RYDEX FUNDS ANNUAL REPORT | SEE NOTES TO FINANCIAL STATEMENTS. |
INVERSE MID-CAP STRATEGY FUND |
FINANCIAL HIGHLIGHTS
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.
A-Class | Year Ended March 31, 2015 | Year Ended March 31, 2014d | Year Ended March 28, 2013d | Year Ended March 31, 2012d | Year Ended March 31, 2011d | |||||||||||||||
Per Share Data | ||||||||||||||||||||
Net asset value, beginning of period | $ | 35.55 | $ | 44.64 | $ | 54.64 | $ | 61.14 | $ | 82.10 | ||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||
Net investment income (loss)a | (.48 | ) | (.64 | ) | (.84 | ) | (1.02 | ) | (1.17 | ) | ||||||||||
Net gain (loss) on investments (realized and unrealized) | (4.31 | ) | (8.45 | ) | (9.16 | ) | (5.48 | ) | (19.79 | ) | ||||||||||
Total from investment operations | (4.79 | ) | (9.09 | ) | (10.00 | ) | (6.50 | ) | (20.96 | ) | ||||||||||
Net asset value, end of period | $ | 30.76 | $ | 35.55 | $ | 44.64 | $ | 54.64 | $ | 61.14 | ||||||||||
Total Returnb | (13.47 | %) | (20.36 | %) | (18.29 | %) | (10.65 | %) | (25.54 | %) | ||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||
Net assets, end of period (in thousands) | $ | 47 | $ | 93 | $ | 26 | $ | 115 | $ | 268 | ||||||||||
Ratios to average net assets: | ||||||||||||||||||||
Net investment income (loss) | (1.40 | %) | (1.65 | %) | (1.52 | %) | (1.63 | %) | (1.54 | %) | ||||||||||
Total expensesc | 1.66 | % | 1.67 | % | 1.64 | % | 1.66 | % | 1.69 | % | ||||||||||
Portfolio turnover rate | 38 | % | — | — | — | — |
C-Class | Year Ended March 31, 2015 | Year Ended March 31, 2014d | Year Ended March 28, 2013d | Year Ended March 31, 2012d | Year Ended March 31, 2011d | |||||||||||||||
Per Share Data | ||||||||||||||||||||
Net asset value, beginning of period | $ | 32.78 | $ | 41.49 | $ | 51.18 | $ | 57.72 | $ | 78.09 | ||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||
Net investment income (loss)a | (.67 | ) | (.90 | ) | (1.14 | ) | (1.44 | ) | (1.65 | ) | ||||||||||
Net gain (loss) on investments (realized and unrealized) | (3.95 | ) | (7.81 | ) | (8.55 | ) | (5.10 | ) | (18.72 | ) | ||||||||||
Total from investment operations | (4.62 | ) | (8.71 | ) | (9.69 | ) | (6.54 | ) | (20.37 | ) | ||||||||||
Net asset value, end of period | $ | 28.16 | $ | 32.78 | $ | 41.49 | $ | 51.18 | $ | 57.72 | ||||||||||
Total Returnb | (14.09 | %) | (20.99 | %) | (18.93 | %) | (11.33 | %) | (26.09 | %) | ||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||
Net assets, end of period (in thousands) | $ | 89 | $ | 131 | $ | 216 | $ | 121 | $ | 337 | ||||||||||
Ratios to average net assets: | ||||||||||||||||||||
Net investment income (loss) | (2.13 | %) | (2.40 | %) | (2.29 | %) | (2.39 | %) | (2.29 | %) | ||||||||||
Total expensesc | 2.41 | % | 2.42 | % | 2.40 | % | 2.42 | % | 2.44 | % | ||||||||||
Portfolio turnover rate | 38 | % | — | — | — | — |
SEE NOTES TO FINANCIAL STATEMENTS. | THE RYDEX FUNDS ANNUAL REPORT | 81 |
INVERSE MID-CAP STRATEGY FUND |
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.
H-Class | Year Ended March 31, 2015 | Year Ended March 31, 2014d | Year Ended March 28, 2013d | Year Ended March 31, 2012d | Year Ended March 31, 2011d | |||||||||||||||
Per Share Data | ||||||||||||||||||||
Net asset value, beginning of period | $ | 35.49 | $ | 44.59 | $ | 54.57 | $ | 61.08 | $ | 82.06 | ||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||
Net investment income (loss)a | (.47 | ) | (.66 | ) | (.81 | ) | (1.05 | ) | (1.20 | ) | ||||||||||
Net gain (loss) on investments (realized and unrealized) | (4.32 | ) | (8.44 | ) | (9.17 | ) | (5.46 | ) | (19.78 | ) | ||||||||||
Total from investment operations | (4.79 | ) | (9.10 | ) | (9.98 | ) | (6.51 | ) | (20.98 | ) | ||||||||||
Net asset value, end of period | $ | 30.70 | $ | 35.49 | $ | 44.59 | $ | 54.57 | $ | 61.08 | ||||||||||
Total Returnb | (13.47 | %) | (20.39 | %) | (18.31 | %) | (10.66 | %) | (25.56 | %) | ||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||
Net assets, end of period (in thousands) | $ | 3,015 | $ | 3,825 | $ | 1,409 | $ | 1,578 | $ | 1,845 | ||||||||||
Ratios to average net assets: | ||||||||||||||||||||
Net investment income (loss) | (1.38 | %) | (1.65 | %) | (1.53 | %) | (1.64 | %) | (1.53 | %) | ||||||||||
Total expensesc | 1.65 | % | 1.67 | % | 1.65 | % | 1.67 | % | 1.69 | % | ||||||||||
Portfolio turnover rate | 38 | % | — | — | — | — |
a | Net investment income (loss) per share was computed using average shares outstanding throughout the period. |
b | Total return does not reflect the impact of any applicable sales charges. |
c | Does not include expenses of the underlying funds in which the Fund invests. |
d | Reverse share split — Per share amounts for the periods presented through February 7, 2014 have been restated to reflect a 1:3 reverse share split effective February 7, 2014. See Note 14 in Notes to Financial Statements. |
82 | THE RYDEX FUNDS ANNUAL REPORT | SEE NOTES TO FINANCIAL STATEMENTS. |
PERFORMANCE REPORT AND FUND PROFILE (Unaudited) | March 31, 2015 |
RUSSELL 2000® 1.5x STRATEGY FUND
OBJECTIVE: Seeks to provide investment results that correlate, before fees and expenses, to the performance of a specific benchmark for small-cap securities on a daily basis. The Fund’s current benchmark is 150% of the performance of the Russell 2000® Index (the “underlying index”). The Fund does not seek to achieve its investment objective over a period of time greater than one day.
For the one-year period ended March 31, 2015, Russell 2000® 1.5x Strategy Fund maintained a daily correlation of over 99% to its benchmark of 150% of the daily price movement of the Russell 2000 Index. Russell 2000® 1.5x Strategy Fund H-Class returned 9.48%, while the Russell 2000 Index returned 8.21% over the same time period.
Among sectors, the biggest performance contributors to the underlying index during the period were Health Care and Financials. The Energy sector detracted the most from return, followed by the Materials sector.
Qorvo, Inc., InterMune, Inc., and Puma Biotechnology, Inc. were the largest contributors to performance of the underlying index for the year. CARBO Ceramics, Inc., Civeo Corp., and GT Advanced Technologies, Inc. were the leading detractors from performance of the underlying index for the year.
Derivatives in the Fund were used to help provide exposure to the composition of the benchmark in the highest efficient manner and to provide leverage, not for hedging purposes. The results of derivatives use during the period were within our expectations and contributed to the Fund’s performance.
Due to the compounding of daily returns, leveraged and inverse funds’ returns over periods other than one day will likely differ in amount and possibly direction from the benchmark return for the same period. Investors should monitor their leveraged and inverse funds’ holdings to ensure that they are consistent with their strategies, as frequently as daily.
The effects of compounding may cause the longer-term correlation of the Fund to its benchmark to diminish. The apparent discrepancy between the leveraged and unleveraged indices is the result of compounding, which is described briefly on page 6 of this report.
The Fund invests excess cash into the Guggenheim Strategy Funds which, in turn, invest in a diversified portfolio of debt securities and financial instruments providing exposure to fixed-income markets. The investment objective of the Guggenheim Strategy Funds is to seek a high level of income consistent with the preservation of capital. For the one year period ended March 31,2015, investment in the Guggenheim Strategy Funds benefited Fund performance relative to investing in other short-term investments such as overnight repurchase agreements.
Performance displayed represents past performance, which is no guarantee of future results.
Holdings Diversification (Market Exposure as % of Net Assets)
![](https://capedge.com/proxy/N-CSR/0001398344-15-003814/rtb1_22.jpg)
“Holdings Diversification (Market Exposure as % of Net Assets)” excludes any temporary cash investments or investments in Guggenheim Strategy Funds Trust mutual funds. Investments in those Funds do not provide “market exposure” to meet the fund’s investment objective, but will significantly increase the portfolio’s exposure to certain other asset categories (and their associated risks), which may cause the Fund to deviate from its principal investment strategy, including: (i) high yield, high risk debt securities rated below the top four long-term rating categories by a nationally recognized statistical rating organization (also known as “junk bonds”); (ii) securities issued by the U.S. government or its agencies and instrumentalities; (iii) CLOs and similar investments; and (iv) other short-term fixed income securities.
THE RYDEX FUNDS ANNUAL REPORT | 83 |
PERFORMANCE REPORT AND FUND PROFILE (Unaudited)(concluded) | March 31, 2015 |
Inception Dates: | |
A-Class | March 31, 2004 |
C-Class | January 23, 2001 |
H-Class | November 1, 2000 |
Ten Largest Holdings (% of Total Net Assets) | |
Guggenheim Strategy Fund I | 6.6% |
Qorvo, Inc. | 0.4% |
Isis Pharmaceuticals, Inc. | 0.3% |
Puma Biotechnology, Inc. | 0.2% |
Office Depot, Inc. | 0.2% |
Ultimate Software Group, Inc. | 0.2% |
JetBlue Airways Corp. | 0.2% |
Brunswick Corp. | 0.2% |
Graphic Packaging Holding Co. | 0.2% |
DexCom, Inc. | 0.2% |
Top Ten Total | 8.7% |
“Ten Largest Holdings” exclude any temporary cash or derivative investments. |
Cumulative Fund Performance*
![](https://capedge.com/proxy/N-CSR/0001398344-15-003814/rtb1_23.jpg)
![](https://capedge.com/proxy/N-CSR/0001398344-15-003814/rtb1_24.jpg)
Average Annual Returns*
Periods Ended March 31, 2015
1 Year | 5 Year | 10 Year | |
A-Class Shares | 9.48% | 18.22% | 8.22% |
A-Class Shares with sales charge† | 4.29% | 17.07% | 7.69% |
C-Class Shares | 8.64% | 17.32% | 7.39% |
C-Class Shares with CDSC‡ | 7.64% | 17.32% | 7.39% |
H-Class Shares | 9.48% | 18.20% | 8.20% |
Russell 2000 Index | 8.21% | 14.57% | 8.82% |
* | The performance data above represents past performance that is not predictive of future results. The investment return and principal value of an investment in the Fund will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Returns are historical and include changes in principal and reinvested dividends and capital gains and do not reflect the effect of taxes. The Russell 2000 Index is an unmanaged index and, unlike the Fund, has no management fees or operating expenses to reduce its reported return. The graphs are based on A-Class shares and H-Class shares only; performance for C-Class shares will vary due to differences in fee structures. |
† | Fund returns are calculated using the maximum sales charge of 4.75%. |
‡ | Fund returns include a CDSC of 1% if redeemed within 12 months of purchase. |
84 | THE RYDEX FUNDS ANNUAL REPORT |
SCHEDULE OF INVESTMENTS | March 31, 2015 |
RUSSELL 2000® 1.5x STRATEGY FUND |
Shares | Value | |||||||
COMMON STOCKS† - 66.2% | ||||||||
FINANCIAL - 15.7% | ||||||||
LaSalle Hotel Properties | 857 | $ | 33,304 | |||||
Investors Bancorp, Inc. | 2,753 | 32,266 | ||||||
Highwoods Properties, Inc. | 693 | 31,727 | ||||||
RLJ Lodging Trust | 1,006 | 31,498 | ||||||
CubeSmart | 1,245 | 30,067 | ||||||
First American Financial Corp. | 822 | 29,329 | ||||||
Prosperity Bancshares, Inc. | 536 | 28,129 | ||||||
Stifel Financial Corp.* | 503 | 28,041 | ||||||
CNO Financial Group, Inc. | 1,571 | 27,052 | ||||||
EPR Properties | 440 | 26,413 | ||||||
Sunstone Hotel Investors, Inc. | 1,582 | 26,372 | ||||||
Webster Financial Corp. | 695 | 25,750 | ||||||
Sovran Self Storage, Inc. | 272 | 25,552 | ||||||
Pebblebrook Hotel Trust | 548 | 25,520 | ||||||
Strategic Hotels & Resorts, Inc.* | 2,052 | 25,506 | ||||||
MGIC Investment Corp.* | 2,602 | 25,056 | ||||||
Sun Communities, Inc. | 370 | 24,686 | ||||||
Radian Group, Inc. | 1,469 | 24,664 | ||||||
GEO Group, Inc. | 558 | 24,407 | ||||||
FirstMerit Corp. | 1,271 | 24,225 | ||||||
Bank of the Ozarks, Inc. | 652 | 24,078 | ||||||
MarketAxess Holdings, Inc. | 290 | 24,041 | ||||||
Medical Properties Trust, Inc. | 1,593 | 23,481 | ||||||
Umpqua Holdings Corp. | 1,281 | 22,008 | ||||||
DCT Industrial Trust, Inc. | 633 | 21,940 | ||||||
Colony Capital, Inc. — Class A | 826 | 21,410 | ||||||
Primerica, Inc. | 420 | 21,378 | ||||||
DiamondRock Hospitality Co. | 1,505 | 21,266 | ||||||
PRA Group, Inc.* | 386 | 20,968 | ||||||
Healthcare Realty Trust, Inc. | 739 | 20,529 | ||||||
National Health Investors, Inc. | 288 | 20,451 | ||||||
Ryman Hospitality Properties, Inc. | 334 | 20,344 | ||||||
United Bankshares, Inc. | 531 | 19,955 | ||||||
Susquehanna Bancshares, Inc. | 1,443 | 19,784 | ||||||
Janus Capital Group, Inc. | 1,150 | 19,768 | ||||||
PrivateBancorp, Inc. — Class A | 551 | 19,379 | ||||||
First Citizens BancShares, Inc. — Class A | 74 | 19,217 | ||||||
Hancock Holding Co. | 633 | 18,901 | ||||||
Acadia Realty Trust | 523 | 18,243 | ||||||
First Industrial Realty Trust, Inc. | 848 | 18,173 | ||||||
Cousins Properties, Inc. | 1,691 | 17,926 | ||||||
WisdomTree Investments, Inc. | 828 | 17,768 | ||||||
FNB Corp. | 1,335 | 17,542 | ||||||
Cathay General Bancorp | 613 | 17,440 | ||||||
RLI Corp. | 330 | 17,295 | ||||||
Western Alliance Bancorporation* | 581 | 17,221 | ||||||
BancorpSouth, Inc. | 739 | 17,160 | ||||||
Wintrust Financial Corp. | 359 | 17,117 | ||||||
Texas Capital Bancshares, Inc.* | 351 | 17,076 | ||||||
Washington Federal, Inc. | 779 | 16,985 | ||||||
American Equity Investment Life Holding Co. | 572 | 16,662 | ||||||
Hudson Pacific Properties, Inc. | 502 | 16,661 | ||||||
Financial Engines, Inc.1 | 396 | 16,564 | ||||||
Valley National Bancorp | 1,744 | 16,463 | ||||||
New Residential Investment Corp. | 1,084 | 16,293 | ||||||
Alexander & Baldwin, Inc. | 375 | 16,193 | ||||||
DuPont Fabros Technology, Inc. | 491 | 16,046 | ||||||
MB Financial, Inc. | 511 | 15,999 | ||||||
Lexington Realty Trust | 1,581 | 15,541 | ||||||
UMB Financial Corp. | 290 | 15,338 | ||||||
IBERIABANK Corp. | 242 | 15,253 | ||||||
Sabra Health Care REIT, Inc. | 453 | 15,017 | ||||||
Invesco Mortgage Capital, Inc. | 946 | 14,691 | ||||||
EastGroup Properties, Inc. | 241 | 14,494 | ||||||
Blackhawk Network Holdings, Inc.* | 404 | 14,451 | ||||||
Kennedy-Wilson Holdings, Inc. | 552 | 14,429 | ||||||
Glacier Bancorp, Inc. | 573 | 14,411 | ||||||
WageWorks, Inc.* | 270 | 14,399 | ||||||
Chambers Street Properties | 1,822 | 14,357 | ||||||
Chesapeake Lodging Trust | 422 | 14,276 | ||||||
Washington Real Estate Investment Trust | 512 | 14,147 | ||||||
Home BancShares, Inc. | 417 | 14,132 | ||||||
Capitol Federal Financial, Inc. | 1,101 | 13,762 | ||||||
Symetra Financial Corp. | 580 | 13,607 | ||||||
First Financial Bankshares, Inc. | 492 | 13,599 | ||||||
Hatteras Financial Corp. | 742 | 13,475 | ||||||
Empire State Realty Trust, Inc. — Class A | 705 | 13,261 | ||||||
AmTrust Financial Services, Inc. | 231 | 13,164 | ||||||
Mack-Cali Realty Corp. | 681 | 13,130 | ||||||
Evercore Partners, Inc. — Class A | 254 | 13,122 | ||||||
New York REIT, Inc. | 1,248 | 13,079 | ||||||
Kemper Corp. | 334 | 13,012 | ||||||
CVB Financial Corp. | 815 | 12,991 | ||||||
Old National Bancorp | 905 | 12,842 | ||||||
Columbia Banking System, Inc. | 441 | 12,776 | ||||||
South State Corp. | 186 | 12,721 | ||||||
Retail Opportunity Investments Corp. | 694 | 12,700 | ||||||
Education Realty Trust, Inc. | 358 | 12,666 | ||||||
BGC Partners, Inc. — Class A | 1,340 | 12,663 | ||||||
EverBank Financial Corp. | 701 | 12,639 | ||||||
Equity One, Inc. | 473 | 12,624 | ||||||
Trustmark Corp. | 519 | 12,601 | ||||||
Selective Insurance Group, Inc. | 433 | 12,579 | ||||||
Potlatch Corp. | 312 | 12,492 | ||||||
PS Business Parks, Inc. | 150 | 12,456 | ||||||
LTC Properties, Inc. | 268 | 12,328 | ||||||
Pennsylvania Real Estate Investment Trust | 529 | 12,289 | ||||||
Pinnacle Financial Partners, Inc. | 274 | 12,182 | ||||||
PennyMac Mortgage Investment Trust | 569 | 12,114 | ||||||
Government Properties Income Trust | 525 | 11,996 | ||||||
Ellie Mae, Inc.* | 216 | 11,947 | ||||||
American Assets Trust, Inc. | 276 | 11,945 | ||||||
Montpelier Re Holdings Ltd. | 300 | 11,531 | ||||||
Redwood Trust, Inc. | 638 | 11,401 |
SEE NOTES TO FINANCIAL STATEMENTS. | THE RYDEX FUNDS ANNUAL REPORT | 85 |
SCHEDULE OF INVESTMENTS (continued) | March 31, 2015 |
RUSSELL 2000® 1.5x STRATEGY FUND |
Shares | Value | |||||||
Hilltop Holdings, Inc.* | 578 | $ | 11,236 | |||||
Aircastle Ltd. | 497 | 11,163 | ||||||
Argo Group International Holdings Ltd. | 222 | 11,133 | ||||||
CYS Investments, Inc. | 1,246 | 11,102 | ||||||
Community Bank System, Inc. | 313 | 11,077 | ||||||
Ramco-Gershenson Properties Trust | 594 | 11,048 | ||||||
FelCor Lodging Trust, Inc. | 955 | 10,973 | ||||||
Associated Estates Realty Corp. | 443 | 10,933 | ||||||
International Bancshares Corp. | 419 | 10,907 | ||||||
BofI Holding, Inc.* | 116 | 10,793 | ||||||
Horace Mann Educators Corp. | 313 | 10,705 | ||||||
Credit Acceptance Corp.* | 54 | 10,530 | ||||||
Parkway Properties, Inc. | 606 | 10,514 | ||||||
National Penn Bancshares, Inc. | 953 | 10,264 | ||||||
STAG Industrial, Inc. | 435 | 10,231 | ||||||
First Midwest Bancorp, Inc. | 579 | 10,057 | ||||||
Hersha Hospitality Trust | 1,543 | 9,983 | ||||||
Springleaf Holdings, Inc.* | 189 | 9,785 | ||||||
HFF, Inc. — Class A | 252 | 9,460 | ||||||
PHH Corp.* | 389 | 9,402 | ||||||
Sterling Bancorp | 697 | 9,347 | ||||||
Summit Hotel Properties, Inc. | 658 | 9,258 | ||||||
Enstar Group Ltd.* | 65 | 9,221 | ||||||
Altisource Residential Corp. | 439 | 9,158 | ||||||
Home Loan Servicing Solutions Ltd. | 546 | 9,031 | ||||||
St. Joe Co.* | 486 | 9,020 | ||||||
Physicians Realty Trust | 512 | 9,016 | ||||||
Franklin Street Properties Corp. | 692 | 8,871 | ||||||
BBCN Bancorp, Inc. | 612 | 8,856 | ||||||
Westamerica Bancorporation | 203 | 8,772 | ||||||
ARMOUR Residential REIT, Inc. | 2,745 | 8,702 | ||||||
Capstead Mortgage Corp. | 736 | 8,663 | ||||||
Provident Financial Services, Inc. | 464 | 8,654 | ||||||
Greenhill & Company, Inc. | 218 | 8,644 | ||||||
Astoria Financial Corp. | 666 | 8,625 | ||||||
Chatham Lodging Trust | 293 | 8,617 | ||||||
Northwest Bancshares, Inc. | 727 | 8,615 | ||||||
Independent Bank Corp. | 195 | 8,555 | ||||||
iStar Financial, Inc.* | 653 | 8,489 | ||||||
NBT Bancorp, Inc. | 336 | 8,420 | ||||||
Ambac Financial Group, Inc.* | 347 | 8,397 | ||||||
Investment Technology Group, Inc.* | 277 | 8,396 | ||||||
Park National Corp. | 98 | 8,385 | ||||||
Encore Capital Group, Inc.* | 198 | 8,235 | ||||||
WesBanco, Inc. | 252 | 8,210 | ||||||
Essent Group Ltd.* | 342 | 8,177 | ||||||
Simmons First National Corp. — Class A | 175 | 7,957 | ||||||
Union Bankshares Corp. | 357 | 7,929 | ||||||
First Financial Bancorp | 444 | 7,908 | ||||||
Chemical Financial Corp. | 252 | 7,903 | ||||||
CoreSite Realty Corp. | 162 | 7,886 | ||||||
CyrusOne, Inc. | 253 | 7,873 | ||||||
Eagle Bancorp, Inc.* | 203 | 7,795 | ||||||
Starwood Waypoint Residential Trust | 301 | 7,781 | ||||||
Apollo Commercial Real Estate Finance, Inc. | 447 | 7,679 | ||||||
Nelnet, Inc. — Class A | 161 | 7,619 | ||||||
Terreno Realty Corp. | 329 | 7,501 | ||||||
Boston Private Financial Holdings, Inc. | 616 | 7,484 | ||||||
Alexander’s, Inc. | 16 | 7,305 | ||||||
Renasant Corp. | 242 | 7,272 | ||||||
United Community Banks, Inc. | 385 | 7,269 | ||||||
Infinity Property & Casualty Corp. | 88 | 7,220 | ||||||
Inland Real Estate Corp. | 672 | 7,184 | ||||||
Kite Realty Group Trust | 253 | 7,127 | ||||||
American Capital Mortgage Investment Corp. | 394 | 7,076 | ||||||
Select Income REIT | 283 | 7,072 | ||||||
Virtus Investment Partners, Inc. | 54 | 7,062 | ||||||
LegacyTexas Financial Group, Inc. | 307 | 6,978 | ||||||
Rexford Industrial Realty, Inc. | 441 | 6,972 | ||||||
Greenlight Capital Re Ltd. — Class A* | 218 | 6,932 | ||||||
Banner Corp. | 151 | 6,931 | ||||||
Stewart Information Services Corp. | 165 | 6,706 | ||||||
AMERISAFE, Inc. | 143 | 6,614 | ||||||
Piper Jaffray Cos.* | 126 | 6,610 | ||||||
Excel Trust, Inc. | 470 | 6,589 | ||||||
First Merchants Corp. | 277 | 6,521 | ||||||
First Commonwealth Financial Corp. | 724 | 6,516 | ||||||
Employers Holdings, Inc. | 241 | 6,505 | ||||||
S&T Bancorp, Inc. | 229 | 6,499 | ||||||
Investors Real Estate Trust | 861 | 6,458 | ||||||
New York Mortgage Trust, Inc. | 806 | 6,255 | ||||||
Navigators Group, Inc.* | 80 | 6,227 | ||||||
Third Point Reinsurance Ltd.* | 437 | 6,184 | ||||||
Universal Insurance Holdings, Inc. | 240 | 6,142 | ||||||
Tompkins Financial Corp. | 114 | 6,139 | ||||||
Cohen & Steers, Inc. | 149 | 6,102 | ||||||
Safety Insurance Group, Inc. | 99 | 5,915 | ||||||
Northfield Bancorp, Inc. | 390 | 5,780 | ||||||
Maiden Holdings Ltd. | 385 | 5,710 | ||||||
City Holding Co. | 121 | 5,691 | ||||||
State Bank Financial Corp. | 270 | 5,670 | ||||||
OFG Bancorp | 347 | 5,663 | ||||||
STORE Capital Corp. | 242 | 5,651 | ||||||
Aviv REIT, Inc. | 152 | 5,548 | ||||||
Brookline Bancorp, Inc. | 543 | 5,457 | ||||||
Rouse Properties, Inc. | 286 | 5,423 | ||||||
Wilshire Bancorp, Inc. | 540 | 5,384 | ||||||
First Potomac Realty Trust | 452 | 5,374 | ||||||
Berkshire Hills Bancorp, Inc. | 193 | 5,346 | ||||||
TowneBank | 331 | 5,322 | ||||||
Southside Bancshares, Inc. | 185 | 5,308 | ||||||
Universal Health Realty Income Trust | 93 | 5,231 | ||||||
Lakeland Financial Corp. | 128 | 5,194 | ||||||
Hanmi Financial Corp. | 245 | 5,182 | ||||||
WSFS Financial Corp. | 68 | 5,143 | ||||||
Capital Bank Financial Corp. — Class A* | 186 | 5,135 |
86 | THE RYDEX FUNDS ANNUAL REPORT | SEE NOTES TO FINANCIAL STATEMENTS. |
SCHEDULE OF INVESTMENTS (continued) | March 31, 2015 |
RUSSELL 2000® 1.5x STRATEGY FUND |
Shares | Value | |||||||
United Financial Bancorp, Inc. | 413 | $ | 5,134 | |||||
Oritani Financial Corp. | 352 | 5,122 | ||||||
Ameris Bancorp | 194 | 5,120 | ||||||
National General Holdings Corp. | 273 | 5,105 | ||||||
Sandy Spring Bancorp, Inc. | 193 | 5,062 | ||||||
United Fire Group, Inc. | 159 | 5,051 | ||||||
TrustCo Bank Corp. NY | 729 | 5,016 | ||||||
First BanCorp* | 801 | 4,966 | ||||||
Cass Information Systems, Inc. | 88 | 4,940 | ||||||
Anworth Mortgage Asset Corp. | 968 | 4,927 | ||||||
Ashford Hospitality Trust, Inc. | 512 | 4,925 | ||||||
Cardinal Financial Corp. | 246 | 4,915 | ||||||
Cedar Realty Trust, Inc. | 652 | 4,883 | ||||||
Western Asset Mortgage Capital Corp.1 | 321 | 4,841 | ||||||
Customers Bancorp, Inc.* | 197 | 4,799 | ||||||
Silver Bay Realty Trust Corp. | 296 | 4,783 | ||||||
Monmouth Real Estate Investment Corp. | 430 | 4,777 | ||||||
Urstadt Biddle Properties, Inc. — Class A | 207 | 4,773 | ||||||
Flushing Financial Corp. | 233 | 4,676 | ||||||
Walter Investment Management Corp.*,1 | 289 | 4,667 | ||||||
Cowen Group, Inc. — Class A* | 887 | 4,612 | ||||||
FBL Financial Group, Inc. — Class A | 74 | 4,589 | ||||||
Resource Capital Corp. | 993 | 4,508 | ||||||
American Residential Properties, Inc.* | 248 | 4,462 | ||||||
Agree Realty Corp. | 134 | 4,418 | ||||||
World Acceptance Corp.* | 60 | 4,375 | ||||||
National Western Life Insurance Co. — Class A | 17 | 4,323 | ||||||
Washington Trust Bancorp, Inc. | 113 | 4,315 | ||||||
Saul Centers, Inc. | 75 | 4,290 | ||||||
KCG Holdings, Inc. — Class A* | 347 | 4,254 | ||||||
Forestar Group, Inc.* | 269 | 4,242 | ||||||
TriCo Bancshares | 174 | 4,199 | ||||||
RAIT Financial Trust | 612 | 4,198 | ||||||
Arlington Asset Investment Corp. — Class A | 172 | 4,138 | ||||||
AG Mortgage Investment Trust, Inc. | 219 | 4,126 | ||||||
Acacia Research Corp. | 385 | 4,120 | ||||||
Dime Community Bancshares, Inc. | 252 | 4,057 | ||||||
Community Trust Bancorp, Inc. | 121 | 4,012 | ||||||
Heartland Financial USA, Inc. | 121 | 3,948 | ||||||
Heritage Financial Corp. | 232 | 3,944 | ||||||
Apollo Residential Mortgage, Inc. | 247 | 3,940 | ||||||
First Interstate BancSystem, Inc. — Class A | 140 | 3,895 | ||||||
Enova International, Inc.* | 197 | 3,879 | ||||||
Stock Yards Bancorp, Inc. | 112 | 3,856 | ||||||
GAMCO Investors, Inc. — Class A | 49 | 3,847 | ||||||
First NBC Bank Holding Co.* | 114 | 3,760 | ||||||
First Busey Corp. | 558 | 3,733 | ||||||
Hannon Armstrong Sustainable Infrastructure Capital, Inc. | 203 | 3,711 | ||||||
1st Source Corp. | 115 | 3,695 | ||||||
Getty Realty Corp. | 197 | 3,585 | ||||||
Dynex Capital, Inc. | 421 | 3,566 | ||||||
Campus Crest Communities, Inc. | 498 | 3,566 | ||||||
International. FCStone, Inc.* | 119 | 3,538 | ||||||
Diamond Hill Investment Group, Inc. | 22 | 3,520 | ||||||
OM Asset Management plc | 186 | 3,467 | ||||||
Waterstone Financial, Inc. | 265 | 3,403 | ||||||
CoBiz Financial, Inc. | 276 | 3,400 | ||||||
ConnectOne Bancorp, Inc. | 174 | 3,386 | ||||||
Westwood Holdings Group, Inc. | 56 | 3,377 | ||||||
Lakeland Bancorp, Inc. | 292 | 3,358 | ||||||
BancFirst Corp. | 55 | 3,354 | ||||||
QTS Realty Trust, Inc. — Class A | 92 | 3,350 | ||||||
Ashford Hospitality Prime, Inc. | 196 | 3,287 | ||||||
Meadowbrook Insurance Group, Inc. | 386 | 3,281 | ||||||
CenterState Banks, Inc. | 273 | 3,251 | ||||||
Federated National Holding Co. | 106 | 3,244 | ||||||
CareTrust REIT, Inc. | 237 | 3,214 | ||||||
Bryn Mawr Bank Corp. | 105 | 3,193 | ||||||
Yadkin Financial Corp.* | 157 | 3,187 | ||||||
HCI Group, Inc. | 69 | 3,165 | ||||||
First Financial Corp. | 88 | 3,158 | ||||||
Banc of California, Inc. | 255 | 3,139 | ||||||
Enterprise Financial Services Corp. | 151 | 3,120 | ||||||
HomeStreet, Inc.* | 170 | 3,114 | ||||||
Great Southern Bancorp, Inc. | 79 | 3,112 | ||||||
MainSource Financial Group, Inc. | 158 | 3,103 | ||||||
Central Pacific Financial Corp. | 132 | 3,032 | ||||||
Metro Bancorp, Inc. | 109 | 3,005 | ||||||
German American Bancorp, Inc. | 101 | 2,972 | ||||||
Ladenburg Thalmann Financial Services, Inc.* | 764 | 2,949 | ||||||
NMI Holdings, Inc. — Class A* | 389 | 2,914 | ||||||
Gladstone Commercial Corp. | 156 | 2,903 | ||||||
Blue Hills Bancorp, Inc.* | 219 | 2,895 | ||||||
Hudson Valley Holding Corp. | 113 | 2,888 | ||||||
United Insurance Holdings Corp. | 128 | 2,880 | ||||||
Clifton Bancorp, Inc. | 204 | 2,878 | ||||||
State Auto Financial Corp. | 117 | 2,842 | ||||||
Beneficial Bancorp, Inc.* | 248 | 2,800 | ||||||
BNC Bancorp | 154 | 2,787 | ||||||
Whitestone REIT — Class B | 173 | 2,747 | ||||||
Independent Bank Group, Inc. | 70 | 2,724 | ||||||
Southwest Bancorp, Inc. | 153 | 2,722 | ||||||
RE/MAX Holdings, Inc. — Class A | 81 | 2,690 | ||||||
First Bancorp | 152 | 2,669 | ||||||
OneBeacon Insurance Group Ltd. — Class A | 175 | 2,662 | ||||||
Bank Mutual Corp. | 359 | 2,628 | ||||||
Peoples Financial Services Corp. | 58 | 2,602 | ||||||
HomeTrust Bancshares, Inc.* | 161 | 2,571 | ||||||
Mercantile Bank Corp. | 130 | 2,542 | ||||||
Walker & Dunlop, Inc.* | 143 | 2,535 | ||||||
Peoples Bancorp, Inc. | 105 | 2,482 | ||||||
CorEnergy Infrastructure Trust, Inc. | 358 | 2,481 | ||||||
Univest Corporation of Pennsylvania | 125 | 2,474 | ||||||
Preferred Bank/Los Angeles CA | 90 | 2,472 | ||||||
Park Sterling Corp. | 343 | 2,435 |
SEE NOTES TO FINANCIAL STATEMENTS. | THE RYDEX FUNDS ANNUAL REPORT | 87 |
SCHEDULE OF INVESTMENTS (continued) | March 31, 2015 |
RUSSELL 2000® 1.5x STRATEGY FUND |
Shares | Value | |||||||
Ares Commercial Real Estate Corp. | 220 | $ | 2,431 | |||||
Financial Institutions, Inc. | 106 | 2,431 | ||||||
First Defiance Financial Corp. | 74 | 2,429 | ||||||
West Bancorporation, Inc. | 122 | 2,427 | ||||||
NewStar Financial, Inc.* | 206 | 2,416 | ||||||
Caesars Acquisition Co. — Class A* | 352 | 2,394 | ||||||
First of Long Island Corp. | 93 | 2,372 | ||||||
Bank of Kentucky Financial Corp. | 48 | 2,354 | ||||||
NewBridge Bancorp | 259 | 2,310 | ||||||
Bridge Bancorp, Inc. | 89 | 2,299 | ||||||
One Liberty Properties, Inc. | 94 | 2,295 | ||||||
Stonegate Bank | 76 | 2,294 | ||||||
Bancorp, Inc.* | 254 | 2,294 | ||||||
Bank of Marin Bancorp | 45 | 2,291 | ||||||
Marcus & Millichap, Inc.* | 61 | 2,286 | ||||||
Arrow Financial Corp. | 84 | 2,281 | ||||||
Independent Bank Corp. | 177 | 2,271 | ||||||
Camden National Corp. | 57 | 2,271 | ||||||
Flagstar Bancorp, Inc.* | 156 | 2,264 | ||||||
Federal Agricultural Mortgage Corp. — Class C | 80 | 2,255 | ||||||
First Community Bancshares, Inc. | 126 | 2,209 | ||||||
Phoenix Companies, Inc.* | 44 | 2,200 | ||||||
Ladder Capital Corp. — Class A | 117 | 2,166 | ||||||
Fidelity Southern Corp. | 128 | 2,161 | ||||||
Pacific Premier Bancorp, Inc.* | 133 | 2,153 | ||||||
Seacoast Banking Corporation of Florida* | 150 | 2,141 | ||||||
United Community Financial Corp. | 390 | 2,129 | ||||||
Suffolk Bancorp | 89 | 2,115 | ||||||
Talmer Bancorp, Inc. — Class A | 138 | 2,113 | ||||||
Great Western Bancorp, Inc. | 96 | 2,113 | ||||||
Citizens, Inc.* | 338 | 2,082 | ||||||
Meridian Bancorp, Inc.* | 157 | 2,068 | ||||||
Armada Hoffler Properties, Inc. | 193 | 2,057 | ||||||
Altisource Asset Management Corp.* | 11 | 2,036 | ||||||
Bridge Capital Holdings* | 76 | 1,984 | ||||||
Consolidated-Tomoka Land Co. | 33 | 1,969 | ||||||
Citizens & Northern Corp. | 95 | 1,917 | ||||||
Guaranty Bancorp | 113 | 1,916 | ||||||
First Connecticut Bancorp, Inc. | 124 | 1,906 | ||||||
BankFinancial Corp. | 144 | 1,892 | ||||||
CNB Financial Corp. | 111 | 1,889 | ||||||
Republic Bancorp, Inc. — Class A | 76 | 1,879 | ||||||
Meta Financial Group, Inc. | 47 | 1,867 | ||||||
Crawford & Co. — Class B | 215 | 1,858 | ||||||
Pacific Continental Corp. | 139 | 1,838 | ||||||
Oppenheimer Holdings, Inc. — Class A | 78 | 1,830 | ||||||
Fidelity & Guaranty Life | 86 | 1,823 | ||||||
Penns Woods Bancorp, Inc. | 37 | 1,810 | ||||||
TriState Capital Holdings, Inc.* | 170 | 1,780 | ||||||
OceanFirst Financial Corp. | 103 | 1,779 | ||||||
Calamos Asset Management, Inc. — Class A | 131 | 1,762 | ||||||
Global Indemnity plc — Class A* | 63 | 1,748 | ||||||
PennyMac Financial Services, Inc. — Class A* | 103 | 1,748 | ||||||
Gain Capital Holdings, Inc. | 178 | 1,739 | ||||||
CU Bancorp* | 76 | 1,729 | ||||||
CatchMark Timber Trust, Inc. — Class A | 147 | 1,723 | ||||||
Moelis & Co. — Class A | 56 | 1,687 | ||||||
Charter Financial Corp. | 145 | 1,668 | ||||||
Baldwin & Lyons, Inc. — Class B | 71 | 1,666 | ||||||
Peapack Gladstone Financial Corp. | 77 | 1,663 | ||||||
Horizon Bancorp | 70 | 1,637 | ||||||
UMH Properties, Inc. | 160 | 1,611 | ||||||
Territorial Bancorp, Inc. | 67 | 1,592 | ||||||
National Bankshares, Inc. | 53 | 1,582 | ||||||
Ames National Corp. | 63 | 1,566 | ||||||
Fox Chase Bancorp, Inc. | 93 | 1,565 | ||||||
Atlas Financial Holdings, Inc.* | 88 | 1,555 | ||||||
Sierra Bancorp | 93 | 1,553 | ||||||
MidWestOne Financial Group, Inc. | 53 | 1,528 | ||||||
National Interstate Corp. | 54 | 1,516 | ||||||
American National Bankshares, Inc. | 66 | 1,490 | ||||||
Heritage Commerce Corp. | 161 | 1,470 | ||||||
Kearny Financial Corp.* | 107 | 1,453 | ||||||
Heritage Oaks Bancorp | 172 | 1,429 | ||||||
Square 1 Financial, Inc. — Class A* | 53 | 1,419 | ||||||
FBR & Co.* | 61 | 1,410 | ||||||
Manning & Napier, Inc. — Class A | 105 | 1,366 | ||||||
Kansas City Life Insurance Co. | 29 | 1,332 | ||||||
State National Companies, Inc. | 133 | 1,323 | ||||||
EMC Insurance Group, Inc. | 39 | 1,318 | ||||||
Capital City Bank Group, Inc. | 81 | 1,316 | ||||||
Altisource Portfolio Solutions S.A.* | 102 | 1,313 | ||||||
First Business Financial Services, Inc. | 30 | 1,297 | ||||||
First Financial Northwest, Inc. | 105 | 1,297 | ||||||
eHealth, Inc.* | 137 | 1,285 | ||||||
Marlin Business Services Corp. | 64 | 1,282 | ||||||
Northrim BanCorp, Inc. | 52 | 1,276 | ||||||
First Bancorp, Inc. | 73 | 1,274 | ||||||
Owens Realty Mortgage, Inc. | 83 | 1,243 | ||||||
Sun Bancorp, Inc.* | 65 | 1,229 | ||||||
Anchor BanCorp Wisconsin, Inc.* | 35 | 1,216 | ||||||
Enterprise Bancorp, Inc. | 57 | 1,211 | ||||||
Regional Management Corp.* | 82 | 1,210 | ||||||
Opus Bank | 39 | 1,204 | ||||||
Stonegate Mortgage Corp.* | 110 | 1,190 | ||||||
Heritage Insurance Holdings, Inc.* | 53 | 1,167 | ||||||
Hallmark Financial Services, Inc.* | 109 | 1,155 | ||||||
Cascade Bancorp* | 238 | 1,142 | ||||||
Merchants Bancshares, Inc. | 39 | 1,138 | ||||||
BBX Capital Corp. — Class A* | 61 | 1,135 | ||||||
Consumer Portfolio Services, Inc.* | 162 | 1,132 | ||||||
Nicholas Financial, Inc.* | 79 | 1,107 | ||||||
Macatawa Bank Corp. | 202 | 1,081 | ||||||
Century Bancorp, Inc. — Class A | 27 | 1,072 | ||||||
Trade Street Residential, Inc. | 143 | 1,024 | ||||||
Old Line Bancshares, Inc. | 64 | 1,011 |
88 | THE RYDEX FUNDS ANNUAL REPORT | SEE NOTES TO FINANCIAL STATEMENTS. |
SCHEDULE OF INVESTMENTS (continued) | March 31, 2015 |
RUSSELL 2000® 1.5x STRATEGY FUND |
Shares | Value | |||||||
Donegal Group, Inc. — Class A | 62 | $ | 975 | |||||
MidSouth Bancorp, Inc. | 64 | 944 | ||||||
JG Wentworth Co. — Class A* | 90 | 935 | ||||||
CommunityOne Bancorp* | 89 | 876 | ||||||
Republic First Bancorp, Inc.* | 237 | 860 | ||||||
Independence Holding Co. | 59 | 802 | ||||||
Pzena Investment Management, Inc. — Class A | 87 | 798 | ||||||
RCS Capital Corp. — Class A | 72 | 766 | ||||||
FXCM, Inc. — Class A | 351 | 748 | ||||||
Ashford, Inc.* | 6 | 713 | ||||||
Palmetto Bancshares, Inc. | 34 | 646 | ||||||
Higher One Holdings, Inc.* | 260 | 629 | ||||||
Silvercrest Asset Management Group, Inc. — Class A | 43 | 613 | ||||||
Triumph Bancorp, Inc.* | 41 | 560 | ||||||
Trupanion, Inc.* | 64 | 512 | ||||||
Hampton Roads Bankshares, Inc.* | 261 | 493 | ||||||
C1 Financial, Inc.* | 25 | 469 | ||||||
ServisFirst Bancshares, Inc. | 14 | 462 | ||||||
GFI Group, Inc. | 77 | 457 | ||||||
Green Bancorp, Inc.* | 36 | 402 | ||||||
Fifth Street Asset Management, Inc. | 32 | 361 | ||||||
CIFC Corp. | 46 | 352 | ||||||
Medley Management, Inc. — Class A | 31 | 341 | ||||||
RenaissanceRe Holdings Ltd. | 1 | 96 | ||||||
Total Financial | 3,294,015 | |||||||
CONSUMER, NON-CYCLICAL - 14.4% | ||||||||
Isis Pharmaceuticals, Inc.* | 904 | 57,557 | ||||||
Puma Biotechnology, Inc.* | 188 | 44,388 | ||||||
DexCom, Inc.* | 577 | 35,969 | ||||||
West Pharmaceutical Services, Inc. | 543 | 32,693 | ||||||
WEX, Inc.* | 298 | 31,994 | ||||||
STERIS Corp. | 455 | 31,973 | ||||||
Team Health Holdings, Inc.* | 540 | 31,595 | ||||||
WellCare Health Plans, Inc.* | 337 | 30,822 | ||||||
Cepheid* | 536 | 30,497 | ||||||
PAREXEL International Corp.* | 438 | 30,217 | ||||||
HealthSouth Corp. | 678 | 30,075 | ||||||
United Natural Foods, Inc.* | 382 | 29,429 | ||||||
Receptos, Inc.* | 168 | 27,701 | ||||||
TreeHouse Foods, Inc.* | 323 | 27,462 | ||||||
Deluxe Corp. | 386 | 26,742 | ||||||
Neurocrine Biosciences, Inc.* | 647 | 25,691 | ||||||
Impax Laboratories, Inc.* | 539 | 25,263 | ||||||
Pacira Pharmaceuticals, Inc.* | 274 | 24,345 | ||||||
Acadia Healthcare Company, Inc.* | 329 | 23,556 | ||||||
Euronet Worldwide, Inc.* | 392 | 23,031 | ||||||
Bluebird Bio, Inc.* | 189 | 22,825 | ||||||
Akorn, Inc.* | 480 | 22,805 | ||||||
ABIOMED, Inc.* | 307 | 21,975 | ||||||
OPKO Health, Inc.*,1 | 1,515 | 21,467 | ||||||
Celldex Therapeutics, Inc.* | 750 | 20,903 | ||||||
Corporate Executive Board Co. | 260 | 20,764 | ||||||
Amsurg Corp. — Class A* | 326 | 20,056 | ||||||
Sotheby’s | 469 | 19,820 | ||||||
ACADIA Pharmaceuticals, Inc.* | 606 | 19,750 | ||||||
Post Holdings, Inc.* | 401 | 18,783 | ||||||
SUPERVALU, Inc.* | 1,559 | 18,131 | ||||||
Haemonetics Corp.* | 401 | 18,012 | ||||||
Helen of Troy Ltd.* | 220 | 17,928 | ||||||
Darling Ingredients, Inc.* | 1,260 | 17,652 | ||||||
Dyax Corp.* | 1,045 | 17,509 | ||||||
Healthcare Services Group, Inc. | 541 | 17,382 | ||||||
Synageva BioPharma Corp.* | 178 | 17,360 | ||||||
Thoratec Corp.* | 411 | 17,217 | ||||||
Advisory Board Co.* | 323 | 17,209 | ||||||
Boston Beer Company, Inc. — Class A* | 64 | 17,113 | ||||||
Prestige Brands Holdings, Inc.* | 399 | 17,113 | ||||||
NuVasive, Inc.* | 359 | 16,510 | ||||||
Owens & Minor, Inc. | 486 | 16,446 | ||||||
Chemed Corp. | 135 | 16,119 | ||||||
On Assignment, Inc.* | 418 | 16,040 | ||||||
Monro Muffler Brake, Inc. | 242 | 15,742 | ||||||
Molina Healthcare, Inc.* | 232 | 15,611 | ||||||
Grand Canyon Education, Inc.* | 359 | 15,546 | ||||||
Novavax, Inc.* | 1,830 | 15,134 | ||||||
Magellan Health, Inc.* | 212 | 15,014 | ||||||
Exact Sciences Corp.* | 680 | 14,974 | ||||||
Ironwood Pharmaceuticals, Inc. — Class A* | 919 | 14,704 | ||||||
Anacor Pharmaceuticals, Inc.* | 253 | 14,636 | ||||||
Kindred Healthcare, Inc. | 600 | 14,274 | ||||||
Insulet Corp.* | 426 | 14,207 | ||||||
Sanderson Farms, Inc. | 178 | 14,178 | ||||||
Clovis Oncology, Inc.* | 190 | 14,104 | ||||||
Air Methods Corp.* | 301 | 14,024 | ||||||
Medicines Co.* | 500 | 14,010 | ||||||
ABM Industries, Inc. | 430 | 13,700 | ||||||
Lancaster Colony Corp. | 143 | 13,609 | ||||||
Cyberonics, Inc.* | 207 | 13,438 | ||||||
Lannett Company, Inc.* | 198 | 13,407 | ||||||
Fresh Market, Inc.* | 329 | 13,371 | ||||||
Intrexon Corp.* | 291 | 13,203 | ||||||
Neogen Corp.* | 282 | 13,178 | ||||||
Heartland Payment Systems, Inc. | 276 | 12,931 | ||||||
Cardtronics, Inc.* | 342 | 12,859 | ||||||
Globus Medical, Inc. — Class A* | 506 | 12,771 | ||||||
Vector Group Ltd. | 579 | 12,720 | ||||||
Korn/Ferry International | 383 | 12,589 | ||||||
Portola Pharmaceuticals, Inc.* | 328 | 12,451 | ||||||
Cantel Medical Corp. | 260 | 12,350 | ||||||
Ligand Pharmaceuticals, Inc. — Class B* | 160 | 12,338 | ||||||
Masimo Corp.* | 372 | 12,269 | ||||||
J&J Snack Foods Corp. | 114 | 12,164 | ||||||
B&G Foods, Inc. | 413 | 12,155 | ||||||
Bright Horizons Family Solutions, Inc.* | 236 | 12,100 | ||||||
Huron Consulting Group, Inc.* | 181 | 11,973 |
SEE NOTES TO FINANCIAL STATEMENTS. | THE RYDEX FUNDS ANNUAL REPORT | 89 |
SCHEDULE OF INVESTMENTS (continued) | March 31, 2015 |
RUSSELL 2000® 1.5x STRATEGY FUND |
Shares | Value | |||||||
Dean Foods Co. | 719 | $ | 11,885 | |||||
Matthews International Corp. — Class A | 230 | 11,847 | ||||||
Integra LifeSciences Holdings Corp.* | 191 | 11,775 | ||||||
FTI Consulting, Inc.* | 314 | 11,762 | ||||||
Snyder’s-Lance, Inc. | 367 | 11,729 | ||||||
Catalent, Inc.* | 376 | 11,712 | ||||||
HeartWare International, Inc.* | 131 | 11,498 | ||||||
PTC Therapeutics, Inc.* | 188 | 11,440 | ||||||
Halozyme Therapeutics, Inc.* | 795 | 11,353 | ||||||
Rent-A-Center, Inc. | 407 | 11,168 | ||||||
Spectranetics Corp.* | 320 | 11,123 | ||||||
ExamWorks Group, Inc.* | 267 | 11,113 | ||||||
Greatbatch, Inc.* | 192 | 11,107 | ||||||
Abaxis, Inc. | 173 | 11,091 | ||||||
EVERTEC, Inc. | 505 | 11,039 | ||||||
AMAG Pharmaceuticals, Inc.* | 200 | 10,932 | ||||||
Fresh Del Monte Produce, Inc. | 278 | 10,817 | ||||||
Nektar Therapeutics* | 976 | 10,736 | ||||||
Acorda Therapeutics, Inc.* | 320 | 10,650 | ||||||
CONMED Corp. | 210 | 10,603 | ||||||
Agios Pharmaceuticals, Inc.* | 112 | 10,562 | ||||||
ARIAD Pharmaceuticals, Inc.* | 1,267 | 10,440 | ||||||
HMS Holdings Corp.* | 674 | 10,413 | ||||||
Brink’s Co. | 373 | 10,306 | ||||||
WD-40 Co. | 115 | 10,182 | ||||||
Depomed, Inc.* | 446 | 9,995 | ||||||
Theravance, Inc. | 634 | 9,966 | ||||||
Wright Medical Group, Inc.* | 384 | 9,907 | ||||||
Keryx Biopharmaceuticals, Inc.*,1 | 776 | 9,878 | ||||||
Natus Medical, Inc.* | 247 | 9,749 | ||||||
ICU Medical, Inc.* | 103 | 9,593 | ||||||
Tumi Holdings, Inc.* | 390 | 9,539 | ||||||
Cambrex Corp.* | 236 | 9,353 | ||||||
Cal-Maine Foods, Inc. | 238 | 9,296 | ||||||
Insperity, Inc. | 175 | 9,151 | ||||||
SpartanNash Co. | 289 | 9,121 | ||||||
MannKind Corp.*,1 | 1,754 | 9,121 | ||||||
Select Medical Holdings Corp. | 606 | 8,987 | ||||||
Andersons, Inc. | 217 | 8,977 | ||||||
Merrimack Pharmaceuticals, Inc.* | 755 | 8,969 | ||||||
Chimerix, Inc.* | 232 | 8,744 | ||||||
LifeLock, Inc.* | 619 | 8,734 | ||||||
PDL BioPharma, Inc. | 1,235 | 8,688 | ||||||
Analogic Corp. | 95 | 8,636 | ||||||
Tetraphase Pharmaceuticals, Inc.* | 235 | 8,610 | ||||||
Achillion Pharmaceuticals, Inc.* | 873 | 8,608 | ||||||
TESARO, Inc.* | 149 | 8,553 | ||||||
Universal Corp. | 179 | 8,441 | ||||||
Endologix, Inc.* | 493 | 8,416 | ||||||
NewLink Genetics Corp.* | 153 | 8,371 | ||||||
Cardiovascular Systems, Inc.* | 213 | 8,316 | ||||||
Seaboard Corp.* | 2 | 8,264 | ||||||
AMN Healthcare Services, Inc.* | 358 | 8,259 | ||||||
Sangamo BioSciences, Inc.* | 522 | 8,185 | ||||||
NxStage Medical, Inc.* | 473 | 8,183 | ||||||
Ensign Group, Inc. | 173 | 8,107 | ||||||
Arena Pharmaceuticals, Inc.* | 1,852 | 8,093 | ||||||
Auspex Pharmaceuticals, Inc.* | 80 | 8,022 | ||||||
Insmed, Inc.* | 381 | 7,925 | ||||||
Cempra, Inc.* | 229 | 7,857 | ||||||
Prothena Corporation plc* | 205 | 7,819 | ||||||
TrueBlue, Inc.* | 318 | 7,743 | ||||||
Repligen Corp.* | 246 | 7,469 | ||||||
MiMedx Group, Inc.* | 716 | 7,446 | ||||||
Array BioPharma, Inc.* | 1,006 | 7,414 | ||||||
Orexigen Therapeutics, Inc.* | 938 | 7,345 | ||||||
ACCO Brands Corp.* | 877 | 7,288 | ||||||
Tornier N.V.* | 273 | 7,158 | ||||||
Affymetrix, Inc.* | 560 | 7,034 | ||||||
Zeltiq Aesthetics, Inc.* | 224 | 6,906 | ||||||
ZIOPHARM Oncology, Inc.*,1 | 626 | 6,742 | ||||||
KYTHERA Biopharmaceuticals, Inc.* | 134 | 6,720 | ||||||
Bio-Reference Laboratories, Inc.* | 188 | 6,625 | ||||||
Multi-Color Corp. | 95 | 6,586 | ||||||
McGrath RentCorp | 199 | 6,549 | ||||||
PharMerica Corp.* | 231 | 6,512 | ||||||
Emergent Biosolutions, Inc.* | 225 | 6,471 | ||||||
Merit Medical Systems, Inc.* | 330 | 6,353 | ||||||
ICF International, Inc.* | 154 | 6,291 | �� | |||||
Team, Inc.* | 158 | 6,159 | ||||||
Hanger, Inc.* | 271 | 6,149 | ||||||
IPC Healthcare, Inc.* | 131 | 6,110 | ||||||
Meridian Bioscience, Inc. | 319 | 6,087 | ||||||
Diamond Foods, Inc.* | 186 | 6,058 | ||||||
Aegerion Pharmaceuticals, Inc.* | 227 | 5,941 | ||||||
Quidel Corp.* | 219 | 5,909 | ||||||
ImmunoGen, Inc.* | 660 | 5,907 | ||||||
RPX Corp.* | 408 | 5,871 | ||||||
Omeros Corp.* | 265 | 5,838 | ||||||
Capital Senior Living Corp.* | 223 | 5,785 | ||||||
Calavo Growers, Inc. | 110 | 5,656 | ||||||
Momenta Pharmaceuticals, Inc.* | 370 | 5,624 | ||||||
Amedisys, Inc.* | 210 | 5,624 | ||||||
Accuray, Inc.* | 591 | 5,496 | ||||||
Capella Education Co. | 84 | 5,450 | ||||||
TherapeuticsMD, Inc.* | 881 | 5,330 | ||||||
Cynosure, Inc. — Class A* | 172 | 5,275 | ||||||
Infinity Pharmaceuticals, Inc.* | 375 | 5,243 | ||||||
Raptor Pharmaceutical Corp.* | 482 | 5,239 | ||||||
Resources Connection, Inc. | 298 | 5,215 | ||||||
Foundation Medicine, Inc.* | 107 | 5,148 | ||||||
USANA Health Sciences, Inc.* | 46 | 5,112 | ||||||
Orthofix International N.V.* | 142 | 5,096 | ||||||
Tootsie Roll Industries, Inc. | 149 | 5,056 | ||||||
National Healthcare Corp. | 79 | 5,033 | ||||||
Retrophin, Inc.* | 210 | 5,032 |
90 | THE RYDEX FUNDS ANNUAL REPORT | SEE NOTES TO FINANCIAL STATEMENTS. |
SCHEDULE OF INVESTMENTS (continued) | March 31, 2015 |
RUSSELL 2000® 1.5x STRATEGY FUND |
Shares | Value | |||||||
Ophthotech Corp.* | 106 | $ | 4,932 | |||||
Navigant Consulting, Inc.* | 378 | 4,899 | ||||||
Quad/Graphics, Inc. | 213 | 4,895 | ||||||
BioCryst Pharmaceuticals, Inc.* | 539 | 4,867 | ||||||
Acceleron Pharma, Inc.* | 127 | 4,834 | ||||||
MacroGenics, Inc.* | 153 | 4,800 | ||||||
Invacare Corp. | 247 | 4,794 | ||||||
Hyperion Therapeutics, Inc.* | 104 | 4,774 | ||||||
Healthways, Inc.* | 242 | 4,767 | ||||||
Relypsa, Inc.* | 131 | 4,725 | ||||||
LDR Holding Corp.* | 128 | 4,690 | ||||||
Ingles Markets, Inc. — Class A | 94 | 4,651 | ||||||
Kforce, Inc. | 208 | 4,640 | ||||||
Luminex Corp.* | 288 | 4,608 | ||||||
Geron Corp.* | 1,207 | 4,550 | ||||||
OvaScience, Inc.* | 131 | 4,550 | ||||||
Anika Therapeutics, Inc.* | 110 | 4,529 | ||||||
Strayer Education, Inc.* | 84 | 4,486 | ||||||
Insys Therapeutics, Inc.* | 77 | 4,476 | ||||||
Boulder Brands, Inc.* | 469 | 4,470 | ||||||
US Physical Therapy, Inc. | 94 | 4,465 | ||||||
Monster Worldwide, Inc.* | 700 | 4,438 | ||||||
NutriSystem, Inc. | 222 | 4,436 | ||||||
Viad Corp. | 158 | 4,396 | ||||||
Esperion Therapeutics, Inc.* | 47 | 4,352 | ||||||
AtriCure, Inc.* | 211 | 4,323 | ||||||
TriNet Group, Inc.* | 121 | 4,263 | ||||||
Ascent Capital Group, Inc. — Class A* | 106 | 4,219 | ||||||
Weis Markets, Inc. | 84 | 4,180 | ||||||
Inter Parfums, Inc. | 128 | 4,175 | ||||||
K12, Inc.* | 265 | 4,166 | ||||||
Sarepta Therapeutics, Inc.* | 313 | 4,157 | ||||||
GenMark Diagnostics, Inc.* | 320 | 4,154 | ||||||
Kite Pharma, Inc.* | 72 | 4,153 | ||||||
Atrion Corp. | 12 | 4,146 | ||||||
Coca-Cola Bottling Company Consolidated | 36 | 4,070 | ||||||
American Public Education, Inc.* | 134 | 4,017 | ||||||
Vascular Solutions, Inc.* | 132 | 4,002 | ||||||
Phibro Animal Health Corp. — Class A | 112 | 3,966 | ||||||
Rockwell Medical, Inc.* | 361 | 3,946 | ||||||
Genomic Health, Inc.* | 129 | 3,941 | ||||||
Accelerate Diagnostics, Inc.* | 174 | 3,915 | ||||||
Sagent Pharmaceuticals, Inc.* | 168 | 3,906 | ||||||
Global Cash Access Holdings, Inc.* | 507 | 3,863 | ||||||
Exelixis, Inc.*,1 | 1,497 | 3,847 | ||||||
Green Dot Corp. — Class A* | 240 | 3,821 | ||||||
Triple-S Management Corp. — Class B* | 192 | 3,817 | ||||||
Inovio Pharmaceuticals, Inc.* | 463 | 3,778 | ||||||
Kelly Services, Inc. — Class A | 211 | 3,680 | ||||||
Ultragenyx Pharmaceutical, Inc.* | 59 | 3,663 | ||||||
Five Prime Therapeutics, Inc.* | 157 | 3,587 | ||||||
Revlon, Inc. — Class A* | 87 | 3,584 | ||||||
Aratana Therapeutics, Inc.* | 221 | 3,538 | ||||||
Sequenom, Inc.* | 895 | 3,535 | ||||||
Central Garden & Pet Co. — Class A* | 332 | 3,526 | ||||||
SciClone Pharmaceuticals, Inc.* | 396 | 3,509 | ||||||
Karyopharm Therapeutics, Inc.* | 114 | 3,490 | ||||||
Xoom Corp.* | 237 | 3,482 | ||||||
Universal American Corp.* | 325 | 3,471 | ||||||
Heidrick & Struggles International, Inc. | 140 | 3,441 | ||||||
AngioDynamics, Inc.* | 190 | 3,380 | ||||||
BioDelivery Sciences International, Inc.* | 320 | 3,360 | ||||||
Synergy Pharmaceuticals, Inc.*,1 | 718 | 3,317 | ||||||
ANI Pharmaceuticals, Inc.* | 53 | 3,315 | ||||||
Surgical Care Affiliates, Inc.* | 96 | 3,296 | ||||||
TG Therapeutics, Inc.* | 211 | 3,266 | ||||||
Progenics Pharmaceuticals, Inc.* | 533 | 3,187 | ||||||
Albany Molecular Research, Inc.* | 181 | 3,186 | ||||||
XenoPort, Inc.* | 445 | 3,168 | ||||||
Intra-Cellular Therapies, Inc.* | 132 | 3,152 | ||||||
Unilife Corp.*,1 | 784 | 3,144 | ||||||
Theravance Biopharma, Inc.* | 181 | 3,140 | ||||||
LHC Group, Inc.* | 95 | 3,138 | ||||||
Chefs’ Warehouse, Inc.* | 139 | 3,118 | ||||||
Forrester Research, Inc. | 84 | 3,090 | ||||||
Elizabeth Arden, Inc.* | 198 | 3,089 | ||||||
Spectrum Pharmaceuticals, Inc.* | 502 | 3,047 | ||||||
Medifast, Inc.* | 101 | 3,027 | ||||||
CBIZ, Inc.* | 319 | 2,976 | ||||||
Carriage Services, Inc. — Class A | 124 | 2,960 | ||||||
CorVel Corp.* | 85 | 2,925 | ||||||
ARC Document Solutions, Inc.* | 316 | 2,917 | ||||||
Cerus Corp.* | 691 | 2,881 | ||||||
Almost Family, Inc.* | 64 | 2,861 | ||||||
Arrowhead Research Corp.* | 420 | 2,841 | ||||||
Ennis, Inc. | 201 | 2,838 | ||||||
Vanda Pharmaceuticals, Inc.* | 305 | 2,837 | ||||||
Cross Country Healthcare, Inc.* | 239 | 2,835 | ||||||
OraSure Technologies, Inc.* | 430 | 2,812 | ||||||
Radius Health, Inc.* | 68 | 2,799 | ||||||
Great Lakes Dredge & Dock Corp.* | 460 | 2,765 | ||||||
Tejon Ranch Co.* | 104 | 2,751 | ||||||
LendingTree, Inc.* | 49 | 2,744 | ||||||
Pernix Therapeutics Holdings, Inc.* | 256 | 2,737 | ||||||
SurModics, Inc.* | 105 | 2,733 | ||||||
Supernus Pharmaceuticals, Inc.* | 225 | 2,720 | ||||||
John B Sanfilippo & Son, Inc. | 63 | 2,715 | ||||||
Heron Therapeutics, Inc.* | 180 | 2,619 | ||||||
SP Plus Corp.* | 119 | 2,600 | ||||||
Career Education Corp.* | 515 | 2,590 | ||||||
Pacific Biosciences of California, Inc.* | 443 | 2,587 | ||||||
Osiris Therapeutics, Inc.* | 146 | 2,567 | ||||||
Landauer, Inc. | 73 | 2,565 | ||||||
Aerie Pharmaceuticals, Inc.* | 81 | 2,539 | ||||||
XOMA Corp.* | 695 | 2,530 | ||||||
OncoMed Pharmaceuticals, Inc.* | 97 | 2,501 |
SEE NOTES TO FINANCIAL STATEMENTS. | THE RYDEX FUNDS ANNUAL REPORT | 91 |
SCHEDULE OF INVESTMENTS (continued) | March 31, 2015 |
RUSSELL 2000® 1.5x STRATEGY FUND |
Shares | Value | |||||||
Agenus, Inc.* | 479 | $ | 2,457 | |||||
Idera Pharmaceuticals, Inc.* | 659 | 2,445 | ||||||
Immunomedics, Inc.* | 636 | 2,436 | ||||||
Antares Pharma, Inc.* | 898 | 2,434 | ||||||
Enanta Pharmaceuticals, Inc.* | 79 | 2,419 | ||||||
Zafgen, Inc.* | 61 | 2,416 | ||||||
Rigel Pharmaceuticals, Inc.* | 673 | 2,403 | ||||||
Avalanche Biotechnologies, Inc.* | 59 | 2,391 | ||||||
CRA International, Inc.* | 76 | 2,365 | ||||||
Ampio Pharmaceuticals, Inc.* | 313 | 2,357 | ||||||
Barrett Business Services, Inc. | 55 | 2,356 | ||||||
BioScrip, Inc.* | 526 | 2,330 | ||||||
Corcept Therapeutics, Inc.* | 411 | 2,302 | ||||||
CryoLife, Inc. | 216 | 2,240 | ||||||
Alder Biopharmaceuticals, Inc.* | 77 | 2,222 | ||||||
Sage Therapeutics, Inc.* | 44 | 2,210 | ||||||
Atara Biotherapeutics, Inc.* | 53 | 2,203 | ||||||
Verastem, Inc.* | 216 | 2,197 | ||||||
STAAR Surgical Co.* | 295 | 2,192 | ||||||
Omega Protein Corp.* | 160 | 2,190 | ||||||
ZS Pharma, Inc.* | 52 | 2,188 | ||||||
Northwest Biotherapeutics, Inc.*,1 | 295 | 2,174 | ||||||
Adeptus Health, Inc. — Class A* | 43 | 2,159 | ||||||
Otonomy, Inc.* | 61 | 2,157 | ||||||
RTI Surgical, Inc.* | 436 | 2,154 | ||||||
CSS Industries, Inc. | 71 | 2,141 | ||||||
Sucampo Pharmaceuticals, Inc. — Class A* | 137 | 2,132 | ||||||
National Beverage Corp.* | 87 | 2,124 | ||||||
RadNet, Inc.* | 252 | 2,117 | ||||||
CTI BioPharma Corp.* | 1,151 | 2,083 | ||||||
Nevro Corp.* | 42 | 2,013 | ||||||
IGI Laboratories, Inc.* | 246 | 2,007 | ||||||
HealthEquity, Inc.* | 80 | 1,999 | ||||||
Regulus Therapeutics, Inc.* | 118 | 1,999 | ||||||
BioTime, Inc.* | 401 | 1,993 | ||||||
MoneyGram International, Inc.* | 224 | 1,935 | ||||||
Exactech, Inc.* | 75 | 1,922 | ||||||
Seneca Foods Corp. — Class A* | 63 | 1,878 | ||||||
Natural Grocers by Vitamin Cottage, Inc.* | 68 | 1,877 | ||||||
Limoneira Co. | 86 | 1,875 | ||||||
Ocular Therapeutix, Inc.* | 44 | 1,847 | ||||||
Epizyme, Inc.* | 98 | 1,840 | ||||||
Navidea Biopharmaceuticals, Inc.* | 1,154 | 1,835 | ||||||
Civeo Corp. | 722 | 1,834 | ||||||
Peregrine Pharmaceuticals, Inc.* | 1,358 | 1,833 | ||||||
Paylocity Holding Corp.* | 64 | 1,833 | ||||||
Lexicon Pharmaceuticals, Inc.* | 1,923 | 1,816 | ||||||
Cytokinetics, Inc.* | 266 | 1,803 | ||||||
BioTelemetry, Inc.* | 203 | 1,797 | ||||||
Endocyte, Inc.* | 284 | 1,778 | ||||||
Utah Medical Products, Inc. | 29 | 1,736 | ||||||
Hackett Group, Inc. | 193 | 1,725 | ||||||
Xencor, Inc.* | 112 | 1,716 | ||||||
Organovo Holdings, Inc.* | 481 | 1,703 | ||||||
VIVUS, Inc.*,1 | 691 | 1,700 | ||||||
Stemline Therapeutics, Inc.* | 114 | 1,650 | ||||||
Village Super Market, Inc. — Class A | 52 | 1,635 | ||||||
Pendrell Corp.* | 1,256 | 1,633 | ||||||
ServiceSource International, Inc.* | 524 | 1,624 | ||||||
POZEN, Inc.* | 210 | 1,621 | ||||||
Franklin Covey Co.* | 84 | 1,618 | ||||||
Universal Technical Institute, Inc. | 167 | 1,603 | ||||||
Repros Therapeutics, Inc.* | 186 | 1,598 | ||||||
ChemoCentryx, Inc.* | 211 | 1,593 | ||||||
K2M Group Holdings, Inc.* | 72 | 1,588 | ||||||
Incorporated Research Holdings, Inc. — Class A* | 48 | 1,571 | ||||||
Threshold Pharmaceuticals, Inc.* | 377 | 1,531 | ||||||
CDI Corp. | 108 | 1,517 | ||||||
Bellicum Pharmaceuticals, Inc.* | 65 | 1,506 | ||||||
Derma Sciences, Inc.* | 175 | 1,482 | ||||||
Weight Watchers International, Inc.* | 212 | 1,482 | ||||||
Five Star Quality Care, Inc.* | 331 | 1,470 | ||||||
Mirati Therapeutics, Inc.* | 50 | 1,466 | ||||||
CytRx Corp.* | 429 | 1,446 | ||||||
Electro Rent Corp. | 127 | 1,440 | ||||||
Senomyx, Inc.* | 326 | 1,438 | ||||||
Farmer Bros Co.* | 57 | 1,411 | ||||||
SFX Entertainment, Inc.* | 340 | 1,391 | ||||||
Revance Therapeutics, Inc.* | 66 | 1,368 | ||||||
Inventure Foods, Inc.* | 118 | 1,320 | ||||||
Nutraceutical International Corp.* | 66 | 1,300 | ||||||
Zogenix, Inc.* | 941 | 1,289 | ||||||
Galena Biopharma, Inc.* | 909 | 1,264 | ||||||
Civitas Solutions, Inc.* | 60 | 1,256 | ||||||
Smart & Final Stores, Inc.* | 71 | 1,250 | ||||||
Inogen, Inc.* | 39 | 1,248 | ||||||
Bridgepoint Education, Inc.* | 127 | 1,226 | ||||||
Cellular Dynamics International, Inc.* | 74 | 1,216 | ||||||
ITT Educational Services, Inc.* | 179 | 1,215 | ||||||
Oxford Immunotec Global plc* | 85 | 1,197 | ||||||
Collectors Universe, Inc. | 53 | 1,196 | ||||||
Versartis, Inc.* | 64 | 1,176 | ||||||
Intersect ENT, Inc.* | 45 | 1,162 | ||||||
Craft Brew Alliance, Inc.* | 84 | 1,146 | ||||||
Coherus Biosciences, Inc.* | 37 | 1,131 | ||||||
Alico, Inc. | 22 | 1,128 | ||||||
Addus HomeCare Corp.* | 48 | 1,105 | ||||||
BioSpecifics Technologies Corp.* | 28 | 1,096 | ||||||
National Research Corp. — Class A | 76 | 1,094 | ||||||
Nature’s Sunshine Products, Inc. | 83 | 1,089 | ||||||
Vital Therapies, Inc.* | 43 | 1,075 | ||||||
Amphastar Pharmaceuticals, Inc.* | 71 | 1,062 | ||||||
Flexion Therapeutics, Inc.* | 46 | 1,036 | ||||||
Bio-Path Holdings, Inc.* | 562 | 1,012 | ||||||
Alimera Sciences, Inc.* | 201 | 1,007 |
92 | THE RYDEX FUNDS ANNUAL REPORT | SEE NOTES TO FINANCIAL STATEMENTS. |
SCHEDULE OF INVESTMENTS (continued) | March 31, 2015 |
RUSSELL 2000® 1.5x STRATEGY FUND |
Shares | Value | |||||||
Information Services Group, Inc. | 251 | $ | 1,001 | |||||
Neuralstem, Inc.*,1 | 527 | 1,001 | ||||||
Immune Design Corp.* | 47 | 992 | ||||||
Fairway Group Holdings Corp.* | 143 | 968 | ||||||
Synta Pharmaceuticals Corp.* | 499 | 968 | ||||||
AAC Holdings, Inc.* | 31 | 948 | ||||||
Sunesis Pharmaceuticals, Inc.* | 381 | 933 | ||||||
Oncothyreon, Inc.* | 565 | 921 | ||||||
Cenveo, Inc.* | 426 | 912 | ||||||
Applied Genetic Technologies Corp.* | 43 | 860 | ||||||
PRGX Global, Inc.* | 213 | 856 | ||||||
Synutra International, Inc.* | 133 | 851 | ||||||
Liberator Medical Holdings, Inc. | 242 | 847 | ||||||
Alliance HealthCare Services, Inc.* | 38 | 843 | ||||||
Hill International, Inc.* | 230 | 826 | ||||||
Enzo Biochem, Inc.* | 275 | 811 | ||||||
Tandem Diabetes Care, Inc.* | 64 | 808 | ||||||
Liberty Tax, Inc. | 29 | 807 | ||||||
NanoString Technologies, Inc.* | 77 | 785 | ||||||
Performant Financial Corp.* | 228 | 775 | ||||||
Lifeway Foods, Inc.* | 36 | 770 | ||||||
Alliance One International, Inc.* | 675 | 743 | ||||||
NanoViricides, Inc.* | 328 | 738 | ||||||
AcelRx Pharmaceuticals, Inc.* | 190 | 733 | ||||||
T2 Biosystems, Inc.* | 46 | 714 | ||||||
Cytori Therapeutics, Inc.*,1 | 604 | 713 | ||||||
Akebia Therapeutics, Inc.* | 60 | 667 | ||||||
Dicerna Pharmaceuticals, Inc.* | 27 | 649 | ||||||
TransEnterix, Inc.* | 220 | 645 | ||||||
Dermira, Inc.* | 40 | 614 | ||||||
TriVascular Technologies, Inc.* | 57 | 598 | ||||||
Neff Corp. — Class A* | 55 | 580 | ||||||
Sientra, Inc.* | 30 | 576 | ||||||
Kindred Biosciences, Inc.* | 80 | 571 | ||||||
Pain Therapeutics, Inc.* | 293 | 554 | ||||||
Achaogen, Inc.* | 53 | 517 | ||||||
Ardelyx, Inc.* | 38 | 497 | ||||||
NeoStem, Inc.* | 192 | 488 | ||||||
Female Health Co. | 167 | 473 | ||||||
Galectin Therapeutics, Inc.* | 139 | 466 | ||||||
Marrone Bio Innovations, Inc.* | 107 | 414 | ||||||
Cara Therapeutics, Inc.* | 41 | 412 | ||||||
Ohr Pharmaceutical, Inc.* | 161 | 409 | ||||||
Egalet Corp.* | 30 | 388 | ||||||
Adamas Pharmaceuticals, Inc.* | 22 | 385 | ||||||
Care.com, Inc.* | 50 | 379 | ||||||
Veracyte, Inc.* | 50 | 364 | ||||||
Vitae Pharmaceuticals, Inc.* | 31 | 363 | ||||||
Genocea Biosciences, Inc.* | 30 | 356 | ||||||
Actinium Pharmaceuticals, Inc.* | 142 | 351 | ||||||
Tokai Pharmaceuticals, Inc.* | 31 | 350 | ||||||
Loxo Oncology, Inc.* | 28 | 349 | ||||||
Eleven Biotherapeutics, Inc.* | 39 | 348 | ||||||
22nd Century Group, Inc.* | 345 | 297 | ||||||
PhotoMedex, Inc.* | 100 | 201 | ||||||
Regado Biosciences, Inc.* | 119 | 145 | ||||||
Roka Bioscience, Inc.* | 38 | 122 | ||||||
Total Consumer, Non-cyclical | 3,020,872 | |||||||
CONSUMER, CYCLICAL - 9.0% | ||||||||
Office Depot, Inc.* | 4,111 | 37,822 | ||||||
JetBlue Airways Corp.* | 1,911 | 36,786 | ||||||
Brunswick Corp. | 713 | 36,684 | ||||||
Jack in the Box, Inc. | 308 | 29,544 | ||||||
Vail Resorts, Inc. | 278 | 28,750 | ||||||
Dana Holding Corp. | 1,302 | 27,550 | ||||||
Tenneco, Inc.* | 469 | 26,930 | ||||||
Casey’s General Stores, Inc. | 296 | 26,669 | ||||||
Buffalo Wild Wings, Inc.* | 146 | 26,462 | ||||||
Wolverine World Wide, Inc. | 780 | 26,090 | ||||||
American Eagle Outfitters, Inc. | 1,495 | 25,535 | ||||||
Watsco, Inc. | 198 | 24,888 | ||||||
Pool Corp. | 348 | 24,276 | ||||||
Restoration Hardware Holdings, Inc.* | 239 | 23,707 | ||||||
Cracker Barrel Old Country Store, Inc. | 147 | 22,365 | ||||||
Life Time Fitness, Inc.* | 314 | 22,281 | ||||||
Skechers U.S.A., Inc. — Class A* | 301 | 21,645 | ||||||
Allegiant Travel Co. — Class A | 106 | 20,383 | ||||||
Texas Roadhouse, Inc. — Class A | 536 | 19,526 | ||||||
Men’s Wearhouse, Inc. | 369 | 19,262 | ||||||
HNI Corp. | 347 | 19,143 | ||||||
Cooper Tire & Rubber Co. | 445 | 19,064 | ||||||
Cheesecake Factory, Inc. | 385 | 18,992 | ||||||
Ryland Group, Inc. | 361 | 17,594 | ||||||
Asbury Automotive Group, Inc.* | 211 | 17,535 | ||||||
Lithia Motors, Inc. — Class A | 176 | 17,496 | ||||||
HSN, Inc. | 255 | 17,399 | ||||||
TRI Pointe Homes, Inc.* | 1,127 | 17,389 | ||||||
Steven Madden Ltd.* | 449 | 17,062 | ||||||
Marriott Vacations Worldwide Corp. | 207 | 16,777 | ||||||
G-III Apparel Group Ltd.* | 148 | 16,672 | ||||||
Pinnacle Entertainment, Inc.* | 459 | 16,566 | ||||||
Group 1 Automotive, Inc. | 187 | 16,144 | ||||||
Mobile Mini, Inc. | 360 | 15,350 | ||||||
Five Below, Inc.* | 418 | 14,869 | ||||||
ANN, Inc.* | 361 | 14,812 | ||||||
Meritage Homes Corp.* | 301 | 14,641 | ||||||
Papa John’s International, Inc. | 236 | 14,587 | ||||||
Bloomin’ Brands, Inc. | 594 | 14,452 | ||||||
Select Comfort Corp.* | 418 | 14,408 | ||||||
DineEquity, Inc. | 129 | 13,804 | ||||||
Gentherm, Inc.* | 272 | 13,739 | ||||||
American Axle & Manufacturing Holdings, Inc.* | 520 | 13,432 | ||||||
UniFirst Corp. | 113 | 13,299 | ||||||
Sonic Corp. | 418 | 13,251 | ||||||
Genesco, Inc.* | 185 | 13,178 | ||||||
Burlington Stores, Inc.* | 221 | 13,133 |
SEE NOTES TO FINANCIAL STATEMENTS. | THE RYDEX FUNDS ANNUAL REPORT | 93 |
SCHEDULE OF INVESTMENTS (continued) | March 31, 2015 |
RUSSELL 2000® 1.5x STRATEGY FUND |
Shares | Value | |||||||
Columbia Sportswear Co. | 211 | $ | 12,850 | |||||
Herman Miller, Inc. | 456 | 12,659 | ||||||
Fiesta Restaurant Group, Inc.* | 206 | 12,566 | ||||||
Iconix Brand Group, Inc.* | 370 | 12,458 | ||||||
United Stationers, Inc. | 303 | 12,420 | ||||||
PriceSmart, Inc. | 144 | 12,237 | ||||||
Steelcase, Inc. — Class A | 636 | 12,046 | ||||||
Beacon Roofing Supply, Inc.* | 380 | 11,894 | ||||||
Churchill Downs, Inc. | 103 | 11,842 | ||||||
Core-Mark Holding Company, Inc. | 178 | 11,449 | ||||||
La-Z-Boy, Inc. | 403 | 11,328 | ||||||
G&K Services, Inc. — Class A | 154 | 11,170 | ||||||
Buckle, Inc. | 217 | 11,087 | ||||||
Brown Shoe Company, Inc. | 336 | 11,021 | ||||||
Children’s Place, Inc. | 170 | 10,912 | ||||||
Popeyes Louisiana Kitchen, Inc.* | 182 | 10,887 | ||||||
Express, Inc.* | 649 | 10,728 | ||||||
Interface, Inc. — Class A | 510 | 10,598 | ||||||
Outerwall, Inc. | 157 | 10,380 | ||||||
First Cash Financial Services, Inc.* | 223 | 10,374 | ||||||
Dorman Products, Inc.* | 208 | 10,348 | ||||||
Pier 1 Imports, Inc. | 727 | 10,163 | ||||||
KB Home | 644 | 10,059 | ||||||
Krispy Kreme Doughnuts, Inc.* | 501 | 10,015 | ||||||
Standard Pacific Corp.* | 1,109 | 9,981 | ||||||
Hibbett Sports, Inc.* | 199 | 9,763 | ||||||
Vitamin Shoppe, Inc.* | 237 | 9,762 | ||||||
Red Robin Gourmet Burgers, Inc.* | 110 | 9,570 | ||||||
Meritor, Inc.* | 752 | 9,483 | ||||||
Penn National Gaming, Inc.* | 604 | 9,459 | ||||||
BJ’s Restaurants, Inc.* | 181 | 9,131 | ||||||
Finish Line, Inc. — Class A | 372 | 9,121 | ||||||
Belmond Ltd. — Class A* | 742 | 9,112 | ||||||
Diamond Resorts International, Inc.* | 272 | 9,093 | ||||||
ScanSource, Inc.* | 220 | 8,943 | ||||||
Guess?, Inc. | 473 | 8,793 | ||||||
Bob Evans Farms, Inc. | 190 | 8,789 | ||||||
Knoll, Inc. | 373 | 8,739 | ||||||
MDC Holdings, Inc. | 300 | 8,550 | ||||||
Boyd Gaming Corp.* | 597 | 8,477 | ||||||
Oxford Industries, Inc. | 111 | 8,375 | ||||||
Cato Corp. — Class A | 211 | 8,356 | ||||||
La Quinta Holdings, Inc.* | 340 | 8,051 | ||||||
Mattress Firm Holding Corp.* | 115 | 8,009 | ||||||
Interval Leisure Group, Inc. | 305 | 7,994 | ||||||
Crocs, Inc.* | 671 | 7,925 | ||||||
TiVo, Inc.* | 731 | 7,756 | ||||||
Hawaiian Holdings, Inc.* | 347 | 7,643 | ||||||
Denny’s Corp.* | 670 | 7,638 | ||||||
Sonic Automotive, Inc. — Class A | 306 | 7,619 | ||||||
Barnes & Noble, Inc.* | 315 | 7,481 | ||||||
Wabash National Corp.* | 530 | 7,473 | ||||||
iRobot Corp.* | 227 | 7,407 | ||||||
Rush Enterprises, Inc. — Class A* | 264 | 7,223 | ||||||
National CineMedia, Inc. | 468 | 7,067 | ||||||
International Speedway Corp. — Class A | 214 | 6,979 | ||||||
Universal Electronics, Inc.* | 123 | 6,942 | ||||||
Libbey, Inc. | 165 | 6,586 | ||||||
Lumber Liquidators Holdings, Inc.* | 211 | 6,494 | ||||||
Standard Motor Products, Inc. | 153 | 6,466 | ||||||
Conn’s, Inc.*,1 | 213 | 6,450 | ||||||
Zumiez, Inc.* | 160 | 6,440 | ||||||
Carmike Cinemas, Inc.* | 186 | 6,250 | ||||||
Cooper-Standard Holding, Inc.* | 105 | 6,216 | ||||||
Wesco Aircraft Holdings, Inc.* | 404 | 6,189 | ||||||
H&E Equipment Services, Inc. | 241 | 6,023 | ||||||
Francesca’s Holdings Corp.* | 325 | 5,785 | ||||||
SkyWest, Inc. | 394 | 5,756 | ||||||
AMC Entertainment Holdings, Inc. — Class A | 162 | 5,749 | ||||||
Callaway Golf Co. | 596 | 5,680 | ||||||
Stage Stores, Inc. | 244 | 5,592 | ||||||
Regis Corp.* | 335 | 5,481 | ||||||
Biglari Holdings, Inc.* | 13 | 5,383 | ||||||
Tuesday Morning Corp.* | 334 | 5,377 | ||||||
Ethan Allen Interiors, Inc. | 194 | 5,362 | ||||||
Steiner Leisure Ltd.* | 112 | 5,309 | ||||||
Remy International, Inc. | 236 | 5,242 | ||||||
Republic Airways Holdings, Inc.* | 381 | 5,239 | ||||||
American Woodmark Corp.* | 94 | 5,145 | ||||||
Cavco Industries, Inc.* | 68 | 5,104 | ||||||
MarineMax, Inc.* | 191 | 5,063 | ||||||
Cash America International, Inc. | 217 | 5,056 | ||||||
Modine Manufacturing Co.* | 367 | 4,943 | ||||||
Fred’s, Inc. — Class A | 283 | 4,836 | ||||||
M/I Homes, Inc.* | 189 | 4,506 | ||||||
Winnebago Industries, Inc. | 210 | 4,465 | ||||||
DTS, Inc.* | 131 | 4,463 | ||||||
Ruth’s Hospitality Group, Inc. | 277 | 4,399 | ||||||
Tower International, Inc.* | 159 | 4,229 | ||||||
Rentrak Corp.* | 76 | 4,223 | ||||||
Caesars Entertainment Corp.* | 393 | 4,138 | ||||||
Scientific Games Corp. — Class A* | 390 | 4,083 | ||||||
Movado Group, Inc. | 142 | 4,050 | ||||||
Unifi, Inc.* | 112 | 4,042 | ||||||
Pep Boys-Manny Moe & Jack* | 410 | 3,944 | ||||||
Douglas Dynamics, Inc. | 172 | 3,928 | ||||||
Haverty Furniture Companies, Inc. | 155 | 3,856 | ||||||
Motorcar Parts of America, Inc.* | 138 | 3,835 | ||||||
Del Frisco’s Restaurant Group, Inc.* | 182 | 3,667 | ||||||
Nautilus, Inc.* | 240 | 3,665 | ||||||
Beazer Homes USA, Inc.* | 206 | 3,650 | ||||||
EZCORP, Inc. — Class A* | 395 | 3,606 | ||||||
Arctic Cat, Inc. | 99 | 3,596 | ||||||
William Lyon Homes — Class A* | 135 | 3,486 | ||||||
Superior Industries International, Inc. | 182 | 3,445 | ||||||
Shoe Carnival, Inc. | 116 | 3,415 |
94 | THE RYDEX FUNDS ANNUAL REPORT | SEE NOTES TO FINANCIAL STATEMENTS. |
SCHEDULE OF INVESTMENTS (continued) | March 31, 2015 |
RUSSELL 2000® 1.5x STRATEGY FUND |
Shares | Value | |||||||
ClubCorp Holdings, Inc. | 169 | $ | 3,272 | |||||
America’s Car-Mart, Inc.* | 60 | 3,255 | ||||||
Citi Trends, Inc.* | 120 | 3,240 | ||||||
Hovnanian Enterprises, Inc. — Class A* | 898 | 3,197 | ||||||
Titan International, Inc. | 339 | 3,173 | ||||||
Daktronics, Inc. | 289 | 3,124 | ||||||
Eros International plc* | 171 | 2,987 | ||||||
Marcus Corp. | 139 | 2,959 | ||||||
Federal-Mogul Holdings Corp.* | 222 | 2,955 | ||||||
Chuy’s Holdings, Inc.* | 127 | 2,861 | ||||||
Ruby Tuesday, Inc.* | 473 | 2,843 | ||||||
Kimball International, Inc. — Class B | 264 | 2,767 | ||||||
Vera Bradley, Inc.* | 168 | 2,727 | ||||||
Stein Mart, Inc. | 214 | 2,664 | ||||||
Kirkland’s, Inc.* | 112 | 2,660 | ||||||
Tile Shop Holdings, Inc.* | 215 | 2,604 | ||||||
PetMed Express, Inc. | 156 | 2,577 | ||||||
Container Store Group, Inc.* | 133 | 2,534 | ||||||
Isle of Capri Casinos, Inc.* | 167 | 2,346 | ||||||
Carrols Restaurant Group, Inc.* | 271 | 2,247 | ||||||
Bravo Brio Restaurant Group, Inc.* | 148 | 2,174 | ||||||
WCI Communities, Inc.* | 90 | 2,156 | ||||||
Perry Ellis International, Inc.* | 93 | 2,154 | ||||||
Miller Industries, Inc. | 87 | 2,132 | ||||||
Aeropostale, Inc.* | 605 | 2,099 | ||||||
Speedway Motorsports, Inc. | 89 | 2,025 | ||||||
NACCO Industries, Inc. — Class A | 38 | 2,014 | ||||||
Strattec Security Corp. | 27 | 1,994 | ||||||
Jamba, Inc.* | 132 | 1,942 | ||||||
Quiksilver, Inc.* | 1,045 | 1,933 | ||||||
PC Connection, Inc. | 74 | 1,931 | ||||||
Big 5 Sporting Goods Corp. | 142 | 1,884 | ||||||
Build-A-Bear Workshop, Inc. — Class A* | 94 | 1,847 | ||||||
LGI Homes, Inc.* | 110 | 1,833 | ||||||
Culp, Inc. | 67 | 1,792 | ||||||
Reading International, Inc. — Class A* | 133 | 1,789 | ||||||
Titan Machinery, Inc.* | 133 | 1,776 | ||||||
Morgans Hotel Group Co.* | 225 | 1,744 | ||||||
Skullcandy, Inc.* | 154 | 1,740 | ||||||
Black Diamond, Inc.* | 175 | 1,654 | ||||||
El Pollo Loco Holdings, Inc.* | 63 | 1,613 | ||||||
Vince Holding Corp.* | 86 | 1,595 | ||||||
Destination Maternity Corp. | 105 | 1,581 | ||||||
Winmark Corp. | 18 | 1,576 | ||||||
Potbelly Corp.* | 115 | 1,576 | ||||||
Christopher & Banks Corp.* | 280 | 1,557 | ||||||
Weyco Group, Inc. | 51 | 1,525 | ||||||
Zoe’s Kitchen, Inc.* | 45 | 1,498 | ||||||
Malibu Boats, Inc. — Class A* | 64 | 1,494 | ||||||
Roundy’s, Inc.* | 302 | 1,477 | ||||||
Installed Building Products, Inc.* | 67 | 1,458 | ||||||
Norcraft Companies, Inc.* | 57 | 1,457 | ||||||
Noodles & Co.* | 83 | 1,448 | ||||||
Monarch Casino & Resort, Inc.* | 73 | 1,397 | ||||||
Sequential Brands Group, Inc.* | 130 | 1,391 | ||||||
AV Homes, Inc.* | 87 | 1,389 | ||||||
Accuride Corp.* | 296 | 1,379 | ||||||
VOXX International Corp. — Class A* | 150 | 1,374 | ||||||
Houston Wire & Cable Co. | 137 | 1,333 | ||||||
Destination XL Group, Inc.* | 268 | 1,324 | ||||||
Escalade, Inc. | 76 | 1,321 | ||||||
Fox Factory Holding Corp.* | 86 | 1,319 | ||||||
Commercial Vehicle Group, Inc.* | 204 | 1,314 | ||||||
Nathan’s Famous, Inc. | 24 | 1,300 | ||||||
Spartan Motors, Inc. | 265 | 1,285 | ||||||
Tilly’s, Inc. — Class A* | 81 | 1,268 | ||||||
Johnson Outdoors, Inc. — Class A | 38 | 1,258 | ||||||
West Marine, Inc.* | 135 | 1,251 | ||||||
Lifetime Brands, Inc. | 80 | 1,222 | ||||||
Fuel Systems Solutions, Inc.* | 109 | 1,203 | ||||||
Flexsteel Industries, Inc. | 37 | 1,158 | ||||||
LeapFrog Enterprises, Inc. — Class A* | 502 | 1,094 | ||||||
Systemax, Inc.* | 87 | 1,063 | ||||||
Pacific Sunwear of California, Inc.* | 383 | 1,057 | ||||||
Dixie Group, Inc.* | 115 | 1,041 | ||||||
Famous Dave’s of America, Inc.* | 36 | 1,026 | ||||||
New Home Company, Inc.* | 64 | 1,021 | ||||||
JAKKS Pacific, Inc.* | 144 | 985 | ||||||
Intrawest Resorts Holdings, Inc.* | 103 | 898 | ||||||
bebe stores, Inc. | 241 | 875 | ||||||
Gaiam, Inc. — Class A* | 115 | 838 | ||||||
Papa Murphy’s Holdings, Inc.* | 45 | 816 | ||||||
Bon-Ton Stores, Inc. | 112 | 780 | ||||||
Marine Products Corp. | 81 | 694 | ||||||
Sears Hometown and Outlet Stores, Inc.* | 89 | 687 | ||||||
Sportsman’s Warehouse Holdings, Inc.* | 75 | 599 | ||||||
Century Communities, Inc.* | 31 | 599 | ||||||
hhgregg, Inc.* | 92 | 564 | ||||||
New York & Company, Inc.* | 224 | 560 | ||||||
Empire Resorts, Inc.* | 116 | 534 | ||||||
UCP, Inc. — Class A* | 60 | 522 | ||||||
Ignite Restaurant Group, Inc.* | 58 | 281 | ||||||
Speed Commerce, Inc.* | 376 | 240 | ||||||
Total Consumer, Cyclical | 1,895,765 | |||||||
INDUSTRIAL - 8.5% | ||||||||
Graphic Packaging Holding Co. | 2,514 | 36,553 | ||||||
Cognex Corp.* | 668 | 33,127 | ||||||
Belden, Inc. | 335 | 31,343 | ||||||
HEICO Corp. | 512 | 31,267 | ||||||
Teledyne Technologies, Inc.* | 270 | 28,817 | ||||||
Esterline Technologies Corp.* | 245 | 28,033 | ||||||
Curtiss-Wright Corp. | 370 | 27,358 | ||||||
Woodward, Inc. | 510 | 26,015 | ||||||
Generac Holdings, Inc.* | 529 | 25,757 | ||||||
CLARCOR, Inc. | 388 | 25,631 | ||||||
Berry Plastics Group, Inc.* | 692 | 25,044 |
SEE NOTES TO FINANCIAL STATEMENTS. | THE RYDEX FUNDS ANNUAL REPORT | 95 |
SCHEDULE OF INVESTMENTS (continued) | March 31, 2015 |
RUSSELL 2000® 1.5x STRATEGY FUND |
Shares | Value | |||||||
FEI Co. | 325 | $ | 24,810 | |||||
Moog, Inc. — Class A* | 317 | 23,791 | ||||||
EMCOR Group, Inc. | 482 | 22,400 | ||||||
EnerSys | 338 | 21,713 | ||||||
KapStone Paper and Packaging Corp. | 651 | 21,379 | ||||||
Polypore International, Inc.* | 347 | 20,438 | ||||||
XPO Logistics, Inc.* | 404 | 18,370 | ||||||
Louisiana-Pacific Corp.* | 1,086 | 17,930 | ||||||
Littelfuse, Inc. | 174 | 17,294 | ||||||
Swift Transportation Co. — Class A* | 654 | 17,018 | ||||||
Barnes Group, Inc. | 417 | 16,884 | ||||||
Mueller Industries, Inc. | 436 | 15,753 | ||||||
Rexnord Corp.* | 579 | 15,454 | ||||||
Sanmina Corp.* | 633 | 15,313 | ||||||
Masonite International Corp.* | 227 | 15,267 | ||||||
Hillenbrand, Inc. | 483 | 14,910 | ||||||
Knight Transportation, Inc. | 460 | 14,835 | ||||||
Universal Display Corp.* | 312 | 14,586 | ||||||
Applied Industrial Technologies, Inc. | 321 | 14,554 | ||||||
Trex Company, Inc.* | 258 | 14,068 | ||||||
Franklin Electric Company, Inc. | 368 | 14,036 | ||||||
Matson, Inc. | 330 | 13,913 | ||||||
Methode Electronics, Inc. | 292 | 13,736 | ||||||
RBC Bearings, Inc. | 179 | 13,701 | ||||||
Forward Air Corp. | 240 | 13,032 | ||||||
Dycom Industries, Inc.* | 261 | 12,747 | ||||||
Coherent, Inc.* | 192 | 12,472 | ||||||
Scorpio Tankers, Inc. | 1,315 | 12,388 | ||||||
Greenbrier Companies, Inc. | 212 | 12,296 | ||||||
Proto Labs, Inc.* | 174 | 12,180 | ||||||
Tetra Tech, Inc. | 507 | 12,178 | ||||||
Watts Water Technologies, Inc. — Class A | 219 | 12,052 | ||||||
Mueller Water Products, Inc. — Class A | 1,220 | 12,017 | ||||||
Simpson Manufacturing Company, Inc. | 318 | 11,884 | ||||||
EnPro Industries, Inc. | 175 | 11,541 | ||||||
Rogers Corp.* | 140 | 11,509 | ||||||
OSI Systems, Inc.* | 154 | 11,436 | ||||||
Boise Cascade Co.* | 303 | 11,350 | ||||||
Actuant Corp. — Class A | 478 | 11,348 | ||||||
MSA Safety, Inc. | 227 | 11,322 | ||||||
Drew Industries, Inc. | 182 | 11,200 | ||||||
Hub Group, Inc. — Class A* | 283 | 11,119 | ||||||
Itron, Inc.* | 302 | 11,026 | ||||||
Werner Enterprises, Inc. | 344 | 10,805 | ||||||
Harsco Corp. | 621 | 10,718 | ||||||
TriMas Corp.* | 348 | 10,715 | ||||||
Astronics Corp.* | 145 | 10,687 | ||||||
TAL International Group, Inc. | 262 | 10,671 | ||||||
GenCorp, Inc.* | 460 | 10,667 | ||||||
Plexus Corp.* | 261 | 10,641 | ||||||
Granite Construction, Inc. | 301 | 10,577 | ||||||
Brady Corp. — Class A | 369 | 10,439 | ||||||
Headwaters, Inc.* | 565 | 10,362 | ||||||
TASER International, Inc.* | 415 | 10,006 | ||||||
Benchmark Electronics, Inc.* | 415 | 9,972 | ||||||
Heartland Express, Inc. | 418 | 9,932 | ||||||
MasTec, Inc.* | 503 | 9,708 | ||||||
Apogee Enterprises, Inc. | 224 | 9,677 | ||||||
AAR Corp. | 304 | 9,333 | ||||||
Tennant Co. | 142 | 9,283 | ||||||
AZZ, Inc. | 197 | 9,178 | ||||||
Fluidigm Corp.* | 216 | 9,094 | ||||||
Kaman Corp. | 211 | 8,953 | ||||||
Exponent, Inc. | 100 | 8,890 | ||||||
UTI Worldwide, Inc.* | 704 | 8,659 | ||||||
Albany International Corp. — Class A | 217 | 8,626 | ||||||
Universal Forest Products, Inc. | 155 | 8,599 | ||||||
RTI International Metals, Inc.* | 236 | 8,475 | ||||||
Saia, Inc.* | 190 | 8,417 | ||||||
Atlas Air Worldwide Holdings, Inc.* | 194 | 8,346 | ||||||
US Ecology, Inc. | 166 | 8,295 | ||||||
Chart Industries, Inc.* | 235 | 8,243 | ||||||
Cubic Corp. | 159 | 8,231 | ||||||
FARO Technologies, Inc.* | 132 | 8,201 | ||||||
Nordic American Tankers Ltd. | 685 | 8,158 | ||||||
Advanced Energy Industries, Inc.* | 316 | 8,109 | ||||||
Standex International Corp. | 98 | 8,049 | ||||||
John Bean Technologies Corp. | 224 | 8,001 | ||||||
AAON, Inc. | 325 | 7,972 | ||||||
ESCO Technologies, Inc. | 204 | 7,952 | ||||||
Federal Signal Corp. | 484 | 7,642 | ||||||
ArcBest Corp. | 200 | 7,578 | ||||||
Sturm Ruger & Company, Inc. | 150 | 7,445 | ||||||
CIRCOR International, Inc. | 136 | 7,439 | ||||||
II-VI, Inc.* | 402 | 7,421 | ||||||
Briggs & Stratton Corp. | 360 | 7,394 | ||||||
Lindsay Corp. | 94 | 7,168 | ||||||
Sun Hydraulics Corp. | 172 | 7,114 | ||||||
Ship Finance International Ltd. | 453 | 6,704 | ||||||
Tutor Perini Corp.* | 287 | 6,701 | ||||||
Badger Meter, Inc. | 111 | 6,653 | ||||||
General Cable Corp. | 375 | 6,461 | ||||||
GasLog Ltd. | 324 | 6,292 | ||||||
Astec Industries, Inc. | 146 | 6,260 | ||||||
Nortek, Inc.* | 70 | 6,178 | ||||||
LSB Industries, Inc.* | 149 | 6,158 | ||||||
Comfort Systems USA, Inc. | 290 | 6,102 | ||||||
Encore Wire Corp. | 160 | 6,061 | ||||||
Newport Corp.* | 306 | 5,832 | ||||||
Quanex Building Products Corp. | 294 | 5,804 | ||||||
Hyster-Yale Materials Handling, Inc. | 79 | 5,790 | ||||||
Altra Industrial Motion Corp. | 208 | 5,749 | ||||||
Raven Industries, Inc. | 280 | 5,729 | ||||||
Smith & Wesson Holding Corp.* | 437 | 5,563 | ||||||
Roadrunner Transportation Systems, Inc.* | 215 | 5,433 | ||||||
Griffon Corp. | 306 | 5,334 |
96 | THE RYDEX FUNDS ANNUAL REPORT | SEE NOTES TO FINANCIAL STATEMENTS. |
SCHEDULE OF INVESTMENTS (continued) | March 31, 2015 |
RUSSELL 2000® 1.5x STRATEGY FUND |
Shares | Value | |||||||
Aegion Corp. — Class A* | 292 | $ | 5,271 | |||||
Hornbeck Offshore Services, Inc.* | 279 | 5,248 | ||||||
Rofin-Sinar Technologies, Inc.* | 216 | 5,234 | ||||||
MYR Group, Inc.* | 164 | 5,140 | ||||||
Fabrinet* | 270 | 5,127 | ||||||
Textainer Group Holdings Ltd. | 166 | 4,978 | ||||||
DHT Holdings, Inc. | 711 | 4,963 | ||||||
Echo Global Logistics, Inc.* | 181 | 4,934 | ||||||
Blount International, Inc.* | 381 | 4,907 | ||||||
CTS Corp. | 260 | 4,677 | ||||||
Kadant, Inc. | 86 | 4,524 | ||||||
Celadon Group, Inc. | 161 | 4,382 | ||||||
DXP Enterprises, Inc.* | 99 | 4,365 | ||||||
Gorman-Rupp Co. | 145 | 4,343 | ||||||
YRC Worldwide, Inc.* | 241 | 4,328 | ||||||
Marten Transport Ltd. | 183 | 4,246 | ||||||
Haynes International, Inc. | 95 | 4,238 | ||||||
Lydall, Inc.* | 131 | 4,155 | ||||||
Columbus McKinnon Corp. | 153 | 4,122 | ||||||
PGT, Inc.* | 364 | 4,068 | ||||||
Aerovironment, Inc.* | 147 | 3,897 | ||||||
Gibraltar Industries, Inc.* | 237 | 3,889 | ||||||
Patrick Industries, Inc.* | 62 | 3,861 | ||||||
Tredegar Corp. | 191 | 3,841 | ||||||
LB Foster Co. — Class A | 79 | 3,751 | ||||||
TTM Technologies, Inc.* | 416 | 3,748 | ||||||
GP Strategies Corp.* | 101 | 3,737 | ||||||
NCI Building Systems, Inc.* | 216 | 3,732 | ||||||
US Concrete, Inc.* | 109 | 3,693 | ||||||
Air Transport Services Group, Inc.* | 400 | 3,688 | ||||||
Myers Industries, Inc. | 210 | 3,681 | ||||||
American Railcar Industries, Inc. | 72 | 3,581 | ||||||
Teekay Tankers Ltd. — Class A | 615 | 3,530 | ||||||
Park-Ohio Holdings Corp. | 67 | 3,529 | ||||||
Advanced Drainage Systems, Inc. | 117 | 3,503 | ||||||
GrafTech International Ltd.* | 900 | 3,501 | ||||||
Argan, Inc. | 96 | 3,472 | ||||||
Alamo Group, Inc. | 55 | 3,472 | ||||||
Park Electrochemical Corp. | 161 | 3,471 | ||||||
Checkpoint Systems, Inc. | 320 | 3,462 | ||||||
NN, Inc. | 137 | 3,436 | ||||||
Era Group, Inc.* | 157 | 3,272 | ||||||
GSI Group, Inc.* | 234 | 3,117 | ||||||
CAI International, Inc.* | 126 | 3,096 | ||||||
Insteel Industries, Inc. | 141 | 3,050 | ||||||
American Science & Engineering, Inc. | 62 | 3,029 | ||||||
FreightCar America, Inc. | 92 | 2,892 | ||||||
Kimball Electronics, Inc.* | 198 | 2,800 | ||||||
Knightsbridge Shipping Ltd. | 532 | 2,660 | ||||||
VSE Corp. | 32 | 2,620 | ||||||
NVE Corp. | 37 | 2,550 | ||||||
Navios Maritime Holdings, Inc. | 610 | 2,550 | ||||||
Global Brass & Copper Holdings, Inc. | 165 | 2,549 | ||||||
Scorpio Bulkers, Inc.* | 1,036 | 2,455 | ||||||
Stoneridge, Inc.* | 217 | 2,450 | ||||||
Mistras Group, Inc.* | 126 | 2,427 | ||||||
Powell Industries, Inc. | 71 | 2,398 | ||||||
Builders FirstSource, Inc.* | 352 | 2,348 | ||||||
National Presto Industries, Inc. | 37 | 2,345 | ||||||
Furmanite Corp.* | 289 | 2,280 | ||||||
Chase Corp. | 52 | 2,274 | ||||||
PowerSecure International, Inc.* | 172 | 2,264 | ||||||
Navios Maritime Acquisition Corp. | 632 | 2,237 | ||||||
Power Solutions International, Inc.* | 34 | 2,186 | ||||||
Quality Distribution, Inc.* | 211 | 2,180 | ||||||
Ducommun, Inc.* | 83 | 2,150 | ||||||
Ply Gem Holdings, Inc.* | 165 | 2,145 | ||||||
Continental Building Products, Inc.* | 90 | 2,033 | ||||||
Stock Building Supply Holdings, Inc.* | 112 | 2,023 | ||||||
Vicor Corp.* | 127 | 1,930 | ||||||
Sparton Corp.* | 78 | 1,911 | ||||||
Kratos Defense & Security Solutions, Inc.* | 344 | 1,902 | ||||||
Orion Marine Group, Inc.* | 211 | 1,869 | ||||||
FRP Holdings, Inc.* | 51 | 1,856 | ||||||
Graham Corp. | 77 | 1,846 | ||||||
Trinseo S.A.* | 88 | 1,742 | ||||||
Global Power Equipment Group, Inc. | 132 | 1,742 | ||||||
CECO Environmental Corp. | 162 | 1,719 | ||||||
AEP Industries, Inc.* | 31 | 1,706 | ||||||
Northwest Pipe Co.* | 73 | 1,675 | ||||||
Casella Waste Systems, Inc. — Class A* | 300 | 1,650 | ||||||
Hurco Companies, Inc. | 50 | 1,647 | ||||||
Capstone Turbine Corp.*,1 | 2,528 | 1,643 | ||||||
Applied Optoelectronics, Inc.* | 113 | 1,569 | ||||||
Vishay Precision Group, Inc.* | 98 | 1,561 | ||||||
Mesa Laboratories, Inc. | 21 | 1,516 | ||||||
Bel Fuse, Inc. — Class B | 77 | 1,465 | ||||||
KEMET Corp.* | 350 | 1,449 | ||||||
Ardmore Shipping Corp. | 139 | 1,400 | ||||||
Dynamic Materials Corp. | 107 | 1,366 | ||||||
Xerium Technologies, Inc.* | 84 | 1,362 | ||||||
LSI Industries, Inc. | 166 | 1,353 | ||||||
USA Truck, Inc.* | 48 | 1,329 | ||||||
PAM Transportation Services, Inc.* | 23 | 1,317 | ||||||
Nordic American Offshore Ltd. | 141 | 1,292 | ||||||
Handy & Harman Ltd.* | 31 | 1,273 | ||||||
Multi-Fineline Electronix, Inc.* | 69 | 1,261 | ||||||
Universal Truckload Services, Inc. | 50 | 1,259 | ||||||
Electro Scientific Industries, Inc. | 189 | 1,168 | ||||||
Frontline Ltd.* | 510 | 1,142 | ||||||
Intevac, Inc.* | 184 | 1,130 | ||||||
Ampco-Pittsburgh Corp. | 64 | 1,117 | ||||||
Twin Disc, Inc. | 63 | 1,113 | ||||||
Safe Bulkers, Inc. | 299 | 1,073 | ||||||
Control4 Corp.* | 88 | 1,054 | ||||||
UFP Technologies, Inc.* | 46 | 1,048 |
SEE NOTES TO FINANCIAL STATEMENTS. | THE RYDEX FUNDS ANNUAL REPORT | 97 |
SCHEDULE OF INVESTMENTS (continued) | March 31, 2015 |
RUSSELL 2000® 1.5x STRATEGY FUND |
Shares | Value | |||||||
Manitex International, Inc.* | 106 | $ | 1,031 | |||||
LMI Aerospace, Inc.* | 82 | 1,001 | ||||||
Heritage-Crystal Clean, Inc.* | 82 | 959 | ||||||
Olympic Steel, Inc. | 70 | 942 | ||||||
CUI Global, Inc.* | 159 | 932 | ||||||
Energy Recovery, Inc.* | 296 | 767 | ||||||
Layne Christensen Co.* | 153 | 767 | ||||||
Dorian LPG Ltd.* | 56 | 730 | ||||||
Viasystems Group, Inc.* | 40 | 700 | ||||||
General Finance Corp.* | 85 | 686 | ||||||
Sterling Construction Company, Inc.* | 145 | 655 | ||||||
Imprivata, Inc.* | 45 | 630 | ||||||
Astronics Corp. — Class B* | 8 | 585 | ||||||
Baltic Trading Ltd. | 377 | 562 | ||||||
Omega Flex, Inc. | 22 | 553 | ||||||
International Shipholding Corp. | 44 | 533 | ||||||
AM Castle & Co.* | 144 | 526 | ||||||
SIFCO Industries, Inc. | 19 | 414 | ||||||
NL Industries, Inc.* | 52 | 403 | ||||||
CHC Group Ltd.* | 257 | 342 | ||||||
Aspen Aerogels, Inc.* | 43 | 313 | ||||||
Revolution Lighting Technologies, Inc.* | 275 | 305 | ||||||
Ultrapetrol Bahamas Ltd.* | 164 | 238 | ||||||
Erickson, Inc.* | 46 | 199 | ||||||
Quest Resource Holding Corp.* | 107 | 135 | ||||||
ARC Group Worldwide, Inc.* | 23 | 123 | ||||||
TCP International Holdings Ltd.* | 55 | 101 | ||||||
Turtle Beach Corp.* | 54 | 100 | ||||||
Total Industrial | 1,776,633 | |||||||
TECHNOLOGY - 7.2% | ||||||||
Ultimate Software Group, Inc.* | 218 | 37,049 | ||||||
MAXIMUS, Inc. | 520 | 34,715 | ||||||
Cypress Semiconductor Corp. | 2,353 | 33,202 | ||||||
SS&C Technologies Holdings, Inc. | 524 | 32,644 | ||||||
Tyler Technologies, Inc.* | 254 | 30,614 | ||||||
Manhattan Associates, Inc.* | 583 | 29,506 | ||||||
Cavium, Inc.* | 407 | 28,824 | ||||||
Verint Systems, Inc.* | 458 | 28,364 | ||||||
Guidewire Software, Inc.* | 522 | 27,462 | ||||||
Aspen Technology, Inc.* | 708 | 27,251 | ||||||
Microsemi Corp.* | 730 | 25,842 | ||||||
Synaptics, Inc.* | 277 | 22,521 | ||||||
Fair Isaac Corp. | 247 | 21,914 | ||||||
Qlik Technologies, Inc.* | 690 | 21,480 | ||||||
Integrated Device Technology, Inc.* | 1,023 | 20,480 | ||||||
Medidata Solutions, Inc.* | 417 | 20,450 | ||||||
ACI Worldwide, Inc.* | 875 | 18,953 | ||||||
Mentor Graphics Corp. | 745 | 17,902 | ||||||
Convergys Corp. | 781 | 17,862 | ||||||
Advent Software, Inc. | 396 | 17,468 | ||||||
Silicon Laboratories, Inc.* | 334 | 16,957 | ||||||
SYNNEX Corp. | 219 | 16,918 | ||||||
Blackbaud, Inc. | 356 | 16,867 | ||||||
Proofpoint, Inc.* | 284 | 16,819 | ||||||
Ambarella, Inc.* | 222 | 16,808 | ||||||
EPAM Systems, Inc.* | 274 | 16,793 | ||||||
Tessera Technologies, Inc. | 411 | 16,556 | ||||||
Science Applications International Corp. | 322 | 16,535 | ||||||
Take-Two Interactive Software, Inc.* | 642 | 16,342 | ||||||
Fairchild Semiconductor International, Inc. — Class A* | 897 | 16,307 | ||||||
CACI International, Inc. — Class A* | 181 | 16,276 | ||||||
Dealertrack Technologies, Inc.* | 413 | 15,908 | ||||||
CommVault Systems, Inc.* | 364 | 15,907 | ||||||
Cirrus Logic, Inc.* | 478 | 15,898 | ||||||
Monolithic Power Systems, Inc. | 297 | 15,637 | ||||||
Electronics for Imaging, Inc.* | 359 | 14,988 | ||||||
Envestnet, Inc.* | 262 | 14,693 | ||||||
Entegris, Inc.* | 1,071 | 14,662 | ||||||
Intersil Corp. — Class A | 990 | 14,177 | ||||||
Demandware, Inc.* | 231 | 14,068 | ||||||
MKS Instruments, Inc. | 412 | 13,930 | ||||||
Semtech Corp.* | 517 | 13,775 | ||||||
FleetMatics Group plc* | 287 | 12,872 | ||||||
Synchronoss Technologies, Inc.* | 271 | 12,862 | ||||||
PMC-Sierra, Inc.* | 1,333 | 12,370 | ||||||
Syntel, Inc.* | 239 | 12,363 | ||||||
NetScout Systems, Inc.* | 280 | 12,278 | ||||||
Power Integrations, Inc. | 234 | 12,187 | ||||||
IGATE Corp.* | 283 | 12,073 | ||||||
MicroStrategy, Inc. — Class A* | 70 | 11,843 | ||||||
Cornerstone OnDemand, Inc.* | 409 | 11,816 | ||||||
OmniVision Technologies, Inc.* | 432 | 11,392 | ||||||
Rambus, Inc.* | 875 | 11,003 | ||||||
Acxiom Corp.* | 592 | 10,946 | ||||||
Progress Software Corp.* | 395 | 10,732 | ||||||
Monotype Imaging Holdings, Inc. | 304 | 9,923 | ||||||
Infoblox, Inc.* | 415 | 9,906 | ||||||
Omnicell, Inc.* | 282 | 9,898 | ||||||
QLogic Corp.* | 671 | 9,891 | ||||||
Veeco Instruments, Inc.* | 308 | 9,409 | ||||||
ExlService Holdings, Inc.* | 251 | 9,337 | ||||||
Cabot Microelectronics Corp.* | 186 | 9,294 | ||||||
Constant Contact, Inc.* | 242 | 9,247 | ||||||
Unisys Corp.* | 394 | 9,145 | ||||||
Insight Enterprises, Inc.* | 315 | 8,984 | ||||||
MedAssets, Inc.* | 469 | 8,827 | ||||||
Super Micro Computer, Inc.* | 265 | 8,800 | ||||||
Cray, Inc.* | 313 | 8,789 | ||||||
MTS Systems Corp. | 116 | 8,775 | ||||||
Imperva, Inc.* | 197 | 8,412 | ||||||
SPS Commerce, Inc.* | 125 | 8,388 | ||||||
InvenSense, Inc. — Class A* | 546 | 8,304 | ||||||
Bottomline Technologies de, Inc.* | 303 | 8,293 | ||||||
Virtusa Corp.* | 200 | 8,276 | ||||||
RealPage, Inc.* | 399 | 8,036 |
98 | THE RYDEX FUNDS ANNUAL REPORT | SEE NOTES TO FINANCIAL STATEMENTS. |
SCHEDULE OF INVESTMENTS (continued) | March 31, 2015 |
RUSSELL 2000® 1.5x STRATEGY FUND |
Shares | Value | |||||||
Diodes, Inc.* | 280 | $ | 7,997 | |||||
CSG Systems International, Inc. | 262 | 7,962 | ||||||
Sykes Enterprises, Inc.* | 303 | 7,530 | ||||||
BroadSoft, Inc.* | 220 | 7,361 | ||||||
Qualys, Inc.* | 155 | 7,204 | ||||||
Ebix, Inc. | 236 | 7,170 | ||||||
ManTech International Corp. — Class A | 185 | 6,279 | ||||||
Kofax Ltd.* | 571 | 6,252 | ||||||
Quality Systems, Inc. | 384 | 6,136 | ||||||
Brooks Automation, Inc. | 513 | 5,966 | ||||||
Pegasystems, Inc. | 273 | 5,938 | ||||||
AVG Technologies N.V.* | 268 | 5,802 | ||||||
Amkor Technology, Inc.* | 656 | 5,796 | ||||||
Lattice Semiconductor Corp.* | 905 | 5,738 | ||||||
Interactive Intelligence Group, Inc.* | 129 | 5,312 | ||||||
Micrel, Inc. | 343 | 5,172 | ||||||
inContact, Inc.* | 467 | 5,090 | ||||||
Actua Corp.* | 316 | 4,895 | ||||||
Callidus Software, Inc.* | 375 | 4,755 | ||||||
Computer Programs & Systems, Inc. | 86 | 4,666 | ||||||
PROS Holdings, Inc.* | 181 | 4,473 | ||||||
Emulex Corp.* | 546 | 4,352 | ||||||
Photronics, Inc.* | 509 | 4,327 | ||||||
Inphi Corp.* | 241 | 4,297 | ||||||
Epiq Systems, Inc. | 239 | 4,285 | ||||||
LivePerson, Inc.* | 417 | 4,268 | ||||||
PDF Solutions, Inc.* | 235 | 4,211 | ||||||
Integrated Silicon Solution, Inc. | 231 | 4,133 | ||||||
Engility Holdings, Inc. | 136 | 4,085 | ||||||
Tangoe, Inc.* | 296 | 4,085 | ||||||
Mercury Systems, Inc.* | 256 | 3,981 | ||||||
RealD, Inc.* | 309 | 3,952 | ||||||
Cvent, Inc.* | 138 | 3,870 | ||||||
FormFactor, Inc.* | 427 | 3,787 | ||||||
Ultratech, Inc.* | 216 | 3,745 | ||||||
Xcerra Corp.* | 409 | 3,636 | ||||||
M/A-COM Technology Solutions Holdings, Inc.* | 97 | 3,614 | ||||||
SciQuest, Inc.* | 211 | 3,572 | ||||||
Glu Mobile, Inc.* | 691 | 3,462 | ||||||
CEVA, Inc.* | 162 | 3,454 | ||||||
TeleTech Holdings, Inc. | 135 | 3,436 | ||||||
Luxoft Holding, Inc.* | 60 | 3,104 | ||||||
Nanometrics, Inc.* | 184 | 3,095 | ||||||
Applied Micro Circuits Corp.* | 600 | 3,060 | ||||||
Exar Corp.* | 304 | 3,055 | ||||||
Rally Software Development Corp.* | 192 | 3,012 | ||||||
Rudolph Technologies, Inc.* | 256 | 2,821 | ||||||
Quantum Corp.* | 1,680 | 2,688 | ||||||
Pericom Semiconductor Corp. | 171 | 2,645 | ||||||
Eastman Kodak Co.* | 136 | 2,583 | ||||||
Ciber, Inc.* | 598 | 2,464 | ||||||
Dot Hill Systems Corp.* | 462 | 2,449 | ||||||
Merge Healthcare, Inc.* | 544 | 2,432 | ||||||
Silver Spring Networks, Inc.* | 269 | 2,405 | ||||||
Barracuda Networks, Inc.* | 61 | 2,347 | ||||||
Violin Memory, Inc.* | 617 | 2,326 | ||||||
IXYS Corp. | 188 | 2,316 | ||||||
Silicon Graphics International Corp.* | 266 | 2,312 | ||||||
Vitesse Semiconductor Corp.* | 424 | 2,251 | ||||||
Cohu, Inc. | 194 | 2,122 | ||||||
KEYW Holding Corp.*,1 | 251 | 2,066 | ||||||
DSP Group, Inc.* | 171 | 2,049 | ||||||
Axcelis Technologies, Inc.* | 855 | 2,035 | ||||||
Entropic Communications, Inc.* | 684 | 2,025 | ||||||
2U, Inc.* | 79 | 2,021 | ||||||
Immersion Corp.* | 218 | 2,001 | ||||||
Seachange International, Inc.* | 253 | 1,986 | ||||||
Carbonite, Inc.* | 137 | 1,959 | ||||||
Digi International, Inc.* | 195 | 1,946 | ||||||
American Software, Inc. — Class A | 190 | 1,942 | ||||||
Maxwell Technologies, Inc.* | 230 | 1,854 | ||||||
Datalink Corp.* | 152 | 1,830 | ||||||
InnerWorkings, Inc.* | 270 | 1,814 | ||||||
Brightcove, Inc.* | 247 | 1,811 | ||||||
Kopin Corp.* | 507 | 1,785 | ||||||
Model N, Inc.* | 149 | 1,782 | ||||||
MaxLinear, Inc. — Class A* | 214 | 1,740 | ||||||
Vocera Communications, Inc.* | 174 | 1,726 | ||||||
Jive Software, Inc.* | 327 | 1,678 | ||||||
Ultra Clean Holdings, Inc.* | 226 | 1,616 | ||||||
Paycom Software, Inc.* | 50 | 1,603 | ||||||
Nimble Storage, Inc.* | 71 | 1,584 | ||||||
Mavenir Systems, Inc.* | 89 | 1,579 | ||||||
Sapiens International Corporation N.V.* | 189 | 1,550 | ||||||
Alpha & Omega Semiconductor Ltd.* | 167 | 1,488 | ||||||
Benefitfocus, Inc.* | 37 | 1,361 | ||||||
Cascade Microtech, Inc.* | 98 | 1,331 | ||||||
QAD, Inc. — Class A | 53 | 1,283 | ||||||
Rosetta Stone, Inc.* | 164 | 1,248 | ||||||
HubSpot, Inc.* | 31 | 1,237 | ||||||
Digimarc Corp. | 54 | 1,185 | ||||||
Agilysys, Inc.* | 112 | 1,102 | ||||||
Globant S.A.* | 52 | 1,095 | ||||||
Varonis Systems, Inc.* | 41 | 1,052 | ||||||
ExOne Co.* | 76 | 1,037 | ||||||
Park City Group, Inc.* | 73 | 1,006 | ||||||
MobileIron, Inc.* | 94 | 870 | ||||||
Computer Task Group, Inc. | 116 | 848 | ||||||
QuickLogic Corp.* | 422 | 814 | ||||||
Rubicon Technology, Inc.* | 200 | 788 | ||||||
Castlight Health, Inc. — Class B* | 99 | 768 | ||||||
Guidance Software, Inc.* | 138 | 747 | ||||||
Everyday Health, Inc.* | 58 | 746 | ||||||
Amber Road, Inc.* | 68 | 629 | ||||||
OPOWER, Inc.* | 60 | 608 | ||||||
Five9, Inc.* | 93 | 517 |
SEE NOTES TO FINANCIAL STATEMENTS. | THE RYDEX FUNDS ANNUAL REPORT | 99 |
SCHEDULE OF INVESTMENTS (continued) | March 31, 2015 |
RUSSELL 2000® 1.5x STRATEGY FUND |
Shares | Value | |||||||
Audience, Inc.* | 107 | $ | 486 | |||||
A10 Networks, Inc.* | 97 | 420 | ||||||
Total Technology | 1,518,176 | |||||||
COMMUNICATIONS - 4.4% | ||||||||
Qorvo, Inc.* | 1,102 | 87,830 | ||||||
j2 Global, Inc. | 366 | 24,039 | ||||||
Aruba Networks, Inc.* | 821 | 20,106 | ||||||
DigitalGlobe, Inc.* | 581 | 19,795 | ||||||
Houghton Mifflin Harcourt Co.* | 838 | 19,676 | ||||||
Time, Inc. | 849 | 19,051 | ||||||
ViaSat, Inc.* | 318 | 18,956 | ||||||
Infinera Corp.* | 942 | 18,529 | ||||||
Plantronics, Inc. | 327 | 17,315 | ||||||
Finisar Corp.* | 794 | 16,944 | ||||||
Sinclair Broadcast Group, Inc. — Class A | 528 | 16,585 | ||||||
Anixter International, Inc.* | 209 | 15,911 | ||||||
Ciena Corp.* | 808 | 15,602 | ||||||
Meredith Corp. | 276 | 15,392 | ||||||
New York Times Co. — Class A | 1,064 | 14,640 | ||||||
InterDigital, Inc. | 285 | 14,461 | ||||||
Polycom, Inc.* | 1,063 | 14,244 | ||||||
comScore, Inc.* | 267 | 13,670 | ||||||
Nexstar Broadcasting Group, Inc. — Class A | 236 | 13,504 | ||||||
Shutterfly, Inc.* | 296 | 13,390 | ||||||
WebMD Health Corp. — Class A* | 298 | 13,063 | ||||||
Cogent Communications Holdings, Inc. | 359 | 12,684 | ||||||
NeuStar, Inc. — Class A*,1 | 430 | 10,587 | ||||||
LogMeIn, Inc.* | 187 | 10,470 | ||||||
West Corp. | 296 | 9,984 | ||||||
Media General, Inc.* | 601 | 9,910 | ||||||
MDC Partners, Inc. — Class A | 326 | 9,242 | ||||||
NETGEAR, Inc.* | 280 | 9,206 | ||||||
NIC, Inc. | 502 | 8,870 | ||||||
Scholastic Corp. | 204 | 8,352 | ||||||
Gogo, Inc.*,1 | 430 | 8,196 | ||||||
New Media Investment Group, Inc. | 342 | 8,184 | ||||||
ADTRAN, Inc. | 434 | 8,103 | ||||||
Shutterstock, Inc.* | 117 | 8,034 | ||||||
Consolidated Communications Holdings, Inc. | 388 | 7,914 | ||||||
Web.com Group, Inc.* | 399 | 7,561 | ||||||
Stamps.com, Inc.* | 109 | 7,335 | ||||||
Globalstar, Inc.*,1 | 2,103 | 7,003 | ||||||
Loral Space & Communications, Inc.* | 100 | 6,844 | ||||||
EW Scripps Co. — Class A* | 240 | 6,826 | ||||||
Ubiquiti Networks, Inc. | 229 | 6,767 | ||||||
Vonage Holdings Corp.* | 1,340 | 6,579 | ||||||
Ruckus Wireless, Inc.* | 499 | 6,422 | ||||||
Iridium Communications, Inc.* | 620 | 6,020 | ||||||
Bankrate, Inc.* | 516 | 5,851 | ||||||
Shenandoah Telecommunications Co. | 186 | 5,796 | ||||||
8x8, Inc.* | 681 | 5,720 | ||||||
Cincinnati Bell, Inc.* | 1,607 | 5,673 | ||||||
Perficient, Inc.* | 266 | 5,504 | ||||||
Harmonic, Inc.* | 726 | 5,380 | ||||||
Ixia* | 443 | 5,374 | ||||||
Gray Television, Inc.* | 382 | 5,279 | ||||||
Journal Communications, Inc. — Class A* | 345 | 5,113 | ||||||
Marketo, Inc.* | 197 | 5,047 | ||||||
Atlantic Tele-Network, Inc. | 72 | 4,984 | ||||||
VASCO Data Security International, Inc.* | 227 | 4,889 | ||||||
Orbitz Worldwide, Inc.* | 397 | 4,629 | ||||||
Lands’ End, Inc.* | 127 | 4,557 | ||||||
Chegg, Inc.* | 566 | 4,500 | ||||||
CalAmp Corp.* | 276 | 4,468 | ||||||
Blucora, Inc.* | 324 | 4,426 | ||||||
Endurance International Group Holdings, Inc.* | 232 | 4,422 | ||||||
FTD Companies, Inc.* | 146 | 4,371 | ||||||
General Communication, Inc. — Class A* | 277 | 4,366 | ||||||
Internap Corp.* | 418 | 4,276 | ||||||
RetailMeNot, Inc.* | 237 | 4,268 | ||||||
Global Eagle Entertainment, Inc.* | 309 | 4,113 | ||||||
HealthStream, Inc.* | 163 | 4,108 | ||||||
Gigamon, Inc.* | 186 | 3,951 | ||||||
Inteliquent, Inc. | 250 | 3,935 | ||||||
Textura Corp.* | 144 | 3,914 | ||||||
XO Group, Inc.* | 207 | 3,658 | ||||||
Premiere Global Services, Inc.* | 371 | 3,547 | ||||||
EarthLink Holdings Corp. | 787 | 3,494 | ||||||
ePlus, Inc.* | 40 | 3,478 | ||||||
Comverse, Inc.* | 173 | 3,408 | ||||||
Comtech Telecommunications Corp. | 117 | 3,387 | ||||||
RingCentral, Inc. — Class A* | 216 | 3,311 | ||||||
ShoreTel, Inc.* | 481 | 3,280 | ||||||
World Wrestling Entertainment, Inc. — Class A | 229 | 3,208 | ||||||
Spok Holdings, Inc. | 167 | 3,201 | ||||||
Intralinks Holdings, Inc.* | 302 | 3,123 | ||||||
GrubHub, Inc.* | 68 | 3,087 | ||||||
Cumulus Media, Inc. — Class A* | 1,241 | 3,065 | ||||||
Sonus Networks, Inc.* | 378 | 2,979 | ||||||
Blue Nile, Inc.* | 93 | 2,961 | ||||||
Harte-Hanks, Inc. | 379 | 2,956 | ||||||
Safeguard Scientifics, Inc.* | 159 | 2,875 | ||||||
Lionbridge Technologies, Inc.* | 497 | 2,843 | ||||||
Entravision Communications Corp. — Class A | 446 | 2,823 | ||||||
FairPoint Communications, Inc.* | 160 | 2,816 | ||||||
Calix, Inc.* | 319 | 2,676 | ||||||
Dice Holdings, Inc.* | 298 | 2,658 | ||||||
RigNet, Inc.* | 92 | 2,630 | ||||||
Intelsat S.A.* | 211 | 2,532 | ||||||
ORBCOMM, Inc.* | 422 | 2,519 | ||||||
Black Box Corp. | 120 | 2,512 | ||||||
Extreme Networks, Inc.* | 742 | 2,345 | ||||||
GTT Communications, Inc.* | 124 | 2,341 | ||||||
Entercom Communications Corp. — Class A* | 190 | 2,309 | ||||||
IDT Corp. — Class B | 129 | 2,290 | ||||||
1-800-Flowers.com, Inc. — Class A* | 191 | 2,260 |
100 | THE RYDEX FUNDS ANNUAL REPORT | SEE NOTES TO FINANCIAL STATEMENTS. |
SCHEDULE OF INVESTMENTS (continued) | March 31, 2015 |
RUSSELL 2000® 1.5x STRATEGY FUND |
Shares | Value | |||||||
Lumos Networks Corp. | 145 | $ | 2,213 | |||||
EVINE Live, Inc.* | 328 | 2,201 | ||||||
Bazaarvoice, Inc.* | 385 | 2,175 | ||||||
Hawaiian Telcom Holdco, Inc.* | 81 | 2,157 | ||||||
Overstock.com, Inc.* | 89 | 2,156 | ||||||
Wayfair, Inc. — Class A* | 67 | 2,152 | ||||||
Wix.com Ltd.* | 106 | 2,031 | ||||||
VirnetX Holding Corp.* | 326 | 1,985 | ||||||
Zendesk, Inc.* | 87 | 1,974 | ||||||
Angie’s List, Inc.* | 335 | 1,966 | ||||||
Liquidity Services, Inc.* | 189 | 1,867 | ||||||
KVH Industries, Inc.* | 122 | 1,845 | ||||||
Zix Corp.* | 456 | 1,792 | ||||||
Limelight Networks, Inc.* | 464 | 1,684 | ||||||
Alliance Fiber Optic Products, Inc. | 96 | 1,672 | ||||||
Telenav, Inc.* | 210 | 1,663 | ||||||
Reis, Inc. | 63 | 1,615 | ||||||
Q2 Holdings, Inc.* | 76 | 1,607 | ||||||
QuinStreet, Inc.* | 267 | 1,589 | ||||||
ChannelAdvisor Corp.* | 160 | 1,550 | ||||||
Martha Stewart Living Omnimedia, Inc. — Class A* | 230 | 1,495 | ||||||
Procera Networks, Inc.* | 159 | 1,493 | ||||||
TechTarget, Inc.* | 128 | 1,476 | ||||||
Daily Journal Corp.* | 8 | 1,466 | ||||||
Central European Media Enterprises Ltd. — Class A* | 542 | 1,442 | ||||||
Lee Enterprises, Inc.* | 450 | 1,427 | ||||||
Oclaro, Inc.* | 717 | 1,420 | ||||||
TeleCommunication Systems, Inc. — Class A* | 370 | 1,417 | ||||||
Boingo Wireless, Inc.* | 179 | 1,350 | ||||||
Rocket Fuel, Inc.* | 142 | 1,306 | ||||||
Clearfield, Inc.* | 87 | 1,289 | ||||||
Marin Software, Inc.* | 203 | 1,277 | ||||||
Numerex Corp. — Class A* | 112 | 1,277 | ||||||
Saga Communications, Inc. — Class A | 28 | 1,247 | ||||||
Sizmek, Inc.* | 170 | 1,234 | ||||||
AH Belo Corp. — Class A | 145 | 1,193 | ||||||
RealNetworks, Inc.* | 177 | 1,191 | ||||||
Rubicon Project, Inc.* | 61 | 1,093 | ||||||
ModusLink Global Solutions, Inc.* | 283 | 1,090 | ||||||
Tessco Technologies, Inc. | 44 | 1,085 | ||||||
Coupons.com, Inc.* | 92 | 1,080 | ||||||
TrueCar, Inc.* | 60 | 1,071 | ||||||
Crown Media Holdings, Inc. — Class A* | 267 | 1,068 | ||||||
Marchex, Inc. — Class B | 253 | 1,032 | ||||||
Cinedigm Corp. — Class A* | 586 | 949 | ||||||
magicJack VocalTec Ltd.* | 138 | 944 | ||||||
Townsquare Media, Inc. — Class A* | 68 | 874 | ||||||
McClatchy Co. — Class A* | 470 | 865 | ||||||
Cyan, Inc.* | 212 | 846 | ||||||
Preformed Line Products Co. | 20 | 843 | ||||||
Millennial Media, Inc.* | 580 | 841 | ||||||
Hemisphere Media Group, Inc.* | 64 | 810 | ||||||
YuMe, Inc.* | 140 | 727 | ||||||
Global Sources Ltd.* | 117 | 686 | ||||||
Rightside Group Ltd.* | 67 | 680 | ||||||
Tremor Video, Inc.* | 273 | 639 | ||||||
NTELOS Holdings Corp. | 130 | 624 | ||||||
ParkerVision, Inc.*,1 | 741 | 615 | ||||||
Covisint Corp.* | 294 | 597 | ||||||
Radio One, Inc. — Class D* | 178 | 548 | ||||||
Travelzoo, Inc.* | 56 | 540 | ||||||
Salem Media Group, Inc. — Class A | 83 | 511 | ||||||
Yodlee, Inc.* | 37 | 498 | ||||||
Dex Media, Inc.* | 114 | 478 | ||||||
Unwired Planet, Inc.* | 754 | 431 | ||||||
Demand Media, Inc.* | 67 | 383 | ||||||
TubeMogul, Inc.* | 27 | 373 | ||||||
Vringo, Inc.* | 550 | 358 | ||||||
Aerohive Networks, Inc.* | 73 | 326 | ||||||
ReachLocal, Inc.* | 101 | 294 | ||||||
Borderfree, Inc.* | 46 | 276 | ||||||
Total Communications | 918,251 | |||||||
UTILITIES - 2.3% | ||||||||
Dynegy, Inc.* | 944 | 29,669 | ||||||
Cleco Corp. | 465 | 25,352 | ||||||
IDACORP, Inc. | 388 | 24,394 | ||||||
WGL Holdings, Inc. | 400 | 22,560 | ||||||
UIL Holdings Corp. | 435 | 22,368 | ||||||
Portland General Electric Co. | 601 | 22,291 | ||||||
Piedmont Natural Gas Company, Inc. | 600 | 22,146 | ||||||
Southwest Gas Corp. | 358 | 20,825 | ||||||
New Jersey Resources Corp. | 648 | 20,127 | ||||||
NorthWestern Corp. | 361 | 19,418 | ||||||
ALLETE, Inc. | 342 | 18,044 | ||||||
PNM Resources, Inc. | 612 | 17,870 | ||||||
Black Hills Corp. | 343 | 17,301 | ||||||
ONE Gas, Inc. | 400 | 17,292 | ||||||
Laclede Group, Inc. | 332 | 17,005 | ||||||
Avista Corp. | 463 | 15,825 | ||||||
South Jersey Industries, Inc. | 254 | 13,787 | ||||||
El Paso Electric Co. | 310 | 11,978 | ||||||
American States Water Co. | 298 | 11,887 | ||||||
MGE Energy, Inc. | 267 | 11,833 | ||||||
Northwest Natural Gas Co. | 209 | 10,022 | ||||||
Ormat Technologies, Inc. | 253 | 9,619 | ||||||
NRG Yield, Inc. — Class A | 183 | 9,284 | ||||||
Otter Tail Corp. | 281 | 9,040 | ||||||
California Water Service Group | 368 | 9,020 | ||||||
Empire District Electric Co. | 332 | 8,240 | ||||||
Abengoa Yield plc | 220 | 7,432 | ||||||
Chesapeake Utilities Corp. | 112 | 5,668 | ||||||
SJW Corp. | 120 | 3,709 | ||||||
Unitil Corp. | 106 | 3,686 | ||||||
Connecticut Water Service, Inc. | 84 | 3,052 |
SEE NOTES TO FINANCIAL STATEMENTS. | THE RYDEX FUNDS ANNUAL REPORT | 101 |
SCHEDULE OF INVESTMENTS (continued) | March 31, 2015 |
RUSSELL 2000® 1.5x STRATEGY FUND |
Shares | Value | |||||||
PICO Holdings, Inc.* | 175 | $ | 2,837 | |||||
Middlesex Water Co. | 123 | 2,799 | ||||||
Atlantic Power Corp. | 928 | 2,608 | ||||||
York Water Co. | 99 | 2,404 | ||||||
EnerNOC, Inc.* | 207 | 2,360 | ||||||
Artesian Resources Corp. — Class A | 59 | 1,262 | ||||||
Ameresco, Inc. — Class A* | 153 | 1,132 | ||||||
Spark Energy, Inc. — Class A | 23 | 339 | ||||||
Total Utilities | 476,485 | |||||||
BASIC MATERIALS - 2.1% | ||||||||
Sensient Technologies Corp. | 381 | 26,242 | ||||||
PolyOne Corp. | 682 | 25,473 | ||||||
Axiall Corp. | 538 | 25,254 | ||||||
Olin Corp. | 607 | 19,448 | ||||||
Minerals Technologies, Inc. | 265 | 19,372 | ||||||
HB Fuller Co. | 384 | 16,462 | ||||||
Chemtura Corp.* | 557 | 15,201 | ||||||
US Silica Holdings, Inc. | 414 | 14,743 | ||||||
Commercial Metals Co. | 905 | 14,651 | ||||||
Balchem Corp. | 234 | 12,959 | ||||||
Stillwater Mining Co.* | 921 | 11,899 | ||||||
A. Schulman, Inc. | 225 | 10,845 | ||||||
Schweitzer-Mauduit International, Inc. | 234 | 10,792 | ||||||
Kaiser Aluminum Corp. | 139 | 10,687 | ||||||
Worthington Industries, Inc. | 396 | 10,538 | ||||||
Clearwater Paper Corp.* | 157 | 10,252 | ||||||
Tronox Ltd. — Class A | 473 | 9,616 | ||||||
Innophos Holdings, Inc. | 169 | 9,525 | ||||||
Globe Specialty Metals, Inc. | 491 | 9,290 | ||||||
PH Glatfelter Co. | 331 | 9,112 | ||||||
Innospec, Inc. | 188 | 8,721 | ||||||
Resolute Forest Products, Inc.* | 502 | 8,660 | ||||||
Quaker Chemical Corp. | 101 | 8,650 | ||||||
Calgon Carbon Corp. | 410 | 8,639 | ||||||
Hecla Mining Co. | 2,815 | 8,389 | ||||||
Neenah Paper, Inc. | 128 | 8,005 | ||||||
OM Group, Inc. | 247 | 7,417 | ||||||
Ferro Corp.* | 552 | 6,928 | ||||||
Stepan Co. | 148 | 6,166 | ||||||
Materion Corp. | 159 | 6,110 | ||||||
AK Steel Holding Corp.* | 1,356 | 6,061 | ||||||
Deltic Timber Corp. | 85 | 5,631 | ||||||
Century Aluminum Co.* | 396 | 5,465 | ||||||
Horsehead Holding Corp.* | 429 | 5,431 | ||||||
Kraton Performance Polymers, Inc.* | 252 | 5,093 | ||||||
Intrepid Potash, Inc.* | 429 | 4,955 | ||||||
Aceto Corp. | 221 | 4,862 | ||||||
Coeur Mining, Inc.* | 796 | 3,749 | ||||||
Schnitzer Steel Industries, Inc. — Class A | 203 | 3,220 | ||||||
OMNOVA Solutions, Inc.* | 365 | 3,113 | ||||||
Koppers Holdings, Inc. | 158 | 3,109 | ||||||
Wausau Paper Corp. | 324 | 3,088 | ||||||
Hawkins, Inc. | 81 | 3,077 | ||||||
Zep, Inc. | 177 | 3,014 | ||||||
Landec Corp.* | 206 | 2,874 | ||||||
American Vanguard Corp. | 221 | 2,347 | ||||||
Kronos Worldwide, Inc. | 161 | 2,037 | ||||||
KMG Chemicals, Inc. | 74 | 1,978 | ||||||
Rentech, Inc.* | 1,744 | 1,953 | ||||||
Orchids Paper Products Co. | 62 | 1,672 | ||||||
Ring Energy, Inc.* | 155 | 1,646 | ||||||
Universal Stainless & Alloy Products, Inc.* | 54 | 1,416 | ||||||
Oil-Dri Corporation of America | 37 | 1,245 | ||||||
Noranda Aluminum Holding Corp. | 341 | 1,013 | ||||||
United States Lime & Minerals, Inc. | 15 | 968 | ||||||
Gold Resource Corp. | 288 | 919 | ||||||
Shiloh Industries, Inc.* | 64 | 899 | ||||||
Molycorp, Inc.*,1 | 1,394 | 537 | ||||||
Ryerson Holding Corp.* | 84 | 535 | ||||||
Total Basic Materials | 451,953 | |||||||
ENERGY - 2.1% | ||||||||
SemGroup Corp. — Class A | 328 | 26,680 | ||||||
Diamondback Energy, Inc.* | 338 | 25,973 | ||||||
Carrizo Oil & Gas, Inc.* | 393 | 19,512 | ||||||
Western Refining, Inc. | 379 | 18,719 | ||||||
Delek US Holdings, Inc. | 457 | 18,166 | ||||||
PDC Energy, Inc.* | 306 | 16,536 | ||||||
Exterran Holdings, Inc. | 451 | 15,140 | ||||||
Bristow Group, Inc. | 274 | 14,919 | ||||||
Matador Resources Co.* | 564 | 12,363 | ||||||
Helix Energy Solutions Group, Inc.* | 812 | 12,148 | ||||||
SEACOR Holdings, Inc.* | 142 | 9,893 | ||||||
Rosetta Resources, Inc.* | 566 | 9,633 | ||||||
Forum Energy Technologies, Inc.* | 459 | 8,996 | ||||||
Pattern Energy Group, Inc. | 309 | 8,751 | ||||||
Green Plains, Inc. | 288 | 8,222 | ||||||
TerraForm Power, Inc. — Class A | 218 | 7,959 | ||||||
SunCoke Energy, Inc. | 519 | 7,754 | ||||||
Bonanza Creek Energy, Inc.* | 302 | 7,447 | ||||||
Synergy Resources Corp.* | 621 | 7,359 | ||||||
McDermott International, Inc.* | 1,826 | 7,012 | ||||||
Parsley Energy, Inc. — Class A* | 409 | 6,536 | ||||||
Stone Energy Corp.* | 432 | 6,342 | ||||||
Flotek Industries, Inc.* | 414 | 6,102 | ||||||
Newpark Resources, Inc.* | 653 | 5,949 | ||||||
Thermon Group Holdings, Inc.* | 245 | 5,897 | ||||||
Sanchez Energy Corp.* | 392 | 5,100 | ||||||
Primoris Services Corp. | 292 | 5,019 | ||||||
CARBO Ceramics, Inc. | 152 | 4,638 | ||||||
RSP Permian, Inc.* | 180 | 4,534 | ||||||
Magnum Hunter Resources Corp.*,1 | 1,522 | 4,064 | ||||||
C&J Energy Services Ltd.* | 355 | 3,951 | ||||||
TETRA Technologies, Inc.* | 607 | 3,751 | ||||||
Northern Oil and Gas, Inc.* | 470 | 3,624 | ||||||
Matrix Service Co.* | 203 | 3,565 | ||||||
Alon USA Energy, Inc. | 202 | 3,347 |
102 | THE RYDEX FUNDS ANNUAL REPORT | SEE NOTES TO FINANCIAL STATEMENTS. |
SCHEDULE OF INVESTMENTS (continued) | March 31, 2015 |
RUSSELL 2000® 1.5x STRATEGY FUND |
Shares | Value | |||||||
Plug Power, Inc.* | 1,285 | $ | 3,328 | |||||
Penn Virginia Corp.*,1 | 504 | 3,266 | ||||||
Parker Drilling Co.* | 931 | 3,248 | ||||||
Callon Petroleum Co.* | 426 | 3,182 | ||||||
Bill Barrett Corp.* | 383 | 3,179 | ||||||
Westmoreland Coal Co.* | 115 | 3,076 | ||||||
Halcon Resources Corp.*,1 | 1,997 | 3,075 | ||||||
Tesco Corp. | 267 | 3,036 | ||||||
Contango Oil & Gas Co.* | 134 | 2,948 | ||||||
REX American Resources Corp.* | 48 | 2,919 | ||||||
PHI, Inc.* | 97 | 2,918 | ||||||
Triangle Petroleum Corp.*,1 | 574 | 2,887 | ||||||
Clean Energy Fuels Corp.* | 537 | 2,865 | ||||||
Gulfmark Offshore, Inc. — Class A | 210 | 2,738 | ||||||
Cloud Peak Energy, Inc.* | 469 | 2,730 | ||||||
Energy XXI Ltd.1 | 721 | 2,624 | ||||||
Pioneer Energy Services Corp.* | 483 | 2,618 | ||||||
Renewable Energy Group, Inc.* | 266 | 2,453 | ||||||
Abraxas Petroleum Corp.* | 711 | 2,311 | ||||||
Clayton Williams Energy, Inc.* | 45 | 2,278 | ||||||
FuelCell Energy, Inc.* | 1,794 | 2,243 | ||||||
ION Geophysical Corp.* | 993 | 2,155 | ||||||
EXCO Resources, Inc. | 1,168 | 2,137 | ||||||
Panhandle Oil and Gas, Inc. — Class A | 107 | 2,118 | ||||||
Approach Resources, Inc.* | 303 | 1,997 | ||||||
Pacific Ethanol, Inc.* | 184 | 1,985 | ||||||
Enphase Energy, Inc.* | 141 | 1,860 | ||||||
Trecora Resources* | 151 | 1,842 | ||||||
Key Energy Services, Inc.* | 1,006 | 1,831 | ||||||
Natural Gas Services Group, Inc.* | 95 | 1,826 | ||||||
FutureFuel Corp. | 167 | 1,715 | ||||||
Alpha Natural Resources, Inc.*,1 | 1,701 | 1,701 | ||||||
Basic Energy Services, Inc.* | 245 | 1,698 | ||||||
Geospace Technologies Corp.* | 101 | 1,668 | ||||||
Solazyme, Inc.*,1 | 582 | 1,665 | ||||||
Gulf Island Fabrication, Inc. | 111 | 1,649 | ||||||
Arch Coal, Inc.*,1 | 1,626 | 1,626 | ||||||
Gastar Exploration, Inc.* | 539 | 1,412 | ||||||
W&T Offshore, Inc. | 269 | 1,375 | ||||||
Rex Energy Corp.* | 369 | 1,373 | ||||||
Eclipse Resources Corp.* | 233 | 1,309 | ||||||
Comstock Resources, Inc. | 366 | 1,307 | ||||||
Vivint Solar, Inc.* | 107 | 1,299 | ||||||
Adams Resources & Energy, Inc. | 16 | 1,075 | ||||||
PetroQuest Energy, Inc.* | 450 | 1,035 | ||||||
Willbros Group, Inc.* | 307 | 1,016 | ||||||
Goodrich Petroleum Corp.* | 268 | 951 | ||||||
FMSA Holdings, Inc.* | 130 | 941 | ||||||
VAALCO Energy, Inc.* | 382 | 936 | ||||||
TransAtlantic Petroleum Ltd.* | 173 | 924 | ||||||
Hallador Energy Co. | 79 | 924 | ||||||
Evolution Petroleum Corp. | 151 | 898 | ||||||
Isramco, Inc.* | 7 | 881 | ||||||
Swift Energy Co.*,1 | 336 | 726 | ||||||
Jones Energy, Inc. — Class A* | 73 | 656 | ||||||
North Atlantic Drilling Ltd. | 547 | 635 | ||||||
Warren Resources, Inc.* | 619 | 551 | ||||||
Independence Contract Drilling, Inc.* | 79 | 551 | ||||||
FX Energy, Inc.* | 415 | 519 | ||||||
Hercules Offshore, Inc.* | 1,235 | 518 | ||||||
Vantage Drilling Co.* | 1,580 | 517 | ||||||
Amyris, Inc.* | 207 | 497 | ||||||
Mitcham Industries, Inc.* | 97 | 446 | ||||||
Nuverra Environmental Solutions, Inc.*,1 | 116 | 413 | ||||||
Vertex Energy, Inc.* | 100 | 370 | ||||||
Resolute Energy Corp.* | 600 | 338 | ||||||
Walter Energy, Inc. | 504 | 312 | ||||||
Emerald Oil, Inc.* | 341 | 252 | ||||||
Midstates Petroleum Company, Inc.* | 286 | 243 | ||||||
Glori Energy, Inc.* | 93 | 198 | ||||||
Profire Energy, Inc.* | 112 | 151 | ||||||
Miller Energy Resources, Inc.* | 231 | 144 | ||||||
Harvest Natural Resources, Inc.* | 322 | 144 | ||||||
American Eagle Energy Corp.* | 234 | 42 | ||||||
Total Energy | 450,875 | |||||||
CONSUMER DISCRETIONARY - 0.2% | ||||||||
Cimpress N.V.* | 256 | 21,600 | ||||||
Travelport Worldwide Ltd. | 230 | 3,841 | ||||||
Virgin America, Inc.* | 117 | 3,557 | ||||||
Shake Shack, Inc. — Class A* | 44 | 2,203 | ||||||
Metaldyne Performance Group, Inc. | 88 | 1,586 | ||||||
Freshpet, Inc.* | 61 | 1,185 | ||||||
Dave & Buster’s Entertainment, Inc.* | 37 | 1,127 | ||||||
Habit Restaurants, Inc. — Class A* | 31 | 996 | ||||||
Boot Barn Holdings, Inc.* | 31 | 742 | ||||||
Total Consumer Discretionary | 36,837 | |||||||
HEALTH CARE - 0.1% | ||||||||
Spark Therapeutics, Inc.* | 62 | 4,804 | ||||||
Providence Service Corp.* | 88 | 4,675 | ||||||
Dynavax Technologies Corp.* | 202 | 4,531 | ||||||
PRA Health Sciences, Inc.* | 150 | 4,326 | ||||||
Diplomat Pharmacy, Inc.* | 117 | 4,046 | ||||||
FibroGen, Inc.* | 48 | 1,506 | ||||||
Genesis Healthcare, Inc.* | 207 | 1,474 | ||||||
Calithera Biosciences, Inc.* | 42 | 690 | ||||||
Symmetry Surgical, Inc.* | 48 | 352 | ||||||
Second Sight Medical Products, Inc.* | 23 | 295 | ||||||
Total Health Care | 26,699 | |||||||
DIVERSIFIED - 0.1% | ||||||||
Horizon Pharma plc* | 501 | 13,012 | ||||||
National Bank Holdings Corp. — Class A | 303 | 5,699 | ||||||
FCB Financial Holdings, Inc. — Class A* | 63 | 1,724 | ||||||
Resource America, Inc. — Class A | 117 | 1,065 |
SEE NOTES TO FINANCIAL STATEMENTS. | THE RYDEX FUNDS ANNUAL REPORT | 103 |
SCHEDULE OF INVESTMENTS (continued) | March 31, 2015 |
RUSSELL 2000® 1.5x STRATEGY FUND |
Shares | Value | |||||||
Tiptree Financial, Inc. — Class A | 69 | $ | 457 | |||||
Total Diversified | 21,957 | |||||||
FINANCIALS - 0.1% | ||||||||
Gramercy Property Trust, Inc. | 359 | 10,083 | ||||||
InfraREIT, Inc. | 176 | 5,032 | ||||||
James River Group Holdings Ltd. | 84 | 1,977 | ||||||
On Deck Capital, Inc.* | 88 | 1,874 | ||||||
Easterly Government Properties, Inc.* | 106 | 1,701 | ||||||
Total Financials | 20,667 | |||||||
CONSUMER STAPLES - 0.0% | ||||||||
HRG Group, Inc.* | 640 | 7,987 | ||||||
GOVERNMENT - 0.0% | ||||||||
Banco Latinoamericano de Comercio Exterior S.A. — Class E | 229 | 7,509 | ||||||
INFORMATION TECHNOLOGY - 0.0% | ||||||||
Box, Inc. — Class A* | 96 | 1,896 | ||||||
New Relic, Inc.* | 44 | 1,527 | ||||||
Hortonworks, Inc.* | 55 | 1,311 | ||||||
Total Information Technology | 4,734 | |||||||
INDUSTRIALS - 0.0% | ||||||||
Patriot Transportation Holding, Inc.* | 17 | 424 | ||||||
Total Common Stocks | ||||||||
(Cost $10,627,812) | 13,929,839 | |||||||
WARRANTS†† - 0.0% | ||||||||
Tejon Ranch Co. | ||||||||
$10.50, 08/31/16† | 54 | 43 | ||||||
Imperial Holdings, Inc. | ||||||||
$10.75, 10/06/19 | 4 | — | ||||||
Magnum Hunter Resources Corp. | ||||||||
$8.50, 04/15/161 | 282 | — | ||||||
Total Warrants | ||||||||
(Cost $344) | 43 | |||||||
RIGHTS - 0.0% | ||||||||
Leap Wireless International, Inc. | ||||||||
Expires 09/17/15††† | 513 | 1,293 | ||||||
Furiex Pharmaceuticals, Inc. | ||||||||
Expires 07/03/17††† | 46 | 449 | ||||||
Omthera Pharmaceuticals, Inc. | ||||||||
Expires 12/31/20††† | 57 | 34 | ||||||
Total Rights | ||||||||
(Cost $570) | 1,776 | |||||||
MUTUAL FUNDS† - 6.6% | ||||||||
Guggenheim Strategy Fund I2 | 55,518 | 1,382,408 | ||||||
Total Mutual Funds | ||||||||
(Cost $1,379,083) | 1,382,408 | |||||||
Face Amount | ||||||||
REPURCHASE AGREEMENTS††,3 - 9.5% | ||||||||
HSBC Group issued 03/31/15 at 0.03% due 04/01/15 | $ | 1,558,818 | 1,558,818 | |||||
RBC Capital Markets issued 03/31/15 at 0.05% due 04/01/15 | 238,220 | 238,220 | ||||||
UMB Financial Corp. issued 03/31/15 at 0.03% due 04/01/15 | 191,211 | 191,211 | ||||||
Total Repurchase Agreements | ||||||||
(Cost $1,988,249) | 1,988,249 | |||||||
SECURITIES LENDING COLLATERAL††,4 - 0.4% | ||||||||
Repurchase Agreements | ||||||||
HSBC Securities, Inc. issued 03/31/15 at 0.10% due 04/01/15 | 55,128 | 55,128 | ||||||
BNP Paribas Securities Corp. issued 03/31/15 at 0.10% due 04/01/15 | 18,964 | 18,964 | ||||||
Barclays Capital, Inc. issued 03/31/15 at 0.10% due 04/01/15 | 9,788 | 9,788 | ||||||
Total Securities Lending Collateral | ||||||||
(Cost $83,880) | 83,880 | |||||||
Total Investments - 82.7% | ||||||||
(Cost $14,079,938) | $ | 17,386,195 | ||||||
Other Assets & Liabilities, net - 17.3% | 3,637,369 | |||||||
Total Net Assets - 100.0% | $ | 21,023,564 | ||||||
104 | THE RYDEX FUNDS ANNUAL REPORT | SEE NOTES TO FINANCIAL STATEMENTS. |
SCHEDULE OF INVESTMENTS (concluded) | March 31, 2015 |
RUSSELL 2000® 1.5x STRATEGY FUND |
Contracts | Unrealized Gain | |||||||
EQUITY FUTURES CONTRACTS PURCHASED† | ||||||||
June 2015 Russell 2000 Index Mini Futures Contracts (Aggregate Value of Contracts $4,122,360) | 33 | $ | 14,055 | |||||
Units | ||||||||
OTC EQUITY INDEX SWAP AGREEMENTS†† | ||||||||
Goldman Sachs International April 2015 Russell 2000 Index Swap, Terminating 04/28/155 (Notional Value $8,524,624) | 6,805 | $ | 146,361 | |||||
Credit Suisse Capital, LLC April 2015 Russell 2000 Index Swap, Terminating 04/28/155 (Notional Value $1,159,758) | 926 | 19,885 | ||||||
Barclays Bank plc April 2015 Russell 2000 Index Swap, Terminating 04/30/155 (Notional Value $3,398,763) | 2,713 | 3,787 | ||||||
(Total Notional Value $13,083,145) | $ | 170,033 |
* | Non-income producing security. |
† | Value determined based on Level 1 inputs, unless otherwise noted — See Note 4. |
†† | Value determined based on Level 2 inputs, unless otherwise noted — See Note 4. |
††† | Value determined based on Level 3 inputs — See Note 4. |
1 | All or portion of this security is on loan at March 31, 2015 — See Note 6. |
2 | Investment in a product that is managed by and/or pays a management fee to a party related to the Adviser — See Note 12. |
3 | Repurchase Agreements — See Note 5. |
4 | Securities lending collateral — See Note 6. |
5 | Total Return based on Russell 2000 Index +/- financing at a variable rate. |
plc — Public Limited Company | |
REIT — Real Estate Investment Trust |
SEE NOTES TO FINANCIAL STATEMENTS. | THE RYDEX FUNDS ANNUAL REPORT | 105 |
RUSSELL 2000® 1.5x STRATEGY FUND |
STATEMENT OF ASSETS AND LIABILITIES
March 31, 2015
Assets: | ||||
Investments, at value - including $79,905 of securities loaned (cost $12,007,809) | $ | 15,314,066 | ||
Repurchase agreements, at value (cost $2,072,129) | 2,072,129 | |||
Total investments (cost $14,079,938) | 17,386,195 | |||
Foreign currency, at value (cost $15) | 15 | |||
Segregated cash with broker | 2,532,300 | |||
Unrealized appreciation on swap agreements | 170,033 | |||
Cash | 1,388 | |||
Receivables: | ||||
Fund shares sold | 1,203,409 | |||
Securities sold | 51,546 | |||
Swap settlement | 27,630 | |||
Dividends | 19,086 | |||
Variation margin | 1,650 | |||
Securities lending income | 391 | |||
Interest | 2 | |||
Total assets | 21,393,645 | |||
Liabilities: | ||||
Payable for: | ||||
Fund shares redeemed | 157,546 | |||
Securities purchased | 86,150 | |||
Return of securities loaned | 85,106 | |||
Management fees | 15,611 | |||
Distribution and service fees | 5,434 | |||
Transfer agent and administrative fees | 4,336 | |||
Portfolio accounting fees | 1,735 | |||
Miscellaneous | 14,163 | |||
Total liabilities | 370,081 | |||
Commitments and contingent liabilities (Note 15) | — | |||
Net assets | $ | 21,023,564 | ||
Net assets consist of: | ||||
Paid in capital | $ | 17,465,124 | ||
Accumulated net investment loss | (4,597 | ) | ||
Accumulated net realized gain on investments | 72,692 | |||
Net unrealized appreciation on investments | 3,490,345 | |||
Net assets | $ | 21,023,564 | ||
A-Class: | ||||
Net assets | $ | 627,472 | ||
Capital shares outstanding | 10,810 | |||
Net asset value per share | $ | 58.05 | ||
Maximum offering price per share (Net asset value divided by 95.25%) | $ | 60.94 | ||
C-Class: | ||||
Net assets | $ | 1,799,764 | ||
Capital shares outstanding | 34,602 | |||
Net asset value per share | $ | 52.01 | ||
H-Class: | ||||
Net assets | $ | 18,596,328 | ||
Capital shares outstanding | 320,953 | |||
Net asset value per share | $ | 57.94 |
STATEMENT OF OPERATIONS
Year Ended March 31, 2015
Investment Income: | ||||
Dividends (net of foreign withholding tax of $129) | $ | 197,091 | ||
Income from securities lending, net | 3,455 | |||
Interest | 987 | |||
Total investment income | 201,533 | |||
Expenses: | ||||
Management fees | 192,284 | |||
Transfer agent and administrative fees | 53,412 | |||
Distribution and service fees: | ||||
A-Class | 1,458 | |||
C-Class | 17,136 | |||
H-Class | 47,670 | |||
Portfolio accounting fees | 21,365 | |||
Custodian fees | 2,482 | |||
Trustees’ fees* | 1,690 | |||
Line of credit fees | 1,006 | |||
Miscellaneous | 37,307 | |||
Total expenses | 375,810 | |||
Net investment loss | (174,277 | ) | ||
Net Realized and Unrealized Gain (Loss): | ||||
Net realized gain (loss) on: | ||||
Investments | 4,943,547 | |||
Swap agreements | 938,921 | |||
Futures contracts | 1,055,198 | |||
Foreign currency | (2 | ) | ||
Net realized gain | 6,937,664 | |||
Net change in unrealized appreciation (depreciation) on: | ||||
Investments | (3,034,702 | ) | ||
Swap agreements | 76,757 | |||
Futures contracts | 116,668 | |||
Net change in unrealized appreciation (depreciation) | (2,841,277 | ) | ||
Net realized and unrealized gain | 4,096,387 | |||
Net increase in net assets resulting from operations | $ | 3,922,110 |
* | Relates to Trustees not deemed “interested persons” within the meaning of Section 2(a)(19) of the 1940 Act. |
106 | THE RYDEX FUNDS ANNUAL REPORT | SEE NOTES TO FINANCIAL STATEMENTS. |
RUSSELL 2000® 1.5x STRATEGY FUND |
STATEMENTS OF CHANGES IN NET ASSETS
Year Ended March 31, 2015 | Year Ended March 31, 2014 | |||||||
Increase (Decrease) in Net Assets from Operations: | ||||||||
Net investment loss | $ | (174,277 | ) | $ | (310,218 | ) | ||
Net realized gain on investments | 6,937,664 | 7,120,234 | ||||||
Net change in unrealized appreciation (depreciation) on investments | (2,841,277 | ) | 2,110,677 | |||||
Net increase in net assets resulting from operations | 3,922,110 | 8,920,693 | ||||||
Distributions to shareholders from: | ||||||||
Net realized gains | ||||||||
A-Class | (2,196 | ) | — | |||||
C-Class | (7,355 | ) | — | |||||
H-Class | (234,847 | ) | — | |||||
Total distributions to shareholders | (244,398 | ) | — | |||||
Capital share transactions: | ||||||||
Proceeds from sale of shares | ||||||||
A-Class | 1,893,905 | 1,668,443 | ||||||
C-Class | 98,855 | 452,183 | ||||||
H-Class | 232,124,981 | 344,982,687 | ||||||
Distributions reinvested | ||||||||
A-Class | 1,903 | — | ||||||
C-Class | 7,229 | — | ||||||
H-Class | 133,841 | — | ||||||
Cost of shares redeemed | ||||||||
A-Class | (1,896,108 | ) | (1,740,054 | ) | ||||
C-Class | (299,746 | ) | (787,292 | ) | ||||
H-Class | (236,252,696 | ) | (378,994,862 | ) | ||||
Net decrease from capital share transactions | (4,187,836 | ) | (34,418,895 | ) | ||||
Net decrease in net assets | (510,124 | ) | (25,498,202 | ) | ||||
Net assets: | ||||||||
Beginning of year | 21,533,688 | 47,031,890 | ||||||
End of year | $ | 21,023,564 | $ | 21,533,688 | ||||
Accumulated net investment loss at end of year | $ | (4,597 | ) | $ | (66,937 | ) | ||
Capital share activity: | ||||||||
Shares sold | ||||||||
A-Class | 37,732 | 37,199 | ||||||
C-Class | 2,156 | 10,755 | ||||||
H-Class | 4,439,943 | 7,350,452 | ||||||
Shares issued from reinvestment of distributions | ||||||||
A-Class | 36 | — | ||||||
C-Class | 153 | — | ||||||
H-Class | 2,554 | — | ||||||
Shares redeemed | ||||||||
A-Class | (38,492 | ) | (35,645 | ) | ||||
C-Class | (6,473 | ) | (19,078 | ) | ||||
H-Class | (4,480,213 | ) | (8,137,425 | ) | ||||
Net decrease in shares | (42,604 | ) | (793,742 | ) |
SEE NOTES TO FINANCIAL STATEMENTS. | THE RYDEX FUNDS ANNUAL REPORT | 107 |
RUSSELL 2000® 1.5x STRATEGY FUND |
FINANCIAL HIGHLIGHTS
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.
A-Class | Year Ended March 31, 2015 | Year Ended March 31, 2014 | Year Ended March 28, 2013 | Year Ended March 31, 2012 | Year Ended March 31, 2011 | |||||||||||||||
Per Share Data | ||||||||||||||||||||
Net asset value, beginning of period | $ | 53.23 | $ | 39.32 | $ | 32.20 | $ | 34.37 | $ | 25.24 | ||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||
Net investment income (loss)a | (.39 | ) | (.37 | ) | (.16 | ) | (.39 | ) | (.35 | ) | ||||||||||
Net gain (loss) on investments (realized and unrealized) | 5.41 | 14.28 | 7.28 | (1.78 | ) | 9.48 | ||||||||||||||
Total from investment operations | 5.02 | 13.91 | 7.12 | (2.17 | ) | 9.13 | ||||||||||||||
Less distributions from: | ||||||||||||||||||||
Net realized gains | (.20 | ) | — | — | — | — | ||||||||||||||
Total distributions | (.20 | ) | — | — | — | — | ||||||||||||||
Net asset value, end of period | $ | 58.05 | $ | 53.23 | $ | 39.32 | $ | 32.20 | $ | 34.37 | ||||||||||
Total Returnb | 9.48 | % | 35.38 | % | 22.11 | % | (6.31 | %) | 36.17 | % | ||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||
Net assets, end of period (in thousands) | $ | 627 | $ | 614 | $ | 392 | $ | 1,355 | $ | 2,312 | ||||||||||
Ratios to average net assets: | ||||||||||||||||||||
Net investment income (loss) | (0.74 | %) | (0.78 | %) | (0.51 | %) | (1.24 | %) | (1.25 | %) | ||||||||||
Total expensesc | 1.70 | % | 1.72 | % | 1.71 | % | 1.73 | % | 1.72 | % | ||||||||||
Portfolio turnover rate | 830 | % | 472 | % | 527 | % | 177 | % | 211 | % |
C-Class | Year Ended March 31, 2015 | Year Ended March 31, 2014 | Year Ended March 28, 2013 | Year Ended March 31, 2012 | Year Ended March 31, 2011 | |||||||||||||||
Per Share Data | ||||||||||||||||||||
Net asset value, beginning of period | $ | 48.08 | $ | 35.78 | $ | 29.52 | $ | 31.75 | $ | 23.50 | ||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||
Net investment income (loss)a | (.70 | ) | (.65 | ) | (.34 | ) | (.54 | ) | (.47 | ) | ||||||||||
Net gain (loss) on investments (realized and unrealized) | 4.83 | 12.95 | 6.60 | (1.69 | ) | 8.72 | ||||||||||||||
Total from investment operations | 4.13 | 12.30 | 6.26 | (2.23 | ) | 8.25 | ||||||||||||||
Less distributions from: | ||||||||||||||||||||
Net realized gains | (.20 | ) | — | — | — | — | ||||||||||||||
Total distributions | (.20 | ) | — | — | — | — | ||||||||||||||
Net asset value, end of period | $ | 52.01 | $ | 48.08 | $ | 35.78 | $ | 29.52 | $ | 31.75 | ||||||||||
Total Returnb | 8.64 | % | 34.38 | % | 21.21 | % | (7.02 | %) | 35.11 | % | ||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||
Net assets, end of period (in thousands) | $ | 1,800 | $ | 1,864 | $ | 1,685 | $ | 1,839 | $ | 2,786 | ||||||||||
Ratios to average net assets: | ||||||||||||||||||||
Net investment income (loss) | (1.49 | %) | (1.55 | %) | (1.15 | %) | (1.99 | %) | (1.90 | %) | ||||||||||
Total expensesc | 2.45 | % | 2.47 | % | 2.46 | % | 2.49 | % | 2.47 | % | ||||||||||
Portfolio turnover rate | 830 | % | 472 | % | 527 | % | 177 | % | 211 | % |
108 | THE RYDEX FUNDS ANNUAL REPORT | SEE NOTES TO FINANCIAL STATEMENTS. |
RUSSELL 2000® 1.5x STRATEGY FUND |
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.
H-Class | Year Ended March 31, 2015 | Year Ended March 31, 2014 | Year Ended March 28, 2013 | Year Ended March 31, 2012 | Year Ended March 31, 2011 | |||||||||||||||
Per Share Data | ||||||||||||||||||||
Net asset value, beginning of period | $ | 53.13 | $ | 39.24 | $ | 32.13 | $ | 34.29 | $ | 25.21 | ||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||
Net investment income (loss)a | (.40 | ) | (.37 | ) | (.08 | ) | (.37 | ) | (.35 | ) | ||||||||||
Net gain (loss) on investments (realized and unrealized) | 5.41 | 14.26 | 7.19 | (1.79 | ) | 9.43 | ||||||||||||||
Total from investment operations | 5.01 | 13.89 | 7.11 | (2.16 | ) | 9.08 | ||||||||||||||
Less distributions from: | ||||||||||||||||||||
Net realized gains | (.20 | ) | — | — | — | — | ||||||||||||||
Total distributions | (.20 | ) | — | — | — | — | ||||||||||||||
Net asset value, end of period | $ | 57.94 | $ | 53.13 | $ | 39.24 | $ | 32.13 | $ | 34.29 | ||||||||||
Total Returnb | 9.48 | % | 35.40 | % | 22.13 | % | (6.30 | %) | 36.02 | % | ||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||
Net assets, end of period (in thousands) | $ | 18,596 | $ | 19,056 | $ | 44,955 | $ | 14,902 | $ | 37,780 | ||||||||||
Ratios to average net assets: | ||||||||||||||||||||
Net investment income (loss) | (0.76 | %) | (0.81 | %) | (0.25 | %) | (1.24 | %) | (1.25 | %) | ||||||||||
Total expensesc | 1.70 | % | 1.72 | % | 1.71 | % | 1.73 | % | 1.72 | % | ||||||||||
Portfolio turnover rate | 830 | % | 472 | % | 527 | % | 177 | % | 211 | % |
a | Net investment income (loss) per share was computed using average shares outstanding throughout the period. |
b | Total return does not reflect the impact of any applicable sales charges. |
c | Does not include expenses of the underlying funds in which the Fund invests. |
SEE NOTES TO FINANCIAL STATEMENTS. | THE RYDEX FUNDS ANNUAL REPORT | 109 |
PERFORMANCE REPORT AND FUND PROFILE (Unaudited) | March 31, 2015 |
RUSSELL 2000® FUND
OBJECTIVE: Seeks to provide investment results that match, before fees and expenses, the performance of a specific benchmark on a daily basis. The Fund’s current benchmark is the Russell 2000® Index (the “underlying index”).
Russell 2000® Fund H-Class turned in a 6.37% performance for the one-year period ended March 31, 2015. Its benchmark, the Russell 2000 Index, returned 8.21% for the period. Russell 2000® Fund maintained a daily correlation of over 99% to its benchmark of the daily price movement of the Russell 2000 Index.
Among sectors, the biggest performance contributors to the underlying index during the period were Health Care and Financials. The Energy sector detracted the most from return, followed by the Materials sector.
Qorvo, Inc., InterMune, Inc., and Puma Biotechnology, Inc. were the largest contributors to performance of the underlying index for the year. CARBO Ceramics, Inc., Civeo Corp., and GT Advanced Technologies, Inc. were the leading detractors from performance of the underlying index for the year.
Derivatives in the Fund were used to help provide exposure to the composition of the benchmark in the highest efficient manner and not for hedging purposes. The results of derivatives use during the period were within our expectations and contributed to the Fund’s performance.
Performance displayed represents past performance, which is no guarantee of future results.
Holdings Diversification (Market Exposure as % of Net Assets)
![](https://capedge.com/proxy/N-CSR/0001398344-15-003814/rtb1_25.jpg)
“Holdings Diversification (Market Exposure as % of Net Assets)” excludes any temporary cash investments.
Inception Dates: | |
A-Class | May 31, 2006 |
C-Class | May 31, 2006 |
H-Class | May 31, 2006 |
Ten Largest Holdings (% of Total Net Assets) | |
Leap Wireless International, Inc. | 0.007% |
Qorvo, Inc. | 0.007% |
Isis Pharmaceuticals, Inc. | 0.004% |
Puma Biotechnology, Inc. | 0.004% |
Ultimate Software Group, Inc. | 0.003% |
Office Depot, Inc. | 0.003% |
Brunswick Corp. | 0.003% |
JetBlue Airways Corp. | 0.003% |
Graphic Packaging Holding Co. | 0.003% |
DexCom, Inc. | 0.003% |
Top Ten Total | 0.040% |
“Ten Largest Holdings” exclude any temporary cash or derivative investments. |
110 | THE RYDEX FUNDS ANNUAL REPORT |
PERFORMANCE REPORT AND FUND PROFILE (Unaudited)(concluded) | March 31, 2015 |
Cumulative Fund Performance*
![](https://capedge.com/proxy/N-CSR/0001398344-15-003814/rtb1_26.jpg)
![](https://capedge.com/proxy/N-CSR/0001398344-15-003814/rtb1_27.jpg)
Average Annual Returns*
Periods Ended March 31, 2015
1 Year | 5 Year | Since Inception (05/31/06) | |
A-Class Shares | 6.42% | 12.93% | 6.25% |
A-Class Shares with sales charge† | 1.35% | 11.84% | 5.67% |
C-Class Shares | 5.61% | 12.01% | 5.40% |
C-Class Shares with CDSC‡ | 4.61% | 12.01% | 5.40% |
H-Class Shares | 6.37% | 12.91% | 6.23% |
Russell 2000 Index | 8.21% | 14.57% | 7.92% |
* | The performance data above represents past performance that is not predictive of future results. The investment return and principal value of an investment in the Fund will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Returns are historical and include changes in principal and reinvested dividends and capital gains and do not reflect the effect of taxes. The Russell 2000 Index is an unmanaged index and, unlike the Fund, has no management fees or operating expenses to reduce its reported return. The graphs are based on A-Class shares and H-Class shares only; performance for C-Class shares will vary due to differences in fee structures. |
† | Fund returns are calculated using the maximum sales charge of 4.75%. |
‡ | Fund returns include a CDSC of 1% if redeemed within 12 months of purchase. |
THE RYDEX FUNDS ANNUAL REPORT | 111 |
SCHEDULE OF INVESTMENTS | March 31, 2015 |
RUSSELL 2000® FUND |
Shares | Value | |||||||
COMMON STOCKS† - 1.1% | ||||||||
FINANCIAL - 0.4% | ||||||||
LaSalle Hotel Properties | 30 | $ | 1,165 | |||||
Investors Bancorp, Inc. | 95 | 1,113 | ||||||
Highwoods Properties, Inc. | 24 | 1,098 | ||||||
RLJ Lodging Trust | 35 | 1,096 | ||||||
CubeSmart | 43 | 1,038 | ||||||
First American Financial Corp. | 28 | 998 | ||||||
Prosperity Bancshares, Inc. | 19 | 997 | ||||||
Stifel Financial Corp.* | 17 | 948 | ||||||
CNO Financial Group, Inc. | 54 | 929 | ||||||
Sunstone Hotel Investors, Inc. | 55 | 917 | ||||||
EPR Properties | 15 | 900 | ||||||
Webster Financial Corp. | 24 | 889 | ||||||
Pebblebrook Hotel Trust | 19 | 885 | ||||||
Strategic Hotels & Resorts, Inc.* | 71 | 883 | ||||||
Sun Communities, Inc. | 13 | 866 | ||||||
MGIC Investment Corp.* | 90 | 866 | ||||||
Radian Group, Inc. | 51 | 855 | ||||||
Bank of the Ozarks, Inc. | 23 | 849 | ||||||
Sovran Self Storage, Inc. | 9 | 845 | ||||||
FirstMerit Corp. | 44 | 839 | ||||||
GEO Group, Inc. | 19 | 831 | ||||||
MarketAxess Holdings, Inc. | 10 | 829 | ||||||
Medical Properties Trust, Inc. | 55 | 811 | ||||||
First Citizens BancShares, Inc. — Class A | 3 | 779 | ||||||
Primerica, Inc. | 15 | 764 | ||||||
DCT Industrial Trust, Inc. | 22 | 762 | ||||||
Umpqua Holdings Corp. | 44 | 756 | ||||||
Colony Capital, Inc. — Class A | 29 | 752 | ||||||
DiamondRock Hospitality Co. | 52 | 735 | ||||||
Ryman Hospitality Properties, Inc. | 12 | 731 | ||||||
National Health Investors, Inc. | 10 | 710 | ||||||
PRA Group, Inc.* | 13 | 706 | ||||||
Healthcare Realty Trust, Inc. | 25 | 695 | ||||||
Janus Capital Group, Inc. | 40 | 687 | ||||||
Susquehanna Bancshares, Inc. | 50 | 686 | ||||||
United Bankshares, Inc. | 18 | 676 | ||||||
PrivateBancorp, Inc. — Class A | 19 | 668 | ||||||
Hancock Holding Co. | 22 | 657 | ||||||
Acadia Realty Trust | 18 | 627 | ||||||
WisdomTree Investments, Inc. | 29 | 622 | ||||||
First Industrial Realty Trust, Inc. | 29 | 621 | ||||||
Cousins Properties, Inc. | 58 | 616 | ||||||
FNB Corp. | 46 | 604 | ||||||
Cathay General Bancorp | 21 | 597 | ||||||
Western Alliance Bancorporation* | 20 | 593 | ||||||
Washington Federal, Inc. | 27 | 589 | ||||||
Financial Engines, Inc. | 14 | 586 | ||||||
Texas Capital Bancshares, Inc.* | 12 | 584 | ||||||
American Equity Investment Life Holding Co. | 20 | 583 | ||||||
BancorpSouth, Inc. | 25 | 581 | ||||||
RLI Corp. | 11 | 577 | ||||||
Wintrust Financial Corp. | 12 | 572 | ||||||
Valley National Bancorp | 60 | 566 | ||||||
Hudson Pacific Properties, Inc. | 17 | 564 | ||||||
MB Financial, Inc. | 18 | 564 | ||||||
Alexander & Baldwin, Inc. | 13 | 561 | ||||||
New Residential Investment Corp. | 37 | 556 | ||||||
DuPont Fabros Technology, Inc. | 17 | 556 | ||||||
Lexington Realty Trust | 55 | 541 | ||||||
Sabra Health Care REIT, Inc. | 16 | 530 | ||||||
UMB Financial Corp. | 10 | 529 | ||||||
Invesco Mortgage Capital, Inc. | 33 | 512 | ||||||
Chesapeake Lodging Trust | 15 | 507 | ||||||
IBERIABANK Corp. | 8 | 504 | ||||||
Glacier Bancorp, Inc. | 20 | 503 | ||||||
Blackhawk Network Holdings, Inc.* | 14 | 501 | ||||||
Washington Real Estate Investment Trust | 18 | 497 | ||||||
Kennedy-Wilson Holdings, Inc. | 19 | 497 | ||||||
Chambers Street Properties | 63 | 496 | ||||||
EastGroup Properties, Inc. | 8 | 481 | ||||||
Equity One, Inc. | 18 | 480 | ||||||
WageWorks, Inc.* | 9 | 480 | ||||||
Capitol Federal Financial, Inc. | 38 | 475 | ||||||
Home BancShares, Inc. | 14 | 474 | ||||||
Hatteras Financial Corp. | 26 | 472 | ||||||
First Financial Bankshares, Inc. | 17 | 470 | ||||||
Symetra Financial Corp. | 20 | 469 | ||||||
Kemper Corp. | 12 | 468 | ||||||
Evercore Partners, Inc. — Class A | 9 | 465 | ||||||
Mack-Cali Realty Corp. | 24 | 463 | ||||||
Alexander’s, Inc. | 1 | 457 | ||||||
AmTrust Financial Services, Inc. | 8 | 456 | ||||||
Empire State Realty Trust, Inc. — Class A | 24 | 451 | ||||||
New York REIT, Inc. | 43 | 451 | ||||||
CVB Financial Corp. | 28 | 446 | ||||||
Potlatch Corp. | 11 | 440 | ||||||
Old National Bancorp | 31 | 440 | ||||||
Retail Opportunity Investments Corp. | 24 | 439 | ||||||
Trustmark Corp. | 18 | 437 | ||||||
Selective Insurance Group, Inc. | 15 | 436 | ||||||
BGC Partners, Inc. — Class A | 46 | 435 | ||||||
Columbia Banking System, Inc. | 15 | 435 | ||||||
American Assets Trust, Inc. | 10 | 433 | ||||||
EverBank Financial Corp. | 24 | 433 | ||||||
PennyMac Mortgage Investment Trust | 20 | 426 | ||||||
Education Realty Trust, Inc. | 12 | 425 | ||||||
Pennsylvania Real Estate Investment Trust | 18 | 418 | ||||||
PS Business Parks, Inc. | 5 | 415 | ||||||
LTC Properties, Inc. | 9 | 414 | ||||||
Government Properties Income Trust | 18 | 411 | ||||||
South State Corp. | 6 | 410 | ||||||
Argo Group International Holdings Ltd. | 8 | 401 | ||||||
Pinnacle Financial Partners, Inc. | 9 | 400 | ||||||
Redwood Trust, Inc. | 22 | 393 |
112 | THE RYDEX FUNDS ANNUAL REPORT | SEE NOTES TO FINANCIAL STATEMENTS. |
SCHEDULE OF INVESTMENTS (continued) | March 31, 2015 |
RUSSELL 2000® FUND |
Shares | Value | |||||||
Ramco-Gershenson Properties Trust | 21 | $ | 391 | |||||
Credit Acceptance Corp.* | 2 | 390 | ||||||
Community Bank System, Inc. | 11 | 389 | ||||||
Hilltop Holdings, Inc.* | 20 | 389 | ||||||
Ellie Mae, Inc.* | 7 | 387 | ||||||
Montpelier Re Holdings Ltd. | 10 | 384 | ||||||
CYS Investments, Inc. | 43 | 383 | ||||||
Aircastle Ltd. | 17 | 382 | ||||||
FelCor Lodging Trust, Inc. | 33 | 379 | ||||||
Horace Mann Educators Corp. | 11 | 376 | ||||||
BofI Holding, Inc.* | 4 | 372 | ||||||
Associated Estates Realty Corp. | 15 | 370 | ||||||
International Bancshares Corp. | 14 | 364 | ||||||
Parkway Properties, Inc. | 21 | 364 | ||||||
Springleaf Holdings, Inc.* | 7 | 362 | ||||||
National Penn Bancshares, Inc. | 33 | 355 | ||||||
STAG Industrial, Inc. | 15 | 353 | ||||||
Gramercy Property Trust, Inc. | 13 | 351 | ||||||
First Midwest Bancorp, Inc. | 20 | 347 | ||||||
Hersha Hospitality Trust | 53 | 343 | ||||||
HFF, Inc. — Class A | 9 | 338 | ||||||
Physicians Realty Trust | 19 | 335 | ||||||
Summit Hotel Properties, Inc. | 23 | 324 | ||||||
Sterling Bancorp | 24 | 322 | ||||||
Greenhill & Company, Inc. | 8 | 317 | ||||||
St. Joe Co.* | 17 | 315 | ||||||
Home Loan Servicing Solutions Ltd. | 19 | 314 | ||||||
PHH Corp.* | 13 | 314 | ||||||
Altisource Residential Corp. | 15 | 313 | ||||||
Franklin Street Properties Corp. | 24 | 308 | ||||||
Eagle Bancorp, Inc.* | 8 | 307 | ||||||
Independent Bank Corp. | 7 | 307 | ||||||
BBCN Bancorp, Inc. | 21 | 304 | ||||||
Westamerica Bancorporation | 7 | 302 | ||||||
ARMOUR Residential REIT, Inc. | 95 | 301 | ||||||
NBT Bancorp, Inc. | 12 | 301 | ||||||
iStar Financial, Inc.* | 23 | 299 | ||||||
Provident Financial Services, Inc. | 16 | 298 | ||||||
Astoria Financial Corp. | 23 | 298 | ||||||
Northwest Bancshares, Inc. | 25 | 296 | ||||||
Capstead Mortgage Corp. | 25 | 294 | ||||||
Chatham Lodging Trust | 10 | 294 | ||||||
WesBanco, Inc. | 9 | 293 | ||||||
CoreSite Realty Corp. | 6 | 292 | ||||||
Encore Capital Group, Inc.* | 7 | 291 | ||||||
Ambac Financial Group, Inc.* | 12 | 290 | ||||||
Essent Group Ltd.* | 12 | 287 | ||||||
Nelnet, Inc. — Class A | 6 | 284 | ||||||
Enstar Group Ltd.* | 2 | 284 | ||||||
Chemical Financial Corp. | 9 | 282 | ||||||
CyrusOne, Inc. | 9 | 280 | ||||||
Apollo Commercial Real Estate Finance, Inc. | 16 | 275 | ||||||
Simmons First National Corp. — Class A | 6 | 273 | ||||||
Investment Technology Group, Inc.* | 9 | 273 | ||||||
First Financial Bancorp | 15 | 267 | ||||||
Union Bankshares Corp. | 12 | 267 | ||||||
Virtus Investment Partners, Inc. | 2 | 262 | ||||||
Starwood Waypoint Residential Trust | 10 | 259 | ||||||
Park National Corp. | 3 | 257 | ||||||
S&T Bancorp, Inc. | 9 | 255 | ||||||
Boston Private Financial Holdings, Inc. | 21 | 255 | ||||||
Greenlight Capital Re Ltd. — Class A* | 8 | 254 | ||||||
National Western Life Insurance Co. — Class A | 1 | 254 | ||||||
Kite Realty Group Trust | 9 | 254 | ||||||
American Capital Mortgage Investment Corp. | 14 | 251 | ||||||
Terreno Realty Corp. | 11 | 251 | ||||||
LegacyTexas Financial Group, Inc. | 11 | 250 | ||||||
Select Income REIT | 10 | 250 | ||||||
Infinity Property & Casualty Corp. | 3 | 246 | ||||||
Inland Real Estate Corp. | 23 | 246 | ||||||
United Community Banks, Inc. | 13 | 245 | ||||||
Stewart Information Services Corp. | 6 | 244 | ||||||
Renasant Corp. | 8 | 240 | ||||||
Rexford Industrial Realty, Inc. | 15 | 237 | ||||||
First Merchants Corp. | 10 | 235 | ||||||
Navigators Group, Inc.* | 3 | 234 | ||||||
AMERISAFE, Inc. | 5 | 231 | ||||||
Banner Corp. | 5 | 230 | ||||||
First Commonwealth Financial Corp. | 25 | 225 | ||||||
Investors Real Estate Trust | 30 | 225 | ||||||
Excel Trust, Inc. | 16 | 224 | ||||||
New York Mortgage Trust, Inc. | 28 | 217 | ||||||
Employers Holdings, Inc. | 8 | 216 | ||||||
Tompkins Financial Corp. | 4 | 215 | ||||||
Third Point Reinsurance Ltd.* | 15 | 212 | ||||||
Ameris Bancorp | 8 | 211 | ||||||
Piper Jaffray Cos.* | 4 | 210 | ||||||
Cohen & Steers, Inc. | 5 | 205 | ||||||
Universal Insurance Holdings, Inc. | 8 | 205 | ||||||
Ashford Hospitality Trust, Inc. | 21 | 202 | ||||||
OFG Bancorp | 12 | 196 | ||||||
Berkshire Hills Bancorp, Inc. | 7 | 194 | ||||||
Maiden Holdings Ltd. | 13 | 193 | ||||||
Northfield Bancorp, Inc. | 13 | 193 | ||||||
Brookline Bancorp, Inc. | 19 | 191 | ||||||
First Potomac Realty Trust | 16 | 190 | ||||||
Rouse Properties, Inc. | 10 | 190 | ||||||
Wilshire Bancorp, Inc. | 19 | 189 | ||||||
State Bank Financial Corp. | 9 | 189 | ||||||
City Holding Co. | 4 | 188 | ||||||
STORE Capital Corp. | 8 | 187 | ||||||
FBL Financial Group, Inc. — Class A | 3 | 186 | ||||||
Sandy Spring Bancorp, Inc. | 7 | 184 | ||||||
Aviv REIT, Inc. | 5 | 183 | ||||||
Safety Insurance Group, Inc. | 3 | 179 | ||||||
TowneBank | 11 | 177 | ||||||
Oritani Financial Corp. | 12 | 175 | ||||||
First BanCorp* | 28 | 174 |
SEE NOTES TO FINANCIAL STATEMENTS. | THE RYDEX FUNDS ANNUAL REPORT | 113 |
SCHEDULE OF INVESTMENTS (continued) | March 31, 2015 |
RUSSELL 2000® FUND |
Shares | Value | |||||||
Cedar Realty Trust, Inc. | 23 | $ | 172 | |||||
Southside Bancshares, Inc. | 6 | 172 | ||||||
TrustCo Bank Corp. NY | 25 | 172 | ||||||
Saul Centers, Inc. | 3 | 172 | ||||||
InfraREIT, Inc. | 6 | 172 | ||||||
Customers Bancorp, Inc.* | 7 | 171 | ||||||
Hanmi Financial Corp. | 8 | 169 | ||||||
Universal Health Realty Income Trust | 3 | 169 | ||||||
Cass Information Systems, Inc. | 3 | 168 | ||||||
National General Holdings Corp. | 9 | 168 | ||||||
Monmouth Real Estate Investment Corp. | 15 | 167 | ||||||
Western Asset Mortgage Capital Corp. | 11 | 166 | ||||||
Capital Bank Financial Corp. — Class A* | 6 | 166 | ||||||
Agree Realty Corp. | 5 | 165 | ||||||
Lakeland Financial Corp. | 4 | 162 | ||||||
American Residential Properties, Inc.* | 9 | 162 | ||||||
Silver Bay Realty Trust Corp. | 10 | 162 | ||||||
United Financial Bancorp, Inc. | 13 | 162 | ||||||
Walter Investment Management Corp.* | 10 | 162 | ||||||
Urstadt Biddle Properties, Inc. — Class A | 7 | 161 | ||||||
Cowen Group, Inc. — Class A* | 31 | 161 | ||||||
Flushing Financial Corp. | 8 | 161 | ||||||
Diamond Hill Investment Group, Inc. | 1 | 160 | ||||||
Cardinal Financial Corp. | 8 | 160 | ||||||
United Fire Group, Inc. | 5 | 159 | ||||||
GAMCO Investors, Inc. — Class A | 2 | 157 | ||||||
Resource Capital Corp. | 34 | 154 | ||||||
Washington Trust Bancorp, Inc. | 4 | 153 | ||||||
WSFS Financial Corp. | 2 | 151 | ||||||
RAIT Financial Trust | 22 | 151 | ||||||
AG Mortgage Investment Trust, Inc. | 8 | 151 | ||||||
KCG Holdings, Inc. — Class A* | 12 | 147 | ||||||
World Acceptance Corp.* | 2 | 146 | ||||||
QTS Realty Trust, Inc. — Class A | 4 | 146 | ||||||
Dime Community Bancshares, Inc. | 9 | 145 | ||||||
TriCo Bancshares | 6 | 145 | ||||||
Arlington Asset Investment Corp. — Class A | 6 | 144 | ||||||
Apollo Residential Mortgage, Inc. | 9 | 144 | ||||||
Anworth Mortgage Asset Corp. | 28 | 143 | ||||||
Forestar Group, Inc.* | 9 | 142 | ||||||
Acacia Research Corp. | 13 | 139 | ||||||
First Interstate BancSystem, Inc. — Class A | 5 | 139 | ||||||
Enova International, Inc.* | 7 | 138 | ||||||
Stock Yards Bancorp, Inc. | 4 | 138 | ||||||
Heritage Financial Corp. | 8 | 136 | ||||||
Community Trust Bancorp, Inc. | 4 | 133 | ||||||
First NBC Bank Holding Co.* | 4 | 132 | ||||||
Heartland Financial USA, Inc. | 4 | 131 | ||||||
1st Source Corp. | 4 | 129 | ||||||
Hannon Armstrong Sustainable Infrastructure Capital, Inc. | 7 | 128 | ||||||
Getty Realty Corp. | 7 | 127 | ||||||
First Busey Corp. | 19 | 127 | ||||||
Dynex Capital, Inc. | 15 | 127 | ||||||
CoBiz Financial, Inc. | 10 | 123 | ||||||
Federated National Holding Co. | 4 | 122 | ||||||
BancFirst Corp. | 2 | 122 | ||||||
Campus Crest Communities, Inc. | 17 | 122 | ||||||
Bryn Mawr Bank Corp. | 4 | 122 | ||||||
Westwood Holdings Group, Inc. | 2 | 121 | ||||||
International. FCStone, Inc.* | 4 | 119 | ||||||
Great Southern Bancorp, Inc. | 3 | 118 | ||||||
German American Bancorp, Inc. | 4 | 118 | ||||||
ConnectOne Bancorp, Inc. | 6 | 117 | ||||||
Waterstone Financial, Inc. | 9 | 116 | ||||||
Lakeland Bancorp, Inc. | 10 | 115 | ||||||
Central Pacific Financial Corp. | 5 | 115 | ||||||
OM Asset Management plc | 6 | 112 | ||||||
Banc of California, Inc. | 9 | 111 | ||||||
Meadowbrook Insurance Group, Inc. | 13 | 111 | ||||||
Metro Bancorp, Inc. | 4 | 110 | ||||||
Great Western Bancorp, Inc. | 5 | 110 | ||||||
HomeStreet, Inc.* | 6 | 110 | ||||||
CareTrust REIT, Inc. | 8 | 108 | ||||||
First Financial Corp. | 3 | 108 | ||||||
CenterState Banks, Inc. | 9 | 107 | ||||||
Blue Hills Bancorp, Inc.* | 8 | 106 | ||||||
Enterprise Financial Services Corp. | 5 | 103 | ||||||
Hudson Valley Holding Corp. | 4 | 102 | ||||||
Bank of Marin Bancorp | 2 | 102 | ||||||
Beneficial Bancorp, Inc.* | 9 | 102 | ||||||
Yadkin Financial Corp.* | 5 | 102 | ||||||
Ashford Hospitality Prime, Inc. | 6 | 101 | ||||||
Ladenburg Thalmann Financial Services, Inc.* | 26 | 100 | ||||||
Phoenix Companies, Inc.* | 2 | 100 | ||||||
RE/MAX Holdings, Inc. — Class A | 3 | 100 | ||||||
Clifton Bancorp, Inc. | 7 | 99 | ||||||
First Defiance Financial Corp. | 3 | 98 | ||||||
MainSource Financial Group, Inc. | 5 | 98 | ||||||
Bank of Kentucky Financial Corp. | 2 | 98 | ||||||
NMI Holdings, Inc. — Class A* | 13 | 97 | ||||||
State Auto Financial Corp. | 4 | 97 | ||||||
Pacific Premier Bancorp, Inc.* | 6 | 97 | ||||||
HomeTrust Bancshares, Inc.* | 6 | 96 | ||||||
Whitestone REIT — Class B | 6 | 95 | ||||||
Peoples Bancorp, Inc. | 4 | 95 | ||||||
Gladstone Commercial Corp. | 5 | 93 | ||||||
HCI Group, Inc. | 2 | 92 | ||||||
Financial Institutions, Inc. | 4 | 92 | ||||||
OneBeacon Insurance Group Ltd. — Class A | 6 | 91 | ||||||
Stonegate Bank | 3 | 91 | ||||||
BNC Bancorp | 5 | 91 | ||||||
United Insurance Holdings Corp. | 4 | 90 | ||||||
Peoples Financial Services Corp. | 2 | 90 | ||||||
Southwest Bancorp, Inc. | 5 | 89 | ||||||
Walker & Dunlop, Inc.* | 5 | 89 | ||||||
Ares Commercial Real Estate Corp. | 8 | 88 | ||||||
Bank Mutual Corp. | 12 | 88 |
114 | THE RYDEX FUNDS ANNUAL REPORT | SEE NOTES TO FINANCIAL STATEMENTS. |
SCHEDULE OF INVESTMENTS (continued) | March 31, 2015 |
RUSSELL 2000® FUND |
Shares | Value | |||||||
First Bancorp | 5 | $ | 88 | |||||
Peapack Gladstone Financial Corp. | 4 | 86 | ||||||
Park Sterling Corp. | 12 | 85 | ||||||
Federal Agricultural Mortgage Corp. — Class C | 3 | 85 | ||||||
CorEnergy Infrastructure Trust, Inc. | 12 | 83 | ||||||
Preferred Bank/Los Angeles CA | 3 | 82 | ||||||
NewStar Financial, Inc.* | 7 | 82 | ||||||
Caesars Acquisition Co. — Class A* | 12 | 82 | ||||||
Arrow Financial Corp. | 3 | 81 | ||||||
Bancorp, Inc.* | 9 | 81 | ||||||
NewBridge Bancorp | 9 | 80 | ||||||
Camden National Corp. | 2 | 80 | ||||||
West Bancorporation, Inc. | 4 | 80 | ||||||
Meta Financial Group, Inc. | 2 | 79 | ||||||
Univest Corporation of Pennsylvania | 4 | 79 | ||||||
Bridge Capital Holdings* | 3 | 78 | ||||||
Mercantile Bank Corp. | 4 | 78 | ||||||
Independent Bank Group, Inc. | 2 | 78 | ||||||
Bridge Bancorp, Inc. | 3 | 77 | ||||||
Independent Bank Corp. | 6 | 77 | ||||||
Talmer Bancorp, Inc. — Class A | 5 | 77 | ||||||
First of Long Island Corp. | 3 | 77 | ||||||
Marcus & Millichap, Inc.* | 2 | 75 | ||||||
Armada Hoffler Properties, Inc. | 7 | 75 | ||||||
Republic Bancorp, Inc. — Class A | 3 | 74 | ||||||
Ladder Capital Corp. — Class A | 4 | 74 | ||||||
Citizens, Inc.* | 12 | 74 | ||||||
One Liberty Properties, Inc. | 3 | 73 | ||||||
FRP Holdings, Inc.* | 2 | 73 | ||||||
Flagstar Bancorp, Inc.* | 5 | 73 | ||||||
Seacoast Banking Corporation of Florida* | 5 | 71 | ||||||
Suffolk Bancorp | 3 | 71 | ||||||
United Community Financial Corp. | 13 | 71 | ||||||
Oppenheimer Holdings, Inc. — Class A | 3 | 70 | ||||||
First Community Bancshares, Inc. | 4 | 70 | ||||||
State National Companies, Inc. | 7 | 70 | ||||||
Anchor BanCorp Wisconsin, Inc.* | 2 | 69 | ||||||
OceanFirst Financial Corp. | 4 | 69 | ||||||
CU Bancorp* | 3 | 68 | ||||||
CNB Financial Corp. | 4 | 68 | ||||||
PennyMac Financial Services, Inc. — Class A* | 4 | 68 | ||||||
Guaranty Bancorp | 4 | 68 | ||||||
Fidelity Southern Corp. | 4 | 68 | ||||||
Calamos Asset Management, Inc. — Class A | 5 | 67 | ||||||
Pacific Continental Corp. | 5 | 66 | ||||||
Meridian Bancorp, Inc.* | 5 | 66 | ||||||
BankFinancial Corp. | 5 | 66 | ||||||
Easterly Government Properties, Inc.* | 4 | 64 | ||||||
On Deck Capital, Inc.* | 3 | 64 | ||||||
Fidelity & Guaranty Life | 3 | 64 | ||||||
TriState Capital Holdings, Inc.* | 6 | 63 | ||||||
First Connecticut Bancorp, Inc. | 4 | 61 | ||||||
Citizens & Northern Corp. | 3 | 61 | ||||||
Crawford & Co. — Class B | 7 | 60 | ||||||
UMH Properties, Inc. | 6 | 60 | ||||||
Moelis & Co. — Class A | 2 | 60 | ||||||
National Bankshares, Inc. | 2 | 60 | ||||||
Consolidated-Tomoka Land Co. | 1 | 60 | ||||||
Gain Capital Holdings, Inc. | 6 | 59 | ||||||
CatchMark Timber Trust, Inc. — Class A | 5 | 59 | ||||||
MidWestOne Financial Group, Inc. | 2 | 58 | ||||||
Charter Financial Corp. | 5 | 58 | ||||||
National Interstate Corp. | 2 | 56 | ||||||
Global Indemnity plc — Class A* | 2 | 56 | ||||||
Heritage Commerce Corp. | 6 | 55 | ||||||
Kearny Financial Corp.* | 4 | 54 | ||||||
Square 1 Financial, Inc. — Class A* | 2 | 54 | ||||||
Atlas Financial Holdings, Inc.* | 3 | 53 | ||||||
RenaissanceRe Holdings Ltd. | 1 | 53 | ||||||
First Bancorp, Inc. | 3 | 52 | ||||||
Manning & Napier, Inc. — Class A | 4 | 52 | ||||||
Altisource Portfolio Solutions S.A.* | 4 | 51 | ||||||
Fox Chase Bancorp, Inc. | 3 | 50 | ||||||
Sierra Bancorp | 3 | 50 | ||||||
Heritage Oaks Bancorp | 6 | 50 | ||||||
Ames National Corp. | 2 | 50 | ||||||
First Financial Northwest, Inc. | 4 | 49 | ||||||
Northrim BanCorp, Inc. | 2 | 49 | ||||||
Penns Woods Bancorp, Inc. | 1 | 49 | ||||||
Capital City Bank Group, Inc. | 3 | 49 | ||||||
Territorial Bancorp, Inc. | 2 | 48 | ||||||
Baldwin & Lyons, Inc. — Class B | 2 | 47 | ||||||
eHealth, Inc.* | 5 | 47 | ||||||
Horizon Bancorp | 2 | 47 | ||||||
FBR & Co.* | 2 | 46 | ||||||
Kansas City Life Insurance Co. | 1 | 46 | ||||||
American National Bankshares, Inc. | 2 | 45 | ||||||
Owens Realty Mortgage, Inc. | 3 | 45 | ||||||
Regional Management Corp.* | 3 | 44 | ||||||
Heritage Insurance Holdings, Inc.* | 2 | 44 | ||||||
Stonegate Mortgage Corp.* | 4 | 43 | ||||||
First Business Financial Services, Inc. | 1 | 43 | ||||||
Enterprise Bancorp, Inc. | 2 | 43 | ||||||
Hallmark Financial Services, Inc.* | 4 | 42 | ||||||
Consumer Portfolio Services, Inc.* | 6 | 42 | ||||||
Marlin Business Services Corp. | 2 | 40 | ||||||
Century Bancorp, Inc. — Class A | 1 | 40 | ||||||
Cascade Bancorp* | 8 | 38 | ||||||
Sun Bancorp, Inc.* | 2 | 38 | ||||||
Macatawa Bank Corp. | 7 | 37 | ||||||
BBX Capital Corp. — Class A* | 2 | 37 | ||||||
Trade Street Residential, Inc. | 5 | 36 | ||||||
EMC Insurance Group, Inc. | 1 | 34 | ||||||
RCS Capital Corp. — Class A | 3 | 32 | ||||||
Old Line Bancshares, Inc. | 2 | 32 | ||||||
Donegal Group, Inc. — Class A | 2 | 31 | ||||||
JG Wentworth Co. — Class A* | 3 | 31 | ||||||
Opus Bank | 1 | 31 |
SEE NOTES TO FINANCIAL STATEMENTS. | THE RYDEX FUNDS ANNUAL REPORT | 115 |
SCHEDULE OF INVESTMENTS (continued) | March 31, 2015 |
RUSSELL 2000® FUND |
Shares | Value | |||||||
CommunityOne Bancorp* | 3 | $ | 30 | |||||
MidSouth Bancorp, Inc. | 2 | 30 | ||||||
Merchants Bancshares, Inc. | 1 | 29 | ||||||
Republic First Bancorp, Inc.* | 8 | 29 | ||||||
Nicholas Financial, Inc.* | 2 | 28 | ||||||
Pzena Investment Management, Inc. — Class A | 3 | 28 | ||||||
Triumph Bancorp, Inc.* | 2 | 27 | ||||||
Independence Holding Co. | 2 | 27 | ||||||
FXCM, Inc. — Class A | 12 | 26 | ||||||
Fifth Street Asset Management, Inc. | 2 | 23 | ||||||
Medley Management, Inc. — Class A | 2 | 22 | ||||||
Higher One Holdings, Inc.* | 9 | 22 | ||||||
Palmetto Bancshares, Inc. | 1 | 19 | ||||||
C1 Financial, Inc.* | 1 | 19 | ||||||
GFI Group, Inc. | 3 | 18 | ||||||
Hampton Roads Bankshares, Inc.* | 9 | 17 | ||||||
Trupanion, Inc.* | 2 | 16 | ||||||
CIFC Corp. | 2 | 15 | ||||||
Great Ajax Corp.* | 1 | 15 | ||||||
Silvercrest Asset Management Group, Inc. — Class A | 1 | 14 | ||||||
Green Bancorp, Inc.* | 1 | 11 | ||||||
Total Financial | 115,243 | |||||||
CONSUMER, NON-CYCLICAL - 0.3% | ||||||||
Isis Pharmaceuticals, Inc.* | 31 | 1,974 | ||||||
Puma Biotechnology, Inc.* | 7 | 1,653 | ||||||
DexCom, Inc.* | 20 | 1,248 | ||||||
West Pharmaceutical Services, Inc. | 19 | 1,143 | ||||||
STERIS Corp. | 16 | 1,124 | ||||||
Team Health Holdings, Inc.* | 19 | 1,113 | ||||||
WellCare Health Plans, Inc.* | 12 | 1,098 | ||||||
Cepheid* | 19 | 1,081 | ||||||
WEX, Inc.* | 10 | 1,073 | ||||||
PAREXEL International Corp.* | 15 | 1,034 | ||||||
HealthSouth Corp. | 23 | 1,019 | ||||||
United Natural Foods, Inc.* | 13 | 1,001 | ||||||
Receptos, Inc.* | 6 | 989 | ||||||
TreeHouse Foods, Inc.* | 11 | 936 | ||||||
Deluxe Corp. | 13 | 900 | ||||||
Impax Laboratories, Inc.* | 19 | 890 | ||||||
Neurocrine Biosciences, Inc.* | 22 | 874 | ||||||
Bluebird Bio, Inc.* | 7 | 845 | ||||||
Euronet Worldwide, Inc.* | 14 | 822 | ||||||
Akorn, Inc.* | 17 | 807 | ||||||
Pacira Pharmaceuticals, Inc.* | 9 | 800 | ||||||
Acadia Healthcare Company, Inc.* | 11 | 788 | ||||||
ABIOMED, Inc.* | 11 | 787 | ||||||
Cimpress N.V.* | 9 | 759 | ||||||
OPKO Health, Inc.* | 52 | 737 | ||||||
Celldex Therapeutics, Inc.* | 26 | 725 | ||||||
Corporate Executive Board Co. | 9 | 719 | ||||||
ACADIA Pharmaceuticals, Inc.* | 21 | 684 | ||||||
Amsurg Corp. — Class A* | 11 | 677 | ||||||
Sotheby’s | 16 | 677 | ||||||
Post Holdings, Inc.* | 14 | 656 | ||||||
Helen of Troy Ltd.* | 8 | 652 | ||||||
Haemonetics Corp.* | 14 | 629 | ||||||
SUPERVALU, Inc.* | 54 | 629 | ||||||
Darling Ingredients, Inc.* | 44 | 617 | ||||||
Healthcare Services Group, Inc. | 19 | 611 | ||||||
Dyax Corp.* | 36 | 603 | ||||||
Prestige Brands Holdings, Inc.* | 14 | 601 | ||||||
Chemed Corp. | 5 | 597 | ||||||
Thoratec Corp.* | 14 | 586 | ||||||
Advisory Board Co.* | 11 | 586 | ||||||
Synageva BioPharma Corp.* | 6 | 585 | ||||||
Owens & Minor, Inc. | 17 | 575 | ||||||
NuVasive, Inc.* | 12 | 552 | ||||||
Molina Healthcare, Inc.* | 8 | 538 | ||||||
On Assignment, Inc.* | 14 | 537 | ||||||
Boston Beer Company, Inc. — Class A* | 2 | 535 | ||||||
Exact Sciences Corp.* | 24 | 528 | ||||||
Novavax, Inc.* | 63 | 521 | ||||||
Anacor Pharmaceuticals, Inc.* | 9 | 521 | ||||||
Monro Muffler Brake, Inc. | 8 | 520 | ||||||
Clovis Oncology, Inc.* | 7 | 520 | ||||||
Grand Canyon Education, Inc.* | 12 | 519 | ||||||
Ironwood Pharmaceuticals, Inc. — Class A* | 32 | 512 | ||||||
Insulet Corp.* | 15 | 500 | ||||||
Kindred Healthcare, Inc. | 21 | 500 | ||||||
Magellan Health, Inc.* | 7 | 496 | ||||||
Sanderson Farms, Inc. | 6 | 478 | ||||||
ABM Industries, Inc. | 15 | 478 | ||||||
Medicines Co.* | 17 | 476 | ||||||
Lancaster Colony Corp. | 5 | 476 | ||||||
Lannett Company, Inc.* | 7 | 474 | ||||||
Heartland Payment Systems, Inc. | 10 | 469 | ||||||
Neogen Corp.* | 10 | 467 | ||||||
Air Methods Corp.* | 10 | 466 | ||||||
Portola Pharmaceuticals, Inc.* | 12 | 456 | ||||||
Cyberonics, Inc.* | 7 | 454 | ||||||
Intrexon Corp.* | 10 | 454 | ||||||
Cardtronics, Inc.* | 12 | 452 | ||||||
Fresh Market, Inc.* | 11 | 447 | ||||||
Vector Group Ltd. | 20 | 440 | ||||||
HeartWare International, Inc.* | 5 | 439 | ||||||
Integra LifeSciences Holdings Corp.* | 7 | 432 | ||||||
Globus Medical, Inc. — Class A* | 17 | 429 | ||||||
Cantel Medical Corp. | 9 | 428 | ||||||
Korn/Ferry International | 13 | 427 | ||||||
J&J Snack Foods Corp. | 4 | 427 | ||||||
Snyder’s-Lance, Inc. | 13 | 415 | ||||||
Dean Foods Co. | 25 | 413 | ||||||
Matthews International Corp. — Class A | 8 | 412 | ||||||
FTI Consulting, Inc.* | 11 | 412 | ||||||
B&G Foods, Inc. | 14 | 412 |
116 | THE RYDEX FUNDS ANNUAL REPORT | SEE NOTES TO FINANCIAL STATEMENTS. |
SCHEDULE OF INVESTMENTS (continued) | March 31, 2015 |
RUSSELL 2000® FUND |
Shares | Value | |||||||
Bright Horizons Family Solutions, Inc.* | 8 | $ | 409 | |||||
Greatbatch, Inc.* | 7 | 405 | ||||||
Catalent, Inc.* | 13 | 405 | ||||||
Huron Consulting Group, Inc.* | 6 | 397 | ||||||
Masimo Corp.* | 12 | 396 | ||||||
Halozyme Therapeutics, Inc.* | 27 | 386 | ||||||
Ligand Pharmaceuticals, Inc. — Class B* | 5 | 386 | ||||||
Abaxis, Inc. | 6 | 385 | ||||||
Rent-A-Center, Inc. | 14 | 384 | ||||||
AMAG Pharmaceuticals, Inc.* | 7 | 383 | ||||||
Spectranetics Corp.* | 11 | 382 | ||||||
Agios Pharmaceuticals, Inc.* | 4 | 377 | ||||||
ExamWorks Group, Inc.* | 9 | 375 | ||||||
Nektar Therapeutics* | 34 | 374 | ||||||
ICU Medical, Inc.* | 4 | 373 | ||||||
EVERTEC, Inc. | 17 | 372 | ||||||
Acorda Therapeutics, Inc.* | 11 | 366 | ||||||
PTC Therapeutics, Inc.* | 6 | 365 | ||||||
ARIAD Pharmaceuticals, Inc.* | 44 | 363 | ||||||
Brink’s Co. | 13 | 359 | ||||||
HMS Holdings Corp.* | 23 | 355 | ||||||
Natus Medical, Inc.* | 9 | 355 | ||||||
WD-40 Co. | 4 | 354 | ||||||
CONMED Corp. | 7 | 353 | ||||||
Fresh Del Monte Produce, Inc. | 9 | 350 | ||||||
Theravance, Inc. | 22 | 346 | ||||||
TESARO, Inc.* | 6 | 344 | ||||||
Keryx Biopharmaceuticals, Inc.* | 27 | 344 | ||||||
Depomed, Inc.* | 15 | 336 | ||||||
Wright Medical Group, Inc.* | 13 | 335 | ||||||
Tumi Holdings, Inc.* | 13 | 318 | ||||||
MannKind Corp.* | 61 | 317 | ||||||
Cambrex Corp.* | 8 | 317 | ||||||
SpartanNash Co. | 10 | 316 | ||||||
Insperity, Inc. | 6 | 314 | ||||||
Cal-Maine Foods, Inc. | 8 | 312 | ||||||
Select Medical Holdings Corp. | 21 | 311 | ||||||
Merrimack Pharmaceuticals, Inc.* | 26 | 309 | ||||||
PDL BioPharma, Inc. | 43 | 303 | ||||||
Chimerix, Inc.* | 8 | 302 | ||||||
Auspex Pharmaceuticals, Inc.* | 3 | 301 | ||||||
LifeLock, Inc.* | 21 | 296 | ||||||
Achillion Pharmaceuticals, Inc.* | 30 | 296 | ||||||
Tetraphase Pharmaceuticals, Inc.* | 8 | 293 | ||||||
Endologix, Inc.* | 17 | 290 | ||||||
Andersons, Inc. | 7 | 290 | ||||||
Universal Corp. | 6 | 283 | ||||||
Sangamo BioSciences, Inc.* | 18 | 282 | ||||||
Ensign Group, Inc. | 6 | 281 | ||||||
Arena Pharmaceuticals, Inc.* | 64 | 280 | ||||||
AMN Healthcare Services, Inc.* | 12 | 277 | ||||||
NxStage Medical, Inc.* | 16 | 277 | ||||||
Cempra, Inc.* | 8 | 274 | ||||||
NewLink Genetics Corp.* | 5 | 274 | ||||||
Cardiovascular Systems, Inc.* | 7 | 273 | ||||||
Repligen Corp.* | 9 | 273 | ||||||
Analogic Corp. | 3 | 273 | ||||||
Array BioPharma, Inc.* | 37 | 273 | ||||||
Insmed, Inc.* | 13 | 270 | ||||||
TrueBlue, Inc.* | 11 | 268 | ||||||
Prothena Corporation plc* | 7 | 267 | ||||||
MiMedx Group, Inc.* | 25 | 260 | ||||||
ZIOPHARM Oncology, Inc.* | 24 | 258 | ||||||
Orexigen Therapeutics, Inc.* | 33 | 258 | ||||||
KYTHERA Biopharmaceuticals, Inc.* | 5 | 251 | ||||||
ACCO Brands Corp.* | 30 | 249 | ||||||
Bio-Reference Laboratories, Inc.* | 7 | 247 | ||||||
Zeltiq Aesthetics, Inc.* | 8 | 247 | ||||||
Affymetrix, Inc.* | 19 | 239 | ||||||
Tornier N.V.* | 9 | 236 | ||||||
IPC Healthcare, Inc.* | 5 | 233 | ||||||
McGrath RentCorp | 7 | 230 | ||||||
Emergent Biosolutions, Inc.* | 8 | 230 | ||||||
PharMerica Corp.* | 8 | 226 | ||||||
USANA Health Sciences, Inc.* | 2 | 223 | ||||||
Omeros Corp.* | 10 | 220 | ||||||
Quidel Corp.* | 8 | 216 | ||||||
Momenta Pharmaceuticals, Inc.* | 14 | 213 | ||||||
Merit Medical Systems, Inc.* | 11 | 212 | ||||||
Meridian Bioscience, Inc. | 11 | 210 | ||||||
Aegerion Pharmaceuticals, Inc.* | 8 | 209 | ||||||
Multi-Color Corp. | 3 | 208 | ||||||
Capital Senior Living Corp.* | 8 | 208 | ||||||
ImmunoGen, Inc.* | 23 | 206 | ||||||
Calavo Growers, Inc. | 4 | 206 | ||||||
ICF International, Inc.* | 5 | 204 | ||||||
Hanger, Inc.* | 9 | 204 | ||||||
RPX Corp.* | 14 | 201 | ||||||
Raptor Pharmaceutical Corp.* | 18 | 196 | ||||||
Diamond Foods, Inc.* | 6 | 195 | ||||||
Team, Inc.* | 5 | 195 | ||||||
Capella Education Co. | 3 | 195 | ||||||
TherapeuticsMD, Inc.* | 32 | 194 | ||||||
Foundation Medicine, Inc.* | 4 | 192 | ||||||
National Healthcare Corp. | 3 | 191 | ||||||
Amedisys, Inc.* | 7 | 187 | ||||||
Tootsie Roll Industries, Inc. | 6 | 187 | ||||||
Ophthotech Corp.* | 4 | 186 | ||||||
Accuray, Inc.* | 20 | 186 | ||||||
Esperion Therapeutics, Inc.* | 2 | 185 | ||||||
Cynosure, Inc. — Class A* | 6 | 184 | ||||||
Hyperion Therapeutics, Inc.* | 4 | 184 | ||||||
Infinity Pharmaceuticals, Inc.* | 13 | 182 | ||||||
Relypsa, Inc.* | 5 | 180 | ||||||
Orthofix International N.V.* | 5 | 179 | ||||||
Dynavax Technologies Corp.* | 8 | 179 | ||||||
Resources Connection, Inc. | 10 | 175 | ||||||
Invacare Corp. | 9 | 175 |
SEE NOTES TO FINANCIAL STATEMENTS. | THE RYDEX FUNDS ANNUAL REPORT | 117 |
SCHEDULE OF INVESTMENTS (continued) | March 31, 2015 |
RUSSELL 2000® FUND |
Shares | Value | |||||||
Insys Therapeutics, Inc.* | 3 | $ | 174 | |||||
OvaScience, Inc.* | 5 | 174 | ||||||
Kite Pharma, Inc.* | 3 | 173 | ||||||
BioCryst Pharmaceuticals, Inc.* | 19 | 172 | ||||||
Navigant Consulting, Inc.* | 13 | 168 | ||||||
Retrophin, Inc.* | 7 | 168 | ||||||
Anika Therapeutics, Inc.* | 4 | 165 | ||||||
Quad/Graphics, Inc. | 7 | 161 | ||||||
Strayer Education, Inc.* | 3 | 160 | ||||||
Luminex Corp.* | 10 | 160 | ||||||
NutriSystem, Inc. | 8 | 160 | ||||||
Providence Service Corp.* | 3 | 159 | ||||||
Ascent Capital Group, Inc. — Class A* | 4 | 159 | ||||||
Geron Corp.* | 42 | 158 | ||||||
Healthways, Inc.* | 8 | 158 | ||||||
MacroGenics, Inc.* | 5 | 157 | ||||||
Kforce, Inc. | 7 | 156 | ||||||
Spark Therapeutics, Inc.* | 2 | 155 | ||||||
Boulder Brands, Inc.* | 16 | 152 | ||||||
Acceleron Pharma, Inc.* | 4 | 152 | ||||||
Monster Worldwide, Inc.* | 24 | 152 | ||||||
Vascular Solutions, Inc.* | 5 | 152 | ||||||
American Public Education, Inc.* | 5 | 150 | ||||||
Weis Markets, Inc. | 3 | 149 | ||||||
Ingles Markets, Inc. — Class A | 3 | 148 | ||||||
LDR Holding Corp.* | 4 | 147 | ||||||
Sarepta Therapeutics, Inc.* | 11 | 146 | ||||||
PRA Health Sciences, Inc.* | 5 | 144 | ||||||
AtriCure, Inc.* | 7 | 143 | ||||||
GenMark Diagnostics, Inc.* | 11 | 143 | ||||||
US Physical Therapy, Inc. | 3 | 143 | ||||||
Phibro Animal Health Corp. — Class A | 4 | 142 | ||||||
K12, Inc.* | 9 | 141 | ||||||
TriNet Group, Inc.* | 4 | 141 | ||||||
Sagent Pharmaceuticals, Inc.* | 6 | 140 | ||||||
Triple-S Management Corp. — Class B* | 7 | 139 | ||||||
Viad Corp. | 5 | 139 | ||||||
Diplomat Pharmacy, Inc.* | 4 | 138 | ||||||
Accelerate Diagnostics, Inc.* | 6 | 135 | ||||||
Exelixis, Inc.*,1 | 52 | 134 | ||||||
Unilife Corp.* | 33 | 132 | ||||||
Rockwell Medical, Inc.* | 12 | 131 | ||||||
Inovio Pharmaceuticals, Inc.* | 16 | 131 | ||||||
Inter Parfums, Inc. | 4 | 130 | ||||||
Global Cash Access Holdings, Inc.* | 17 | 130 | ||||||
Aratana Therapeutics, Inc.* | 8 | 128 | ||||||
Green Dot Corp. — Class A* | 8 | 127 | ||||||
ANI Pharmaceuticals, Inc.* | 2 | 125 | ||||||
AngioDynamics, Inc.* | 7 | 125 | ||||||
Ultragenyx Pharmaceutical, Inc.* | 2 | 124 | ||||||
SciClone Pharmaceuticals, Inc.* | 14 | 124 | ||||||
TG Therapeutics, Inc.* | 8 | 124 | ||||||
Revlon, Inc. — Class A* | 3 | 124 | ||||||
Heidrick & Struggles International, Inc. | 5 | 123 | ||||||
Sequenom, Inc.* | 31 | 122 | ||||||
Karyopharm Therapeutics, Inc.* | 4 | 122 | ||||||
Genomic Health, Inc.* | 4 | 122 | ||||||
Kelly Services, Inc. — Class A | 7 | 122 | ||||||
Intra-Cellular Therapies, Inc.* | 5 | 119 | ||||||
Xoom Corp.* | 8 | 118 | ||||||
Universal American Corp.* | 11 | 117 | ||||||
Central Garden & Pet Co. — Class A* | 11 | 117 | ||||||
BioDelivery Sciences International, Inc.* | 11 | 116 | ||||||
Synergy Pharmaceuticals, Inc.* | 25 | 116 | ||||||
Five Prime Therapeutics, Inc.* | 5 | 114 | ||||||
Coca-Cola Bottling Company Consolidated | 1 | 113 | ||||||
Chefs’ Warehouse, Inc.* | 5 | 112 | ||||||
LendingTree, Inc.* | 2 | 112 | ||||||
Forrester Research, Inc. | 3 | 110 | ||||||
Elizabeth Arden, Inc.* | 7 | 109 | ||||||
Progenics Pharmaceuticals, Inc.* | 18 | 108 | ||||||
XenoPort, Inc.* | 15 | 107 | ||||||
Tejon Ranch Co.* | 4 | 106 | ||||||
Albany Molecular Research, Inc.* | 6 | 106 | ||||||
Landauer, Inc. | 3 | 105 | ||||||
Cerus Corp.* | 25 | 104 | ||||||
Theravance Biopharma, Inc.* | 6 | 104 | ||||||
CorVel Corp.* | 3 | 103 | ||||||
Spectrum Pharmaceuticals, Inc.* | 17 | 103 | ||||||
Surgical Care Affiliates, Inc.* | 3 | 103 | ||||||
CBIZ, Inc.* | 11 | 103 | ||||||
ARC Document Solutions, Inc.* | 11 | 102 | ||||||
Arrowhead Research Corp.* | 15 | 101 | ||||||
Sage Therapeutics, Inc.* | 2 | 100 | ||||||
LHC Group, Inc.* | 3 | 99 | ||||||
Ennis, Inc. | 7 | 99 | ||||||
OraSure Technologies, Inc.* | 15 | 98 | ||||||
Supernus Pharmaceuticals, Inc.* | 8 | 97 | ||||||
Pernix Therapeutics Holdings, Inc.* | 9 | 96 | ||||||
Great Lakes Dredge & Dock Corp.* | 16 | 96 | ||||||
Nevro Corp.* | 2 | 96 | ||||||
Carriage Services, Inc. — Class A | 4 | 95 | ||||||
Cross Country Healthcare, Inc.* | 8 | 95 | ||||||
Aerie Pharmaceuticals, Inc.* | 3 | 94 | ||||||
Pacific Biosciences of California, Inc.* | 16 | 93 | ||||||
CRA International, Inc.* | 3 | 93 | ||||||
Enanta Pharmaceuticals, Inc.* | 3 | 92 | ||||||
Career Education Corp.* | 18 | 91 | ||||||
Medifast, Inc.* | 3 | 90 | ||||||
Almost Family, Inc.* | 2 | 89 | ||||||
Northwest Biotherapeutics, Inc.* | 12 | 88 | ||||||
Osiris Therapeutics, Inc.* | 5 | 88 | ||||||
SP Plus Corp.* | 4 | 87 | ||||||
XOMA Corp.* | 24 | 87 | ||||||
Heron Therapeutics, Inc.* | 6 | 87 | ||||||
Agenus, Inc.* | 17 | 87 | ||||||
Alder Biopharmaceuticals, Inc.* | 3 | 87 | ||||||
John B Sanfilippo & Son, Inc. | 2 | 86 |
118 | THE RYDEX FUNDS ANNUAL REPORT | SEE NOTES TO FINANCIAL STATEMENTS. |
SCHEDULE OF INVESTMENTS (continued) | March 31, 2015 |
RUSSELL 2000® FUND |
Shares | Value | |||||||
Barrett Business Services, Inc. | 2 | $ | 86 | |||||
Idera Pharmaceuticals, Inc.* | 23 | 85 | ||||||
Immunomedics, Inc.* | 22 | 84 | ||||||
ZS Pharma, Inc.* | 2 | 84 | ||||||
Antares Pharma, Inc.* | 31 | 84 | ||||||
Ocular Therapeutix, Inc.* | 2 | 84 | ||||||
Vanda Pharmaceuticals, Inc.* | 9 | 84 | ||||||
Atara Biotherapeutics, Inc.* | 2 | 83 | ||||||
Ampio Pharmaceuticals, Inc.* | 11 | 83 | ||||||
Radius Health, Inc.* | 2 | 82 | ||||||
Omega Protein Corp.* | 6 | 82 | ||||||
Rigel Pharmaceuticals, Inc.* | 23 | 82 | ||||||
Avalanche Biotechnologies, Inc.* | 2 | 81 | ||||||
BioScrip, Inc.* | 18 | 80 | ||||||
Zafgen, Inc.* | 2 | 79 | ||||||
Corcept Therapeutics, Inc.* | 14 | 78 | ||||||
SurModics, Inc.* | 3 | 78 | ||||||
Sucampo Pharmaceuticals, Inc. — Class A* | 5 | 78 | ||||||
OncoMed Pharmaceuticals, Inc.* | 3 | 77 | ||||||
Exactech, Inc.* | 3 | 77 | ||||||
Xencor, Inc.* | 5 | 77 | ||||||
RadNet, Inc.* | 9 | 76 | ||||||
Epizyme, Inc.* | 4 | 75 | ||||||
HealthEquity, Inc.* | 3 | 75 | ||||||
STAAR Surgical Co.* | 10 | 74 | ||||||
RTI Surgical, Inc.* | 15 | 74 | ||||||
National Beverage Corp.* | 3 | 73 | ||||||
CryoLife, Inc. | 7 | 73 | ||||||
CTI BioPharma Corp.* | 40 | 72 | ||||||
Verastem, Inc.* | 7 | 71 | ||||||
Otonomy, Inc.* | 2 | 71 | ||||||
James River Group Holdings Ltd. | 3 | 71 | ||||||
Smart & Final Stores, Inc.* | 4 | 70 | ||||||
BioTime, Inc.* | 14 | 70 | ||||||
MoneyGram International, Inc.* | 8 | 69 | ||||||
Regulus Therapeutics, Inc.* | 4 | 68 | ||||||
Peregrine Pharmaceuticals, Inc.* | 50 | 68 | ||||||
Incorporated Research Holdings, Inc. — Class A* | 2 | 65 | ||||||
Limoneira Co. | 3 | 65 | ||||||
IGI Laboratories, Inc.* | 8 | 65 | ||||||
Threshold Pharmaceuticals, Inc.* | 16 | 65 | ||||||
Navidea Biopharmaceuticals, Inc.* | 40 | 64 | ||||||
Civeo Corp. | 25 | 64 | ||||||
Lexicon Pharmaceuticals, Inc.* | 67 | 63 | ||||||
Village Super Market, Inc. — Class A | 2 | 63 | ||||||
Civitas Solutions, Inc.* | 3 | 63 | ||||||
FibroGen, Inc.* | 2 | 63 | ||||||
Endocyte, Inc.* | 10 | 63 | ||||||
Hackett Group, Inc. | 7 | 63 | ||||||
BioTelemetry, Inc.* | 7 | 62 | ||||||
Coherus Biosciences, Inc.* | 2 | 61 | ||||||
AAC Holdings, Inc.* | 2 | 61 | ||||||
Cytokinetics, Inc.* | 9 | 61 | ||||||
CSS Industries, Inc. | 2 | 60 | ||||||
Organovo Holdings, Inc.* | 17 | 60 | ||||||
Utah Medical Products, Inc. | 1 | 60 | ||||||
Seneca Foods Corp. — Class A* | 2 | 60 | ||||||
VIVUS, Inc.* | 24 | 59 | ||||||
Mirati Therapeutics, Inc.* | 2 | 59 | ||||||
Stemline Therapeutics, Inc.* | 4 | 58 | ||||||
Franklin Covey Co.* | 3 | 58 | ||||||
Universal Technical Institute, Inc. | 6 | 58 | ||||||
Paylocity Holding Corp.* | 2 | 57 | ||||||
Pendrell Corp.* | 44 | 57 | ||||||
Oxford Immunotec Global plc* | 4 | 56 | ||||||
CDI Corp. | 4 | 56 | ||||||
ServiceSource International, Inc.* | 18 | 56 | ||||||
Galena Biopharma, Inc.* | 40 | 56 | ||||||
Natural Grocers by Vitamin Cottage, Inc.* | 2 | 55 | ||||||
POZEN, Inc.* | 7 | 54 | ||||||
ChemoCentryx, Inc.* | 7 | 53 | ||||||
Intersect ENT, Inc.* | 2 | 52 | ||||||
Repros Therapeutics, Inc.* | 6 | 52 | ||||||
Alico, Inc. | 1 | 51 | ||||||
Derma Sciences, Inc.* | 6 | 51 | ||||||
CytRx Corp.* | 15 | 51 | ||||||
Adeptus Health, Inc. — Class A* | 1 | 50 | ||||||
Farmer Bros Co.* | 2 | 50 | ||||||
Cellular Dynamics International, Inc.* | 3 | 49 | ||||||
SFX Entertainment, Inc.* | 12 | 49 | ||||||
Weight Watchers International, Inc.* | 7 | 49 | ||||||
Five Star Quality Care, Inc.* | 11 | 49 | ||||||
Senomyx, Inc.* | 11 | 49 | ||||||
Bellicum Pharmaceuticals, Inc.* | 2 | 46 | ||||||
Addus HomeCare Corp.* | 2 | 46 | ||||||
Electro Rent Corp. | 4 | 45 | ||||||
Zogenix, Inc.* | 33 | 45 | ||||||
Collectors Universe, Inc. | 2 | 45 | ||||||
Flexion Therapeutics, Inc.* | 2 | 45 | ||||||
Inventure Foods, Inc.* | 4 | 45 | ||||||
K2M Group Holdings, Inc.* | 2 | 44 | ||||||
National Research Corp. — Class A | 3 | 43 | ||||||
Genesis Healthcare, Inc.* | 6 | 43 | ||||||
Immune Design Corp.* | 2 | 42 | ||||||
Revance Therapeutics, Inc.* | 2 | 41 | ||||||
Craft Brew Alliance, Inc.* | 3 | 41 | ||||||
Oncothyreon, Inc.* | 25 | 41 | ||||||
ITT Educational Services, Inc.* | 6 | 41 | ||||||
Nutraceutical International Corp.* | 2 | 39 | ||||||
Nature’s Sunshine Products, Inc. | 3 | 39 | ||||||
BioSpecifics Technologies Corp.* | 1 | 39 | ||||||
Bridgepoint Education, Inc.* | 4 | 39 | ||||||
Sientra, Inc.* | 2 | 38 | ||||||
Tandem Diabetes Care, Inc.* | 3 | 38 | ||||||
Sunesis Pharmaceuticals, Inc.* | 15 | 37 | ||||||
Versartis, Inc.* | 2 | 37 | ||||||
Information Services Group, Inc. | 9 | 36 |
SEE NOTES TO FINANCIAL STATEMENTS. | THE RYDEX FUNDS ANNUAL REPORT | 119 |
SCHEDULE OF INVESTMENTS (continued) | March 31, 2015 |
RUSSELL 2000® FUND |
Shares | Value | |||||||
Alimera Sciences, Inc.* | 7 | $ | 35 | |||||
Bio-Path Holdings, Inc.* | 19 | 34 | ||||||
Neuralstem, Inc.* | 18 | 34 | ||||||
Fairway Group Holdings Corp.* | 5 | 34 | ||||||
Invitae Corp.* | 2 | 34 | ||||||
Synta Pharmaceuticals Corp.* | 17 | 33 | ||||||
Calithera Biosciences, Inc.* | 2 | 33 | ||||||
Cenveo, Inc.* | 15 | 32 | ||||||
Synutra International, Inc.* | 5 | 32 | ||||||
Inogen, Inc.* | 1 | 32 | ||||||
Neff Corp. — Class A* | 3 | 32 | ||||||
T2 Biosystems, Inc.* | 2 | 31 | ||||||
Dermira, Inc.* | 2 | 31 | ||||||
NanoString Technologies, Inc.* | 3 | 31 | ||||||
Amphastar Pharmaceuticals, Inc.* | 2 | 30 | ||||||
Enzo Biochem, Inc.* | 10 | 30 | ||||||
Hill International, Inc.* | 8 | 29 | ||||||
Cytori Therapeutics, Inc.* | 24 | 28 | ||||||
PRGX Global, Inc.* | 7 | 28 | ||||||
Liberator Medical Holdings, Inc. | 8 | 28 | ||||||
Liberty Tax, Inc. | 1 | 28 | ||||||
Performant Financial Corp.* | 8 | 27 | ||||||
AcelRx Pharmaceuticals, Inc.* | 7 | 27 | ||||||
Patriot National, Inc.* | 2 | 25 | ||||||
Alliance One International, Inc.* | 23 | 25 | ||||||
Vital Therapies, Inc.* | 1 | 25 | ||||||
NanoViricides, Inc.* | 11 | 25 | ||||||
Dicerna Pharmaceuticals, Inc.* | 1 | 24 | ||||||
TransEnterix, Inc.* | 8 | 23 | ||||||
Vitae Pharmaceuticals, Inc.* | 2 | 23 | ||||||
Tokai Pharmaceuticals, Inc.* | 2 | 23 | ||||||
Akebia Therapeutics, Inc.* | 2 | 22 | ||||||
Alliance HealthCare Services, Inc.* | 1 | 22 | ||||||
Entellus Medical, Inc.* | 1 | 22 | ||||||
Kindred Biosciences, Inc.* | 3 | 21 | ||||||
Lifeway Foods, Inc.* | 1 | 21 | ||||||
TriVascular Technologies, Inc.* | 2 | 21 | ||||||
Applied Genetic Technologies Corp.* | 1 | 20 | ||||||
Achaogen, Inc.* | 2 | 20 | ||||||
Pain Therapeutics, Inc.* | 10 | 19 | ||||||
NeoStem, Inc.* | 7 | 18 | ||||||
Adamas Pharmaceuticals, Inc.* | 1 | 17 | ||||||
Actinium Pharmaceuticals, Inc.* | 7 | 17 | ||||||
Female Health Co. | 6 | 17 | ||||||
Galectin Therapeutics, Inc.* | 5 | 17 | ||||||
Marrone Bio Innovations, Inc.* | 4 | 15 | ||||||
Ohr Pharmaceutical, Inc.* | 6 | 15 | ||||||
Care.com, Inc.* | 2 | 15 | ||||||
Symmetry Surgical, Inc.* | 2 | 15 | ||||||
Veracyte, Inc.* | 2 | 15 | ||||||
Ardelyx, Inc.* | 1 | 13 | ||||||
Egalet Corp.* | 1 | 13 | ||||||
Second Sight Medical Products, Inc.* | 1 | 13 | ||||||
Loxo Oncology, Inc.* | 1 | 12 | ||||||
Genocea Biosciences, Inc.* | 1 | 12 | ||||||
22nd Century Group, Inc.* | 12 | 10 | ||||||
Cara Therapeutics, Inc.* | 1 | 10 | ||||||
Eleven Biotherapeutics, Inc.* | 1 | 9 | ||||||
PhotoMedex, Inc.* | 3 | 6 | ||||||
Regado Biosciences, Inc.* | 4 | 5 | ||||||
Roka Bioscience, Inc.* | 1 | 3 | ||||||
Total Consumer, Non-cyclical | 106,561 | |||||||
CONSUMER, CYCLICAL - 0.1% | ||||||||
Office Depot, Inc.* | 142 | 1,306 | ||||||
Brunswick Corp. | 25 | 1,286 | ||||||
JetBlue Airways Corp.* | 66 | 1,270 | ||||||
Jack in the Box, Inc. | 11 | 1,055 | ||||||
Vail Resorts, Inc. | 10 | 1,034 | ||||||
Dana Holding Corp. | 45 | 951 | ||||||
Tenneco, Inc.* | 16 | 919 | ||||||
Buffalo Wild Wings, Inc.* | 5 | 906 | ||||||
Wolverine World Wide, Inc. | 27 | 903 | ||||||
Casey’s General Stores, Inc. | 10 | 901 | ||||||
American Eagle Outfitters, Inc. | 52 | 888 | ||||||
Watsco, Inc. | 7 | 879 | ||||||
Pool Corp. | 12 | 837 | ||||||
Restoration Hardware Holdings, Inc.* | 8 | 793 | ||||||
Life Time Fitness, Inc.* | 11 | 781 | ||||||
Allegiant Travel Co. — Class A | 4 | 769 | ||||||
Cracker Barrel Old Country Store, Inc. | 5 | 761 | ||||||
Skechers U.S.A., Inc. — Class A* | 10 | 719 | ||||||
Texas Roadhouse, Inc. — Class A | 19 | 692 | ||||||
Men’s Wearhouse, Inc. | 13 | 679 | ||||||
HNI Corp. | 12 | 662 | ||||||
Cooper Tire & Rubber Co. | 15 | 643 | ||||||
Cheesecake Factory, Inc. | 13 | 641 | ||||||
HSN, Inc. | 9 | 614 | ||||||
TRI Pointe Homes, Inc.* | 39 | 602 | ||||||
Lithia Motors, Inc. — Class A | 6 | 595 | ||||||
Ryland Group, Inc. | 12 | 585 | ||||||
Asbury Automotive Group, Inc.* | 7 | 582 | ||||||
Pinnacle Entertainment, Inc.* | 16 | 578 | ||||||
Steven Madden Ltd.* | 15 | 570 | ||||||
Marriott Vacations Worldwide Corp. | 7 | 568 | ||||||
G-III Apparel Group Ltd.* | 5 | 563 | ||||||
Group 1 Automotive, Inc. | 6 | 518 | ||||||
Mobile Mini, Inc. | 12 | 511 | ||||||
Five Below, Inc.* | 14 | 498 | ||||||
Papa John’s International, Inc. | 8 | 494 | ||||||
ANN, Inc.* | 12 | 492 | ||||||
Bloomin’ Brands, Inc. | 20 | 487 | ||||||
Meritage Homes Corp.* | 10 | 486 | ||||||
Select Comfort Corp.* | 14 | 483 | ||||||
Burlington Stores, Inc.* | 8 | 475 | ||||||
UniFirst Corp. | 4 | 471 | ||||||
American Axle & Manufacturing Holdings, Inc.* | 18 | 465 |
120 | THE RYDEX FUNDS ANNUAL REPORT | SEE NOTES TO FINANCIAL STATEMENTS. |
SCHEDULE OF INVESTMENTS (continued) | March 31, 2015 |
RUSSELL 2000® FUND |
Shares | Value | |||||||
Churchill Downs, Inc. | 4 | $ | 461 | |||||
Gentherm, Inc.* | 9 | 455 | ||||||
Herman Miller, Inc. | 16 | 444 | ||||||
Sonic Corp. | 14 | 444 | ||||||
Iconix Brand Group, Inc.* | 13 | 438 | ||||||
DineEquity, Inc. | 4 | 428 | ||||||
Genesco, Inc.* | 6 | 427 | ||||||
Fiesta Restaurant Group, Inc.* | 7 | 427 | ||||||
Columbia Sportswear Co. | 7 | 426 | ||||||
PriceSmart, Inc. | 5 | 425 | ||||||
Steelcase, Inc. — Class A | 22 | 417 | ||||||
United Stationers, Inc. | 10 | 410 | ||||||
Beacon Roofing Supply, Inc.* | 13 | 407 | ||||||
Brown Shoe Company, Inc. | 12 | 394 | ||||||
La-Z-Boy, Inc. | 14 | 395 | ||||||
Core-Mark Holding Company, Inc. | 6 | 386 | ||||||
Children’s Place, Inc. | 6 | 385 | ||||||
Interface, Inc. — Class A | 18 | 374 | ||||||
First Cash Financial Services, Inc.* | 8 | 372 | ||||||
Express, Inc.* | 22 | 364 | ||||||
G&K Services, Inc. — Class A | 5 | 363 | ||||||
Popeyes Louisiana Kitchen, Inc.* | 6 | 359 | ||||||
Buckle, Inc. | 7 | 358 | ||||||
Pier 1 Imports, Inc. | 25 | 350 | ||||||
Dorman Products, Inc.* | 7 | 348 | ||||||
Red Robin Gourmet Burgers, Inc.* | 4 | 348 | ||||||
KB Home | 22 | 344 | ||||||
Hibbett Sports, Inc.* | 7 | 343 | ||||||
Standard Pacific Corp.* | 38 | 342 | ||||||
Krispy Kreme Doughnuts, Inc.* | 17 | 340 | ||||||
Outerwall, Inc. | 5 | 331 | ||||||
Vitamin Shoppe, Inc.* | 8 | 330 | ||||||
Penn National Gaming, Inc.* | 21 | 329 | ||||||
Meritor, Inc.* | 26 | 328 | ||||||
ScanSource, Inc.* | 8 | 325 | ||||||
Bob Evans Farms, Inc. | 7 | 324 | ||||||
Belmond Ltd. — Class A* | 26 | 319 | ||||||
Finish Line, Inc. — Class A | 13 | 319 | ||||||
Knoll, Inc. | 13 | 305 | ||||||
BJ’s Restaurants, Inc.* | 6 | 303 | ||||||
Oxford Industries, Inc. | 4 | 302 | ||||||
Diamond Resorts International, Inc.* | 9 | 301 | ||||||
Boyd Gaming Corp.* | 21 | 298 | ||||||
Guess?, Inc. | 16 | 297 | ||||||
Interval Leisure Group, Inc. | 11 | 288 | ||||||
MDC Holdings, Inc. | 10 | 285 | ||||||
La Quinta Holdings, Inc.* | 12 | 284 | ||||||
Mattress Firm Holding Corp.* | 4 | 279 | ||||||
Cato Corp. — Class A | 7 | 277 | ||||||
Sonic Automotive, Inc. — Class A | 11 | 274 | ||||||
TiVo, Inc.* | 25 | 265 | ||||||
Hawaiian Holdings, Inc.* | 12 | 264 | ||||||
Denny’s Corp.* | 23 | 262 | ||||||
Barnes & Noble, Inc.* | 11 | 261 | ||||||
iRobot Corp.* | 8 | 261 | ||||||
Wabash National Corp.* | 18 | 253 | ||||||
Crocs, Inc.* | 21 | 248 | ||||||
Rush Enterprises, Inc. — Class A* | 9 | 246 | ||||||
National CineMedia, Inc. | 16 | 242 | ||||||
Zumiez, Inc.* | 6 | 242 | ||||||
Libbey, Inc. | 6 | 239 | ||||||
Cooper-Standard Holding, Inc.* | 4 | 237 | ||||||
International Speedway Corp. — Class A | 7 | 228 | ||||||
Universal Electronics, Inc.* | 4 | 225 | ||||||
Lumber Liquidators Holdings, Inc.* | 7 | 215 | ||||||
Wesco Aircraft Holdings, Inc.* | 14 | 214 | ||||||
AMC Entertainment Holdings, Inc. — Class A | 6 | 213 | ||||||
Conn’s, Inc.* | 7 | 212 | ||||||
Standard Motor Products, Inc. | 5 | 211 | ||||||
SkyWest, Inc. | 14 | 205 | ||||||
Carmike Cinemas, Inc.* | 6 | 202 | ||||||
Callaway Golf Co. | 21 | 200 | ||||||
H&E Equipment Services, Inc. | 8 | 200 | ||||||
Regis Corp.* | 12 | 196 | ||||||
Francesca’s Holdings Corp.* | 11 | 196 | ||||||
Ethan Allen Interiors, Inc. | 7 | 193 | ||||||
Tuesday Morning Corp.* | 12 | 193 | ||||||
Steiner Leisure Ltd.* | 4 | 190 | ||||||
MarineMax, Inc.* | 7 | 186 | ||||||
Stage Stores, Inc. | 8 | 183 | ||||||
Republic Airways Holdings, Inc.* | 13 | 179 | ||||||
Remy International, Inc. | 8 | 178 | ||||||
Modine Manufacturing Co.* | 13 | 175 | ||||||
Fred’s, Inc. — Class A | 10 | 171 | ||||||
DTS, Inc.* | 5 | 170 | ||||||
Rentrak Corp.* | 3 | 167 | ||||||
American Woodmark Corp.* | 3 | 164 | ||||||
Cash America International, Inc. | 7 | 163 | ||||||
Ruth’s Hospitality Group, Inc. | 10 | 159 | ||||||
Cavco Industries, Inc.* | 2 | 150 | ||||||
Winnebago Industries, Inc. | 7 | 149 | ||||||
Caesars Entertainment Corp.* | 14 | 147 | ||||||
Unifi, Inc.* | 4 | 144 | ||||||
M/I Homes, Inc.* | 6 | 143 | ||||||
Movado Group, Inc. | 5 | 143 | ||||||
Motorcar Parts of America, Inc.* | 5 | 139 | ||||||
Douglas Dynamics, Inc. | 6 | 137 | ||||||
Scientific Games Corp. — Class A* | 13 | 136 | ||||||
Pep Boys-Manny Moe & Jack* | 14 | 135 | ||||||
Travelport Worldwide Ltd. | 8 | 133 | ||||||
Tower International, Inc.* | 5 | 133 | ||||||
William Lyon Homes — Class A* | 5 | 129 | ||||||
EZCORP, Inc. — Class A* | 14 | 128 | ||||||
Haverty Furniture Companies, Inc. | 5 | 124 | ||||||
Beazer Homes USA, Inc.* | 7 | 124 | ||||||
Nautilus, Inc.* | 8 | 122 | ||||||
Virgin America, Inc.* | 4 | 122 | ||||||
Del Frisco’s Restaurant Group, Inc.* | 6 | 121 |
SEE NOTES TO FINANCIAL STATEMENTS. | THE RYDEX FUNDS ANNUAL REPORT | 121 |
SCHEDULE OF INVESTMENTS (continued) | March 31, 2015 |
RUSSELL 2000® FUND |
Shares | Value | |||||||
Shoe Carnival, Inc. | 4 | $ | 118 | |||||
ClubCorp Holdings, Inc. | 6 | 116 | ||||||
Superior Industries International, Inc. | 6 | 114 | ||||||
Titan International, Inc. | 12 | 112 | ||||||
Hovnanian Enterprises, Inc. — Class A* | 31 | 110 | ||||||
Arctic Cat, Inc. | 3 | 109 | ||||||
America’s Car-Mart, Inc.* | 2 | 109 | ||||||
Daktronics, Inc. | 10 | 108 | ||||||
Citi Trends, Inc.* | 4 | 108 | ||||||
Federal-Mogul Holdings Corp.* | 8 | 106 | ||||||
Marcus Corp. | 5 | 106 | ||||||
Eros International plc* | 6 | 105 | ||||||
Shake Shack, Inc. — Class A* | 2 | 100 | ||||||
Vera Bradley, Inc.* | 6 | 97 | ||||||
Ruby Tuesday, Inc.* | 16 | 96 | ||||||
Container Store Group, Inc.* | 5 | 95 | ||||||
Kirkland’s, Inc.* | 4 | 95 | ||||||
Kimball International, Inc. — Class B | 9 | 94 | ||||||
Chuy’s Holdings, Inc.* | 4 | 90 | ||||||
Winmark Corp. | 1 | 88 | ||||||
Stein Mart, Inc. | 7 | 87 | ||||||
Tile Shop Holdings, Inc.* | 7 | 85 | ||||||
Isle of Capri Casinos, Inc.* | 6 | 84 | ||||||
PetMed Express, Inc. | 5 | 83 | ||||||
PC Connection, Inc. | 3 | 78 | ||||||
Carrols Restaurant Group, Inc.* | 9 | 75 | ||||||
Strattec Security Corp. | 1 | 74 | ||||||
Jamba, Inc.* | 5 | 74 | ||||||
Miller Industries, Inc. | 3 | 74 | ||||||
Aeropostale, Inc.* | 21 | 73 | ||||||
WCI Communities, Inc.* | 3 | 72 | ||||||
Perry Ellis International, Inc.* | 3 | 69 | ||||||
Speedway Motorsports, Inc. | 3 | 68 | ||||||
Reading International, Inc. — Class A* | 5 | 67 | ||||||
Titan Machinery, Inc.* | 5 | 67 | ||||||
LGI Homes, Inc.* | 4 | 67 | ||||||
Quiksilver, Inc.* | 36 | 67 | ||||||
Zoe’s Kitchen, Inc.* | 2 | 67 | ||||||
Big 5 Sporting Goods Corp. | 5 | 66 | ||||||
Habit Restaurants, Inc. — Class A* | 2 | 64 | ||||||
Morgans Hotel Group Co.* | 8 | 62 | ||||||
Dave & Buster’s Entertainment, Inc.* | 2 | 61 | ||||||
Destination Maternity Corp. | 4 | 60 | ||||||
Weyco Group, Inc. | 2 | 60 | ||||||
Build-A-Bear Workshop, Inc. — Class A* | 3 | 59 | ||||||
Bravo Brio Restaurant Group, Inc.* | 4 | 59 | ||||||
Freshpet, Inc.* | 3 | 58 | ||||||
Monarch Casino & Resort, Inc.* | 3 | 57 | ||||||
Black Diamond, Inc.* | 6 | 57 | ||||||
Skullcandy, Inc.* | 5 | 57 | ||||||
Vince Holding Corp.* | 3 | 56 | ||||||
Christopher & Banks Corp.* | 10 | 56 | ||||||
Potbelly Corp.* | 4 | 55 | ||||||
Nathan’s Famous, Inc. | 1 | 54 | ||||||
Metaldyne Performance Group, Inc. | 3 | 54 | ||||||
Culp, Inc. | 2 | 54 | ||||||
NACCO Industries, Inc. — Class A | 1 | 53 | ||||||
Noodles & Co.* | 3 | 52 | ||||||
Escalade, Inc. | 3 | 52 | ||||||
El Pollo Loco Holdings, Inc.* | 2 | 51 | ||||||
Norcraft Companies, Inc.* | 2 | 51 | ||||||
Roundy’s, Inc.* | 10 | 49 | ||||||
Houston Wire & Cable Co. | 5 | 49 | ||||||
AV Homes, Inc.* | 3 | 48 | ||||||
Boot Barn Holdings, Inc.* | 2 | 48 | ||||||
Tilly’s, Inc. — Class A* | 3 | 47 | ||||||
Malibu Boats, Inc. — Class A* | 2 | 47 | ||||||
Accuride Corp.* | 10 | 47 | ||||||
West Marine, Inc.* | 5 | 46 | ||||||
Fox Factory Holding Corp.* | 3 | 46 | ||||||
Lifetime Brands, Inc. | 3 | 46 | ||||||
VOXX International Corp. — Class A* | 5 | 46 | ||||||
Commercial Vehicle Group, Inc.* | 7 | 45 | ||||||
Destination XL Group, Inc.* | 9 | 44 | ||||||
Fuel Systems Solutions, Inc.* | 4 | 44 | ||||||
Spartan Motors, Inc. | 9 | 44 | ||||||
Installed Building Products, Inc.* | 2 | 44 | ||||||
Sequential Brands Group, Inc.* | 4 | 43 | ||||||
LeapFrog Enterprises, Inc. — Class A* | 17 | 37 | ||||||
Systemax, Inc.* | 3 | 37 | ||||||
Papa Murphy’s Holdings, Inc.* | 2 | 36 | ||||||
Dixie Group, Inc.* | 4 | 36 | ||||||
Pacific Sunwear of California, Inc.* | 13 | 36 | ||||||
Intrawest Resorts Holdings, Inc.* | 4 | 35 | ||||||
JAKKS Pacific, Inc.* | 5 | 34 | ||||||
Johnson Outdoors, Inc. — Class A | 1 | 33 | ||||||
New Home Company, Inc.* | 2 | 32 | ||||||
Flexsteel Industries, Inc. | 1 | 31 | ||||||
Gaiam, Inc. — Class A* | 4 | 29 | ||||||
bebe stores, Inc. | 8 | 29 | ||||||
Famous Dave’s of America, Inc.* | 1 | 29 | ||||||
Bon-Ton Stores, Inc. | 4 | 28 | ||||||
Marine Products Corp. | 3 | 26 | ||||||
Sportsman’s Warehouse Holdings, Inc.* | 3 | 24 | ||||||
Sears Hometown and Outlet Stores, Inc.* | 3 | 23 | ||||||
New York & Company, Inc.* | 8 | 20 | ||||||
Flex Pharma, Inc.* | 1 | 20 | ||||||
Century Communities, Inc.* | 1 | 19 | ||||||
Empire Resorts, Inc.* | 4 | 18 | ||||||
hhgregg, Inc.* | 3 | 18 | ||||||
UCP, Inc. — Class A* | 2 | 17 | ||||||
Ignite Restaurant Group, Inc.* | 2 | 10 | ||||||
Speed Commerce, Inc.* | 13 | 8 | ||||||
Total Consumer, Cyclical | 65,714 | |||||||
INDUSTRIAL - 0.1% | ||||||||
Graphic Packaging Holding Co. | 87 | 1,265 | ||||||
Cognex Corp.* | 23 | 1,140 |
122 | THE RYDEX FUNDS ANNUAL REPORT | SEE NOTES TO FINANCIAL STATEMENTS. |
SCHEDULE OF INVESTMENTS (continued) | March 31, 2015 |
RUSSELL 2000® FUND |
Shares | Value | |||||||
Belden, Inc. | 12 | $ | 1,122 | |||||
HEICO Corp. | 18 | 1,098 | ||||||
Curtiss-Wright Corp. | 13 | 960 | ||||||
Teledyne Technologies, Inc.* | 9 | 960 | ||||||
Woodward, Inc. | 18 | 918 | ||||||
Esterline Technologies Corp.* | 8 | 914 | ||||||
Generac Holdings, Inc.* | 18 | 876 | ||||||
Berry Plastics Group, Inc.* | 24 | 868 | ||||||
CLARCOR, Inc. | 13 | 858 | ||||||
FEI Co. | 11 | 840 | ||||||
Moog, Inc. — Class A* | 11 | 826 | ||||||
EMCOR Group, Inc. | 17 | 789 | ||||||
EnerSys | 12 | 771 | ||||||
KapStone Paper and Packaging Corp. | 22 | 722 | ||||||
Polypore International, Inc.* | 12 | 707 | ||||||
XPO Logistics, Inc.* | 14 | 638 | ||||||
Louisiana-Pacific Corp.* | 37 | 610 | ||||||
Swift Transportation Co. — Class A* | 23 | 599 | ||||||
Littelfuse, Inc. | 6 | 597 | ||||||
Barnes Group, Inc. | 14 | 567 | ||||||
Mueller Industries, Inc. | 15 | 542 | ||||||
Masonite International Corp.* | 8 | 537 | ||||||
Rexnord Corp.* | 20 | 534 | ||||||
Sanmina Corp.* | 22 | 533 | ||||||
Hillenbrand, Inc. | 17 | 525 | ||||||
Knight Transportation, Inc. | �� | 16 | 517 | |||||
Universal Display Corp.* | 11 | 514 | ||||||
Applied Industrial Technologies, Inc. | 11 | 499 | ||||||
Franklin Electric Company, Inc. | 13 | 496 | ||||||
Trex Company, Inc.* | 9 | 490 | ||||||
Methode Electronics, Inc. | 10 | 470 | ||||||
Matson, Inc. | 11 | 464 | ||||||
RBC Bearings, Inc. | 6 | 459 | ||||||
Coherent, Inc.* | 7 | 455 | ||||||
Watts Water Technologies, Inc. — Class A | 8 | 440 | ||||||
Dycom Industries, Inc.* | 9 | 439 | ||||||
Forward Air Corp. | 8 | 434 | ||||||
Proto Labs, Inc.* | 6 | 420 | ||||||
Mueller Water Products, Inc. — Class A | 42 | 414 | ||||||
Simpson Manufacturing Company, Inc. | 11 | 411 | ||||||
Rogers Corp.* | 5 | 411 | ||||||
Greenbrier Companies, Inc. | 7 | 407 | ||||||
Scorpio Tankers, Inc. | 43 | 404 | ||||||
MSA Safety, Inc. | 8 | 399 | ||||||
EnPro Industries, Inc. | 6 | 396 | ||||||
Hub Group, Inc. — Class A* | 10 | 393 | ||||||
Tetra Tech, Inc. | 16 | 384 | ||||||
Actuant Corp. — Class A | 16 | 380 | ||||||
Werner Enterprises, Inc. | 12 | 377 | ||||||
Boise Cascade Co.* | 10 | 375 | ||||||
OSI Systems, Inc.* | 5 | 371 | ||||||
GenCorp, Inc.* | 16 | 371 | ||||||
TriMas Corp.* | 12 | 369 | ||||||
Drew Industries, Inc. | 6 | 369 | ||||||
Astronics Corp.* | 5 | 369 | ||||||
Brady Corp. — Class A | 13 | 368 | ||||||
Plexus Corp.* | 9 | 367 | ||||||
TAL International Group, Inc. | 9 | 367 | ||||||
Itron, Inc.* | 10 | 365 | ||||||
Harsco Corp. | 21 | 362 | ||||||
Granite Construction, Inc. | 10 | 351 | ||||||
Headwaters, Inc.* | 19 | 348 | ||||||
Apogee Enterprises, Inc. | 8 | 346 | ||||||
AAR Corp. | 11 | 338 | ||||||
TASER International, Inc.* | 14 | 338 | ||||||
Benchmark Electronics, Inc.* | 14 | 336 | ||||||
Heartland Express, Inc. | 14 | 333 | ||||||
MasTec, Inc.* | 17 | 328 | ||||||
Tennant Co. | 5 | 327 | ||||||
AZZ, Inc. | 7 | 326 | ||||||
FARO Technologies, Inc.* | 5 | 311 | ||||||
Saia, Inc.* | 7 | 310 | ||||||
Atlas Air Worldwide Holdings, Inc.* | 7 | 301 | ||||||
US Ecology, Inc. | 6 | 300 | ||||||
Kaman Corp. | 7 | 297 | ||||||
UTI Worldwide, Inc.* | 24 | 295 | ||||||
Fluidigm Corp.* | 7 | 295 | ||||||
RTI International Metals, Inc.* | 8 | 287 | ||||||
Nordic American Tankers Ltd. | 24 | 285 | ||||||
John Bean Technologies Corp. | 8 | 286 | ||||||
Advanced Energy Industries, Inc.* | 11 | 282 | ||||||
Chart Industries, Inc.* | 8 | 281 | ||||||
Albany International Corp. — Class A | 7 | 278 | ||||||
Universal Forest Products, Inc. | 5 | 277 | ||||||
CIRCOR International, Inc. | 5 | 274 | ||||||
ESCO Technologies, Inc. | 7 | 273 | ||||||
AAON, Inc. | 11 | 270 | ||||||
Federal Signal Corp. | 17 | 268 | ||||||
Exponent, Inc. | 3 | 267 | ||||||
ArcBest Corp. | 7 | 265 | ||||||
Cubic Corp. | 5 | 259 | ||||||
II-VI, Inc.* | 14 | 258 | ||||||
Sun Hydraulics Corp. | 6 | 248 | ||||||
Sturm Ruger & Company, Inc. | 5 | 248 | ||||||
Briggs & Stratton Corp. | 12 | 246 | ||||||
Standex International Corp. | 3 | 246 | ||||||
Badger Meter, Inc. | 4 | 240 | ||||||
Ship Finance International Ltd. | 16 | 237 | ||||||
Tutor Perini Corp.* | 10 | 234 | ||||||
Lindsay Corp. | 3 | 229 | ||||||
General Cable Corp. | 13 | 224 | ||||||
Hyster-Yale Materials Handling, Inc. | 3 | 220 | ||||||
Astec Industries, Inc. | 5 | 214 | ||||||
GasLog Ltd. | 11 | 214 | ||||||
Comfort Systems USA, Inc. | 10 | 210 | ||||||
Newport Corp.* | 11 | 210 | ||||||
LSB Industries, Inc.* | 5 | 207 | ||||||
Raven Industries, Inc. | 10 | 205 |
SEE NOTES TO FINANCIAL STATEMENTS. | THE RYDEX FUNDS ANNUAL REPORT | 123 |
SCHEDULE OF INVESTMENTS (continued) | March 31, 2015 |
RUSSELL 2000® FUND |
Shares | Value | |||||||
Altra Industrial Motion Corp. | 7 | $ | 193 | |||||
Griffon Corp. | 11 | 192 | ||||||
Smith & Wesson Holding Corp.* | 15 | 191 | ||||||
Encore Wire Corp. | 5 | 189 | ||||||
Hornbeck Offshore Services, Inc.* | 10 | 189 | ||||||
MYR Group, Inc.* | 6 | 188 | ||||||
Aegion Corp. — Class A* | 10 | 181 | ||||||
Textainer Group Holdings Ltd. | 6 | 180 | ||||||
Quanex Building Products Corp. | 9 | 178 | ||||||
Roadrunner Transportation Systems, Inc.* | 7 | 177 | ||||||
Nortek, Inc.* | 2 | 177 | ||||||
DHT Holdings, Inc. | 25 | 175 | ||||||
Fabrinet* | 9 | 171 | ||||||
Rofin-Sinar Technologies, Inc.* | 7 | 170 | ||||||
Blount International, Inc.* | 13 | 167 | ||||||
Echo Global Logistics, Inc.* | 6 | 164 | ||||||
Celadon Group, Inc. | 6 | 163 | ||||||
CTS Corp. | 9 | 162 | ||||||
Lydall, Inc.* | 5 | 159 | ||||||
Kadant, Inc. | 3 | 158 | ||||||
Gorman-Rupp Co. | 5 | 150 | ||||||
American Railcar Industries, Inc. | 3 | 149 | ||||||
GP Strategies Corp.* | 4 | 148 | ||||||
PGT, Inc.* | 13 | 145 | ||||||
YRC Worldwide, Inc.* | 8 | 144 | ||||||
LB Foster Co. — Class A | 3 | 142 | ||||||
Tredegar Corp. | 7 | 141 | ||||||
Marten Transport Ltd. | 6 | 139 | ||||||
US Concrete, Inc.* | 4 | 136 | ||||||
Columbus McKinnon Corp. | 5 | 135 | ||||||
Haynes International, Inc. | 3 | 134 | ||||||
Aerovironment, Inc.* | 5 | 133 | ||||||
DXP Enterprises, Inc.* | 3 | 132 | ||||||
Gibraltar Industries, Inc.* | 8 | 131 | ||||||
Park Electrochemical Corp. | 6 | 129 | ||||||
Air Transport Services Group, Inc.* | 14 | 129 | ||||||
Alamo Group, Inc. | 2 | 126 | ||||||
TTM Technologies, Inc.* | 14 | 126 | ||||||
NN, Inc. | 5 | 125 | ||||||
Patrick Industries, Inc.* | 2 | 125 | ||||||
Myers Industries, Inc. | 7 | 123 | ||||||
NCI Building Systems, Inc.* | 7 | 121 | ||||||
GrafTech International Ltd.* | 31 | 121 | ||||||
Teekay Tankers Ltd. — Class A | 21 | 121 | ||||||
Advanced Drainage Systems, Inc. | 4 | 120 | ||||||
Checkpoint Systems, Inc. | 11 | 119 | ||||||
Argan, Inc. | 3 | 109 | ||||||
Insteel Industries, Inc. | 5 | 108 | ||||||
GSI Group, Inc.* | 8 | 107 | ||||||
Park-Ohio Holdings Corp. | 2 | 105 | ||||||
Era Group, Inc.* | 5 | 104 | ||||||
Kimball Electronics, Inc.* | 7 | 99 | ||||||
CAI International, Inc.* | 4 | 98 | ||||||
American Science & Engineering, Inc. | 2 | 98 | ||||||
FreightCar America, Inc. | 3 | 94 | ||||||
Global Brass & Copper Holdings, Inc. | 6 | 93 | ||||||
Knightsbridge Shipping Ltd. | 18 | 90 | ||||||
Navios Maritime Holdings, Inc. | 21 | 88 | ||||||
Chase Corp. | 2 | 87 | ||||||
Scorpio Bulkers, Inc.* | 36 | 85 | ||||||
VSE Corp. | 1 | 82 | ||||||
Builders FirstSource, Inc.* | 12 | 80 | ||||||
Stoneridge, Inc.* | 7 | 79 | ||||||
PowerSecure International, Inc.* | 6 | 79 | ||||||
Furmanite Corp.* | 10 | 79 | ||||||
Ply Gem Holdings, Inc.* | 6 | 78 | ||||||
Navios Maritime Acquisition Corp. | 22 | 78 | ||||||
Ducommun, Inc.* | 3 | 78 | ||||||
Mistras Group, Inc.* | 4 | 77 | ||||||
Sparton Corp.* | 3 | 74 | ||||||
Quality Distribution, Inc.* | 7 | 72 | ||||||
Stock Building Supply Holdings, Inc.* | 4 | 72 | ||||||
Mesa Laboratories, Inc. | 1 | 72 | ||||||
Graham Corp. | 3 | 72 | ||||||
NVE Corp. | 1 | 69 | ||||||
Northwest Pipe Co.* | 3 | 69 | ||||||
Continental Building Products, Inc.* | 3 | 68 | ||||||
Powell Industries, Inc. | 2 | 68 | ||||||
Kratos Defense & Security Solutions, Inc.* | 12 | 66 | ||||||
Global Power Equipment Group, Inc. | 5 | 66 | ||||||
Hurco Companies, Inc. | 2 | 66 | ||||||
Power Solutions International, Inc.* | 1 | 64 | ||||||
CECO Environmental Corp. | 6 | 64 | ||||||
National Presto Industries, Inc. | 1 | 63 | ||||||
Orion Marine Group, Inc.* | 7 | 62 | ||||||
Vicor Corp.* | 4 | 61 | ||||||
Trinseo S.A.* | 3 | 59 | ||||||
PAM Transportation Services, Inc.* | 1 | 57 | ||||||
Bel Fuse, Inc. — Class B | 3 | 57 | ||||||
Capstone Turbine Corp.* | 87 | 57 | ||||||
Applied Optoelectronics, Inc.* | 4 | 56 | ||||||
USA Truck, Inc.* | 2 | 55 | ||||||
AEP Industries, Inc.* | 1 | 55 | ||||||
Casella Waste Systems, Inc. — Class A* | 10 | 55 | ||||||
Dynamic Materials Corp. | 4 | 51 | ||||||
Universal Truckload Services, Inc. | 2 | 50 | ||||||
Ardmore Shipping Corp. | 5 | 50 | ||||||
KEMET Corp.* | 12 | 50 | ||||||
LSI Industries, Inc. | 6 | 49 | ||||||
Xerium Technologies, Inc.* | 3 | 49 | ||||||
Vishay Precision Group, Inc.* | 3 | 48 | ||||||
Nordic American Offshore Ltd. | 5 | 46 | ||||||
UFP Technologies, Inc.* | 2 | 46 | ||||||
Frontline Ltd.* | 19 | 43 | ||||||
Handy & Harman Ltd.* | 1 | 41 | ||||||
Manitex International, Inc.* | 4 | 39 | ||||||
Electro Scientific Industries, Inc. | 6 | 37 | ||||||
Intevac, Inc.* | 6 | 37 |
124 | THE RYDEX FUNDS ANNUAL REPORT | SEE NOTES TO FINANCIAL STATEMENTS. |
SCHEDULE OF INVESTMENTS (continued) | March 31, 2015 |
RUSSELL 2000® FUND |
Shares | Value | |||||||
LMI Aerospace, Inc.* | 3 | $ | 37 | |||||
Multi-Fineline Electronix, Inc.* | 2 | 37 | ||||||
Control4 Corp.* | 3 | 36 | ||||||
Safe Bulkers, Inc. | 10 | 36 | ||||||
Twin Disc, Inc. | 2 | 35 | ||||||
Heritage-Crystal Clean, Inc.* | 3 | 35 | ||||||
Ampco-Pittsburgh Corp. | 2 | 35 | ||||||
CUI Global, Inc.* | 5 | 29 | ||||||
Imprivata, Inc.* | 2 | 28 | ||||||
Olympic Steel, Inc. | 2 | 27 | ||||||
Dorian LPG Ltd.* | 2 | 26 | ||||||
Energy Recovery, Inc.* | 10 | 26 | ||||||
Omega Flex, Inc. | 1 | 25 | ||||||
Layne Christensen Co.* | 5 | 25 | ||||||
Patriot Transportation Holding, Inc.* | 1 | 25 | ||||||
International Shipholding Corp. | 2 | 24 | ||||||
General Finance Corp.* | 3 | 24 | ||||||
Sterling Construction Company, Inc.* | 5 | 23 | ||||||
SIFCO Industries, Inc. | 1 | 22 | ||||||
Baltic Trading Ltd. | 13 | 19 | ||||||
AM Castle & Co.* | 5 | 18 | ||||||
Viasystems Group, Inc.* | 1 | 17 | ||||||
NL Industries, Inc.* | 2 | 16 | ||||||
CHC Group Ltd.* | 9 | 12 | ||||||
Revolution Lighting Technologies, Inc.* | 10 | 11 | ||||||
Ultrapetrol Bahamas Ltd.* | 6 | 9 | ||||||
Erickson, Inc.* | 2 | 9 | ||||||
Aspen Aerogels, Inc.* | 1 | 7 | ||||||
ARC Group Worldwide, Inc.* | 1 | 5 | ||||||
Quest Resource Holding Corp.* | 4 | 5 | ||||||
Turtle Beach Corp.* | 2 | 4 | ||||||
TCP International Holdings Ltd.* | 2 | 4 | ||||||
Total Industrial | 61,033 | |||||||
TECHNOLOGY - 0.1% | ||||||||
Ultimate Software Group, Inc.* | 8 | 1,360 | ||||||
MAXIMUS, Inc. | 18 | 1,201 | ||||||
Cypress Semiconductor Corp. | 81 | 1,142 | ||||||
SS&C Technologies Holdings, Inc. | 18 | 1,121 | ||||||
Tyler Technologies, Inc.* | 9 | 1,085 | ||||||
Manhattan Associates, Inc.* | 20 | 1,012 | ||||||
Cavium, Inc.* | 14 | 990 | ||||||
Verint Systems, Inc.* | 16 | 991 | ||||||
Guidewire Software, Inc.* | 18 | 947 | ||||||
Aspen Technology, Inc.* | 24 | 924 | ||||||
Microsemi Corp.* | 25 | 884 | ||||||
Synaptics, Inc.* | 10 | 813 | ||||||
Fair Isaac Corp. | 9 | 798 | ||||||
Qlik Technologies, Inc.* | 24 | 747 | ||||||
Integrated Device Technology, Inc.* | 35 | 700 | ||||||
Medidata Solutions, Inc.* | 14 | 686 | ||||||
ACI Worldwide, Inc.* | 30 | 650 | ||||||
Mentor Graphics Corp. | 26 | 625 | ||||||
SYNNEX Corp. | 8 | 618 | ||||||
Advent Software, Inc. | 14 | 618 | ||||||
Convergys Corp. | 27 | 617 | ||||||
Silicon Laboratories, Inc.* | 12 | 609 | ||||||
Ambarella, Inc.* | 8 | 606 | ||||||
Proofpoint, Inc.* | 10 | 592 | ||||||
Blackbaud, Inc. | 12 | 569 | ||||||
CommVault Systems, Inc.* | 13 | 568 | ||||||
Science Applications International Corp. | 11 | 564 | ||||||
Tessera Technologies, Inc. | 14 | 565 | ||||||
Fairchild Semiconductor International, Inc. — Class A* | 31 | 564 | ||||||
Take-Two Interactive Software, Inc.* | 22 | 560 | ||||||
EPAM Systems, Inc.* | 9 | 552 | ||||||
CACI International, Inc. — Class A* | 6 | 540 | ||||||
Dealertrack Technologies, Inc.* | 14 | 538 | ||||||
Cirrus Logic, Inc.* | 16 | 532 | ||||||
Monolithic Power Systems, Inc. | 10 | 527 | ||||||
Entegris, Inc.* | 37 | 507 | ||||||
Envestnet, Inc.* | 9 | 505 | ||||||
Electronics for Imaging, Inc.* | 12 | 501 | ||||||
Demandware, Inc.* | 8 | 487 | ||||||
Intersil Corp. — Class A | 34 | 487 | ||||||
Semtech Corp.* | 18 | 480 | ||||||
MKS Instruments, Inc. | 14 | 473 | ||||||
FleetMatics Group plc* | 10 | 449 | ||||||
NetScout Systems, Inc.* | 10 | 439 | ||||||
Synchronoss Technologies, Inc.* | 9 | 427 | ||||||
PMC-Sierra, Inc.* | 46 | 427 | ||||||
IGATE Corp.* | 10 | 427 | ||||||
Power Integrations, Inc. | 8 | 417 | ||||||
Syntel, Inc.* | 8 | 414 | ||||||
Cornerstone OnDemand, Inc.* | 14 | 404 | ||||||
OmniVision Technologies, Inc.* | 15 | 396 | ||||||
Progress Software Corp.* | 14 | 380 | ||||||
Rambus, Inc.* | 30 | 377 | ||||||
Acxiom Corp.* | 20 | 370 | ||||||
Infoblox, Inc.* | 15 | 358 | ||||||
Omnicell, Inc.* | 10 | 351 | ||||||
QLogic Corp.* | 23 | 339 | ||||||
MicroStrategy, Inc. — Class A* | 2 | 338 | ||||||
Veeco Instruments, Inc.* | 11 | 336 | ||||||
ExlService Holdings, Inc.* | 9 | 335 | ||||||
Monotype Imaging Holdings, Inc. | 10 | 326 | ||||||
Unisys Corp.* | 14 | 325 | ||||||
Insight Enterprises, Inc.* | 11 | 314 | ||||||
Cray, Inc.* | 11 | 309 | ||||||
Constant Contact, Inc.* | 8 | 306 | ||||||
MTS Systems Corp. | 4 | 303 | ||||||
MedAssets, Inc.* | 16 | 301 | ||||||
Cabot Microelectronics Corp.* | 6 | 300 | ||||||
Imperva, Inc.* | 7 | 299 | ||||||
Super Micro Computer, Inc.* | 9 | 299 | ||||||
Virtusa Corp.* | 7 | 290 |
SEE NOTES TO FINANCIAL STATEMENTS. | THE RYDEX FUNDS ANNUAL REPORT | 125 |
SCHEDULE OF INVESTMENTS (continued) | March 31, 2015 |
RUSSELL 2000® FUND |
Shares | Value | |||||||
InvenSense, Inc. — Class A* | 19 | $ | 289 | |||||
Diodes, Inc.* | 10 | 286 | ||||||
RealPage, Inc.* | 14 | 282 | ||||||
Bottomline Technologies de, Inc.* | 10 | 274 | ||||||
CSG Systems International, Inc. | 9 | 274 | ||||||
SPS Commerce, Inc.* | 4 | 268 | ||||||
BroadSoft, Inc.* | 8 | 268 | ||||||
Sykes Enterprises, Inc.* | 10 | 249 | ||||||
Qualys, Inc.* | 5 | 232 | ||||||
Kofax Ltd.* | 20 | 219 | ||||||
Ebix, Inc. | 7 | 213 | ||||||
Brooks Automation, Inc. | 18 | 209 | ||||||
Quality Systems, Inc. | 13 | 208 | ||||||
ManTech International Corp. — Class A | 6 | 204 | ||||||
Amkor Technology, Inc.* | 23 | 203 | ||||||
Lattice Semiconductor Corp.* | 31 | 197 | ||||||
Pegasystems, Inc. | 9 | 196 | ||||||
AVG Technologies N.V.* | 9 | 195 | ||||||
Micrel, Inc. | 12 | 181 | ||||||
Callidus Software, Inc.* | 14 | 178 | ||||||
inContact, Inc.* | 16 | 174 | ||||||
Actua Corp.* | 11 | 170 | ||||||
Interactive Intelligence Group, Inc.* | 4 | 165 | ||||||
Computer Programs & Systems, Inc. | 3 | 163 | ||||||
Photronics, Inc.* | 18 | 153 | ||||||
Emulex Corp.* | 19 | 151 | ||||||
Engility Holdings, Inc. | 5 | 150 | ||||||
M/A-COM Technology Solutions Holdings, Inc.* | 4 | 149 | ||||||
PROS Holdings, Inc.* | 6 | 148 | ||||||
Epiq Systems, Inc. | 8 | 143 | ||||||
PDF Solutions, Inc.* | 8 | 143 | ||||||
LivePerson, Inc.* | 14 | 143 | ||||||
Integrated Silicon Solution, Inc. | 8 | 143 | ||||||
Inphi Corp.* | 8 | 143 | ||||||
RealD, Inc.* | 11 | 141 | ||||||
Cvent, Inc.* | 5 | 140 | ||||||
Mercury Systems, Inc.* | 9 | 140 | ||||||
Tangoe, Inc.* | 10 | 138 | ||||||
FormFactor, Inc.* | 15 | 133 | ||||||
CEVA, Inc.* | 6 | 128 | ||||||
TeleTech Holdings, Inc. | 5 | 127 | ||||||
Xcerra Corp.* | 14 | 124 | ||||||
Ultratech, Inc.* | 7 | 121 | ||||||
Glu Mobile, Inc.* | 24 | 120 | ||||||
SciQuest, Inc.* | 7 | 119 | ||||||
Rally Software Development Corp.* | 7 | 110 | ||||||
Applied Micro Circuits Corp.* | 21 | 107 | ||||||
Luxoft Holding, Inc.* | 2 | 103 | ||||||
Nanometrics, Inc.* | 6 | 101 | ||||||
Exar Corp.* | 10 | 101 | ||||||
Rudolph Technologies, Inc.* | 9 | 99 | ||||||
Eastman Kodak Co.* | 5 | 95 | ||||||
Pericom Semiconductor Corp. | 6 | 93 | ||||||
Quantum Corp.* | 58 | 93 | ||||||
Ciber, Inc.* | 21 | 87 | ||||||
Merge Healthcare, Inc.* | 19 | 85 | ||||||
Dot Hill Systems Corp.* | 16 | 85 | ||||||
Silver Spring Networks, Inc.* | 9 | 80 | ||||||
HubSpot, Inc.* | 2 | 80 | ||||||
Vitesse Semiconductor Corp.* | 15 | 80 | ||||||
Violin Memory, Inc.* | 21 | 79 | ||||||
Silicon Graphics International Corp.* | 9 | 78 | ||||||
Barracuda Networks, Inc.* | 2 | 77 | ||||||
2U, Inc.* | 3 | 77 | ||||||
Cohu, Inc. | 7 | 77 | ||||||
KEYW Holding Corp.* | 9 | 74 | ||||||
IXYS Corp. | 6 | 74 | ||||||
Immersion Corp.* | 8 | 73 | ||||||
DSP Group, Inc.* | 6 | 72 | ||||||
American Software, Inc. — Class A | 7 | 72 | ||||||
Carbonite, Inc.* | 5 | 72 | ||||||
Axcelis Technologies, Inc.* | 30 | 71 | ||||||
Entropic Communications, Inc.* | 24 | 71 | ||||||
Seachange International, Inc.* | 9 | 71 | ||||||
New Relic, Inc.* | 2 | 69 | ||||||
Brightcove, Inc.* | 9 | 66 | ||||||
Maxwell Technologies, Inc.* | 8 | 64 | ||||||
Paycom Software, Inc.* | 2 | 64 | ||||||
Kopin Corp.* | 18 | 63 | ||||||
InnerWorkings, Inc.* | 9 | 60 | ||||||
Datalink Corp.* | 5 | 60 | ||||||
Digi International, Inc.* | 6 | 60 | ||||||
Model N, Inc.* | 5 | 60 | ||||||
Vocera Communications, Inc.* | 6 | 60 | ||||||
Sapiens International Corporation N.V.* | 7 | 57 | ||||||
Ultra Clean Holdings, Inc.* | 8 | 57 | ||||||
MaxLinear, Inc. — Class A* | 7 | 57 | ||||||
Jive Software, Inc.* | 11 | 56 | ||||||
Alpha & Omega Semiconductor Ltd.* | 6 | 53 | ||||||
Mavenir Systems, Inc.* | 3 | 53 | ||||||
QAD, Inc. — Class A | 2 | 48 | ||||||
Hortonworks, Inc.* | 2 | 48 | ||||||
Rosetta Stone, Inc.* | 6 | 46 | ||||||
Nimble Storage, Inc.* | 2 | 45 | ||||||
Digimarc Corp. | 2 | 44 | ||||||
Globant S.A.* | 2 | 42 | ||||||
Park City Group, Inc.* | 3 | 41 | ||||||
ExOne Co.* | 3 | 41 | ||||||
Cascade Microtech, Inc.* | 3 | 41 | ||||||
Agilysys, Inc.* | 4 | 39 | ||||||
Benefitfocus, Inc.* | 1 | 37 | ||||||
Computer Task Group, Inc. | 4 | 29 | ||||||
QuickLogic Corp.* | 15 | 29 | ||||||
Workiva, Inc.* | 2 | 29 | ||||||
MobileIron, Inc.* | 3 | 28 | ||||||
Rubicon Technology, Inc.* | 7 | 28 | ||||||
Guidance Software, Inc.* | 5 | 27 | ||||||
Everyday Health, Inc.* | 2 | 26 |
126 | THE RYDEX FUNDS ANNUAL REPORT | SEE NOTES TO FINANCIAL STATEMENTS. |
SCHEDULE OF INVESTMENTS (continued) | March 31, 2015 |
RUSSELL 2000® FUND |
Shares | Value | |||||||
Varonis Systems, Inc.* | 1 | $ | 26 | |||||
Castlight Health, Inc. — Class B* | 3 | 23 | ||||||
OPOWER, Inc.* | 2 | 20 | ||||||
Amber Road, Inc.* | 2 | 19 | ||||||
Audience, Inc.* | 4 | 18 | ||||||
Five9, Inc.* | 3 | 17 | ||||||
A10 Networks, Inc.* | 3 | 13 | ||||||
Total Technology | 52,605 | |||||||
COMMUNICATIONS - 0.1% | ||||||||
Qorvo, Inc.* | 38 | 3,029 | ||||||
j2 Global, Inc. | 13 | 855 | ||||||
Aruba Networks, Inc.* | 28 | 687 | ||||||
DigitalGlobe, Inc.* | 20 | 681 | ||||||
Houghton Mifflin Harcourt Co.* | 29 | 681 | ||||||
ViaSat, Inc.* | 11 | 657 | ||||||
Time, Inc. | 29 | 651 | ||||||
Infinera Corp.* | 33 | 649 | ||||||
Plantronics, Inc. | 11 | 582 | ||||||
Finisar Corp.* | 27 | 576 | ||||||
Sinclair Broadcast Group, Inc. — Class A | 18 | 565 | ||||||
Meredith Corp. | 10 | 558 | ||||||
Ciena Corp.* | 28 | 541 | ||||||
Anixter International, Inc.* | 7 | 533 | ||||||
New York Times Co. — Class A | 37 | 509 | ||||||
InterDigital, Inc. | 10 | 507 | ||||||
Polycom, Inc.* | 37 | 496 | ||||||
comScore, Inc.* | 9 | 462 | ||||||
Nexstar Broadcasting Group, Inc. — Class A | 8 | 458 | ||||||
Shutterfly, Inc.* | 10 | 451 | ||||||
WebMD Health Corp. — Class A* | 10 | 439 | ||||||
Cogent Communications Holdings, Inc. | 12 | 424 | ||||||
NeuStar, Inc. — Class A* | 15 | 369 | ||||||
Media General, Inc.* | 21 | 346 | ||||||
West Corp. | 10 | 337 | ||||||
LogMeIn, Inc.* | 6 | 337 | ||||||
MDC Partners, Inc. — Class A | 11 | 312 | ||||||
NIC, Inc. | 17 | 301 | ||||||
NETGEAR, Inc.* | 9 | 296 | ||||||
New Media Investment Group, Inc. | 12 | 287 | ||||||
Scholastic Corp. | 7 | 287 | ||||||
Gogo, Inc.* | 15 | 286 | ||||||
Shutterstock, Inc.* | 4 | 275 | ||||||
Stamps.com, Inc.* | 4 | 269 | ||||||
Web.com Group, Inc.* | 14 | 265 | ||||||
Consolidated Communications Holdings, Inc. | 13 | 265 | ||||||
ADTRAN, Inc. | 14 | 261 | ||||||
Globalstar, Inc.* | 73 | 243 | ||||||
Ubiquiti Networks, Inc. | 8 | 236 | ||||||
EW Scripps Co. — Class A* | 8 | 228 | ||||||
Vonage Holdings Corp.* | 46 | 226 | ||||||
Ruckus Wireless, Inc.* | 17 | 219 | ||||||
Loral Space & Communications, Inc.* | 3 | 205 | ||||||
Bankrate, Inc.* | 18 | 204 | ||||||
Iridium Communications, Inc.* | 21 | 204 | ||||||
8x8, Inc.* | 24 | 202 | ||||||
Cincinnati Bell, Inc.* | 56 | 198 | ||||||
Shenandoah Telecommunications Co. | 6 | 187 | ||||||
Perficient, Inc.* | 9 | 186 | ||||||
Ixia* | 15 | 182 | ||||||
Gray Television, Inc.* | 13 | 180 | ||||||
Marketo, Inc.* | 7 | 179 | ||||||
Journal Communications, Inc. — Class A* | 12 | 178 | ||||||
VASCO Data Security International, Inc.* | 8 | 172 | ||||||
Harmonic, Inc.* | 23 | 170 | ||||||
Orbitz Worldwide, Inc.* | 14 | 163 | ||||||
CalAmp Corp.* | 10 | 162 | ||||||
Chegg, Inc.* | 20 | 159 | ||||||
General Communication, Inc. — Class A* | 10 | 158 | ||||||
Endurance International Group Holdings, Inc.* | 8 | 152 | ||||||
HealthStream, Inc.* | 6 | 151 | ||||||
Blucora, Inc.* | 11 | 150 | ||||||
FTD Companies, Inc.* | 5 | 150 | ||||||
Global Eagle Entertainment, Inc.* | 11 | 146 | ||||||
RetailMeNot, Inc.* | 8 | 144 | ||||||
Lands’ End, Inc.* | 4 | 144 | ||||||
Internap Corp.* | 14 | 143 | ||||||
Inteliquent, Inc. | 9 | 142 | ||||||
Atlantic Tele-Network, Inc. | 2 | 138 | ||||||
Textura Corp.* | 5 | 136 | ||||||
Gigamon, Inc.* | 6 | 127 | ||||||
Premiere Global Services, Inc.* | 13 | 124 | ||||||
XO Group, Inc.* | 7 | 124 | ||||||
EarthLink Holdings Corp. | 27 | 120 | ||||||
Comverse, Inc.* | 6 | 119 | ||||||
ShoreTel, Inc.* | 17 | 116 | ||||||
Comtech Telecommunications Corp. | 4 | 116 | ||||||
Spok Holdings, Inc. | 6 | 115 | ||||||
World Wrestling Entertainment, Inc. — Class A | 8 | 112 | ||||||
RingCentral, Inc. — Class A* | 7 | 107 | ||||||
FairPoint Communications, Inc.* | 6 | 106 | ||||||
Intralinks Holdings, Inc.* | 10 | 103 | ||||||
Sonus Networks, Inc.* | 13 | 102 | ||||||
Harte-Hanks, Inc. | 13 | 101 | ||||||
Lionbridge Technologies, Inc.* | 17 | 97 | ||||||
Wayfair, Inc. — Class A* | 3 | 96 | ||||||
Blue Nile, Inc.* | 3 | 96 | ||||||
Entravision Communications Corp. — Class A | 15 | 95 | ||||||
Cumulus Media, Inc. — Class A* | 38 | 94 | ||||||
Calix, Inc.* | 11 | 92 | ||||||
GrubHub, Inc.* | 2 | 91 | ||||||
Safeguard Scientifics, Inc.* | 5 | 90 | ||||||
ORBCOMM, Inc.* | 15 | 90 | ||||||
Dice Holdings, Inc.* | 10 | 89 | ||||||
ePlus, Inc.* | 1 | 87 | ||||||
RigNet, Inc.* | 3 | 86 | ||||||
Entercom Communications Corp. — Class A* | 7 | 85 |
SEE NOTES TO FINANCIAL STATEMENTS. | THE RYDEX FUNDS ANNUAL REPORT | 127 |
SCHEDULE OF INVESTMENTS (continued) | March 31, 2015 |
RUSSELL 2000® FUND |
Shares | Value | |||||||
Intelsat S.A.* | 7 | $ | 84 | |||||
Black Box Corp. | 4 | 84 | ||||||
1-800-Flowers.com, Inc. — Class A* | 7 | 83 | ||||||
Extreme Networks, Inc.* | 26 | 82 | ||||||
Hawaiian Telcom Holdco, Inc.* | 3 | 80 | ||||||
Wix.com Ltd.* | 4 | 77 | ||||||
Lumos Networks Corp. | 5 | 76 | ||||||
GTT Communications, Inc.* | 4 | 76 | ||||||
EVINE Live, Inc.* | 11 | 74 | ||||||
Bazaarvoice, Inc.* | 13 | 73 | ||||||
Overstock.com, Inc.* | 3 | 73 | ||||||
IDT Corp. — Class B | 4 | 71 | ||||||
Angie’s List, Inc.* | 12 | 70 | ||||||
Liquidity Services, Inc.* | 7 | 69 | ||||||
Zendesk, Inc.* | 3 | 68 | ||||||
VirnetX Holding Corp.* | 11 | 67 | ||||||
Q2 Holdings, Inc.* | 3 | 63 | ||||||
Zix Corp.* | 16 | 63 | ||||||
KVH Industries, Inc.* | 4 | 60 | ||||||
Box, Inc. — Class A* | 3 | 59 | ||||||
Limelight Networks, Inc.* | 16 | 58 | ||||||
Telenav, Inc.* | 7 | 55 | ||||||
QuinStreet, Inc.* | 9 | 54 | ||||||
Alliance Fiber Optic Products, Inc. | 3 | 52 | ||||||
Martha Stewart Living Omnimedia, Inc. — Class A* | 8 | 52 | ||||||
Reis, Inc. | 2 | 51 | ||||||
Central European Media Enterprises Ltd. — Class A* | 19 | 51 | ||||||
TeleCommunication Systems, Inc. — Class A* | 13 | 50 | ||||||
Oclaro, Inc.* | 25 | 50 | ||||||
Tessco Technologies, Inc. | 2 | 49 | ||||||
ChannelAdvisor Corp.* | 5 | 48 | ||||||
Procera Networks, Inc.* | 5 | 47 | ||||||
TechTarget, Inc.* | 4 | 46 | ||||||
Rocket Fuel, Inc.* | 5 | 46 | ||||||
Numerex Corp. — Class A* | 4 | 46 | ||||||
Boingo Wireless, Inc.* | 6 | 45 | ||||||
Saga Communications, Inc. — Class A | 1 | 45 | ||||||
Clearfield, Inc.* | 3 | 44 | ||||||
Lee Enterprises, Inc.* | 14 | 44 | ||||||
Marin Software, Inc.* | 7 | 44 | ||||||
Sizmek, Inc.* | 6 | 44 | ||||||
Preformed Line Products Co. | 1 | 42 | ||||||
AH Belo Corp. — Class A | 5 | 41 | ||||||
RealNetworks, Inc.* | 6 | 40 | ||||||
ModusLink Global Solutions, Inc.* | 10 | 39 | ||||||
Marchex, Inc. — Class B | 9 | 37 | ||||||
Crown Media Holdings, Inc. — Class A* | 9 | 36 | ||||||
Rubicon Project, Inc.* | 2 | 36 | ||||||
TrueCar, Inc.* | 2 | 36 | ||||||
Coupons.com, Inc.* | 3 | 35 | ||||||
magicJack VocalTec Ltd.* | 5 | 34 | ||||||
Cinedigm Corp. — Class A* | 20 | 32 | ||||||
McClatchy Co. — Class A* | 16 | 29 | ||||||
Millennial Media, Inc.* | 20 | 29 | ||||||
Cyan, Inc.* | 7 | 28 | ||||||
Yodlee, Inc.* | 2 | 27 | ||||||
YuMe, Inc.* | 5 | 26 | ||||||
Townsquare Media, Inc. — Class A* | 2 | 26 | ||||||
Hemisphere Media Group, Inc.* | 2 | 25 | ||||||
Global Sources Ltd.* | 4 | 23 | ||||||
ParkerVision, Inc.* | 26 | 22 | ||||||
Tremor Video, Inc.* | 9 | 21 | ||||||
Connecture, Inc.* | 2 | 21 | ||||||
Covisint Corp.* | 10 | 20 | ||||||
Rightside Group Ltd.* | 2 | 20 | ||||||
Travelzoo, Inc.* | 2 | 19 | ||||||
NTELOS Holdings Corp. | 4 | 19 | ||||||
Radio One, Inc. — Class D* | 6 | 18 | ||||||
Salem Media Group, Inc. — Class A | 3 | 18 | ||||||
Dex Media, Inc.* | 4 | 17 | ||||||
Unwired Planet, Inc.* | 26 | 15 | ||||||
TubeMogul, Inc.* | 1 | 14 | ||||||
Aerohive Networks, Inc.* | 3 | 13 | ||||||
Vringo, Inc.* | 19 | 12 | ||||||
Borderfree, Inc.* | 2 | 12 | ||||||
ReachLocal, Inc.* | 4 | 12 | ||||||
Demand Media, Inc.* | 2 | 11 | ||||||
Total Communications | 31,479 | |||||||
UTILITIES - 0.0% | ||||||||
Dynegy, Inc.* | 33 | 1,038 | ||||||
Cleco Corp. | 16 | 872 | ||||||
IDACORP, Inc. | 13 | 817 | ||||||
WGL Holdings, Inc. | 14 | 790 | ||||||
Portland General Electric Co. | 21 | 779 | ||||||
Piedmont Natural Gas Company, Inc. | 21 | 775 | ||||||
UIL Holdings Corp. | 15 | 771 | ||||||
Southwest Gas Corp. | 12 | 698 | ||||||
New Jersey Resources Corp. | 22 | 683 | ||||||
NorthWestern Corp. | 12 | 646 | ||||||
ALLETE, Inc. | 12 | 633 | ||||||
PNM Resources, Inc. | 21 | 613 | ||||||
Black Hills Corp. | 12 | 605 | ||||||
ONE Gas, Inc. | 14 | 605 | ||||||
Laclede Group, Inc. | 11 | 563 | ||||||
Avista Corp. | 16 | 547 | ||||||
South Jersey Industries, Inc. | 9 | 489 | ||||||
El Paso Electric Co. | 11 | 425 | ||||||
American States Water Co. | 10 | 398 | ||||||
MGE Energy, Inc. | 9 | 399 | ||||||
Ormat Technologies, Inc. | 9 | 342 | ||||||
Northwest Natural Gas Co. | 7 | 336 | ||||||
Otter Tail Corp. | 10 | 322 | ||||||
California Water Service Group | 13 | 319 | ||||||
NRG Yield, Inc. — Class A | 6 | 304 |
128 | THE RYDEX FUNDS ANNUAL REPORT | SEE NOTES TO FINANCIAL STATEMENTS. |
SCHEDULE OF INVESTMENTS (continued) | March 31, 2015 |
RUSSELL 2000® FUND |
Shares | Value | |||||||
Empire District Electric Co. | 11 | $ | 273 | |||||
Abengoa Yield plc | 8 | 270 | ||||||
Chesapeake Utilities Corp. | 4 | 202 | ||||||
Unitil Corp. | 4 | 139 | ||||||
SJW Corp. | 4 | 124 | ||||||
Connecticut Water Service, Inc. | 3 | 109 | ||||||
PICO Holdings, Inc.* | 6 | 97 | ||||||
Middlesex Water Co. | 4 | 91 | ||||||
Atlantic Power Corp. | 32 | 90 | ||||||
EnerNOC, Inc.* | 7 | 80 | ||||||
York Water Co. | 3 | 73 | ||||||
Artesian Resources Corp. — Class A | 2 | 43 | ||||||
Ameresco, Inc. — Class A* | 5 | 37 | ||||||
Spark Energy, Inc. — Class A | 1 | 15 | ||||||
Total Utilities | 16,412 | |||||||
ENERGY - 0.0% | ||||||||
Diamondback Energy, Inc.* | 12 | 921 | ||||||
SemGroup Corp. — Class A | 11 | 895 | ||||||
Carrizo Oil & Gas, Inc.* | 14 | 695 | ||||||
Western Refining, Inc. | 13 | 642 | ||||||
Delek US Holdings, Inc. | 16 | 636 | ||||||
PDC Energy, Inc.* | 11 | 594 | ||||||
Exterran Holdings, Inc. | 16 | 537 | ||||||
Bristow Group, Inc. | 9 | 490 | ||||||
Helix Energy Solutions Group, Inc.* | 28 | 419 | ||||||
Matador Resources Co.* | 19 | 416 | ||||||
SEACOR Holdings, Inc.* | 5 | 348 | ||||||
Rosetta Resources, Inc.* | 20 | 340 | ||||||
Pattern Energy Group, Inc. | 12 | 340 | ||||||
Forum Energy Technologies, Inc.* | 16 | 314 | ||||||
TerraForm Power, Inc. — Class A | 8 | 292 | ||||||
Green Plains, Inc. | 10 | 286 | ||||||
SunCoke Energy, Inc. | 18 | 268 | ||||||
Synergy Resources Corp.* | 22 | 261 | ||||||
Bonanza Creek Energy, Inc.* | 10 | 247 | ||||||
McDermott International, Inc.* | 63 | 242 | ||||||
Parsley Energy, Inc. — Class A* | 14 | 224 | ||||||
Stone Energy Corp.* | 15 | 220 | ||||||
Newpark Resources, Inc.* | 23 | 210 | ||||||
Flotek Industries, Inc.* | 14 | 206 | ||||||
Thermon Group Holdings, Inc.* | 8 | 192 | ||||||
Sanchez Energy Corp.*,1 | 14 | 182 | ||||||
RSP Permian, Inc.* | 7 | 176 | ||||||
Primoris Services Corp. | 10 | 172 | ||||||
CARBO Ceramics, Inc. | 5 | 153 | ||||||
Magnum Hunter Resources Corp.* | 53 | 142 | ||||||
Callon Petroleum Co.* | 18 | 134 | ||||||
C&J Energy Services Ltd.* | 12 | 134 | ||||||
TETRA Technologies, Inc.* | 21 | 130 | ||||||
Northern Oil and Gas, Inc.* | 16 | 123 | ||||||
Matrix Service Co.* | 7 | 123 | ||||||
REX American Resources Corp.* | 2 | 122 | ||||||
Alon USA Energy, Inc. | 7 | 116 | ||||||
Plug Power, Inc.* | 44 | 114 | ||||||
Parker Drilling Co.* | 32 | 112 | ||||||
Penn Virginia Corp.* | 17 | 110 | ||||||
Contango Oil & Gas Co.* | 5 | 110 | ||||||
Bill Barrett Corp.* | 13 | 108 | ||||||
Westmoreland Coal Co.* | 4 | 107 | ||||||
Halcon Resources Corp.* | 69 | 106 | ||||||
Tesco Corp. | 9 | 102 | ||||||
Clean Energy Fuels Corp.* | 19 | 101 | ||||||
Clayton Williams Energy, Inc.* | 2 | 101 | ||||||
Cloud Peak Energy, Inc.* | 16 | 93 | ||||||
Pioneer Energy Services Corp.* | 17 | 92 | ||||||
Gulfmark Offshore, Inc. — Class A | 7 | 91 | ||||||
Energy XXI Ltd. | 25 | 91 | ||||||
Triangle Petroleum Corp.* | 18 | 91 | ||||||
PHI, Inc.* | 3 | 90 | ||||||
Renewable Energy Group, Inc.* | 9 | 83 | ||||||
Abraxas Petroleum Corp.* | 25 | 81 | ||||||
Panhandle Oil and Gas, Inc. — Class A | 4 | 79 | ||||||
FuelCell Energy, Inc.* | 62 | 78 | ||||||
ION Geophysical Corp.* | 34 | 74 | ||||||
EXCO Resources, Inc. | 40 | 73 | ||||||
Adams Resources & Energy, Inc. | 1 | 67 | ||||||
Enphase Energy, Inc.* | 5 | 66 | ||||||
Approach Resources, Inc.* | 10 | 66 | ||||||
Pacific Ethanol, Inc.* | 6 | 65 | ||||||
Key Energy Services, Inc.* | 35 | 64 | ||||||
FutureFuel Corp. | 6 | 62 | ||||||
Trecora Resources* | 5 | 61 | ||||||
Vivint Solar, Inc.* | 5 | 61 | ||||||
Gulf Island Fabrication, Inc. | 4 | 59 | ||||||
Alpha Natural Resources, Inc.* | 59 | 59 | ||||||
Natural Gas Services Group, Inc.* | 3 | 58 | ||||||
Solazyme, Inc.* | 20 | 57 | ||||||
Arch Coal, Inc.* | 56 | 56 | ||||||
Basic Energy Services, Inc.* | 8 | 55 | ||||||
FMSA Holdings, Inc.* | 7 | 51 | ||||||
Gastar Exploration, Inc.* | 19 | 50 | ||||||
Geospace Technologies Corp.* | 3 | 50 | ||||||
Rex Energy Corp.* | 13 | 48 | ||||||
Comstock Resources, Inc. | 13 | 46 | ||||||
W&T Offshore, Inc. | 9 | 46 | ||||||
Eclipse Resources Corp.* | 8 | 45 | ||||||
Goodrich Petroleum Corp.* | 12 | 43 | ||||||
PetroQuest Energy, Inc.* | 16 | 37 | ||||||
Willbros Group, Inc.* | 11 | 36 | ||||||
Jones Energy, Inc. — Class A* | 4 | 36 | ||||||
Hallador Energy Co. | 3 | 35 | ||||||
TransAtlantic Petroleum Ltd.* | 6 | 32 | ||||||
VAALCO Energy, Inc.* | 13 | 32 | ||||||
Evolution Petroleum Corp. | 5 | 30 | ||||||
Swift Energy Co.* | 12 | 26 | ||||||
North Atlantic Drilling Ltd. | 19 | 22 |
SEE NOTES TO FINANCIAL STATEMENTS. | THE RYDEX FUNDS ANNUAL REPORT | 129 |
SCHEDULE OF INVESTMENTS (continued) | March 31, 2015 |
RUSSELL 2000® FUND |
Shares | Value | |||||||
Independence Contract Drilling, Inc.* | 3 | $ | 21 | |||||
Hercules Offshore, Inc.* | 43 | 18 | ||||||
Vantage Drilling Co.* | 55 | 18 | ||||||
Warren Resources, Inc.* | 20 | 18 | ||||||
FX Energy, Inc.* | 14 | 18 | ||||||
Amyris, Inc.* | 7 | 17 | ||||||
Emerald Oil, Inc.* | 21 | 16 | ||||||
Nuverra Environmental Solutions, Inc.* | 4 | 14 | ||||||
Mitcham Industries, Inc.* | 3 | 14 | ||||||
Resolute Energy Corp.* | 21 | 12 | ||||||
Vertex Energy, Inc.* | 3 | 11 | ||||||
Walter Energy, Inc. | 17 | 11 | ||||||
Midstates Petroleum Company, Inc.* | 10 | 9 | ||||||
Glori Energy, Inc.* | 3 | 6 | ||||||
Profire Energy, Inc.* | 4 | 5 | ||||||
Miller Energy Resources, Inc.* | 8 | 5 | ||||||
Harvest Natural Resources, Inc.* | 11 | 5 | ||||||
American Eagle Energy Corp.* | 8 | 1 | ||||||
Total Energy | 15,769 | |||||||
BASIC MATERIALS - 0.0% | ||||||||
PolyOne Corp. | 24 | 896 | ||||||
Sensient Technologies Corp. | 13 | 895 | ||||||
Axiall Corp. | 19 | 892 | ||||||
Olin Corp. | 21 | 673 | ||||||
Minerals Technologies, Inc. | 9 | 658 | ||||||
HB Fuller Co. | 13 | 557 | ||||||
Chemtura Corp.* | 19 | 519 | ||||||
Commercial Metals Co. | 31 | 502 | ||||||
US Silica Holdings, Inc. | 14 | 499 | ||||||
Balchem Corp. | 8 | 443 | ||||||
Stillwater Mining Co.* | 32 | 414 | ||||||
A. Schulman, Inc. | 8 | 386 | ||||||
Kaiser Aluminum Corp. | 5 | 384 | ||||||
Worthington Industries, Inc. | 14 | 373 | ||||||
Schweitzer-Mauduit International, Inc. | 8 | 369 | ||||||
Quaker Chemical Corp. | 4 | 343 | ||||||
Innophos Holdings, Inc. | 6 | 338 | ||||||
Clearwater Paper Corp.* | 5 | 327 | ||||||
Tronox Ltd. — Class A | 16 | 325 | ||||||
Globe Specialty Metals, Inc. | 17 | 322 | ||||||
PH Glatfelter Co. | 11 | 303 | ||||||
Calgon Carbon Corp. | 14 | 295 | ||||||
Resolute Forest Products, Inc.* | 17 | 293 | ||||||
Hecla Mining Co. | 98 | 292 | ||||||
Innospec, Inc. | 6 | 278 | ||||||
Neenah Paper, Inc. | 4 | 250 | ||||||
OM Group, Inc. | 8 | 240 | ||||||
Ferro Corp.* | 19 | 238 | ||||||
AK Steel Holding Corp.* | 47 | 210 | ||||||
Stepan Co. | 5 | 208 | ||||||
Deltic Timber Corp. | 3 | 199 | ||||||
Century Aluminum Co.* | 14 | 193 | ||||||
Materion Corp. | 5 | 192 | ||||||
Horsehead Holding Corp.* | 15 | 190 | ||||||
Kraton Performance Polymers, Inc.* | 9 | 182 | ||||||
Aceto Corp. | 8 | 176 | ||||||
Intrepid Potash, Inc.* | 15 | 173 | ||||||
Coeur Mining, Inc.* | 27 | 127 | ||||||
Hawkins, Inc. | 3 | 114 | ||||||
Schnitzer Steel Industries, Inc. — Class A | 7 | 111 | ||||||
OMNOVA Solutions, Inc.* | 13 | 111 | ||||||
Wausau Paper Corp. | 11 | 105 | ||||||
Zep, Inc. | 6 | 102 | ||||||
Koppers Holdings, Inc. | 5 | 98 | ||||||
Landec Corp.* | 7 | 98 | ||||||
American Vanguard Corp. | 8 | 85 | ||||||
KMG Chemicals, Inc. | 3 | 80 | ||||||
Kronos Worldwide, Inc. | 6 | 76 | ||||||
Rentech, Inc.* | 60 | 67 | ||||||
United States Lime & Minerals, Inc. | 1 | 65 | ||||||
Orchids Paper Products Co. | 2 | 54 | ||||||
Ring Energy, Inc.* | 5 | 53 | ||||||
Universal Stainless & Alloy Products, Inc.* | 2 | 52 | ||||||
Noranda Aluminum Holding Corp. | 12 | 36 | ||||||
Oil-Dri Corporation of America | 1 | 34 | ||||||
Gold Resource Corp. | 10 | 32 | ||||||
Shiloh Industries, Inc.* | 2 | 28 | ||||||
Ryerson Holding Corp.* | 3 | 19 | ||||||
Molycorp, Inc.* | 48 | 18 | ||||||
Total Basic Materials | 15,592 | |||||||
DIVERSIFIED - 0.0% | ||||||||
Horizon Pharma plc* | 17 | 442 | ||||||
HRG Group, Inc.* | 22 | 275 | ||||||
National Bank Holdings Corp. — Class A | 9 | 169 | ||||||
FCB Financial Holdings, Inc. — Class A* | 2 | 55 | ||||||
Resource America, Inc. — Class A | 4 | 36 | ||||||
Tiptree Financial, Inc. — Class A | 2 | 13 | ||||||
Total Diversified | 990 | |||||||
GOVERNMENT - 0.0% | ||||||||
Banco Latinoamericano de Comercio Exterior S.A. — Class E | 8 | 262 | ||||||
Total Common Stocks | ||||||||
(Cost $264,911) | 481,660 | |||||||
WARRANTS†† - 0.0% | ||||||||
Tejon Ranch Co. | ||||||||
$10.50, 08/31/16† | 29 | 23 | ||||||
Magnum Hunter Resources Corp. | ||||||||
$8.50, 04/15/161 | 444 | — | ||||||
Total Warrants | ||||||||
(Cost $150) | 23 |
130 | THE RYDEX FUNDS ANNUAL REPORT | SEE NOTES TO FINANCIAL STATEMENTS. |
SCHEDULE OF INVESTMENTS (concluded) | March 31, 2015 |
RUSSELL 2000® FUND |
Shares | Value | |||||||
RIGHTS - 0.0% | ||||||||
Leap Wireless International, Inc. | ||||||||
Expires 09/17/15††† | 1,211 | $ | 3,051 | |||||
Furiex Pharmaceuticals, Inc. | ||||||||
Expires 07/03/17††† | 88 | 860 | ||||||
Omthera Pharmaceuticals, Inc. | ||||||||
Expires 12/31/20††† | 86 | 52 | ||||||
Total Rights | ||||||||
(Cost $1,952) | 3,963 | |||||||
Face Amount | ||||||||
REPURCHASE AGREEMENTS††,2 - 95.5% | ||||||||
HSBC Group issued 03/31/15 at 0.03% due 04/01/15 | $ | 34,503,758 | 34,503,758 | |||||
RBC Capital Markets issued 03/31/15 at 0.05% due 04/01/15 | 5,272,907 | 5,272,907 | ||||||
UMB Financial Corp. issued 03/31/15 at 0.03% due 04/01/15 | 4,232,374 | 4,232,374 | ||||||
Total Repurchase Agreements | ||||||||
(Cost $44,009,039) | 44,009,039 | |||||||
SECURITIES LENDING COLLATERAL††,3 - 0.0% | ||||||||
Repurchase Agreements | ||||||||
HSBC Securities, Inc. issued 03/31/15 at 0.10% due 04/01/15 | 4,215 | 4,215 | ||||||
BNP Paribas Securities Corp. issued 03/31/15 at 0.10% due 04/01/15 | 1,450 | 1,450 |
Barclays Capital, Inc. issued 03/31/15 at 0.10% due 04/01/15 | 748 | 748 | ||||||
Total Securities Lending Collateral | ||||||||
(Cost $6,413) | 6,413 | |||||||
Total Investments - 96.6% | ||||||||
(Cost $44,282,465) | $ | 44,501,098 | ||||||
Other Assets & Liabilities, net - 3.4% | 1,579,572 | |||||||
Total Net Assets - 100.0% | $ | 46,080,670 | ||||||
Contracts | Unrealized Gain | |||||||
EQUITY FUTURES CONTRACTS PURCHASED† | ||||||||
June 2015 Russell 2000 Index Mini Futures Contracts (Aggregate Value of Contracts $42,222,960) | 338 | $ | 345,765 | |||||
Units | ||||||||
OTC EQUITY INDEX SWAP AGREEMENTS†† | ||||||||
Goldman Sachs International April 2015 Russell 2000 Index Swap, Terminating 04/28/154 (Notional Value $1,532,899) | 1,224 | $ | 26,667 | |||||
Barclays Bank plc April 2015 Russell 2000 Index Swap, Terminating 04/30/154 (Notional Value $1,628,523) | 1,300 | 13,529 | ||||||
Credit Suisse Capital, LLC April 2015 Russell 2000 Index Swap, Terminating 04/28/154 (Notional Value $353,469) | 282 | 6,060 | ||||||
(Total Notional Value $3,514,891) | $ | 46,256 |
* | Non-income producing security. |
† | Value determined based on Level 1 inputs, unless otherwise noted — See Note 4. |
†† | Value determined based on Level 2 inputs, unless otherwise noted — See Note 4. |
††† | Value determined based on Level 3 inputs — See Note 4. |
1 | All or portion of this security is on loan at March 31, 2015 — See Note 6. |
2 | Repurchase Agreements — See Note 5. |
3 | Securities lending collateral — See Note 6. |
4 | Total Return based on Russell 2000 Index +/- financing at a variable rate. |
plc — Public Limited Company | |
REIT — Real Estate Investment Trust |
SEE NOTES TO FINANCIAL STATEMENTS. | THE RYDEX FUNDS ANNUAL REPORT | 131 |
RUSSELL 2000® FUND |
STATEMENT OF ASSETS AND LIABILITIES
March 31, 2015
Assets: | ||||
Investments, at value - including $5,423 of securities loaned (cost $267,013) | $ | 485,646 | ||
Repurchase agreements, at value (cost $44,015,452) | 44,015,452 | |||
Total investments (cost $44,282,465) | 44,501,098 | |||
Foreign currency, at value (cost $68) | 68 | |||
Segregated cash with broker | 2,279,631 | |||
Unrealized appreciation on swap agreements | 46,256 | |||
Cash | 100 | |||
Receivables: | ||||
Fund shares sold | 373,070 | |||
Securities sold | 127,678 | |||
Dividends | 17,930 | |||
Swap settlement | 12,827 | |||
Securities lending income | 2,345 | |||
Interest | 40 | |||
Foreign taxes reclaim | 1 | |||
Total assets | 47,361,044 | |||
Liabilities: | ||||
Payable for: | ||||
Fund shares redeemed | 951,836 | |||
Securities purchased | 127,849 | |||
Variation margin | 81,120 | |||
Management fees | 39,661 | |||
Distribution and service fees | 15,812 | |||
Transfer agent and administrative fees | 13,220 | |||
Portfolio accounting fees | 7,932 | |||
Return of securities loaned | 6,507 | |||
Miscellaneous | 36,437 | |||
Total liabilities | 1,280,374 | |||
Commitments and contingent liabilities (Note 15) | — | |||
Net assets | $ | 46,080,670 | ||
Net assets consist of: | ||||
Paid in capital | $ | 45,767,788 | ||
Accumulated net investment loss | (368 | ) | ||
Accumulated net realized loss on investments | (297,404 | ) | ||
Net unrealized appreciation on investments | 610,654 | |||
Net assets | $ | 46,080,670 | ||
A-Class: | ||||
Net assets | $ | 13,919,688 | ||
Capital shares outstanding | 357,980 | |||
Net asset value per share | $ | 38.88 | ||
Maximum offering price per share (Net asset value divided by 95.25%) | $ | 40.82 | ||
C-Class: | ||||
Net assets | $ | 4,259,271 | ||
Capital shares outstanding | 118,312 | |||
Net asset value per share | $ | 36.00 | ||
H-Class: | ||||
Net assets | $ | 27,901,711 | ||
Capital shares outstanding | 719,339 | |||
Net asset value per share | $ | 38.79 |
STATEMENT OF OPERATIONS
Year Ended March 31, 2015
Investment Income: | ||||
Dividends (net of foreign withholding tax of $344) | $ | 392,366 | ||
Income from securities lending, net | 20,316 | |||
Interest | 4,161 | |||
Total investment income | 416,843 | |||
Expenses: | ||||
Management fees | 381,261 | |||
Transfer agent and administrative fees | 127,088 | |||
Distribution and service fees: | ||||
A-Class | 15,247 | |||
C-Class | 32,191 | |||
H-Class | 103,796 | |||
Portfolio accounting fees | 76,254 | |||
Custodian fees | 5,906 | |||
Trustees’ fees* | 3,514 | |||
Line of credit fees | 29 | |||
Miscellaneous | 88,091 | |||
Total expenses | 833,377 | |||
Net investment loss | (416,534 | ) | ||
Net Realized and Unrealized Gain (Loss): | ||||
Net realized gain (loss) on: | ||||
Investments | 10,879,955 | |||
Swap agreements | 2,690,705 | |||
Futures contracts | 238,052 | |||
Foreign currency | (4 | ) | ||
Net realized gain | 13,808,708 | |||
Net change in unrealized appreciation (depreciation) on: | ||||
Investments | (10,903,187 | ) | ||
Swap agreements | (10,812 | ) | ||
Futures contracts | 416,185 | |||
Net change in unrealized appreciation (depreciation) | (10,497,814 | ) | ||
Net realized and unrealized gain | 3,310,894 | |||
Net increase in net assets resulting from operations | $ | 2,894,360 |
* | Relates to Trustees not deemed “interested persons” within the meaning of Section 2(a)(19) of the 1940 Act. |
132 | THE RYDEX FUNDS ANNUAL REPORT | SEE NOTES TO FINANCIAL STATEMENTS. |
RUSSELL 2000® FUND |
STATEMENTS OF CHANGES IN NET ASSETS
Year Ended March 31, 2015 | Year Ended March 31, 2014 | |||||||
Increase (Decrease) in Net Assets from Operations: | ||||||||
Net investment loss | $ | (416,534 | ) | $ | (644,338 | ) | ||
Net realized gain on investments | 13,808,708 | 9,558,159 | ||||||
Net change in unrealized appreciation (depreciation) on investments | (10,497,814 | ) | 1,984,823 | |||||
Net increase in net assets resulting from operations | 2,894,360 | 10,898,644 | ||||||
Distributions to shareholders from: | ||||||||
Net realized gains | ||||||||
A-Class | (428,859 | ) | (144,615 | ) | ||||
C-Class | (120,935 | ) | (188,715 | ) | ||||
H-Class | (2,896,710 | ) | (2,108,628 | ) | ||||
Total distributions to shareholders | (3,446,504 | ) | (2,441,958 | ) | ||||
Capital share transactions: | ||||||||
Proceeds from sale of shares | ||||||||
A-Class | 44,122,051 | 48,530,276 | ||||||
C-Class | 22,066,473 | 36,005,575 | ||||||
H-Class | 516,907,387 | 553,111,336 | ||||||
Distributions reinvested | ||||||||
A-Class | 423,430 | 140,867 | ||||||
C-Class | 105,736 | 182,177 | ||||||
H-Class | 2,810,032 | 2,078,107 | ||||||
Cost of shares redeemed | ||||||||
A-Class | (34,232,043 | ) | (49,593,502 | ) | ||||
C-Class | (21,273,536 | ) | (35,912,850 | ) | ||||
H-Class | (534,945,783 | ) | (619,725,426 | ) | ||||
Net decrease from capital share transactions | (4,016,253 | ) | (65,183,440 | ) | ||||
Net decrease in net assets | (4,568,397 | ) | (56,726,754 | ) | ||||
Net assets: | ||||||||
Beginning of year | 50,649,067 | 107,375,821 | ||||||
End of year | $ | 46,080,670 | $ | 50,649,067 | ||||
Accumulated net investment loss at end of year | $ | (368 | ) | $ | (118,275 | ) | ||
Capital share activity: | ||||||||
Shares sold | ||||||||
A-Class | 1,191,618 | 1,368,170 | ||||||
C-Class | 636,256 | 1,080,807 | ||||||
H-Class | 14,045,560 | 15,698,082 | ||||||
Shares issued from reinvestment of distributions | ||||||||
A-Class | 11,478 | 3,960 | ||||||
C-Class | 3,089 | 5,461 | ||||||
H-Class | 76,360 | 58,522 | ||||||
Shares redeemed | ||||||||
A-Class | (930,285 | ) | (1,402,362 | ) | ||||
C-Class | (612,792 | ) | (1,079,626 | ) | ||||
H-Class | (14,573,641 | ) | (17,719,218 | ) | ||||
Net decrease in shares | (152,357 | ) | (1,986,204 | ) |
SEE NOTES TO FINANCIAL STATEMENTS. | THE RYDEX FUNDS ANNUAL REPORT | 133 |
RUSSELL 2000® FUND |
FINANCIAL HIGHLIGHTS
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.
A-Class | Year Ended March 31, 2015 | Year Ended March 31, 2014 | Year Ended March 28, 2013 | Year Ended March 31, 2012 | Year Ended March 31, 2011 | |||||||||||||||
Per Share Data | ||||||||||||||||||||
Net asset value, beginning of period | $ | 37.80 | $ | 32.26 | $ | 28.20 | $ | 28.54 | $ | 22.96 | ||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||
Net investment income (loss)a | (.25 | ) | (.27 | ) | (.13 | ) | (.23 | ) | (.24 | ) | ||||||||||
Net gain (loss) on investments (realized and unrealized) | 2.61 | 7.54 | 4.19 | (.11 | ) | 5.82 | ||||||||||||||
Total from investment operations | 2.36 | 7.27 | 4.06 | (.34 | ) | 5.58 | ||||||||||||||
Less distributions from: | ||||||||||||||||||||
Net realized gains | (1.28 | ) | (1.73 | ) | — | — | — | |||||||||||||
Total distributions | (1.28 | ) | (1.73 | ) | — | — | — | |||||||||||||
Net asset value, end of period | $ | 38.88 | $ | 37.80 | $ | 32.26 | $ | 28.20 | $ | 28.54 | ||||||||||
Total Returnb | 6.42 | % | 22.87 | % | 14.40 | % | (1.19 | %) | 24.30 | % | ||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||
Net assets, end of period (in thousands) | $ | 13,920 | $ | 3,219 | $ | 3,723 | $ | 670 | $ | 755 | ||||||||||
Ratios to average net assets: | ||||||||||||||||||||
Net investment income (loss) | (0.67 | %) | (0.77 | %) | (0.44 | %) | (0.89 | %) | (1.01 | %) | ||||||||||
Total expenses | 1.57 | % | 1.60 | % | 1.55 | % | 1.58 | % | 1.56 | % | ||||||||||
Portfolio turnover rate | 947 | % | 267 | % | 160 | % | 121 | % | 284 | % |
C-Class | Year Ended March 31, 2015 | Year Ended March 31, 2014 | Year Ended March 28, 2013 | Year Ended March 31, 2012 | Year Ended March 31, 2011 | |||||||||||||||
Per Share Data | ||||||||||||||||||||
Net asset value, beginning of period | $ | 35.36 | $ | 30.54 | $ | 26.90 | $ | 27.46 | $ | 22.29 | ||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||
Net investment income (loss)a | (.60 | ) | (.48 | ) | (.31 | ) | (.46 | ) | (.47 | ) | ||||||||||
Net gain (loss) on investments (realized and unrealized) | 2.52 | 7.03 | 3.95 | (.10 | ) | 5.64 | ||||||||||||||
Total from investment operations | 1.92 | 6.55 | 3.64 | (.56 | ) | 5.17 | ||||||||||||||
Less distributions from: | ||||||||||||||||||||
Net realized gains | (1.28 | ) | (1.73 | ) | — | — | — | |||||||||||||
Total distributions | (1.28 | ) | (1.73 | ) | — | — | — | |||||||||||||
Net asset value, end of period | $ | 36.00 | $ | 35.36 | $ | 30.54 | $ | 26.90 | $ | 27.46 | ||||||||||
Total Returnb | 5.61 | % | 21.78 | % | 13.53 | % | (2.40 | %) | 23.25 | % | ||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||
Net assets, end of period (in thousands) | $ | 4,259 | $ | 3,245 | $ | 2,599 | $ | 6,285 | $ | 7,068 | ||||||||||
Ratios to average net assets: | ||||||||||||||||||||
Net investment income (loss) | (1.77 | %) | (1.47 | %) | (1.19 | %) | (1.83 | %) | (1.87 | %) | ||||||||||
Total expenses | 2.57 | % | 2.37 | % | 2.31 | % | 2.34 | % | 2.31 | % | ||||||||||
Portfolio turnover rate | 947 | % | 267 | % | 160 | % | 121 | % | 284 | % |
134 | THE RYDEX FUNDS ANNUAL REPORT | SEE NOTES TO FINANCIAL STATEMENTS. |
RUSSELL 2000® FUND |
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.
H-Class | Year Ended March 31, 2015 | Year Ended March 31, 2014 | Year Ended March 28, 2013 | Year Ended March 31, 2012 | Year Ended March 31, 2011 | |||||||||||||||
Per Share Data | ||||||||||||||||||||
Net asset value, beginning of period | $ | 37.73 | $ | 32.25 | $ | 28.16 | $ | 28.52 | $ | 22.93 | ||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||
Net investment income (loss)a | (.28 | ) | (.27 | ) | (.12 | ) | (.22 | ) | (.27 | ) | ||||||||||
Net gain (loss) on investments (realized and unrealized) | 2.62 | 7.48 | 4.21 | (.14 | ) | 5.86 | ||||||||||||||
Total from investment operations | 2.34 | 7.21 | 4.09 | (.36 | ) | 5.59 | ||||||||||||||
Less distributions from: | ||||||||||||||||||||
Net realized gains | (1.28 | ) | (1.73 | ) | — | — | — | |||||||||||||
Total distributions | (1.28 | ) | (1.73 | ) | — | — | — | |||||||||||||
Net asset value, end of period | $ | 38.79 | $ | 37.73 | $ | 32.25 | $ | 28.16 | $ | 28.52 | ||||||||||
Total Returnb | 6.37 | % | 22.69 | % | 14.52 | % | (1.26 | %) | 24.32 | % | ||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||
Net assets, end of period (in thousands) | $ | 27,902 | $ | 44,185 | $ | 101,053 | $ | 63,447 | $ | 32,389 | ||||||||||
Ratios to average net assets: | ||||||||||||||||||||
Net investment income (loss) | (0.77 | %) | (0.78 | %) | (0.42 | %) | (0.83 | %) | (1.09 | %) | ||||||||||
Total expenses | 1.58 | % | 1.59 | % | 1.52 | % | 1.58 | % | 1.57 | % | ||||||||||
Portfolio turnover rate | 947 | % | 267 | % | 160 | % | 121 | % | 284 | % |
a | Net investment income (loss) per share was computed using average shares outstanding throughout the period. |
b | Total return does not reflect the impact of any applicable sales charges. |
SEE NOTES TO FINANCIAL STATEMENTS. | THE RYDEX FUNDS ANNUAL REPORT | 135 |
PERFORMANCE REPORT AND FUND PROFILE (Unaudited) | March 31, 2015 |
INVERSE RUSSELL 2000® STRATEGY FUND
OBJECTIVE: Seeks to provide investment results that match, before fees and expenses, the performance of a specific benchmark on a daily basis. The Fund’s current benchmark is the inverse (opposite) of the performance of the Russell 2000® Index (the “underlying index”). The Fund does not seek to achieve its investment objective over a period of time greater than one day.
For the one-year period ended March 31, 2015, Inverse Russell 2000® Strategy Fund maintained a daily correlation of over 99% to its benchmark of -100% of the daily price movement of the Russell 2000 Index. Inverse Russell 2000® Strategy Fund H-Class returned -11.51% while the Russell 2000 Index returned 8.21% over the same time period.
Among sectors, the biggest performance contributors to the underlying index during the period were Health Care and Financials. The Energy sector detracted the most from return, followed by the Materials sector.
Qorvo, Inc., InterMune, Inc., and Puma Biotechnology, Inc. were the largest contributors to performance of the underlying index for the year. CARBO Ceramics, Inc., Civeo Corp., and GT Advanced Technologies, Inc. were the leading detractors from performance of the underlying index for the year.
Derivatives in the Fund were used to help provide exposure to the composition of the benchmark in the highest efficient manner and not for hedging purposes. The results of derivatives use during the period were within our expectations and contributed to the Fund’s performance.
Due to the compounding of daily returns, leveraged and inverse funds’ returns over periods other than one day will likely differ in amount and possibly direction from the benchmark return for the same period. Investors should monitor their leveraged and inverse funds’ holdings to ensure that they are consistent with their strategies, as frequently as daily.
The effects of compounding may cause the longer-term correlation of the Fund to its benchmark to diminish. The apparent discrepancy between the leveraged and unleveraged indices is the result of compounding, which is described briefly on page 6 of this report.
The Fund invests excess cash into the Guggenheim Strategy Funds which, in turn, invest in a diversified portfolio of debt securities and financial instruments providing exposure to fixed-income markets. The investment objective of the Guggenheim Strategy Funds is to seek a high level of income consistent with the preservation of capital. For the one year period ended March 31,2015, investment in the Guggenheim Strategy Funds benefited Fund performance relative to investing in other short-term investments such as overnight repurchase agreements.
Performance displayed represents past performance, which is no guarantee of future results.
Holdings Diversification (Market Exposure as % of Net Assets)
![](https://capedge.com/proxy/N-CSR/0001398344-15-003814/rtb1_28.jpg)
“Holdings Diversification (Market Exposure as % of Net Assets)” excludes any temporary cash investments or investments in Guggenheim Strategy Funds Trust mutual funds. Investments in those Funds do not provide “market exposure” to meet the fund’s investment objective, but will significantly increase the portfolio’s exposure to certain other asset categories (and their associated risks), which may cause the Fund to deviate from its principal investment strategy, including: (i) high yield, high risk debt securities rated below the top four long-term rating categories by a nationally recognized statistical rating organization (also known as “junk bonds”); (ii) securities issued by the U.S. government or its agencies and instrumentalities; (iii) CLOs and similar investments; and (iv) other short-term fixed income securities.
136 | THE RYDEX FUNDS ANNUAL REPORT |
PERFORMANCE REPORT AND FUND PROFILE (Unaudited)(concluded) | March 31, 2015 |
Inception Dates: | |
A-Class | March 31, 2004 |
C-Class | February 20, 2004 |
H-Class | February 20, 2004 |
The Fund invests principally in derivative investments such as swap agreements and futures contracts.
Largest Holding (% of Total Net Assets) | |
Guggenheim Strategy Fund I | 25.7% |
Total | 25.7% |
“Largest Holding” excludes any temporary cash or derivative instruments. |
Cumulative Fund Performance*
![](https://capedge.com/proxy/N-CSR/0001398344-15-003814/rtb1_29.jpg)
![](https://capedge.com/proxy/N-CSR/0001398344-15-003814/rtb1_30.jpg)
Average Annual Returns*
Periods Ended March 31, 2015
1 Year | 5 Year | 10 Year | |
A-Class Shares | -11.48% | -18.45% | -13.43% |
A-Class Shares with sales charge† | -15.70% | -19.24% | -13.85% |
C-Class Shares | -12.19% | -19.05% | -14.06% |
C-Class Shares with CDSC‡ | -13.07% | -19.05% | -14.06% |
H-Class Shares | -11.51% | -18.41% | -13.40% |
Russell 2000 Index | 8.21% | 14.57% | 8.82% |
* | The performance data above represents past performance that is not predictive of future results. The investment return and principal value of an investment in the Fund will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Returns are historical and include changes in principal and reinvested dividends and capital gains and do not reflect the effect of taxes. The Russell 2000 Index is an unmanaged index and, unlike the Fund, has no management fees or operating expenses to reduce its reported return. The graphs are based on A-Class shares and H-Class shares only; performance for C-Class shares will vary due to differences in fee structures. |
† | Fund returns are calculated using the maximum sales charge of 4.75%. |
‡ | Fund returns include a CDSC of 1% if redeemed within 12 months of purchase. |
THE RYDEX FUNDS ANNUAL REPORT | 137 |
SCHEDULE OF INVESTMENTS | March 31, 2015 |
INVERSE RUSSELL 2000® STRATEGY FUND |
Shares | Value | |||||||
MUTUAL FUNDS† - 25.7% | ||||||||
Guggenheim Strategy Fund I1 | 86,114 | $ | 2,144,238 | |||||
Total Mutual Funds | ||||||||
(Cost $2,142,830) | 2,144,238 | |||||||
Face Amount | ||||||||
REPURCHASE AGREEMENTS††,2 - 77.8% | ||||||||
HSBC Group issued 03/31/15 at 0.03% due 04/01/15 | $ | 5,094,566 | 5,094,566 | |||||
RBC Capital Markets issued 03/31/15 at 0.05% due 04/01/15 | 778,557 | 778,557 | ||||||
UMB Financial Corp. issued 03/31/15 at 0.03% due 04/01/15 | 624,921 | 624,921 | ||||||
Total Repurchase Agreements | ||||||||
(Cost $6,498,044) | 6,498,044 | |||||||
Total Investments - 103.5% | ||||||||
(Cost $8,640,874) | $ | 8,642,282 | ||||||
Other Assets & Liabilities, net - (3.5)% | (294,174 | ) | ||||||
Total Net Assets - 100.0% | $ | 8,348,108 | ||||||
Contracts | Unrealized Gain (Loss) | |||||||
EQUITY FUTURES CONTRACTS SOLD SHORT† | ||||||||
June 2015 Russell 2000 Index Mini Futures Contracts (Aggregate Value of Contracts $624,600) | 5 | $ | 5,760 | |||||
Units | ||||||||
OTC EQUITY INDEX SWAP AGREEMENTS SOLD SHORT†† | ||||||||
Goldman Sachs International April 2015 Russell 2000 Index Swap, Terminating 04/28/153 (Notional Value $258,494) | 206 | $ | (4,426 | ) | ||||
Credit Suisse Capital, LLC April 2015 Russell 2000 Index Swap, Terminating 04/28/153 (Notional Value $294,678) | 235 | (5,052 | ) | |||||
Barclays Bank plc April 2015 Russell 2000 Index Swap, Terminating 04/30/153 (Notional Value $7,138,607) | 5,698 | (63,352 | ) | |||||
(Total Notional Value $7,691,779) | $ | (72,830 | ) |
† | Value determined based on Level 1 inputs — See Note 4. |
†† | Value determined based on Level 2 inputs — See Note 4. |
1 | Investment in a product that is managed by and/or pays a management fee to a party related to the Adviser — See Note 12. |
2 | Repurchase Agreements — See Note 5. |
3 | Total Return based on Russell 2000 Index +/- financing at a variable rate. |
plc — Public Limited Company |
138 | THE RYDEX FUNDS ANNUAL REPORT | SEE NOTES TO FINANCIAL STATEMENTS. |
INVERSE RUSSELL 2000® STRATEGY FUND |
STATEMENT OF ASSETS AND LIABILITIES
March 31, 2015
Assets: | ||||
Investments, at value (cost $2,142,830) | $ | 2,144,238 | ||
Repurchase agreements, at value (cost $6,498,044) | 6,498,044 | |||
Total investments (cost $8,640,874) | 8,642,282 | |||
Segregated cash with broker | 1,029,608 | |||
Receivables: | ||||
Fund shares sold | 40,139 | |||
Variation margin | 5,985 | |||
Dividends | 2,326 | |||
Interest | 6 | |||
Total assets | 9,720,346 | |||
Liabilities: | ||||
Unrealized depreciation on swap agreements | 72,830 | |||
Payable for: | ||||
Fund shares redeemed | 1,171,092 | |||
Securities purchased | 102,326 | |||
Management fees | 6,694 | |||
Swap settlement | 4,148 | |||
Distribution and service fees | 2,882 | |||
Transfer agent and administrative fees | 1,860 | |||
Portfolio accounting fees | 744 | |||
Miscellaneous | 9,662 | |||
Total liabilities | 1,372,238 | |||
Commitments and contingent liabilities (Note 15) | — | |||
Net assets | $ | 8,348,108 | ||
Net assets consist of: | ||||
Paid in capital | $ | 61,557,338 | ||
Accumulated net investment loss | (45,359 | ) | ||
Accumulated net realized loss on investments | (53,098,209 | ) | ||
Net unrealized depreciation on investments | (65,662 | ) | ||
Net assets | $ | 8,348,108 | ||
A-Class: | ||||
Net assets | $ | 893,581 | ||
Capital shares outstanding | 30,585 | |||
Net asset value per share | $ | 29.22 | ||
Maximum offering price per share (Net asset value divided by 95.25%) | $ | 30.68 | ||
C-Class: | ||||
Net assets | $ | 1,679,572 | ||
Capital shares outstanding | 62,522 | |||
Net asset value per share | $ | 26.86 | ||
H-Class: | ||||
Net assets | $ | 5,774,955 | ||
Capital shares outstanding | 197,121 | |||
Net asset value per share | $ | 29.30 |
STATEMENT OF OPERATIONS
Year Ended March 31, 2015
Investment Income: | ||||
Dividends | $ | 71,906 | ||
Interest | 2,958 | |||
Total investment income | 74,864 | |||
Expenses: | ||||
Management fees | 222,645 | |||
Transfer agent and administrative fees | 61,846 | |||
Distribution and service fees: | ||||
A-Class | 21,873 | |||
C-Class | 12,854 | |||
H-Class | 36,759 | |||
Portfolio accounting fees | 24,738 | |||
Custodian fees | 2,895 | |||
Trustees’ fees* | 1,907 | |||
Miscellaneous | 46,014 | |||
Total expenses | 431,531 | |||
Net investment loss | (356,667 | ) | ||
Net Realized and Unrealized Gain (Loss): | ||||
Net realized gain (loss) on: | ||||
Investments | (29,077 | ) | ||
Swap agreements | (2,378,935 | ) | ||
Futures contracts | (215,228 | ) | ||
Net realized loss | (2,623,240 | ) | ||
Net change in unrealized appreciation (depreciation) on: | ||||
Investments | 1,408 | |||
Swap agreements | 117,773 | |||
Futures contracts | 5,760 | |||
Net change in unrealized appreciation (depreciation) | 124,941 | |||
Net realized and unrealized loss | (2,498,299 | ) | ||
Net decrease in net assets resulting from operations | $ | (2,854,966 | ) |
* | Relates to Trustees not deemed “interested persons” within the meaning of Section 2(a)(19) of the 1940 Act. |
SEE NOTES TO FINANCIAL STATEMENTS. | THE RYDEX FUNDS ANNUAL REPORT | 139 |
INVERSE RUSSELL 2000® STRATEGY FUND |
STATEMENTS OF CHANGES IN NET ASSETS
Year Ended March 31, 2015 | Year Ended March 31, 2014 | |||||||
Increase (Decrease) in Net Assets from Operations: | ||||||||
Net investment loss | $ | (356,667 | ) | $ | (299,337 | ) | ||
Net realized loss on investments | (2,623,240 | ) | (6,281,506 | ) | ||||
Net change in unrealized appreciation (depreciation) on investments | 124,941 | (167,687 | ) | |||||
Net decrease in net assets resulting from operations | (2,854,966 | ) | (6,748,530 | ) | ||||
Capital share transactions: | ||||||||
Proceeds from sale of shares | ||||||||
A-Class | 15,968,383 | 23,165,472 | ||||||
C-Class | 6,202,950 | 3,936,557 | ||||||
H-Class | 115,461,343 | 92,194,810 | ||||||
Cost of shares redeemed | ||||||||
A-Class | (21,273,561 | ) | (14,117,385 | ) | ||||
C-Class | (4,906,679 | ) | (3,635,185 | ) | ||||
H-Class | (119,810,604 | ) | (89,100,370 | ) | ||||
Net increase (decrease) from capital share transactions | (8,358,168 | ) | 12,443,899 | |||||
Net increase (decrease) in net assets | (11,213,134 | ) | 5,695,369 | |||||
Net assets: | ||||||||
Beginning of year | 19,561,242 | 13,865,873 | ||||||
End of year | $ | 8,348,108 | $ | 19,561,242 | ||||
Accumulated net investment loss at end of year | $ | (45,359 | ) | $ | (62,483 | ) | ||
Capital share activity: | ||||||||
Shares sold | ||||||||
A-Class | 473,685 | 617,161 | * | |||||
C-Class | 204,651 | 116,767 | * | |||||
H-Class | 3,469,349 | 2,419,872 | * | |||||
Shares redeemed | ||||||||
A-Class | (664,308 | ) | (410,651 | )* | ||||
C-Class | (160,695 | ) | (108,355 | )* | ||||
H-Class | (3,625,353 | ) | (2,363,113 | )* | ||||
Net increase (decrease) in shares | (302,671 | ) | 271,681 | * |
* | Reverse Share Split — Capital share activity for the periods presented through February 7, 2014 has been restated to reflect a 1:3 reverse share split effective February 7, 2014. See Note 14 in the Notes to Financial Statements. |
140 | THE RYDEX FUNDS ANNUAL REPORT | SEE NOTES TO FINANCIAL STATEMENTS. |
INVERSE RUSSELL 2000® STRATEGY FUND |
FINANCIAL HIGHLIGHTS
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.
A-Class | Year Ended March 31, 2015 | Year Ended March 31, 2014d | Year Ended March 28, 2013d | Year Ended March 31, 2012d | Year Ended March 31, 2011d | |||||||||||||||
Per Share Data | ||||||||||||||||||||
Net asset value, beginning of period | $ | 33.01 | $ | 43.21 | $ | 52.38 | $ | 59.31 | $ | 81.01 | ||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||
Net investment income (loss)a | (.46 | ) | (.61 | ) | (.81 | ) | (1.02 | ) | (1.14 | ) | ||||||||||
Net gain (loss) on investments (realized and unrealized) | (3.33 | ) | (9.59 | ) | (8.36 | ) | (5.91 | ) | (20.56 | ) | ||||||||||
Total from investment operations | (3.79 | ) | (10.20 | ) | (9.17 | ) | (6.93 | ) | (21.70 | ) | ||||||||||
Net asset value, end of period | $ | 29.22 | $ | 33.01 | $ | 43.21 | $ | 52.38 | $ | 59.31 | ||||||||||
Total Returnb | (11.48 | %) | (23.59 | %) | (17.53 | %) | (11.68 | %) | (26.78 | %) | ||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||
Net assets, end of period (in thousands) | $ | 894 | $ | 7,302 | $ | 635 | $ | 612 | $ | 1,114 | ||||||||||
Ratios to average net assets: | ||||||||||||||||||||
Net investment income (loss) | (1.40 | %) | (1.69 | %) | (1.60 | %) | (1.66 | %) | (1.53 | %) | ||||||||||
Total expensesc | 1.71 | % | 1.72 | % | 1.72 | % | 1.75 | % | 1.71 | % | ||||||||||
Portfolio turnover rate | 189 | % | — | — | — | — |
C-Class | Year Ended March 31, 2015 | Year Ended March 31, 2014d | Year Ended March 28, 2013d | Year Ended March 31, 2012d | Year Ended March 31, 2011d | |||||||||||||||
Per Share Data | ||||||||||||||||||||
Net asset value, beginning of period | $ | 30.59 | $ | 40.30 | $ | 49.22 | $ | 56.14 | $ | 77.26 | ||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||
Net investment income (loss)a | (.63 | ) | (.83 | ) | (1.14 | ) | (1.41 | ) | (1.65 | ) | ||||||||||
Net gain (loss) on investments (realized and unrealized) | (3.10 | ) | (8.88 | ) | (7.78 | ) | (5.51 | ) | (19.47 | ) | ||||||||||
Total from investment operations | (3.73 | ) | (9.71 | ) | (8.92 | ) | (6.92 | ) | (21.12 | ) | ||||||||||
Net asset value, end of period | $ | 26.86 | $ | 30.59 | $ | 40.30 | $ | 49.22 | $ | 56.14 | ||||||||||
Total Returnb | (12.19 | %) | (24.08 | %) | (18.16 | %) | (12.29 | %) | (27.34 | %) | ||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||
Net assets, end of period (in thousands) | $ | 1,680 | $ | 568 | $ | 409 | $ | 837 | $ | 1,158 | ||||||||||
Ratios to average net assets: | ||||||||||||||||||||
Net investment income (loss) | (2.13 | %) | (2.45 | %) | (2.35 | %) | (2.43 | %) | (2.28 | %) | ||||||||||
Total expensesc | 2.45 | % | 2.47 | % | 2.47 | % | 2.51 | % | 2.46 | % | ||||||||||
Portfolio turnover rate | 189 | % | — | — | — | — |
SEE NOTES TO FINANCIAL STATEMENTS. | THE RYDEX FUNDS ANNUAL REPORT | 141 |
INVERSE RUSSELL 2000® STRATEGY FUND |
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.
H-Class | Year Ended March 31, 2015 | Year Ended March 31, 2014d | Year Ended March 28, 2013d | Year Ended March 31, 2012d | Year Ended March 31, 2011d | |||||||||||||||
Per Share Data | ||||||||||||||||||||
Net asset value, beginning of period | $ | 33.11 | $ | 43.26 | $ | 52.42 | $ | 59.37 | $ | 81.03 | ||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||
Net investment income (loss)a | (.46 | ) | (.65 | ) | (.84 | ) | (1.05 | ) | (1.14 | ) | ||||||||||
Net gain (loss) on investments (realized and unrealized) | (3.35 | ) | (9.50 | ) | (8.32 | ) | (5.90 | ) | (20.52 | ) | ||||||||||
Total from investment operations | (3.81 | ) | (10.15 | ) | (9.16 | ) | (6.95 | ) | (21.66 | ) | ||||||||||
Net asset value, end of period | $ | 29.30 | $ | 33.11 | $ | 43.26 | $ | 52.42 | $ | 59.37 | ||||||||||
Total Returnb | (11.51 | %) | (23.46 | %) | (17.46 | %) | (11.72 | %) | (26.73 | %) | ||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||
Net assets, end of period (in thousands) | $ | 5,775 | $ | 11,691 | $ | 12,822 | $ | 17,283 | $ | 9,572 | ||||||||||
Ratios to average net assets: | ||||||||||||||||||||
Net investment income (loss) | (1.41 | %) | (1.69 | %) | (1.62 | %) | (1.70 | %) | (1.53 | %) | ||||||||||
Total expensesc | 1.70 | % | 1.72 | % | 1.74 | % | 1.77 | % | 1.71 | % | ||||||||||
Portfolio turnover rate | 189 | % | — | — | — | — |
a | Net investment income (loss) per share was computed using average shares outstanding throughout the period. |
b | Total return does not reflect the impact of any applicable sales charges. |
c | Does not include expenses of the underlying funds in which the Fund invests. |
d | Reverse share split — Per share amounts for the periods presented through February 7, 2014 have been restated to reflect a 1:3 reverse share split effective February 7, 2014. See Note 14 in the Notes to Financial Statements. |
142 | THE RYDEX FUNDS ANNUAL REPORT | SEE NOTES TO FINANCIAL STATEMENTS. |
PERFORMANCE REPORT AND FUND PROFILE (Unaudited) | March 31, 2015 |
GOVERNMENT LONG BOND 1.2x STRATEGY FUND
OBJECTIVE: Seeks to provide investment results that correspond, before fees and expenses, to a benchmark for U.S. Government securities on a daily basis. The Fund’s current benchmark is 120% of the daily price movement of the Long Treasury Bond. The Long Treasury Bond is the U.S. Treasury bond with the longest maturity, which is currently 30 years. The price movement of the Long Treasury Bond is based on the daily price change of the most recently issued Long Treasury Bond. The Fund does not seek to achieve its investment objective over a period of time greater than one day.
For the one-year period ended March 31, 2015, the Government Long Bond 1.2x Strategy Fund Investor Class returned 30.66%. The price movement of the Long Treasury Bond was 22.33% for the same period. The Fund maintained a daily correlation of over 99% to its benchmark.
The return of a comparison index, the Barclays Long Treasury Bond Index, was 21.40%.
The yield on the 30-year bond was 3.72% at the beginning of the period and finished at 2.54% on March 31, 2015. The government bond yields of many industrial economies, including the U.S., dipped to multiyear lows in the first quarter of 2015.
The lower interest rate environment was a major factor in the positive return of the Fund. Throughout the period, long bond prices moved up and yields down. This was partly a result of quantitative easing programs in Europe and Japan. Falling commodity prices, especially oil, and weakening global economic growth increased the demand for fixed income assets around the world.
U.S. bonds became more attractive relative to foreign bonds, which helped to support Treasuries despite uncertainty surrounding the Federal Reserve’s timing to raise interest rates. In spite of falling rates, U.S. Treasuries were yielding more than government bonds of many other countries.
Derivatives in the Fund are used to provide additional exposure to composition of the benchmark in the highest efficient manner and to provide leverage, not for hedging purposes. The results of derivatives use during the period were within our expectations and contributed to the Fund’s performance.
Due to the compounding of daily returns, leveraged and inverse funds’ returns over periods other than one day will likely differ in amount and possibly direction from the benchmark return for the same period. Investors should monitor their leveraged and inverse funds’ holdings to ensure that they are consistent with their strategies, as frequently as daily.
The effects of compounding may cause the longer-term correlation of the Fund to its benchmark to diminish. The apparent discrepancy between the leveraged and unleveraged indices is the result of compounding, which is described briefly on page 6 of this report.
The Fund invests excess cash into the Guggenheim Strategy Funds which, in turn, invest in a diversified portfolio of debt securities and financial instruments providing exposure to fixed-income markets. The investment objective of the Guggenheim Strategy Funds is to seek a high level of income consistent with the preservation of capital. For the one year period ended March 31,2015, investment in the Guggenheim Strategy Funds benefited Fund performance relative to investing in other short-term investments such as overnight repurchase agreements.
Performance displayed represents past performance, which is no guarantee of future results.
THE RYDEX FUNDS ANNUAL REPORT | 143 |
PERFORMANCE REPORT AND FUND PROFILE (Unaudited)(continued) | March 31, 2015 |
Holdings Diversification (Market Exposure as % of Net Assets)
![](https://capedge.com/proxy/N-CSR/0001398344-15-003814/rtb1_31.jpg)
“Holdings Diversification (Market Exposure as % of Net Assets)” excludes any temporary cash investments or investments in Guggenheim Strategy Funds Trust mutual funds. Investments in those Funds do not provide “market exposure” to meet the fund’s investment objective, but will significantly increase the portfolio’s exposure to certain other asset categories (and their associated risks), which may cause the Fund to deviate from its principal investment strategy, including: (i) high yield, high risk debt securities rated below the top four long-term rating categories by a nationally recognized statistical rating organization (also known as “junk bonds”); (ii) securities issued by the U.S. government or its agencies and instrumentalities; (iii) CLOs and similar investments; and (iv) other short-term fixed income securities.
Inception Dates: | |
Investor Class | January 3, 1994 |
Advisor Class | August 1, 2003 |
A-Class | March 31, 2004 |
C-Class | May 2, 2001 |
H-Class | September 18, 2014 |
The Fund invests principally in U.S. Government securities and in derivative investments such as futures contracts.
Largest Holdings (% of Total Net Assets) | |
U.S. Treasury Bond | 68.3% |
Guggenheim Strategy Fund I | 6.5% |
Total | 74.8% |
“Largest Holdings” exclude any temporary cash or derivative instruments. |
144 | THE RYDEX FUNDS ANNUAL REPORT |
PERFORMANCE REPORT AND FUND PROFILE (Unaudited)(concluded) | March 31, 2015 |
Cumulative Fund Performance*
![](https://capedge.com/proxy/N-CSR/0001398344-15-003814/rtb1_32.jpg)
![](https://capedge.com/proxy/N-CSR/0001398344-15-003814/rtb1_33.jpg)
Average Annual Returns*
Periods Ended March 31, 2015
1 Year | 5 Year | 10 Year | |
Investor Class Shares | 30.66% | 14.65% | 8.87% |
Advisor Class Shares | 30.17% | 14.11% | 8.24% |
A-Class Shares | 30.37% | 14.51% | 8.64% |
A-Class Shares with sales charge† | 24.17% | 13.39% | 8.11% |
C-Class Shares | 29.37% | 13.56% | 7.77% |
C-Class Shares with CDSC‡ | 28.37% | 13.56% | 7.77% |
Daily Price Movement of Long Treasury Bond** | 22.33% | 7.65% | 3.47% |
Barclays Long Treasury Bond Index | 21.40% | 10.61% | 7.90% |
Since Inception (09/18/14) | |||
H-Class Shares | 22.28% | ||
Daily Price Movement of Long Treasury Bond** | 17.52% | ||
Barclays Long Treasury Bond Index | 15.77% |
* | The performance data above represents past performance that is not predictive of future results. The investment return and principal value of an investment in the Fund will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Returns are historical and include changes in principal and reinvested dividends and capital gains and do not reflect the effect of taxes. The Barclays Long Treasury Bond Index and Daily Price Movement of Long Bond are unmanaged indices and, unlike the Fund, have no management fees or operating expenses to reduce their reported returns. The graphs are based on Investor Class shares and A-Class shares only; performance for Advisor Class shares, C- Class shares and H-Class shares will vary due to differences in fee structures. |
** | Does not reflect any interest. |
† | Fund returns are calculated using the maximum sales charge of 4.75%. |
‡ | Fund returns include a CDSC of 1% if redeemed within 12 months of purchase. |
THE RYDEX FUNDS ANNUAL REPORT | 145 |
SCHEDULE OF INVESTMENTS | March 31, 2015 |
GOVERNMENT LONG BOND 1.2x STRATEGY FUND |
Shares | Value | |||||||
MUTUAL FUNDS† - 6.5% | ||||||||
Guggenheim Strategy Fund I1 | 408,252 | $ | 10,165,485 | |||||
Total Mutual Funds | ||||||||
(Cost $10,145,123) | 10,165,485 | |||||||
Face Amount | ||||||||
U.S. GOVERNMENT SECURITIES†† - 68.3% | ||||||||
U.S. Treasury Bonds | ||||||||
2.50% due 02/15/45 | $ | 108,169,000 | 107,256,325 | |||||
Total U.S. Government Securities | ||||||||
(Cost $105,082,034) | 107,256,325 | |||||||
REPURCHASE AGREEMENTS††,2 - 25.4% | ||||||||
HSBC Group issued 03/31/15 at 0.03% due 04/01/15 | 31,165,884 | 31,165,884 | ||||||
RBC Capital Markets issued 03/31/15 at 0.05% due 04/01/15 | 4,762,809 | 4,762,809 | ||||||
UMB Financial Corp. issued 03/31/15 at 0.03% due 04/01/15 | 3,822,937 | 3,822,937 | ||||||
Total Repurchase Agreements | ||||||||
(Cost $39,751,630) | 39,751,630 | |||||||
Total Investments - 100.2% | ||||||||
(Cost $154,978,787) | $ | 157,173,440 | ||||||
Other Assets & Liabilities, net - (0.2)% | (376,557 | ) | ||||||
Total Net Assets - 100.0% | $ | 156,796,883 | ||||||
Contracts | Unrealized Gain | |||||||
INTEREST RATE FUTURES CONTRACTS PURCHASED† | ||||||||
June 2015 U.S. Treasury Ultra Long Bond Futures Contracts (Aggregate Value of Contracts $99,960,000) | 588 | $ | 2,433,953 |
† | Value determined based on Level 1 inputs — See Note 4. |
†† | Value determined based on Level 2 inputs — See Note 4. |
1 | Investment in a product that is managed by and/or pays a management fee to a party related to the Adviser — See Note 12. |
2 | Repurchase Agreements — See Note 5. |
146 | THE RYDEX FUNDS ANNUAL REPORT | SEE NOTES TO FINANCIAL STATEMENTS. |
GOVERNMENT LONG BOND 1.2x STRATEGY FUND |
STATEMENT OF ASSETS AND LIABILITIES
March 31, 2015
Assets: | ||||
Investments, at value (cost $115,227,157) | $ | 117,421,810 | ||
Repurchase agreements, at value (cost $39,751,630) | 39,751,630 | |||
Total investments (cost $154,978,787) | 157,173,440 | |||
Segregated cash with broker | 2,234,400 | |||
Receivables: | ||||
Fund shares sold | 20,044,230 | |||
Interest | 336,197 | |||
Variation margin | 238,875 | |||
Dividends | 12,119 | |||
Total assets | 180,039,261 | |||
Liabilities: | ||||
Payable for: | ||||
Securities purchased | 14,733,239 | |||
Fund shares redeemed | 8,310,878 | |||
Management fees | 54,976 | |||
Distribution and service fees | 23,144 | |||
Transfer agent and administrative fees | 21,991 | |||
Portfolio accounting fees | 10,995 | |||
Miscellaneous | 87,155 | |||
Total liabilities | 23,242,378 | |||
Commitments and contingent liabilities (Note 15) | — | |||
Net assets | $ | 156,796,883 | ||
Net assets consist of: | ||||
Paid in capital | $ | 169,874,376 | ||
Undistributed net investment income | — | |||
Accumulated net realized loss on investments | (17,706,099 | ) | ||
Net unrealized appreciation on investments | 4,628,606 | |||
Net assets | $ | 156,796,883 | ||
Investor Class: | ||||
Net assets | $ | 61,459,738 | ||
Capital shares outstanding | 1,039,661 | |||
Net asset value per share | $ | 59.12 | ||
Advisor Class: | ||||
Net assets | $ | 10,203,261 | ||
Capital shares outstanding | 173,616 | |||
Net asset value per share | $ | 58.77 | ||
A-Class: | ||||
Net assets | $ | 3,878,816 | ||
Capital shares outstanding | 65,228 | |||
Net asset value per share | $ | 59.47 | ||
Maximum offering price per share (Net asset value divided by 95.25%) | $ | 62.44 | ||
C-Class: | ||||
Net assets | $ | 2,872,931 | ||
Capital shares outstanding | 48,622 | |||
Net asset value per share | $ | 59.09 | ||
H-Class: | ||||
Net assets | $ | 78,382,137 | ||
Capital shares outstanding | 1,318,586 | |||
Net asset value per share | $ | 59.44 |
STATEMENT OF OPERATIONS
Year Ended March 31, 2015
Investment Income: | ||||
Interest | $ | 3,428,329 | ||
Dividends | 204,626 | |||
Income from securities lending, net | 1,701 | |||
Total investment income | 3,634,656 | |||
Expenses: | ||||
Management fees | 860,992 | |||
Transfer agent and administrative fees | 344,401 | |||
Distribution and service fees: | ||||
Advisor Class | 373,638 | |||
A-Class | 7,310 | |||
C-Class | 32,145 | |||
H-Class** | 83,680 | |||
Portfolio accounting fees | 170,961 | |||
Registration fees | 118,686 | |||
Custodian fees | 20,065 | |||
Trustees’ fees* | 11,834 | |||
Line of credit fees | 10,208 | |||
Miscellaneous | 103,555 | |||
Total expenses | 2,137,475 | |||
Net investment income | 1,497,181 | |||
Net Realized and Unrealized Gain (Loss): | ||||
Net realized gain (loss) on: | ||||
Investments | 15,842,047 | |||
Futures contracts | 16,256,763 | |||
Net realized gain | 32,098,810 | |||
Net change in unrealized appreciation (depreciation) on: | ||||
Investments | 1,163,742 | |||
Futures contracts | 2,144,605 | |||
Net change in unrealized appreciation (depreciation) | 3,308,347 | |||
Net realized and unrealized gain | 35,407,157 | |||
Net increase in net assets resulting from operations | $ | 36,904,338 |
* | Relates to Trustees not deemed “interested persons” within the meaning of Section 2(a)(19) of the 1940 Act. |
** | Since commencement of operations: September 18, 2014. |
SEE NOTES TO FINANCIAL STATEMENTS. | THE RYDEX FUNDS ANNUAL REPORT | 147 |
GOVERNMENT LONG BOND 1.2x STRATEGY FUND |
STATEMENTS OF CHANGES IN NET ASSETS
Year Ended March 31, 2015 | Year Ended March 31, 2014 | |||||||
Increase (Decrease) in Net Assets from Operations: | ||||||||
Net investment income | $ | 1,497,181 | $ | 1,710,481 | ||||
Net realized gain (loss) on investments | 32,098,810 | (45,960,905 | ) | |||||
Net change in unrealized appreciation (depreciation) on investments | 3,308,347 | (132,943 | ) | |||||
Net increase (decrease) in net assets resulting from operations | 36,904,338 | (44,383,367 | ) | |||||
Distributions to shareholders from: | ||||||||
Net investment income | ||||||||
Investor Class | (703,362 | ) | (898,854 | ) | ||||
Advisor Class | (473,253 | ) | (703,095 | ) | ||||
A-Class | (28,531 | ) | (99,323 | ) | ||||
C-Class | (8,930 | ) | (9,209 | ) | ||||
H-Class* | (301,178 | ) | — | |||||
Return of capital | ||||||||
Investor Class | — | (7,266 | ) | |||||
Advisor Class | — | (5,684 | ) | |||||
A-Class | — | (803 | ) | |||||
C-Class | — | (74 | ) | |||||
H-Class* | — | — | ||||||
Total distributions to shareholders | (1,515,254 | ) | (1,724,308 | ) | ||||
Capital share transactions: | ||||||||
Proceeds from sale of shares | ||||||||
Investor Class | 660,449,135 | 1,219,761,863 | ||||||
Advisor Class | 3,280,358,617 | 6,476,276,741 | ||||||
A-Class | 36,939,152 | 103,303,063 | ||||||
C-Class | 33,913,164 | 26,953,816 | ||||||
H-Class* | 1,267,499,822 | — | ||||||
Distributions reinvested | ||||||||
Investor Class | 697,459 | 874,942 | ||||||
Advisor Class | 463,311 | 689,127 | ||||||
A-Class | 27,051 | 43,748 | ||||||
C-Class | 7,765 | 7,193 | ||||||
H-Class* | 301,178 | — | ||||||
Cost of shares redeemed | ||||||||
Investor Class | (658,880,369 | ) | (1,452,469,764 | ) | ||||
Advisor Class | (3,412,680,611 | ) | (6,413,503,973 | ) | ||||
A-Class | (35,500,878 | ) | (115,219,148 | ) | ||||
C-Class | (34,886,168 | ) | (28,044,431 | ) | ||||
H-Class* | (1,195,580,232 | ) | — | |||||
Net decrease from capital share transactions | (56,871,604 | ) | (181,326,823 | ) | ||||
Net decrease in net assets | (21,482,520 | ) | (227,434,498 | ) | ||||
Net assets: | ||||||||
Beginning of year | 178,279,403 | 405,713,901 | ||||||
End of year | $ | 156,796,883 | $ | 178,279,403 | ||||
Undistributed net investment income at end of year | $ | — | $ | — |
148 | THE RYDEX FUNDS ANNUAL REPORT | SEE NOTES TO FINANCIAL STATEMENTS. |
GOVERNMENT LONG BOND 1.2x STRATEGY FUND |
STATEMENTS OF CHANGES IN NET ASSETS (concluded)
Year Ended March 31, 2015 | Year Ended March 31, 2014 | |||||||
Capital share activity: | ||||||||
Shares sold | ||||||||
Investor Class | 12,620,583 | 26,724,760 | ** | |||||
Advisor Class | 66,215,971 | 145,113,873 | ** | |||||
A-Class | 676,780 | 2,253,656 | ** | |||||
C-Class | 652,055 | 593,997 | ** | |||||
H-Class* | 22,022,660 | — | ||||||
Shares issued from reinvestment of distributions | ||||||||
Investor Class | 13,125 | 18,706 | ** | |||||
Advisor Class | 9,160 | 15,528 | ** | |||||
A-Class | 504 | 976 | ** | |||||
C-Class | 151 | 163 | ** | |||||
H-Class* | 5,002 | — | ||||||
Shares redeemed | ||||||||
Investor Class | (12,545,418 | ) | (31,595,986 | )** | ||||
Advisor Class | (68,905,187 | ) | (144,429,030 | )** | ||||
A-Class | (649,474 | ) | (2,534,796 | )** | ||||
C-Class | (673,432 | ) | (619,014 | )** | ||||
H-Class* | (20,709,076 | ) | — | |||||
Net decrease in shares | (1,266,596 | ) | (4,457,167 | )** |
* | Since commencement of operations: September 18, 2014. |
** | Reverse Share Split — Capital share activity for the periods presented through February 7, 2014 has been restated to reflect a 1:3 reverse share split effective February 7, 2014. See Note 14 in Notes to Financial Statements. |
SEE NOTES TO FINANCIAL STATEMENTS. | THE RYDEX FUNDS ANNUAL REPORT | 149 |
GOVERNMENT LONG BOND 1.2x STRATEGY FUND |
FINANCIAL HIGHLIGHTS
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.
Investor Class | Year Ended March 31, 2015 | Year Ended March 31, 2014d | Year Ended March 28, 2013d | Year Ended March 31, 2012d | Year Ended March 31, 2011d | |||||||||||||||
Per Share Data | ||||||||||||||||||||
Net asset value, beginning of period | $ | 45.80 | $ | 48.55 | $ | 44.73 | $ | 34.28 | $ | 32.88 | ||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||
Net investment income (loss)a | .63 | .61 | .57 | .96 | 1.08 | |||||||||||||||
Net gain (loss) on investments (realized and unrealized) | 13.34 | (2.76 | ) | 4.21 | 10.45 | 1.40 | ||||||||||||||
Total from investment operations | 13.97 | (2.15 | ) | 4.78 | 11.41 | 2.48 | ||||||||||||||
Less distributions from: | ||||||||||||||||||||
Net investment income | (.65 | ) | (.60 | ) | (.72 | ) | (.96 | ) | (1.08 | ) | ||||||||||
Net realized gains | — | — | (.24 | ) | — | — | ||||||||||||||
Total distributions | (.65 | ) | (.60 | ) | (.96 | ) | (.96 | ) | (1.08 | ) | ||||||||||
Net asset value, end of period | $ | 59.12 | $ | 45.80 | $ | 48.55 | $ | 44.73 | $ | 34.28 | ||||||||||
Total Returnb | 30.66 | % | (4.37 | %) | 10.63 | % | 33.38 | % | 7.42 | % | ||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||
Net assets, end of period (in thousands) | $ | 61,460 | $ | 43,573 | $ | 281,800 | $ | 43,709 | $ | 44,707 | ||||||||||
Ratios to average net assets: | ||||||||||||||||||||
Net investment income (loss) | 1.21 | % | 1.22 | % | 1.15 | % | 2.24 | % | 3.03 | % | ||||||||||
Total expensesc | 0.95 | % | 0.97 | % | 0.95 | % | 0.95 | % | 0.98 | % | ||||||||||
Portfolio turnover rate | 1,932 | % | 2,661 | % | 1,759 | % | 2,322 | % | 1,930 | % |
Advisor Class | Year Ended March 31, 2015 | Year Ended March 31, 2014d | Year Ended March 28, 2013d | Year Ended March 31, 2012d | Year Ended March 31, 2011d | |||||||||||||||
Per Share Data | ||||||||||||||||||||
Net asset value, beginning of period | $ | 45.48 | $ | 48.23 | $ | 44.33 | $ | 34.08 | $ | 32.65 | ||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||
Net investment income (loss)a | .31 | .25 | .33 | .75 | .93 | |||||||||||||||
Net gain (loss) on investments (realized and unrealized) | 13.36 | (2.63 | ) | 4.26 | 10.25 | 1.40 | ||||||||||||||
Total from investment operations | 13.67 | (2.38 | ) | 4.59 | 11.00 | 2.33 | ||||||||||||||
Less distributions from: | ||||||||||||||||||||
Net investment income | (.38 | ) | (.37 | ) | (.45 | ) | (.75 | ) | (.90 | ) | ||||||||||
Net realized gains | — | — | (.24 | ) | — | — | ||||||||||||||
Total distributions | (.38 | ) | (.37 | ) | (.69 | ) | (.75 | ) | (.90 | ) | ||||||||||
Net asset value, end of period | $ | 58.77 | $ | 45.48 | $ | 48.23 | $ | 44.33 | $ | 34.08 | ||||||||||
Total Returnb | 30.17 | % | (4.93 | %) | 10.21 | % | 32.56 | % | 7.03 | % | ||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||
Net assets, end of period (in thousands) | $ | 10,203 | $ | 129,785 | $ | 103,845 | $ | 11,600 | $ | 31,420 | ||||||||||
Ratios to average net assets: | ||||||||||||||||||||
Net investment income (loss) | 0.62 | % | 0.64 | % | 0.63 | % | 1.77 | % | 2.46 | % | ||||||||||
Total expensesc | 1.46 | % | 1.46 | % | 1.43 | % | 1.45 | % | 1.48 | % | ||||||||||
Portfolio turnover rate | 1,932 | % | 2,661 | % | 1,759 | % | 2,322 | % | 1,930 | % |
150 | THE RYDEX FUNDS ANNUAL REPORT | SEE NOTES TO FINANCIAL STATEMENTS. |
GOVERNMENT LONG BOND 1.2x STRATEGY FUND |
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.
A-Class | Year Ended March 31, 2015 | Year Ended March 31, 2014d | Year Ended March 28, 2013d | Year Ended March 31, 2012d | Year Ended March 31, 2011d | |||||||||||||||
Per Share Data | ||||||||||||||||||||
Net asset value, beginning of period | $ | 46.07 | $ | 48.73 | $ | 44.77 | $ | 34.34 | $ | 32.89 | ||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||
Net investment income (loss)a | .51 | .48 | .48 | .87 | .99 | |||||||||||||||
Net gain (loss) on investments (realized and unrealized) | 13.42 | (2.65 | ) | 4.29 | 10.43 | 1.45 | ||||||||||||||
Total from investment operations | 13.93 | (2.17 | ) | 4.77 | 11.30 | 2.44 | ||||||||||||||
Less distributions from: | ||||||||||||||||||||
Net investment income | (.53 | ) | (.49 | ) | (.57 | ) | (.87 | ) | (.99 | ) | ||||||||||
Net realized gains | — | — | (.24 | ) | — | — | ||||||||||||||
Total distributions | (.53 | ) | (.49 | ) | (.81 | ) | (.87 | ) | (.99 | ) | ||||||||||
Net asset value, end of period | $ | 59.47 | $ | 46.07 | $ | 48.73 | $ | 44.77 | $ | 34.34 | ||||||||||
Total Returnb | 30.37 | % | (4.40 | %) | 10.62 | % | 33.00 | % | 7.35 | % | ||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||
Net assets, end of period (in thousands) | $ | 3,879 | $ | 1,724 | $ | 15,476 | $ | 10,885 | $ | 2,753 | ||||||||||
Ratios to average net assets: | ||||||||||||||||||||
Net investment income (loss) | 0.97 | % | 1.04 | % | 0.94 | % | 2.02 | % | 2.75 | % | ||||||||||
Total expensesc | 1.20 | % | 1.22 | % | 1.20 | % | 1.20 | % | 1.23 | % | ||||||||||
Portfolio turnover rate | 1,932 | % | 2,661 | % | 1,759 | % | 2,322 | % | 1,930 | % |
C-Class | Year Ended March 31, 2015 | Year Ended March 31, 2014d | Year Ended March 28, 2013d | Year Ended March 31, 2012d | Year Ended March 31, 2011d | |||||||||||||||
Per Share Data | ||||||||||||||||||||
Net asset value, beginning of period | $ | 45.79 | $ | 48.51 | $ | 44.63 | $ | 34.25 | $ | 32.82 | ||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||
Net investment income (loss)a | .13 | .12 | .15 | .57 | .72 | |||||||||||||||
Net gain (loss) on investments (realized and unrealized) | 13.30 | (2.71 | ) | 4.21 | 10.35 | 1.43 | ||||||||||||||
Total from investment operations | 13.43 | (2.59 | ) | 4.36 | 10.92 | 2.15 | ||||||||||||||
Less distributions from: | ||||||||||||||||||||
Net investment income | (.13 | ) | (.13 | ) | (.24 | ) | (.54 | ) | (.72 | ) | ||||||||||
Net realized gains | — | — | (.24 | ) | — | — | ||||||||||||||
Total distributions | (.13 | ) | (.13 | ) | (.48 | ) | (.54 | ) | (.72 | ) | ||||||||||
Net asset value, end of period | $ | 59.09 | $ | 45.79 | $ | 48.51 | $ | 44.63 | $ | 34.25 | ||||||||||
Total Returnb | 29.37 | % | (5.33 | %) | 9.69 | % | 32.01 | % | 6.47 | % | ||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||
Net assets, end of period (in thousands) | $ | 2,873 | $ | 3,198 | $ | 4,594 | $ | 4,451 | $ | 6,091 | ||||||||||
Ratios to average net assets: | ||||||||||||||||||||
Net investment income (loss) | 0.26 | % | 0.34 | % | 0.31 | % | 1.32 | % | 1.93 | % | ||||||||||
Total expensesc | 1.95 | % | 1.97 | % | 1.94 | % | 1.95 | % | 1.97 | % | ||||||||||
Portfolio turnover rate | 1,932 | % | 2,661 | % | 1,759 | % | 2,322 | % | 1,930 | % |
SEE NOTES TO FINANCIAL STATEMENTS. | THE RYDEX FUNDS ANNUAL REPORT | 151 |
GOVERNMENT LONG BOND 1.2x STRATEGY FUND |
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.
H-Class | Year Ended March 31, 2015e | |||
Per Share Data | ||||
Net asset value, beginning of period | $ | 48.83 | ||
Income (loss) from investment operations: | ||||
Net investment income (loss)a | .28 | |||
Net gain (loss) on investments (realized and unrealized) | 10.59 | |||
Total from investment operations | 10.87 | |||
Less distributions from: | ||||
Net investment income | (.26 | ) | ||
Total distributions | (.26 | ) | ||
Net asset value, end of period | $ | 59.44 | ||
Total Returnb | 22.28 | % | ||
Ratios/Supplemental Data | ||||
Net assets, end of period (in thousands) | $ | 78,382 | ||
Ratios to average net assets: | ||||
Net investment income (loss) | 0.89 | % | ||
Total expensesc | 1.18 | % | ||
Portfolio turnover rate | 1,932 | % |
a | Net investment income (loss) per share was computed using average shares outstanding throughout the period. |
b | Total return does not reflect the impact of any applicable sales charges. |
c | Does not include expenses of the underlying funds in which the Fund invests. |
d | Reverse share split — Per share amounts for the periods presented through February 7, 2014 have been restated to reflect a 1:3 reverse share split effective February 7, 2014. See Note 14 in Notes to Financial Statements. |
e | Since commencement of operations: September 18, 2014. Percentage amounts for the period, except total return and portfolio turnover rate, have been annualized. The portfolio turnover rate stated is for the entire period of the Fund, not since the commencement of operations of the Class. |
152 | THE RYDEX FUNDS ANNUAL REPORT | SEE NOTES TO FINANCIAL STATEMENTS. |
PERFORMANCE REPORT AND FUND PROFILE (Unaudited) | March 31, 2015 |
INVERSE GOVERNMENT LONG BOND STRATEGY FUND
OBJECTIVE: Seeks to provide total returns that inversely correlate, before fees and expenses, to the price movements of a benchmark for U.S. Treasury debt instruments or futures contract on a specified debt instrument on a daily basis. The Fund’s current benchmark is the inverse (opposite) of the daily price movement of the Long Treasury Bond. The Long Treasury Bond is the U.S. Treasury bond with the longest maturity, which is currently 30 years. The price movement of the Long Treasury Bond is based on the daily price change of the most recently issued Long Treasury Bond. The Fund does not seek to achieve its investment objective over a period of time greater than one day.
For the one-year period ended March 31, 2015, the Inverse Government Long Bond Strategy Fund Investor Class returned -22.23%. The price movement of the Long Treasury Bond was 22.33% for the same period. The Fund maintained a daily correlation of over 99% to its benchmark.
The return of a comparison index, the Barclays Long Treasury Bond Index, was 21.40%.
The yield on the 30-year bond was 3.72% at the beginning of the period and finished at 2.54% on March 31, 2015. The government bond yields of many industrial economies, including the U.S., dipped to multiyear lows in the first quarter of 2015.
The lower interest rate environment was a major factor in the positive return of the Fund. Throughout the period, long bond prices moved up and yields down. This was partly a result of quantitative easing programs in Europe and Japan. Falling commodity prices, especially oil, and weakening global economic growth increased the demand for fixed income assets around the world.
U.S. bonds became more attractive relative to foreign bonds, which helped to support Treasuries despite uncertainty surrounding the Federal Reserve’s timing to raise interest rates. In spite of falling rates, U.S. Treasuries were yielding more than government bonds of many other countries.
Derivatives in the Fund are used to help provide exposure to the composition of the benchmark in the highest efficient manner and not for hedging purposes. The results of derivatives use during the period were within our expectations and contributed to the Fund’s performance.
Due to the compounding of daily returns, leveraged and inverse funds’ returns over periods other than one day will likely differ in amount and possibly direction from the benchmark return for the same period. Investors should monitor their leveraged and inverse funds’ holdings to ensure that they are consistent with their strategies, as frequently as daily.
The effects of compounding may cause the longer-term correlation of the Fund to its benchmark to diminish. The apparent discrepancy between the leveraged and unleveraged indices is the result of compounding, which is described briefly on page 6 of this report.
The Fund invests excess cash into the Guggenheim Strategy Funds which, in turn, invest in a diversified portfolio of debt securities and financial instruments providing exposure to fixed-income markets. The investment objective of the Guggenheim Strategy Funds is to seek a high level of income consistent with the preservation of capital. For the one year period ended March 31, 2015, investment in the Guggenheim Strategy Funds benefited Fund performance relative to investing in other short-term investments such as overnight repurchase agreements.
Performance displayed represents past performance, which is no guarantee of future results.
THE RYDEX FUNDS ANNUAL REPORT | 153 |
PERFORMANCE REPORT AND FUND PROFILE (Unaudited)(continued) | March 31, 2015 |
Holdings Diversification (Market Exposure as % of Net Assets)
![](https://capedge.com/proxy/N-CSR/0001398344-15-003814/rtb1_34.jpg)
“Holdings Diversification (Market Exposure as % of Net Assets)” excludes any temporary cash investments or investments in Guggenheim Strategy Funds Trust mutual funds. Investments in those Funds do not provide “market exposure” to meet the fund’s investment objective, but will significantly increase the portfolio’s exposure to certain other asset categories (and their associated risks), which may cause the Fund to deviate from its principal investment strategy, including: (i) high yield, high risk debt securities rated below the top four long-term rating categories by a nationally recognized statistical rating organization (also known as “junk bonds”); (ii) securities issued by the U.S. government or its agencies and instrumentalities; (iii) CLOs and similar investments; and (iv) other short-term fixed income securities.
Inception Dates: | |
Investor Class | March 3, 1995 |
Advisor Class | August 1, 2003 |
A Class | March 31, 2004 |
C Class | March 28, 2001 |
H Class | September 18, 2014 |
The Fund invests principally in short sales and derivative investments such as futures contracts.
Largest Long Holdings (% of Total Net Assets) | |
Guggenheim Strategy Fund I | 24.4% |
Total | 24.4% |
“Largest Long Holdings” exclude any temporary cash or derivative instruments. |
154 | THE RYDEX FUNDS ANNUAL REPORT |
PERFORMANCE REPORT AND FUND PROFILE (Unaudited)(concluded) | March 31, 2015 |
Cumulative Fund Performance*
![](https://capedge.com/proxy/N-CSR/0001398344-15-003814/rtb1_35.jpg)
![](https://capedge.com/proxy/N-CSR/0001398344-15-003814/rtb1_36.jpg)
Average Annual Returns*
Periods Ended March 31, 2015
1 Year | 5 Year | 10 Year | |
Investor Class Shares | -22.23% | -13.35% | -8.64% |
Advisor Class Shares | -22.66% | -13.75% | -9.07% |
A-Class Shares | -22.43% | -13.55% | -8.88% |
A-Class Shares with sales charge† | -26.11% | -14.40% | -9.32% |
C-Class Shares | -23.00% | -14.19% | -9.55% |
C-Class Shares with CDSC‡ | -23.77% | -14.19% | -9.55% |
Daily Price Movement of Long Treasury Bond** | 22.33% | 7.65% | 3.47% |
Barclays Long Treasury Bond Index | 21.40% | 10.61% | 7.90% |
Since Inception (09/18/14) | |||
H-Class Shares | -17.16% | ||
Daily Price Movement of Long Treasury Bond** | 17.52% | ||
Barclays Long Treasury Bond Index | 15.77% |
* | The performance data above represents past performance that is not predictive of future results. The investment return and principal value of an investment in the Fund will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Returns are historical and include changes in principal and reinvested dividends and capital gains and do not reflect the effect of taxes. The Barclays Long Treasury Bond Index and Daily Price Movement of Long Treasury Bond are unmanaged indices and, unlike the Fund, have no management fees or operating expenses to reduce their reported returns. The graphs are based on Investor Class shares and A-Class shares only; performance for Advisor Class shares, C- Class shares and H-Class shares will vary due to differences in fee structures. |
** | Does not reflect any interest. |
† | Fund returns are calculated using the maximum sales charge of 4.75%. |
‡ | Fund returns include a CDSC of 1% if redeemed within 12 months of purchase. |
THE RYDEX FUNDS ANNUAL REPORT | 155 |
SCHEDULE OF INVESTMENTS | March 31, 2015 |
INVERSE GOVERNMENT LONG BOND STRATEGY FUND |
Shares | Value | |||||||
MUTUAL FUNDS† - 24.4% | ||||||||
Guggenheim Strategy Fund I1 | 2,138,319 | $ | 53,244,134 | |||||
Total Mutual Funds | ||||||||
(Cost $53,319,911) | 53,244,134 | |||||||
Face Amount | ||||||||
FEDERAL AGENCY DISCOUNT NOTES†† - 40.4% | ||||||||
Farmer Mac2 | ||||||||
0.13% due 08/03/15 | $ | 15,000,000 | 14,995,140 | |||||
0.14% due 09/10/15 | 15,000,000 | 14,991,225 | ||||||
0.21% due 10/01/15 | 15,000,000 | 14,988,795 | ||||||
0.17% due 10/08/15 | 15,000,000 | 14,988,360 | ||||||
0.17% due 09/15/15 | 5,000,000 | 4,996,985 | ||||||
0.09% due 04/05/15 | 1,100,000 | 1,099,995 | ||||||
Total Farmer Mac | 66,060,500 | |||||||
Federal Farm Credit2 | ||||||||
0.12% due 04/10/15 | 10,000,000 | 9,999,910 | ||||||
0.22% due 10/05/15 | 8,000,000 | 7,993,888 | ||||||
Total Federal Farm Credit | 17,993,798 | |||||||
Fannie Mae3 | ||||||||
0.09% due 05/01/15 | 4,250,000 | 4,249,851 | ||||||
Total Federal Agency Discount Notes | ||||||||
(Cost $88,290,985) | 88,304,149 | |||||||
REPURCHASE AGREEMENTS†† - 77.8% | ||||||||
Individual Repurchase Agreement4 | ||||||||
Barclays Capital Issued 03/31/15 at 0.01% due 04/01/15 (secured by U.S. Treasury Bond, at a rate of 2.50% and maturing 02/15/45 as collateral, with a value of $121,942,397) to be repurchased at $119,551,403 | 119,551,370 | 119,551,370 | ||||||
Joint Repurchase Agreements5 | ||||||||
HSBC Group issued 03/31/15 at 0.03% due 04/01/15 | 39,592,529 | 39,592,529 | ||||||
RBC Capital Markets issued 03/31/15 at 0.05% due 04/01/15 | 6,050,579 | 6,050,579 | ||||||
UMB Financial Corp. issued 03/31/15 at 0.03% due 04/01/15 | 4,856,584 | 4,856,584 | ||||||
Total Repurchase Agreements | ||||||||
(Cost $170,051,062) | 170,051,062 | |||||||
Total Investments - 142.6% | ||||||||
(Cost $311,661,958) | $ | 311,599,345 | ||||||
U.S. GOVERNMENT SECURITIES SOLD SHORT†† - (68.2)% | ||||||||
U.S. Treasury Bonds | ||||||||
2.50% due 02/15/45 | 150,232,000 | (148,964,418 | ) | |||||
Total U.S. Government Securities Sold Short | ||||||||
(Proceeds $146,225,193) | (148,964,418 | ) | ||||||
Other Assets & Liabilities, net - 25.6% | 56,015,367 | |||||||
Total Net Assets - 100.0% | $ | 218,650,294 | ||||||
Contracts | Unrealized Loss | |||||||
INTEREST RATE FUTURES CONTRACTS SOLD SHORT† | ||||||||
June 2015 U.S. Treasury Ultra Long Bond Futures Contracts (Aggregate Value of Contracts $86,020,000) | 506 | $ | (981,736 | ) |
† | Value determined based on Level 1 inputs — See Note 4. |
†† | Value determined based on Level 2 inputs — See Note 4. |
1 | Affiliated issuer — See Note 12. |
2 | The issuer operates under a Congressional charter; its securities are neither issued nor guaranteed by the U.S. Government. |
3 | On September 7, 2008, the issuer was placed in conservatorship by the Federal Housing Finance Agency (FHFA). As conservator, the FHFA has full powers to control the assets and operations of the firm. |
4 | All or portion of this security is pledged as short collateral at March 31, 2015. |
5 | Repurchase Agreements — See Note 5. |
156 | THE RYDEX FUNDS ANNUAL REPORT | SEE NOTES TO FINANCIAL STATEMENTS. |
INVERSE GOVERNMENT LONG BOND STRATEGY FUND |
STATEMENT OF ASSETS AND LIABILITIES
March 31, 2015
Assets: | ||||
Investments in unaffiliated issuers, at value (cost $88,290,985) | $ | 88,304,149 | ||
Investments in affiliated issuers, at value (cost $53,319,911) | 53,244,134 | |||
Repurchase agreements, at value (cost $170,051,062) | 170,051,062 | |||
Total investments (cost $311,661,958) | 311,599,345 | |||
Segregated cash with broker | 1,922,800 | |||
Receivables: | ||||
Fund shares sold | 42,427,588 | |||
Securities Sold | 27,154,498 | |||
Dividends | 63,479 | |||
Total assets | 383,167,710 | |||
Liabilities: | ||||
Securities sold short, at value (proceeds $146,225,193) | 148,964,418 | |||
Payable for: | ||||
Fund shares redeemed | 14,420,884 | |||
Interest | 466,881 | |||
Variation margin | 205,562 | |||
Management fees | 167,559 | |||
Securities purchased | 63,479 | |||
Distribution and service fees | 49,145 | |||
Transfer agent and administrative fees | 46,544 | |||
Portfolio accounting fees | 18,503 | |||
Miscellaneous | 114,441 | |||
Total liabilities | 164,517,416 | |||
Commitments and contingent liabilities (Note 15) | — | |||
Net assets | $ | 218,650,294 | ||
Net assets consist of: | ||||
Paid in capital | $ | 595,941,052 | ||
Accumulated net investment loss | (1,507,712 | ) | ||
Accumulated net realized loss on investments | (371,999,472 | ) | ||
Net unrealized depreciation on investments | (3,783,574 | ) | ||
Net assets | $ | 218,650,294 | ||
Investor Class: | ||||
Net assets | $ | 105,695,680 | ||
Capital shares outstanding | 2,953,889 | |||
Net asset value per share | $ | 35.78 | ||
Advisor Class: | ||||
Net assets | $ | 11,700,664 | ||
Capital shares outstanding | 345,959 | |||
Net asset value per share | $ | 33.82 | ||
A-Class: | ||||
Net assets | $ | 21,579,696 | ||
Capital shares outstanding | 622,625 | |||
Net asset value per share | $ | 34.66 | ||
Maximum offering price per share (Net asset value divided by 95.25%) | $ | 36.39 | ||
C-Class: | ||||
Net assets | $ | 35,873,894 | ||
Capital shares outstanding | 1,154,627 | |||
Net asset value per share | $ | 31.07 | ||
H-Class: | ||||
Net assets | $ | 43,800,360 | ||
Capital shares outstanding | 1,263,415 | |||
Net asset value per share | $ | 34.67 |
SEE NOTES TO FINANCIAL STATEMENTS. | THE RYDEX FUNDS ANNUAL REPORT | 157 |
INVERSE GOVERNMENT LONG BOND STRATEGY FUND |
STATEMENT OF OPERATIONS
Year Ended March 31, 2015
Investment Income: | ||||
Dividends from securities of affiliated issuers | $ | 881,692 | ||
Interest | 99,143 | |||
Total investment income | 980,835 | |||
Expenses: | ||||
Management fees | 2,625,582 | |||
Transfer agent and administrative fees | 729,328 | |||
Distribution and service fees: | ||||
Advisor Class | 274,120 | |||
A-Class | 79,769 | |||
C-Class | 474,535 | |||
H-Class** | 29,686 | |||
Portfolio accounting fees | 277,630 | |||
Short interest expense | 5,061,422 | |||
Custodian fees | 34,078 | |||
Trustees’ fees* | 25,580 | |||
Miscellaneous | 384,030 | |||
Total expenses | 9,995,760 | |||
Net investment loss | (9,014,925 | ) | ||
Net Realized and Unrealized Gain (Loss): | ||||
Net realized gain (loss) on: | ||||
Investments in affiliated issuers | (161,780 | ) | ||
Futures contracts | (33,058,090 | ) | ||
Securities sold short | (38,858,220 | ) | ||
Net realized loss | (72,078,090 | ) | ||
Net change in unrealized appreciation (depreciation) on: | ||||
Investments in unaffiliated issuers | (20,072 | ) | ||
Investments in affiliated issuers | (75,777 | ) | ||
Securities sold short | (297,836 | ) | ||
Futures contracts | (511,861 | ) | ||
Net change in unrealized appreciation (depreciation) | (905,546 | ) | ||
Net realized and unrealized loss | (72,983,636 | ) | ||
Net decrease in net assets resulting from operations | $ | (81,998,561 | ) |
* | Relates to Trustees not deemed “interested persons” within the meaning of Section 2(a)(19) of the 1940 Act. |
** | Since commencement of operations: September 18, 2014. |
158 | THE RYDEX FUNDS ANNUAL REPORT | SEE NOTES TO FINANCIAL STATEMENTS. |
INVERSE GOVERNMENT LONG BOND STRATEGY FUND |
STATEMENTS OF CHANGES IN NET ASSETS
Year Ended March 31, 2015 | Year Ended March 31, 2014 | |||||||
Increase (Decrease) in Net Assets from Operations: | ||||||||
Net investment loss | $ | (9,014,925 | ) | $ | (15,338,405 | ) | ||
Net realized gain (loss) on investments | (72,078,090 | ) | 11,531,426 | |||||
Net change in unrealized appreciation (depreciation) on investments | (905,546 | ) | (1,471,301 | ) | ||||
Net decrease in net assets resulting from operations | (81,998,561 | ) | (5,278,280 | ) | ||||
Capital share transactions: | ||||||||
Proceeds from sale of shares | ||||||||
Investor Class | 297,049,590 | 1,212,780,870 | ||||||
Advisor Class | 2,869,893,061 | 5,382,740,545 | ||||||
A-Class | 9,691,719 | 105,073,218 | ||||||
C-Class | 31,214,542 | 28,159,469 | ||||||
H-Class* | 1,071,187,111 | — | ||||||
Cost of shares redeemed | ||||||||
Investor Class | (332,060,409 | ) | (1,181,336,410 | ) | ||||
Advisor Class | (2,856,681,364 | ) | (5,368,048,897 | ) | ||||
A-Class | (29,814,806 | ) | (88,137,870 | ) | ||||
C-Class | (40,220,259 | ) | (28,117,046 | ) | ||||
H-Class* | (1,021,206,700 | ) | — | |||||
Net increase (decrease) from capital share transactions | (947,515 | ) | 63,113,879 | |||||
Net increase (decrease) in net assets | (82,946,076 | ) | 57,835,599 | |||||
Net assets: | ||||||||
Beginning of year | 301,596,370 | 243,760,771 | ||||||
End of year | $ | 218,650,294 | $ | 301,596,370 | ||||
Accumulated net investment loss at end of year | $ | (1,507,712 | ) | $ | (4,248,821 | ) | ||
Capital share activity: | ||||||||
Shares sold | ||||||||
Investor Class | 7,228,729 | 25,688,339 | ** | |||||
Advisor Class | 70,764,860 | 119,675,656 | ** | |||||
A-Class | 258,256 | 2,241,652 | ** | |||||
C-Class | 864,726 | 674,822 | ** | |||||
H-Class* | 29,826,219 | — | ||||||
Shares redeemed | ||||||||
Investor Class | (8,137,808 | ) | (25,096,700 | )** | ||||
Advisor Class | (70,800,361 | ) | (119,576,482 | )** | ||||
A-Class | (751,587 | ) | (1,893,603 | )** | ||||
C-Class | (1,130,632 | ) | (677,648 | )** | ||||
H-Class* | (28,562,804 | ) | — | |||||
Net increase (decrease) in shares | (440,402 | ) | 1,036,036 | ** |
* | Since commencement of operations: September 18, 2014. |
** | Reverse Share Split — Capital share acitivity for the periods presented through February 21, 2014 has been restated to reflect a 1:5 reverse share split effective February 21, 2014. See Note 14 in Notes to Financial Statements. |
SEE NOTES TO FINANCIAL STATEMENTS. | THE RYDEX FUNDS ANNUAL REPORT | 159 |
INVERSE GOVERNMENT LONG BOND STRATEGY FUND |
FINANCIAL HIGHLIGHTS
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.
Investor Class | Year Ended March 31, 2015 | Year Ended March 31, 2014c | Year Ended March 28, 2013c | Year Ended March 31, 2012c | Year Ended March 31, 2011c | |||||||||||||||
Per Share Data | ||||||||||||||||||||
Net asset value, beginning of period | $ | 46.01 | $ | 43.94 | $ | 48.33 | $ | 65.42 | $ | 73.23 | ||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||
Net investment income (loss)a | (1.15 | ) | (1.65 | ) | (1.20 | ) | (2.15 | ) | (3.10 | ) | ||||||||||
Net gain (loss) on investments (realized and unrealized) | (9.08 | ) | 3.72 | (3.19 | ) | (14.94 | ) | (4.71 | ) | |||||||||||
Total from investment operations | (10.23 | ) | 2.07 | (4.39 | ) | (17.09 | ) | (7.81 | ) | |||||||||||
Net asset value, end of period | $ | 35.78 | $ | 46.01 | $ | 43.94 | $ | 48.33 | $ | 65.42 | ||||||||||
Total Returnb | (22.23 | %) | 4.69 | % | (9.10 | %) | (26.07 | %) | (10.72 | %) | ||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||
Net assets, end of period (in thousands) | $ | 105,696 | $ | 177,735 | $ | 143,739 | $ | 247,454 | $ | 406,031 | ||||||||||
Ratios to average net assets: | ||||||||||||||||||||
Net investment income (loss) | (2.80 | %) | (3.46 | %) | (2.82 | %) | (3.99 | %) | (4.78 | %) | ||||||||||
Total expensese,f | 3.15 | % | 3.50 | % | 2.99 | % | 4.13 | % | 5.06 | % | ||||||||||
Portfolio turnover rate | 2,190 | % | 1,097 | % | 1,309 | % | 1,107 | % | 771 | % |
Advisor Class | Year Ended March 31, 2015 | Year Ended March 31, 2014 c | Year Ended March 28, 2013 c | Year Ended March 31, 2012 c | Year Ended March 31, 2011 c | |||||||||||||||
Per Share Data | ||||||||||||||||||||
Net asset value, beginning of period | $ | 43.73 | $ | 41.72 | $ | 46.17 | $ | 62.98 | $ | 70.84 | ||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||
Net investment income (loss)a | (1.35 | ) | (1.67 | ) | (1.35 | ) | (2.05 | ) | (3.30 | ) | ||||||||||
Net gain (loss) on investments (realized and unrealized) | (8.56 | ) | 3.68 | (3.10 | ) | (14.76 | ) | (4.56 | ) | |||||||||||
Total from investment operations | (9.91 | ) | 2.01 | (4.45 | ) | (16.81 | ) | (7.86 | ) | |||||||||||
Net asset value, end of period | $ | 33.82 | $ | 43.73 | $ | 41.72 | $ | 46.17 | $ | 62.98 | ||||||||||
Total Returnb | (22.66 | %) | 4.87 | % | (9.64 | %) | (26.75 | %) | (11.08 | %) | ||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||
Net assets, end of period (in thousands) | $ | 11,701 | $ | 16,679 | $ | 11,776 | $ | 199,137 | $ | 44,798 | ||||||||||
Ratios to average net assets: | ||||||||||||||||||||
Net investment income (loss) | (3.35 | %) | (3.69 | %) | (3.29 | %) | (4.22 | %) | (5.28 | %) | ||||||||||
Total expensese,f | 3.64 | % | 3.72 | % | 3.45 | % | 4.38 | % | 5.56 | % | ||||||||||
Portfolio turnover rate | 2,190 | % | 1,097 | % | 1,309 | % | 1,107 | % | 771 | % |
160 | THE RYDEX FUNDS ANNUAL REPORT | SEE NOTES TO FINANCIAL STATEMENTS. |
INVERSE GOVERNMENT LONG BOND STRATEGY FUND |
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.
A-Class | Year Ended March 31, 2015 | Year Ended March 31, 2014c | Year Ended March 28, 2013c | Year Ended March 31, 2012c | Year Ended March 31, 2011c | |||||||||||||||
Per Share Data | ||||||||||||||||||||
Net asset value, beginning of period | $ | 44.68 | $ | 42.77 | $ | 47.18 | $ | 64.00 | $ | 71.82 | ||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||
Net investment income (loss)a | (1.23 | ) | (1.73 | ) | (1.35 | ) | (2.25 | ) | (3.20 | ) | ||||||||||
Net gain (loss) on investments (realized and unrealized) | (8.79 | ) | 3.64 | (3.06 | ) | (14.57 | ) | (4.62 | ) | |||||||||||
Total from investment operations | (10.02 | ) | 1.91 | (4.41 | ) | (16.82 | ) | (7.82 | ) | |||||||||||
Net asset value, end of period | $ | 34.66 | $ | 44.68 | $ | 42.77 | $ | 47.18 | $ | 64.00 | ||||||||||
Total Returnb | (22.43 | %) | 4.51 | % | (9.43 | %) | (26.25 | %) | (10.86 | %) | ||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||
Net assets, end of period (in thousands) | $ | 21,580 | $ | 49,859 | $ | 32,842 | $ | 37,607 | $ | 73,475 | ||||||||||
Ratios to average net assets: | ||||||||||||||||||||
Net investment income (loss) | (3.06 | %) | (3.73 | %) | (3.20 | %) | (4.24 | %) | (5.03 | %) | ||||||||||
Total expensese,f | 3.40 | % | 3.78 | % | 3.37 | % | 4.38 | % | 5.31 | % | ||||||||||
Portfolio turnover rate | 2,190 | % | 1,097 | % | 1,309 | % | 1,107 | % | 771 | % |
C-Class | Year Ended March 31, 2015 | Year Ended March 31, 2014c | Year Ended March 28, 2013c | Year Ended March 31, 2012c | Year Ended March 31, 2011c | |||||||||||||||
Per Share Data | ||||||||||||||||||||
Net asset value, beginning of period | $ | 40.35 | $ | 38.92 | $ | 43.25 | $ | 59.09 | $ | 66.81 | ||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||
Net investment income (loss)a | (1.36 | ) | (1.86 | ) | (1.50 | ) | (2.40 | ) | (3.40 | ) | ||||||||||
Net gain (loss) on investments (realized and unrealized) | (7.92 | ) | 3.29 | (2.83 | ) | (13.44 | ) | (4.32 | ) | |||||||||||
Total from investment operations | (9.28 | ) | 1.43 | (4.33 | ) | (15.84 | ) | (7.72 | ) | |||||||||||
Net asset value, end of period | $ | 31.07 | $ | 40.35 | $ | 38.92 | $ | 43.25 | $ | 59.09 | ||||||||||
Total Returnb | (23.00 | %) | 3.73 | % | (10.06 | %) | (26.82 | %) | (11.53 | %) | ||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||
Net assets, end of period (in thousands) | $ | 35,874 | $ | 57,323 | $ | 55,404 | $ | 69,472 | $ | 114,470 | ||||||||||
Ratios to average net assets: | ||||||||||||||||||||
Net investment income (loss) | (3.78 | %) | (4.45 | %) | (3.96 | %) | (4.98 | %) | (5.78 | %) | ||||||||||
Total expensese,f | 4.14 | % | 4.49 | % | 4.13 | % | 5.12 | % | 6.06 | % | ||||||||||
Portfolio turnover rate | 2,190 | % | 1,097 | % | 1,309 | % | 1,107 | % | 771 | % |
SEE NOTES TO FINANCIAL STATEMENTS. | THE RYDEX FUNDS ANNUAL REPORT | 161 |
INVERSE GOVERNMENT LONG BOND STRATEGY FUND |
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.
H-Class | Period Ended March 31, 2015d | |||
Per Share Data | ||||
Net asset value, beginning of period | $ | 41.85 | ||
Income (loss) from investment operations: | ||||
Net investment income (loss)a | (.52 | ) | ||
Net gain (loss) on investments (realized and unrealized) | (6.66 | ) | ||
Total from investment operations | (7.18 | ) | ||
Net asset value, end of period | $ | 34.67 | ||
Total Returnb | (17.16 | %) | ||
Ratios/Supplemental Data | ||||
Net assets, end of period (in thousands) | $ | 43,800 | ||
Ratios to average net assets: | ||||
Net investment income (loss) | (2.75 | %) | ||
Total expensese,f | 3.07 | % | ||
Portfolio turnover rate | 2,190 | % |
a | Net investment income (loss) per share was computed using average shares outstanding throughout the period. |
b | Total return does not reflect the impact of any applicable sales charges. |
c | Reverse share split — Per share amounts for the periods presented through February 21, 2014 have been restated to reflect a 1:5 reverse share split effective February 21, 2014. See Note 14 in Notes to Financial Statements. |
d | Since commencement of operations: September 18, 2014. Percentage amounts for the period, except total return and portfolio turnover rate, have been annualized. The portfolio turnover rate stated is for the entire period of the Fund, not since the commencement of operations of the Class. |
e | Does not include expenses of the underlying funds in which the Fund invests. |
f | Total expenses may include interest expense related to short sales. Excluding interest expense, the operating expense ratio for the period and years ended would be: |
03/31/15 | 03/31/14 | 03/28/13 | 03/31/12 | 03/31/11 | |
Investor Class | 1.40% | 1.41% | 1.39% | 1.39% | 1.42% |
Advisor Class | 1.90% | 1.91% | 1.88% | 1.87% | 1.91% |
A-Class | 1.65% | 1.66% | 1.64% | 1.65% | 1.67% |
C-Class | 2.40% | 2.41% | 2.39% | 2.40% | 2.42% |
H-Class | 1.60% | — | — | — | — |
162 | THE RYDEX FUNDS ANNUAL REPORT | SEE NOTES TO FINANCIAL STATEMENTS. |
PERFORMANCE REPORT AND FUND PROFILE (Unaudited) | March 31, 2015 |
HIGH YIELD STRATEGY FUND
OBJECTIVE: Seeks to provide investment results that correlate, before fees and expenses, to the performance of the high yield bond market.
High Yield Strategy Fund H-Class returned 4.14% for the one-year period ended March 31, 2015. For comparison, the Barclays U.S. Corporate High Yield Index returned 2.00%.
The communications and consumer non-cyclical industries contributed most to the performance of the Barclays High Yield index. The energy and basic industry segments detracted most.
From a ratings perspective, credits with a BB+ rating contributed most to the performance of the Barclays High Yield index, followed by holdings with a lower, BB rating. The category of bonds detracting most from return was that with a CCC+ rating.
Derivatives in the Fund are used to help provide exposure to the composition of the benchmark in the highest efficient manner and not for hedging purposes. The results of derivatives use during the period were within our expectations and contributed to the Fund’s performance.
The Fund invests excess cash into the Guggenheim Strategy Funds which, in turn, invest in a diversified portfolio of debt securities and financial instruments providing exposure to fixed-income markets. The investment objective of the Guggenheim Strategy Funds is to seek a high level of income consistent with the preservation of capital. For the one year period ended March 31,2015, investment in the Guggenheim Strategy Funds benefited Fund performance relative to investing in other short-term investments such as overnight repurchase agreements.
Performance displayed represents past performance, which is no guarantee of future results.
Holdings Diversification (Market Exposure as % of Net Assets)
![](https://capedge.com/proxy/N-CSR/0001398344-15-003814/rtb1_37.jpg)
“Holdings Diversification (Market Exposure as % of Net Assets)” excludes any temporary cash investments or investments in Guggenheim Strategy Funds Trust mutual funds. Investments in those Funds do not provide “market exposure” to meet the fund’s investment objective, but will significantly increase the portfolio’s exposure to certain other asset categories (and their associated risks), which may cause the Fund to deviate from its principal investment strategy, including: (i) high yield, high risk debt securities rated below the top four long-term rating categories by a nationally recognized statistical rating organization (also known as “junk bonds”); (ii) securities issued by the U.S. government or its agencies and instrumentalities; (iii) CLOs and similar investments; and (iv) other short-term fixed income securities.
THE RYDEX FUNDS ANNUAL REPORT | 163 |
PERFORMANCE REPORT AND FUND PROFILE (Unaudited)(concluded) | March 31, 2015 |
Inception Dates: | |
A-Class | April 16, 2007 |
C-Class | April 16, 2007 |
H-Class | April 16, 2007 |
The Fund invests principally in derivative instruments such as high yield credit default swap agreements and futures contracts.
Largest Holdings (% of Total Net Assets) | |
Guggenheim Strategy Fund I | 10.1% |
Guggenheim Strategy Fund II | 5.3% |
SPDR Barclays High Yield Bond ETF | 2.3% |
iShares iBoxx $ High Yield Corporate Bond ETF | 1.8% |
Total | 19.5% |
“Largest Holdings” exclude any temporary cash or derivative investments. |
Cumulative Fund Performance*
![](https://capedge.com/proxy/N-CSR/0001398344-15-003814/rtb1_38.jpg)
![](https://capedge.com/proxy/N-CSR/0001398344-15-003814/rtb1_39.jpg)
Average Annual Returns*
Periods Ended March 31, 2015
1 Year | 5 Year | Since Inception (04/16/07) | |
A-Class Shares | 4.06% | 9.24% | 6.63% |
A-Class Shares with sales charge† | -0.87% | 8.18% | 5.98% |
C-Class Shares | 3.33% | 8.45% | 5.84% |
C-Class Shares with CDSC‡ | 2.33% | 8.45% | 5.84% |
H-Class Shares | 4.14% | 9.34% | 6.67% |
Barclays U.S. Corporate High Yield Index | 2.00% | 8.59% | 7.83% |
S&P 500 Index | 12.73% | 14.47% | 6.67% |
* | The performance data above represents past performance that is not predictive of future results. The investment return and principal value of an investment in the Fund will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Returns are historical and include changes in principal and reinvested dividends and capital gains and do not reflect the effect of taxes. The S&P 500 Index and the Barclays U.S. Corporate High Yield Index are unmanaged indices and, unlike the Fund, have no management fees or operating expenses to reduce their reported returns. The graphs are based on A-Class shares and H-Class shares only; performance for C-Class shares will vary due to differences in fee structures. |
† | Fund returns are calculated using the maximum sales charge of 4.75%. |
‡ | Fund returns include a CDSC of 1% if redeemed within 12 months of purchase. |
164 | THE RYDEX FUNDS ANNUAL REPORT |
SCHEDULE OF INVESTMENTS | March 31, 2015 |
HIGH YIELD STRATEGY FUND |
Shares | Value | |||||||
EXCHANGE-TRADED FUNDS† - 4.1% | ||||||||
SPDR Barclays High Yield Bond ETF1 | 360,542 | $ | 14,140,457 | |||||
iShares iBoxx $ High Yield Corporate Bond ETF | 127,947 | 11,593,278 | ||||||
Total Exchange-Traded Funds | ||||||||
(Cost $25,573,572) | 25,733,735 | |||||||
MUTUAL FUNDS† - 15.4% | ||||||||
Guggenheim Strategy Fund I2 | 2,582,943 | 64,315,270 | ||||||
Guggenheim Strategy Fund II2 | 1,356,206 | 33,783,080 | ||||||
Total Mutual Funds | ||||||||
(Cost $97,901,168) | 98,098,350 | |||||||
Face Amount | ||||||||
REPURCHASE AGREEMENTS††,3 - 68.6% | ||||||||
HSBC Group issued 03/31/15 at 0.03% due 04/01/15 | $ | 341,794,905 | 341,794,905 | |||||
RBC Capital Markets issued 03/31/15 at 0.05% due 04/01/15 | 52,233,517 | 52,233,517 | ||||||
UMB Financial Corp. issued 03/31/15 at 0.03% due 04/01/15 | 41,925,984 | 41,925,984 | ||||||
Total Repurchase Agreements | ||||||||
(Cost $435,954,406) | 435,954,406 |
SECURITIES LENDING COLLATERAL††,4 - 1.7% | ||||||||
Repurchase Agreements | ||||||||
HSBC Securities, Inc. issued 03/31/15 at 0.10% due 04/01/15 | 7,049,883 | 7,049,883 | ||||||
BNP Paribas Securities Corp. issued 03/31/15 at 0.10% due 04/01/15 | 2,425,160 | 2,425,160 | ||||||
Barclays Capital, Inc. issued 03/31/15 at 0.10% due 04/01/15 | 1,251,777 | 1,251,777 | ||||||
Total Securities Lending Collateral | ||||||||
(Cost $10,726,820) | 10,726,820 | |||||||
Total Investments - 89.8% | ||||||||
(Cost $570,155,966) | $ | 570,513,311 | ||||||
Other Assets & Liabilities, net - 10.2% | 64,696,508 | |||||||
Total Net Assets - 100.0% | $ | 635,209,819 | ||||||
Contracts | Unrealized Gain | |||||||
INTEREST RATE FUTURES CONTRACTS PURCHASED† | ||||||||
June 2015 U.S. Treasury 5 Year Note Futures Contracts (Aggregate Value of Contracts $540,793,859) | 4,499 | $ | 2,913,204 |
CENTRALLY CLEARED CREDIT DEFAULT SWAP AGREEMENTS PROTECTION SOLD††,5 | |||||||
Index | Counterparty | Protection Premium Rate | Maturity Date | Notional Principal | Notional Value | Upfront Premiums Paid | Unrealized Appreciation |
CDX.NA.HY.24 Index | Goldman Sachs International | 5.00% | 06/20/20 | $ 218,000,000 | $ (233,399,127) | $ 14,868,241 | $ 530,886 |
CDX.NA.HY.24 Index | Barclays Bank plc | 5.00% | 06/20/20 | 392,750,000 | (420,493,155) | 26,619,681 | 1,123,474 |
† | Value determined based on Level 1 inputs — See Note 4. |
†† | Value determined based on Level 2 inputs — See Note 4. |
1 | All or portion of this security is on loan at March 31, 2015 — See Note 6. |
2 | Affiliated issuer — See Note 12. |
3 | Repurchase Agreements — See Note 5. |
4 | Securities lending collateral — See Note 6. |
5 | Credit Default Swaps — See Note 7. |
plc — Public Limited Company |
SEE NOTES TO FINANCIAL STATEMENTS. | THE RYDEX FUNDS ANNUAL REPORT | 165 |
HIGH YIELD STRATEGY FUND |
STATEMENT OF ASSETS AND LIABILITIES
March 31, 2015
Assets: | ||||
Investments in unaffiliated issuers, at value – including $10,605,088 of securities loaned (cost $25,573,572) | $ | 25,733,735 | ||
Investments in affiliated issuers, at value (cost $97,901,168) | 98,098,350 | |||
Repurchase agreements, at value (cost $446,681,226) | 446,681,226 | |||
Total investments (cost $570,155,966) | 570,513,311 | |||
Unamortized upfront premiums paid on credit default swaps | 41,487,922 | |||
Segregated cash with broker | 3,900,780 | |||
Unrealized appreciation on swap agreements | 1,654,360 | |||
Receivables: | ||||
Fund shares sold | 49,016,758 | |||
Protection fees on credit default swaps | 1,017,917 | |||
Variation margin | 810,304 | |||
Dividends | 109,749 | |||
Securities lending income | 1,029 | |||
Interest | 392 | |||
Total assets | 668,512,522 | |||
Liabilities: | ||||
Segregated cash from broker | 11,133,571 | |||
Payable for: | ||||
Return of securities loaned | 10,883,600 | |||
Fund shares redeemed | 7,194,198 | |||
Securities purchased | 3,231,450 | |||
Management fees | 374,090 | |||
Distribution and service fees | 126,652 | |||
Transfer agent and administrative fees | 124,697 | |||
Portfolio accounting fees | 40,350 | |||
Miscellaneous | 194,095 | |||
Total liabilities | 33,302,703 | |||
Commitments and contingent liabilities (Note 15) | — | |||
Net assets | $ | 635,209,819 | ||
Net assets consist of: | ||||
Paid in capital | $ | 631,799,795 | ||
Undistributed net investment income | 5,031,017 | |||
Accumulated net realized loss on investments | (6,545,902 | ) | ||
Net unrealized appreciation on investments | 4,924,909 | |||
Net assets | $ | 635,209,819 | ||
A-Class: | ||||
Net assets | $ | 10,122,751 | ||
Capital shares outstanding | 424,676 | |||
Net asset value per share | $ | 23.84 | ||
Maximum offering price per share (Net asset value divided by 95.25%) | $ | 25.03 | ||
C-Class: | ||||
Net assets | $ | 3,632,494 | ||
Capital shares outstanding | 165,069 | |||
Net asset value per share | $ | 22.01 | ||
H-Class: | ||||
Net assets | $ | 621,454,574 | ||
Capital shares outstanding | 26,005,389 | |||
Net asset value per share | $ | 23.90 |
STATEMENT OF OPERATIONS
Year Ended March 31, 2015
Investment Income: | ||||
Dividends from securities of affiliated issuers | $ | 772,788 | ||
Dividends from securities of unaffiliated issuers | 479,450 | |||
Income from securities lending, net | 53,602 | |||
Interest | 22,967 | |||
Total investment income | 1,328,807 | |||
Expenses: | ||||
Management fees | 1,478,728 | |||
Transfer agent and administrative fees | 492,909 | |||
Distribution and service fees: | ||||
A-Class | 30,109 | |||
C-Class | 41,676 | |||
H-Class | 452,381 | |||
Portfolio accounting fees | 178,891 | |||
Custodian fees | 22,963 | |||
Trustees’ fees* | 9,684 | |||
Line of credit fees | 157 | |||
Miscellaneous | 215,487 | |||
Total expenses | 2,922,985 | |||
Net investment loss | (1,594,178 | ) | ||
Net Realized and Unrealized Gain (Loss): | ||||
Net realized gain (loss) on: | ||||
Investments in unaffiliated issuers | (476,303 | ) | ||
Investments in affiliated issuers | (179,045 | ) | ||
Swap agreements | 1,378,969 | |||
Futures contracts | (1,139,814 | ) | ||
Net realized loss | (416,193 | ) | ||
Net change in unrealized appreciation (depreciation) on: | ||||
Investments in unaffiliated issuers | (3,169 | ) | ||
Investments in affiliated issuers | 215,582 | |||
Swap agreements | 1,362,705 | |||
Futures contracts | 3,408,616 | |||
Net change in unrealized appreciation (depreciation) | 4,983,734 | |||
Net realized and unrealized gain | 4,567,541 | |||
Net increase in net assets resulting from operations | $ | 2,973,363 |
* | Relates to Trustees not deemed “interested persons” within the meaning of Section 2(a)(19) of the 1940 Act. |
166 | THE RYDEX FUNDS ANNUAL REPORT | SEE NOTES TO FINANCIAL STATEMENTS. |
HIGH YIELD STRATEGY FUND |
STATEMENTS OF CHANGES IN NET ASSETS |
Year Ended March 31, 2015 | Year Ended March 31, 2014 | |||||||
Increase (Decrease) in Net Assets from Operations: | ||||||||
Net investment loss | $ | (1,594,178 | ) | $ | (1,603,218 | ) | ||
Net realized gain (loss) on investments | (416,193 | ) | 9,208,805 | |||||
Net change in unrealized appreciation (depreciation) on investments | 4,983,734 | (2,328,385 | ) | |||||
Net increase in net assets resulting from operations | 2,973,363 | 5,277,202 | ||||||
Distributions to shareholders from: | ||||||||
Net investment income | ||||||||
A-Class | — | (1,483,249 | ) | |||||
C-Class | — | (223,483 | ) | |||||
H-Class | — | (4,204,914 | ) | |||||
Net realized gains | ||||||||
A-Class | — | (3,838,006 | ) | |||||
C-Class | — | (578,277 | ) | |||||
H-Class | — | (10,880,499 | ) | |||||
Total distributions to shareholders | — | (21,208,428 | ) | |||||
Capital share transactions: | ||||||||
Proceeds from sale of shares | ||||||||
A-Class | 111,821,153 | 191,756,789 | ||||||
C-Class | 6,349,542 | 21,843,169 | ||||||
H-Class | 1,444,459,495 | 546,082,437 | ||||||
Distributions reinvested | ||||||||
A-Class | — | 2,855,693 | ||||||
C-Class | — | 726,119 | ||||||
H-Class | — | 12,967,381 | ||||||
Cost of shares redeemed | ||||||||
A-Class | (114,269,767 | ) | (188,407,437 | ) | ||||
C-Class | (7,975,098 | ) | (23,916,955 | ) | ||||
H-Class | (913,063,243 | ) | (894,910,014 | ) | ||||
Net increase (decrease) from capital share transactions | 527,322,082 | (331,002,818 | ) | |||||
Net increase (decrease) in net assets | 530,295,445 | (346,934,044 | ) | |||||
Net assets: | ||||||||
Beginning of year | 104,914,374 | 451,848,418 | ||||||
End of year | $ | 635,209,819 | $ | 104,914,374 | ||||
Undistributed net investment income at end of year | $ | 5,031,017 | $ | — | ||||
Capital share activity: | ||||||||
Shares sold | ||||||||
A-Class | 4,778,273 | 7,639,730 | ||||||
C-Class | 295,743 | 915,383 | ||||||
H-Class | 61,500,842 | 21,905,501 | ||||||
Shares issued from reinvestment of distributions | ||||||||
A-Class | — | 126,079 | ||||||
C-Class | — | 34,397 | ||||||
H-Class | — | 571,502 | ||||||
Shares redeemed | ||||||||
A-Class | (4,899,564 | ) | (7,648,199 | ) | ||||
C-Class | (370,259 | ) | (1,002,209 | ) | ||||
H-Class | (39,302,340 | ) | (35,953,373 | ) | ||||
Net increase (decrease) in shares | 22,002,695 | (13,411,189 | ) |
SEE NOTES TO FINANCIAL STATEMENTS. | THE RYDEX FUNDS ANNUAL REPORT | 167 |
HIGH YIELD STRATEGY FUND |
FINANCIAL HIGHLIGHTS
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.
A-Class | Year Ended March 31, 2015 | Year Ended March 31, 2014 | Year Ended March 28, 2013 | Year Ended March 31, 2012 | Year Ended March 31, 2011 | |||||||||||||||
Per Share Data | ||||||||||||||||||||
Net asset value, beginning of period | $ | 22.89 | $ | 25.16 | $ | 22.93 | $ | 21.98 | $ | 20.42 | ||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||
Net investment income (loss)a | (.15 | ) | (.30 | ) | (.22 | ) | (.27 | ) | (.30 | ) | ||||||||||
Net gain (loss) on investments (realized and unrealized) | 1.10 | 2.13 | 3.13 | 1.77 | 3.37 | |||||||||||||||
Total from investment operations | .95 | 1.83 | 2.91 | 1.50 | 3.07 | |||||||||||||||
Less distributions from: | ||||||||||||||||||||
Net investment income | — | (1.14 | ) | (.43 | ) | (.55 | ) | (1.51 | ) | |||||||||||
Net realized gains | — | (2.96 | ) | (.25 | ) | — | — | |||||||||||||
Total distributions | — | (4.10 | ) | (.68 | ) | (.55 | ) | (1.51 | ) | |||||||||||
Net asset value, end of period | $ | 23.84 | $ | 22.89 | $ | 25.16 | $ | 22.93 | $ | 21.98 | ||||||||||
Total Returnb | 4.06 | % | 7.53 | % | 12.86 | % | 6.94 | % | 15.21 | % | ||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||
Net assets, end of period (in thousands) | $ | 10,123 | $ | 12,499 | $ | 10,777 | $ | 11,890 | $ | 14,561 | ||||||||||
Ratios to average net assets: | ||||||||||||||||||||
Net investment income (loss) | (0.63 | %) | (1.21 | %) | (0.92 | %) | (1.21 | %) | (1.40 | %) | ||||||||||
Total expensesc | 1.50 | % | 1.53 | % | 1.50 | % | 1.49 | % | 1.54 | % | ||||||||||
Portfolio turnover rate | 393 | % | 205 | % | 95 | % | 583 | % | — |
C-Class | Year Ended March 31, 2015 | Year Ended March 31, 2014 | Year Ended March 28, 2013 | Year Ended March 31, 2012 | Year Ended March 31, 2011 | |||||||||||||||
Per Share Data | ||||||||||||||||||||
Net asset value, beginning of period | $ | 21.29 | $ | 23.83 | $ | 21.92 | $ | 21.19 | $ | 19.87 | ||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||
Net investment income (loss)a | (.27 | ) | (.44 | ) | (.37 | ) | (.45 | ) | (.45 | ) | ||||||||||
Net gain (loss) on investments (realized and unrealized) | .99 | 2.00 | 2.96 | 1.73 | 3.28 | |||||||||||||||
Total from investment operations | .72 | 1.56 | 2.59 | 1.28 | 2.83 | |||||||||||||||
Less distributions from: | ||||||||||||||||||||
Net investment income | — | (1.14 | ) | (.43 | ) | (.55 | ) | (1.51 | ) | |||||||||||
Net realized gains | — | (2.96 | ) | (.25 | ) | — | — | |||||||||||||
Total distributions | — | (4.10 | ) | (.68 | ) | (.55 | ) | (1.51 | ) | |||||||||||
Net asset value, end of period | $ | 22.01 | $ | 21.29 | $ | 23.83 | $ | 21.92 | $ | 21.19 | ||||||||||
Total Returnb | 3.33 | % | 6.74 | % | 11.98 | % | 6.16 | % | 14.40 | % | ||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||
Net assets, end of period (in thousands) | $ | 3,632 | $ | 5,100 | $ | 6,958 | $ | 7,343 | $ | 6,129 | ||||||||||
Ratios to average net assets: | ||||||||||||||||||||
Net investment income (loss) | (1.25 | %) | (1.89 | %) | (1.62 | %) | (2.10 | %) | (2.13 | %) | ||||||||||
Total expensesc | 2.25 | % | 2.28 | % | 2.27 | % | 2.25 | % | 2.28 | % | ||||||||||
Portfolio turnover rate | 393 | % | 205 | % | 95 | % | 583 | % | — |
168 | THE RYDEX FUNDS ANNUAL REPORT | SEE NOTES TO FINANCIAL STATEMENTS. |
HIGH YIELD STRATEGY FUND |
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.
H-Class | Year Ended March 31, 2015 | Year Ended March 31, 2014 | Year Ended March 28, 2013 | Year Ended March 31, 2012 | Year Ended March 31, 2011 | |||||||||||||||
Per Share Data | ||||||||||||||||||||
Net asset value, beginning of period | $ | 22.94 | $ | 25.12 | $ | 22.90 | $ | 21.95 | $ | 20.38 | ||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||
Net investment income (loss)a | (.19 | ) | (.24 | ) | (.24 | ) | (.28 | ) | (.30 | ) | ||||||||||
Net gain (loss) on investments (realized and unrealized) | 1.15 | 2.16 | 3.14 | 1.78 | 3.38 | |||||||||||||||
Total from investment operations | .96 | 1.92 | 2.90 | 1.50 | 3.08 | |||||||||||||||
Less distributions from: | ||||||||||||||||||||
Net investment income | — | (1.14 | ) | (.43 | ) | (.55 | ) | (1.51 | ) | |||||||||||
Net realized gains | — | (2.96 | ) | (.25 | ) | — | — | |||||||||||||
Total distributions | — | (4.10 | ) | (.68 | ) | (.55 | ) | (1.51 | ) | |||||||||||
Net asset value, end of period | $ | 23.90 | $ | 22.94 | $ | 25.12 | $ | 22.90 | $ | 21.95 | ||||||||||
Total Returnb | 4.14 | % | 7.86 | % | 12.83 | % | 6.95 | % | 15.29 | % | ||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||
Net assets, end of period (in thousands) | $ | 621,455 | $ | 87,315 | $ | 434,113 | $ | 266,950 | $ | 116,106 | ||||||||||
Ratios to average net assets: | ||||||||||||||||||||
Net investment income (loss) | (0.81 | %) | (0.97 | %) | (0.99 | %) | (1.26 | %) | (1.38 | %) | ||||||||||
Total expensesc | 1.46 | % | 1.53 | % | 1.51 | % | 1.49 | % | 1.53 | % | ||||||||||
Portfolio turnover rate | 393 | % | 205 | % | 95 | % | 583 | % | — |
a | Net investment income (loss) per share was computed using average shares outstanding throughout the period. |
b | Total return does not reflect the impact of any applicable sales charges. |
c | Does not include expenses of the underlying funds in which the Fund invests. |
SEE NOTES TO FINANCIAL STATEMENTS. | THE RYDEX FUNDS ANNUAL REPORT | 169 |
PERFORMANCE REPORT AND FUND PROFILE (Unaudited) | March 31, 2015 |
INVERSE HIGH YIELD STRATEGY FUND
OBJECTIVE: Seeks to provide investment results that inversely correlate, before fees and expenses, to the performance of the high yield bond market.
Inverse High Yield Strategy Fund H-Class returned -8.84% for the one year period ended March 31, 2015. For comparison, the Barclays U.S. Corporate High Yield Index returned 2.00%.
The communications and consumer non-cyclical industries contributed most to the performance of the Barclays High Yield index. The energy and basic industry segments detracted most.
From a ratings perspective, credits with a BB+ rating contributed most to the performance of the Barclays High Yield index, followed by holdings with a lower, BB rating. The category of bonds detracting most from return was that with a CCC+ rating.
Derivatives in the Fund are used to help provide exposure to the composition of the benchmark in the highest efficient manner and not for hedging purposes. The results of derivatives use during the period were within our expectations and contributed to the Fund’s performance.
Due to the compounding of daily returns, leveraged and inverse funds’ returns over periods other than one day will likely differ in amount and possibly direction from the benchmark return for the same period. Investors should monitor their leveraged and inverse funds’ holdings to ensure that they are consistent with their strategies, as frequently as daily.
The effects of compounding may cause the longer-term correlation of the Fund to its benchmark to diminish. The apparent discrepancy between the leveraged and unleveraged indices is the result of compounding, which is described briefly on page 6 of this report.
The Fund invests excess cash into the Guggenheim Strategy Funds which, in turn, invest in a diversified portfolio of debt securities and financial instruments providing exposure to fixed-income markets. The investment objective of the Guggenheim Strategy Funds is to seek a high level of income consistent with the preservation of capital. For the one year period ended March 31,2015, investment in the Guggenheim Strategy Funds benefited Fund performance relative to investing in other short-term investments such as overnight repurchase agreements.
Performance displayed represents past performance which is no guarantee of future results.
Holdings Diversification (Market Exposure as % of Net Assets)
![](https://capedge.com/proxy/N-CSR/0001398344-15-003814/rtb1_40.jpg)
“Holdings Diversification (Market Exposure as % of Net Assets)” excludes any temporary cash investments or investments in Guggenheim Strategy Funds Trust mutual funds. Investments in those Funds do not provide “market exposure” to meet the fund’s investment objective, but will significantly increase the portfolio’s exposure to certain other asset categories (and their associated risks), which may cause the Fund to deviate from its principal investment strategy, including: (i) high yield, high risk debt securities rated below the top four long-term rating categories by a nationally recognized statistical rating organization (also known as “junk bonds”); (ii) securities issued by the U.S. government or its agencies and instrumentalities; (iii) CLOs and similar investments; and (iv) other short-term fixed income securities.
170 | THE RYDEX FUNDS ANNUAL REPORT |
PERFORMANCE REPORT AND FUND PROFILE (Unaudited)(concluded) | March 31, 2015 |
Inception Dates: | |
A-Class | April 16, 2007 |
C-Class | April 16, 2007 |
H-Class | April 16, 2007 |
The Fund invests principally in derivative investments such as high yield credit default swap agreements and futures contracts.
Largest Holdings (% of Total Net Assets) | |
Guggenheim Strategy Fund I | 22.4% |
Guggenheim Strategy Fund II | 22.3% |
Total | 44.7% |
“Largest Holdings” exclude any temporary cash or derivative investments. |
Cumulative Fund Performance*
![](https://capedge.com/proxy/N-CSR/0001398344-15-003814/rtb1_41.jpg)
![](https://capedge.com/proxy/N-CSR/0001398344-15-003814/rtb1_42.jpg)
Average Annual Returns*
Periods Ended March 31, 2015
1 Year | 5 Year | Since Inception (04/16/07) | |
A-Class Shares | -9.59% | -12.97% | -10.94% |
A-Class Shares with sales charge† | -13.88% | -13.81% | -11.48% |
C-Class Shares | -9.49% | -13.48% | -11.48% |
C-Class Shares with CDSC‡ | -10.40% | -13.48% | -11.48% |
H-Class Shares | -8.84% | -12.78% | -10.79% |
Barclays U.S. Corporate High Yield Index | 2.00% | 8.59% | 7.83% |
S&P 500 Index | 12.73% | 14.47% | 6.67% |
* | The performance data above represents past performance that is not predictive of future results. The investment return and principal value of an investment in the Fund will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Returns are historical and include changes in principal and reinvested dividends and capital gains and do not reflect the effect of taxes. The S&P 500 Index and the Barclays U.S. Corporate High Yield Index are unmanaged indices and, unlike the Fund, have no management fees or operating expenses to reduce their reported returns. The graphs are based on A-Class shares and H-Class shares only; performance for C-Class shares will vary due to differences in fee structures. |
† | Fund returns are calculated using the maximum sales charge of 4.75%. |
‡ | Fund returns include a CDSC of 1% if redeemed within 12 months of purchase. |
THE RYDEX FUNDS ANNUAL REPORT | 171 |
SCHEDULE OF INVESTMENTS | March 31, 2015 |
INVERSE HIGH YIELD STRATEGY FUND |
Shares | Value | |||||||
MUTUAL FUNDS† - 44.7% | ||||||||
Guggenheim Strategy Fund I1 | 29,027 | $ | 722,765 | |||||
Guggenheim Strategy Fund II1 | 29,003 | 722,472 | ||||||
Total Mutual Funds | ||||||||
(Cost $1,443,200) | 1,445,237 | |||||||
Face Amount | ||||||||
REPURCHASE AGREEMENTS††,2 - 51.9% | ||||||||
HSBC Group issued 03/31/15 at 0.03% due 04/01/15 | $ | 1,313,437 | 1,313,437 | |||||
RBC Capital Markets issued 03/31/15 at 0.05% due 04/01/15 | 200,721 | 200,721 | ||||||
UMB Financial Corp. issued 03/31/15 at 0.03% due 04/01/15 | 161,112 | 161,112 | ||||||
Total Repurchase Agreements | ||||||||
(Cost $1,675,270) | 1,675,270 | |||||||
Total Investments - 96.6% | ||||||||
(Cost $3,118,470) | $ | 3,120,507 | ||||||
Other Assets & Liabilities, net - 3.4% | 108,903 | |||||||
Total Net Assets - 100.0% | $ | 3,229,410 | ||||||
Contracts | Unrealized Loss | |||||||
INTEREST RATE FUTURES CONTRACTS SOLD SHORT† | ||||||||
June 2015 U.S. Treasury 5 Year Note Futures Contracts (Aggregate Value of Contracts $2,884,875) | 24 | $ | (17,919 | ) |
CENTRALLY CLEARED CREDIT DEFAULT SWAP AGREEMENT PROTECTION PURCHASED†† | |||||||
Index | Counterparty | Protection Premium Rate | Maturity Date | Notional Principal | Notional Value | Upfront Premiums Received | Unrealized Depreciation |
CDX.NA.HY.24 Index | Barclays Bank plc | 5.00% | 06/20/20 | $ 3,250,000 | $ 3,479,574 | $ (219,902) | $ (9,672) |
† | Value determined based on Level 1 inputs — See Note 4. |
†† | Value determined based on Level 2 inputs — See Note 4. |
1 | Investment in a product that is managed by and/or pays a management fee to a party related to the Adviser — See Note 12. |
2 | Repurchase Agreements — See Note 5. |
plc — Public Limited Company |
172 | THE RYDEX FUNDS ANNUAL REPORT | SEE NOTES TO FINANCIAL STATEMENTS. |
INVERSE HIGH YIELD STRATEGY FUND |
STATEMENT OF ASSETS AND LIABILITIES
March 31, 2015
Assets: | ||||
Investments, at value (cost $1,443,200) | $ | 1,445,237 | ||
Repurchase agreements, at value (cost $1,675,270) | 1,675,270 | |||
Total investments (cost $3,118,470) | 3,120,507 | |||
Segregated cash with broker | 356,047 | |||
Receivables: | ||||
Fund shares sold | 6,337 | |||
Dividends | 1,961 | |||
Interest | 2 | |||
Total assets | 3,484,854 | |||
Liabilities: | ||||
Unamortized upfront premiums received on credit default swaps | 219,902 | |||
Unrealized depreciation on swap agreements | 9,672 | |||
Payable for: | ||||
Protection fees on credit default swaps | 5,417 | |||
Variation margin | 4,688 | |||
Management fees | 4,058 | |||
Securities purchased | 1,961 | |||
Distribution and service fees | 1,803 | |||
Transfer agent and administrative fees | 1,353 | |||
Portfolio accounting fees | 541 | |||
Fund shares redeemed | 6 | |||
Miscellaneous | 6,043 | |||
Total liabilities | 255,444 | |||
Commitments and contingent liabilities (Note 15) | — | |||
Net assets | $ | 3,229,410 | ||
Net assets consist of: | ||||
Paid in capital | $ | 20,247,978 | ||
Accumulated net investment loss | (81,106 | ) | ||
Accumulated net realized loss on investments | (16,911,908 | ) | ||
Net unrealized depreciation on investments | (25,554 | ) | ||
Net assets | $ | 3,229,410 | ||
A-Class: | ||||
Net assets | $ | 371,578 | ||
Capital shares outstanding | 19,318 | |||
Net asset value per share | $ | 19.23 | ||
Maximum offering price per share (Net asset value divided by 95.25%) | $ | 20.19 | ||
C-Class: | ||||
Net assets | $ | 734,014 | ||
Capital shares outstanding | 40,090 | |||
Net asset value per share | $ | 18.31 | ||
H-Class: | ||||
Net assets | $ | 2,123,818 | ||
Capital shares outstanding | 109,045 | |||
Net asset value per share | $ | 19.48 |
STATEMENT OF OPERATIONS
Year Ended March 31, 2015
Investment Income: | ||||
Dividends | $ | 89,136 | ||
Interest | 1,459 | |||
Total investment income | 90,595 | |||
Expenses: | ||||
Management fees | 125,702 | |||
Transfer agent and administrative fees | 41,901 | |||
Distribution and service fees: | ||||
A-Class | 22,920 | |||
C-Class | 10,400 | |||
H-Class | 16,380 | |||
Portfolio accounting fees | 16,760 | |||
Registration fees | 14,469 | |||
Custodian fees | 1,991 | |||
Trustees’ fees* | 1,480 | |||
Miscellaneous | 9,172 | |||
Total expenses | 261,175 | |||
Net investment loss | (170,580 | ) | ||
Net Realized and Unrealized Gain (Loss): | ||||
Net realized gain (loss) on: | ||||
Investments | (45,935 | ) | ||
Swap agreements | (992,480 | ) | ||
Futures contracts | (1,000,814 | ) | ||
Net realized loss | (2,039,229 | ) | ||
Net change in unrealized appreciation (depreciation) on: | ||||
Investments | 2,037 | |||
Swap agreements | 14,031 | |||
Futures contracts | (43,580 | ) | ||
Net change in unrealized appreciation (depreciation) | (27,512 | ) | ||
Net realized and unrealized loss | (2,066,741 | ) | ||
Net decrease in net assets resulting from operations | $ | (2,237,321 | ) |
* | Relates to Trustees not deemed “interested persons” within the meaning of Section 2(a)(19) of the 1940 Act. |
SEE NOTES TO FINANCIAL STATEMENTS. | THE RYDEX FUNDS ANNUAL REPORT | 173 |
INVERSE HIGH YIELD STRATEGY FUND |
STATEMENTS OF CHANGES IN NET ASSETS
Year Ended March 31, 2015 | Year Ended March 31, 2014 | |||||||
Increase (Decrease) in Net Assets from Operations: | ||||||||
Net investment loss | $ | (170,580 | ) | $ | (457,841 | ) | ||
Net realized loss on investments | (2,039,229 | ) | (1,803,174 | ) | ||||
Net change in unrealized appreciation (depreciation) on investments | (27,512 | ) | 31,991 | |||||
Net decrease in net assets resulting from operations | (2,237,321 | ) | (2,229,024 | ) | ||||
Capital share transactions: | ||||||||
Proceeds from sale of shares | ||||||||
A-Class | 159,702,077 | 143,759,590 | ||||||
C-Class | 1,688,742 | 10,211,762 | ||||||
H-Class | 127,515,789 | 283,765,472 | ||||||
Cost of shares redeemed | ||||||||
A-Class | (163,681,021 | ) | (137,648,553 | ) | ||||
C-Class | (2,426,887 | ) | (10,474,214 | ) | ||||
H-Class | (126,501,026 | ) | (289,618,110 | ) | ||||
Net decrease from capital share transactions | (3,702,326 | ) | (4,053 | ) | ||||
Net decrease in net assets | (5,939,647 | ) | (2,233,077 | ) | ||||
Net assets: | ||||||||
Beginning of year | 9,169,057 | 11,402,134 | ||||||
End of year | $ | 3,229,410 | $ | 9,169,057 | ||||
Accumulated net investment loss at end of year | $ | (81,106 | ) | $ | (181,265 | ) | ||
Capital share activity: | ||||||||
Shares sold | ||||||||
A-Class | 7,767,769 | 6,275,459 | ||||||
C-Class | 86,161 | 459,566 | ||||||
H-Class | 6,204,216 | 12,130,203 | ||||||
Shares redeemed | ||||||||
A-Class | (7,990,799 | ) | (6,039,639 | ) | ||||
C-Class | (123,220 | ) | (471,060 | ) | ||||
H-Class | (6,209,959 | ) | (12,398,442 | ) | ||||
Net decrease in shares | (265,832 | ) | (43,913 | ) |
174 | THE RYDEX FUNDS ANNUAL REPORT | SEE NOTES TO FINANCIAL STATEMENTS. |
INVERSE HIGH YIELD STRATEGY FUND |
FINANCIAL HIGHLIGHTS
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.
A-Class | Year Ended March 31, 2015 | Year Ended March 31, 2014 | Year Ended March 28, 2013 | Year Ended March 31, 2012 | Year Ended March 31, 2011 | |||||||||||||||
Per Share Data | ||||||||||||||||||||
Net asset value, beginning of period | $ | 21.27 | $ | 23.98 | $ | 28.15 | $ | 31.99 | $ | 38.51 | ||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||
Net investment income (loss)a | (.21 | ) | (.35 | ) | (.37 | ) | (.43 | ) | (.47 | ) | ||||||||||
Net gain (loss) on investments (realized and unrealized) | (1.83 | ) | (2.36 | ) | (3.80 | ) | (3.41 | ) | (6.05 | ) | ||||||||||
Total from investment operations | (2.04 | ) | (2.71 | ) | (4.17 | ) | (3.84 | ) | (6.52 | ) | ||||||||||
Net asset value, end of period | $ | 19.23 | $ | 21.27 | $ | 23.98 | $ | 28.15 | $ | 31.99 | ||||||||||
Total Returnb | (9.59 | %) | (11.30 | %) | (14.81 | %) | (11.98 | %) | (16.96 | %) | ||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||
Net assets, end of period (in thousands) | $ | 372 | $ | 5,155 | $ | 157 | $ | 556 | $ | 1,512 | ||||||||||
Ratios to average net assets: | ||||||||||||||||||||
Net investment income (loss) | (1.02 | %) | (1.52 | %) | (1.38 | %) | (1.39 | %) | (1.39 | %) | ||||||||||
Total expensesc | 1.52 | % | 1.54 | % | 1.49 | % | 1.51 | % | 1.53 | % | ||||||||||
Portfolio turnover rate | 784 | % | — | — | — | — |
C-Class | Year Ended March 31, 2015 | Year Ended March 31, 2014 | Year Ended March 28, 2013 | Year Ended March 31, 2012 | Year Ended March 31, 2011 | |||||||||||||||
Per Share Data | ||||||||||||||||||||
Net asset value, beginning of period | $ | 20.23 | $ | 22.98 | $ | 27.21 | $ | 31.12 | $ | 37.77 | ||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||
Net investment income (loss)a | (.30 | ) | (.50 | ) | (.53 | ) | (.55 | ) | (.72 | ) | ||||||||||
Net gain (loss) on investments (realized and unrealized) | (1.62 | ) | (2.25 | ) | (3.70 | ) | (3.36 | ) | (5.93 | ) | ||||||||||
Total from investment operations | (1.92 | ) | (2.75 | ) | (4.23 | ) | (3.91 | ) | (6.65 | ) | ||||||||||
Net asset value, end of period | $ | 18.31 | $ | 20.23 | $ | 22.98 | $ | 27.21 | $ | 31.12 | ||||||||||
Total Returnb | (9.49 | %) | (11.97 | %) | (15.51 | %) | (12.60 | %) | (17.61 | %) | ||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||
Net assets, end of period (in thousands) | $ | 734 | $ | 1,561 | $ | 2,037 | $ | 693 | $ | 2,535 | ||||||||||
Ratios to average net assets: | ||||||||||||||||||||
Net investment income (loss) | (1.53 | %) | (2.28 | %) | (2.13 | %) | (1.87 | %) | (2.13 | %) | ||||||||||
Total expensesc | 2.25 | % | 2.30 | % | 2.25 | % | 2.26 | % | 2.28 | % | ||||||||||
Portfolio turnover rate | 784 | % | — | — | — | — |
SEE NOTES TO FINANCIAL STATEMENTS. | THE RYDEX FUNDS ANNUAL REPORT | 175 |
INVERSE HIGH YIELD STRATEGY FUND |
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.
H-Class | Year Ended March 31, 2015 | Year Ended March 31, 2014 | Year Ended March 28, 2013 | Year Ended March 31, 2012 | Year Ended March 31, 2011 | |||||||||||||||
Per Share Data | ||||||||||||||||||||
Net asset value, beginning of period | $ | 21.37 | $ | 24.04 | $ | 28.22 | $ | 32.04 | $ | 38.60 | ||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||
Net investment income (loss)a | (.19 | ) | (.35 | ) | (.36 | ) | (.47 | ) | (.50 | ) | ||||||||||
Net gain (loss) on investments (realized and unrealized) | (1.70 | ) | (2.32 | ) | (3.82 | ) | (3.35 | ) | (6.06 | ) | ||||||||||
Total from investment operations | (1.89 | ) | (2.67 | ) | (4.18 | ) | (3.82 | ) | (6.56 | ) | ||||||||||
Net asset value, end of period | $ | 19.48 | $ | 21.37 | $ | 24.04 | $ | 28.22 | $ | 32.04 | ||||||||||
Total Returnb | (8.84 | %) | (11.11 | %) | (14.81 | %) | (11.92 | %) | (16.99 | %) | ||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||
Net assets, end of period (in thousands) | $ | 2,124 | $ | 2,453 | $ | 9,208 | $ | 13,357 | $ | 9,699 | ||||||||||
Ratios to average net assets: | ||||||||||||||||||||
Net investment income (loss) | (0.93 | %) | (1.50 | %) | (1.38 | %) | (1.51 | %) | (1.38 | %) | ||||||||||
Total expensesc | 1.51 | % | 1.52 | % | 1.50 | % | 1.51 | % | 1.53 | % | ||||||||||
Portfolio turnover rate | 784 | % | — | — | — | — |
a | Net investment income (loss) per share was computed using average shares outstanding throughout the period. |
b | Total return does not reflect the impact of any applicable sales charges. |
c | Does not include expenses of the underlying funds in which the Fund invests. |
176 | THE RYDEX FUNDS ANNUAL REPORT | SEE NOTES TO FINANCIAL STATEMENTS. |
PERFORMANCE REPORT AND FUND PROFILE (Unaudited) | March 31, 2015 |
U.S. GOVERNMENT MONEY MARKET FUND
OBJECTIVE: Seeks to provide security of principal, high current income, and liquidity.
For the one-year period ended March 31, 2015, U.S. Government Money Market Fund returned 0.00%.
Interest rates defied expectations and continued to decline throughout the period. Short-term government agency and repurchase agreement rates were range-bound through the third quarter of 2014, and remained so for much of the rest of the period. Short-term rates were “anchored” by the Federal Reserve’s monetary policy. The Fed’s chair, Janet Yellen, maintained that the central bank would keep short-term rates low until the data around employment and inflation indicated otherwise. The Federal Reserve controls the fed funds rate. This rate, which guides other short-term rates, has been set close to zero since 2008.
Even though strict regulations of government money market funds can result in lower yields, such funds may also have a high degree of safety and liquidity.
Performance displayed represents past performance, which is no guarantee of future results.
An investment in the U.S. Government Money Market Fund is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Although the Fund seeks to preserve the value of your investment at $1.00 per share, it is possible to lose money by investing in the Fund.
Holdings Diversification (Market Exposure as % of Net Assets)
![](https://capedge.com/proxy/N-CSR/0001398344-15-003814/rtb1_43.jpg)
FADN — Federal Agency Discount Note
FAN — Federal Agency Note
Inception Date: June 18, 2012 |
The Fund invests principally in money market instruments issued or guaranteed as to principal and interest by the U.S. Government, its agencies or instrumentalities and enters into repurchase agreements fully collateralized by U.S. government securities.
Average Annual Returns*
Periods Ended March 31, 2015
1 Year | 5 Year | 10 Year | |
Money Market Class | 0.00% | 0.00% | 1.18% |
* | The performance data above represents past performance that is not predictive of future results. The investment return and principal value of an investment in the Fund will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Returns are historical and include changes in principal and reinvested dividends and capital gains and do not reflect the effect of taxes. |
THE RYDEX FUNDS ANNUAL REPORT | 177 |
SCHEDULE OF INVESTMENTS | March 31, 2015 |
U.S. GOVERNMENT MONEY MARKET FUND |
Face Amount | Value | |||||||
FEDERAL AGENCY DISCOUNT NOTES†† - 36.1% | ||||||||
Farmer Mac1 | ||||||||
0.01% due 04/01/15 | $ | 200,000,000 | $ | 200,000,000 | ||||
0.15% due 09/25/15 | 15,000,000 | 14,989,306 | ||||||
0.17% due 10/08/15 | 10,000,000 | 9,991,028 | ||||||
0.20% due 11/12/15 | 8,000,000 | 7,990,250 | ||||||
Total Farmer Mac | 232,970,584 | |||||||
Freddie Mac2 | ||||||||
0.14% due 10/01/15 | 10,000,000 | 9,992,883 | ||||||
Federal Farm Credit Bank1 | ||||||||
0.14% due 09/28/15 | 5,000,000 | 4,996,500 | ||||||
Federal Home Loan Bank1 | ||||||||
0.15% due 10/05/15 | 3,000,000 | 2,997,663 | ||||||
Total Federal Agency Discount Notes | ||||||||
(Cost $250,957,630) | 250,957,630 | |||||||
FEDERAL AGENCY NOTES†† - 11.5% | ||||||||
Federal Home Loan Bank1 | ||||||||
0.35% due 03/07/16 | 20,000,000 | 20,000,000 | ||||||
0.30% due 12/30/15 | 20,000,000 | 20,000,000 | ||||||
0.17% due 07/22/15 | 10,000,000 | 10,000,000 | ||||||
0.12% due 07/17/15 | 10,000,000 | 9,998,752 | ||||||
Total Federal Home Loan Bank | 59,998,752 | |||||||
Federal Farm Credit Bank1 | ||||||||
0.19% due 10/01/15 | 10,000,000 | 10,000,000 | ||||||
Farmer Mac1 | ||||||||
0.19% due 09/09/15 | 10,000,000 | 9,998,323 | ||||||
Total Federal Agency Notes | ||||||||
(Cost $79,997,075) | 79,997,075 | |||||||
COMMERCIAL PAPER†† - 21.1% | ||||||||
UBS Finance Delaware LLC | ||||||||
0.27% due 04/17/15 | 15,000,000 | 14,998,200 | ||||||
Sheffield Receivables Corporation | ||||||||
0.18% due 05/04/15 | 15,000,000 | 14,997,525 | ||||||
General RE Corp. | ||||||||
0.13% due 06/08/15 | 15,000,000 | 14,996,317 | ||||||
AstraZeneca plc | ||||||||
0.11% due 06/22/15 | 15,000,000 | 14,996,242 | ||||||
American Honda Finance Corp. | ||||||||
0.12% due 06/23/15 | 15,000,000 | 14,995,850 | ||||||
ING US Funding, LLC | ||||||||
0.25% due 06/03/15 | 10,000,000 | 9,995,682 | ||||||
0.24% due 06/03/15 | 5,000,000 | 4,997,841 | ||||||
Total ING US Funding, LLC | 14,993,523 | |||||||
Prudential plc | ||||||||
0.20% due 07/10/15 | 15,000,000 | 14,991,667 | ||||||
Nestle Capital Corp. | ||||||||
0.20% due 07/13/15 | 15,000,000 | 14,991,417 | ||||||
General Electric Capital Corp. | ||||||||
0.24% due 09/02/15 | 15,000,000 | 14,984,600 | ||||||
Abbott Laboratories | ||||||||
0.13% due 04/10/15 | 10,000,000 | 9,999,675 | ||||||
Societe Generale North America, Inc. | ||||||||
0.33% due 06/05/15 | 1,200,000 | 1,199,285 | ||||||
Total Commercial Paper | ||||||||
(Cost $146,144,301) | 146,144,301 | |||||||
REPURCHASE AGREEMENTS†† - 48.2% | ||||||||
Individual Repurchase Agreement | ||||||||
HSBC Group Issued 03/31/15 at 0.03% due 04/01/15 (secured by U.S. Treasury Strips, 0.03% 05/15/18 – 02/15/24 with a value of $175,536,100) to be repurchased at $150,797,921 | 150,797,795 | 150,797,795 | ||||||
Joint Repurchase Agreements3 | ||||||||
HSBC Group issued 03/31/15 at 0.03% due 04/01/15 | 144,230,067 | 144,230,067 | ||||||
RBC Capital Markets issued 03/31/15 at 0.05% due 04/01/15 | 22,041,416 | 22,041,416 | ||||||
UMB Financial Corp. issued 03/31/15 at 0.03% due 04/01/15 | 17,691,859 | 17,691,859 | ||||||
Total Repurchase Agreements | ||||||||
(Cost $334,761,137) | 334,761,137 | |||||||
Total Investments - 116.9% | ||||||||
(Cost $811,860,143) | $ | 811,860,143 | ||||||
Other Assets & Liabilities, net - (16.9)% | (117,311,408 | ) | ||||||
Total Net Assets - 100.0% | $ | 694,548,735 |
†† | Value determined based on Level 2 inputs — See Note 4. |
1 | The issuer operates under a Congressional charter; its securities are neither issued nor guaranteed by the U.S. Government. |
2 | On September 7, 2008, the issuer was placed in conservatorship by the Federal Housing Finance Agency (FHFA). As conservator, the FHFA has full powers to control the assets and operations of the firm. |
3 | Repurchase Agreements — See Note 5. |
plc — Public Limited Company |
178 | THE RYDEX FUNDS ANNUAL REPORT | SEE NOTES TO FINANCIAL STATEMENTS. |
U.S. GOVERNMENT MONEY MARKET FUND |
STATEMENT OF ASSETS AND LIABILITIES
March 31, 2015
Assets: | ||||
Investments, at value (cost $477,099,006) | $ | 477,099,006 | ||
Repurchase agreements, at value (cost $334,761,137) | 334,761,137 | |||
Total investments (cost $811,860,143) | 811,860,143 | |||
Receivables: | ||||
Fund shares sold | 23,911,117 | |||
Interest | 40,092 | |||
Total assets | 835,811,352 | |||
Liabilities: | ||||
Overdraft due to custodian bank | 2,521 | |||
Payable for: | ||||
Fund shares redeemed | 140,880,870 | |||
Portfolio accounting fees | 2,460 | |||
Transfer agent and administrative fees | 1,034 | |||
Miscellaneous | 375,732 | |||
Total liabilities | 141,262,617 | |||
Commitments and contingent liabilities (Note 15) | — | |||
Net assets | $ | 694,548,735 | ||
Net assets consist of: | ||||
Paid in capital | $ | 694,566,525 | ||
Undistributed net investment income | — | |||
Accumulated net realized loss on investments | (17,790 | ) | ||
Net assets | $ | 694,548,735 | ||
Capital shares outstanding | 695,142,766 | |||
Net asset value per share | $ | 1.00 |
STATEMENT OF OPERATIONS
Year Ended March 31, 2015
Investment Income: | ||||
Interest | $ | 657,625 | ||
Total investment income | 657,625 | |||
Expenses: | ||||
Management fees | 4,110,336 | |||
Transfer agent and administrative fees | 1,644,153 | |||
Portfolio accounting fees | 582,481 | |||
Registration fees | 581,800 | |||
Custodian fees | 95,887 | |||
Trustees’ fees* | 60,412 | |||
Line of credit fees | 5 | |||
Miscellaneous | 479,720 | |||
Total expenses | 7,554,794 | |||
Less: | ||||
Expenses waived by service company | (2,223,213 | ) | ||
Expenses waived by Adviser | (4,674,256 | ) | ||
Total waived expenses | (6,897,469 | ) | ||
Net expenses | 657,325 | |||
Net investment income | 300 | |||
Net Realized and Unrealized Gain (Loss): | ||||
Net realized gain (loss) on: | ||||
Investments | (17,790 | ) | ||
Net realized loss | (17,790 | ) | ||
Net decrease in net assets resulting from operations | $ | (17,490 | ) |
* | Relates to Trustees not deemed “interested persons” within the meaning of Section 2(a)(19) of the 1940 Act. |
SEE NOTES TO FINANCIAL STATEMENTS. | THE RYDEX FUNDS ANNUAL REPORT | 179 |
U.S. GOVERNMENT MONEY MARKET FUND |
STATEMENTS OF CHANGES IN NET ASSETS
Year Ended March 31, 2015 | Year Ended March 31, 2014 | |||||||
Increase (Decrease) in Net Assets from Operations: | ||||||||
Net investment income | $ | 300 | $ | 337 | ||||
Net realized gain (loss) on investments | (17,790 | ) | 21,943 | |||||
Net increase (decrease) in net assets resulting from operations | (17,490 | ) | 22,280 | |||||
Distributions to shareholders from: | ||||||||
Net investment income | (526 | ) | (335 | ) | ||||
Net realized gains | (21,943 | ) | (1,204 | ) | ||||
Total distributions to shareholders | (22,469 | ) | (1,539 | ) | ||||
Capital share transactions: | ||||||||
Proceeds from sale of shares | 10,417,562,989 | 12,276,487,338 | ||||||
Distributions reinvested | 22,085 | 1,240 | ||||||
Cost of shares redeemed | (10,503,131,193 | ) | (12,344,744,809 | ) | ||||
Net decrease from capital share transactions | (85,546,119 | ) | (68,256,231 | ) | ||||
Net decrease in net assets | (85,586,078 | ) | (68,235,490 | ) | ||||
Net assets: | ||||||||
Beginning of year | 780,134,813 | 848,370,303 | ||||||
End of year | $ | 694,548,735 | $ | 780,134,813 | ||||
Undistributed net investment income at end of year | $ | — | $ | 225 | ||||
Capital share activity: | ||||||||
Shares sold | 10,417,562,989 | 12,276,487,140 | ||||||
Shares issued from reinvestment of distributions | 22,293 | 1,240 | ||||||
Shares redeemed | (10,503,131,193 | ) | (12,344,744,809 | ) | ||||
Net decrease in shares | (85,545,911 | ) | (68,256,429 | ) |
180 | THE RYDEX FUNDS ANNUAL REPORT | SEE NOTES TO FINANCIAL STATEMENTS. |
U.S. GOVERNMENT MONEY MARKET FUND |
FINANCIAL HIGHLIGHTS
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.
Money Market Classa | Year Ended March 31, 2015 | Year Ended March 31, 2014 | Period Ended March 28, 2013 | Period Ended March 31, 2012 | Period Ended March 31, 2011 | |||||||||||||||
Per Share Data | ||||||||||||||||||||
Net asset value, beginning of period | $ | 1.00 | $ | 1.00 | $ | 1.00 | $ | 1.00 | $ | 1.00 | ||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||
Net investment income (loss) | — | b | — | b | — | b | — | b | — | b | ||||||||||
Net gain (loss) on investments (realized and unrealized) | — | b | — | b | — | b | — | b | — | b | ||||||||||
Total from investment operations | — | b | — | b | — | b | — | b | — | b | ||||||||||
Less distributions from: | ||||||||||||||||||||
Net investment income | (— | )b | (— | )b | (— | )b | (— | )b | (— | )b | ||||||||||
Net realized gains | (— | )b | (— | )b | — | (— | )b | (— | )b | |||||||||||
Total distributions | (— | )b | (— | )b | (— | )b | (— | )b | (— | )b | ||||||||||
Net asset value, end of period | $ | 1.00 | $ | 1.00 | $ | 1.00 | $ | 1.00 | $ | 1.00 | ||||||||||
Total Return | 0.00 | % | 0.00 | % | 0.00 | % | 0.00 | % | 0.01 | % | ||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||
Net assets, end of period (in thousands) | $ | 694,549 | $ | 780,135 | $ | 848,370 | $ | 607,565 | $ | 833,899 | ||||||||||
Ratios to average net assets: | ||||||||||||||||||||
Net investment income (loss) | 0.00 | %d | 0.00 | %d | 0.00 | %d | 0.00 | %d | 0.01 | % | ||||||||||
Total expenses | 0.92 | % | 0.93 | % | 0.95 | % | 0.91 | % | 0.94 | % | ||||||||||
Net expensesc | 0.08 | % | 0.09 | % | 0.17 | % | 0.11 | % | 0.22 | % | ||||||||||
Portfolio turnover rate | — | — | — | — | — |
a | Effective June 15, 2012, the Fund’s Investor Class shares, Advisor Class shares, A-Class shares, C-Class shares and Investor2 Class shares were converted into the newly created Money Market Class. The financial highlights for periods prior to that date reflect the performance of the former Investor Class. |
b | Less than $0.01 per share. |
c | Net expense information reflects the expense ratios after expense waivers. |
d | Less than 0.01%. |
SEE NOTES TO FINANCIAL STATEMENTS. | THE RYDEX FUNDS ANNUAL REPORT | 181 |
NOTES TO FINANCIAL STATEMENTS
1. Organization and Significant Accounting Policies
Organization
The Rydex Series Funds (the “Trust”), a Delaware business trust, is registered with the SEC under the Investment Company Act of 1940 (“1940 Act”), as a non-diversified, open-ended investment company of the series type. Each series, in effect, is representing a separate Fund. The Trust is authorized to issue an unlimited number of no par value shares. The Trust accounts for the assets of each fund separately.
The Trust offers a combination of eight separate classes of shares: Investor Class shares, Advisor Class shares, A-Class shares, C-Class shares, H-Class shares, Y-Class shares, Institutional Class shares and Money Market Class shares. Sales of shares of each Class are made without a front-end sales charge at the net asset value per share (“NAV”), with the exception of A-Class shares. A-Class shares are sold at the NAV, plus the applicable front-end sales charge. The sales charge varies depending on the amount purchased, but will not exceed 4.75%. A-Class share purchases of $1 million or more are exempt from the front-end sales charge but have a 1% contingent deferred sales charge (“CDSC”) if shares are redeemed within 12 months of purchase. C-Class shares have a 1% CDSC if shares are redeemed within 12 months of purchase. Institutional Class shares are offered primarily for direct investment by institutions such as pension and profit sharing plans, endowments, foundations and corporations. Institutional Class shares have a minimum initial investment of $2 million and a minimum account balance of $1 million. Institutional Class shares are offered without a front-end sales charge or CDSC. At March 31, 2015, the Trust consisted of fifty-two funds.
This report covers the Nova Fund, S&P 500® Fund, Inverse S&P 500® Strategy Fund, Monthly Rebalance NASDAQ-100® 2x Strategy Fund, Inverse NASDAQ-100® Strategy Fund, Mid-Cap 1.5x Strategy Fund, Inverse Mid-Cap Strategy Fund, Russell 2000® 1.5x Strategy Fund, Russell 2000® Fund, Inverse Russell 2000® Strategy Fund, Government Long Bond 1.2x Strategy Fund, Inverse Government Long Bond Strategy Fund, High Yield Strategy Fund, Inverse High Yield Strategy Fund, and U.S. Government Money Market Fund (the “Funds”). Only Investor Class, Advisor Class, A-Class, C-Class, H-Class and Money Market Class shares had been issued by the Funds.
The Funds are designed and operated to accommodate frequent trading by shareholders and, unlike most mutual funds, offer unlimited exchange privileges with no minimum holding periods or transactions fees, which may cause the Funds to experience high portfolio turnover.
Guggenheim Investments (“GI”) provides advisory services, and Rydex Fund Services, LLC (“RFS”) provides transfer agent, administrative and accounting services to the Trust. Guggenheim Funds Distributors, LLC (“GFD”) acts as principal underwriter for the Trust. GI, RFS and GFD are affiliated entities.
Significant Accounting Policies
The Funds operate as investment companies and accordingly follow the investment company accounting and reporting guidance of the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification Topic 946 Financial Services – Investment Companies.
The following significant accounting policies are in conformity with U.S. generally accepted accounting principles (“U.S. GAAP”) and are consistently followed by the Trust. This requires management to make estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates. All time references are based on Eastern Time.
The NAV of each Class of the Funds is calculated by dividing the market value of the Fund’s securities and other assets, less all liabilities, attributable to the Class by the number of outstanding shares of the Class.
The Trust calculates a NAV twice each business day; at 10:45 a.m. and at the close of the New York Stock Exchange (“NYSE”), usually 4:00 p.m. for the Russell 2000® Fund and the S&P 500® Fund. All other Funds in this report will price at the afternoon NAV. The NAV is calculated using the current market value of each Fund’s total assets as of the respective time of calculation. These financial statements are based on the March 31, 2015, afternoon NAV.
A. The Board of Trustees of the Funds (the “Board”) has adopted policies and procedures for the valuation of the Funds’ investments (the “Valuation Procedures”). Pursuant to the Valuation Procedures, the Board has delegated to a valuation committee, consisting of representatives from Guggenheim’s investment management, fund administration, legal and compliance
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departments (the “Valuation Committee”), the day-to-day responsibility for implementing the Valuation Procedures, including, under most circumstances, the responsibility for determining the fair value of the Funds' securities or other assets.
Valuations of the Funds’ securities are supplied primarily by pricing services appointed pursuant to the processes set forth in the Valuation Procedures. The Valuation Committee convenes monthly, or more frequently as needed and will review the valuation of all assets which have been fair valued for reasonableness. The Funds’ officers, through the Valuation Committee and consistent with the monitoring and review responsibilities set forth in the Valuation Procedures, regularly review procedures used by, and valuations provided by, the pricing services.
If the pricing service cannot or does not provide a valuation for a particular investment or such valuation is deemed unreliable, such investment is fair valued by the Valuation Committee.
Equity securities listed on an exchange (NYSE or American Stock Exchange) are valued at the last quoted sales price as of the close of business on the NYSE, usually 4:00 p.m. on the valuation date. Equity securities listed on the NASDAQ market system are valued at the NASDAQ Official Closing Price on the valuation date, which may not necessarily represent the last sale price. If there has been no sale on such exchange or NASDAQ on a given day, the security is valued at the closing bid price on that day.
Open-end investment companies (“Mutual Funds”) are valued at their NAV as of the close of business, on the valuation date. Exchange-traded funds (“ETFs”) and closed-end investment companies (“CEFs”) are valued at the last quoted sales price.
The U.S. Government Money Market Fund values debt securities at amortized cost pursuant to Rule 2a-7 of the 1940 Act, which approximates market value.
With the exception of the U.S. Government Money Market Fund, U.S. government securities are valued by either independent pricing services, the last traded fill price, or at the reported bid price at the close of business. Other debt securities with a maturity of greater than 60 days at acquisition are valued at prices that reflect broker/dealer supplied valuations or are obtained from independent pricing services, which may consider the trade activity, treasury spreads, yields or price of bonds of comparable quality, coupon, maturity, and type, as well as prices quoted by dealers who make markets in such securities. Short-term debt securities with a maturity of 60 days or less at acquisition are valued at amortized cost, provided such amount approximates market value.
Repurchase agreements are valued at amortized cost, which approximates market value.
The value of futures contracts is accounted for using the unrealized gain or loss on the contracts that is determined by marking the contracts to their current realized settlement prices. Financial futures contracts are valued at the 4:00 p.m. price on the valuation date. In the event that the exchange for a specific futures contract closes earlier than 4:00 p.m., the futures contract is valued at the Official Settlement Price of the exchange. However, the underlying securities from which the futures contract value is derived are monitored until 4:00 p.m. to determine if fair valuation would provide a more accurate valuation.
The value of OTC swap agreements and credit default swap agreements entered into by a Fund is accounted for using the unrealized gain or loss on the agreements that is determined by marking the agreements to the last quoted value of the index that the swap pertains to at the close of the NYSE. The swap's value is then adjusted to include dividends accrued, and financing charges and/or interest associated with the swap agreements.
Investments for which market quotations are not readily available are fair valued as determined in good faith by GI under the direction of the Board of Trustees using methods established or ratified by the Board of Trustees.
Valuations in accordance with these methods are intended to reflect each security’s (or asset’s) “fair value.” Each such determination is based on a consideration of all relevant factors, which are likely to vary from one pricing context to another. Examples of such factors may include, but are not limited to: (i) the type of security, (ii) the initial cost of the security, (iii) the existence of any contractual restrictions on the security’s disposition, (iv) the price and extent of public trading in similar securities of the issuer or of comparable companies, (v) quotations or evaluated prices from broker-dealers and/or pricing services, (vi) information obtained from the issuer, analysts, and/or the appropriate stock exchange (for exchange-traded securities), (vii) an analysis of the company’s financial statements, and (viii) an evaluation of the forces that influence the issuer and the market(s) in which the security is purchased and sold (e.g. the existence of pending merger activity, public offerings or tender offers that might affect the value of the security).
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In connection with futures contracts and other derivative investments, such factors may include obtaining information as to how (a) these contracts and other derivative investments trade in the futures or other derivative markets, respectively, and (b) the securities underlying these contracts and other derivative investments trade in the cash market.
B. Certain U.S. Government and Agency Obligations are traded on a discount basis; the interest rates shown on the Schedules of Investments reflect the effective rates paid at the time of purchase by the Funds. Other securities bear interest at the rates shown, payable at fixed dates through maturity.
C. When a Fund engages in a short sale of a security, an amount equal to the proceeds is reflected as an asset and an equivalent liability. The amount of the liability is subsequently marked-to-market to reflect the market value of the short sale. The Fund maintains a segregated account of cash and/or securities as collateral for short sales.
Fees, if any, paid to brokers to borrow securities in connection with short sales are recorded as interest expense. In addition, the Fund must pay out the dividend rate of the equity or coupon rate of the obligation to the lender and record this as an expense. Short dividend or interest expense is a cost associated with the investment objective of short sales transactions, rather than an operational cost associated with the day-to-day management of any mutual fund. The Funds may also receive rebate income from the broker resulting from the investment of the proceeds from securities sold short.
D. Upon entering into a futures contract, a Fund deposits and maintains as collateral such initial margin as required by the exchange on which the transaction is affected. Pursuant to the contract, the Fund agrees to receive from or pay to the broker an amount of cash equal to the daily fluctuation in value of the contract. Such receipts or payments are known as variation margin and are recorded by the Fund as unrealized gains or losses. When the contract is closed, the Fund records a realized gain or loss equal to the difference between the value of the contract at the time it was opened and the value at the time it was closed.
E. Swap agreements are marked-to-market daily and the change, if any, is recorded as unrealized gain or loss. Payments received or made as a result of an agreement or termination of the agreement are recognized as realized gains or losses.
Credit default swap agreements are marked-to-market daily and the change, if any, is recorded as unrealized gain or loss. Upfront payments received or made by a Fund on credit default swap agreements are amortized over the expected life of the agreement. Periodic payments received or paid by a Fund are recorded as realized gains or losses. Payments received or made as a result of a credit event or termination of the contract are recognized, net of a proportional amount of the upfront payment, as realized gains or losses.
F. Security transactions are recorded on the trade date for financial reporting purposes. Realized gains and losses from securities transactions are recorded using the identified cost basis. Proceeds from lawsuits related to investment holdings are recorded as realized gains in the respective Fund. Dividend income is recorded on the ex-dividend date, net of applicable taxes withheld by foreign countries. Taxable non-cash dividends are recorded as dividend income. Interest income, including amortization of premiums and accretion of discounts, is accrued on a daily basis. Dividend income from REITs is recorded based on the income included in the distributions received from the REIT investments using published REIT classifications, including some management estimates when actual amounts are not available. Distributions received in excess of this estimated amount are recorded as a reduction of the cost of investments or reclassified to capital gains. The actual amounts of income, return of capital, and capital gains are only determined by each REIT after its fiscal year-end, and may differ from the estimated amounts.
G. Dividends from net investment income are declared daily in the Government Long Bond 1.2x Strategy Fund and the U.S. Government Money Market Fund. Dividends are reinvested in additional shares unless shareholders request payment in cash. Distributions of net investment income in the remaining Funds and distributions of net realized gains, if any, in all Funds are declared at least annually and recorded on the ex-dividend date and are determined in accordance with income tax regulations which may differ from U.S. GAAP.
H. Interest and dividend income, most expenses, all realized gains and losses, and all unrealized gains and losses are allocated to the classes based upon the value of the outstanding shares in each Class. Certain costs, such as distribution and service fees are charged directly to specific classes. In addition, certain expenses have been allocated to the individual Funds in the Trust on a pro rata basis upon the respective aggregate net assets of each Fund included in the Trust.
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I. The Funds may leave cash overnight in their cash account with the custodian. Periodically, a Fund may have cash due to the custodian bank as an overdraft balance. A fee is incurred on this overdraft, calculated by multiplying the overdraft by a rate based on the federal funds rate.
J. Under the Funds’ organizational documents, their Trustees and Officers are indemnified against certain liabilities arising out of the performance of their duties to the Trust. In addition, throughout the normal course of business, the Funds enter into contracts that contain a variety of representations and warranties which provide general indemnifications. The Funds’ maximum exposure under these arrangements is unknown, as this would involve future claims that may be made against the Funds and/or their affiliates that have not yet occurred. However, based on experience, the Funds expect the risk of loss to be remote.
2. Financial Instruments
As part of their investment strategy, the Funds utilize short sales and a variety of derivative instruments. These investments involve, to varying degrees, elements of market risk and risks in excess of the amounts recognized in the Statements of Assets and Liabilities.
A short sale is a transaction in which a Fund sells a security it does not own. If the security sold short decreases in price between the time the Fund sells the security and closes its short position, that Fund will realize a gain on the transaction. Conversely, if the security increases in price during the period, that Fund will realize a loss on the transaction. The risk of such price increases is the principal risk of engaging in short sales.
A futures contract is an agreement to purchase (long) or sell (short) an agreed amount of securities or other instruments at a set price for delivery at a future date. There are significant risks associated with a Fund’s use of futures contracts, including (i) there may be an imperfect or no correlation between the changes in market value of the underlying asset and the prices of futures contracts; (ii) there may not be a liquid secondary market for a futures contract; (iii) trading restrictions or limitations may be imposed by an exchange; and (iv) government regulations may restrict trading in futures contracts. When investing in futures, there is minimal counterparty credit risk to the Fund because futures are exchange-traded and the exchange’s clearinghouse, as counterparty to all exchange-traded futures, guarantees against default. Cash deposits are shown as restricted cash on the Statement of Assets and Liabilities; securities held as collateral are noted on the Schedule of Investments.
A swap is an agreement that obligates two parties to exchange a series of cash flows at specified intervals based upon or calculated by reference to changes in specified prices or rates for a specified amount of an underlying asset. A Fund utilizing OTC swaps bears the risk of loss of the amount expected to be received under a swap agreement in the event of the default or bankruptcy of a swap agreement counterparty. Additionally, there is no guarantee that a Fund or an underlying fund could eliminate its exposure under an outstanding swap agreement by entering into an offsetting swap agreement with the same or another party.
A credit default swap enables a Fund to buy or sell protection against a defined credit event of an issuer or a basket of securities. Generally, the seller of credit protection against an issuer or basket of securities receives a periodic payment from the buyer to compensate against potential default events. If a default event occurs, the seller must pay the buyer the full notional value of the reference obligation in exchange for the reference obligation. If no default occurs, the counterparty will pay the stream of payments and have no further obligations to the Fund selling the credit protection. A Fund bears the risk of loss of the amount expected to be received under a swap agreement in the event of the default or bankruptcy of a swap agreement counterparty, or in the case of a credit default swap in which the Fund is selling credit protection, the default of a third party issuer.
The leveraged Funds described in this report use derivative instruments to achieve leveraged exposure to their respective underlying indices. Since these Funds’ investment strategy involves consistently applied leverage, the value of the Fund’s shares will tend to increase or decrease more than the value of any increase or decrease in the underlying index. In addition, as investment in derivative instruments generally requires a small investment relative to the amount of investment exposure assumed, this creates an opportunity for increased net income but, at the same time, additional leverage risk. The Funds’ use of leverage, through borrowings or instruments such as derivatives, may cause the Funds to be more volatile and riskier than if they had not been leveraged.
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In conjunction with the use of short sales and derivative instruments, the Funds are required to maintain collateral in various forms. The Funds use, where appropriate, depending on the financial instrument utilized and the broker involved, margin deposits at the broker, cash and/or securities segregated at the custodian bank, discount notes or the repurchase agreements allocated to each Fund.
The Trust has established counterparty credit guidelines and enters into transactions only with financial institutions of investment grade or better. The Trust monitors the counterparty credit risk.
3. Fees and Other Transactions with Affiliates
Under the terms of an investment advisory contract, the Funds pay GI investment advisory fees calculated at their annualized rates below, based on the average daily net assets of the Funds:
Fund | Management Fees (as a % of Net Assets) |
Nova Fund | 0.75% |
S&P 500® Fund | 0.75% |
Inverse S&P 500® Strategy Fund | 0.90% |
Monthly Rebalance NASDAQ-100® 2x Strategy Fund | 0.90% |
Inverse NASDAQ-100® Strategy Fund | 0.90% |
Mid-Cap 1.5x Strategy Fund | 0.90% |
Inverse Mid-Cap Strategy Fund | 0.90% |
Russell 2000® 1.5x Strategy Fund | 0.90% |
Russell 2000® Fund | 0.75% |
Inverse Russell 2000® Strategy Fund | 0.90% |
Government Long Bond 1.2x Strategy Fund | 0.50% |
Inverse Government Long Bond Strategy Fund | 0.90% |
High Yield Strategy Fund | 0.75% |
Inverse High Yield Strategy Fund | 0.75% |
U.S. Government Money Market Fund | 0.50% |
GI has contractually agreed to reduce fees and/or reimburse expenses for the Monthly Rebalance NASDAQ-100® 2x Strategy Fund to the extent necessary to keep net operating expenses for A-Class, C-Class and H-Class shares (including Rule 12b-1 fees if any) (excluding brokerage, dividends on securities sold short, acquired fund fees and expenses, interest, taxes, litigation, indemnification, and extraordinary expenses) from exceeding 1.35%, 2.10% and 1.35% of the Fund’s A-Class, C-Class and H-Class shares average daily net assets, respectively. The Total Annual Fund Operating Expenses After Fee Waiver and/or Expense Reimbursement includes Excluded Expenses and, thus, from time to time may be higher than 1.35%, 2.10% and 1.35%, respectively. This agreement may be terminated only with the approval of the Fund’s Board of Trustees. In any event, this undertaking will continue until November 28, 2015.
RFS provides transfer agent and administrative services to the Funds for fees calculated at the annualized rates below, based on the average daily net assets of the Funds. For these services, RFS receives the following:
Fund | Transfer Agent and Administrative Fees (as a % of Net Assets) |
Government Long Bond 1.2x Strategy Fund | 0.20% |
U.S. Government Money Market Fund | 0.20% |
Remaining Funds | 0.25% |
RFS also provides accounting services to the Funds for fees calculated at annualized rates below, based on the average daily net assets of each Fund.
Fund Accounting Fees | (as a % of Net Assets) |
S&P 500® Fund | 0.15% |
Russell 2000® Fund | 0.15% |
Remaining Funds | |
On the first $250 million | 0.10% |
On the next $250 million | 0.075% |
On the next $250 million | 0.05% |
Over $750 million | 0.03% |
RFS engages external service providers to perform other necessary services for the Trust, such as audit and accounting related services, legal services, custody, printing and mailing, etc., on a pass-through basis. Such expenses are allocated to various Funds within the complex based on relative net assets.
The Trust has adopted a Distribution and Shareholder Services Plan applicable to its Advisor Class shares and a Distribution Plan applicable to A-Class shares and H-Class shares for which GFD and other firms that provide distribution and/or shareholder services (“Service Providers”) may receive compensation. If a Service Provider provides distribution services, the Funds will pay distribution fees to GFD at an annual rate not to exceed 0.25% of average daily net assets, pursuant to Rule 12b-1 of the 1940 Act. GFD, in turn, will pay the Service Provider out of its fees. GFD may, at its discretion, retain a portion of such payments to compensate itself for distribution services. With regard to Advisor Class shares only, if a Service Provider provides shareholder services, GFD will receive shareholder servicing fees from the Funds at an annual rate not to exceed 0.25% of average daily net assets. GFD, in turn, will compensate Service Providers for
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providing such services, while retaining a portion of such payments to compensate itself for shareholder services it performs.
The Trust has adopted a separate Distribution and Shareholder Services Plan applicable to its C-Class shares that allows the Funds to pay annual distribution and service fees of 1.00% of the Funds’ C-Class shares average daily net assets. The annual 0.25% service fee compensates a shareholder’s financial adviser for providing ongoing services to the shareholder. The annual distribution fee of 0.75% reimburses GFD for paying the shareholder’s financial adviser an ongoing sales commission. GFD advances the first year’s service and distribution fees to the financial adviser. GFD retains the service and distribution fees on accounts with no authorized dealer of record.
GI and its affiliates have voluntarily agreed to waive their fees, including but not limited to accounting, shareholder investor services and investment advisory fees, in an attempt to maintain a positive net yield for the U.S. Government Money Market Fund. GI or its affiliates may terminate this voluntary waiver at any time upon notice to the Fund. When shareholder investor services fees are waived, dealer compensation will be reduced to the extent of such waiver.
For the year ended March 31, 2015, GFD retained sales charges of $360,571 relating to sales of A-Class shares of the Trust.
Certain trustees and officers of the Trust are also officers of GI, RFS and GFD.
4. Fair Value Measurement
In accordance with U.S. GAAP, fair value is defined as the price that the Funds would receive to sell an investment or pay to transfer a liability in an orderly transaction with an independent buyer in the principal market, or in the absence of a principal market, the most advantageous market for the investment or liability. U.S. GAAP establishes a three-tier fair value hierarchy based on the types of inputs used to value assets and liabilities and requires corresponding disclosure. The hierarchy and the corresponding inputs are summarized below:
Level 1 — quoted prices in active markets for identical assets or liabilities.
Level 2 — significant other observable inputs (for example quoted prices for securities that are similar based on characteristics such as interest rates, prepayment speeds, credit risk, etc.).
Level 3 — significant unobservable inputs based on the best information available under the circumstances, to the extent observable inputs are not available, which may include assumptions.
The types of inputs available depend on a variety of factors, such as the type of security and the characteristics of the markets in which it trades, if any. Fair valuation determinations that rely on fewer or no observable inputs require greater judgment. Accordingly, fair value determinations for Level 3 securities require the greatest amount of judgment.
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The following table summarizes the inputs used to value the Funds’ investments at March 31, 2015:
Level 1 Investments In Securities | Level 1 Other Financial Instruments* | Level 2 Investments In Securities | Level 2 Other Financial Instruments* | Level 3 Investments In Securities | Total | |||||||||||||||||||
Assets | ||||||||||||||||||||||||
Nova Fund | $ | 141,762,279 | $ | 51,181 | $ | 5,717,647 | $ | 287,457 | $ | — | $ | 147,818,564 | ||||||||||||
S&P 500® Fund | 268,606,807 | 41,574 | 26,757,947 | 7,629 | — | 295,413,957 | ||||||||||||||||||
Inverse S&P 500® Strategy Fund | 21,538,257 | 123,544 | 52,559,292 | — | — | 74,221,093 | ||||||||||||||||||
Monthly Rebalance NASDAQ-100® 2x Strategy Fund | 289,845,030 | 392,662 | 12,012,350 | 153,803 | — | 302,403,845 | ||||||||||||||||||
Inverse NASDAQ-100® Strategy Fund | 1,924,197 | 4,490 | 6,026,650 | — | — | 7,955,337 | ||||||||||||||||||
Mid-Cap 1.5x Strategy Fund | 15,085,461 | 518 | 7,410,657 | 275,813 | — | 22,772,449 | ||||||||||||||||||
Inverse Mid-Cap Strategy Fund | 707,700 | — | 2,960,147 | — | — | 3,667,847 | ||||||||||||||||||
Russell 2000® 1.5x Strategy Fund | 15,312,290 | 14,055 | 2,072,129 | 170,033 | 1,776 | 17,570,283 | ||||||||||||||||||
Russell 2000® Fund | 481,683 | 345,765 | 44,015,452 | 46,256 | 3,963 | 44,893,119 | ||||||||||||||||||
Inverse Russell 2000® Strategy Fund | 2,144,238 | 5,760 | 6,498,044 | — | — | 8,648,042 | ||||||||||||||||||
Government Long Bond 1.2x Strategy Fund | 10,165,485 | 2,433,953 | 147,007,955 | — | — | 159,607,393 | ||||||||||||||||||
Inverse Government Long Bond Strategy Fund | 53,244,134 | — | 258,355,211 | — | — | 311,599,345 | ||||||||||||||||||
High Yield Strategy Fund | 123,832,085 | 2,913,204 | 446,681,226 | 1,654,360 | — | 575,080,875 | ||||||||||||||||||
Inverse High Yield Strategy Fund | 1,445,237 | — | 1,675,270 | — | — | 3,120,507 | ||||||||||||||||||
U.S. Government Money Market Fund | — | — | 811,860,143 | — | — | 811,860,143 | ||||||||||||||||||
Liabilities | ||||||||||||||||||||||||
S&P 500® Fund | $ | — | $ | — | $ | — | $ | 22,129 | $ | — | $ | 22,129 | ||||||||||||
Inverse S&P 500® Strategy Fund | — | — | — | 440,549 | — | 440,549 | ||||||||||||||||||
Inverse NASDAQ-100® Strategy Fund | — | — | — | 27,392 | — | 27,392 | ||||||||||||||||||
Inverse Mid-Cap Strategy Fund | — | — | — | 44,532 | — | 44,532 | ||||||||||||||||||
Inverse Russell 2000® Strategy Fund | — | — | — | 72,830 | — | 72,830 | ||||||||||||||||||
Inverse Government Long Bond Strategy Fund | — | 981,736 | 148,964,418 | — | — | 149,946,154 | ||||||||||||||||||
Inverse High Yield Strategy Fund | — | 17,919 | — | 9,672 | — | 27,591 |
* | Other financial instruments may include futures contracts and/or swaps, which are reported as unrealized gain/loss at period end. |
Transfers between investment levels may occur as the markets fluctuate and/or the availability of data used in the investment’s valuation changes. The Funds recognize transfers between the levels as of the beginning of the period. As of March 31, 2015, Russell 2000® 1.5x Strategy Fund and Russell 2000® Fund had securities with a total value of $1,327 and $3,103 respectively, transfer from Level 2 to Level 3 based on a change in availability of market information.
The inputs or methodologies used for valuing securities are not necessarily an indication of the risk associated with investing in those securities. The suitability of the techniques and sources employed to determine fair valuation are regularly monitored and subject to change.
5. Repurchase Agreements
The Funds transfer 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 Funds’ custodian and is evaluated to ensure that its market value exceeds, at a minimum, 102% of the original face amount of the repurchase agreements. Each Fund holds a pro rata share of the collateral based on the dollar amount of the repurchase agreement entered into by each Fund.
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At March 31, 2015, the repurchase agreements in the joint account were as follows:
Counterparty and Terms of Agreement | Face Value | Repurchase Price | Collateral | Par Value | Fair Value | |
HSBC Group | U.S. Treasury Strips | |||||
0.03% | 0.00% | |||||
Due 04/01/15 | $922,646,685 | $922,647,454 | 02/15/24 - 05/15/44 | $1,876,361,900 | $941,099,692 | |
RBC Capital Markets | U.S. Treasury Note | |||||
0.05% | 2.13% | |||||
Due 04/01/15 | 141,000,000 | 141,000,196 | 12/31/21 | 92,325,000 | 95,818,749 | |
U.S. TIP Bond | ||||||
3.88% | ||||||
04/25/29 | 22,465,400 | 48,001,266 | ||||
UMB Financial Corp. | U.S. Treasury Notes | |||||
0.03% | 1.38% - 3.25% | |||||
Due 04/01/15 | 113,175,677 | 113,175,772 | 11/30/15 - 12/31/16 | 109,984,100 | 115,439,211 |
In the event of counterparty default, the Funds have the right to collect the collateral to offset losses incurred. There is potential loss to the Funds in the event the Funds are delayed or prevented from exercising their 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 Funds seek to assert their rights. The Funds’ investment adviser, acting under the supervision of the Board of Trustees, reviews the value of the collateral and the creditworthiness of those banks and dealers with which the Funds enter into repurchase agreements to evaluate potential risks.
6. Portfolio Securities Loaned
The Funds may lend their securities to approved brokers to earn additional income. Security lending income shown on the Statements of Operations is shown net of rebates paid to the borrowers and earnings on cash collateral investments shared with the lending agent. Within this arrangement, the Funds act as the lender, Credit Suisse acts as the lending agent, and other approved registered broker dealers act as the borrowers. The Funds receive cash collateral, valued at 102% of the value of the securities on loan. Under the terms of the Funds’ securities lending agreement with Credit Suisse, cash collateral is invested in one or more joint repurchase agreements collateralized by obligations of the U.S. Treasury or Government Agencies and cash. The Funds bear the risk of loss on cash collateral investments. 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 Funds the next business day. Although the collateral mitigates the risk, the Funds 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 Funds have the right under the securities lending agreement to recover the securities from the borrower on demand.
At March 31, 2015, the Funds participated in securities lending as follows:
Fund | Value of Securities Loaned | Cash Collateral Received | ||||||
Nova Fund | $ | 30,716 | $ | 31,450 | ||||
S&P 500® Fund | 296,079 | 306,125 | ||||||
Mid-Cap 1.5x Strategy Fund | 24,184 | 24,750 | ||||||
Russell 2000® 1.5x Strategy Fund | 79,905 | 85,106 | ||||||
Russell 2000® Fund | 5,423 | 6,507 | ||||||
High Yield Strategy Fund | 10,605,088 | 10,883,600 |
THE RYDEX FUNDS ANNUAL REPORT | 189 |
NOTES TO FINANCIAL STATEMENTS (continued)
Cash collateral received was invested in the following joint repurchase agreements at March 31, 2015:
Counterparty and Terms of Agreement | Face Value | Repurchase Price | Collateral | Par Value | Fair Value | |
HSBC Securities, Inc. | Fannie Mae Strips | |||||
0.10% | 0.00% | |||||
Due 04/01/15 | $7,343,923 | $7,343,943 | 11/15/17 - 07/15/37 | $8,190,765 | $5,637,399 | |
Federal Farm Credit Bank | ||||||
0.19% | ||||||
06/12/17 | 1,853,312 | 1,853,559 | ||||
BNP Paribas Securities Corp. | U.S. Treasury Note | |||||
0.10% | 2.13% | |||||
Due 04/01/15 | 2,526,309 | 2,526,316 | 12/31/21 | 1,161,256 | 1,196,967 | |
U.S. Treasury Bond | ||||||
4.38% | ||||||
05/15/41 | 1,002,210 | 1,379,870 | ||||
Barclays Capital Corp. | U.S. Treasury Strips | |||||
0.10% | 0.00% | |||||
Due 04/01/15 | 1,303,987 | 1,303,991 | 05/15/20 - 05/15/44 | 2,017,237 | 1,198,528 | |
U.S. Treasury Bond | ||||||
4.75% | ||||||
02/15/41 | 91,529 | 131,544 |
There was also $163,319 in segregated cash held as collateral.
7. Disclosures about Credit Derivatives
In accordance with its principal investment strategy, the High Yield Strategy Fund enters into credit default swaps as a seller of protection primarily to gain exposure similar to the high yield bond market. Credit default swaps are instruments which allow for the full or partial transfer of third party credit risk, with respect to a particular entity or entities, from one counterparty to the other. A seller of credit default swaps is selling credit protection or assuming credit risk with respect to the underlying entity or entities. If a credit event occurs, as defined under the terms of the swap agreement, the Fund will either (i) pay to the buyer of protection an amount equal to the notional amount of the swap and take delivery of the referenced obligation or underlying securities comprising the referenced index or (ii) pay a net settlement amount in the form of cash or securities equal to the notional amount of the swap less the recovery value of the referenced obligation or underlying securities comprising the referenced index. The Notional Principal reflects the maximum potential amount the Fund could be required to make as a seller of credit protection if a credit event occurs. As the seller of protection, the Fund receives periodic premium payments from the counterparty and may also receive or pay an upfront premium adjustment to the stated periodic premium. In the event a credit event occurs, an adjustment will be made to any upfront premiums that were received by a reduction of 1.00% per credit event.
The quoted market prices and resulting market values for credit default swap agreements on securities and credit indices serve as an indicator of the current status of the payment/performance risk and represent the likelihood of an expected liability (or profit) for the credit derivative had the notional amount of the swap agreement been closed/sold as of the period end. Increasing market values, in absolute terms when compared to the notional amount of the swap, represent a deterioration of the referenced entity’s credit soundness and a greater likelihood or risk of default or other credit event occurring as defined under the terms of the agreement.
The table on page 165 included in the Schedule of Investments summarizes the information with regard to sold protection on credit default swap contracts as of March 31, 2015.
190 | THE RYDEX FUNDS ANNUAL REPORT |
NOTES TO FINANCIAL STATEMENTS (continued)
8. Derivative Investment Holdings Categorized by Risk Exposure
U.S. GAAP requires disclosures to enable investors to better understand how and why the Funds use derivative instruments, how these derivative instruments are accounted for and their effects on the Funds’ financial position and results of operations.
The following Funds utilized derivatives for the following purposes:
Fund | Index Exposure | Liquidity | Leverage |
Nova Fund | x | x | x |
S&P 500 Fund | x | x | — |
Inverse S&P 500 Strategy Fund | x | x | — |
Monthly Rebalance NASDAQ-100® 2x Strategy Fund | x | x | x |
Inverse NASDAQ-100® Strategy Fund | x | x | — |
Mid-Cap 1.5x Strategy Fund | x | x | x |
Inverse Mid-Cap Strategy Fund | x | x | — |
Russell 2000® 1.5x Strategy Fund | x | x | x |
Russell 2000® Fund | x | x | — |
Inverse Russell 2000® Strategy Fund | x | x | — |
Government Long Bond 1.2x Strategy Fund | x | x | x |
Inverse Government Long Bond Strategy Fund | x | x | — |
High Yield Strategy Fund | x | x | — |
Inverse High Yield Strategy Fund | x | x | — |
The following table represents the notional amount of derivative instruments outstanding as an approximate percentage of the Funds’ net assets on a daily basis.
Approximate percentage of Fund's Net Assets on a daily basis | ||
Fund | Long | Short |
Nova Fund | 80% | — |
S&P 500® Fund | 20% | — |
Inverse S&P 500® Strategy Fund | — | 100% |
Monthly Rebalance NASDAQ-100® 2x Strategy Fund | 125% | — |
Inverse NASDAQ-100® Strategy Fund | — | 100% |
Mid-Cap 1.5x Strategy Fund | 85% | — |
Inverse Mid-Cap 1.5x Strategy Fund | — | 100% |
Russell 2000® 1.5x Strategy Fund | 100% | — |
Russell 2000® Fund | 50% | — |
Inverse Russell 2000® Strategy | — | 100% |
Government Long Bond 1.2x Strategy Fund | 65% | — |
Inverse Government Long Bond Strategy Fund | — | 50% |
High Yield Strategy Fund* | 80% | — |
Inverse High Yield Strategy Fund* | — | 90% |
* | These Funds utilize a combination of currency and/or financial-linked derivatives to obtain exposure to their benchmarks. The gross derivative instrument exposure is 170% and 190% for the High Yield Strategy Fund and Inverse High Yield Strategy Fund, respectively. |
The following is a summary of the location of derivative investments on the Funds’ Statements of Assets and Liabilities as of March 31, 2015:
Derivative Investment Type | Asset Derivatives | Liability Derivatives |
Equity/Interest Rate contracts | Variation margin | Variation margin |
Equity/Credit contracts | Unrealized appreciation on swap agreements | Unrealized depreciation on swap agreements |
THE RYDEX FUNDS ANNUAL REPORT | 191 |
NOTES TO FINANCIAL STATEMENTS (continued)
The following table sets forth the fair value of the Funds’ derivative investments categorized by primary risk exposure at March 31, 2015:
Asset Derivative Investments Value | ||||||||||||||||||||
Fund | Futures Equity Contracts* | Swaps Equity Contracts | Futures Interest Rate Contracts* | Swaps Credit Default Contracts | Total Value at March 31, 2015 | |||||||||||||||
Nova Fund | $ | 51,181 | $ | 287,457 | $ | — | $ | — | $ | 338,638 | ||||||||||
S&P 500® Fund | 41,574 | 7,629 | — | — | 49,203 | |||||||||||||||
Inverse S&P 500® Strategy Fund | 123,544 | — | — | — | 123,544 | |||||||||||||||
Monthly Rebalance NASDAQ-100® 2x Strategy Fund | 392,662 | 153,803 | — | — | 546,465 | |||||||||||||||
Inverse NASDAQ-100® Strategy Fund | 4,490 | — | — | — | 4,490 | |||||||||||||||
Mid-Cap 1.5x Strategy Fund | 518 | 275,813 | — | — | 276,331 | |||||||||||||||
Russell 2000® 1.5x Strategy Fund | 14,055 | 170,033 | — | — | 184,088 | |||||||||||||||
Russell 2000® Fund | 345,765 | 46,256 | — | — | 392,021 | |||||||||||||||
Inverse Russell 2000® Strategy Fund | 5,760 | — | — | — | 5,760 | |||||||||||||||
Government Long Bond 1.2x Strategy Fund | — | — | 2,433,953 | — | 2,433,953 | |||||||||||||||
High Yield Strategy Fund | — | — | 2,913,204 | 1,654,360 | 4,567,564 |
Liability Derivative Investments Value | ||||||||||||||||||||
Fund | Futures Equity Contracts* | Swaps Equity Contracts | Futures Interest Rate Contracts* | Swaps Credit Default Contracts | Total Value at March 31, 2015 | |||||||||||||||
S&P 500® Fund | $ | — | $ | 22,129 | $ | — | $ | — | $ | 22,129 | ||||||||||
Inverse S&P 500® Strategy Fund | — | 440,549 | — | — | 440,549 | |||||||||||||||
Inverse NASDAQ-100® Strategy Fund | — | 27,392 | — | — | 27,392 | |||||||||||||||
Inverse Mid-Cap Strategy Fund | — | 44,532 | — | — | 44,532 | |||||||||||||||
Inverse Russell 2000® Strategy Fund | — | 72,830 | — | — | 72,830 | |||||||||||||||
Inverse Government Long Bond Strategy Fund | — | — | 981,736 | — | 981,736 | |||||||||||||||
Inverse High Yield Strategy Fund | — | — | 17,919 | 9,672 | 27,591 |
* | Includes cumulative appreciation (depreciation) of futures contracts as reported on the Schedules of Investments. Only current day’s variation margin is reported within the Statements of Assets and Liabilities. |
The following is a summary of the location of derivative investments on the Funds' Statements of Operations for the year ended March 31, 2015:
Derivative Investment Type | Location of Gain (Loss) on Derivatives |
Equity/Interest Rate contracts | Net realized gain (loss) on futures contracts |
Net change in unrealized appreciation (depreciation) on futures contracts | |
Equity/Credit contracts | Net realized gain (loss) on swap agreements |
Net change in unrealized appreciation (depreciation) on swap agreements |
192 | THE RYDEX FUNDS ANNUAL REPORT |
NOTES TO FINANCIAL STATEMENTS (continued)
The following is a summary of the Funds’ realized gain (loss) and change in unrealized appreciation (depreciation) on derivative investments recognized on the Statements of Operations categorized by primary risk exposure for the year ended March 31, 2015:
Realized Gain (Loss) on Derivative Investments Recognized on the Statements of Operations | ||||||||||||||||||||
Fund | Futures Equity Contracts | Swaps Equity Contracts | Futures Interest Rate Contracts | Swaps Credit Default Contracts | Total | |||||||||||||||
Nova Fund | $ | 5,670,134 | $ | 5,057,830 | $ | — | $ | — | $ | 10,727,964 | ||||||||||
S&P 500® Fund | 1,578,529 | 3,929,346 | — | — | 5,507,875 | |||||||||||||||
Inverse S&P 500® Strategy Fund | (797,822 | ) | (15,580,972 | ) | — | — | (16,378,794 | ) | ||||||||||||
Monthly Rebalance NASDAQ-100® 2x Strategy Fund | (2,017,498 | ) | (11,312,459 | ) | — | — | (13,329,957 | ) | ||||||||||||
Inverse NASDAQ-100® Strategy Fund | 206,203 | (3,013,781 | ) | — | — | (2,807,578 | ) | |||||||||||||
Mid-Cap 1.5x Strategy Fund | 3,137,237 | 4,069,403 | — | — | 7,206,640 | |||||||||||||||
Inverse Mid-Cap Strategy Fund | (64,785 | ) | (318,367 | ) | — | — | (383,152 | ) | ||||||||||||
Russell 2000® 1.5x Strategy Fund | 1,055,198 | 938,921 | — | — | 1,994,119 | |||||||||||||||
Russell 2000® Fund | 238,052 | 2,690,705 | — | — | 2,928,757 | |||||||||||||||
Inverse Russell 2000® Strategy Fund | (215,228 | ) | (2,378,935 | ) | — | — | (2,594,163 | ) | ||||||||||||
Government Long Bond 1.2x Strategy Fund | — | — | 16,256,763 | — | 16,256,763 | |||||||||||||||
Inverse Government Long Bond Strategy Fund | — | — | (33,058,090 | ) | — | (33,058,090 | ) | |||||||||||||
High Yield Strategy Fund | — | — | (1,139,814 | ) | 1,378,969 | 239,155 | ||||||||||||||
Inverse High Yield Strategy Fund | — | — | (1,000,814 | ) | (992,480 | ) | (1,993,294 | ) |
Change in Unrealized Appreciation (Depreciation) on Derivative Investments Recognized on the Statements of Operations | ||||||||||||||||||||
Fund | Futures Equity Contracts | Swaps Equity Contracts | Futures Interest Rate Contracts | Swaps Credit Default Contracts | Total | |||||||||||||||
Nova Fund | $ | (221,076 | ) | $ | (49,146 | ) | $ | — | $ | — | $ | (270,222 | ) | |||||||
S&P 500® Fund | (433,297 | ) | (624,866 | ) | — | — | (1,058,163 | ) | ||||||||||||
Inverse S&P 500® Strategy Fund | 186,535 | 148,570 | — | — | 335,105 | |||||||||||||||
Monthly Rebalance NASDAQ-100® 2x Strategy Fund | 392,662 | 153,803 | — | — | 546,465 | |||||||||||||||
Inverse NASDAQ-100® Strategy Fund | 4,490 | (47,717 | ) | — | — | (43,227 | ) | |||||||||||||
Mid-Cap 1.5x Strategy Fund | (54,360 | ) | 127,516 | — | — | 73,156 | ||||||||||||||
Inverse Mid-Cap Strategy Fund | — | 8,735 | — | — | 8,735 | |||||||||||||||
Russell 2000® 1.5x Strategy Fund | 116,668 | 76,757 | — | — | 193,425 | |||||||||||||||
Russell 2000® Fund | 416,185 | (10,812 | ) | — | — | 405,373 | ||||||||||||||
Inverse Russell 2000® Strategy Fund | 5,760 | 117,773 | — | — | 123,533 | |||||||||||||||
Government Long Bond 1.2x Strategy Fund | — | — | 2,144,605 | — | 2,144,605 | |||||||||||||||
Inverse Government Long Bond Strategy Fund | — | — | (511,861 | ) | — | (511,861 | ) | |||||||||||||
High Yield Strategy Fund | — | — | 3,408,616 | 1,362,705 | 4,771,321 | |||||||||||||||
Inverse High Yield Strategy Fund | — | — | (43,580 | ) | 14,031 | (29,549 | ) |
9. Offsetting
In the normal course of business, the Funds enter into transactions subject to enforceable master netting arrangements or other similar arrangements. Generally, the right to offset in those agreements allows the Funds to counteract the exposure to a specific counterparty with collateral received or delivered to that counterparty based on the terms of the arrangements. These arrangements provide for the right to liquidate upon the occurrence of an event of default, credit event upon merger or additional termination event.
In order to better define their contractual rights and to secure rights that will help the Funds mitigate their counterparty risk, the Funds may enter into an International Swaps and Derivatives Association, Inc. Master Agreement (“ISDA Master Agreement”) or similar agreement with their derivative contract counterparties. An ISDA Master Agreement is a bilateral agreement between a Fund and a counterparty that governs OTC derivatives, including foreign exchange contracts, and
THE RYDEX FUNDS ANNUAL REPORT | 193 |
NOTES TO FINANCIAL STATEMENTS (continued)
typically contains, among other things, collateral posting terms and netting provisions in the event of a default and/or termination event. The provisions of the ISDA Master Agreement typically permit a single net payment in the event of a default (close-out netting) or similar event, including the bankruptcy or insolvency of the counterparty.
For derivatives traded under an ISDA Master Agreement, the collateral requirements are typically calculated by netting the mark to market amount for each transaction under such agreement and comparing that amount to the value of any collateral currently pledged by the Funds and the counterparty. For financial reporting purposes, cash collateral that has been pledged to cover obligations of the Funds and cash collateral received from the counterparty, if any, is reported separately on the Statement of Assets and Liabilities as segregated cash with broker/receivable for variation margin, or payable for swap settlement/variation margin. Generally, the amount of collateral due from or to a counterparty must exceed a minimum transfer amount threshold (e.g., $300,000) before a transfer is required to be made. To the extent amounts due to the Funds from their counterparties are not fully collateralized, contractually or otherwise, the Funds bear the risk of loss from counterparty nonperformance. The Funds attempt to mitigate counterparty risk by only entering into agreements with counterparties that they believe to be of good standing and by monitoring the financial stability of those counterparties.
For financial reporting purposes, the Funds do not offset derivative assets and derivative liabilities that are subject to netting arrangements in the Statements of Assets and Liabilities.
The following tables present derivative financial instruments and secured financing transactions that are subject to enforceable netting arrangements and offset in the Statements of Assets and Liabilities in conformity with U.S. GAAP.
Gross Amounts Not Offset in the Statements of Assets and Liabilities | |||||||||||||||||||||||||
Fund | Instrument | Gross Amounts of Recognized Assets1 | Gross Amounts Offset In the Statements of Assets and Liabilities | Net Amount of Assets Presented on the Statements of Assets and Liabilities | Financial Instruments | Cash Collateral Received | Net Amount | ||||||||||||||||||
Nova Fund | Swap equity contracts | $ | 287,457 | $ | — | �� | $ | 287,457 | $ | — | $ | — | $ | 287,457 | |||||||||||
S&P 500® Fund | Swap equity contracts | 7,629 | — | 7,629 | — | — | 7,629 | ||||||||||||||||||
Monthly Rebalance NASDAQ-100® 2x Strategy Fund | Swap equity contracts | 153,803 | — | 153,803 | — | — | 153,803 | ||||||||||||||||||
Mid-Cap 1.5x Strategy Fund | Swap equity contracts | 275,813 | — | 275,813 | — | — | 275,813 | ||||||||||||||||||
Russell 2000® 1.5x Strategy Fund | Swap equity contracts | 170,033 | — | 170,033 | — | — | 170,033 | ||||||||||||||||||
Russell 2000® Fund | Swap equity contracts | 46,256 | — | 46,256 | — | — | 46,256 |
Gross Amounts Not Offset in the Statements of Assets and Liabilities | |||||||||||||||||||||||||
Fund | Instrument | Gross Amounts of Recognized Liabilities1 | Gross Amounts Offset In the Statements of Assets and Liabilities | Net Amount of Liabilities Presented on the Statements of Assets and Liabilities | Financial Instruments | Cash Collateral Pledged | Net Amount | ||||||||||||||||||
S&P 500® Fund | Swap equity contracts | $ | 22,129 | $ | — | $ | 22,129 | $ | — | $ | 22,129 | $ | — | ||||||||||||
Inverse S&P 500® Strategy Fund | Swap equity contracts | 440,549 | — | 440,549 | — | 440,549 | — | ||||||||||||||||||
Inverse NASDAQ-100® Strategy Fund | Swap equity contracts | 27,392 | — | 27,392 | — | 27,392 | — | ||||||||||||||||||
Inverse Mid-Cap Strategy Fund | Swap equity contracts | 44,532 | — | 44,532 | — | 44,532 | — | ||||||||||||||||||
Inverse Russell 2000® Strategy Fund | Swap equity contracts | 72,830 | — | 72,830 | — | 72,830 | — |
1 | Exchange-traded futures and centrally cleared swaps are excluded from these reported amounts. |
194 | THE RYDEX FUNDS ANNUAL REPORT |
NOTES TO FINANCIAL STATEMENTS (continued)
10. Federal Income Tax Information
The Funds intend to comply with the provisions of Subchapter M of the Internal Revenue Code applicable to regulated investment companies and will distribute substantially all taxable net investment income and capital gains sufficient to relieve the Funds from all, or substantially all, federal income, excise and state income taxes. Therefore, no provision for federal or state income tax is required.
Tax positions taken or expected to be taken in the course of preparing the Funds' tax returns are evaluated 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. Management has analyzed the Funds' tax positions taken, or to be taken, on Federal income tax returns for all open tax years, and has concluded that no provision for income tax is required in the Funds' financial statements. The Funds' federal tax returns are subject to examination by the Internal Revenue Service for a period of three years after they are filed.
Tax basis capital losses in excess of capital gains are carried forward to offset future net capital gains. For the year ended March 31, 2015, the following capital loss carryforward amounts were expired or used:
Fund | Amount | |||
Nova Fund | $ | 16,397,469 | ||
Inverse S&P 500® Strategy Fund | 59,724,340 | |||
Inverse NASDAQ-100® Strategy Fund | 15,380,081 | |||
Inverse Mid-Cap Strategy Fund | 3,855,787 | |||
Inverse Russell 2000® Strategy Fund | 13,474,576 | |||
Government Long Bond 1.2x Strategy Fund | 36,484,848 | |||
Inverse Government Long Bond Strategy Fund | 60,731,802 |
The tax character of distributions paid during the year ended March 31, 2015 was as follows:
Fund | Ordinary Income | Long-Term Capital Gain | Return of Capital | Total Distributions | ||||||||||||
Nova Fund | $ | 169,151 | $ | — | $ | — | $ | 169,151 | ||||||||
S&P 500® Fund | 1,683,213 | 2,899,418 | — | 4,582,631 | ||||||||||||
Inverse S&P 500® Strategy Fund | — | — | — | — | ||||||||||||
Monthly Rebalance NASDAQ-100® 2x Strategy Fund * | — | — | — | — | ||||||||||||
Inverse NASDAQ-100® Strategy Fund | — | — | — | — | ||||||||||||
Mid-Cap 1.5x Strategy Fund | 227,935 | 409,228 | — | 637,163 | ||||||||||||
Inverse Mid-Cap Strategy Fund | — | — | — | — | ||||||||||||
Russell 2000® 1.5x Strategy Fund | — | 244,398 | — | 244,398 | ||||||||||||
Russell 2000® Fund | 2,480,559 | 965,945 | — | 3,446,504 | ||||||||||||
Inverse Russell 2000® Strategy Fund | — | — | — | — | ||||||||||||
Government Long Bond 1.2x Strategy Fund | 1,497,181 | — | 18,073 | 1,515,254 | ||||||||||||
Inverse Government Long Bond Strategy Fund | — | — | — | — | ||||||||||||
High Yield Strategy Fund | — | — | — | — | ||||||||||||
Inverse High Yield Strategy Fund | — | — | — | — | ||||||||||||
U.S. Government Money Market Fund | 22,469 | — | — | 22,469 |
* | Monthly Rebalance NASDAQ-100® 2x Strategy Fund commenced operations on November 28, 2014. |
THE RYDEX FUNDS ANNUAL REPORT | 195 |
NOTES TO FINANCIAL STATEMENTS (continued)
The tax character of distributions paid during the year ended March 31, 2014 was as follows:
Fund | Ordinary Income | Long-Term Capital Gain | Return of Capital | Total Distributions | ||||||||||||
Nova Fund | $ | — | $ | — | $ | — | $ | — | ||||||||
S&P 500® Fund | 402,265 | — | — | 402,265 | ||||||||||||
Inverse S&P 500® Strategy Fund | — | — | — | — | ||||||||||||
Inverse NASDAQ-100® Strategy Fund | — | — | — | — | ||||||||||||
Mid-Cap 1.5x Strategy Fund | — | — | — | — | ||||||||||||
Inverse Mid-Cap Strategy Fund | — | — | — | — | ||||||||||||
Russell 2000® 1.5x Strategy Fund | — | — | — | — | ||||||||||||
Russell 2000® Fund | 2,441,958 | — | — | 2,441,958 | ||||||||||||
Inverse Russell 2000® Strategy Fund | — | — | — | — | ||||||||||||
Government Long Bond 1.2x Strategy Fund | 1,710,481 | — | 13,827 | 1,724,308 | ||||||||||||
Inverse Government Long Bond Strategy Fund | — | — | — | — | ||||||||||||
High Yield Strategy Fund | 21,208,428 | — | — | 21,208,428 | ||||||||||||
Inverse High Yield Strategy Fund | — | — | — | — | ||||||||||||
U.S. Government Money Market Fund | 1,539 | — | — | 1,539 |
Note: For federal income tax purposes, short-term capital gain distributions are treated as ordinary income distributions.
The tax character of distributable earnings/(accumulated losses) at March 31, 2015 was as follows:
Fund | Undistributed Ordinary Income | Undistributed Long-Term Capital Gain | Net Unrealized Appreciation/ (Depreciation) | Capital Loss Carryforward and Other Losses | ||||||||||||
Nova Fund | $ | 261,033 | $ | — | $ | 26,490,485 | $ | (2,155,773 | ) | |||||||
S&P 500® Fund | 2,010,881 | — | 70,213,513 | — | ||||||||||||
Inverse S&P 500® Strategy Fund | — | — | (450,308 | ) | (320,376,492 | ) | ||||||||||
Monthly Rebalance NASDAQ-100® 2x Strategy Fund* | — | — | (3,030,366 | ) | (16,483,994 | ) | ||||||||||
Inverse NASDAQ-100® Strategy Fund | — | — | (29,720 | ) | (51,927,921 | ) | ||||||||||
Mid-Cap 1.5x Strategy Fund | 1,870,707 | — | 4,233,582 | — | ||||||||||||
Inverse Mid-Cap Strategy Fund | — | — | (45,608 | ) | (13,414,626 | ) | ||||||||||
Russell 2000® 1.5x Strategy Fund | 978,939 | — | 2,579,501 | — | ||||||||||||
Russell 2000® Fund | 742,891 | — | (430,009 | ) | — | |||||||||||
Inverse Russell 2000® Strategy Fund | — | — | (73,734 | ) | (53,135,496 | ) | ||||||||||
Government Long Bond 1.2x Strategy Fund | — | — | (610,666 | ) | (12,466,827 | ) | ||||||||||
Inverse Government Long Bond Strategy Fund | — | — | (7,356,609 | ) | (369,934,149 | ) | ||||||||||
High Yield Strategy Fund | 5,031,017 | — | 1,558,177 | (3,179,170 | ) | |||||||||||
Inverse High Yield Strategy Fund | — | — | (8,738 | ) | (17,009,830 | ) | ||||||||||
U.S. Government Money Market Fund | — | — | — | (17,790 | ) |
* | Monthly Rebalance NASDAQ-100® 2x Strategy Fund commenced operations on November 28, 2014. |
Capital Loss Carryforward amounts may be limited due to Federal income tax regulations.
For Federal income tax purposes, capital loss carryforwards represent realized losses of the Funds that may be carried forward and applied against future capital gains. For taxable years beginning on or before December 22, 2010, such capital losses may be carried forward for a maximum of eight years. Under the RIC Modernization Act of 2010, the Funds are permitted to carry forward capital losses incurred in taxable years beginning after December 22, 2010 for an unlimited period. However, any losses incurred during those taxable years must be utilized prior to the losses incurred in pre-enactment taxable years. As a result of this ordering rule, pre-enactment capital loss carryforwards may be more likely
196 | THE RYDEX FUNDS ANNUAL REPORT |
NOTES TO FINANCIAL STATEMENTS (continued)
to expire unused. Additionally, post-enactment capital losses that are carried forward will retain their character as either short-term or long-term capital losses rather than being considered all short-term as under previous law. As of March 31, 2015, capital loss carryforwards for the Funds were as follows:
Expires in | Expires in | Expires in | Expires in | Unlimited | Total Capital Loss | |||||||||||||||||||||||
Fund | 2016 | 2017 | 2018 | 2019 | Short-Term | Long-Term | Carryforward | |||||||||||||||||||||
Nova Fund | $ | — | $ | — | $ | (2,155,773 | ) | $ | — | $ | — | $ | — | $ | (2,155,773 | ) | ||||||||||||
S&P 500® Fund | — | — | — | — | — | — | — | |||||||||||||||||||||
Inverse S&P 500® Strategy Fund | — | — | (107,667,355 | ) | (64,265,070 | ) | (127,096,839 | ) | (21,347,228 | ) | (320,376,492 | ) | ||||||||||||||||
Monthly Rebalance NASDAQ-100® 2x Strategy Fund* | — | — | — | — | (15,509,092 | ) | (974,902 | ) | (16,483,994 | ) | ||||||||||||||||||
Inverse NASDAQ-100® Strategy Fund | (8,534,020 | ) | — | (16,105,314 | ) | (9,266,829 | ) | (15,709,230 | ) | (2,281,780 | ) | (51,897,173 | ) | |||||||||||||||
Mid-Cap 1.5x Strategy Fund | — | — | — | — | — | — | — | |||||||||||||||||||||
Inverse Mid-Cap Strategy Fund | (850,800 | ) | — | (6,411,872 | ) | (1,499,847 | ) | (3,836,217 | ) | (802,288 | ) | (13,401,024 | ) | |||||||||||||||
Russell 2000® 1.5x Strategy Fund | — | — | — | — | — | — | — | |||||||||||||||||||||
Russell 2000® Fund | — | — | — | — | — | — | — | |||||||||||||||||||||
Inverse Russell 2000® Strategy Fund | (7,459,340 | ) | — | (15,938,452 | ) | (10,451,551 | ) | (15,503,898 | ) | (3,736,896 | ) | (53,090,137 | ) | |||||||||||||||
Government Long Bond 1.2x Strategy Fund | — | — | — | — | (11,860,594 | ) | (606,233 | ) | (12,466,827 | ) | ||||||||||||||||||
Inverse Government Long Bond Strategy Fund | (2,188,094 | ) | (24,167,315 | ) | (68,305,233 | ) | (23,242,075 | ) | (203,586,931 | ) | (46,936,789 | ) | (368,426,437 | ) | ||||||||||||||
High Yield Strategy Fund | — | — | — | — | (3,179,170 | ) | — | (3,179,170 | ) | |||||||||||||||||||
Inverse High Yield Strategy Fund | — | — | (3,356,295 | ) | (4,361,182 | ) | (8,584,610 | ) | (626,637 | ) | (16,928,724 | ) | ||||||||||||||||
U.S. Government Money Market Fund | — | — | — | — | (17,790 | ) | — | (17,790 | ) |
* | Monthly Rebalance NASDAQ-100® 2x Strategy Fund commenced operations on November 28, 2014. |
Net investment income and net realized gains (losses) may differ for financial statement and tax purposes because of temporary or permanent book/tax differences. These differences are typically due to late year loss deferrals, losses deferred due to wash sales, utilization of earnings and profits on shareholder redemptions, and "mark to market" of futures contracts and passive foreign investment companies (PFICs) for tax purposes. Additional differences may result from tax treatment of net investment losses and expired capital loss carryforwards. To the extent these differences are permanent, reclassifications are made to the appropriate equity accounts in the period that the differences arise. These reclassifications have no effect on the net assets or NAV.
On the Statements of Assets and Liabilities the following adjustments were made for permanent book/tax differences:
Fund | Paid In Capital | Undistributed Net Investment Income | Accumulated Net Realized Gain (Loss) | |||||||||
Nova Fund | $ | — | $ | — | $ | — | ||||||
S&P 500® Fund | 10,695,319 | — | (10,695,319 | ) | ||||||||
Inverse S&P 500® Strategy Fund | (61,142,838 | ) | 1,418,498 | 59,724,340 | ||||||||
Monthly Rebalance NASDAQ-100® 2x Strategy Fund* | (340,343 | ) | 340,343 | — | ||||||||
Inverse NASDAQ-100® Strategy Fund | (15,495,824 | ) | 115,743 | 15,380,081 | ||||||||
Mid-Cap 1.5x Strategy Fund | 10,267,645 | 337,764 | (10,605,409 | ) | ||||||||
Inverse Mid-Cap Strategy Fund | (3,911,560 | ) | 55,773 | 3,855,787 | ||||||||
Russell 2000® 1.5x Strategy Fund | 5,543,013 | 236,617 | (5,779,630 | ) | ||||||||
Russell 2000® Fund | 8,551,027 | 534,441 | (9,085,468 | ) | ||||||||
Inverse Russell 2000® Strategy Fund | (13,848,367 | ) | 373,791 | 13,474,576 | ||||||||
Government Long Bond 1.2x Strategy Fund | (18,073 | ) | 18,073 | — | ||||||||
Inverse Government Long Bond Strategy Fund | (72,487,836 | ) | 11,756,034 | 60,731,802 | ||||||||
High Yield Strategy Fund | (18,266 | ) | 6,625,195 | (6,606,929 | ) | |||||||
Inverse High Yield Strategy Fund | (848,069 | ) | 270,739 | 577,330 | ||||||||
U.S. Government Money Market Fund | (1 | ) | 1 | — |
* | Monthly Rebalance NASDAQ-100® 2x Strategy Fund commenced operations on November 28, 2014. |
THE RYDEX FUNDS ANNUAL REPORT | 197 |
NOTES TO FINANCIAL STATEMENTS (continued)
At March 31, 2015, 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:
Fund | Tax Cost | Tax Unrealized Gain | Tax Unrealized Loss | Net Unrealized Gain (Loss) | ||||||||||||
Nova Fund | $ | 121,276,898 | $ | 26,924,444 | $ | (721,416 | ) | $ | 26,203,028 | |||||||
S&P 500® Fund | 225,136,740 | 71,546,049 | (1,318,035 | ) | 70,228,014 | |||||||||||
Inverse S&P 500® Strategy Fund | 74,107,308 | — | (9,759 | ) | (9,759 | ) | ||||||||||
Monthly Rebalance NASDAQ-100® 2x Strategy Fund* | 305,041,549 | 4,743,905 | (7,928,074 | ) | (3,184,169 | ) | ||||||||||
Inverse NASDAQ-100® Strategy Fund | 7,953,175 | — | (2,328 | ) | (2,328 | ) | ||||||||||
Mid-Cap 1.5x Strategy Fund | 18,538,349 | 3,999,984 | (42,215 | ) | 3,957,769 | |||||||||||
Inverse Mid-Cap Strategy Fund | 3,668,923 | 894 | (1,970 | ) | (1,076 | ) | ||||||||||
Russell 2000® 1.5x Strategy Fund | 14,976,727 | 2,535,524 | (126,056 | ) | 2,409,468 | |||||||||||
Russell 2000® Fund | 44,977,363 | — | (476,265 | ) | (476,265 | ) | ||||||||||
Inverse Russell 2000® Strategy Fund | 8,643,186 | — | (904 | ) | (904 | ) | ||||||||||
Government Long Bond 1.2x Strategy Fund | 157,784,106 | — | (610,666 | ) | (610,666 | ) | ||||||||||
Inverse Government Long Bond Strategy Fund | 316,216,729 | — | (4,617,384 | ) | (4,617,384 | ) | ||||||||||
High Yield Strategy Fund | 570,609,494 | — | (96,183 | ) | (96,183 | ) | ||||||||||
Inverse High Yield Strategy Fund | 3,119,572 | 935 | — | 935 | ||||||||||||
U.S. Government Money Market Fund | 811,860,143 | 58 | (58 | ) | — |
* | Monthly Rebalance NASDAQ-100® 2x Strategy Fund commenced operations on November 28, 2014. |
Pursuant to Federal income tax regulations applicable to investment companies, the Funds have elected to treat net capital losses and certain ordinary losses realized between November 1 and March 31 of each year as occurring on the first day of the following tax year. The Funds have also elected to treat certain ordinary losses realized between January 1 and March 31 of each year as occurring on the first day of the following tax year. For the year ended March 31, 2015, the following losses reflected in the accompanying financial statements were deferred for Federal income tax purposes until April 1, 2015:
Fund | Ordinary | Capital | ||||||
Inverse NASDAQ-100® Strategy Fund | $ | (30,748 | ) | $ | — | |||
Inverse Mid-Cap Strategy Fund | (13,602 | ) | — | |||||
Inverse Russell 2000® Strategy Fund | (45,359 | ) | — | |||||
Inverse Government Long Bond Strategy Fund | (1,507,712 | ) | — | |||||
Inverse High Yield Strategy Fund | (81,106 | ) | — |
198 | THE RYDEX FUNDS ANNUAL REPORT |
NOTES TO FINANCIAL STATEMENTS (continued)
11. Securities Transactions
For the year ended March 31, 2015, the cost of purchases and proceeds from sales of investment securities, excluding government securities, short-term investments and derivatives, were as follows:
Fund | Purchases | Sales | ||||||
Nova Fund | $ | 530,171,724 | $ | 493,255,305 | ||||
S&P 500® Fund | 752,072,082 | 671,227,559 | ||||||
Inverse S&P 500® Strategy Fund | 24,159,287 | 25,500,000 | ||||||
Monthly Rebalance NASDAQ-100® 2x Strategy Fund | 448,369,873 | 151,793,976 | ||||||
Inverse NASDAQ-100® Strategy Fund | 6,339,715 | 4,400,000 | ||||||
Mid-Cap 1.5x Strategy Fund | 234,364,884 | 243,151,492 | ||||||
Inverse Mid-Cap Strategy Fund | 1,020,985 | 310,000 | ||||||
Russell 2000® 1.5x Strategy Fund | 158,008,233 | 160,288,848 | ||||||
Russell 2000® Fund | 250,399,869 | 287,016,638 | ||||||
Inverse Russell 2000® Strategy Fund | 13,884,527 | 11,700,000 | ||||||
Government Long Bond 1.2x Strategy Fund | 43,322,223 | 33,100,000 | ||||||
Inverse Government Long Bond Strategy Fund | 102,199,365 | 48,600,000 | ||||||
High Yield Strategy Fund | 389,476,928 | 293,847,536 | ||||||
Inverse High Yield Strategy Fund | 58,102,494 | 56,600,000 | ||||||
U.S. Government Money Market Fund | — | — |
For the year ended March 31, 2015, the cost of purchases and proceeds from sales of government securities were:
Fund | Purchases | Sales | ||||||
Government Long Bond 1.2x Strategy Fund | $ | 2,401,754,144 | $ | 2,395,761,618 | ||||
Inverse Government Long Bond Strategy Fund | (2,067,597,266 | ) | (2,109,764,434 | ) |
12. Affiliated and/or Related Transactions
Investments representing 5% or more of the outstanding voting shares of a portfolio company of a fund, or control of or by, or common control under GI, result in that portfolio company being considered an affiliated company of such fund, as defined in the 1940 Act.
The Funds may invest in the Guggenheim Strategy Funds Trust consisting of Guggenheim Strategy Fund I, Guggenheim Strategy Fund II, and Guggenheim Strategy Fund III (collectively, the “Cash Management Funds”), open-end management investment companies managed by GI. The Cash Management Funds, which launched on March 11, 2014, are offered as cash management options only to mutual funds, trusts, and other accounts managed by GI and/or its affiliates, and are not available to the public. The Cash Management Funds pay no investment management fees. The Cash Management Funds’ annual report on Form N-CSR dated September 30, 2014 is available publicly or upon request. This information is also available from the EDGAR database on the SEC’s website at http://www.sec.gov.
THE RYDEX FUNDS ANNUAL REPORT | 199 |
NOTES TO FINANCIAL STATEMENTS (continued)
Transactions during the year ended March 31, 2015 in which the portfolio company is an “affiliated person” are as follows:
Affiliated issuers | Value 03/31/14 | Additions | Reductions | Value 03/31/15 | Shares 03/31/15 | Investment Income | Realized Gain (Loss) | Capital Gain Distributions | ||||||||||||||||||||||||
Inverse Government Long Bond Strategy Fund | ||||||||||||||||||||||||||||||||
Guggenheim Strategy Fund I | $ | — | $ | 102,199,366 | $ | (48,600,000 | ) | $ | 53,244,134 | 2,138,319 | $ | 881,692 | $ | (161,780 | ) | $ | — | |||||||||||||||
High Yield Strategy Fund | ||||||||||||||||||||||||||||||||
Guggenheim Strategy Fund I | $ | — | $ | 186,816,494 | $ | (122,500,000 | ) | $ | 64,315,270 | 2,582,943 | $ | 373,644 | $ | (78,427 | ) | $ | — | |||||||||||||||
Guggenheim Strategy Fund II | 22,981,600 | 127,848,608 | (117,000,000 | ) | 33,783,080 | 1,356,206 | 399,144 | (100,618 | ) | — | ||||||||||||||||||||||
$ | 22,981,600 | $ | 314,665,102 | $ | (239,500,000 | ) | $ | 98,098,350 | $ | 772,788 | $ | (179,045 | ) | $ | — |
13. Line of Credit
The Trust, along with other affiliated trusts, secured an uncommitted, $75,000,000 line of credit from U.S. Bank, N.A., which expires June 13, 2015. This line of credit is reserved for emergency or temporary purposes. Borrowings, if any, under this arrangement bear interest equal to the Prime Rate, minus 2%, which shall be paid monthly, averaging 1.25% for the year ended March 31, 2015. The Funds did not have any borrowings under this agreement at March 31, 2015.
The average daily balances borrowed for the year ended March 31, 2015, were as follows:
Fund | Average Daily Balance | |||
Nova Fund | $ | 44,686 | ||
S&P 500® Fund | 50,044 | |||
Inverse S&P 500® Strategy Fund | 84,047 | |||
Mid-Cap 1.5x Strategy Fund | 61,500 | |||
Russell 2000® 1.5x Strategy Fund | 79,348 | |||
Russell 2000® Fund | 2,307 | |||
Government Long Bond 1.2x Strategy Fund | 805,427 | |||
High Yield Strategy Fund | 12,361 | |||
U.S. Government Money Market Fund | 370 |
14. Reverse Share Splits
A reverse share split occurred for the following funds:
Fund | Effective Date | Split Type |
Inverse NASDAQ-100® Strategy Fund | February 21, 2014 | One-for-Five Reverse Split |
Inverse Mid-Cap Strategy Fund | February 7, 2014 | One-for-Three Reverse Split |
Inverse Russell 2000® Strategy Fund | February 7, 2014 | One-for-Three Reverse Split |
Government Long Bond 1.2x Strategy Fund | February 7, 2014 | One-for-Three Reverse Split |
Inverse Government Long Bond Strategy Fund | February 21, 2014 | One-for-Five Reverse Split |
The effect of these transactions was to divide the number of outstanding shares of the Fund by the split ratio, resulting in a corresponding increase in net asset value per share. The share transactions presented in the statement of changes in net assets and the per share data in the financial highlights for each of the periods presented prior to the effective date have been restated to reflect these reverse share splits. There were no changes in net assets, results of operations or total return as a result of these transactions.
200 | THE RYDEX FUNDS ANNUAL REPORT |
NOTES TO FINANCIAL STATEMENTS (continued)
15. Legal Proceedings
Tribune Company
Rydex Series Funds has been named as a defendant and a putative member of the proposed defendant class of shareholders in the case entitled Kirschner v. FitzSimons, No. 12-2652 (S.D.N.Y.) (formerly Official Committee of Unsecured Creditors of Tribune Co. v. FitzSimons, Adv. Pro. No. 10-54010 (Bankr. D. Del.)) (the “FitzSimons action”), as a result of ownership by certain series of the Rydex Series Funds of shares in the Tribune Company (“Tribune”) in 2007, when Tribune effected a leveraged buyout transaction (“LBO”) by which Tribune converted to a privately-held company. In his complaint, the plaintiff has alleged that, in connection with the LBO, Tribune insiders and shareholders were overpaid for their Tribune stock using financing that the insiders knew would, and ultimately did, leave the Tribune Company insolvent. The plaintiff has asserted claims against certain insiders, major shareholders, professional advisers, and others involved in the LBO. The plaintiff is also attempting to obtain from former Tribune shareholders, including the Rydex Series Funds, the proceeds they received in connection with the LBO.
In June 2011, a group of Tribune creditors filed multiple actions against former Tribune shareholders involving state law constructive fraudulent conveyance claims arising out of the 2007 LBO (the “SLCFC actions”). Rydex Series Funds has been named as a defendant in one of the SLCFC actions: Deutsche Bank Trust Co. Americas v. McGurn, No. 11-1510 (S.D.N.Y.). In those actions, the creditors seek to recover from Tribune’s former shareholders the proceeds received in connection with the 2007 LBO.
The FitzSimons action and the SLCFC actions have been consolidated with the majority of the other Tribune LBO-related lawsuits in a multidistrict litigation proceeding captioned In re Tribune Company Fraudulent Conveyance Litig., No. 11-md-2696 (S.D.N.Y.) (the “MDL Proceeding”).
On September 23, 2013, the District Court granted the defendants’ omnibus motion to dismiss the SLCFC actions, on the basis that the creditors lacked standing. On September 30, 2013, the creditors filed a notice of appeal of the September 23 order. On October 28, 2013, the defendants filed a joint notice of cross-appeal of that same order.
The SLCFC appeals have been fully briefed, and oral argument in front of the U.S. Court of Appeals for the Second Circuit occurred on November 5, 2014. The Court has not yet issued a decision on the appeals.
On May 23, 2014, the defendants filed motions to dismiss the FitzSimons action, including a global motion to dismiss Count I, which is the claim brought against former Tribune shareholders for intentional fraudulent conveyance under U.S. federal law. The Court has not yet issued a decision on any of these motions.
None of these lawsuits alleges any wrongdoing on the part of Rydex Series Funds. The following series of Rydex Series Funds held shares of Tribune and tendered these shares as part of Tribune’s LBO: Nova Fund, S&P 500® Pure Value Fund, Multi-Cap Core Equity Fund, S&P 500® Fund, Multi-Hedge Strategies Fund and Hedged Equity Fund (the “Funds”). The value of the proceeds received by the foregoing Funds was $28,220, $109,242, $9,860, $3,400, $1,181,160, and $10,880, respectively. At this stage of the proceedings, Rydex Series Funds is not able to make a reliable predication as to the outcome of these lawsuits or the effect, if any, on a Fund’s net asset value.
Lyondell Chemical Company
In December 2011, Rydex Series Funds was named as a defendant in Weisfelner, as Trustee of the LB Creditor Trust, v. Fund 1 (In re Lyondell Chemical Co.), Adv. Pro. No. 10-4609 (Bankr. S.D.N.Y.) (the “Creditor Trust action”).
Similar to the claims made in the Tribune matter, the Weisfelner complaint seeks to have set aside and recovered as fraudulent transfers from former Lyondell Chemical Company (“Lyondell”) shareholders the consideration paid to them pursuant to the cash out merger of Lyondell shareholders in connection with the combination of Lyondell and Basell AF in 2007. Lyondell filed for bankruptcy in 2008.
On April 7, 2014, the plaintiff filed a Third Amended Complaint. In the related action entitled Weisfelner, as Trustee of the LB Litigation Trust v. A. Holmes & H. Holmes TTEE (In re Lyondell Co.), Adversary Proceeding No. 10-5525 (Bankr. S.D.N.Y.) (the “Litigation Trust action”), the plaintiff also filed a Second Amended Complaint that alleges a claim against the former
THE RYDEX FUNDS ANNUAL REPORT | 201 |
NOTES TO FINANCIAL STATEMENTS (concluded)
Lyondell shareholders under federal law for intentional fraudulent transfer. A third related action against the former Lyondell shareholders, Weisfelner, as Trustee of the LB Creditor Trust v. Reichman, Adversary Proceeding No. 12-1570 (Bankr. S.D.N.Y.) (the “Reichman action”), is pending as well.
On May 8, 2014, the plaintiff in the Litigation Trust action filed a motion to certify a defendant class generally comprised of all former Lyondell shareholders that received proceeds in exchange for their shares in the 2007 merger transaction.
On July 30, 2014, the defendants filed a motion to dismiss these lawsuits. The Court held oral argument on the motions to dismiss and on the motion for class certification on January 14 and January 15, 2015. The Court has not yet issued decisions on these motions. Discovery has commenced in these lawsuits.
These lawsuits do not allege any wrongdoing on the part of Rydex Series Funds. The following series of Rydex Series Funds received cash proceeds from the cash out merger in the following amounts: Basic Materials Fund - $1,725,168; Long Short Equity Fund f/k/a U.S. Long Short Momentum Fund - $2,193,600; Global 130/30 Strategy Fund - $37,920; Hedged Equity Fund - $1,440; and Multi-Hedge Strategies Fund - $1,116,480. At this stage of the proceedings, Rydex Series Funds is not able to make a reliable predication as to the outcome of these lawsuits or the effect, if any, on a Fund’s net asset value.
202 | THE RYDEX FUNDS ANNUAL REPORT |
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Board of Trustees and
Shareholders of Rydex Series Funds:
We have audited the accompanying statements of assets and liabilities, including the schedules of investments, of Nova Fund, S&P 500® Fund, Inverse S&P 500® Strategy Fund, Monthly Rebalance NASDAQ-100® 2x Strategy Fund, Inverse NASDAQ-100® Strategy Fund, Mid-Cap 1.5x Strategy Fund, Inverse Mid-Cap Strategy Fund, Russell 2000® 1.5x Strategy Fund, Russell 2000® Fund, Inverse Russell 2000® Strategy Fund, Government Long Bond 1.2x Strategy Fund, Inverse Government Long Bond Strategy Fund, High Yield Strategy Fund, Inverse High Yield Strategy Fund and U.S. Government Money Market Fund (fifteen of the series constituting the Rydex Series Funds) (the “Funds”) as of March 31, 2015, and the related statements of operations, the statements of changes in net assets, and the financial highlights for each of the years or periods indicated therein. These financial statements and financial highlights are the responsibility of the Funds’ management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. We were not engaged to perform an audit of the Funds’ internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Funds’ internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements and financial highlights, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of March 31, 2015, by correspondence with the custodian, transfer agent, and brokers or by other appropriate auditing procedures where replies from brokers were not received. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of the above listed Funds (fifteen of the series constituting the Rydex Series Funds) at March 31, 2015, and the results of their operations, the changes in their net assets, and their financial highlights for each of the years or periods indicated therein, in conformity with U.S. generally accepted accounting principles.
![](https://capedge.com/proxy/N-CSR/0001398344-15-003814/ncsr_05.jpg)
McLean, Virginia
May 21, 2015
THE RYDEX FUNDS ANNUAL REPORT | 203 |
OTHER INFORMATION (Unaudited)
Tax Information
This information is being provided as required by the Internal Revenue Code (IRC). Amounts shown may differ from those elsewhere in the report because of differences in tax and financial reporting practice.
Of the taxable ordinary income distributions paid during the fiscal year ending March 31, 2015, the following funds had the corresponding percentages qualify for the dividends received deduction for corporations:
Fund | % Qualifying |
Nova Fund | 100.00% |
S&P 500® Fund | 46.60% |
Mid-Cap 1.5x Strategy Fund | 34.78% |
Russell 2000 Strategy Fund | 3.46% |
The following amounts of taxable ordinary income dividends paid during the fiscal year qualified for the lower income tax rate available to individuals under the Jobs and Growth Tax Relief Reconciliation Act of 2003:
Fund | % Qualifying |
Nova Fund | 100.00% |
S&P 500® Fund | 46.03% |
Mid-Cap 1.5x Strategy Fund | 34.78% |
Russell 2000 Strategy Fund | 2.52% |
Additionally, of the taxable ordinary income distributions paid during the fiscal year ending March 31, 2015, the following funds had the corresponding percentages qualify as interest related dividends and qualified short-term capital gains as permitted by IRC Section 871(k)(1) and IRC Section 871(k)(2), respectively:
Fund | % Qualifying | % STCG Qualifying |
S&P 500® Fund | 0.00% | 100.00% |
Mid-Cap 1.5x Strategy Fund | 0.00% | 100.00% |
Russell 2000® Fund | 0.00% | 100.00% |
Government Long Bond 1.2x Strategy Fund | 100.00% | 0.00% |
U.S. Government Money Market Fund | 100.00% | 100.00% |
With respect to the taxable year ended March 31, 2015, the Funds hereby designate as capital gain dividends the amounts listed below, or, if subsequently determined to be different, the net capital gain of such year:
Fund | From long-term capital gains, subject to the 15% rate gains category: | From long-term capital gains, using proceeds from shareholder redemptions: | ||||||
S&P 500® Fund | $ | 2,899,418 | $ | 3,640,724 | ||||
Mid-Cap 1.5x Strategy Fund | 409,228 | 4,032,982 | ||||||
Russell 2000® 1.5x Strategy Fund | 244,398 | 4,013,079 | ||||||
Russell 2000® Fund | 965,945 | 6,772,304 |
Board Considerations in Approving the Investment Advisory Agreement for the Monthly Rebalance NASDAQ-100® 2x Strategy Fund
At an in-person meeting of the Board of Trustees (the “Board”) of Rydex Series Funds (the “Trust”) held on August 18, 2014 (the “Meeting”), called for the purpose of, among other things, consideration of, and voting on, the approval of the investment advisory agreement applicable to the Monthly Rebalance NASDAQ-100® 2x Strategy Fund, a new series of the Trust (the “Fund”), the Board, including the Trustees who are not “interested persons,” as defined by the Investment
204 | THE RYDEX FUNDS ANNUAL REPORT |
OTHER INFORMATION (Unaudited)(continued)
Company Act of 1940, of the Trust (the “Independent Trustees”), unanimously approved the investment advisory agreement (the “Investment Advisory Agreement”) between the Trust and Security Investors, LLC (the “Advisor”) with respect to the Fund, based on the Board’s review of qualitative and quantitative information provided by the Advisor.
In reaching the conclusion to approve the Investment Advisory Agreement, the Independent Trustees requested and obtained from the Advisor such information as the Independent Trustees deemed reasonably necessary to evaluate the Investment Advisory Agreement. In advance of the Meeting, the Advisor provided the Board with a wide variety of information, including comparisons of Fund fees relative to comparable peer funds, including the current Rydex Dynamic NASDAQ-100 2x Strategy Fund, which has an investment strategy that is identical to that of the Fund except that it rebalances daily. The Independent Trustees carefully evaluated the information provided and considered all factors that it deemed to be relevant, including those discussed below. At the Meeting, independent legal counsel advised the Independent Trustees with respect to their deliberations and their fiduciary responsibilities associated with the Board’s consideration of the approval of the Investment Advisory Agreement. The Board also received a memorandum from Fund counsel regarding the Board’s responsibilities when considering the approval of an investment advisory agreement.
During the Meeting, the Board, including the Independent Trustees, evaluated a number of considerations, including among others: (a) the nature, extent and quality of the investment advisory and other services to be provided by the Advisor; (b) the Advisor’s investment management personnel; (c) the Advisor’s operations and financial condition; (d) the expected benefits (such as soft dollars) to the Advisor and its affiliates from their relationship with the Fund; (e) a comparison of the Fund’s projected expense ratios to those of similarly situated funds, paying special attention to the absence of breakpoints in these fees and the Advisor’s rationale for not including breakpoints; (f) the Fund’s expected overall fees and operating expenses compared with those of peer funds; (g) the Advisor’s compliance systems; (h) the Advisor’s policies and compliance procedures applicable to personal securities transactions; (i) the Advisor’s reputation, expertise and resources in the financial markets; and (j) the proposed expense limitation/fee waiver agreement between the Advisor and the Fund. In its deliberations, the Board did not identify any particular factor as controlling, noting that each Trustee could attribute different weights to the various factors considered.
Based on the Board’s deliberations at the Meeting, the Board, including all of the Independent Trustees, unanimously: (a) concluded that the terms of the Investment Advisory Agreement are fair and reasonable; (b) concluded that the Advisor’s fees were reasonable in light of the services that it will provide to the Fund; and (c) agreed to approve the Investment Advisory Agreement based upon the following considerations, among others:
• Nature, Extent and Quality of Services Provided by the Advisor. At the Meeting, the Board reviewed the scope of services to be provided by the Advisor under the Investment Advisory Agreement and noted that the Advisor was capable of providing high quality advisory services to the Fund, as indicated by the nature and quality of services provided by the Advisor in the past, including the provision of similar services to the Rydex Dynamic NASDAQ-100 2x Strategy Fund, the firm’s management capabilities, the professional qualifications and experience of its portfolio managers, and its investment and management oversight processes.
• Fund Expenses and Performance of the Fund and the Advisor. As the Fund had not yet commenced operations, the Board was not able to review the Fund’s performance; however, at the Meeting, the Board considered the Advisor’s track record of successfully managing funds tracking the performance of a benchmark. The Board also reviewed the hypothetical performance of the proposed benchmark for a 20-year period ending in June 2014, noting that the hypothetical performance compared favorably to the actual performance of the Rydex Dynamic NASDAQ-100 2x Strategy Fund. The Board also reviewed statistical information provided by the Advisor regarding the expense ratio components of the Fund. The Advisor engaged FUSE Research Network LLC (“FUSE”), an independent, third party research provider, to prepare an advisory contract approval report to help the Board fulfill its advisory contract approval responsibilities. The reports compared the Fund’s fees and expenses to those of comparable funds in the Fund’s peer group, including the Rydex Dynamic NASDAQ-100 2x Strategy Fund, and the broader peer universe, as determined by FUSE. Statistical information in the FUSE report related to the expense ratio component was based on a comparison of the Fund’s and peer funds’ actual advisory fees, waivers/reimbursements, and gross and net total expenses. The Board also considered the Advisor’s representation that it found the peer groups compiled by FUSE to be appropriate.
THE RYDEX FUNDS ANNUAL REPORT | 205 |
OTHER INFORMATION (Unaudited)(concluded)
• Costs of Services Provided to the Fund and Profits Realized by the Advisor and its Affiliates. With respect to the cost of advisory services provided and the Advisor’s profitability, on the basis of the Board’s review of the fees to be charged by the Advisor for investment advisory and related services, the Board concluded that it was too early to predict profitability from the Fund, but noted that this matter would be given further consideration on an ongoing basis.
• Economies of Scale. The Board noted that because the Fund had not yet commenced operations, there were as of now, no economies of scale to share with shareholders.
• Other Benefits to the Advisor and/or its Affiliates. In addition to evaluating the services provided by the Advisor, the Board considered the nature and amount of other benefits to be received by the Advisor and its affiliates as a result of their relationship with the Fund. In particular, the Board considered the nature, extent and quality of the administrative, distribution, and shareholder services to be performed by the Advisor’s affiliates and the fees to be paid to the Advisor’s affiliates for those services under separate agreements.
On the basis of the information provided to it and its evaluation of that information, the Board, including the Independent Trustees, concluded that the approval of the Investment Advisory Agreement would provide Fund shareholders with high quality services at a cost that was appropriate, reasonable, and in the best interests of the Fund and its shareholders. The Board, including the Independent Trustees, unanimously approved the Investment Advisory Agreement.
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 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 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 are 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 800-SEC-0330. Copies of the portfolio holdings are also available to shareholders, without charge and upon request, by calling 800.820.0888.
206 | THE RYDEX FUNDS ANNUAL REPORT |
INFORMATION ON BOARD OF TRUSTEES AND OFFICERS (Unaudited)
A Board of Trustees oversees the Trust, as well as other trusts of GI, 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 800.820.0888.
Name, Address* and Year of Birth of Trustee | Position(s) Held with the Trust, Term of Office and Length of Time Served | Principal Occupation(s) During Past 5 Years | Number of Portfolios in Fund Complex Overseen by Trustee*** | Other Directorships Held by Trustee |
INTERESTED TRUSTEE | ||||
Donald C. Cacciapaglia** (1951) | Trustee from 2012 to present. | Current: President and CEO, certain other funds in the Fund Complex (2012-present); Vice Chairman, Guggenheim Investments (2010-present). Former: Chairman and CEO, Channel Capital Group, Inc. (2002-2010). | 221 | Clear Spring Life Insurance Company (2015-present); Guggenheim Partners Japan, Ltd. (2014-present); Delaware Life (2013-present); Guggenheim Life and Annuity Company (2011-present); Paragon Life Insurance Company of Indiana (2011-present). |
INDEPENDENT TRUSTEES | ||||
Corey A. Colehour (1945) | Trustee and Member of the Audit, Governance, Nominating, and Investment and Performance Committees from 1998 to present. | Retired. | 133 | None. |
J. Kenneth Dalton (1941) | Trustee, Member and Chairman of the Audit Committee, and Member of the Governance and Nominating Committees from 1998 to present; and Member of the Risk Oversight Committee from 2010 to present. | Retired. | 133 | Epiphany Funds (4) (2009-present). |
John O. Demaret (1940) | Vice Chairman of the Board of Trustees from 2014 to present; Trustee from 1998 to present and Chairman of the Board from 2006 to 2014; Member and Chairman of the Audit Committee from 1998 to present; and Member of the Risk Oversight Committee from 2010 to present. | Retired. | 133 | None. |
THE RYDEX FUNDS ANNUAL REPORT | 207 |
INFORMATION ON BOARD OF TRUSTEES AND OFFICERS (Unaudited)(continued)
Name, Address* and Year of Birth of Trustee | Position(s) Held with the Trust, Term of Office and Length of Time Served | Principal Occupation(s) During Past 5 Years | Number of Portfolios in Fund Complex Overseen by Trustee*** | Other Directorships Held by Trustee |
INDEPENDENT TRUSTEES - concluded | ||||
Werner E. Keller (1940) | Chairman of the Board from 2014 to present; Vice Chairman of the Board of Trustees from 2010 to 2014; Trustee and Member of the Audit, Governance, and Nominating Committees from 2005 to present; and Chairman and Member of the Risk Oversight Committee from 2010 to present. | Current: Founder and President, Keller Partners, LLC (investment research firm) (2005-present). | 133 | None. |
Thomas F. Lydon, Jr. (1960) | Trustee and Member of the Audit, Governance, and Nominating Committees from 2005 to present. | Current: President, Global Trends Investments (registered investment adviser) (1996-present). | 133 | US Global Investors (GROW) (1995-present). |
Patrick T. McCarville (1942) | Trustee, Member of the Audit Committee, and Chairman and Member of the Governance and Nominating Committees from 1998 to present. | Retired. Former: Chief Executive Officer, Par Industries, Inc., d/b/a Par Leasing (1977-2010). | 133 | None. |
Name, Address* and Year of Birth | Position(s) Held with the Trust, Term of Office and Length of Time Served | Principal Occupation(s) During Past 5 Years |
OFFICERS | ||
Donald C. Cacciapaglia (1951) | President (2012-present). | Current: President and CEO, certain other funds in the Fund Complex (2012-present); Vice Chairman, Guggenheim Investments (2010-present). Former: Chairman and CEO, Channel Capital Group Inc. (2002-2010). |
Michael P. Byrum (1970) | Vice President (1999-present). | Current: Senior Vice President, Security Investors, LLC (2010-present); President and Chief Investment Officer, Rydex Holdings, LLC (2008-present); Director and Chairman, Advisory Research Center, Inc. (2006-present); Manager, Guggenheim Specialized Products, LLC (2005-present). Former: Vice President, Guggenheim Distributors, LLC (2009); Director (2009-2010) and Secretary (2002-2010), Rydex Fund Services, LLC; Director (2008-2010), Chief Investment Officer (2006-2010), President (2004-2010) and Secretary (2002-2010), Rydex Advisors, LLC; Director (2008-2010), Chief Investment Officer (2006-2010), President (2004-2010) and Secretary (2002-2010), Rydex Advisors II, LLC. |
208 | THE RYDEX FUNDS ANNUAL REPORT |
INFORMATION ON BOARD OF TRUSTEES AND OFFICERS (Unaudited)(concluded)
Name, Address* and Year of Birth | Position(s) Held with the Trust, Term of Office and Length of Time Served | Principal Occupation(s) During Past 5 Years |
OFFICERS - concluded | ||
Nikolaos Bonos (1963) | Vice President and Treasurer (2003-present). | Current: Senior Vice President, Security Investors, LLC (2010-present); Chief Executive Officer, Guggenheim Specialized Products, LLC (2009-present); Chief Executive Officer & President, Rydex Fund Services, LLC (2009-present); Vice President, Rydex Holdings, LLC (2008-present). Former: Senior Vice President, Security Global Investors, LLC (2010-2011); and Senior Vice President, Rydex Advisors, LLC and Rydex Advisors II, LLC (2006-2011). |
Elisabeth Miller (1968) | Chief Compliance Officer (2012-present). | Current: CCO, certain other funds in the Fund Complex (2012-present); CCO, Security Investors, LLC (2012-present); CCO, Guggenheim Funds Investment Advisors, LLC (2012-present); Managing Director, Guggenheim Investments (2012-present); Vice President, Guggenheim Funds Distributors, LLC (March 2014-present). Former: CCO, Guggenheim Distributors, LLC (2009-March 2014); Senior Manager, Security Investors, LLC (2004-2009); Senior Manager, Guggenheim Distributors, LLC (2004-2009). |
Joseph M. Arruda (1966) | Assistant Treasurer (2006-present). | Current: Assistant Treasurer, certain other funds in the Fund Complex (2006-present); Vice President, Security Investors, LLC (2010-present); CFO and Manager, Guggenheim Specialized Products, LLC (2009-present). Former: Vice President, Security Global Investors, LLC (2010-2011); Vice President, Rydex Advisors, LLC (2010); Vice President, Rydex Advisors II, LLC (2010). |
Paul J. Davio (1972) | Assistant Treasurer (2014-present). | Current: Assistant Treasurer, certain other funds in the Fund Complex (2014-present); Director, Guggenheim Investments (2006-present). Former: Manager, Mutual Fund Administration, Guggenheim Investments (2003-2006). |
Amy J. Lee (1961) | Vice President (2009-present) and Secretary (2012-present). | Current: Chief Legal Officer, certain other funds in the Fund Complex (2013-present); Senior Managing Director, Guggenheim Investments (2012-present). Former: Vice President, Associate General Counsel and Assistant Secretary, Security Benefit Life Insurance Company and Security Benefit Corporation (2004-2012). |
* | All Trustees and Officers may be reached c/o Guggenheim Investments, 805 King Farm Boulevard, Suite 600, Rockville, MD 20850. |
** | Mr. Cacciapaglia is an “interested” person of the Trust, as that term is defined in the 1940 Act by virtue of his affiliation with the Adviser’s parent company. |
*** | The “Fund Complex” includes all closed-end and open-end funds (including all of their portfolios) advised by the Adviser and any funds that have an investment adviser or servicing agent that is an affiliated person of the Adviser. Information provided is as of the date of this report. |
THE RYDEX FUNDS ANNUAL REPORT | 209 |
GUGGENHEIM INVESTMENTS PRIVACY POLICIES (Unaudited)
Rydex Funds, Guggenheim Funds, Rydex Investments, Guggenheim Funds Distributors, LLC, Security Investors, LLC, Security Distributors, Inc., Guggenheim Partners Investment Managers, LLC, and Rydex Advisory Services (Collectively “Guggenheim Investments”).
Our Commitment to You
When you become a Guggenheim Investments investor, you entrust us with not only your hard-earned money but also with personal and financial information about you. We recognize that your relationship with us is based on trust and that you expect us to act responsibly and in your best interests. Because we have access to this private information about you, we hold ourselves to the highest standards in its safekeeping and use. This means, most importantly, that we do not sell client information to anyone—whether it is your personal information or if you are a current or former Guggenheim Investments client.
The Information We Collect About You
In the course of doing business with shareholders and investors, we collect nonpublic personal information about you. You typically provide personal information when you complete a Guggenheim Investments account application or when you request a transaction that involves Rydex and Guggenheim Investments funds or one of the Guggenheim Investments affiliated companies. “Nonpublic personal information” is personally identifiable private information about you. For example, it includes information regarding your name and address, Social Security or taxpayer identification number, assets, income, account balance, bank account information and investment activity (e.g., purchase and redemption history).
How We Handle Your Personal Information
As emphasized above, we do not sell information about current or former clients or their accounts to third parties. Nor do we share such information, except when necessary to complete transactions at your request or to make you aware of related investment products and services that we offer. Additional details about how we handle your personal information are provided below. To complete certain transactions or account changes that you direct, it may be necessary to provide identifying information to companies, individuals or groups that are not affiliated with Guggenheim Investments. For example, if you ask to transfer assets from another financial institution to Guggenheim Investments, we will need to provide certain information about you to that company to complete the transaction. To alert you to other Guggenheim Investments investment products and services, we may share your information within the Guggenheim Investments family of affiliated companies. This would include, for example, sharing your information within Guggenheim Investments so we can make you aware of new Rydex and Guggenheim Investments funds or the services offered through another Guggenheim Investments affiliated company. In certain instances, we may contract with nonaffiliated companies to perform services for us. Where necessary, we will disclose information we have about you to these third parties. In all such cases, we provide the third party with only the information necessary to carry out its assigned responsibilities and only for that purpose. And we require these third parties to treat your private information with the same high degree of confidentiality that we do. In certain instances, we may share information with other financial institutions regarding individuals and entities in response to the U.S.A. Patriot Act. Finally, we will release information about you if you direct us to do so, if we are compelled by law to do so or in other circumstances permitted by law.
Opt Out Provisions
We do not sell your personal information to anyone. The law allows you to “opt out” of only certain kinds of information sharing with third parties. The firm does not share personal information about you with any third parties that triggers this opt-out right. This means YOU ARE ALREADY OPTED OUT.
210 | THE RYDEX FUNDS ANNUAL REPORT |
GUGGENHEIM INVESTMENTS PRIVACY POLICIES (Unaudited)(concluded)
How We Protect Privacy Online
Our concern for the privacy of our shareholders also extends to those who use our web site, guggenheiminvestments.com. Our web site uses some of the most secure forms of online communication available, including encryption technology, Secure Socket Layer (SSL) protocol, firewalls and user names and passwords. These technologies provide a high level of security and privacy when you access your account information or initiate online transactions. The Guggenheim Investments web site offers customized features that require our use of “http cookies”—tiny pieces of information that we ask your browser to store. However, we make very limited use of these cookies. We only use cookies for session management and security features on the Guggenheim Investments web site. We do not use them to pull data from your hard drive, to learn your email address, or to view data in cookies created by other web sites. We will not share the information in our cookies or give others access to it. See the legal information area on our web site for more details about web site security and privacy features.
How We Safeguard Your Personal Information
We restrict access to nonpublic personal information about shareholders to our employees and in some cases to third parties (for example, the service providers described above) as permitted by law. We maintain strict physical, electronic and procedural safeguards that comply with federal standards to guard your nonpublic personal information.
We’ll Keep You Informed
As required by federal law, we will notify shareholders of our privacy policy annually. We reserve the right to modify this policy at any time, but rest assured that if we do change it, we will tell you promptly. You will also be able to access our privacy policy from our web site at guggenheiminvestments.com. Should you have any questions regarding our privacy policy, contact us at 800.820.0888 or 301.296.5100.
THE RYDEX FUNDS ANNUAL REPORT | 211 |
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3.31.2015
Rydex Funds Annual Report
Domestic Equity Funds | ||
S&P 500® Pure Growth Fund | ||
S&P 500® Pure Value Fund | ||
S&P MidCap 400® Pure Growth Fund | ||
S&P MidCap 400® Pure Value Fund | ||
S&P SmallCap 600® Pure Growth Fund | ||
S&P SmallCap 600® Pure Value Fund |
International Equity Funds |
Europe 1.25x Strategy Fund |
Japan 2x Strategy Fund |
Specialty Funds |
Strengthening Dollar 2x Strategy Fund |
Weakening Dollar 2x Strategy Fund |
RTB2-ANN-0315x0316 | guggenheiminvestments.com |
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TABLE OF CONTENTS |
DEAR SHAREHOLDER | 2 |
ECONOMIC AND MARKET OVERVIEW | 4 |
A BRIEF NOTE ON THE COMPOUNDING OF RETURNS | 6 |
ABOUT SHAREHOLDERS’ FUND EXPENSES | 7 |
S&P 500® PURE GROWTH FUND | 10 |
S&P 500® PURE VALUE FUND | 18 |
S&P MIDCAP 400® PURE GROWTH FUND | 26 |
S&P MIDCAP 400® PURE VALUE FUND | 34 |
S&P SMALLCAP 600® PURE GROWTH FUND | 42 |
S&P SMALLCAP 600® PURE VALUE FUND | 51 |
EUROPE 1.25x STRATEGY FUND | 60 |
JAPAN 2x STRATEGY FUND | 68 |
STRENGTHENING DOLLAR 2x STRATEGY FUND | 75 |
WEAKENING DOLLAR 2x STRATEGY FUND | 82 |
NOTES TO FINANCIAL STATEMENTS | 89 |
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM | 105 |
OTHER INFORMATION | 106 |
INFORMATION ON BOARD OF TRUSTEES AND OFFICERS | 108 |
GUGGENHEIM INVESTMENTS PRIVACY POLICIES | 111 |
THE RYDEX FUNDS ANNUAL REPORT | 1 |
March 31, 2015 |
Dear Shareholder:
Security Investors, LLC (the “Investment Adviser”) is pleased to present the annual shareholder report for a selection of our Funds (the “Funds”) for the one-year period ended March 31, 2015.
The Investment Adviser is part of Guggenheim Investments, which represents the investment management businesses of Guggenheim Partners, LLC (“Guggenheim”), a global, diversified financial services firm.
Guggenheim Funds Distributors, LLC is the distributor of the Funds. Guggenheim Funds Distributors, LLC is affiliated with Guggenheim and the Investment Adviser.
We encourage you to read the Economic and Market Overview section of the report, which follows this letter, and then the Performance Report and Fund Profile for each Fund.
We are committed to providing innovative investment solutions and appreciate the trust you place in us.
Sincerely,
![](https://capedge.com/proxy/N-CSR/0001398344-15-003814/ncsr_02.jpg)
Donald C. Cacciapaglia
President
April 30, 2015
Read a prospectus and summary prospectus (if available) carefully before investing. It contains the investment objectives, risks, charges, expenses, and other information, which should be considered carefully before investing. Obtain a prospectus and summary prospectus (if available) at guggenheiminvestments.com or call 800.820.0888.
Inverse and leveraged Funds are not suitable for all investors. • These Funds should be utilized only by investors who (a) understand the risks associated with the use of leverage, (b) understand the consequences of seeking daily leveraged investment results, (c) understand the risk of shorting, and (d) intend to actively monitor and manage their investments. • The more a Fund invests in leveraged instruments, the more the leverage will magnify any gains or losses on those investments. • Inverse Funds involve certain risks, which include increased volatility due to the Funds’ possible use of short sales of securities and derivatives, such as options and futures. • The Funds’ use of derivatives, such as futures, options, and swap agreements, may expose the Funds’ shareholders to additional risks that they would not be subject to if they invested directly in the securities underlying those derivatives. • Short-selling involves increased risks and costs. You risk paying more for a security than you received from its sale. • Leveraged and inverse Funds seek to provide investment results that match the performance of a specific benchmark, before fees and expenses, on a daily basis. Because the Funds seek to track the performance of their benchmark on a daily basis, mathematical compounding, especially with respect to those Funds that use leverage as part of their investment strategy, may prevent a Fund from correlating with the monthly, quarterly, annual, or other period performance of its benchmark. Due to the compounding of daily returns, leveraged and inverse Funds’ returns over periods other than one day will likely differ in amount and possibly direction from the benchmark return for the same period. For those Funds that consistently apply leverage, the value of the Fund’s shares will tend to increase or decrease more than the value of any increase or decrease in its benchmark index. The Funds rebalance their portfolios on a daily basis, increasing exposure in response to that day’s gains or reducing exposure in response to that day’s losses. Daily rebalancing will impair a Fund’s performance if the benchmark experiences volatility. Investors should monitor their leveraged and inverse Funds’ holdings consistent with their strategies, as frequently as daily. • For more on these and other risks, please read the prospectus.
Pure Style Funds may not be suitable for all investors. • The Funds are subject to the risk that large, medium and small-capitalization stocks may underperform other segments of the equity market or the equity market as a whole • Value stocks are subject to the risk that the intrinsic value of the stock may never be realized by the market or that the price goes down. Growth stocks typically invest a high portion of their earnings back into their business and may lack the dividend yield that could cushion their decline in a market downturn. Growth stocks may be more volatile than other stocks because they are more sensitive to investor perceptions regarding the growth potential of the issuing company. • The Funds are subject to the risk that unanticipated early closings of securities exchanges and other financial markets may result in the Funds’ inability to buy or sell securities or other financial instruments on that day. In certain circumstances, it may be difficult for the Funds to purchase and sell particular investments within a reasonable time at a fair price. • Unlike many investment companies, the Funds are not actively “managed.” This means that based on market and economic conditions, the Funds’ performance could be lower than other types of funds that may actively shift their portfolio assets to take advantage of market opportunities. • The Funds are subject to active trading and tracking error risks, which may increase volatility, impact the Funds’ ability to achieve their investment objective and may decrease the Funds’ performance. • These Funds are considered non-diversified and can invest a greater portion of their assets in securities of individual issuers than a diversified fund. As a result, changes in the market value of a single security could cause greater fluctuations in the value of Fund shares than would occur in a more diversified fund. • Securities are not deposits or obligations of any bank, are not guaranteed by any bank, are not insured by the FDIC or any other agency, and involve investment risks, including the possible loss of the principal amount invested. • Please read the prospectus for more detailed information regarding these and other risks.
2 | THE RYDEX FUNDS ANNUAL REPORT |
March 31, 2015 |
The Strengthening Dollar 2x Strategy Fund is subject to a number of risks and may not be suitable for all investors. • The Fund’s use of derivatives such as futures and swap agreements may expose the fund to additional risks that it would not be subject to if it invested directly in the securities underlying those derivatives. • The Fund’s exposure to foreign currencies subjects the Fund to the risk that those currencies will decline in value relative to the U.S. dollar, or, in the case of short positions, that the U.S. dollar will decline in value relative to the currency being hedged. • The more the Fund invests in leveraged instruments, the more the leverage will magnify any gains or losses on those investments. These risks may cause the Fund to experience higher losses and/or volatility than a Fund that does not invest in derivatives, use leverage or have exposure to foreign currencies. • Also, the Fund is subject to active trading and tracking error risks that may increase volatility, decrease performance and impact the Fund’s ability to achieve its investment objective. This fund is considered non-diversified and can invest a greater portion of its assets in securities of individual issuers than a diversified fund. As a result, changes in the market value of a single security could cause greater fluctuations in the value of fund shares than would occur in a more diversified fund. • For more on these and other risks, please read the prospectus
The Weakening Dollar 2x Strategy Fund is subject to a number of risks and may not be suitable for all investors. • The Fund’s use of derivatives such as futures and swap agreements may expose the Fund to additional risks that it would not be subject to if it invested directly in the securities underlying those derivatives. • The Fund’s indirect exposure to foreign currencies subjects the Fund to the risk that those currencies will decline in value relative to the U.S. dollar, or, in the case of short positions, that the U.S. dollar will decline in value relative to the currency being hedged. • The more the Fund invests in leveraged instruments, the more the leverage will magnify any gains or losses on those investments. These risks may cause the Fund to experience higher losses and/or volatility than a fund that does not invest in derivatives, use leverage or have exposure to foreign currencies. • Also, the Fund is subject to active trading and tracking error risks that may increase volatility, decrease performance and impact the Fund’s ability to achieve its investment objective. This Fund is considered non-diversified and can invest a greater portion of its assets in securities of individual issuers than a diversified fund. As a result, changes in the market value of a single security could cause greater fluctuations in the value of Fund shares than would occur in a more diversified fund. • For more on these and other risks, please read the prospectus.
THE RYDEX FUNDS ANNUAL REPORT | 3 |
ECONOMIC AND MARKET OVERVIEW (Unaudited) | March 31, 2015 |
The U.S. continued to enjoy a self-sustaining economic expansion for the 12-month period ended March 31, 2015, although winter weather was likely to distort first-quarter economic data. In addition, U.S. companies scaled back hiring in the last month of the period, adding to evidence that the domestic economy has lost some momentum since the turn of the year. The March increase in payrolls was the smallest since December 2013 and broke a 12-month run of gains above 200,000.
Despite this short-term dislocation, the economy remains on track. Indeed, many other labor market indicators, such as initial jobless claims and the job openings rate, suggest that the U.S. labor market remains quite strong, supporting the conclusion that March’s payroll report was just a temporary blip, similar to the one witnessed last winter. As soon as temporary seasonal factors have dissipated, economic data is likely to bounce back. The labor market has improved over the past year, as subdued mortgage rates and tight housing inventory continue to point to fairly stable appreciation in the housing market, which is key to the ongoing recovery. Consumers are also being helped by lower fuel prices, which are acting as a tax cut for U.S. consumers, freeing up discretionary spending in other areas and acting as a support for consumption.
In Europe, economic data has been surprisingly good and should continue along that path on the back of the European Central Bank’s program of quantitative easing and depreciation of the euro. Japan’s economy remains weak and, without more structural reform, continued monetary accommodation could lead to stagflation. China’s policymakers appear likely to continue the supply of credit and do whatever else is necessary to maintain growth there at an acceptable pace for the near term.
Given weakness overseas and the effect of a stronger U.S. dollar on international earnings, some stocks could face a more challenging environment in the near term, but our research shows that equity markets tend to perform quite well in the periods leading up to a U.S. Federal Reserve (the “Fed”) rate increase. The yield on the 10-year Treasury note declined in January by more than 50 basis points before rebounding in February, echoing the pattern since 2009—Treasury yields decline and a sell-off ensues, driving rates higher. Then conditions stabilize, and rates test their previous lows. Liquidity from foreign central banks and comparatively attractive U.S. yields continue to push global investors to U.S. Treasuries, which should hold down U.S. interest rates in the near term.
Against this backdrop, the U.S. central bank feels pressure to raise its key rate above zero, but insists the decision will be data-dependent and not occur prematurely. With a secular inflation increase unlikely in the near term, slack in the economy, and disinflation being imported from abroad, the Fed may not hike rates until later in the year. The Fed for now appears to be focused on wage growth, which is key for sustaining the expansion but also an indicator of inflationary pressure. The lack of sustained wage growth has been a topic that has confounded the Fed lately. Given the strengthening employment numbers and the apparent reduction in labor market slack, wages should start to increase more steadily across the board. This is one of the most important data points at the moment for the Fed.
The underlying U.S. economy remains strong and investors should avoid being panicked by seasonal setbacks. Indeed, considering the strength of the economy and the wave of liquidity emanating from various central banks around the world, the general investment environment should remain attractive.
For the 12 months ended March 31, 2015, the Standard & Poor’s 500® (“S&P 500”) Index* returned 12.73%. The Morgan Stanley Capital International (“MSCI”) Europe-Australasia-Far East (“EAFE”) Index* returned -0.92%. The return of the MSCI Emerging Markets Index* was 0.44%.
In the bond market, the Barclays U.S. Aggregate Bond Index* posted a 5.72% return for the period, while the Barclays U.S. Corporate High Yield Index* returned 2.00%. The return of the Bank of America Merrill Lynch 3-Month U.S. Treasury Bill Index* was 0.03% for the 12-month period.
The opinions and forecasts expressed may not actually come to pass. This information is subject to change at any time, based on market and other conditions, and should not be construed as a recommendation of any specific security or strategy.
4 | THE RYDEX FUNDS ANNUAL REPORT |
ECONOMIC AND MARKET OVERVIEW (Unaudited)(concluded) | March 31, 2015 |
*Index Definitions:
The following indices are referenced throughout this report. Indices are unmanaged and not available for direct investment. Index performance does not reflect transaction costs, fees, or expenses.
Barclays U.S. Aggregate Bond Index is a broad-based benchmark that measures the investment grade, U.S. dollar-denominated, fixed-rate taxable bond market, including U.S. Treasuries, government-related and corporate securities, MBS (agency fixed-rate and hybrid ARM pass-throughs), ABS, and CMBS.
Barclays U.S. Corporate High Yield Index measures the market of U.S. dollar-denominated, non-investment grade, fixed-rate, taxable corporate bonds. Securities are classified as high yield if the middle rating of Moody’s, Fitch, and S&P is Ba1/BB+/BB+ or below.
Bank of America (“BofA”) Merrill Lynch 3-Month U.S. Treasury Bill Index is an unmanaged market index of U.S. Treasury securities maturing in 90 days that assumes reinvestment of all income.
STOXX® Europe 50 Index provides a blue-chip representation of super-sector leaders in Europe. The index covers 50 stocks from developed European countries such as Austria, Belgium, Denmark, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, the Netherlands, Norway, Portugal, Spain, Sweden, Switzerland, and the United Kingdom.
MSCI EAFE Index is a free float-adjusted market capitalization index that is designed to measure the equity market performance of developed markets, excluding the U.S. & Canada.
MSCI Emerging Markets Index is a free float-adjusted market capitalization-weighted index that is designed to measure equity market performance in the global emerging markets.
Nikkei-225 Stock Average Index is a price-weighted index comprised of Japan’s top 225 blue-chip companies on the Tokyo Stock Exchange.
S&P 500® Index is a capitalization-weighted index of 500 stocks designed to measure the performance of the broad economy, representing all major industries and is considered a representation of the U.S. stock market.
S&P 500® Pure Growth Index is narrow in focus, containing only those S&P 500 Index companies with strong growth characteristics as selected by S&P. The S&P 500 Index is a capitalization-weighted index covering 500 industrial, utility, transportation, and financial companies of the U.S. markets (mostly NYSE Euronext issues).
S&P 500® Pure Value Index is narrow in focus, containing only those S&P 500 Index companies with strong value characteristics as selected by S&P. The S&P 500 Index is a capitalization-weighted index covering 500 industrial, utility, transportation, and financial companies of the U.S. markets (mostly NYSE Euronext issues).
S&P MidCap 400® Pure Growth Index is narrow in focus, containing only those S&P MidCap 400 Index companies with strong growth characteristics as selected by S&P. The S&P MidCap 400 Index measures the performance of the mid-capitalization sector of the U.S. equity market.
S&P MidCap 400® Pure Value Index is narrow in focus, containing only those S&P MidCap 400 Index companies with strong value characteristics as selected by S&P. The S&P MidCap 400 Index measures the performance of the mid-capitalization sector of the U.S. equity market.
S&P SmallCap 600® Pure Growth Index is narrow in focus, containing only those S&P SmallCap 600 Index companies with strong growth characteristics as selected by S&P. The S&P SmallCap 600 Index measures the performance of the small-capitalization sector of the U.S. equity market.
S&P SmallCap 600® Pure Value Index is narrow in focus, containing only those S&P SmallCap 600 Index companies with strong value characteristics as selected by S&P. The S&P SmallCap 600 Index measures the performance of the small-capitalization sector of the U.S. equity market.
The USD or U.S. Dollar Index® (USDX) is an index that determines the relative value of the United States dollar to a basket of foreign currencies. This formulated “basket” of currencies comprises the weighting of six other currencies as follows: euro (EUR), 57.6% + Japanese yen (JPY), 13.6% + pound sterling (GBP), 11.9% + Canadian dollar (CAD), 9.1% + Swedish krona (SEK), 4.2% + Swiss franc (CHF) 3.6%.
THE RYDEX FUNDS ANNUAL REPORT | 5 |
A BRIEF NOTE ON THE COMPOUNDING OF RETURNS (Unaudited) |
Many of the Funds described in this report are benchmarked daily to leveraged and/or inverse leveraged versions of published indices. To properly evaluate the performance of these funds, it is essential to understand the effect of mathematical compounding on their respective returns.
Because of the nonlinear effects of leverage applied over time, it is possible for a fund to perform in line with its benchmark for several individual periods in a row, yet seem to trail the benchmark over the entire period. It is also possible that a fund that performs in-line with its benchmark on a daily basis may seem to outperform its benchmark over longer periods.
An Example of Compounding
For example, consider a hypothetical fund that is designed to produce returns that correspond to 150% of an index. On the first day of a period, the index rises from a level of 100 to a level of 106, producing a 6.0% gain and an expectation that the fund will rise by 9.0%. On the same day, the fund’s net asset value per share (“NAV”) increases from $10.00 to $10.90 for a gain of 9.0% — in line with its benchmark.
On day two, assume the index falls from 106 to 99 for a loss of about 6.6%. The fund, as expected, falls 9.9% to a price of $9.82. On each day, the fund performed exactly in line with its benchmark, but for the two-day period, the fund was down 1.8%, while the index was down only 1.0%. Without taking into account the daily compounding of returns, one would expect the fund to lose 1.5% and would see the fund as trailing by 0.3% when in fact it had performed perfectly. This example is summarized in the table below.
Index Level | Index Performance | Fund Expectation | Fund NAV | Fund Performance | Assessment | |
Start | 100 | $10.00 | ||||
Day 1 | 106 | 6.0% | 9.0% | $10.90 | 9.0% | In line |
Day 2 | 99 | -6.6% | -9.9% | $9.82 | -9.9% | In line |
Cumulative | -1.0% | -1.5% | -1.8% | -0.3% |
As illustrated by this simple example, the effect of leverage can make it difficult to form expectations or judgments about fund performance given only the returns of the unleveraged index.
Because certain funds seek to track the performance of their benchmark on a daily basis, mathematical compounding, especially with respect to those funds that use leverage as part of their investment strategy, may prevent a fund from correlating with the monthly, quarterly, annual or other period performance of its benchmark. Due to the compounding of daily returns, leveraged and inverse funds’ returns over periods other than one day will likely differ in amount and possibly direction from the benchmark return for the same period. Investors should monitor their leveraged and inverse funds’ holdings consistent with their strategies, as frequently as daily. For those funds that consistently apply leverage, the value of the fund’s shares will tend to increase or decrease more than the value of any increase or decrease in its benchmark index. For more on correlation, leverage and other risks, please read the prospectus.
In general, any change in direction in an index will produce compounding that seems to work against an investor. Were the index to move in the same direction (either up or down) for two or more periods in a row, the compounding of those returns would work in an investor’s favor, causing the fund to seemingly beat its benchmark.
As a general rule of thumb, more leverage in a fund will magnify the compounding effect, while less leverage will generally produce results that are more in line with expectations. In addition, periods of high volatility in an underlying index will also cause the effects of compounding to be more pronounced, while lower volatility will produce a more muted effect.
6 | THE RYDEX FUNDS 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; 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 September 30, 2014 and ending March 31, 2015.
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 illustrated 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.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads) on purchase payments, and contingent deferred sales charges (“CDSC”) on redemptions, if any. Therefore, the second table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
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 FUNDS ANNUAL REPORT | 7 |
ABOUT SHAREHOLDERS’ FUND EXPENSES (Unaudited)(continued)
Expense Ratio1 | Fund Return | Beginning Account Value September 30, 2014 | Ending Account Value March 31, 2015 | Expenses Paid During Period2 | |
Table 1. Based on actual Fund return3 | |||||
S&P 500® Pure Growth Fund | |||||
A-Class | 1.48% | 7.20% | $1,000.00 | $1,072.00 | $7.65 |
C-Class | 2.24% | 6.80% | 1,000.00 | 1,068.00 | 11.55 |
H-Class | 1.49% | 7.20% | 1,000.00 | 1,072.00 | 7.70 |
S&P 500® Pure Value Fund | |||||
A-Class | 1.49% | 2.32% | 1,000.00 | 1,023.20 | 7.52 |
C-Class | 2.24% | 1.93% | 1,000.00 | 1,019.30 | 11.28 |
H-Class | 1.49% | 2.33% | 1,000.00 | 1,023.30 | 7.52 |
S&P MidCap 400® Pure Growth Fund | |||||
A-Class | 1.49% | 8.38% | 1,000.00 | 1,083.80 | 7.74 |
C-Class | 2.24% | 7.99% | 1,000.00 | 1,079.90 | 11.62 |
H-Class | 1.49% | 8.38% | 1,000.00 | 1,083.80 | 7.74 |
S&P MidCap 400® Pure Value Fund | |||||
A-Class | 1.49% | 6.97% | 1,000.00 | 1,069.70 | 7.69 |
C-Class | 2.24% | 6.58% | 1,000.00 | 1,065.80 | 11.54 |
H-Class | 1.49% | 6.98% | 1,000.00 | 1,069.80 | 7.69 |
S&P SmallCap 600® Pure Growth Fund | |||||
A-Class | 1.48% | 16.22% | 1,000.00 | 1,162.20 | 7.98 |
C-Class | 2.23% | 15.79% | 1,000.00 | 1,157.90 | 12.00 |
H-Class | 1.48% | 16.22% | 1,000.00 | 1,162.20 | 7.98 |
S&P SmallCap 600® Pure Value Fund | |||||
A-Class | 1.48% | 8.81% | 1,000.00 | 1,088.10 | 7.70 |
C-Class | 2.23% | 8.42% | 1,000.00 | 1,084.20 | 11.59 |
H-Class | 1.49% | 8.85% | 1,000.00 | 1,088.50 | 7.76 |
Europe 1.25x Strategy Fund | |||||
A-Class | 1.70% | (6.58%) | 1,000.00 | 934.20 | 8.20 |
C-Class | 2.47% | (6.86%) | 1,000.00 | 931.40 | 11.89 |
H-Class | 1.70% | (6.57%) | 1,000.00 | 934.30 | 8.20 |
Japan 2x Strategy Fund | |||||
A-Class | 1.53% | 15.99% | 1,000.00 | 1,159.90 | 8.24 |
C-Class | 2.27% | 15.66% | 1,000.00 | 1,156.60 | 12.21 |
H-Class | 1.51% | 16.03% | 1,000.00 | 1,160.30 | 8.13 |
Strengthening Dollar 2x Strategy Fund | |||||
A-Class | 1.67% | 28.40% | 1,000.00 | 1,284.00 | 9.51 |
C-Class | 2.43% | 27.92% | 1,000.00 | 1,279.20 | 13.81 |
H-Class | 1.67% | 28.39% | 1,000.00 | 1,283.90 | 9.51 |
Weakening Dollar 2x Strategy Fund | |||||
A-Class | 1.69% | (24.05%) | 1,000.00 | 759.50 | 7.41 |
C-Class | 2.44% | (24.35%) | 1,000.00 | 756.50 | 10.69 |
H-Class | 1.68% | (24.02%) | 1,000.00 | 759.80 | 7.37 |
8 | THE RYDEX FUNDS ANNUAL REPORT |
ABOUT SHAREHOLDERS’ FUND EXPENSES (Unaudited)(concluded)
Expense Ratio1 | Fund Return | Beginning Account Value September 30, 2014 | Ending Account Value March 31, 2015 | Expenses Paid During Period2 | |
Table 2. Based on hypothetical 5% return (before expenses) | |||||
S&P 500® Pure Growth Fund | |||||
A-Class | 1.48% | 5.00% | $1,000.00 | $1,017.55 | $7.44 |
C-Class | 2.24% | 5.00% | 1,000.00 | 1,013.76 | 11.25 |
H-Class | 1.49% | 5.00% | 1,000.00 | 1,017.50 | 7.49 |
S&P 500® Pure Value Fund | |||||
A-Class | 1.49% | 5.00% | 1,000.00 | 1,017.50 | 7.49 |
C-Class | 2.24% | 5.00% | 1,000.00 | 1,013.76 | 11.25 |
H-Class | 1.49% | 5.00% | 1,000.00 | 1,017.50 | 7.49 |
S&P MidCap 400® Pure Growth Fund | |||||
A-Class | 1.49% | 5.00% | 1,000.00 | 1,017.50 | 7.49 |
C-Class | 2.24% | 5.00% | 1,000.00 | 1,013.76 | 11.25 |
H-Class | 1.49% | 5.00% | 1,000.00 | 1,017.50 | 7.49 |
S&P MidCap 400® Pure Value Fund | |||||
A-Class | 1.49% | 5.00% | 1,000.00 | 1,017.50 | 7.49 |
C-Class | 2.24% | 5.00% | 1,000.00 | 1,013.76 | 11.25 |
H-Class | 1.49% | 5.00% | 1,000.00 | 1,017.50 | 7.49 |
S&P SmallCap 600® Pure Growth Fund | |||||
A-Class | 1.48% | 5.00% | 1,000.00 | 1,017.55 | 7.44 |
C-Class | 2.23% | 5.00% | 1,000.00 | 1,013.81 | 11.20 |
H-Class | 1.48% | 5.00% | 1,000.00 | 1,017.55 | 7.44 |
S&P SmallCap 600® Pure Value Fund | |||||
A-Class | 1.48% | 5.00% | 1,000.00 | 1,017.55 | 7.44 |
C-Class | 2.23% | 5.00% | 1,000.00 | 1,013.81 | 11.20 |
H-Class | 1.49% | 5.00% | 1,000.00 | 1,017.50 | 7.49 |
Europe 1.25x Strategy Fund | |||||
A-Class | 1.70% | 5.00% | 1,000.00 | 1,016.45 | 8.55 |
C-Class | 2.47% | 5.00% | 1,000.00 | 1,012.62 | 12.39 |
H-Class | 1.70% | 5.00% | 1,000.00 | 1,016.45 | 8.55 |
Japan 2x Strategy Fund | |||||
A-Class | 1.53% | 5.00% | 1,000.00 | 1,017.30 | 7.70 |
C-Class | 2.27% | 5.00% | 1,000.00 | 1,013.61 | 11.40 |
H-Class | 1.51% | 5.00% | 1,000.00 | 1,017.40 | 7.59 |
Strengthening Dollar 2x Strategy Fund | |||||
A-Class | 1.67% | 5.00% | 1,000.00 | 1,016.60 | 8.40 |
C-Class | 2.43% | 5.00% | 1,000.00 | 1,012.81 | 12.19 |
H-Class | 1.67% | 5.00% | 1,000.00 | 1,016.60 | 8.40 |
Weakening Dollar 2x Strategy Fund | |||||
A-Class | 1.69% | 5.00% | 1,000.00 | 1,016.50 | 8.50 |
C-Class | 2.44% | 5.00% | 1,000.00 | 1,012.76 | 12.24 |
H-Class | 1.68% | 5.00% | 1,000.00 | 1,016.55 | 8.45 |
1 | Annualized and excludes expenses of the underlying funds in which the Funds invest. |
2 | Expenses are equal to the Fund's annualized expense ratio, net of any applicable fee waivers, multiplied by the average account value over the period, multiplied by 182/365 (to reflect the one-half year period). |
3 | Actual cumulative return at net asset value for the period September 30, 2014 to March 31, 2015. |
THE RYDEX FUNDS ANNUAL REPORT | 9 |
PERFORMANCE REPORT AND FUND PROFILE (Unaudited) | March 31, 2015 |
S&P 500® PURE GROWTH FUND
OBJECTIVE: Seeks to provide investment results that match, before fees and expenses, the performance of a benchmark for large-cap growth securities on a daily basis. The Fund’s current benchmark is the S&P 500® Pure Growth Index (the “underlying index”).
For the one-year period ended March 31, 2015, S&P 500® Pure Growth Fund H-Class returned 12.98%, compared with a gain of 14.67% for the S&P 500 Pure Growth Index. The Fund maintained a daily correlation of over 99% to its benchmark.
Health Care was the sector contributing most to performance of the underlying index, followed by Consumer Discretionary. Energy was the only sector that detracted from performance of the underlying index. The sectors that contributed least were Materials and Financials.
Stocks that contributed most to return of the underlying index were Southwest Airlines Co., Vertex Pharmaceuticals, Inc., and Celgene Corp. First Solar, Inc., Wynn Resorts Ltd., and Michael Kors Holdings Ltd. were the largest detractors from performance of the underlying index.
Performance displayed represents past performance, which is no guarantee of future results.
Holdings Diversification (Market Exposure as % of Net Assets)
![](https://capedge.com/proxy/N-CSR/0001398344-15-003814/rtb2_01.jpg)
“Holdings Diversification (Market Exposure as % of Net Assets)” excludes any temporary cash investments.
Inception Dates: | |
A-Class | September 1, 2004 |
C-Class | February 20, 2004 |
H-Class | February 20, 2004 |
Ten Largest Holdings (% of Total Net Assets) | |
DR Horton, Inc. | 2.6% |
Lennar Corp. — Class A | 2.0% |
Under Armour, Inc. — Class A | 1.9% |
Micron Technology, Inc. | 1.8% |
Avago Technologies Ltd. | 1.8% |
Facebook, Inc. — Class A | 1.8% |
Constellation Brands, Inc. — Class A | 1.8% |
Actavis plc | 1.7% |
Southwest Airlines Co. | 1.7% |
Regeneron Pharmaceuticals, Inc. | 1.6% |
Top Ten Total | 18.7% |
“Ten Largest Holdings” exclude any temporary cash or derivative investments. |
10 | THE RYDEX FUNDS ANNUAL REPORT |
PERFORMANCE REPORT AND FUND PROFILE (Unaudited)(concluded) | March 31, 2015 |
Cumulative Fund Performance*
![](https://capedge.com/proxy/N-CSR/0001398344-15-003814/rtb2_02.jpg)
![](https://capedge.com/proxy/N-CSR/0001398344-15-003814/rtb2_03.jpg)
Average Annual Returns*
Periods Ended March 31, 2015
1 Year | 5 Year | 10 Year | |
A-Class Shares | 12.98% | 16.88% | 9.14% |
A-Class Shares with sales charge† | 7.62% | 15.75% | 8.61% |
C-Class Shares | 12.13% | 16.00% | 8.32% |
C-Class Shares with CDSC‡ | 11.13% | 16.00% | 8.32% |
H-Class Shares | 12.98% | 16.88% | 9.13% |
S&P 500 Pure Growth Index | 14.67% | 18.98% | 11.49% |
* | The performance data above represents past performance that is not predictive of future results. The investment return and principal value of an investment in the Fund will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Returns are historical and include changes in principal and reinvested dividends and capital gains and do not reflect the effect of taxes. The S&P 500 Pure Growth Index is an unmanaged index and, unlike the Fund, has no management fees or operating expenses to reduce its reported return. The graphs are based on A-Class and H-Class shares only; performance for C-Class shares will vary due to differences in fee structure. |
† | Fund returns are calculated using the maximum sales charge of 4.75%. |
‡ | Fund returns include a CDSC of 1% if redeemed within 12 months of purchase. |
THE RYDEX FUNDS ANNUAL REPORT | 11 |
SCHEDULE OF INVESTMENTS | March 31, 2015 |
S&P 500® PURE GROWTH FUND |
Shares | Value | |||||||
COMMON STOCKS† - 99.0% | ||||||||
CONSUMER, NON-CYCLICAL - 27.3% | ||||||||
Constellation Brands, Inc. — Class A* | 23,645 | $ | 2,747,785 | |||||
Actavis plc* | 8,683 | 2,584,191 | ||||||
Regeneron Pharmaceuticals, Inc.* | 5,575 | 2,517,000 | ||||||
Monster Beverage Corp.* | 16,696 | 2,310,643 | ||||||
AmerisourceBergen Corp. — Class A | 19,620 | 2,230,205 | ||||||
Alexion Pharmaceuticals, Inc.* | 12,802 | 2,218,587 | ||||||
Celgene Corp.* | 19,082 | 2,199,773 | ||||||
Gilead Sciences, Inc.* | 21,308 | 2,090,954 | ||||||
Zoetis, Inc. | 40,540 | 1,876,597 | ||||||
DaVita HealthCare Partners, Inc.* | 21,820 | 1,773,530 | ||||||
Edwards Lifesciences Corp.* | 12,310 | 1,753,683 | ||||||
Amgen, Inc. | 10,500 | 1,678,425 | ||||||
Keurig Green Mountain, Inc. | 14,330 | 1,601,091 | ||||||
Moody’s Corp. | 14,903 | 1,546,931 | ||||||
Biogen, Inc.* | 3,499 | 1,477,418 | ||||||
United Rentals, Inc.* | 15,280 | 1,392,925 | ||||||
Robert Half International, Inc. | 22,889 | 1,385,242 | ||||||
Mylan N.V.* | 20,300 | 1,204,805 | ||||||
Intuitive Surgical, Inc.* | 2,070 | 1,045,412 | ||||||
Hospira, Inc.* | 11,600 | 1,018,944 | ||||||
Molson Coors Brewing Co. — Class B | 13,540 | 1,008,053 | ||||||
Cintas Corp. | 11,910 | 972,213 | ||||||
Dr Pepper Snapple Group, Inc. | 12,200 | 957,456 | ||||||
AbbVie, Inc. | 14,351 | 840,108 | ||||||
MasterCard, Inc. — Class A | 9,646 | 833,318 | ||||||
Lorillard, Inc. | 10,330 | 675,066 | ||||||
Total Consumer, Non-cyclical | 41,940,355 | |||||||
CONSUMER, CYCLICAL - 22.0% | ||||||||
DR Horton, Inc. | 140,800 | 4,010,072 | ||||||
Lennar Corp. — Class A | 60,295 | 3,123,884 | ||||||
Under Armour, Inc. — Class A* | 36,190 | 2,922,342 | ||||||
Southwest Airlines Co. | 57,913 | 2,565,546 | ||||||
Delta Air Lines, Inc. | 50,657 | 2,277,539 | ||||||
O’Reilly Automotive, Inc.* | 9,730 | 2,104,015 | ||||||
Chipotle Mexican Grill, Inc. — Class A* | 2,710 | 1,762,963 | ||||||
CVS Health Corp. | 15,550 | 1,604,916 | ||||||
Harman International Industries, Inc. | 11,480 | 1,534,072 | ||||||
Lowe’s Companies, Inc. | 19,650 | 1,461,764 | ||||||
Dollar Tree, Inc.* | 15,820 | 1,283,714 | ||||||
Wyndham Worldwide Corp. | 13,232 | 1,197,099 | ||||||
AutoZone, Inc.* | 1,600 | 1,091,456 | ||||||
Michael Kors Holdings Ltd.* | 16,200 | 1,065,150 | ||||||
Hanesbrands, Inc. | 29,100 | 975,141 | ||||||
VF Corp. | 12,470 | 939,116 | ||||||
Nordstrom, Inc. | 10,100 | 811,232 | ||||||
Home Depot, Inc. | 7,000 | 795,270 | ||||||
Ross Stores, Inc. | 7,300 | 769,128 | ||||||
NIKE, Inc. — Class B | 7,650 | 767,525 | ||||||
Leggett & Platt, Inc. | 16,180 | 745,736 | ||||||
Total Consumer, Cyclical | 33,807,680 | |||||||
TECHNOLOGY - 17.3% | ||||||||
Micron Technology, Inc.* | 104,440 | 2,833,456 | ||||||
Avago Technologies Ltd. | 21,820 | 2,770,704 | ||||||
Apple, Inc. | 20,100 | 2,501,043 | ||||||
Akamai Technologies, Inc.* | 35,005 | 2,486,930 | ||||||
Skyworks Solutions, Inc. | 22,920 | 2,252,807 | ||||||
Red Hat, Inc.* | 24,189 | 1,832,317 | ||||||
Seagate Technology plc | 30,517 | 1,587,800 | ||||||
Electronic Arts, Inc.* | 25,224 | 1,483,550 | ||||||
Cognizant Technology Solutions Corp. — Class A* | 23,422 | 1,461,299 | ||||||
Western Digital Corp. | 14,240 | 1,295,982 | ||||||
Fiserv, Inc.* | 12,846 | 1,019,972 | ||||||
Cerner Corp.* | 10,644 | 779,779 | ||||||
NVIDIA Corp. | 34,900 | 730,283 | ||||||
QUALCOMM, Inc. | 10,477 | 726,475 | ||||||
Citrix Systems, Inc.* | 10,980 | 701,293 | ||||||
SanDisk Corp. | 10,930 | 695,367 | ||||||
Intel Corp. | 21,820 | 682,311 | ||||||
Lam Research Corp. | 9,600 | 674,256 | ||||||
Total Technology | 26,515,624 | |||||||
COMMUNICATIONS - 13.0% | ||||||||
Facebook, Inc. — Class A* | 33,462 | 2,751,079 | ||||||
VeriSign, Inc.* | 36,005 | 2,411,255 | ||||||
Expedia, Inc. | 25,489 | 2,399,279 | ||||||
DIRECTV* | 24,884 | 2,117,628 | ||||||
Equinix, Inc. | 7,400 | 1,723,090 | ||||||
F5 Networks, Inc.* | 13,980 | 1,606,861 | ||||||
Yahoo!, Inc.* | 34,345 | 1,526,120 | ||||||
Time Warner, Inc. | 11,600 | 979,504 | ||||||
Priceline Group, Inc.* | 831 | 967,409 | ||||||
Alliance Data Systems Corp.* | 3,120 | 924,300 | ||||||
Walt Disney Co. | 8,200 | 860,098 | ||||||
eBay, Inc.* | 12,600 | 726,768 | ||||||
Google, Inc. — Class A* | 784 | 434,885 | ||||||
Google, Inc. — Class C* | 785 | 430,180 | ||||||
Total Communications | 19,858,456 | |||||||
FINANCIAL - 11.1% | ||||||||
American Tower Corp. — Class A | 18,720 | 1,762,488 | ||||||
CBRE Group, Inc. — Class A* | 40,340 | 1,561,561 | ||||||
Health Care REIT, Inc. | 16,950 | 1,311,252 | ||||||
Host Hotels & Resorts, Inc. | 62,790 | 1,267,102 | ||||||
Navient Corp. | 60,090 | 1,221,630 | ||||||
Kimco Realty Corp. | 43,609 | 1,170,902 | ||||||
Equity Residential | 14,700 | 1,144,542 | ||||||
Legg Mason, Inc. | 20,250 | 1,117,800 | ||||||
Visa, Inc. — Class A | 16,484 | 1,078,218 | ||||||
AvalonBay Communities, Inc. | 5,870 | 1,022,848 | ||||||
Ameriprise Financial, Inc. | 6,950 | 909,338 |
12 | THE RYDEX FUNDS ANNUAL REPORT | SEE NOTES TO FINANCIAL STATEMENTS. |
SCHEDULE OF INVESTMENTS (concluded) | March 31, 2015 |
S&P 500® PURE GROWTH FUND |
Shares | Value | |||||||
Essex Property Trust, Inc. | 3,800 | $ | 873,620 | |||||
Boston Properties, Inc. | 6,070 | 852,714 | ||||||
Macerich Co. | 10,110 | 852,576 | ||||||
Ventas, Inc. | 10,900 | 795,918 | ||||||
Total Financial | 16,942,509 | |||||||
INDUSTRIAL - 3.5% | ||||||||
Union Pacific Corp. | 11,200 | 1,213,071 | ||||||
Martin Marietta Materials, Inc. | 8,510 | 1,189,698 | ||||||
Amphenol Corp. — Class A | 17,050 | 1,004,757 | ||||||
Thermo Fisher Scientific, Inc. | 7,120 | 956,501 | ||||||
CH Robinson Worldwide, Inc. | 12,880 | 943,074 | ||||||
Total Industrial | 5,307,101 | |||||||
ENERGY - 3.0% | ||||||||
EOG Resources, Inc. | 14,700 | 1,347,844 | ||||||
Range Resources Corp. | 23,109 | 1,202,592 | ||||||
Cabot Oil & Gas Corp. — Class A | 40,040 | 1,182,381 | ||||||
Williams Companies, Inc. | 16,080 | 813,487 | ||||||
Total Energy | 4,546,304 | |||||||
BASIC MATERIALS - 1.8% | ||||||||
Sherwin-Williams Co. | 4,100 | 1,166,450 | ||||||
Sigma-Aldrich Corp. | 5,800 | 801,850 | ||||||
Ecolab, Inc. | 6,275 | 717,735 | ||||||
Total Basic Materials | 2,686,035 | |||||||
Total Common Stocks | ||||||||
(Cost $121,083,215) | 151,604,064 |
Face Amount | ||||||||
REPURCHASE AGREEMENTS††,1 - 0.9% | ||||||||
HSBC Group issued 03/31/15 at 0.03% due 04/01/15 | $ | 1,022,522 | 1,022,522 | |||||
RBC Capital Markets issued 03/31/15 at 0.05% due 04/01/15 | 156,263 | 156,263 | ||||||
UMB Financial Corp. issued 03/31/15 at 0.03% due 04/01/15 | 125,427 | 125,427 | ||||||
Total Repurchase Agreements | ||||||||
(Cost $1,304,212) | 1,304,212 | |||||||
Total Investments - 99.9% | ||||||||
(Cost $122,387,427) | $ | 152,908,276 | ||||||
Other Assets & Liabilities, net - 0.1% | 189,438 | |||||||
Total Net Assets - 100.0% | $ | 153,097,714 |
* | Non-income producing security. |
† | Value determined based on Level 1 inputs — See Note 4. |
†† | Value determined based on Level 2 inputs — See Note 4. |
1 | Repurchase Agreements — See Note 5. |
plc — Public Limited Company | |
REIT — Real Estate Investment Trust |
SEE NOTES TO FINANCIAL STATEMENTS. | THE RYDEX FUNDS ANNUAL REPORT | 13 |
S&P 500® PURE GROWTH FUND |
STATEMENT OF ASSETS AND LIABILITIES
March 31, 2015
Assets: | ||||
Investments, at value (cost $121,083,215) | $ | 151,604,064 | ||
Repurchase agreements, at value (cost $1,304,212) | 1,304,212 | |||
Total investments (cost $122,387,427) | 152,908,276 | |||
Cash | 10,458 | |||
Receivables: | ||||
Fund shares sold | 926,489 | |||
Dividends | 81,973 | |||
Interest | 1 | |||
Total assets | 153,927,197 | |||
Liabilities: | ||||
Payable for: | ||||
Fund shares redeemed | 519,866 | |||
Management fees | 111,168 | |||
Distribution and service fees | 50,949 | |||
Transfer agent and administrative fees | 37,056 | |||
Portfolio accounting fees | 14,822 | |||
Miscellaneous | 95,622 | |||
Total liabilities | 829,483 | |||
Commitments and contingent liabilities (Note 14) | — | |||
Net assets | $ | 153,097,714 | ||
Net assets consist of: | ||||
Paid in capital | $ | 124,279,446 | ||
Accumulated net investment loss | (363,241 | ) | ||
Accumulated net realized loss on investments | (1,339,340 | ) | ||
Net unrealized appreciation on investments | 30,520,849 | |||
Net assets | $ | 153,097,714 | ||
A-Class: | ||||
Net assets | $ | 25,768,395 | ||
Capital shares outstanding | 461,402 | |||
Net asset value per share | $ | 55.85 | ||
Maximum offering price per share (Net asset value divided by 95.25%) | $ | 58.64 | ||
C-Class: | ||||
Net assets | $ | 22,701,486 | ||
Capital shares outstanding | 443,123 | |||
Net asset value per share | $ | 51.23 | ||
H-Class: | ||||
Net assets | $ | 104,627,833 | ||
Capital shares outstanding | 1,873,771 | |||
Net asset value per share | $ | 55.84 |
STATEMENT OF OPERATIONS
Year Ended March 31, 2015
Investment Income: | ||||
Dividends | $ | 1,419,577 | ||
Income from securities lending, net | 433 | |||
Interest | 228 | |||
Total investment income | 1,420,238 | |||
Expenses: | ||||
Management fees | 1,232,114 | |||
Transfer agent and administrative fees | 410,705 | |||
Distribution and service fees: | ||||
A-Class | 64,485 | |||
C-Class | 198,128 | |||
H-Class | 296,688 | |||
Portfolio accounting fees | 164,281 | |||
Custodian fees | 19,163 | |||
Trustees’ fees* | 11,562 | |||
Line of credit fees | 675 | |||
Miscellaneous | 220,159 | |||
Total expenses | 2,617,960 | |||
Net investment loss | (1,197,722 | ) | ||
Net Realized and Unrealized Gain (Loss): | ||||
Net realized gain (loss) on: | ||||
Investments | 10,011,328 | |||
Net realized gain | 10,011,328 | |||
Net change in unrealized appreciation (depreciation) on: | ||||
Investments | 4,587,390 | |||
Net change in unrealized appreciation (depreciation) | 4,587,390 | |||
Net realized and unrealized gain | 14,598,718 | |||
Net increase in net assets resulting from operations | $ | 13,400,996 |
* | Relates to Trustees not deemed “interested persons” within the meaning of Section 2(a)(19) of the 1940 Act. |
14 | THE RYDEX FUNDS ANNUAL REPORT | SEE NOTES TO FINANCIAL STATEMENTS. |
S&P 500® PURE GROWTH FUND |
STATEMENTS OF CHANGES IN NET ASSETS
Year Ended March 31, 2015 | Year Ended March 31, 2014 | |||||||
Increase (Decrease) in Net Assets from Operations: | ||||||||
Net investment loss | $ | (1,197,722 | ) | $ | (647,036 | ) | ||
Net realized gain on investments | 10,011,328 | 9,974,053 | ||||||
Net change in unrealized appreciation (depreciation) on investments | 4,587,390 | 8,963,993 | ||||||
Net increase in net assets resulting from operations | 13,400,996 | 18,291,010 | ||||||
Distributions to shareholders from: | ||||||||
Net realized gains | ||||||||
A-Class | (602,725 | ) | — | |||||
C-Class | (628,949 | ) | — | |||||
H-Class | (3,232,222 | ) | — | |||||
Total distributions to shareholders | (4,463,896 | ) | — | |||||
Capital share transactions: | ||||||||
Proceeds from sale of shares | ||||||||
A-Class | 37,179,898 | 37,301,868 | ||||||
C-Class | 14,859,172 | 12,501,975 | ||||||
H-Class | 422,548,514 | 636,709,145 | ||||||
Distributions reinvested | ||||||||
A-Class | 569,662 | — | ||||||
C-Class | 609,646 | — | ||||||
H-Class | 3,196,101 | — | ||||||
Cost of shares redeemed | ||||||||
A-Class | (34,342,245 | ) | (35,975,939 | ) | ||||
C-Class | (11,449,505 | ) | (7,186,094 | ) | ||||
H-Class | (429,533,249 | ) | (597,296,078 | ) | ||||
Net increase from capital share transactions | 3,637,994 | 46,054,877 | ||||||
Net increase in net assets | 12,575,094 | 64,345,887 | ||||||
Net assets: | ||||||||
Beginning of year | 140,522,620 | 76,176,733 | ||||||
End of year | $ | 153,097,714 | $ | 140,522,620 | ||||
(Accumulated net investment loss)/Undistributed net investment income at end of year | $ | (363,241 | ) | $ | — | |||
Capital share activity: | ||||||||
Shares sold | ||||||||
A-Class | 703,638 | 826,973 | ||||||
C-Class | 302,375 | 292,518 | ||||||
H-Class | 7,902,853 | 14,083,714 | ||||||
Shares issued from reinvestment of distributions | ||||||||
A-Class | 10,626 | — | ||||||
C-Class | 12,364 | — | ||||||
H-Class | 59,629 | — | ||||||
Shares redeemed | ||||||||
A-Class | (646,079 | ) | (819,808 | ) | ||||
C-Class | (233,689 | ) | (170,107 | ) | ||||
H-Class | (8,126,262 | ) | (13,397,258 | ) | ||||
Net increase (decrease) in shares | (14,545 | ) | 816,032 |
SEE NOTES TO FINANCIAL STATEMENTS. | THE RYDEX FUNDS ANNUAL REPORT | 15 |
S&P 500® PURE GROWTH FUND |
FINANCIAL HIGHLIGHTS
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.
A-Class | Year Ended March 31, 2015 | Year Ended March 31, 2014 | Year Ended March 28, 2013 | Year Ended March 31, 2012 | Year Ended March 31, 2011 | |||||||||||||||
Per Share Data | ||||||||||||||||||||
Net asset value, beginning of period | $ | 50.81 | $ | 38.86 | $ | 34.54 | $ | 33.15 | $ | 26.51 | ||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||
Net investment income (loss)a | (.33 | ) | (.23 | ) | (.13 | ) | (.20 | ) | (.18 | ) | ||||||||||
Net gain (loss) on investments (realized and unrealized) | 6.86 | 12.18 | 4.45 | 1.82 | 6.82 | |||||||||||||||
Total from investment operations | 6.53 | 11.95 | 4.32 | 1.62 | 6.64 | |||||||||||||||
Less distributions from: | ||||||||||||||||||||
Net realized gains | (1.49 | ) | — | — | (.23 | ) | — | |||||||||||||
Total distributions | (1.49 | ) | — | — | (.23 | ) | — | |||||||||||||
Net asset value, end of period | $ | 55.85 | $ | 50.81 | $ | 38.86 | $ | 34.54 | $ | 33.15 | ||||||||||
Total Returnb | 12.98 | % | 30.75 | % | 12.51 | % | 4.96 | % | 25.05 | % | ||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||
Net assets, end of period (in thousands) | $ | 25,768 | $ | 19,978 | $ | 15,001 | $ | 2,846 | $ | 2,704 | ||||||||||
Ratios to average net assets: | ||||||||||||||||||||
Net investment income (loss) | (0.62 | %) | (0.51 | %) | (0.38 | %) | (0.62 | %) | (0.65 | %) | ||||||||||
Total expenses | 1.50 | % | 1.52 | % | 1.51 | % | 1.52 | % | 1.53 | % | ||||||||||
Portfolio turnover rate | 274 | % | 594 | % | 421 | % | 586 | % | 808 | % |
C-Class | Year Ended March 31, 2015 | Year Ended March 31, 2014 | Year Ended March 28, 2013 | Year Ended March 31, 2012 | Year Ended March 31, 2011 | |||||||||||||||
Per Share Data | ||||||||||||||||||||
Net asset value, beginning of period | $ | 47.07 | $ | 36.27 | $ | 32.48 | $ | 31.42 | $ | 25.32 | ||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||
Net investment income (loss)a | (.67 | ) | (.52 | ) | (.38 | ) | (.41 | ) | (.41 | ) | ||||||||||
Net gain (loss) on investments (realized and unrealized) | 6.32 | 11.32 | 4.17 | 1.70 | 6.51 | |||||||||||||||
Total from investment operations | 5.65 | 10.80 | 3.79 | 1.29 | 6.10 | |||||||||||||||
Less distributions from: | ||||||||||||||||||||
Net realized gains | (1.49 | ) | — | — | (.23 | ) | — | |||||||||||||
Total distributions | (1.49 | ) | — | — | (.23 | ) | — | |||||||||||||
Net asset value, end of period | $ | 51.23 | $ | 47.07 | $ | 36.27 | $ | 32.48 | $ | 31.42 | ||||||||||
Total Returnb | 12.13 | % | 29.78 | % | 11.70 | % | 4.15 | % | 24.09 | % | ||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||
Net assets, end of period (in thousands) | $ | 22,701 | $ | 17,042 | $ | 8,692 | $ | 11,623 | $ | 8,384 | ||||||||||
Ratios to average net assets: | ||||||||||||||||||||
Net investment income (loss) | (1.37 | %) | (1.24 | %) | (1.19 | %) | (1.35 | %) | (1.53 | %) | ||||||||||
Total expenses | 2.25 | % | 2.27 | % | 2.25 | % | 2.26 | % | 2.29 | % | ||||||||||
Portfolio turnover rate | 274 | % | 594 | % | 421 | % | 586 | % | 808 | % |
16 | THE RYDEX FUNDS ANNUAL REPORT | SEE NOTES TO FINANCIAL STATEMENTS. |
S&P 500® PURE GROWTH FUND |
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.
H-Class | Year Ended March 31, 2015 | Year Ended March 31, 2014 | Year Ended March 28, 2013 | Year Ended March 31, 2012 | Year Ended March 31, 2011 | |||||||||||||||
Per Share Data | ||||||||||||||||||||
Net asset value, beginning of period | $ | 50.80 | $ | 38.84 | $ | 34.52 | $ | 33.13 | $ | 26.50 | ||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||
Net investment income (loss)a | (.34 | ) | (.23 | ) | (.15 | ) | (.19 | ) | (.26 | ) | ||||||||||
Net gain (loss) on investments (realized and unrealized) | 6.87 | 12.19 | 4.47 | 1.81 | 6.89 | |||||||||||||||
Total from investment operations | 6.53 | 11.96 | 4.32 | 1.62 | 6.63 | |||||||||||||||
Less distributions from: | ||||||||||||||||||||
Net realized gains | (1.49 | ) | — | — | (.23 | ) | — | |||||||||||||
Total distributions | (1.49 | ) | — | — | (.23 | ) | — | |||||||||||||
Net asset value, end of period | $ | 55.84 | $ | 50.80 | $ | 38.84 | $ | 34.52 | $ | 33.13 | ||||||||||
Total Returnb | 12.98 | % | 30.79 | % | 12.51 | % | 4.96 | % | 25.02 | % | ||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||
Net assets, end of period (in thousands) | $ | 104,628 | $ | 103,502 | $ | 52,483 | $ | 36,627 | $ | 38,831 | ||||||||||
Ratios to average net assets: | ||||||||||||||||||||
Net investment income (loss) | (0.65 | %) | (0.50 | %) | (0.43 | %) | (0.59 | %) | (0.89 | %) | ||||||||||
Total expenses | 1.50 | % | 1.52 | % | 1.50 | % | 1.51 | % | 1.55 | % | ||||||||||
Portfolio turnover rate | 274 | % | 594 | % | 421 | % | 586 | % | 808 | % |
a | Net investment income (loss) per share was computed using average shares outstanding throughout the period. |
b | Total return does not reflect the impact of any applicable sales charges. |
SEE NOTES TO FINANCIAL STATEMENTS. | THE RYDEX FUNDS ANNUAL REPORT | 17 |
PERFORMANCE REPORT AND FUND PROFILE (Unaudited) | March 31, 2015 |
S&P 500® PURE VALUE FUND
OBJECTIVE: Seeks to provide investment results that match, before fees and expenses, the performance of a benchmark for large-cap value securities on a daily basis. The Fund’s current benchmark is the S&P 500® Pure Value Index (the “underlying index”).
For the one-year period ended March 31, 2015, S&P 500® Pure Value Fund H-Class returned 5.60%, compared with a gain of 7.33% for the S&P 500 Pure Value Index. The Fund maintained a daily correlation of over 99% to its benchmark.
The Utilities sector was the leading contributor to performance of the underlying index, followed by the Health Care sector. Energy was the largest detractor from performance, followed by the Industrials sector.
The strongest contributors to performance of the underlying index for the year included Anthem, Inc., Tesoro Corp., and Humana, Inc. The stocks that detracted most from performance of the underlying index were Ensco PLC, Nabors Industries Ltd., and Genworth Financial, Inc. — Class A.
Performance displayed represents past performance, which is no guarantee of future results.
Holdings Diversification (Market Exposure as % of Net Assets)
![](https://capedge.com/proxy/N-CSR/0001398344-15-003814/rtb2_04.jpg)
“Holdings Diversification (Market Exposure as % of Net Assets)” excludes any temporary cash investments.
Inception Dates: | |
A-Class | September 1, 2004 |
C-Class | February 20, 2004 |
H-Class | February 20, 2004 |
Ten Largest Holdings (% of Total Net Assets) | |
Valero Energy Corp. | 2.4% |
Berkshire Hathaway, Inc. — Class B | 2.1% |
Assurant, Inc. | 1.8% |
General Motors Co. | 1.8% |
Anthem, Inc. | 1.7% |
Staples, Inc. | 1.7% |
Phillips 66 | 1.7% |
Tesoro Corp. | 1.6% |
Marathon Petroleum Corp. | 1.5% |
Unum Group | 1.5% |
Top Ten Total | 17.8% |
“Ten Largest Holdings” exclude any temporary cash or derivative investments. |
18 | THE RYDEX FUNDS ANNUAL REPORT |
PERFORMANCE REPORT AND FUND PROFILE (Unaudited)(concluded) | March 31, 2015 |
Cumulative Fund Performance*
![](https://capedge.com/proxy/N-CSR/0001398344-15-003814/rtb2_05.jpg)
![](https://capedge.com/proxy/N-CSR/0001398344-15-003814/rtb2_06.jpg)
Average Annual Returns*
Periods Ended March 31, 2015
1 Year | 5 Year | 10 Year | |
A-Class Shares | 5.60% | 14.79% | 7.13% |
A-Class Shares with sales charge† | 0.58% | 13.68% | 6.61% |
C-Class Shares | 4.81% | 13.94% | 6.35% |
C-Class Shares with CDSC‡ | 3.81% | 13.94% | 6.35% |
H-Class Shares | 5.60% | 14.79% | 7.17% |
S&P 500 Pure Value Index | 7.33% | 17.45% | 10.22% |
* | The performance data above represents past performance that is not predictive of future results. The investment return and principal value of an investment in the Fund will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Returns are historical and include changes in principal and reinvested dividends and capital gains and do not reflect the effect of taxes. The S&P 500 Pure Value Index is an unmanaged index and, unlike the Fund, has no management fees or operating expenses to reduce its reported return. The graphs are based on A-Class and H-Class shares only; performance for C-Class shares will vary due to differences in fee structure. |
† | Fund returns are calculated using the maximum sales charge of 4.75%. |
‡ | Fund returns include a CDSC of 1% if redeemed within 12 months of purchase. |
THE RYDEX FUNDS ANNUAL REPORT | 19 |
SCHEDULE OF INVESTMENTS | March 31, 2015 |
S&P 500® PURE VALUE FUND |
Shares | Value | |||||||
COMMON STOCKS† - 99.5% | ||||||||
FINANCIAL - 31.9% | ||||||||
Berkshire Hathaway, Inc. — Class B* | 10,324 | $ | 1,489,959 | |||||
Assurant, Inc. | 21,068 | 1,293,786 | ||||||
Unum Group | 31,878 | 1,075,245 | ||||||
MetLife, Inc. | 18,920 | 956,406 | ||||||
Prudential Financial, Inc. | 11,313 | 908,547 | ||||||
American International Group, Inc. | 16,318 | 894,063 | ||||||
Hartford Financial Services Group, Inc. | 21,211 | 887,044 | ||||||
Genworth Financial, Inc. — Class A* | 120,772 | 882,843 | ||||||
Lincoln National Corp. | 15,356 | 882,356 | ||||||
Loews Corp. | 19,330 | 789,244 | ||||||
XL Group plc — Class A | 18,762 | 690,442 | ||||||
SunTrust Banks, Inc. | 15,417 | 633,484 | ||||||
Citigroup, Inc. | 11,808 | 608,349 | ||||||
Morgan Stanley | 16,310 | 582,104 | ||||||
Zions Bancorporation | 20,998 | 566,946 | ||||||
JPMorgan Chase & Co. | 9,187 | 556,548 | ||||||
People’s United Financial, Inc. | 35,893 | 545,573 | ||||||
Travelers Companies, Inc. | 4,969 | 537,298 | ||||||
Capital One Financial Corp. | 6,757 | 532,587 | ||||||
Aflac, Inc. | 8,319 | 532,499 | ||||||
Bank of America Corp. | 32,439 | 499,236 | ||||||
PNC Financial Services Group, Inc. | 5,252 | 489,696 | ||||||
Goldman Sachs Group, Inc. | 2,547 | 478,760 | ||||||
KeyCorp | 33,673 | 476,810 | ||||||
ACE Ltd. | 4,097 | 456,775 | ||||||
NASDAQ OMX Group, Inc. | 8,774 | 446,948 | ||||||
Cincinnati Financial Corp. | 7,932 | 422,617 | ||||||
Progressive Corp. | 15,181 | 412,923 | ||||||
Fifth Third Bancorp | 21,887 | 412,570 | ||||||
Comerica, Inc. | 9,023 | 407,208 | ||||||
BB&T Corp. | 10,021 | 390,719 | ||||||
Chubb Corp. | 3,788 | 382,967 | ||||||
Principal Financial Group, Inc. | 7,077 | 363,545 | ||||||
Torchmark Corp. | 6,495 | 356,705 | ||||||
Bank of New York Mellon Corp. | 8,805 | 354,313 | ||||||
Hudson City Bancorp, Inc. | 33,620 | 352,338 | ||||||
Huntington Bancshares, Inc. | 28,701 | 317,146 | ||||||
Total Financial | 22,866,599 | |||||||
ENERGY - 25.3% | ||||||||
Valero Energy Corp. | 26,956 | 1,714,941 | ||||||
Phillips 66 | 15,133 | 1,189,454 | ||||||
Tesoro Corp. | 12,300 | 1,122,867 | ||||||
Marathon Petroleum Corp. | 10,787 | 1,104,481 | ||||||
Newfield Exploration Co.* | 27,399 | 961,432 | ||||||
Noble Corporation plc | 64,838 | 925,886 | ||||||
Hess Corp. | 13,630 | 925,068 | ||||||
First Solar, Inc.* | 14,336 | 857,149 | ||||||
Chesapeake Energy Corp.1 | 56,280 | 796,925 | ||||||
Marathon Oil Corp. | 29,392 | 767,425 | ||||||
Devon Energy Corp. | 12,137 | 731,982 | ||||||
Murphy Oil Corp. | 15,062 | 701,889 | ||||||
Diamond Offshore Drilling, Inc.1 | 25,315 | 678,189 | ||||||
Chevron Corp. | 6,105 | 640,903 | ||||||
QEP Resources, Inc. | 29,679 | 618,807 | ||||||
Baker Hughes, Inc. | 9,322 | 592,693 | ||||||
Ensco plc — Class A | 27,816 | 586,083 | ||||||
Apache Corp. | 9,062 | 546,710 | ||||||
National Oilwell Varco, Inc. | 9,168 | 458,308 | ||||||
ConocoPhillips | 7,052 | 439,058 | ||||||
Exxon Mobil Corp. | 4,439 | 377,315 | ||||||
Helmerich & Payne, Inc. | 5,372 | 365,672 | ||||||
Halliburton Co. | 8,042 | 352,883 | ||||||
Transocean Ltd.1 | 23,710 | 347,826 | ||||||
Occidental Petroleum Corp. | 4,527 | 330,471 | ||||||
Total Energy | 18,134,417 | |||||||
CONSUMER, CYCLICAL - 12.6% | ||||||||
General Motors Co. | 34,485 | 1,293,189 | ||||||
Staples, Inc. | 73,517 | 1,197,224 | ||||||
GameStop Corp. — Class A1 | 27,032 | 1,026,135 | ||||||
Ford Motor Co. | 60,501 | 976,486 | ||||||
Best Buy Company, Inc. | 22,410 | 846,874 | ||||||
Kohl’s Corp. | 10,127 | 792,438 | ||||||
Goodyear Tire & Rubber Co. | 27,381 | 741,477 | ||||||
Wal-Mart Stores, Inc. | 5,233 | 430,414 | ||||||
Target Corp. | 5,049 | 414,371 | ||||||
Costco Wholesale Corp. | 2,457 | 372,223 | ||||||
Whirlpool Corp. | 1,768 | 357,242 | ||||||
Carnival Corp. | 6,181 | 295,699 | ||||||
Johnson Controls, Inc. | 5,787 | 291,896 | ||||||
Total Consumer, Cyclical | 9,035,668 | |||||||
UTILITIES - 8.1% | ||||||||
NRG Energy, Inc. | 23,371 | 588,716 | ||||||
FirstEnergy Corp. | 15,131 | 530,493 | ||||||
Exelon Corp. | 15,069 | 506,469 | ||||||
AES Corp. | 38,717 | 497,513 | ||||||
Entergy Corp. | 5,312 | 411,627 | ||||||
Consolidated Edison, Inc. | 6,513 | 397,292 | ||||||
PG&E Corp. | 7,180 | 381,043 | ||||||
SCANA Corp. | 5,339 | 293,592 | ||||||
DTE Energy Co. | 3,610 | 291,291 | ||||||
Xcel Energy, Inc. | 8,196 | 285,303 | ||||||
Duke Energy Corp. | 3,637 | 279,249 | ||||||
Ameren Corp. | 6,493 | 274,005 | ||||||
American Electric Power Company, Inc. | 4,817 | 270,956 | ||||||
Pepco Holdings, Inc. | 10,099 | 270,956 | ||||||
Pinnacle West Capital Corp. | 4,015 | 255,956 | ||||||
TECO Energy, Inc. | 12,223 | 237,126 | ||||||
Total Utilities | 5,771,587 | |||||||
CONSUMER, NON-CYCLICAL - 7.6% | ||||||||
Anthem, Inc. | 7,947 | 1,227,097 | ||||||
Humana, Inc. | 5,508 | 980,534 |
20 | THE RYDEX FUNDS ANNUAL REPORT | SEE NOTES TO FINANCIAL STATEMENTS. |
SCHEDULE OF INVESTMENTS (concluded) | March 31, 2015 |
S&P 500® PURE VALUE FUND |
Shares | Value | |||||||
Archer-Daniels-Midland Co. | 19,180 | $ | 909,132 | |||||
Tyson Foods, Inc. — Class A | 23,568 | 902,654 | ||||||
Cardinal Health, Inc. | 7,445 | 672,060 | ||||||
Sysco Corp. | 11,641 | 439,215 | ||||||
Avery Dennison Corp. | 5,235 | 276,984 | ||||||
Total Consumer, Non-cyclical | 5,407,676 | |||||||
INDUSTRIAL - 5.1% | ||||||||
Jacobs Engineering Group, Inc.* | 23,683 | 1,069,525 | ||||||
Fluor Corp. | 13,531 | 773,432 | ||||||
L-3 Communications Holdings, Inc. | 3,718 | 467,687 | ||||||
Owens-Illinois, Inc.* | 17,853 | 416,332 | ||||||
Ryder System, Inc. | 4,101 | 389,144 | ||||||
Deere & Co. | 3,450 | 302,530 | ||||||
Joy Global, Inc. | 5,510 | 215,882 | ||||||
Total Industrial | 3,634,532 | |||||||
BASIC MATERIALS - 2.9% | ||||||||
Newmont Mining Corp. | 21,058 | 457,169 | ||||||
Freeport-McMoRan, Inc. | 23,897 | 452,848 | ||||||
Allegheny Technologies, Inc. | 11,183 | 335,602 | ||||||
Nucor Corp. | 6,260 | 297,538 | ||||||
LyondellBasell Industries N.V. — Class A | 3,100 | 272,180 | ||||||
Dow Chemical Co. | 5,536 | 265,617 | ||||||
Total Basic Materials | 2,080,954 | |||||||
COMMUNICATIONS - 2.4% | ||||||||
News Corp. — Class A* | 51,866 | 830,375 | ||||||
CenturyLink, Inc. | 9,378 | 324,010 | ||||||
AT&T, Inc. | 9,111 | 297,474 | ||||||
Juniper Networks, Inc. | 10,617 | 239,732 | ||||||
Total Communications | 1,691,591 | |||||||
TECHNOLOGY - 2.2% | ||||||||
Xerox Corp. | 52,407 | 673,430 | ||||||
Computer Sciences Corp. | 7,410 | 483,725 | ||||||
Hewlett-Packard Co. | 12,675 | 394,953 | ||||||
Total Technology | 1,552,108 | |||||||
DIVERSIFIED - 1.4% | ||||||||
Leucadia National Corp. | 43,363 | 966,561 | ||||||
Total Common Stocks | ||||||||
(Cost $56,545,179) | 71,141,693 | |||||||
Face Amount | ||||||||
REPURCHASE AGREEMENTS††,2 - 0.3% | ||||||||
HSBC Group issued 03/31/15 at 0.03% due 04/01/15 | $ | 176,549 | 176,549 | |||||
RBC Capital Markets issued 03/31/15 at 0.05% due 04/01/15 | 26,981 | 26,981 | ||||||
UMB Financial Corp. issued 03/31/15 at 0.03% due 04/01/15 | 21,656 | 21,656 | ||||||
Total Repurchase Agreements | ||||||||
(Cost $225,186) | 225,186 | |||||||
SECURITIES LENDING COLLATERAL††,3 - 3.1% | ||||||||
Repurchase Agreements | ||||||||
HSBC Securities, Inc. issued 03/31/15 at 0.10% due 04/01/15 | 1,472,925 | 1,472,925 | ||||||
BNP Paribas Securities Corp. issued 03/31/15 at 0.10% due 04/01/15 | 506,686 | 506,686 | ||||||
Barclays Capital, Inc. issued 03/31/15 at 0.10% due 04/01/15 | 261,533 | 261,533 | ||||||
Total Securities Lending Collateral | ||||||||
(Cost $2,241,144) | 2,241,144 | |||||||
Total Investments - 102.9% | ||||||||
(Cost $59,011,509) | $ | 73,608,023 | ||||||
Other Assets & Liabilities, net - (2.9)% | (2,075,265 | ) | ||||||
Total Net Assets - 100.0% | $ | 71,532,758 |
* | Non-income producing security. |
† | Value determined based on Level 1 inputs — See Note 4. |
†† | Value determined based on Level 2 inputs — See Note 4. |
1 | All or portion of this security is on loan at March 31, 2015 — See Note 6. |
2 | Repurchase Agreements — See Note 5. |
3 | Securities lending collateral — See Note 6. |
plc — Public Limited Company |
SEE NOTES TO FINANCIAL STATEMENTS. | THE RYDEX FUNDS ANNUAL REPORT | 21 |
S&P 500® PURE VALUE FUND |
STATEMENT OF ASSETS AND LIABILITIES
March 31, 2015
Assets: | ||||
Investments, at value - including $2,235,256 of securities loaned (cost $56,545,179) | $ | 71,141,693 | ||
Repurchase agreements, at value (cost $2,466,330) | 2,466,330 | |||
Total investments (cost $59,011,509) | 73,608,023 | |||
Segregated cash with broker | 32,756 | |||
Cash | 15,721 | |||
Receivables: | ||||
Securities sold | 4,116,259 | |||
Fund shares sold | 834,980 | |||
Dividends | 113,087 | |||
Securities lending income | 15,090 | |||
Total assets | 78,735,916 | |||
Liabilities: | ||||
Payable for: | ||||
Fund shares redeemed | 4,731,007 | |||
Return of securities loaned | 2,273,900 | |||
Management fees | 63,317 | |||
Distribution and service fees | 25,133 | |||
Transfer agent and administrative fees | 21,106 | |||
Portfolio accounting fees | 8,442 | |||
Miscellaneous | 80,253 | |||
Total liabilities | 7,203,158 | |||
Commitments and contingent liabilities (Note 14) | — | |||
Net assets | $ | 71,532,758 | ||
Net assets consist of: | ||||
Paid in capital | $ | 63,487,561 | ||
Undistributed net investment income | 1,084,891 | |||
Accumulated net realized loss on investments | (7,636,208 | ) | ||
Net unrealized appreciation on investments | 14,596,514 | |||
Net assets | $ | 71,532,758 | ||
A-Class: | ||||
Net assets | $ | 16,222,400 | ||
Capital shares outstanding | 111,810 | |||
Net asset value per share | $ | 145.09 | ||
Maximum offering price per share (Net asset value divided by 95.25%) | $ | 152.33 | ||
C-Class: | ||||
Net assets | $ | 6,390,498 | ||
Capital shares outstanding | 49,100 | |||
Net asset value per share | $ | 130.15 | ||
H-Class: | ||||
Net assets | $ | 48,919,860 | ||
Capital shares outstanding | 335,951 | |||
Net asset value per share | $ | 145.62 |
STATEMENT OF OPERATIONS
Year Ended March 31, 2015
Investment Income: | ||||
Dividends | $ | 3,567,093 | ||
Income from securities lending, net | 82,851 | |||
Interest | 190 | |||
Total investment income | 3,650,134 | |||
Expenses: | ||||
Management fees | 1,247,388 | |||
Transfer agent and administrative fees | 415,796 | |||
Distribution and service fees: | ||||
A-Class | 61,271 | |||
C-Class | 74,249 | |||
H-Class | 335,963 | |||
Portfolio accounting fees | 166,132 | |||
Custodian fees | 19,437 | |||
Trustees’ fees* | 11,833 | |||
Line of credit fees | 364 | |||
Miscellaneous | 232,810 | |||
Total expenses | 2,565,243 | |||
Net investment income | 1,084,891 | |||
Net Realized and Unrealized Gain (Loss): | ||||
Net realized gain (loss) on: | ||||
Investments | 5,872,408 | |||
Net realized gain | 5,872,408 | |||
Net change in unrealized appreciation (depreciation) on: | ||||
Investments | (1,346,174 | ) | ||
Net change in unrealized appreciation (depreciation) | (1,346,174 | ) | ||
Net realized and unrealized gain | 4,526,234 | |||
Net increase in net assets resulting from operations | $ | 5,611,125 |
* | Relates to Trustees not deemed “interested persons” within the meaning of Section 2(a)(19) of the 1940 Act. |
22 | THE RYDEX FUNDS ANNUAL REPORT | SEE NOTES TO FINANCIAL STATEMENTS. |
S&P 500® PURE VALUE FUND |
STATEMENTS OF CHANGES IN NET ASSETS
Year Ended March 31, 2015 | Year Ended March 31, 2014 | |||||||
Increase (Decrease) in Net Assets from Operations: | ||||||||
Net investment income | $ | 1,084,891 | $ | 298,766 | ||||
Net realized gain on investments | 5,872,408 | 17,670,652 | ||||||
Net change in unrealized appreciation (depreciation) on investments | (1,346,174 | ) | 1,013,121 | |||||
Net increase in net assets resulting from operations | 5,611,125 | 18,982,539 | ||||||
Distributions to shareholders from: | ||||||||
Net investment income | ||||||||
A-Class | (27,416 | ) | (4,543 | ) | ||||
C-Class | (8,632 | ) | (9,295 | ) | ||||
H-Class | (94,796 | ) | (154,084 | ) | ||||
Net realized gains | ||||||||
A-Class | (814,700 | ) | (112,508 | ) | ||||
C-Class | (256,525 | ) | (230,200 | ) | ||||
H-Class | (2,817,022 | ) | (3,815,942 | ) | ||||
Total distributions to shareholders | (4,019,091 | ) | (4,326,572 | ) | ||||
Capital share transactions: | ||||||||
Proceeds from sale of shares | ||||||||
A-Class | 63,590,141 | 5,628,794 | ||||||
C-Class | 9,712,015 | 5,902,053 | ||||||
H-Class | 502,106,517 | 369,062,897 | ||||||
Distributions reinvested | ||||||||
A-Class | 826,012 | 106,616 | ||||||
C-Class | 260,348 | 225,859 | ||||||
H-Class | 2,878,464 | 3,914,756 | ||||||
Cost of shares redeemed | ||||||||
A-Class | (52,604,015 | ) | (3,047,246 | ) | ||||
C-Class | (8,669,041 | ) | (5,327,015 | ) | ||||
H-Class | (572,669,115 | ) | (349,827,346 | ) | ||||
Net increase (decrease) from capital share transactions | (54,568,674 | ) | 26,639,368 | |||||
Net increase (decrease) in net assets | (52,976,640 | ) | 41,295,335 | |||||
Net assets: | ||||||||
Beginning of year | 124,509,398 | 83,214,063 | ||||||
End of year | $ | 71,532,758 | $ | 124,509,398 | ||||
Undistributed net investment income at end of year | $ | 1,084,891 | $ | 130,844 | ||||
Capital share activity: | ||||||||
Shares sold | ||||||||
A-Class | 439,661 | 42,301 | ||||||
C-Class | 73,971 | 50,818 | ||||||
H-Class | 3,448,759 | 2,933,227 | ||||||
Shares issued from reinvestment of distributions | ||||||||
A-Class | 5,624 | 798 | ||||||
C-Class | 1,971 | 1,860 | ||||||
H-Class | 19,528 | 29,199 | ||||||
Shares redeemed | ||||||||
A-Class | (364,842 | ) | (23,402 | ) | ||||
C-Class | (66,550 | ) | (46,452 | ) | ||||
H-Class | (3,942,732 | ) | (2,852,369 | ) | ||||
Net increase (decrease) in shares | (384,610 | ) | 135,980 |
SEE NOTES TO FINANCIAL STATEMENTS. | THE RYDEX FUNDS ANNUAL REPORT | 23 |
S&P 500® PURE VALUE FUND |
FINANCIAL HIGHLIGHTS
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.
A-Class | Year Ended March 31, 2015 | Year Ended March 31, 2014 | Year Ended March 28, 2013 | Year Ended March 31, 2012 | Year Ended March 31, 2011 | |||||||||||||||
Per Share Data | ||||||||||||||||||||
Net asset value, beginning of period | $ | 141.39 | $ | 111.68 | $ | 93.49 | $ | 90.21 | $ | 79.66 | ||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||
Net investment income (loss)a | 1.14 | .61 | .58 | .30 | .01 | |||||||||||||||
Net gain (loss) on investments (realized and unrealized) | 6.83 | 35.01 | 17.75 | 2.98 | 11.87 | |||||||||||||||
Total from investment operations | 7.97 | 35.62 | 18.33 | 3.28 | 11.88 | |||||||||||||||
Less distributions from: | ||||||||||||||||||||
Net investment income | (.14 | ) | (.23 | ) | (.14 | ) | — | (1.33 | ) | |||||||||||
Net realized gains | (4.13 | ) | (5.68 | ) | — | — | — | |||||||||||||
Total distributions | (4.27 | ) | (5.91 | ) | (.14 | ) | — | (1.33 | ) | |||||||||||
Net asset value, end of period | $ | 145.09 | $ | 141.39 | $ | 111.68 | $ | 93.49 | $ | 90.21 | ||||||||||
Total Returnb | 5.60 | % | 32.21 | % | 19.63 | % | 3.64 | % | 15.14 | % | ||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||
Net assets, end of period (in thousands) | $ | 16,222 | $ | 4,435 | $ | 1,303 | $ | 1,846 | $ | 2,329 | ||||||||||
Ratios to average net assets: | ||||||||||||||||||||
Net investment income (loss) | 0.78 | % | 0.47 | % | 0.61 | % | 0.34 | % | 0.01 | % | ||||||||||
Total expenses | 1.51 | % | 1.52 | % | 1.51 | % | 1.51 | % | 1.54 | % | ||||||||||
Portfolio turnover rate | 295 | % | 410 | % | 669 | % | 762 | % | 820 | % |
C-Class | Year Ended March 31, 2015 | Year Ended March 31, 2014 | Year Ended March 28, 2013 | Year Ended March 31, 2012 | Year Ended March 31, 2011 | |||||||||||||||
Per Share Data | ||||||||||||||||||||
Net asset value, beginning of period | $ | 128.19 | $ | 102.46 | $ | 86.42 | $ | 83.99 | $ | 74.81 | ||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||
Net investment income (loss)a | .04 | (.30 | ) | (.19 | ) | (.36 | ) | (.51 | ) | |||||||||||
Net gain (loss) on investments (realized and unrealized) | 6.19 | 31.94 | 16.37 | 2.79 | 11.02 | |||||||||||||||
Total from investment operations | 6.23 | 31.64 | 16.18 | 2.43 | 10.51 | |||||||||||||||
Less distributions from: | ||||||||||||||||||||
Net investment income | (.14 | ) | (.23 | ) | (.14 | ) | — | (1.33 | ) | |||||||||||
Net realized gains | (4.13 | ) | (5.68 | ) | — | — | — | |||||||||||||
Total distributions | (4.27 | ) | (5.91 | ) | (.14 | ) | — | (1.33 | ) | |||||||||||
Net asset value, end of period | $ | 130.15 | $ | 128.19 | $ | 102.46 | $ | 86.42 | $ | 83.99 | ||||||||||
Total Returnb | 4.81 | % | 31.21 | % | 18.76 | % | 2.88 | % | 14.28 | % | ||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||
Net assets, end of period (in thousands) | $ | 6,390 | $ | 5,090 | $ | 3,430 | $ | 2,128 | $ | 5,690 | ||||||||||
Ratios to average net assets: | ||||||||||||||||||||
Net investment income (loss) | 0.03 | % | (0.26 | %) | (0.22 | %) | (0.45 | %) | (0.68 | %) | ||||||||||
Total expenses | 2.25 | % | 2.27 | % | 2.26 | % | 2.27 | % | 2.29 | % | ||||||||||
Portfolio turnover rate | 295 | % | 410 | % | 669 | % | 762 | % | 820 | % |
24 | THE RYDEX FUNDS ANNUAL REPORT | SEE NOTES TO FINANCIAL STATEMENTS. |
S&P 500® PURE VALUE FUND |
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.
H-Class | Year Ended March 31, 2015 | Year Ended March 31, 2014 | Year Ended March 28, 2013 | Year Ended March 31, 2012 | Year Ended March 31, 2011 | |||||||||||||||
Per Share Data | ||||||||||||||||||||
Net asset value, beginning of period | $ | 141.89 | $ | 112.06 | $ | 93.80 | $ | 90.50 | $ | 79.91 | ||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||
Net investment income (loss)a | .97 | .51 | .57 | .33 | (.02 | ) | ||||||||||||||
Net gain (loss) on investments (realized and unrealized) | 7.03 | 35.23 | 17.83 | 2.97 | 11.94 | |||||||||||||||
Total from investment operations | 8.00 | 35.74 | 18.40 | 3.30 | 11.92 | |||||||||||||||
Less distributions from: | ||||||||||||||||||||
Net investment income | (.14 | ) | (.23 | ) | (.14 | ) | — | (1.33 | ) | |||||||||||
Net realized gains | (4.13 | ) | (5.68 | ) | — | — | — | |||||||||||||
Total distributions | (4.27 | ) | (5.91 | ) | (.14 | ) | — | (1.33 | ) | |||||||||||
Net asset value, end of period | $ | 145.62 | $ | 141.89 | $ | 112.06 | $ | 93.80 | $ | 90.50 | ||||||||||
Total Returnb | 5.60 | % | 32.21 | % | 19.64 | % | 3.65 | % | 15.14 | % | ||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||
Net assets, end of period (in thousands) | $ | 48,920 | $ | 114,984 | $ | 78,480 | $ | 68,886 | $ | 26,852 | ||||||||||
Ratios to average net assets: | ||||||||||||||||||||
Net investment income (loss) | 0.66 | % | 0.40 | % | 0.58 | % | 0.38 | % | (0.03 | %) | ||||||||||
Total expenses | 1.51 | % | 1.52 | % | 1.52 | % | 1.51 | % | 1.54 | % | ||||||||||
Portfolio turnover rate | 295 | % | 410 | % | 669 | % | 762 | % | 820 | % |
a | Net investment income (loss) per share was computed using average shares outstanding throughout the period. |
b | Total return does not reflect the impact of any applicable sales charges. |
SEE NOTES TO FINANCIAL STATEMENTS. | THE RYDEX FUNDS ANNUAL REPORT | 25 |
PERFORMANCE REPORT AND FUND PROFILE (Unaudited) | March 31, 2015 |
S&P MIDCAP 400® PURE GROWTH FUND
OBJECTIVE: Seeks to provide investment results that match, before fees and expenses, the performance of a benchmark for mid-cap growth securities on a daily basis. The Fund’s current benchmark is the S&P MidCap 400® Pure Growth Index (the “underlying index”).
For the one-year period ended March 31, 2015, S&P MidCap 400® Pure Growth Fund H-Class returned 7.18%, compared with a gain of 8.53% for the S&P MidCap 400 Pure Growth Index. The Fund maintained a daily correlation of over 99% to its benchmark.
The Health Care and the Consumer Discretionary sectors contributed most to return of the underlying index for the period. The Energy sector detracted most from return, followed by the Utilities sector.
United Therapeutics Corp., Salix Pharmaceuticals Ltd., and Centene Corp. added the most to performance of the underlying index for the period. SM Energy Co., 3D Systems Corp., and Patterson-UTI Energy, Inc. detracted most from performance of the underlying index for the period.
Performance displayed represents past performance, which is no guarantee of future results.
Holdings Diversification (Market Exposure as % of Net Assets)
![](https://capedge.com/proxy/N-CSR/0001398344-15-003814/rtb2_07.jpg)
“Holdings Diversification (Market Exposure as % of Net Assets)” excludes any temporary cash investments.
Inception Dates: | |
A-Class | September 1, 2004 |
C-Class | February 20, 2004 |
H-Class | February 20, 2004 |
Ten Largest Holdings (% of Total Net Assets) | |
Trinity Industries, Inc. | 2.7% |
Centene Corp. | 2.7% |
JetBlue Airways Corp. | 2.5% |
United Therapeutics Corp. | 2.4% |
Alexander & Baldwin, Inc. | 2.3% |
Eagle Materials, Inc. | 2.2% |
Toll Brothers, Inc. | 2.2% |
Akorn, Inc. | 2.2% |
ARRIS Group, Inc. | 2.0% |
Salix Pharmaceuticals Ltd. | 2.0% |
Top Ten Total | 23.2% |
“Ten Largest Holdings” exclude any temporary cash or derivative investments. |
26 | THE RYDEX FUNDS ANNUAL REPORT |
PERFORMANCE REPORT AND FUND PROFILE (Unaudited)(concluded) | March 31, 2015 |
Cumulative Fund Performance*
![](https://capedge.com/proxy/N-CSR/0001398344-15-003814/rtb2_08.jpg)
![](https://capedge.com/proxy/N-CSR/0001398344-15-003814/rtb2_09.jpg)
Average Annual Returns*
Periods Ended March 31, 2015
1 Year | 5 Year | 10 Year | |
A-Class Shares | 7.18% | 15.08% | 10.72% |
A-Class Shares with sales charge† | 2.08% | 13.96% | 10.19% |
C-Class Shares | 6.39% | 14.22% | 9.90% |
C-Class Shares with CDSC‡ | 5.49% | 14.22% | 9.90% |
H-Class Shares | 7.18% | 15.07% | 10.72% |
S&P MidCap 400 Pure Growth Index | 8.53% | 16.56% | 12.34% |
* | The performance data above represents past performance that is not predictive of future results. The investment return and principal value of an investment in the Fund will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Returns are historical and include changes in principal and reinvested dividends and capital gains and do not reflect the effect of taxes. The S&P MidCap 400 Pure Growth Index is an unmanaged index and, unlike the Fund, has no management fees or operating expenses to reduce its reported return. The graphs are based on A-Class and H-Class shares only; performance for C-Class shares will vary due to differences in fee structure. |
† | Fund returns are calculated using the maximum sales charge of 4.75%. |
‡ | Fund returns include a CDSC of 1% if redeemed within 12 months of purchase. |
THE RYDEX FUNDS ANNUAL REPORT | 27 |
SCHEDULE OF INVESTMENTS | March 31, 2015 |
S&P MIDCAP 400® PURE GROWTH FUND |
Shares | Value | |||||||
COMMON STOCKS† - 99.6% | ||||||||
CONSUMER, NON-CYCLICAL - 25.9% | ||||||||
Centene Corp.* | 72,500 | $ | 5,125,025 | |||||
United Therapeutics Corp.* | 26,359 | 4,545,214 | ||||||
Akorn, Inc.* | 87,300 | 4,147,622 | ||||||
Salix Pharmaceuticals Ltd.* | 22,288 | 3,851,589 | ||||||
Hain Celestial Group, Inc.* | 53,327 | 3,415,594 | ||||||
WhiteWave Foods Co. — Class A* | 74,100 | 3,285,594 | ||||||
Global Payments, Inc. | 24,100 | 2,209,488 | ||||||
IDEXX Laboratories, Inc.* | 14,300 | 2,209,064 | ||||||
Boston Beer Company, Inc. — Class A* | 7,400 | 1,978,760 | ||||||
VCA, Inc.* | 35,730 | 1,958,719 | ||||||
Gartner, Inc.* | 22,100 | 1,853,085 | ||||||
Corporate Executive Board Co. | 21,200 | 1,693,032 | ||||||
Live Nation Entertainment, Inc.* | 64,670 | 1,631,624 | ||||||
STERIS Corp. | 22,600 | 1,588,102 | ||||||
Service Corporation International | 57,900 | 1,508,295 | ||||||
SEI Investments Co. | 31,400 | 1,384,426 | ||||||
MEDNAX, Inc.* | 19,000 | 1,377,690 | ||||||
Charles River Laboratories International, Inc.* | 16,800 | 1,332,072 | ||||||
WEX, Inc.* | 10,969 | 1,177,632 | ||||||
Cooper Companies, Inc. | 6,200 | 1,162,004 | ||||||
Align Technology, Inc.* | 21,300 | 1,145,621 | ||||||
Sirona Dental Systems, Inc.* | 12,134 | 1,091,939 | ||||||
Total Consumer, Non-cyclical | 49,672,191 | |||||||
CONSUMER, CYCLICAL - 20.6% | ||||||||
JetBlue Airways Corp.* | 249,800 | 4,808,650 | ||||||
Toll Brothers, Inc.* | 106,000 | 4,170,041 | ||||||
NVR, Inc.* | 2,400 | 3,188,784 | ||||||
Buffalo Wild Wings, Inc.* | 14,700 | 2,664,228 | ||||||
Advance Auto Parts, Inc. | 16,803 | 2,515,241 | ||||||
Signet Jewelers Ltd. | 17,600 | 2,442,704 | ||||||
Alaska Air Group, Inc. | 36,230 | 2,397,701 | ||||||
Foot Locker, Inc. | 37,500 | 2,362,500 | ||||||
Tempur Sealy International, Inc.* | 37,900 | 2,188,346 | ||||||
Polaris Industries, Inc. | 14,833 | 2,092,936 | ||||||
Brunswick Corp. | 32,800 | 1,687,560 | ||||||
Carter’s, Inc. | 17,274 | 1,597,327 | ||||||
Williams-Sonoma, Inc. | 19,900 | 1,586,229 | ||||||
Domino’s Pizza, Inc. | 15,600 | 1,568,580 | ||||||
Brinker International, Inc. | 19,700 | 1,212,732 | ||||||
LKQ Corp.* | 45,350 | 1,159,146 | ||||||
HSN, Inc. | 14,200 | 968,866 | ||||||
Deckers Outdoor Corp.* | 12,300 | 896,301 | ||||||
Total Consumer, Cyclical | 39,507,872 | |||||||
FINANCIAL - 17.0% | ||||||||
Alexander & Baldwin, Inc. | 101,700 | 4,391,406 | ||||||
Extra Space Storage, Inc. | 48,600 | 3,283,902 | ||||||
Camden Property Trust | 37,500 | 2,929,875 | ||||||
Jones Lang LaSalle, Inc. | 16,500 | 2,811,600 | ||||||
LaSalle Hotel Properties | 72,300 | 2,809,578 | ||||||
RenaissanceRe Holdings Ltd. | 21,800 | 2,174,114 | ||||||
Duke Realty Corp. | 97,600 | 2,124,752 | ||||||
Omega Healthcare Investors, Inc. | 49,600 | 2,012,272 | ||||||
Primerica, Inc. | 35,300 | 1,796,770 | ||||||
Weingarten Realty Investors | 46,300 | 1,665,874 | ||||||
Lamar Advertising Co. — Class A | 26,500 | 1,570,655 | ||||||
Signature Bank* | 11,801 | 1,529,174 | ||||||
Regency Centers Corp. | 21,000 | 1,428,840 | ||||||
Kilroy Realty Corp. | 14,800 | 1,127,316 | ||||||
UDR, Inc. | 29,100 | 990,273 | ||||||
Total Financial | 32,646,401 | |||||||
INDUSTRIAL - 14.0% | ||||||||
Trinity Industries, Inc. | 144,600 | 5,134,745 | ||||||
Eagle Materials, Inc. | 51,551 | 4,307,602 | ||||||
Packaging Corporation of America | 35,900 | 2,807,021 | ||||||
Wabtec Corp. | 24,960 | 2,371,450 | ||||||
Old Dominion Freight Line, Inc.* | 30,595 | 2,364,994 | ||||||
Zebra Technologies Corp. — Class A* | 22,800 | 2,068,302 | ||||||
ITT Corp. | 48,300 | 1,927,653 | ||||||
Acuity Brands, Inc. | 10,400 | 1,748,864 | ||||||
Cognex Corp.* | 31,700 | 1,572,003 | ||||||
Landstar System, Inc. | 23,091 | 1,530,933 | ||||||
Gentex Corp. | 58,332 | 1,067,476 | ||||||
Total Industrial | 26,901,043 | |||||||
TECHNOLOGY - 10.3% | ||||||||
Cadence Design Systems, Inc.* | 197,400 | 3,640,056 | ||||||
SolarWinds, Inc.* | 68,800 | 3,525,312 | ||||||
MAXIMUS, Inc. | 45,900 | 3,064,284 | ||||||
Rackspace Hosting, Inc.* | 41,100 | 2,120,349 | ||||||
Fair Isaac Corp. | 20,311 | 1,801,992 | ||||||
Ultimate Software Group, Inc.* | 9,786 | 1,663,180 | ||||||
ACI Worldwide, Inc.* | 68,637 | 1,486,677 | ||||||
Riverbed Technology, Inc.* | 63,600 | 1,329,876 | ||||||
Tyler Technologies, Inc.* | 9,000 | 1,084,770 | ||||||
Total Technology | 19,716,496 | |||||||
COMMUNICATIONS - 7.5% | ||||||||
ARRIS Group, Inc.* | 134,450 | 3,884,932 | ||||||
Fortinet, Inc.* | 95,800 | 3,348,210 | ||||||
InterDigital, Inc. | 45,890 | 2,328,459 | ||||||
Qorvo, Inc.* | 28,600 | 2,279,420 | ||||||
AMC Networks, Inc. — Class A* | 19,700 | 1,509,808 | ||||||
FactSet Research Systems, Inc. | 6,800 | 1,082,560 | ||||||
Total Communications | 14,433,389 | |||||||
BASIC MATERIALS - 2.4% | ||||||||
Minerals Technologies, Inc. | 24,651 | 1,801,988 | ||||||
Cytec Industries, Inc. | 31,900 | 1,723,876 | ||||||
Valspar Corp. | 13,300 | 1,117,599 | ||||||
Total Basic Materials | 4,643,463 | |||||||
28 | THE RYDEX FUNDS ANNUAL REPORT | SEE NOTES TO FINANCIAL STATEMENTS. |
SCHEDULE OF INVESTMENTS (concluded) | March 31, 2015 |
S&P MIDCAP 400® PURE GROWTH FUND |
Shares | Value | |||||||
ENERGY - 1.1% | ||||||||
Dresser-Rand Group, Inc.* | 25,400 | $ | 2,040,890 | |||||
UTILITIES - 0.8% | ||||||||
UGI Corp. | 47,800 | 1,557,802 | ||||||
Total Common Stocks | ||||||||
(Cost $159,179,925) | 191,119,547 |
Face Amount | ||||||||
REPURCHASE AGREEMENTS††,1 - 0.3% | ||||||||
HSBC Group issued 03/31/15 at 0.03% due 04/01/15 | $ | 498,748 | 498,748 | |||||
RBC Capital Markets issued 03/31/15 at 0.05% due 04/01/15 | 76,219 | 76,219 | ||||||
UMB Financial Corp. issued 03/31/15 at 0.03% due 04/01/15 | 61,178 | 61,178 | ||||||
Total Repurchase Agreements | ||||||||
(Cost $636,145) | 636,145 | |||||||
Total Investments - 99.9% | ||||||||
(Cost $159,816,070) | $ | 191,755,692 | ||||||
Other Assets & Liabilities, net - 0.1% | 252,878 | |||||||
Total Net Assets - 100.0% | $ | 192,008,570 |
* | Non-income producing security. |
† | Value determined based on Level 1 inputs — See Note 4. |
†† | Value determined based on Level 2 inputs — See Note 4. |
1 | Repurchase Agreements — See Note 5. |
SEE NOTES TO FINANCIAL STATEMENTS. | THE RYDEX FUNDS ANNUAL REPORT | 29 |
S&P MIDCAP 400® PURE GROWTH FUND |
STATEMENT OF ASSETS AND LIABILITIES
March 31, 2015
Assets: | ||||
Investments, at value (cost $159,179,925) | $ | 191,119,547 | ||
Repurchase agreements, at value (cost $636,145) | 636,145 | |||
Total investments (cost $159,816,070) | 191,755,692 | |||
Cash | 6,720 | |||
Receivables: | ||||
Securities sold | 1,074,789 | |||
Dividends | 114,678 | |||
Fund shares sold | 81,952 | |||
Securities lending income | 470 | |||
Interest | 1 | |||
Total assets | 193,034,302 | |||
Liabilities: | ||||
Payable for: | ||||
Fund shares redeemed | 656,094 | |||
Management fees | 119,758 | |||
Distribution and service fees | 56,019 | |||
Transfer agent and administrative fees | 39,919 | |||
Portfolio accounting fees | 15,968 | |||
Miscellaneous | 137,974 | |||
Total liabilities | 1,025,732 | |||
Commitments and contingent liabilities (Note 14) | — | |||
Net assets | $ | 192,008,570 | ||
Net assets consist of: | ||||
Paid in capital | $ | 154,801,901 | ||
Undistributed net investment income | — | |||
Accumulated net realized gain on investments | 5,267,047 | |||
Net unrealized appreciation on investments | 31,939,622 | |||
Net assets | $ | 192,008,570 | ||
A-Class: | ||||
Net assets | $ | 40,647,953 | ||
Capital shares outstanding | 754,682 | |||
Net asset value per share | $ | 53.86 | ||
Maximum offering price per share (Net asset value divided by 95.25%) | $ | 56.55 | ||
C-Class: | ||||
Net assets | $ | 26,689,100 | ||
Capital shares outstanding | 549,208 | |||
Net asset value per share | $ | 48.60 | ||
H-Class: | ||||
Net assets | $ | 124,671,517 | ||
Capital shares outstanding | 2,312,395 | |||
Net asset value per share | $ | 53.91 |
STATEMENT OF OPERATIONS
Year Ended March 31, 2015
Investment Income: | ||||
Dividends | $ | 2,016,255 | ||
Income from securities lending, net | 213,188 | |||
Interest | 210 | |||
Total investment income | 2,229,653 | |||
Expenses: | ||||
Management fees | 1,697,897 | |||
Transfer agent and administrative fees | 565,966 | |||
Distribution and service fees: | ||||
A-Class | 120,585 | |||
C-Class | 263,321 | |||
H-Class | 379,551 | |||
Portfolio accounting fees | 226,152 | |||
Custodian fees | 26,433 | |||
Trustees’ fees* | 18,540 | |||
Tax expense | 2,114 | |||
Line of credit fees | 383 | |||
Miscellaneous | 307,429 | |||
Total expenses | 3,608,371 | |||
Net investment loss | (1,378,718 | ) | ||
Net Realized and Unrealized Gain (Loss): | ||||
Net realized gain (loss) on: | ||||
Investments | 29,700,840 | |||
Net realized gain | 29,700,840 | |||
Net change in unrealized appreciation (depreciation) on: | ||||
Investments | (18,164,089 | ) | ||
Net change in unrealized appreciation (depreciation) | (18,164,089 | ) | ||
Net realized and unrealized gain | 11,536,751 | |||
Net increase in net assets resulting from operations | $ | 10,158,033 |
* | Relates to Trustees not deemed “interested persons” within the meaning of Section 2(a)(19) of the 1940 Act. |
30 | THE RYDEX FUNDS ANNUAL REPORT | SEE NOTES TO FINANCIAL STATEMENTS. |
S&P MIDCAP 400® PURE GROWTH FUND |
STATEMENTS OF CHANGES IN NET ASSETS
Year Ended March 31, 2015 | Year Ended March 31, 2014 | |||||||
Increase (Decrease) in Net Assets from Operations: | ||||||||
Net investment loss | $ | (1,378,718 | ) | $ | (1,185,523 | ) | ||
Net realized gain on investments | 29,700,840 | 55,085,731 | ||||||
Net change in unrealized appreciation (depreciation) on investments | (18,164,089 | ) | (4,970,041 | ) | ||||
Net increase in net assets resulting from operations | 10,158,033 | 48,930,167 | ||||||
Distributions to shareholders from: | ||||||||
Net realized gains | ||||||||
A-Class | (7,116,622 | ) | (1,952,757 | ) | ||||
C-Class | (4,084,213 | ) | (948,399 | ) | ||||
H-Class | (22,003,582 | ) | (6,562,447 | ) | ||||
Total distributions to shareholders | (33,204,417 | ) | (9,463,603 | ) | ||||
Capital share transactions: | ||||||||
Proceeds from sale of shares | ||||||||
A-Class | 39,741,275 | 36,744,483 | ||||||
C-Class | 6,287,664 | 12,268,993 | ||||||
H-Class | 147,612,847 | 228,779,489 | ||||||
Distributions reinvested | ||||||||
A-Class | 6,967,839 | 1,901,016 | ||||||
C-Class | 3,990,817 | 922,659 | ||||||
H-Class | 21,471,603 | 6,298,116 | ||||||
Cost of shares redeemed | ||||||||
A-Class | (61,004,231 | ) | (33,701,785 | ) | ||||
C-Class | (9,508,175 | ) | (6,985,331 | ) | ||||
H-Class | (215,228,354 | ) | (317,602,501 | ) | ||||
Net decrease from capital share transactions | (59,668,715 | ) | (71,374,861 | ) | ||||
Net decrease in net assets | (82,715,099 | ) | (31,908,297 | ) | ||||
Net assets: | ||||||||
Beginning of year | 274,723,669 | 306,631,966 | ||||||
End of year | $ | 192,008,570 | $ | 274,723,669 | ||||
Undistributed net investment income at end of year | $ | — | $ | — | ||||
Capital share activity: | ||||||||
Shares sold | ||||||||
A-Class | 737,028 | 700,297 | ||||||
C-Class | 127,220 | 242,805 | ||||||
H-Class | 2,657,949 | 4,249,934 | ||||||
Shares issued from reinvestment of distributions | ||||||||
A-Class | 138,912 | 33,658 | ||||||
C-Class | 87,942 | 17,659 | ||||||
H-Class | 427,636 | 111,412 | ||||||
Shares redeemed | ||||||||
A-Class | (1,132,013 | ) | (640,363 | ) | ||||
C-Class | (193,674 | ) | (138,844 | ) | ||||
H-Class | (3,955,768 | ) | (6,041,405 | ) | ||||
Net decrease in shares | (1,104,768 | ) | (1,464,847 | ) |
SEE NOTES TO FINANCIAL STATEMENTS. | THE RYDEX FUNDS ANNUAL REPORT | 31 |
S&P MIDCAP 400® PURE GROWTH FUND |
FINANCIAL HIGHLIGHTS
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.
A-Class | Year Ended March 31, 2015 | Year Ended March 31, 2014 | Year Ended March 28, 2013 | Year Ended March 31, 2012 | Year Ended March 31, 2011 | |||||||||||||||
Per Share Data | ||||||||||||||||||||
Net asset value, beginning of period | $ | 58.66 | $ | 49.76 | $ | 44.11 | $ | 42.76 | $ | 32.21 | ||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||
Net investment income (loss)a | (.29 | ) | (.22 | ) | (.19 | ) | (.45 | ) | (.38 | ) | ||||||||||
Net gain (loss) on investments (realized and unrealized) | 3.88 | 11.05 | 5.84 | 1.80 | 10.93 | |||||||||||||||
Total from investment operations | 3.59 | 10.83 | 5.65 | 1.35 | 10.55 | |||||||||||||||
Less distributions from: | ||||||||||||||||||||
Net realized gains | (8.39 | ) | (1.93 | ) | — | — | — | |||||||||||||
Total distributions | (8.39 | ) | (1.93 | ) | — | — | — | |||||||||||||
Net asset value, end of period | $ | 53.86 | $ | 58.66 | $ | 49.76 | $ | 44.11 | $ | 42.76 | ||||||||||
Total Returnb | 7.18 | % | 21.90 | % | 12.81 | % | 3.16 | % | 32.75 | % | ||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||
Net assets, end of period (in thousands) | $ | 40,648 | $ | 59,293 | $ | 45,638 | $ | 36,052 | $ | 25,237 | ||||||||||
Ratios to average net assets: | ||||||||||||||||||||
Net investment income (loss) | (0.53 | %) | (0.40 | %) | (0.43 | %) | (1.09 | %) | (1.04 | %) | ||||||||||
Total expenses | 1.51 | % | 1.52 | % | 1.50 | % | 1.50 | % | 1.54 | % | ||||||||||
Portfolio turnover rate | 134 | % | 131 | % | 188 | % | 226 | % | 448 | % |
C-Class | Year Ended March 31, 2015 | Year Ended March 31, 2014 | Year Ended March 28, 2013 | Year Ended March 31, 2012 | Year Ended March 31, 2011 | |||||||||||||||
Per Share Data | ||||||||||||||||||||
Net asset value, beginning of period | $ | 54.13 | $ | 46.39 | $ | 41.43 | $ | 40.47 | $ | 30.71 | ||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||
Net investment income (loss)a | (.64 | ) | (.58 | ) | (.49 | ) | (.71 | ) | (.63 | ) | ||||||||||
Net gain (loss) on investments (realized and unrealized) | 3.50 | 10.25 | 5.45 | 1.67 | 10.39 | |||||||||||||||
Total from investment operations | 2.86 | 9.67 | 4.96 | .96 | 9.76 | |||||||||||||||
Less distributions from: | ||||||||||||||||||||
Net realized gains | (8.39 | ) | (1.93 | ) | — | — | — | |||||||||||||
Total distributions | (8.39 | ) | (1.93 | ) | — | — | — | |||||||||||||
Net asset value, end of period | $ | 48.60 | $ | 54.13 | $ | 46.39 | $ | 41.43 | $ | 40.47 | ||||||||||
Total Returnb | 6.39 | % | 20.98 | % | 12.00 | % | 2.35 | % | 31.78 | % | ||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||
Net assets, end of period (in thousands) | $ | 26,689 | $ | 28,567 | $ | 18,837 | $ | 16,228 | $ | 10,102 | ||||||||||
Ratios to average net assets: | ||||||||||||||||||||
Net investment income (loss) | (1.26 | %) | (1.15 | %) | (1.19 | %) | (1.83 | %) | (1.83 | %) | ||||||||||
Total expenses | 2.26 | % | 2.27 | % | 2.25 | % | 2.25 | % | 2.29 | % | ||||||||||
Portfolio turnover rate | 134 | % | 131 | % | 188 | % | 226 | % | 448 | % |
32 | THE RYDEX FUNDS ANNUAL REPORT | SEE NOTES TO FINANCIAL STATEMENTS. |
S&P MIDCAP 400® PURE GROWTH FUND |
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.
H-Class | Year Ended March 31, 2015 | Year Ended March 31, 2014 | Year Ended March 28, 2013 | Year Ended March 31, 2012 | Year Ended March 31, 2011 | |||||||||||||||
Per Share Data | ||||||||||||||||||||
Net asset value, beginning of period | $ | 58.71 | $ | 49.80 | $ | 44.14 | $ | 42.81 | $ | 32.25 | ||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||
Net investment income (loss)a | (.29 | ) | (.18 | ) | (.20 | ) | (.44 | ) | (.38 | ) | ||||||||||
Net gain (loss) on investments (realized and unrealized) | 3.88 | 11.02 | 5.86 | 1.77 | 10.94 | |||||||||||||||
Total from investment operations | 3.59 | 10.84 | 5.66 | 1.33 | 10.56 | |||||||||||||||
Less distributions from: | ||||||||||||||||||||
Net realized gains | (8.39 | ) | (1.93 | ) | — | — | — | |||||||||||||
Total distributions | (8.39 | ) | (1.93 | ) | — | — | — | |||||||||||||
Net asset value, end of period | $ | 53.91 | $ | 58.71 | $ | 49.80 | $ | 44.14 | $ | 42.81 | ||||||||||
Total Returnb | 7.18 | % | 21.91 | % | 12.82 | % | 3.11 | % | 32.74 | % | ||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||
Net assets, end of period (in thousands) | $ | 124,672 | $ | 186,863 | $ | 242,157 | $ | 312,510 | $ | 212,654 | ||||||||||
Ratios to average net assets: | ||||||||||||||||||||
Net investment income (loss) | (0.52 | %) | (0.33 | %) | (0.45 | %) | (1.08 | %) | (1.02 | %) | ||||||||||
Total expenses | 1.51 | % | 1.52 | % | 1.50 | % | 1.50 | % | 1.55 | % | ||||||||||
Portfolio turnover rate | 134 | % | 131 | % | 188 | % | 226 | % | 448 | % |
a | Net investment income (loss) per share was computed using average shares outstanding throughout the period. |
b | Total return does not reflect the impact of any applicable sales charges. |
SEE NOTES TO FINANCIAL STATEMENTS. | THE RYDEX FUNDS ANNUAL REPORT | 33 |
PERFORMANCE REPORT AND FUND PROFILE (Unaudited) | March 31, 2015 |
S&P MIDCAP 400® PURE VALUE FUND
OBJECTIVE: Seeks to provide investment results that match, before fees and expenses, the performance of a benchmark for mid-cap value securities on a daily basis. The Fund’s current benchmark is the S&P MidCap 400® Pure Value Index (the “underlying index”).
For the one-year period ended March 31, 2015, S&P MidCap 400® Pure Value Fund H-Class returned 6.26%, compared with a return of 8.34% for the S&P MidCap 400 Pure Value Index. The Fund maintained a daily correlation of over 99% to its benchmark.
The sectors that contributed most to performance of the underlying index for the period were Health Care and Financials. The Energy sector detracted most from performance, followed by the Materials sector.
JetBlue Airways Corp., Health Net, Inc., and Murphy USA, Inc. contributed most to performance of the underlying index for the period. Abercrombie & Fitch Co. — Class A, Unit Corp., and Tidewater, Inc. detracted most from performance of the underlying index for the period.
Performance displayed represents past performance, which is no guarantee of future results.
Holdings Diversification (Market Exposure as % of Net Assets)
![](https://capedge.com/proxy/N-CSR/0001398344-15-003814/rtb2_10.jpg)
“Holdings Diversification (Market Exposure as % of Net Assets)” excludes any temporary cash investments.
Inception Dates: | |
A-Class | September 1, 2004 |
C-Class | February 20, 2004 |
H-Class | February 20, 2004 |
Ten Largest Holdings (% of Total Net Assets) | |
Domtar Corp. | 2.2% |
AGCO Corp. | 2.1% |
Nabors Industries Ltd. | 2.0% |
Reinsurance Group of America, Inc. — Class A | 1.9% |
Ascena Retail Group, Inc. | 1.9% |
ManpowerGroup, Inc. | 1.7% |
Arrow Electronics, Inc. | 1.7% |
Avnet, Inc. | 1.7% |
HollyFrontier Corp. | 1.7% |
Ingram Micro, Inc. — Class A | 1.7% |
Top Ten Total | 18.6% |
“Ten Largest Holdings” exclude any temporary cash or derivative investments. |
34 | THE RYDEX FUNDS ANNUAL REPORT |
PERFORMANCE REPORT AND FUND PROFILE (Unaudited)(concluded) | March 31, 2015 |
Cumulative Fund Performance*
![](https://capedge.com/proxy/N-CSR/0001398344-15-003814/rtb2_11.jpg)
![](https://capedge.com/proxy/N-CSR/0001398344-15-003814/rtb2_12.jpg)
Average Annual Returns*
Periods Ended March 31, 2015
1 Year | 5 Year | 10 Year | |
A-Class Shares | 6.25% | 10.52% | 6.66% |
A-Class Shares with sales charge† | 1.20% | 9.45% | 6.14% |
C-Class Shares | 5.47% | 9.68% | 5.81% |
C-Class Shares with CDSC‡ | 4.47% | 9.68% | 5.81% |
H-Class Shares | 6.26% | 10.50% | 6.65% |
S&P MidCap 400 Pure Value Index | 8.34% | 13.43% | 9.58% |
* | The performance data above represents past performance that is not predictive of future results. The investment return and principal value of an investment in the Fund will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Returns are historical and include changes in principal and reinvested dividends and capital gains and do not reflect the effect of taxes. The S&P MidCap 400 Pure Value Index is an unmanaged index and, unlike the Fund, has no management fees or operating expenses to reduce its reported return. The graphs are based on A-Class and H-Class shares only; performance for C-Class shares will vary due to differences in fee structure. |
† | Fund returns are calculated using the maximum sales charge of 4.75%. |
‡ | Fund returns include a CDSC of 1% if redeemed within 12 months of purchase. |
THE RYDEX FUNDS ANNUAL REPORT | 35 |
SCHEDULE OF INVESTMENTS | March 31, 2015 |
S&P MIDCAP 400® PURE VALUE FUND |
Shares | Value | |||||||
COMMON STOCKS† - 99.4% | ||||||||
INDUSTRIAL - 23.9% | ||||||||
AGCO Corp. | 6,015 | $ | 286,555 | |||||
Arrow Electronics, Inc.* | 3,845 | 235,121 | ||||||
Avnet, Inc. | 5,279 | 234,916 | ||||||
Tech Data Corp.* | 3,915 | 226,170 | ||||||
AECOM* | 7,149 | 220,332 | ||||||
Terex Corp. | 7,959 | 211,630 | ||||||
Orbital ATK, Inc. | 2,263 | 173,414 | ||||||
KBR, Inc. | 11,758 | 170,256 | ||||||
Jabil Circuit, Inc. | 6,736 | 157,488 | ||||||
Oshkosh Corp. | 3,079 | 150,224 | ||||||
Vishay Intertechnology, Inc. | 10,126 | 139,941 | ||||||
Greif, Inc. — Class A | 3,556 | 139,644 | ||||||
Exelis, Inc. | 5,476 | 133,450 | ||||||
Tidewater, Inc.1 | 5,847 | 111,912 | ||||||
Con-way, Inc. | 2,460 | 108,560 | ||||||
SPX Corp. | 1,120 | 95,088 | ||||||
Triumph Group, Inc. | 1,500 | 89,580 | ||||||
Rock-Tenn Co. — Class A | 1,340 | 86,430 | ||||||
Kennametal, Inc. | 2,260 | 76,139 | ||||||
Regal-Beloit Corp. | 925 | 73,926 | ||||||
Granite Construction, Inc. | 1,870 | 65,712 | ||||||
Bemis Company, Inc. | 1,277 | 59,138 | ||||||
Timken Co. | 1,170 | 49,304 | ||||||
TimkenSteel Corp. | 1,684 | 44,575 | ||||||
Total Industrial | 3,339,505 | |||||||
FINANCIAL - 18.4% | ||||||||
Reinsurance Group of America, Inc. — Class A | 2,873 | 267,735 | ||||||
Old Republic International Corp. | 13,070 | 195,266 | ||||||
Hanover Insurance Group, Inc. | 2,621 | 190,232 | ||||||
Kemper Corp. | 4,811 | 187,436 | ||||||
Aspen Insurance Holdings Ltd. | 3,886 | 183,536 | ||||||
American Financial Group, Inc. | 2,357 | 151,202 | ||||||
First American Financial Corp. | 3,889 | 138,760 | ||||||
Everest Re Group Ltd. | 699 | 121,626 | ||||||
StanCorp Financial Group, Inc. | 1,752 | 120,187 | ||||||
FirstMerit Corp. | 4,610 | 87,866 | ||||||
Mercury General Corp. | 1,480 | 85,470 | ||||||
Trustmark Corp. | 3,510 | 85,223 | ||||||
Associated Banc-Corp. | 4,548 | 84,593 | ||||||
International Bancshares Corp. | 3,212 | 83,608 | ||||||
Fulton Financial Corp. | 6,730 | 83,048 | ||||||
Umpqua Holdings Corp. | 4,407 | 75,712 | ||||||
Hancock Holding Co. | 2,520 | 75,247 | ||||||
HCC Insurance Holdings, Inc. | 1,280 | 72,538 | ||||||
Washington Federal, Inc. | 3,230 | 70,430 | ||||||
TCF Financial Corp. | 3,447 | 54,187 | ||||||
Valley National Bancorp | 5,445 | 51,401 | ||||||
New York Community Bancorp, Inc. | 3,011 | 50,374 | ||||||
Prosperity Bancshares, Inc. | 920 | 48,282 | ||||||
Total Financial | 2,563,959 | |||||||
ENERGY - 16.5% | ||||||||
Nabors Industries Ltd. | 20,100 | 274,364 | ||||||
HollyFrontier Corp. | 5,718 | 230,264 | ||||||
Patterson-UTI Energy, Inc. | 11,220 | 210,656 | ||||||
Western Refining, Inc. | 3,900 | 192,621 | ||||||
Denbury Resources, Inc.1 | 25,420 | 185,313 | ||||||
Superior Energy Services, Inc. | 7,992 | 178,541 | ||||||
SM Energy Co. | 2,780 | 143,670 | ||||||
Murphy USA, Inc.* | 1,960 | 141,845 | ||||||
Unit Corp.* | 4,974 | 139,173 | ||||||
Atwood Oceanics, Inc. | 4,920 | 138,301 | ||||||
Rowan Companies plc — Class A | 7,230 | 128,043 | ||||||
NOW, Inc.*,1 | 4,830 | 104,521 | ||||||
Rosetta Resources, Inc.* | 4,120 | 70,122 | ||||||
Oil States International, Inc.* | 1,550 | 61,644 | ||||||
Peabody Energy Corp.1 | 12,159 | 59,822 | ||||||
Helix Energy Solutions Group, Inc.* | 2,500 | 37,400 | ||||||
Total Energy | 2,296,300 | |||||||
CONSUMER, NON-CYCLICAL - 11.4% | ||||||||
ManpowerGroup, Inc. | 2,815 | 242,512 | ||||||
Community Health Systems, Inc.* | 3,338 | 174,511 | ||||||
WellCare Health Plans, Inc.* | 1,900 | 173,773 | ||||||
Health Net, Inc.* | 2,759 | 166,892 | ||||||
RR Donnelley & Sons Co. | 7,860 | 150,833 | ||||||
Owens & Minor, Inc. | 4,215 | 142,636 | ||||||
Rent-A-Center, Inc. | 4,947 | 135,746 | ||||||
FTI Consulting, Inc.* | 2,380 | 89,155 | ||||||
United Natural Foods, Inc.* | 1,140 | 87,826 | ||||||
Dean Foods Co. | 4,727 | 78,137 | ||||||
Aaron’s, Inc. | 2,660 | 75,305 | ||||||
Avon Products, Inc. | 7,900 | 63,121 | ||||||
Total Consumer, Non-cyclical | 1,580,447 | |||||||
CONSUMER, CYCLICAL - 11.2% | ||||||||
Ascena Retail Group, Inc.* | 18,278 | 265,213 | ||||||
Ingram Micro, Inc. — Class A* | 9,146 | 229,748 | ||||||
World Fuel Services Corp. | 3,757 | 215,952 | ||||||
MDC Holdings, Inc. | 6,221 | 177,299 | ||||||
Abercrombie & Fitch Co. — Class A | 5,034 | 110,949 | ||||||
CST Brands, Inc. | 2,420 | 106,069 | ||||||
JC Penney Company, Inc.*,1 | 12,009 | 100,996 | ||||||
Guess?, Inc. | 4,380 | 81,424 | ||||||
Dana Holding Corp. | 3,610 | 76,388 | ||||||
International Speedway Corp. — Class A | 2,190 | 71,416 | ||||||
Office Depot, Inc.* | 6,791 | 62,477 | ||||||
ANN, Inc.* | 1,400 | 57,442 | ||||||
Total Consumer, Cyclical | 1,555,373 |
36 | THE RYDEX FUNDS ANNUAL REPORT | SEE NOTES TO FINANCIAL STATEMENTS. |
SCHEDULE OF INVESTMENTS (concluded) | March 31, 2015 |
S&P MIDCAP 400® PURE VALUE FUND |
Shares | Value | |||||||
BASIC MATERIALS - 8.6% | ||||||||
Domtar Corp. | 6,495 | $ | 300,199 | |||||
Reliance Steel & Aluminum Co. | 3,325 | 203,091 | ||||||
Commercial Metals Co. | 12,165 | 196,951 | ||||||
United States Steel Corp.1 | 6,667 | 162,675 | ||||||
Cabot Corp. | 3,030 | 136,350 | ||||||
Olin Corp. | 3,160 | 101,246 | ||||||
Steel Dynamics, Inc. | 4,758 | 95,636 | ||||||
Total Basic Materials | 1,196,148 | |||||||
UTILITIES - 3.4% | ||||||||
ONE Gas, Inc. | 2,526 | 109,198 | ||||||
Great Plains Energy, Inc. | 3,451 | 92,073 | ||||||
Hawaiian Electric Industries, Inc. | 2,666 | 85,632 | ||||||
MDU Resources Group, Inc. | 3,587 | 76,547 | ||||||
Atmos Energy Corp. | 1,067 | 59,005 | ||||||
WGL Holdings, Inc. | 932 | 52,565 | ||||||
Total Utilities | 475,020 | |||||||
TECHNOLOGY - 2.5% | ||||||||
Advanced Micro Devices, Inc.* | 38,477 | 103,118 | ||||||
Lexmark International, Inc. — Class A | 2,336 | 98,906 | ||||||
Convergys Corp. | 3,149 | 72,018 | ||||||
NCR Corp.* | 2,307 | 68,080 | ||||||
Total Technology | 342,122 | |||||||
COMMUNICATIONS - 2.2% | ||||||||
Telephone & Data Systems, Inc. | 6,643 | 165,410 | ||||||
Time, Inc. | 6,106 | 137,019 | ||||||
Total Communications | 302,429 | |||||||
HEALTH CARE - 1.3% | ||||||||
Halyard Health, Inc.* | 3,630 | 178,596 | ||||||
Total Common Stocks | ||||||||
(Cost $10,759,556) | 13,829,899 |
Face Amount | ||||||||
REPURCHASE AGREEMENTS††,2 - 0.7% | ||||||||
HSBC Group issued 03/31/15 at 0.03% due 04/01/15 | $ | 76,518 | 76,518 | |||||
RBC Capital Markets issued 03/31/15 at 0.05% due 04/01/15 | 11,694 | 11,694 | ||||||
UMB Financial Corp. issued 03/31/15 at 0.03% due 04/01/15 | 9,386 | 9,386 | ||||||
Total Repurchase Agreements | ||||||||
(Cost $97,598) | 97,598 | |||||||
SECURITIES LENDING COLLATERAL††,3 - 3.1% | ||||||||
Repurchase Agreements | ||||||||
HSBC Securities, Inc. issued 03/31/15 at 0.10% due 04/01/15 | 282,200 | 282,200 | ||||||
BNP Paribas Securities Corp. issued 03/31/15 at 0.10% due 04/01/15 | 97,077 | 97,077 | ||||||
Barclays Capital, Inc. issued 03/31/15 at 0.10% due 04/01/15 | 50,107 | 50,107 | ||||||
Total Securities Lending Collateral | ||||||||
(Cost $429,384) | 429,384 | |||||||
Total Investments - 103.2% | ||||||||
(Cost $11,286,538) | $ | 14,356,881 | ||||||
Other Assets & Liabilities, net - (3.2)% | (451,560 | ) | ||||||
Total Net Assets - 100.0% | $ | 13,905,321 |
* | Non-income producing security. |
† | Value determined based on Level 1 inputs — See Note 4. |
†† | Value determined based on Level 2 inputs — See Note 4. |
1 | All or portion of this security is on loan at March 31, 2015 — See Note 6. |
2 | Repurchase Agreements — See Note 5. |
3 | Securities lending collateral — See Note 6. |
plc — Public Limited Company |
SEE NOTES TO FINANCIAL STATEMENTS. | THE RYDEX FUNDS ANNUAL REPORT | 37 |
S&P MIDCAP 400® PURE VALUE FUND |
STATEMENT OF ASSETS AND LIABILITIES
March 31, 2015
Assets: | ||||
Investments, at value - including $411,361 of securities loaned (cost $10,759,556) | $ | 13,829,899 | ||
Repurchase agreements, at value (cost $526,982) | 526,982 | |||
Total investments (cost $11,286,538) | 14,356,881 | |||
Segregated cash with broker | 6,276 | |||
Receivables: | ||||
Fund shares sold | 1,098,749 | |||
Dividends | 15,156 | |||
Securities lending income | 894 | |||
Total assets | 15,477,956 | |||
Liabilities: | ||||
Payable for: | ||||
Fund shares redeemed | 839,502 | |||
Return of securities loaned | 435,660 | |||
Securities purchased | 265,939 | |||
Management fees | 9,848 | |||
Distribution and service fees | 5,071 | |||
Transfer agent and administrative fees | 3,283 | |||
Portfolio accounting fees | 1,313 | |||
Miscellaneous | 12,019 | |||
Total liabilities | 1,572,635 | |||
Commitments and contingent liabilities (Note 14) | — | |||
Net assets | $ | 13,905,321 | ||
Net assets consist of: | ||||
Paid in capital | $ | 14,574,203 | ||
Undistributed net investment income | 28,715 | |||
Accumulated net realized loss on investments | (3,767,940 | ) | ||
Net unrealized appreciation on investments | 3,070,343 | |||
Net assets | $ | 13,905,321 | ||
A-Class: | ||||
Net assets | $ | 1,904,016 | ||
Capital shares outstanding | 41,682 | |||
Net asset value per share | $ | 45.68 | ||
Maximum offering price per share (Net asset value divided by 95.25%) | $ | 47.96 | ||
C-Class: | ||||
Net assets | $ | 3,033,215 | ||
Capital shares outstanding | 72,925 | |||
Net asset value per share | $ | 41.59 | ||
H-Class: | ||||
Net assets | $ | 8,968,090 | ||
Capital shares outstanding | 196,578 | |||
Net asset value per share | $ | 45.62 |
STATEMENT OF OPERATIONS
Year Ended March 31, 2015
Investment Income: | ||||
Dividends | $ | 342,244 | ||
Income from securities lending, net | 5,721 | |||
Interest | 24 | |||
Total investment income | 347,989 | |||
Expenses: | ||||
Management fees | 147,546 | |||
Transfer agent and administrative fees | 49,182 | |||
Distribution and service fees: | ||||
A-Class | 5,650 | |||
C-Class | 30,560 | |||
H-Class | 35,892 | |||
Portfolio accounting fees | 19,673 | |||
Custodian fees | 2,296 | |||
Trustees’ fees* | 1,607 | |||
Line of credit fees | 179 | |||
Miscellaneous | 26,689 | |||
Total expenses | 319,274 | |||
Net investment income | 28,715 | |||
Net Realized and Unrealized Gain (Loss): | ||||
Net realized gain (loss) on: | ||||
Investments | 821,447 | |||
Net realized gain | 821,447 | |||
Net change in unrealized appreciation (depreciation) on: | ||||
Investments | (111,329 | ) | ||
Net change in unrealized appreciation (depreciation) | (111,329 | ) | ||
Net realized and unrealized gain | 710,118 | |||
Net increase in net assets resulting from operations | $ | 738,833 |
* | Relates to Trustees not deemed “interested persons” within the meaning of Section 2(a)(19) of the 1940 Act. |
38 | THE RYDEX FUNDS ANNUAL REPORT | SEE NOTES TO FINANCIAL STATEMENTS. |
S&P MIDCAP 400® PURE VALUE FUND |
STATEMENTS OF CHANGES IN NET ASSETS
Year Ended March 31, 2015 | Year Ended March 31, 2014 | |||||||
Increase (Decrease) in Net Assets from Operations: | ||||||||
Net investment income | $ | 28,715 | $ | 18,945 | ||||
Net realized gain on investments | 821,447 | 3,292,740 | ||||||
Net change in unrealized appreciation (depreciation) on investments | (111,329 | ) | (2,272,142 | ) | ||||
Net increase in net assets resulting from operations | 738,833 | 1,039,543 | ||||||
Distributions to shareholders from: | ||||||||
Net investment income | ||||||||
A-Class | (1,894 | ) | (6,418 | ) | ||||
C-Class | (3,562 | ) | (10,279 | ) | ||||
H-Class | (13,489 | ) | (35,413 | ) | ||||
Total distributions to shareholders | (18,945 | ) | (52,110 | ) | ||||
Capital share transactions: | ||||||||
Proceeds from sale of shares | ||||||||
A-Class | 11,223,218 | 10,210,160 | ||||||
C-Class | 3,652,910 | 2,956,353 | ||||||
H-Class | 118,121,754 | 180,329,694 | ||||||
Distributions reinvested | ||||||||
A-Class | 1,845 | 5,904 | ||||||
C-Class | 3,500 | 10,187 | ||||||
H-Class | 13,216 | 33,473 | ||||||
Cost of shares redeemed | ||||||||
A-Class | (11,626,460 | ) | (9,772,932 | ) | ||||
C-Class | (2,948,860 | ) | (4,562,781 | ) | ||||
H-Class | (120,382,579 | ) | (248,292,026 | ) | ||||
Net decrease from capital share transactions | (1,941,456 | ) | (69,081,968 | ) | ||||
Net decrease in net assets | (1,221,568 | ) | (68,094,535 | ) | ||||
Net assets: | ||||||||
Beginning of year | 15,126,889 | 83,221,424 | ||||||
End of year | $ | 13,905,321 | $ | 15,126,889 | ||||
Undistributed net investment income at end of year | $ | 28,715 | $ | 18,945 | ||||
Capital share activity: | ||||||||
Shares sold | ||||||||
A-Class | 253,969 | 259,238 | ||||||
C-Class | 91,046 | 81,786 | ||||||
H-Class | 2,697,009 | 4,580,797 | ||||||
Shares issued from reinvestment of distributions | ||||||||
A-Class | 41 | 142 | ||||||
C-Class | 86 | 266 | ||||||
H-Class | 296 | 805 | ||||||
Shares redeemed | ||||||||
A-Class | (267,091 | ) | (248,039 | ) | ||||
C-Class | (74,102 | ) | (128,153 | ) | ||||
H-Class | (2,746,513 | ) | (6,499,596 | ) | ||||
Net decrease in shares | (45,259 | ) | (1,952,754 | ) |
SEE NOTES TO FINANCIAL STATEMENTS. | THE RYDEX FUNDS ANNUAL REPORT | 39 |
S&P MIDCAP 400® PURE VALUE FUND |
FINANCIAL HIGHLIGHTS
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.
A-Class | Year Ended March 31, 2015 | Year Ended March 31, 2014 | Year Ended March 28, 2013 | Year Ended March 31, 2012 | Year Ended March 31, 2011 | |||||||||||||||
Per Share Data | ||||||||||||||||||||
Net asset value, beginning of period | $ | 43.04 | $ | 36.18 | $ | 30.88 | $ | 31.43 | $ | 30.45 | ||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||
Net investment income (loss)a | .11 | (.03 | ) | .07 | .06 | .02 | ||||||||||||||
Net gain (loss) on investments (realized and unrealized) | 2.58 | 7.08 | 5.23 | (.61 | ) | 3.64 | ||||||||||||||
Total from investment operations | 2.69 | 7.05 | 5.30 | (.55 | ) | 3.66 | ||||||||||||||
Less distributions from: | ||||||||||||||||||||
Net investment income | (.05 | ) | (.19 | ) | — | — | (.17 | ) | ||||||||||||
Net realized gains | — | — | — | — | (2.51 | ) | ||||||||||||||
Total distributions | (.05 | ) | (.19 | ) | — | — | (2.68 | ) | ||||||||||||
Net asset value, end of period | $ | 45.68 | $ | 43.04 | $ | 36.18 | $ | 30.88 | $ | 31.43 | ||||||||||
Total Returnb | 6.25 | % | 19.49 | % | 17.16 | % | (1.75 | %) | 12.81 | % | ||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||
Net assets, end of period (in thousands) | $ | 1,904 | $ | 2,357 | $ | 1,571 | $ | 6,817 | $ | 785 | ||||||||||
Ratios to average net assets: | ||||||||||||||||||||
Net investment income (loss) | 0.26 | % | (0.06 | %) | 0.23 | % | 0.22 | % | 0.08 | % | ||||||||||
Total expenses | 1.51 | % | 1.52 | % | 1.51 | % | 1.49 | % | 1.53 | % | ||||||||||
Portfolio turnover rate | 638 | % | 506 | % | 757 | % | 619 | % | 407 | % |
C-Class | Year Ended March 31, 2015 | Year Ended March 31, 2014 | Year Ended March 28, 2013 | Year Ended March 31, 2012 | Year Ended March 31, 2011 | |||||||||||||||
Per Share Data | ||||||||||||||||||||
Net asset value, beginning of period | $ | 39.48 | $ | 33.46 | $ | 28.78 | $ | 29.53 | $ | 28.96 | ||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||
Net investment income (loss)a | (.18 | ) | (.25 | ) | (.13 | ) | (.16 | ) | (.23 | ) | ||||||||||
Net gain (loss) on investments (realized and unrealized) | 2.34 | 6.46 | 4.81 | (.59 | ) | 3.48 | ||||||||||||||
Total from investment operations | 2.16 | 6.21 | 4.68 | (.75 | ) | 3.25 | ||||||||||||||
Less distributions from: | ||||||||||||||||||||
Net investment income | (.05 | ) | (.19 | ) | — | — | (.17 | ) | ||||||||||||
Net realized gains | — | — | — | — | (2.51 | ) | ||||||||||||||
Total distributions | (.05 | ) | (.19 | ) | — | — | (2.68 | ) | ||||||||||||
Net asset value, end of period | $ | 41.59 | $ | 39.48 | $ | 33.46 | $ | 28.78 | $ | 29.53 | ||||||||||
Total Returnb | 5.47 | % | 18.57 | % | 16.26 | % | (2.54 | %) | 12.03 | % | ||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||
Net assets, end of period (in thousands) | $ | 3,033 | $ | 2,207 | $ | 3,413 | $ | 2,194 | $ | 2,311 | ||||||||||
Ratios to average net assets: | ||||||||||||||||||||
Net investment income (loss) | (0.44 | %) | (0.71 | %) | (0.45 | %) | (0.60 | %) | (0.83 | %) | ||||||||||
Total expenses | 2.26 | % | 2.28 | % | 2.26 | % | 2.26 | % | 2.30 | % | ||||||||||
Portfolio turnover rate | 638 | % | 506 | % | 757 | % | 619 | % | 407 | % |
40 | THE RYDEX FUNDS ANNUAL REPORT | SEE NOTES TO FINANCIAL STATEMENTS. |
S&P MIDCAP 400® PURE VALUE FUND |
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.
H-Class | Year Ended March 31, 2015 | Year Ended March 31, 2014 | Year Ended March 28, 2013 | Year Ended March 31, 2012 | Year Ended March 31, 2011 | |||||||||||||||
Per Share Data | ||||||||||||||||||||
Net asset value, beginning of period | $ | 42.98 | $ | 36.16 | $ | 30.86 | $ | 31.42 | $ | 30.43 | ||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||
Net investment income (loss)a | .11 | .06 | .08 | .01 | (.06 | ) | ||||||||||||||
Net gain (loss) on investments (realized and unrealized) | 2.58 | 6.95 | 5.22 | (.57 | ) | 3.73 | ||||||||||||||
Total from investment operations | 2.69 | 7.01 | 5.30 | (.56 | ) | 3.67 | ||||||||||||||
Less distributions from: | ||||||||||||||||||||
Net investment income | (.05 | ) | (.19 | ) | — | — | (.17 | ) | ||||||||||||
Net realized gains | — | — | — | — | (2.51 | ) | ||||||||||||||
Total distributions | (.05 | ) | (.19 | ) | — | — | (2.68 | ) | ||||||||||||
Net asset value, end of period | $ | 45.62 | $ | 42.98 | $ | 36.16 | $ | 30.86 | $ | 31.42 | ||||||||||
Total Returnb | 6.26 | % | 19.39 | % | 17.17 | % | (1.78 | %) | 12.85 | % | ||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||
Net assets, end of period (in thousands) | $ | 8,968 | $ | 10,563 | $ | 78,237 | $ | 18,838 | $ | 54,206 | ||||||||||
Ratios to average net assets: | ||||||||||||||||||||
Net investment income (loss) | 0.25 | % | 0.15 | % | 0.24 | % | 0.02 | % | (0.19 | %) | ||||||||||
Total expenses | 1.51 | % | 1.52 | % | 1.52 | % | 1.51 | % | 1.54 | % | ||||||||||
Portfolio turnover rate | 638 | % | 506 | % | 757 | % | 619 | % | 407 | % |
a | Net investment income (loss) per share was computed using average shares outstanding throughout the period. |
b | Total return does not reflect the impact of any applicable sales charges. |
SEE NOTES TO FINANCIAL STATEMENTS. | THE RYDEX FUNDS ANNUAL REPORT | 41 |
PERFORMANCE REPORT AND FUND PROFILE (Unaudited) | March 31, 2015 |
S&P SMALLCAP 600® PURE GROWTH FUND
OBJECTIVE: Seeks to provide investment results that match, before fees and expenses, the performance of a benchmark for small-cap growth securities on a daily basis. The Fund’s current benchmark is the S&P SmallCap 600® Pure Growth Index (the “underlying index”).
For the one-year period ended March 31, 2015, S&P SmallCap 600® Pure Growth Fund H-Class returned 11.13%, compared with a gain of 13.00% for the S&P SmallCap 600 Pure Growth Index. The Fund maintained a daily correlation of over 99% to its benchmark.
The Health Care sector and the Consumer Discretionary sector contributed most to performance of the underlying index for the period. The Energy sector was the largest detractor from performance, followed by the Materials sector.
The best-performing stocks in the S&P SmallCap 600 Pure Growth Index were Akorn, Inc., ABIOMED, Inc., and Repligen Corp. The weakest performers in the underlying index were C&J Energy Services Ltd., Stone Energy Corp., and Matrix Service Co.
Performance displayed represents past performance, which is no guarantee of future results.
Holdings Diversification (Market Exposure as % of Net Assets)
![](https://capedge.com/proxy/N-CSR/0001398344-15-003814/rtb2_13.jpg)
“Holdings Diversification (Market Exposure as % of Net Assets)” excludes any temporary cash investments.
Inception Dates: | |
A-Class | September 1, 2004 |
C-Class | February 20, 2004 |
H-Class | February 20, 2004 |
Ten Largest Holdings (% of Total Net Assets) | |
Lannett Company, Inc. | 2.6% |
Carrizo Oil & Gas, Inc. | 1.6% |
ABIOMED, Inc. | 1.6% |
Take-Two Interactive Software, Inc. | 1.5% |
TASER International, Inc. | 1.5% |
Synchronoss Technologies, Inc. | 1.5% |
Universal Insurance Holdings, Inc. | 1.4% |
Meritage Homes Corp. | 1.4% |
Synergy Resources Corp. | 1.4% |
General Communication, Inc. — Class A | 1.4% |
Top Ten Total | 15.9% |
“Ten Largest Holdings” exclude any temporary cash or derivative investments. |
42 | THE RYDEX FUNDS ANNUAL REPORT |
PERFORMANCE REPORT AND FUND PROFILE (Unaudited)(concluded) | March 31, 2015 |
Cumulative Fund Performance*
![](https://capedge.com/proxy/N-CSR/0001398344-15-003814/rtb2_14.jpg)
![](https://capedge.com/proxy/N-CSR/0001398344-15-003814/rtb2_15.jpg)
Average Annual Returns*
Periods Ended March 31, 2015
1 Year | 5 Year | 10 Year | |
A-Class Shares | 11.15% | 15.63% | 8.47% |
A-Class Shares with sales charge† | 5.88% | 14.51% | 7.95% |
C-Class Shares | 10.30% | 14.78% | 7.68% |
C-Class Shares with CDSC‡ | 9.30% | 14.78% | 7.68% |
H-Class Shares | 11.13% | 15.64% | 8.47% |
S&P SmallCap 600 Pure Growth Index | 13.00% | 18.04% | 10.68% |
* | The performance data above represents past performance that is not predictive of future results. The investment return and principal value of an investment in the Fund will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Returns are historical and include changes in principal and reinvested dividends and capital gains and do not reflect the effect of taxes. The S&P SmallCap 600 Pure Growth Index is an unmanaged index and, unlike the Fund, has no management fees or operating expenses to reduce its reported return. The graphs are based on A-Class and H-Class shares only; performance for C-Class shares will vary due to differences in fee structure. |
† | Fund returns are calculated using the maximum sales charge of 4.75%. |
‡ | Fund returns include a CDSC of 1% if redeemed within 12 months of purchase. |
THE RYDEX FUNDS ANNUAL REPORT | 43 |
SCHEDULE OF INVESTMENTS | March 31, 2015 |
S&P SMALLCAP 600® PURE GROWTH FUND |
Shares | Value | |||||||
COMMON STOCKS† - 99.5% | ||||||||
CONSUMER, NON-CYCLICAL - 22.0% | ||||||||
Lannett Company, Inc.* | 22,627 | $ | 1,532,075 | |||||
ABIOMED, Inc.* | 12,801 | 916,295 | ||||||
Molina Healthcare, Inc.* | 11,236 | 756,070 | ||||||
PAREXEL International Corp.* | 10,509 | 725,016 | ||||||
Repligen Corp.* | 23,853 | 724,177 | ||||||
On Assignment, Inc.* | 18,386 | 705,471 | ||||||
Depomed, Inc.* | 29,061 | 651,258 | ||||||
ExamWorks Group, Inc.* | 14,841 | 617,682 | ||||||
Natus Medical, Inc.* | 12,759 | 503,598 | ||||||
AMN Healthcare Services, Inc.* | 21,712 | 500,896 | ||||||
Calavo Growers, Inc. | 9,130 | 469,465 | ||||||
Cambrex Corp.* | 10,686 | 423,486 | ||||||
Cynosure, Inc. — Class A* | 13,354 | 409,567 | ||||||
Ligand Pharmaceuticals, Inc. — Class B* | 5,248 | 404,673 | ||||||
Cal-Maine Foods, Inc.1 | 9,937 | 388,139 | ||||||
Anika Therapeutics, Inc.* | 9,248 | 380,740 | ||||||
Abaxis, Inc. | 5,745 | 368,312 | ||||||
Chemed Corp. | 3,000 | 358,200 | ||||||
Ensign Group, Inc. | 7,500 | 351,450 | ||||||
Albany Molecular Research, Inc.* | 19,030 | 334,928 | ||||||
Snyder’s-Lance, Inc. | 9,500 | 303,620 | ||||||
Impax Laboratories, Inc.* | 6,197 | 290,453 | ||||||
Helen of Troy Ltd.* | 3,320 | 270,547 | ||||||
Affymetrix, Inc.* | 20,487 | 257,317 | ||||||
Cantel Medical Corp. | 4,930 | 234,175 | ||||||
J&J Snack Foods Corp. | 1,469 | 156,742 | ||||||
Total Consumer, Non-cyclical | 13,034,352 | |||||||
FINANCIAL - 22.0% | ||||||||
Universal Insurance Holdings, Inc. | 32,608 | 834,439 | ||||||
Sabra Health Care REIT, Inc. | 24,297 | 805,445 | ||||||
Chesapeake Lodging Trust | 22,360 | 756,438 | ||||||
CoreSite Realty Corp. | 15,142 | 737,113 | ||||||
Bank Mutual Corp. | 79,194 | 579,700 | ||||||
DiamondRock Hospitality Co. | 40,422 | 571,163 | ||||||
American Assets Trust, Inc. | 12,850 | 556,149 | ||||||
HFF, Inc. — Class A | 14,742 | 553,415 | ||||||
Universal Health Realty Income Trust | 9,070 | 510,188 | ||||||
Associated Estates Realty Corp. | 18,713 | 461,836 | ||||||
Post Properties, Inc. | 7,375 | 419,859 | ||||||
Retail Opportunity Investments Corp. | 22,287 | 407,852 | ||||||
First Midwest Bancorp, Inc. | 23,029 | 400,013 | ||||||
Glacier Bancorp, Inc. | 15,150 | 381,023 | ||||||
Boston Private Financial Holdings, Inc. | 30,424 | 369,652 | ||||||
Home BancShares, Inc. | 10,605 | 359,403 | ||||||
Medical Properties Trust, Inc. | 24,276 | 357,828 | ||||||
MB Financial, Inc. | 11,280 | 353,177 | ||||||
BofI Holding, Inc.* | 3,758 | 349,644 | ||||||
HCI Group, Inc. | 7,539 | 345,814 | ||||||
PrivateBancorp, Inc. — Class A | 9,248 | 325,252 | ||||||
PRA Group, Inc.* | 5,752 | 312,449 | ||||||
Bank of the Ozarks, Inc. | 8,096 | 298,985 | ||||||
Sovran Self Storage, Inc. | 3,050 | 286,517 | ||||||
Enova International, Inc.* | 14,034 | 276,329 | ||||||
Pinnacle Financial Partners, Inc. | 5,854 | 260,269 | ||||||
Education Realty Trust, Inc. | 7,310 | 258,628 | ||||||
Healthcare Realty Trust, Inc. | 9,106 | 252,965 | ||||||
Inland Real Estate Corp. | 23,125 | 247,206 | ||||||
Cousins Properties, Inc. | 17,819 | 188,881 | ||||||
CareTrust REIT, Inc. | 12,685 | 172,009 | ||||||
Total Financial | 12,989,641 | |||||||
CONSUMER, CYCLICAL - 17.8% | ||||||||
Meritage Homes Corp.* | 17,010 | 827,367 | ||||||
Skechers U.S.A., Inc. — Class A* | 10,788 | 775,765 | ||||||
Pinnacle Entertainment, Inc.* | 21,463 | 774,600 | ||||||
Standard Pacific Corp.* | 77,665 | 698,985 | ||||||
Ryland Group, Inc. | 12,630 | 615,586 | ||||||
G-III Apparel Group Ltd.* | 5,152 | 580,373 | ||||||
DTS, Inc.* | 15,775 | 537,454 | ||||||
Allegiant Travel Co. — Class A | 2,553 | 490,916 | ||||||
Select Comfort Corp.* | 13,035 | 449,316 | ||||||
Zumiez, Inc.* | 11,105 | 446,976 | ||||||
Papa John’s International, Inc. | 6,631 | 409,861 | ||||||
BJ’s Restaurants, Inc.* | 7,890 | 398,051 | ||||||
Popeyes Louisiana Kitchen, Inc.* | 6,630 | 396,607 | ||||||
Sonic Corp. | 12,279 | 389,244 | ||||||
Winnebago Industries, Inc. | 16,495 | 350,684 | ||||||
Jack in the Box, Inc. | 3,270 | 313,658 | ||||||
Outerwall, Inc.1 | 4,738 | 313,277 | ||||||
Texas Roadhouse, Inc. — Class A | 8,302 | 302,442 | ||||||
Iconix Brand Group, Inc.* | 8,780 | 295,623 | ||||||
Wolverine World Wide, Inc. | 8,721 | 291,717 | ||||||
Universal Electronics, Inc.* | 4,613 | 260,358 | ||||||
Marriott Vacations Worldwide Corp. | 2,990 | 242,340 | ||||||
Francesca’s Holdings Corp.* | 10,940 | 194,732 | ||||||
Scientific Games Corp. — Class A*,1 | 13,319 | 139,450 | ||||||
Total Consumer, Cyclical | 10,495,382 | |||||||
INDUSTRIAL - 13.8% | ||||||||
TASER International, Inc.*,1 | 36,500 | 880,015 | ||||||
Methode Electronics, Inc. | 16,535 | 777,806 | ||||||
PGT, Inc.* | 59,749 | 667,695 | ||||||
ArcBest Corp. | 14,140 | 535,764 | ||||||
Apogee Enterprises, Inc. | 12,163 | 525,442 | ||||||
Lydall, Inc.* | 16,018 | 508,091 | ||||||
KapStone Paper and Packaging Corp. | 15,332 | 503,503 | ||||||
Heartland Express, Inc. | 20,838 | 495,111 | ||||||
Headwaters, Inc.* | 25,860 | 474,272 | ||||||
US Ecology, Inc. | 9,204 | 459,924 | ||||||
Hillenbrand, Inc. | 12,562 | 387,789 | ||||||
Knight Transportation, Inc. | 11,238 | 362,426 | ||||||
Saia, Inc.* | 7,063 | 312,891 | ||||||
Bel Fuse, Inc. — Class B | 16,270 | 309,618 | ||||||
Curtiss-Wright Corp. | 3,900 | 288,366 |
44 | THE RYDEX FUNDS ANNUAL REPORT | SEE NOTES TO FINANCIAL STATEMENTS. |
SCHEDULE OF INVESTMENTS (continued) | March 31, 2015 |
S&P SMALLCAP 600® PURE GROWTH FUND |
Shares | Value | |||||||
Matson, Inc. | 5,908 | $ | 249,081 | |||||
AZZ, Inc. | 4,405 | 205,229 | ||||||
Forward Air Corp. | 3,450 | 187,335 | ||||||
Total Industrial | 8,130,358 | |||||||
TECHNOLOGY - 11.3% | ||||||||
Take-Two Interactive Software, Inc.* | 35,734 | 909,609 | ||||||
Synchronoss Technologies, Inc.* | 18,267 | 866,951 | ||||||
Omnicell, Inc.* | 16,755 | 588,101 | ||||||
Manhattan Associates, Inc.* | 10,909 | 552,103 | ||||||
IGATE Corp.* | 11,743 | 500,956 | ||||||
Synaptics, Inc.* | 5,604 | 455,633 | ||||||
Super Micro Computer, Inc.* | 13,520 | 448,999 | ||||||
NetScout Systems, Inc.*,1 | 9,895 | 433,896 | ||||||
Tessera Technologies, Inc. | 9,427 | 379,720 | ||||||
Monolithic Power Systems, Inc. | 6,890 | 362,759 | ||||||
Virtusa Corp.* | 7,160 | 296,281 | ||||||
Dealertrack Technologies, Inc.* | 6,755 | 260,203 | ||||||
Blackbaud, Inc. | 5,136 | 243,344 | ||||||
Electronics for Imaging, Inc.* | 5,295 | 221,066 | ||||||
MicroStrategy, Inc. — Class A* | 767 | 129,769 | ||||||
Total Technology | 6,649,390 | |||||||
COMMUNICATIONS - 6.3% | ||||||||
General Communication, Inc. — Class A* | 52,230 | 823,146 | ||||||
LogMeIn, Inc.* | 10,525 | 589,295 | ||||||
Dice Holdings, Inc.* | 55,165 | 492,072 | ||||||
comScore, Inc.* | 8,508 | 435,610 | ||||||
j2 Global, Inc. | 6,343 | 416,608 | ||||||
EW Scripps Co. — Class A* | 13,451 | 382,546 | ||||||
VASCO Data Security International, Inc.*,1 | 9,710 | 209,153 | ||||||
Consolidated Communications Holdings, Inc. | 10,101 | 206,060 | ||||||
ViaSat, Inc.* | 2,710 | 161,543 | ||||||
Total Communications | 3,716,033 | |||||||
ENERGY - 3.8% | ||||||||
Carrizo Oil & Gas, Inc.* | 18,698 | 928,355 | ||||||
Synergy Resources Corp.* | 69,468 | 823,196 | ||||||
Flotek Industries, Inc.* | 21,074 | 310,631 | ||||||
PetroQuest Energy, Inc.* | 89,356 | 205,519 | ||||||
Total Energy | 2,267,701 | |||||||
BASIC MATERIALS - 2.5% | ||||||||
US Silica Holdings, Inc.1 | 14,009 | 498,861 | ||||||
Deltic Timber Corp. | 4,860 | 321,975 | ||||||
Neenah Paper, Inc. | 4,252 | 265,920 | ||||||
Century Aluminum Co.* | 13,944 | 192,427 | ||||||
Balchem Corp. | 3,163 | 175,167 | �� | |||||
Total Basic Materials | 1,454,350 | |||||||
CONSUMER DISCRETIONARY - 0.0% | ||||||||
EW Scripps Co.* | 1,400 | 35,840 | ||||||
Total Common Stocks | ||||||||
(Cost $51,222,066) | 58,773,047 | |||||||
Face Amount | ||||||||
REPURCHASE AGREEMENTS††,2 - 0.3% | ||||||||
HSBC Group issued 03/31/15 at 0.03% due 04/01/15 | $ | 136,513 | 136,513 | |||||
RBC Capital Markets issued 03/31/15 at 0.05% due 04/01/15 | 20,862 | 20,862 | ||||||
UMB Financial Corp. issued 03/31/15 at 0.03% due 04/01/15 | 16,745 | 16,745 | ||||||
Total Repurchase Agreements | ||||||||
(Cost $174,120) | 174,120 | |||||||
SECURITIES LENDING COLLATERAL††,3 - 3.1% | ||||||||
Repurchase Agreements | ||||||||
HSBC Securities, Inc. issued 03/31/15 at 0.10% due 04/01/15 | 1,219,541 | 1,219,541 | ||||||
BNP Paribas Securities Corp. issued 03/31/15 at 0.10% due 04/01/15 | 419,522 | 419,522 | ||||||
Barclays Capital, Inc. issued 03/31/15 at 0.10% due 04/01/15 | 216,541 | 216,541 | ||||||
Total Securities Lending Collateral | ||||||||
(Cost $1,855,604) | 1,855,604 | |||||||
Total Investments - 102.9% | ||||||||
(Cost $53,251,790) | $ | 60,802,771 | ||||||
SEE NOTES TO FINANCIAL STATEMENTS. | THE RYDEX FUNDS ANNUAL REPORT | 45 |
SCHEDULE OF INVESTMENTS (concluded) | March 31, 2015 |
S&P SMALLCAP 600® PURE GROWTH FUND |
Shares | Value | |||||||
COMMON STOCKS SOLD SHORT† - 0.0% | ||||||||
CONSUMER DISCRETIONARY - 0.0% | ||||||||
Journal Media Group, Inc.* | 3,362 | $ | (29,384 | ) | ||||
Total Common Stock Sold Short | ||||||||
(Proceeds $29,400) | (29,384 | ) | ||||||
Other Assets & Liabilities, net - (2.9)% | (1,702,955 | ) | ||||||
Total Net Assets - 100.0% | $ | 59,070,432 |
* | Non-income producing security. |
† | Value determined based on Level 1 inputs — See Note 4. |
†† | Value determined based on Level 2 inputs — See Note 4. |
1 | All or portion of this security is on loan at March 31, 2015 — See Note 6. |
2 | Repurchase Agreements — See Note 5. |
3 | Securities lending collateral — See Note 6. |
REIT — Real Estate Investment Trust |
46 | THE RYDEX FUNDS ANNUAL REPORT | SEE NOTES TO FINANCIAL STATEMENTS. |
S&P SMALLCAP 600® PURE GROWTH FUND |
STATEMENT OF ASSETS AND LIABILITIES
March 31, 2015
Assets: | ||||
Investments, at value - including $1,834,303 of securities loaned (cost $51,222,066) | $ | 58,773,047 | ||
Repurchase agreements, at value (cost $2,029,724) | 2,029,724 | |||
Total investments (cost $53,251,790) | 60,802,771 | |||
Segregated cash with broker | 27,121 | |||
Receivables: | ||||
Fund shares sold | 785,237 | |||
Securities sold | 564,580 | |||
Dividends | 40,694 | |||
Securities lending income | 889 | |||
Total assets | 62,221,292 | |||
Liabilities: | ||||
Securities sold short, at value (proceeds $29,400) | 29,384 | |||
Payable for: | ||||
Return of securities loaned | 1,882,725 | |||
Securities purchased | 653,576 | |||
Fund shares redeemed | 502,006 | |||
Management fees | 33,395 | |||
Distribution and service fees | 14,297 | |||
Transfer agent and administrative fees | 11,132 | |||
Portfolio accounting fees | 4,452 | |||
Miscellaneous | 19,893 | |||
Total liabilities | 3,150,860 | |||
Commitments and contingent liabilities (Note 14) | — | |||
Net assets | $ | 59,070,432 | ||
Net assets consist of: | ||||
Paid in capital | $ | 53,600,346 | ||
Undistributed net investment income | — | |||
Accumulated net realized loss on investments | (2,080,911 | ) | ||
Net unrealized appreciation on investments | 7,550,997 | |||
Net assets | $ | 59,070,432 | ||
A-Class: | ||||
Net assets | $ | 2,824,598 | ||
Capital shares outstanding | 47,954 | |||
Net asset value per share | $ | 58.90 | ||
Maximum offering price per share (Net asset value divided by 95.25%) | $ | 61.84 | ||
C-Class: | ||||
Net assets | $ | 5,435,839 | ||
Capital shares outstanding | 100,142 | |||
Net asset value per share | $ | 54.28 | ||
H-Class: | ||||
Net assets | $ | 50,809,995 | ||
Capital shares outstanding | 862,747 | |||
Net asset value per share | $ | 58.89 |
STATEMENT OF OPERATIONS
Year Ended March 31, 2015
Investment Income: | ||||
Dividends (net of foreign withholding tax of $363) | $ | 216,563 | ||
Income from securities lending, net | 3,666 | |||
Interest | 38 | |||
Total investment income | 220,267 | |||
Expenses: | ||||
Management fees | 194,023 | |||
Transfer agent and administrative fees | 64,675 | |||
Distribution and service fees: | ||||
A-Class | 9,086 | |||
C-Class | 30,156 | |||
H-Class | 48,050 | |||
Portfolio accounting fees | 25,870 | |||
Registration fees | 20,891 | |||
Custodian fees | 3,007 | |||
Trustees’ fees* | 1,876 | |||
Line of credit fees | 286 | |||
Miscellaneous | 10,464 | |||
Total expenses | 408,384 | |||
Net investment loss | (188,117 | ) | ||
Net Realized and Unrealized Gain (Loss): | ||||
Net realized gain (loss) on: | ||||
Investments | 2,956,093 | |||
Net realized gain | 2,956,093 | |||
Net change in unrealized appreciation (depreciation) on: | ||||
Investments | 2,390,639 | |||
Securities sold short | 16 | |||
Net change in unrealized appreciation (depreciation) | 2,390,655 | |||
Net realized and unrealized gain | 5,346,748 | |||
Net increase in net assets resulting from operations | $ | 5,158,631 |
* | Relates to Trustees not deemed “interested persons” within the meaning of Section 2(a)(19) of the 1940 Act. |
SEE NOTES TO FINANCIAL STATEMENTS. | THE RYDEX FUNDS ANNUAL REPORT | 47 |
S&P SMALLCAP 600® PURE GROWTH FUND |
STATEMENTS OF CHANGES IN NET ASSETS
Year Ended March 31, 2015 | Year Ended March 31, 2014 | |||||||
Increase (Decrease) in Net Assets from Operations: | ||||||||
Net investment loss | $ | (188,117 | ) | $ | (399,977 | ) | ||
Net realized gain on investments | 2,956,093 | 5,014,825 | ||||||
Net change in unrealized appreciation (depreciation) on investments | 2,390,655 | 3,155,012 | ||||||
Net increase in net assets resulting from operations | 5,158,631 | 7,769,860 | ||||||
Capital share transactions: | ||||||||
Proceeds from sale of shares | ||||||||
A-Class | 1,853,974 | 10,306,511 | ||||||
C-Class | 4,335,594 | 6,653,049 | ||||||
H-Class | 126,430,453 | 342,094,749 | ||||||
Cost of shares redeemed | ||||||||
A-Class | (6,513,702 | ) | (4,376,811 | ) | ||||
C-Class | (3,479,599 | ) | (6,385,674 | ) | ||||
H-Class | (97,243,555 | ) | (337,494,514 | ) | ||||
Net increase from capital share transactions | 25,383,165 | 10,797,310 | ||||||
Net increase in net assets | 30,541,796 | 18,567,170 | ||||||
Net assets: | ||||||||
Beginning of year | 28,528,636 | 9,961,466 | ||||||
End of year | $ | 59,070,432 | $ | 28,528,636 | ||||
Undistributed net investment income/(Accumulated net investment loss) at end of year | $ | — | $ | (95,970 | ) | |||
Capital share activity: | ||||||||
Shares sold | ||||||||
A-Class | 33,948 | 199,801 | ||||||
C-Class | 85,842 | 143,830 | ||||||
H-Class | 2,360,921 | 7,053,262 | ||||||
Shares redeemed | ||||||||
A-Class | (123,092 | ) | (86,422 | ) | ||||
C-Class | (72,433 | ) | (136,657 | ) | ||||
H-Class | (1,818,920 | ) | (6,871,867 | ) | ||||
Net increase in shares | 466,266 | 301,947 |
48 | THE RYDEX FUNDS ANNUAL REPORT | SEE NOTES TO FINANCIAL STATEMENTS. |
S&P SMALLCAP 600® PURE GROWTH FUND |
FINANCIAL HIGHLIGHTS
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.
A-Class | Year Ended March 31, 2015 | Year Ended March 31, 2014 | Year Ended March 28, 2013 | Year Ended March 31, 2012 | Year Ended March 31, 2011 | |||||||||||||||
Per Share Data | ||||||||||||||||||||
Net asset value, beginning of period | $ | 52.99 | $ | 41.94 | $ | 37.97 | $ | 36.06 | $ | 28.49 | ||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||
Net investment income (loss)a | (.46 | ) | (.31 | ) | (.12 | ) | (.35 | ) | (.34 | ) | ||||||||||
Net gain (loss) on investments (realized and unrealized) | 6.37 | 11.36 | 4.09 | 2.26 | 7.91 | |||||||||||||||
Total from investment operations | 5.91 | 11.05 | 3.97 | 1.91 | 7.57 | |||||||||||||||
Net asset value, end of period | $ | 58.90 | $ | 52.99 | $ | 41.94 | $ | 37.97 | $ | 36.06 | ||||||||||
Total Returnb | 11.15 | % | 26.35 | % | 10.46 | % | 5.30 | % | 26.57 | % | ||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||
Net assets, end of period (in thousands) | $ | 2,825 | $ | 7,265 | $ | 995 | $ | 1,018 | $ | 2,115 | ||||||||||
Ratios to average net assets: | ||||||||||||||||||||
Net investment income (loss) | (0.88 | %) | (0.60 | %) | (0.31 | %) | (1.00 | %) | (1.15 | %) | ||||||||||
Total expenses | 1.51 | % | 1.53 | % | 1.51 | % | 1.52 | % | 1.54 | % | ||||||||||
Portfolio turnover rate | 380 | % | 677 | % | 645 | % | 500 | % | 732 | % |
C-Class | Year Ended March 31, 2015 | Year Ended March 31, 2014 | Year Ended March 28, 2013 | Year Ended March 31, 2012 | Year Ended March 31, 2011 | |||||||||||||||
Per Share Data | ||||||||||||||||||||
Net asset value, beginning of period | $ | 49.21 | $ | 39.24 | $ | 35.79 | $ | 34.25 | $ | 27.25 | ||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||
Net investment income (loss)a | (.74 | ) | (.66 | ) | (.42 | ) | (.57 | ) | (.54 | ) | ||||||||||
Net gain (loss) on investments (realized and unrealized) | 5.81 | 10.63 | 3.87 | 2.11 | 7.54 | |||||||||||||||
Total from investment operations | 5.07 | 9.97 | 3.45 | 1.54 | 7.00 | |||||||||||||||
Net asset value, end of period | $ | 54.28 | $ | 49.21 | $ | 39.24 | $ | 35.79 | $ | 34.25 | ||||||||||
Total Returnb | 10.30 | % | 25.41 | % | 9.64 | % | 4.50 | % | 25.69 | % | ||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||
Net assets, end of period (in thousands) | $ | 5,436 | $ | 4,268 | $ | 3,122 | $ | 2,568 | $ | 3,072 | ||||||||||
Ratios to average net assets: | ||||||||||||||||||||
Net investment income (loss) | (1.50 | %) | (1.46 | %) | (1.17 | %) | (1.71 | %) | (1.80 | %) | ||||||||||
Total expenses | 2.25 | % | 2.28 | % | 2.26 | % | 2.26 | % | 2.29 | % | ||||||||||
Portfolio turnover rate | 380 | % | 677 | % | 645 | % | 500 | % | 732 | % |
SEE NOTES TO FINANCIAL STATEMENTS. | THE RYDEX FUNDS ANNUAL REPORT | 49 |
S&P SMALLCAP 600® PURE GROWTH FUND |
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.
H-Class | Year Ended March 31, 2015 | Year Ended March 31, 2014 | Year Ended March 28, 2013 | Year Ended March 31, 2012 | Year Ended March 31, 2011 | |||||||||||||||
Per Share Data | ||||||||||||||||||||
Net asset value, beginning of period | $ | 52.99 | $ | 41.94 | $ | 37.97 | $ | 36.07 | $ | 28.48 | ||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||
Net investment income (loss)a | (.31 | ) | (.38 | ) | (.31 | ) | (.39 | ) | (.34 | ) | ||||||||||
Net gain (loss) on investments (realized and unrealized) | 6.21 | 11.43 | 4.28 | 2.29 | 7.93 | |||||||||||||||
Total from investment operations | 5.90 | 11.05 | 3.97 | 1.90 | 7.59 | |||||||||||||||
Net asset value, end of period | $ | 58.89 | $ | 52.99 | $ | 41.94 | $ | 37.97 | $ | 36.07 | ||||||||||
Total Returnb | 11.13 | % | 26.35 | % | 10.46 | % | 5.27 | % | 26.65 | % | ||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||
Net assets, end of period (in thousands) | $ | 50,810 | $ | 16,996 | $ | 5,844 | $ | 29,214 | $ | 92,084 | ||||||||||
Ratios to average net assets: | ||||||||||||||||||||
Net investment income (loss) | (0.58 | %) | (0.77 | %) | (0.81 | %) | (1.10 | %) | (1.07 | %) | ||||||||||
Total expenses | 1.49 | % | 1.52 | % | 1.50 | % | 1.52 | % | 1.55 | % | ||||||||||
Portfolio turnover rate | 380 | % | 677 | % | 645 | % | 500 | % | 732 | % |
a | Net investment income (loss) per share was computed using average shares outstanding throughout the period. |
b | Total return does not reflect the impact of any applicable sales charges. |
50 | THE RYDEX FUNDS ANNUAL REPORT | SEE NOTES TO FINANCIAL STATEMENTS. |
PERFORMANCE REPORT AND FUND PROFILE (Unaudited) | March 31, 2015 |
S&P SMALLCAP 600® PURE VALUE FUND
OBJECTIVE: Seeks to provide investment results that match, before fees and expenses, the performance of a benchmark for small-cap value securities on a daily basis. The Fund’s current benchmark is the S&P SmallCap 600® Pure Value Index (the “underlying index”).
For the one-year period ended March 31, 2015, S&P SmallCap 600® Pure Value Fund H-Class returned 0.63%, compared with a return of 2.72% for the S&P SmallCap 600 Pure Value Index. The Fund maintained a daily correlation of over 99% to its benchmark.
The sectors that contributed most to return were the Financials and Health Care sectors. The Energy sector was the only one that detracted from return. The Consumer Staples sector contributed least, followed by the Materials sector.
The stocks that contributed most to return in the S&P SmallCap 600 Pure Value Index were Perry Ellis International, Inc., Century Aluminum Co., and Super Micro Computer, Inc. Those that detracted most from return of the underlying index were Pioneer Energy Services Corp., Swift Energy Co., and Cloud Peak Energy, Inc.
Performance displayed represents past performance, which is no guarantee of future results.
Holdings Diversification (Market Exposure as % of Net Assets)
![](https://capedge.com/proxy/N-CSR/0001398344-15-003814/rtb2_16.jpg)
“Holdings Diversification (Market Exposure as % of Net Assets)” excludes any temporary cash investments.
Inception Dates: | |
A-Class | September 1, 2004 |
C-Class | February 20, 2004 |
H-Class | February 20, 2004 |
Ten Largest Holdings (% of Total Net Assets) | |
Meadowbrook Insurance Group, Inc. | 1.5% |
Central Garden & Pet Co. — Class A | 1.4% |
Cash America International, Inc. | 1.3% |
Universal Corp. | 1.3% |
TTM Technologies, Inc. | 1.3% |
SkyWest, Inc. | 1.3% |
Kelly Services, Inc. — Class A | 1.2% |
Pioneer Energy Services Corp. | 1.2% |
Seneca Foods Corp. — Class A | 1.2% |
Griffon Corp. | 1.1% |
Top Ten Total | 12.8% |
“Ten Largest Holdings” exclude any temporary cash or derivative investments. |
THE RYDEX FUNDS ANNUAL REPORT | 51 |
PERFORMANCE REPORT AND FUND PROFILE (Unaudited)(concluded) | March 31, 2015 |
Cumulative Fund Performance*
![](https://capedge.com/proxy/N-CSR/0001398344-15-003814/rtb2_17.jpg)
![](https://capedge.com/proxy/N-CSR/0001398344-15-003814/rtb2_18.jpg)
Average Annual Returns*
Periods Ended March 31, 2015
1 Year | 5 Year | 10 Year | |
A-Class Shares | 0.58% | 9.65% | 5.08% |
A-Class Shares with sales charge† | -4.19% | 8.59% | 4.56% |
C-Class Shares | -0.13% | 8.81% | 4.24% |
C-Class Shares with CDSC‡ | -1.13% | 8.81% | 4.24% |
H-Class Shares | 0.63% | 9.61% | 5.04% |
S&P SmallCap 600 Pure Value Index | 2.72% | 13.10% | 8.86% |
* | The performance data above represents past performance that is not predictive of future results. The investment return and principal value of an investment in the Fund will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Returns are historical and include changes in principal and reinvested dividends and capital gains and do not reflect the effect of taxes. The S&P SmallCap 600 Pure Value Index is an unmanaged index and, unlike the Fund, has no management fees or operating expenses to reduce its reported return. The graphs are based on A-Class and H-Class shares only; performance for C-Class shares will vary due to differences in fee structure. |
† | Fund returns are calculated using the maximum sales charge of 4.75%. |
‡ | Fund returns include a CDSC of 1% if redeemed within 12 months of purchase. |
52 | THE RYDEX FUNDS ANNUAL REPORT |
SCHEDULE OF INVESTMENTS | March 31, 2015 |
S&P SMALLCAP 600® PURE VALUE FUND |
Shares | Value | |||||||
COMMON STOCKS† - 98.9% | ||||||||
INDUSTRIAL - 20.4% | ||||||||
TTM Technologies, Inc.* | 23,703 | $ | 213,564 | |||||
Griffon Corp. | 10,452 | 182,178 | ||||||
AAR Corp. | 5,581 | 171,337 | ||||||
Benchmark Electronics, Inc.* | 6,990 | 167,970 | ||||||
Gibraltar Industries, Inc.* | 9,833 | 161,360 | ||||||
Universal Forest Products, Inc. | 2,627 | 145,746 | ||||||
Olympic Steel, Inc. | 10,757 | 144,789 | ||||||
Atlas Air Worldwide Holdings, Inc.* | 3,121 | 134,265 | ||||||
RTI International Metals, Inc.* | 3,730 | 133,944 | ||||||
Comfort Systems USA, Inc. | 6,229 | 131,058 | ||||||
Sanmina Corp.* | 5,295 | 128,086 | ||||||
Roadrunner Transportation Systems, Inc.* | 5,026 | 127,007 | ||||||
Aegion Corp. — Class A* | 6,471 | 116,802 | ||||||
EMCOR Group, Inc. | 2,285 | 106,184 | ||||||
Briggs & Stratton Corp. | 4,761 | 97,791 | ||||||
Hub Group, Inc. — Class A* | 2,362 | 92,803 | ||||||
Plexus Corp.* | 2,262 | 92,222 | ||||||
Tredegar Corp. | 4,485 | 90,193 | ||||||
Fabrinet* | 4,516 | 85,759 | ||||||
Hornbeck Offshore Services, Inc.* | 4,493 | 84,513 | ||||||
Encore Wire Corp. | 2,061 | 78,071 | ||||||
Celadon Group, Inc. | 2,830 | 77,033 | ||||||
II-VI, Inc.* | 3,972 | 73,323 | ||||||
National Presto Industries, Inc. | 1,148 | 72,772 | ||||||
Kaman Corp. | 1,592 | 67,548 | ||||||
General Cable Corp. | 3,570 | 61,511 | ||||||
DXP Enterprises, Inc.* | 1,154 | 50,880 | ||||||
LSB Industries, Inc.* | 1,210 | 50,009 | ||||||
Astec Industries, Inc. | 1,017 | 43,609 | ||||||
Powell Industries, Inc. | 1,285 | 43,394 | ||||||
Tetra Tech, Inc. | 1,540 | 36,991 | ||||||
AM Castle & Co.*,1 | 7,795 | 28,452 | ||||||
Total Industrial | 3,291,164 | |||||||
CONSUMER, NON-CYCLICAL - 18.2% | ||||||||
Central Garden & Pet Co. — Class A* | 20,600 | 218,772 | ||||||
Universal Corp. | 4,533 | 213,776 | ||||||
Kelly Services, Inc. — Class A | 10,854 | 189,295 | ||||||
Seneca Foods Corp. — Class A* | 6,280 | 187,207 | ||||||
SpartanNash Co. | 5,394 | 170,234 | ||||||
Monster Worldwide, Inc.* | 26,467 | 167,801 | ||||||
Almost Family, Inc.* | 3,748 | 167,574 | ||||||
PharMerica Corp.* | 5,455 | 153,776 | ||||||
Viad Corp. | 5,281 | 146,917 | ||||||
Kindred Healthcare, Inc. | 6,120 | 145,595 | ||||||
Magellan Health, Inc.* | 1,944 | 137,674 | ||||||
ABM Industries, Inc. | 4,276 | 136,233 | ||||||
LHC Group, Inc.* | 3,597 | 118,809 | ||||||
CDI Corp. | 8,395 | 117,950 | ||||||
Insperity, Inc. | 2,039 | 106,619 | ||||||
Brink’s Co. | 3,785 | 104,580 | ||||||
Hanger, Inc.* | 4,490 | 101,878 | ||||||
Invacare Corp. | 5,027 | 97,574 | ||||||
TrueBlue, Inc.* | 3,824 | 93,114 | ||||||
Andersons, Inc. | 2,145 | 88,739 | ||||||
Heidrick & Struggles International, Inc. | 2,373 | 58,328 | ||||||
Total Consumer, Non-cyclical | 2,922,445 | |||||||
CONSUMER, CYCLICAL - 17.7% | ||||||||
Cash America International, Inc. | 9,230 | 215,059 | ||||||
SkyWest, Inc. | 13,803 | 201,662 | ||||||
Pep Boys-Manny Moe & Jack* | 16,830 | 161,905 | ||||||
M/I Homes, Inc.* | 6,773 | 161,468 | ||||||
ScanSource, Inc.* | 3,350 | 136,178 | ||||||
Stage Stores, Inc. | 5,790 | 132,708 | ||||||
EZCORP, Inc. — Class A* | 14,350 | 131,016 | ||||||
Big 5 Sporting Goods Corp. | 9,784 | 129,834 | ||||||
United Stationers, Inc. | 2,894 | 118,625 | ||||||
Titan International, Inc. | 11,704 | 109,549 | ||||||
Fred’s, Inc. — Class A | 6,372 | 108,897 | ||||||
Sonic Automotive, Inc. — Class A | 4,180 | 104,082 | ||||||
Superior Industries International, Inc. | 5,214 | 98,701 | ||||||
Perry Ellis International, Inc.* | 3,977 | 92,107 | ||||||
VOXX International Corp. — Class A* | 9,317 | 85,344 | ||||||
Haverty Furniture Companies, Inc. | 3,406 | 84,741 | ||||||
Biglari Holdings, Inc.* | 201 | 83,234 | ||||||
Unifi, Inc.* | 2,179 | 78,640 | ||||||
Arctic Cat, Inc. | 2,160 | 78,451 | ||||||
Barnes & Noble, Inc.* | 2,980 | 70,775 | ||||||
Ruby Tuesday, Inc.* | 11,523 | 69,253 | ||||||
Marcus Corp. | 3,204 | 68,213 | ||||||
Casey’s General Stores, Inc. | 742 | 66,854 | ||||||
Callaway Golf Co. | 6,298 | 60,020 | ||||||
Stein Mart, Inc. | 4,781 | 59,523 | ||||||
Children’s Place, Inc. | 796 | 51,095 | ||||||
Genesco, Inc.* | 631 | 44,946 | ||||||
Movado Group, Inc. | 1,280 | 36,506 | ||||||
Total Consumer, Cyclical | 2,839,386 | |||||||
ENERGY - 14.3% | ||||||||
Pioneer Energy Services Corp.* | 34,592 | 187,489 | ||||||
Basic Energy Services, Inc.* | 25,793 | 178,745 | ||||||
Green Plains, Inc. | 6,197 | 176,924 | ||||||
Northern Oil and Gas, Inc.* | 17,941 | 138,325 | ||||||
Penn Virginia Corp.*,1 | 19,230 | 124,610 | ||||||
C&J Energy Services Ltd.* | 9,945 | 110,688 | ||||||
TETRA Technologies, Inc.* | 17,820 | 110,128 | ||||||
Cloud Peak Energy, Inc.* | 17,668 | 102,828 | ||||||
Gulf Island Fabrication, Inc. | 6,861 | 101,954 | ||||||
Matrix Service Co.* | 5,140 | 90,258 | ||||||
ION Geophysical Corp.* | 38,645 | 83,860 | ||||||
SEACOR Holdings, Inc.* | 1,192 | 83,047 | ||||||
Stone Energy Corp.* | 5,550 | 81,474 | ||||||
Swift Energy Co.*,1 | 35,855 | 77,447 | ||||||
Newpark Resources, Inc.* | 7,607 | 69,300 |
SEE NOTES TO FINANCIAL STATEMENTS. | THE RYDEX FUNDS ANNUAL REPORT | 53 |
SCHEDULE OF INVESTMENTS (continued) | March 31, 2015 |
S&P SMALLCAP 600® PURE VALUE FUND |
Shares | Value | |||||||
Tesco Corp. | 5,936 | $ | 67,492 | |||||
CARBO Ceramics, Inc.1 | 2,204 | 67,244 | ||||||
PDC Energy, Inc.* | 1,220 | 65,929 | ||||||
Exterran Holdings, Inc. | 1,809 | 60,728 | ||||||
Gulfmark Offshore, Inc. — Class A | 4,436 | 57,845 | ||||||
Rex Energy Corp.*,1 | 15,370 | 57,176 | ||||||
Geospace Technologies Corp.* | 2,731 | 45,089 | ||||||
FutureFuel Corp. | 3,691 | 37,907 | ||||||
Comstock Resources, Inc.1 | 9,640 | 34,415 | ||||||
Bristow Group, Inc. | 615 | 33,487 | ||||||
Arch Coal, Inc.*,1 | 29,556 | 29,553 | ||||||
Paragon Offshore plc1 | 19,561 | 25,429 | ||||||
Total Energy | 2,299,371 | |||||||
FINANCIAL - 11.6% | ||||||||
Meadowbrook Insurance Group, Inc. | 27,431 | 233,163 | ||||||
Stewart Information Services Corp. | 3,840 | 156,057 | ||||||
Employers Holdings, Inc. | 5,370 | 144,936 | ||||||
United Fire Group, Inc. | 4,401 | 139,820 | ||||||
Infinity Property & Casualty Corp. | 1,364 | 111,916 | ||||||
Selective Insurance Group, Inc. | 3,616 | 105,045 | ||||||
Navigators Group, Inc.* | 1,243 | 96,755 | ||||||
Horace Mann Educators Corp. | 2,675 | 91,485 | ||||||
OFG Bancorp | 5,330 | 86,986 | ||||||
First BanCorp* | 13,090 | 81,158 | ||||||
Calamos Asset Management, Inc. — Class A | 5,998 | 80,673 | ||||||
Forestar Group, Inc.* | 5,060 | 79,796 | ||||||
Astoria Financial Corp. | 6,150 | 79,643 | ||||||
Susquehanna Bancshares, Inc. | 4,682 | 64,190 | ||||||
Provident Financial Services, Inc. | 3,028 | 56,472 | ||||||
Safety Insurance Group, Inc. | 920 | 54,970 | ||||||
Wintrust Financial Corp. | 994 | 47,394 | ||||||
Central Pacific Financial Corp. | 1,660 | 38,130 | ||||||
Capstead Mortgage Corp. | 3,214 | 37,829 | ||||||
ProAssurance Corp. | 816 | 37,463 | ||||||
Old National Bancorp | 2,441 | 34,638 | ||||||
Total Financial | 1,858,519 | |||||||
BASIC MATERIALS - 6.4% | ||||||||
Kraton Performance Polymers, Inc.* | 6,773 | 136,882 | ||||||
OM Group, Inc. | 4,083 | 122,612 | ||||||
Zep, Inc. | 7,169 | 122,088 | ||||||
Stepan Co. | 2,780 | 115,815 | ||||||
A. Schulman, Inc. | 2,288 | 110,282 | ||||||
Veritiv Corp.* | 2,089 | 92,188 | ||||||
PH Glatfelter Co. | 3,248 | 89,417 | ||||||
Materion Corp. | 2,204 | 84,700 | ||||||
Kaiser Aluminum Corp. | 985 | 75,737 | ||||||
American Vanguard Corp. | 3,528 | 37,467 | ||||||
Koppers Holdings, Inc. | 1,698 | 33,417 | ||||||
Total Basic Materials | 1,020,605 | |||||||
TECHNOLOGY - 5.7% | ||||||||
Insight Enterprises, Inc.* | 6,141 | 175,141 | ||||||
Ciber, Inc.* | 36,391 | 149,931 | ||||||
SYNNEX Corp. | 1,598 | 123,446 | ||||||
Digi International, Inc.* | 10,329 | 103,083 | ||||||
ManTech International Corp. — Class A | 3,010 | 102,159 | ||||||
CACI International, Inc. — Class A* | 975 | 87,672 | ||||||
Engility Holdings, Inc. | 2,366 | 71,075 | ||||||
Sykes Enterprises, Inc.* | 2,490 | 61,877 | ||||||
Cohu, Inc. | 3,993 | 43,683 | ||||||
Total Technology | 918,067 | |||||||
COMMUNICATIONS - 4.2% | ||||||||
Liquidity Services, Inc.*,1 | 17,080 | 168,751 | ||||||
Harte-Hanks, Inc. | 15,020 | 117,156 | ||||||
Scholastic Corp. | 2,428 | 99,402 | ||||||
Blucora, Inc.* | 6,250 | 85,375 | ||||||
Anixter International, Inc.* | 1,110 | 84,504 | ||||||
Spok Holdings, Inc. | 2,542 | 48,730 | ||||||
NETGEAR, Inc.* | 1,203 | 39,554 | ||||||
Black Box Corp. | 1,464 | 30,642 | ||||||
Total Communications | 674,114 | |||||||
UTILITIES - 0.4% | ||||||||
Laclede Group, Inc. | 682 | 34,932 | ||||||
Avista Corp. | 1,020 | 34,864 | ||||||
Total Utilities | 69,796 | |||||||
Total Common Stocks | ||||||||
(Cost $12,574,549) | 15,893,467 | |||||||
Face Amount | ||||||||
REPURCHASE AGREEMENTS††,2 - 0.7% | ||||||||
HSBC Group issued 03/31/15 at 0.03% due 04/01/15 | $ | 81,857 | 81,857 | |||||
RBC Capital Markets issued 03/31/15 at 0.05% due 04/01/15 | 12,510 | 12,510 | ||||||
UMB Financial Corp. issued 03/31/15 at 0.03% due 04/01/15 | 10,041 | 10,041 | ||||||
Total Repurchase Agreements | ||||||||
(Cost $104,408) | 104,408 |
54 | THE RYDEX FUNDS ANNUAL REPORT | SEE NOTES TO FINANCIAL STATEMENTS. |
SCHEDULE OF INVESTMENTS (concluded) | March 31, 2015 |
S&P SMALLCAP 600® PURE VALUE FUND |
Face Amount | Value | |||||||
SECURITIES LENDING COLLATERAL††,3 - 3.0% | ||||||||
Repurchase Agreements | ||||||||
HSBC Securities, Inc. issued 03/31/15 at 0.10% due 04/01/15 | $ | 312,376 | $ | 312,376 | ||||
BNP Paribas Securities Corp. issued 03/31/15 at 0.10% due 04/01/15 | 107,457 | 107,457 | ||||||
Barclays Capital, Inc. issued 03/31/15 at 0.10% due 04/01/15 | 55,465 | 55,465 | ||||||
Total Securities Lending Collateral | ||||||||
(Cost $475,298) | 475,298 | |||||||
Total Investments - 102.6% | ||||||||
(Cost $13,154,255) | $ | 16,473,173 | ||||||
Other Assets & Liabilities, net - (2.6)% | (424,619 | ) | ||||||
Total Net Assets - 100.0% | $ | 16,048,554 |
* | Non-income producing security. |
† | Value determined based on Level 1 inputs — See Note 4. |
†† | Value determined based on Level 2 inputs — See Note 4. |
1 | All or portion of this security is on loan at March 31, 2015 — See Note 6. |
2 | Repurchase Agreements — See Note 5. |
3 | Securities lending collateral — See Note 6. |
plc — Public Limited Company |
SEE NOTES TO FINANCIAL STATEMENTS. | THE RYDEX FUNDS ANNUAL REPORT | 55 |
S&P SMALLCAP 600® PURE VALUE FUND |
STATEMENT OF ASSETS AND LIABILITIES
March 31, 2015
Assets: | ||||
Investments, at value - including $457,313 of securities loaned (cost $12,574,549) | $ | 15,893,467 | ||
Repurchase agreements, at value (cost $579,706) | 579,706 | |||
Total investments (cost $13,154,255) | 16,473,173 | |||
Segregated cash with broker | 6,947 | |||
Receivables: | ||||
Securities sold | 343,009 | |||
Fund shares sold | 76,170 | |||
Dividends | 9,122 | |||
Securities lending income | 1,289 | |||
Total assets | 16,909,710 | |||
Liabilities: | ||||
Payable for: | ||||
Return of securities loaned | 482,245 | |||
Fund shares redeemed | 342,906 | |||
Management fees | 11,149 | |||
Distribution and service fees | 5,636 | |||
Transfer agent and administrative fees | 3,716 | |||
Securities purchased | 2,114 | |||
Portfolio accounting fees | 1,486 | |||
Miscellaneous | 11,904 | |||
Total liabilities | 861,156 | |||
Commitments and contingent liabilities (Note 14) | — | |||
Net assets | $ | 16,048,554 | ||
Net assets consist of: | ||||
Paid in capital | $ | 40,900,279 | ||
Undistributed net investment income | — | |||
Accumulated net realized loss on investments | (28,170,643 | ) | ||
Net unrealized appreciation on investments | 3,318,918 | |||
Net assets | $ | 16,048,554 | ||
A-Class: | ||||
Net assets | $ | 1,592,052 | ||
Capital shares outstanding | 61,682 | |||
Net asset value per share | $ | 25.81 | ||
Maximum offering price per share (Net asset value divided by 95.25%) | $ | 27.10 | ||
C-Class: | ||||
Net assets | $ | 3,082,191 | ||
Capital shares outstanding | 135,331 | |||
Net asset value per share | $ | 22.78 | ||
H-Class: | ||||
Net assets | $ | 11,374,311 | ||
Capital shares outstanding | 442,479 | |||
Net asset value per share | $ | 25.71 |
STATEMENT OF OPERATIONS
Year Ended March 31, 2015
Investment Income: | ||||
Dividends (net of foreign withholding tax of $64) | $ | 262,242 | ||
Income from securities lending, net | 6,422 | |||
Interest | 27 | |||
Total investment income | 268,691 | |||
Expenses: | ||||
Management fees | 137,892 | |||
Transfer agent and administrative fees | 45,964 | |||
Distribution and service fees: | ||||
A-Class | 2,612 | |||
C-Class | 30,589 | |||
H-Class | 35,705 | |||
Portfolio accounting fees | 18,385 | |||
Registration fees | 15,538 | |||
Custodian fees | 2,138 | |||
Trustees’ fees* | 1,529 | |||
Line of credit fees | 259 | |||
Miscellaneous | 8,735 | |||
Total expenses | 299,346 | |||
Net investment loss | (30,655 | ) | ||
Net Realized and Unrealized Gain (Loss): | ||||
Net realized gain (loss) on: | ||||
Investments | 2,268,375 | |||
Net realized gain | 2,268,375 | |||
Net change in unrealized appreciation (depreciation) on: | ||||
Investments | (1,503,522 | ) | ||
Net change in unrealized appreciation (depreciation) | (1,503,522 | ) | ||
Net realized and unrealized gain | 764,853 | |||
Net increase in net assets resulting from operations | $ | 734,198 |
* | Relates to Trustees not deemed “interested persons” within the meaning of Section 2(a)(19) of the 1940 Act. |
56 | THE RYDEX FUNDS ANNUAL REPORT | SEE NOTES TO FINANCIAL STATEMENTS. |
S&P SMALLCAP 600® PURE VALUE FUND |
STATEMENTS OF CHANGES IN NET ASSETS
Year Ended March 31, 2015 | Year Ended March 31, 2014 | |||||||
Increase (Decrease) in Net Assets from Operations: | ||||||||
Net investment loss | $ | (30,655 | ) | $ | (127,130 | ) | ||
Net realized gain on investments | 2,268,375 | 4,060,418 | ||||||
Net change in unrealized appreciation (depreciation) on investments | (1,503,522 | ) | 346,408 | |||||
Net increase in net assets resulting from operations | 734,198 | 4,279,696 | ||||||
Capital share transactions: | ||||||||
Proceeds from sale of shares | ||||||||
A-Class | 3,277,688 | 1,058,772 | ||||||
C-Class | 2,725,130 | 4,733,420 | ||||||
H-Class | 108,245,422 | 217,271,980 | ||||||
Cost of shares redeemed | ||||||||
A-Class | (2,703,495 | ) | (1,936,024 | ) | ||||
C-Class | (4,064,150 | ) | (5,294,994 | ) | ||||
H-Class | (120,076,906 | ) | (228,428,263 | ) | ||||
Net decrease from capital share transactions | (12,596,311 | ) | (12,595,109 | ) | ||||
Net decrease in net assets | (11,862,113 | ) | (8,315,413 | ) | ||||
Net assets: | ||||||||
Beginning of year | 27,910,667 | 36,226,080 | ||||||
End of year | $ | 16,048,554 | $ | 27,910,667 | ||||
Undistributed net investment income/(Accumulated net investment loss) at end of year | $ | — | $ | (40,344 | ) | |||
Capital share activity: | ||||||||
Shares sold | ||||||||
A-Class | 133,032 | 47,370 | ||||||
C-Class | 123,385 | 232,036 | ||||||
H-Class | 4,385,027 | 9,393,903 | ||||||
Shares redeemed | ||||||||
A-Class | (110,967 | ) | (87,067 | ) | ||||
C-Class | (185,935 | ) | (258,641 | ) | ||||
H-Class | (4,818,402 | ) | (10,096,699 | ) | ||||
Net decrease in shares | (473,860 | ) | (769,098 | ) |
SEE NOTES TO FINANCIAL STATEMENTS. | THE RYDEX FUNDS ANNUAL REPORT | 57 |
S&P SMALLCAP 600® PURE VALUE FUND |
FINANCIAL HIGHLIGHTS
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.
A-Class | Year Ended March 31, 2015 | Year Ended March 31, 2014 | Year Ended March 28, 2013 | Year Ended March 31, 2012 | Year Ended March 31, 2011 | |||||||||||||||
Per Share Data | ||||||||||||||||||||
Net asset value, beginning of period | $ | 25.66 | $ | 19.55 | $ | 17.07 | $ | 17.42 | $ | 19.60 | ||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||
Net investment income (loss)a | (.03 | ) | (.09 | ) | (.01 | ) | (.12 | ) | (.13 | ) | ||||||||||
Net gain (loss) on investments (realized and unrealized) | .18 | 6.20 | 2.49 | (.23 | ) | 1.20 | ||||||||||||||
Total from investment operations | .15 | 6.11 | 2.48 | (.35 | ) | 1.07 | ||||||||||||||
Less distributions from: | ||||||||||||||||||||
Net realized gains | — | — | — | — | (3.25 | ) | ||||||||||||||
Total distributions | — | — | — | — | (3.25 | ) | ||||||||||||||
Net asset value, end of period | $ | 25.81 | $ | 25.66 | $ | 19.55 | $ | 17.07 | $ | 17.42 | ||||||||||
Total Returnb | 0.58 | % | 31.25 | % | 14.53 | % | (2.01 | %) | 6.98 | % | ||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||
Net assets, end of period (in thousands) | $ | 1,592 | $ | 1,016 | $ | 1,551 | $ | 961 | $ | 8,845 | ||||||||||
Ratios to average net assets: | ||||||||||||||||||||
Net investment income (loss) | (0.10 | %) | (0.39 | %) | (0.08 | %) | (0.71 | %) | (0.73 | %) | ||||||||||
Total expenses | 1.50 | % | 1.52 | % | 1.51 | % | 1.53 | % | 1.53 | % | ||||||||||
Portfolio turnover rate | 579 | % | 658 | % | 655 | % | 744 | % | 692 | % |
C-Class | Year Ended March 31, 2015 | Year Ended March 31, 2014 | Year Ended March 28, 2013 | Year Ended March 31, 2012 | Year Ended March 31, 2011 | |||||||||||||||
Per Share Data | ||||||||||||||||||||
Net asset value, beginning of period | $ | 22.81 | $ | 17.51 | $ | 15.40 | $ | 15.85 | $ | 18.27 | ||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||
Net investment income (loss)a | (.19 | ) | (.22 | ) | (.13 | ) | (.20 | ) | (.23 | ) | ||||||||||
Net gain (loss) on investments (realized and unrealized) | .16 | 5.52 | 2.24 | (.25 | ) | 1.06 | ||||||||||||||
Total from investment operations | (.03 | ) | 5.30 | 2.11 | (.45 | ) | .83 | |||||||||||||
Less distributions from: | ||||||||||||||||||||
Net realized gains | — | — | — | — | (3.25 | ) | ||||||||||||||
Total distributions | — | — | — | — | (3.25 | ) | ||||||||||||||
Net asset value, end of period | $ | 22.78 | $ | 22.81 | $ | 17.51 | $ | 15.40 | $ | 15.85 | ||||||||||
Total Returnb | (0.13 | %) | 30.27 | % | 13.70 | % | (2.84 | %) | 6.12 | % | ||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||
Net assets, end of period (in thousands) | $ | 3,082 | $ | 4,514 | $ | 3,932 | $ | 1,955 | $ | 2,243 | ||||||||||
Ratios to average net assets: | ||||||||||||||||||||
Net investment income (loss) | (0.84 | %) | (1.10 | %) | (0.84 | %) | (1.39 | %) | (1.37 | %) | ||||||||||
Total expenses | 2.25 | % | 2.27 | % | 2.26 | % | 2.26 | % | 2.28 | % | ||||||||||
Portfolio turnover rate | 579 | % | 658 | % | 655 | % | 744 | % | 692 | % |
58 | THE RYDEX FUNDS ANNUAL REPORT | SEE NOTES TO FINANCIAL STATEMENTS. |
S&P SMALLCAP 600® PURE VALUE FUND |
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.
H-Class | Year Ended March 31, 2015 | Year Ended March 31, 2014 | Year Ended March 28, 2013 | Year Ended March 31, 2012 | Year Ended March 31, 2011 | |||||||||||||||
Per Share Data | ||||||||||||||||||||
Net asset value, beginning of period | $ | 25.55 | $ | 19.47 | $ | 17.00 | $ | 17.38 | $ | 19.57 | ||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||
Net investment income (loss)a | (.01 | ) | (.06 | ) | (.06 | ) | (.11 | ) | (.11 | ) | ||||||||||
Net gain (loss) on investments (realized and unrealized) | .17 | 6.14 | 2.53 | (.27 | ) | 1.17 | ||||||||||||||
Total from investment operations | .16 | 6.08 | 2.47 | (.38 | ) | 1.06 | ||||||||||||||
Less distributions from: | ||||||||||||||||||||
Net realized gains | — | — | — | — | (3.25 | ) | ||||||||||||||
Total distributions | — | — | — | — | (3.25 | ) | ||||||||||||||
Net asset value, end of period | $ | 25.71 | $ | 25.55 | $ | 19.47 | $ | 17.00 | $ | 17.38 | ||||||||||
Total Returnb | 0.63 | % | 31.23 | % | 14.53 | % | (2.19 | %) | 6.94 | % | ||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||
Net assets, end of period (in thousands) | $ | 11,374 | $ | 22,380 | $ | 30,743 | $ | 24,298 | $ | 15,980 | ||||||||||
Ratios to average net assets: | ||||||||||||||||||||
Net investment income (loss) | (0.03 | %) | (0.25 | %) | (0.32 | %) | (0.69 | %) | (0.56 | %) | ||||||||||
Total expenses | 1.50 | % | 1.53 | % | 1.51 | % | 1.49 | % | 1.54 | % | ||||||||||
Portfolio turnover rate | 579 | % | 658 | % | 655 | % | 744 | % | 692 | % |
a | Net investment income (loss) per share was computed using average shares outstanding throughout the period. |
b | Total return does not reflect the impact of any applicable sales charges. |
SEE NOTES TO FINANCIAL STATEMENTS. | THE RYDEX FUNDS ANNUAL REPORT | 59 |
PERFORMANCE REPORT AND FUND PROFILE (Unaudited) | March 31, 2015 |
EUROPE 1.25x STRATEGY FUND
OBJECTIVE: Seeks to provide investment results that correlate, before fees and expenses, to the performance of a specific benchmark. The Fund’s current benchmark is 125% of the fair value of the STOXX® Europe 50 Index (the “underlying index”).
For the one-year period ended March 31, 2015, Europe 1.25x Strategy Fund maintained a daily correlation of over 98% to its benchmark of 125% of the daily price movement of the STOXX Europe 50 Index. Europe 1.25x Strategy Fund H-Class returned -10.36% while the STOXX Europe 50 Index returned -5.29% over the same period.
The sectors that contributed most to return of the underlying index were Health Care and Consumer Staples. The sectors detracting most from return were Energy and Financials.
The stocks that contributed most to performance of the underlying index were Novartis AG, Bayer AG, and Anheuser-Busch InBev S.A. Those that detracted most from performance of the underlying index were HSBC Holdings PLC, Total S.A., and Royal Dutch Shell PLC — Class A.
Derivatives in the Fund were used to help provide exposure to the composition of the benchmark in the highest efficient manner and to provide leverage, not for hedging purposes. The results of derivatives use during the period were within our expectations and contributed to the Fund’s performance.
Due to the compounding of daily returns, leveraged and inverse funds’ returns over periods other than one day will likely differ in amount and possibly direction from the benchmark return for the same period. Investors should monitor their leveraged and inverse funds’ holdings to ensure that they are consistent with their strategies, as frequently as daily.
The effects of compounding may cause the longer-term correlation of the Fund to its benchmark to diminish. The apparent discrepancy between the leveraged and unleveraged indices is the result of compounding, which is described briefly on page 6 of this report.
The Fund invests excess cash into the Guggenheim Strategy Funds which, in turn, invest in a diversified portfolio of debt securities and financial instruments providing exposure to fixed-income markets. The investment objective of the Guggenheim Strategy Funds is to seek a high level of income consistent with the preservation of capital. For the one-year period ended March 31, 2015, investment in the Guggenheim Strategy Funds benefited Fund performance relative to investing in other short-term investments such as overnight repurchase agreements.
Performance displayed represents past performance, which is no guarantee of future results.
Holdings Diversification (Market Exposure as % of Net Assets)
![](https://capedge.com/proxy/N-CSR/0001398344-15-003814/rtb2_19.jpg)
“Holdings Diversification (Market Exposure as % of Net Assets)” excludes any temporary cash investments or investments in Guggenheim Strategy Funds Trust mutual funds. Investments in those Funds do not provide “market exposure” to meet the fund’s investment objective, but will significantly increase the portfolio’s exposure to certain other asset categories (and their associated risks), which may cause the Fund to deviate from its principal investment strategy, including: (i) high yield, high risk debt securities rated below the top four long-term rating categories by a nationally recognized statistical rating organization (also known as “junk bonds”); (ii) securities issued by the U.S. government or its agencies and instrumentalities; (iii) CLOs and similar investments; and (iv) other short-term fixed income securities.
60 | THE RYDEX FUNDS ANNUAL REPORT |
PERFORMANCE REPORT AND FUND PROFILE (Unaudited)(concluded) | March 31, 2015 |
Inception Dates: | |
A-Class | March 31, 2004 |
C-Class | May 10, 2001 |
H-Class | May 8, 2000 |
Country | % of Common Stocks | Value | ||||||
United Kingdom | 34 | % | $ | 1,673,638 | ||||
Switzerland | 23 | % | 1,127,761 | |||||
Germany | 16 | % | 785,204 | |||||
France | 12 | % | 604,980 | |||||
Spain | 6 | % | 275,268 | |||||
Netherlands | 3 | % | 148,184 | |||||
Belgium | 2 | % | 114,717 | |||||
Other | 4 | % | 185,155 | |||||
Total Common Stocks | 100 | % | $ | 4,914,907 |
Cumulative Fund Performance*
![](https://capedge.com/proxy/N-CSR/0001398344-15-003814/rtb2_20.jpg)
![](https://capedge.com/proxy/N-CSR/0001398344-15-003814/rtb2_21.jpg)
Ten Largest Holdings (% of Total Net Assets) | |
Novartis AG ADR | 2.6% |
Nestle S.A. ADR | 2.5% |
Roche Holding AG ADR | 2.0% |
HSBC Holdings plc ADR | 1.7% |
Bayer AG ADR | 1.3% |
Sanofi ADR | 1.2% |
Total S.A. ADR | 1.2% |
BP plc ADR | 1.2% |
Royal Dutch Shell plc — Class A ADR | 1.2% |
GlaxoSmithKline plc ADR | 1.1% |
Top Ten Total | 16.0% |
“Ten Largest Holdings” exclude any temporary cash or derivative investments. |
Average Annual Returns*
Periods Ended March 31, 2015
1 Year | 5 Year | 10 Year | |
A-Class Shares | -10.33% | 1.98% | -0.35% |
A-Class Shares with sales charge† | -14.60% | 0.99% | -0.83% |
C-Class Shares | -10.94% | 1.02% | -1.19% |
C-Class Shares with CDSC‡ | -11.83% | 1.02% | -1.19% |
H-Class Shares | -10.36% | 1.78% | -0.43% |
STOXX Europe 50 Index | -5.29% | 4.22% | 3.26% |
* | The performance data above represents past performance that is not predictive of future results. The investment return and principal value of an investment in the Fund will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Returns are historical and include changes in principal and reinvested dividends and capital gains and do not reflect the effect of taxes. The STOXX Europe 50 Index is an unmanaged index and, unlike the Fund, has no management fees or operating expenses to reduce its reported return. The graphs are based on A-Class and H-Class shares only; performance for C-Class shares will vary due to differences in fee structure. |
† | Fund returns are calculated using the maximum sales charge of 4.75%. |
‡ | Fund returns include a CDSC of 1% if redeemed within 12 months of purchase. |
THE RYDEX FUNDS ANNUAL REPORT | 61 |
SCHEDULE OF INVESTMENTS | March 31, 2015 |
EUROPE 1.25x STRATEGY FUND |
Shares | Value | |||||||
COMMON STOCKS† - 41.3% | ||||||||
CONSUMER, NON-CYCLICAL - 16.1% | ||||||||
Novartis AG ADR | 3,130 | $ | 308,650 | |||||
Nestle S.A. ADR | 3,938 | 296,218 | ||||||
Roche Holding AG ADR | 6,859 | 235,812 | ||||||
Bayer AG ADR | 1,010 | 151,768 | ||||||
Sanofi ADR | 2,959 | 146,293 | ||||||
GlaxoSmithKline plc ADR | 2,949 | 136,096 | ||||||
British American Tobacco plc ADR | 1,136 | 117,883 | ||||||
Anheuser-Busch InBev N.V. ADR | 941 | 114,717 | ||||||
AstraZeneca plc ADR | 1,541 | 105,451 | ||||||
Diageo plc ADR | 768 | 84,918 | ||||||
Unilever N.V. — Class Y | 1,908 | 79,678 | ||||||
Reckitt Benckiser Group plc ADR | 4,037 | 69,073 | ||||||
Unilever plc ADR | 1,604 | 66,903 | ||||||
Total Consumer, Non-cyclical | 1,913,460 | |||||||
FINANCIAL - 10.4% | ||||||||
HSBC Holdings plc ADR | 4,680 | 199,322 | ||||||
Banco Santander S.A. ADR | 17,128 | 127,604 | ||||||
Allianz SE ADR | 5,562 | 96,807 | ||||||
BNP Paribas S.A. ADR | 2,728 | 82,727 | ||||||
Prudential plc ADR | 1,555 | 77,563 | ||||||
Banco Bilbao Vizcaya Argentaria S.A. ADR | 7,583 | 76,057 | ||||||
Lloyds Banking Group plc ADR* | 16,172 | 75,523 | ||||||
Barclays plc ADR | 4,983 | 72,602 | ||||||
ING Groep N.V. ADR* | 4,689 | 68,506 | ||||||
UBS AG*,1 | 3,450 | 64,431 | ||||||
AXA S.A. ADR | 2,545 | 64,237 | ||||||
Zurich Insurance Group AG ADR | 1,828 | 61,686 | ||||||
Deutsche Bank AG | 1,578 | 54,804 | ||||||
Credit Suisse Group AG ADR | 1,858 | 50,036 | ||||||
Standard Chartered plc | 2,457 | 39,459 | ||||||
UBS Group AG* | 1,172 | 21,998 | ||||||
Total Financial | 1,233,362 | |||||||
ENERGY - 4.5% | ||||||||
Total S.A. ADR | 2,890 | 143,517 | ||||||
BP plc ADR | 3,657 | 143,025 | ||||||
Royal Dutch Shell plc — Class A ADR | 2,372 | 141,490 | ||||||
Eni SpA ADR | 1,642 | 56,830 | ||||||
BG Group plc ADR | 4,116 | 50,853 | ||||||
Total Energy | 535,715 | |||||||
COMMUNICATIONS - 2.6% | ||||||||
Vodafone Group plc ADR | 3,233 | 105,654 | ||||||
Telefonica S.A. ADR | 4,990 | 71,607 | ||||||
Deutsche Telekom AG ADR | 3,793 | 69,165 | ||||||
BT Group plc ADR | 992 | 64,649 | ||||||
Total Communications | 311,075 | |||||||
BASIC MATERIALS - 2.4% | ||||||||
BASF SE ADR | 1,118 | 111,202 | ||||||
Rio Tinto plc ADR | 1,502 | 62,182 | ||||||
BHP Billiton Ltd. ADR | 1,187 | 55,160 | ||||||
Air Liquide S.A. ADR | 2,116 | 54,371 | ||||||
Total Basic Materials | 282,915 | |||||||
INDUSTRIAL - 1.8% | ||||||||
Siemens AG ADR | 962 | 104,088 | ||||||
ABB Ltd. ADR | 2,819 | 59,678 | ||||||
Schneider Electric SE ADR | 3,577 | 55,408 | ||||||
Total Industrial | 219,174 | |||||||
CONSUMER, CYCLICAL - 1.4% | ||||||||
Daimler AG ADR | 1,214 | 113,509 | ||||||
Cie Financiere Richemont S.A. ADR | 6,410 | 51,248 | ||||||
Total Consumer, Cyclical | 164,757 | |||||||
TECHNOLOGY - 0.7% | ||||||||
SAP SE ADR | 1,162 | 83,862 | ||||||
UTILITIES - 0.5% | ||||||||
National Grid plc ADR | 944 | 60,992 | ||||||
CONSUMER DISCRETIONARY - 0.5% | ||||||||
LVMH Moet Hennessy Louis Vuitton SE ADR | 1,658 | 58,428 | ||||||
MATERIALS - 0.4% | ||||||||
Glencore plc ADR | 6,041 | 51,166 | ||||||
Total Common Stocks | ||||||||
(Cost $4,329,177) | 4,914,906 | |||||||
RIGHTS† - 0.0% | ||||||||
Telefonica SA | ||||||||
Expires 04/12/15 | 4,990 | 805 | ||||||
Total Foreign Rights - Spain | ||||||||
(Cost $728) | 805 | |||||||
MUTUAL FUNDS† - 0.5% | ||||||||
Guggenheim Strategy Fund I2 | 2,556 | 63,634 | ||||||
Total Mutual Funds | ||||||||
(Cost $63,507) | 63,634 |
62 | THE RYDEX FUNDS ANNUAL REPORT | SEE NOTES TO FINANCIAL STATEMENTS. |
SCHEDULE OF INVESTMENTS (concluded) | March 31, 2015 |
EUROPE 1.25x STRATEGY FUND |
Face Amount | Value | |||||||
REPURCHASE AGREEMENTS††,3 - 50.4% | ||||||||
HSBC Group issued 03/31/15 at 0.03% due 04/01/15 | $ | 4,704,719 | $ | 4,704,719 | ||||
RBC Capital Markets issued 03/31/15 at 0.05% due 04/01/15 | 718,981 | 718,981 | ||||||
UMB Financial Corp. issued 03/31/15 at 0.03% due 04/01/15 | 577,100 | 577,100 | ||||||
Total Repurchase Agreements | ||||||||
(Cost $6,000,800) | 6,000,800 | |||||||
SECURITIES LENDING COLLATERAL††,4 - 0.5% | ||||||||
Repurchase Agreements | ||||||||
HSBC Securities, Inc. issued 03/31/15 at 0.10% due 04/01/15 | 36,630 | 36,630 | ||||||
BNP Paribas Securities Corp. issued 03/31/15 at 0.10% due 04/01/15 | 12,601 | 12,601 | ||||||
Barclays Capital, Inc. issued 03/31/15 at 0.10% due 04/01/15 | 6,504 | 6,504 | ||||||
Total Securities Lending Collateral | ||||||||
(Cost $55,735) | 55,735 | |||||||
Total Investments - 92.7% | ||||||||
(Cost $10,449,947) | $ | 11,035,880 | ||||||
Other Assets & Liabilities, net - 7.3% | 872,028 | |||||||
Total Net Assets - 100.0% | $ | 11,907,908 | ||||||
Contracts | Unrealized Loss | |||||||
CURRENCY FUTURES CONTRACTS PURCHASED† | ||||||||
June 2015 Euro FX Futures Contracts (Aggregate Value of Contracts $9,953,925) | 74 | $ | (69,326 | ) | ||||
EQUITY FUTURES CONTRACTS PURCHASED†† | ||||||||
June 2015 STOXX 50 Index Futures Contracts (Aggregate Value of Contracts $9,782,607) | 269 | $ | (91,708 | ) |
* | Non-income producing security. |
† | Value determined based on Level 1 inputs — See Note 4. |
†† | Value determined based on Level 2 inputs — See Note 4. |
1 | All or portion of this security is on loan at March 31, 2015 — See Note 6. |
2 | Investment in a product that is managed by and/or pays a management fee to a party related to the Adviser — See Note 12. |
3 | Repurchase Agreements — See Note 5. |
4 | Securities lending collateral — See Note 6. |
ADR — American Depositary Receipt | |
plc — Public Limited Company |
SEE NOTES TO FINANCIAL STATEMENTS. | THE RYDEX FUNDS ANNUAL REPORT | 63 |
EUROPE 1.25x STRATEGY FUND |
STATEMENT OF ASSETS AND LIABILITIES
March 31, 2015
Assets: | ||||
Investments, at value - including $54,160 of securities loaned (cost $4,393,412) | $ | 4,979,345 | ||
Repurchase agreements, at value (cost $6,056,535) | 6,056,535 | |||
Total investments (cost $10,449,947) | 11,035,880 | |||
Segregated cash with broker | 1,046,603 | |||
Cash | 68,232 | |||
Receivables: | ||||
Fund shares sold | 232,096 | |||
Dividends | 57,769 | |||
Foreign taxes reclaim | 10,690 | |||
Swap settlement | 2,262 | |||
Securities lending income | 131 | |||
Interest | 5 | |||
Total assets | 12,453,668 | |||
Liabilities: | ||||
Foreign currency, at value (cost $66,152) | 65,322 | |||
Payable for: | ||||
Fund shares redeemed | 229,820 | |||
Variation margin | 168,832 | |||
Return of securities loaned | 56,550 | |||
Management fees | 9,090 | |||
Distribution and service fees | 3,053 | |||
Transfer agent and administrative fees | 2,525 | |||
Portfolio accounting fees | 1,010 | |||
Securities purchased | 495 | |||
Miscellaneous | 9,063 | |||
Total liabilities | 545,760 | |||
Commitments and contingent liabilities (Note 14) | — | |||
Net assets | $ | 11,907,908 | ||
Net assets consist of: | ||||
Paid in capital | $ | 23,222,085 | ||
Undistributed net investment income | 63,417 | |||
Accumulated net realized loss on investments | (11,803,325 | ) | ||
Net unrealized appreciation on investments | 425,731 | |||
Net assets | $ | 11,907,908 | ||
A-Class: | ||||
Net assets | $ | 1,165,041 | ||
Capital shares outstanding | 74,908 | |||
Net asset value per share | $ | 15.55 | ||
Maximum offering price per share (Net asset value divided by 95.25%) | $ | 16.33 | ||
C-Class: | ||||
Net assets | $ | 1,023,447 | ||
Capital shares outstanding | 74,312 | |||
Net asset value per share | $ | 13.77 | ||
�� | ||||
H-Class: | ||||
Net assets | $ | 9,719,420 | ||
Capital shares outstanding | 630,436 | |||
Net asset value per share | $ | 15.42 |
STATEMENT OF OPERATIONS
Year Ended March 31, 2015
Investment Income: | ||||
Dividends (net of foreign withholding tax of $14,824) | $ | 279,636 | ||
Income from securities lending, net | 961 | |||
Interest | 609 | |||
Total investment income | 281,206 | |||
Expenses: | ||||
Management fees | 110,994 | |||
Transfer agent and administrative fees | 30,832 | |||
Distribution and service fees: | ||||
A-Class | 3,532 | |||
C-Class | 8,206 | |||
H-Class | 25,248 | |||
Portfolio accounting fees | 12,332 | |||
Registration fees | 11,340 | |||
Custodian fees | 1,439 | |||
Trustees’ fees* | 1,105 | |||
Line of credit fees | 131 | |||
Tax expense | 85 | |||
Miscellaneous | 13,172 | |||
Total expenses | 218,416 | |||
Net investment income | 62,790 | |||
Net Realized and Unrealized Gain (Loss): | ||||
Net realized gain (loss) on: | ||||
Investments | 182,168 | |||
Swap agreements | 4,023 | |||
Futures contracts | 14,597 | |||
Foreign currency | 627 | |||
Net realized gain | 201,415 | |||
Net change in unrealized appreciation (depreciation) on: | ||||
Investments | (741,935 | ) | ||
Futures contracts | (325,312 | ) | ||
Foreign currency | 737 | |||
Net change in unrealized appreciation (depreciation) | (1,066,510 | ) | ||
Net realized and unrealized loss | (865,095 | ) | ||
Net decrease in net assets resulting from operations | $ | (802,305 | ) |
* | Relates to Trustees not deemed “interested persons” within the meaning of Section 2(a)(19) of the 1940 Act. |
64 | THE RYDEX FUNDS ANNUAL REPORT | SEE NOTES TO FINANCIAL STATEMENTS. |
EUROPE 1.25x STRATEGY FUND |
STATEMENTS OF CHANGES IN NET ASSETS
Year Ended March 31, 2015 | Year Ended March 31, 2014 | |||||||
Increase (Decrease) in Net Assets from Operations: | ||||||||
Net investment income | $ | 62,790 | $ | 62,852 | ||||
Net realized gain on investments | 201,415 | 1,358,485 | ||||||
Net change in unrealized appreciation (depreciation) on investments | (1,066,510 | ) | 1,364,932 | |||||
Net increase (decrease) in net assets resulting from operations | (802,305 | ) | 2,786,269 | |||||
Distributions to shareholders from: | ||||||||
Net investment income | ||||||||
A-Class | (3,176 | ) | — | |||||
C-Class | (1,621 | ) | — | |||||
H-Class | (21,638 | ) | — | |||||
Total distributions to shareholders | (26,435 | ) | — | |||||
Capital share transactions: | ||||||||
Proceeds from sale of shares | ||||||||
A-Class | 10,994,698 | 52,743,507 | ||||||
C-Class | 18,931,297 | 7,218,044 | ||||||
H-Class | 200,800,044 | 207,864,838 | ||||||
Distributions reinvested | ||||||||
A-Class | 2,063 | — | ||||||
C-Class | 1,530 | — | ||||||
H-Class | 21,551 | — | ||||||
Cost of shares redeemed | ||||||||
A-Class | (12,260,495 | ) | (54,374,701 | ) | ||||
C-Class | (18,280,475 | ) | (7,224,756 | ) | ||||
H-Class | (202,112,879 | ) | (209,443,547 | ) | ||||
Net decrease from capital share transactions | (1,902,666 | ) | (3,216,615 | ) | ||||
Net decrease in net assets | (2,731,406 | ) | (430,346 | ) | ||||
Net assets: | ||||||||
Beginning of year | 14,639,314 | 15,069,660 | ||||||
End of year | $ | 11,907,908 | $ | 14,639,314 | ||||
Undistributed net investment income at end of year | $ | 63,417 | $ | 26,435 | ||||
Capital share activity: | ||||||||
Shares sold | ||||||||
A-Class | 706,168 | 3,372,060 | ||||||
C-Class | 1,263,133 | 497,359 | ||||||
H-Class | 12,265,910 | 13,214,764 | ||||||
Shares issued from reinvestment of distributions | ||||||||
A-Class | 126 | — | ||||||
C-Class | 105 | — | ||||||
H-Class | 1,328 | — | ||||||
Shares redeemed | ||||||||
A-Class | (778,025 | ) | (3,501,903 | ) | ||||
C-Class | (1,223,396 | ) | (494,056 | ) | ||||
H-Class | (12,306,127 | ) | (13,302,797 | ) | ||||
Net decrease in shares | (70,778 | ) | (214,573 | ) |
SEE NOTES TO FINANCIAL STATEMENTS. | THE RYDEX FUNDS ANNUAL REPORT | 65 |
EUROPE 1.25x STRATEGY FUND |
FINANCIAL HIGHLIGHTS
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.
A-Class | Year Ended March 31, 2015 | Year Ended March 31, 2014 | Year Ended March 28, 2013 | Year Ended March 31, 2012 | Year Ended March 31, 2011 | |||||||||||||||
Per Share Data | ||||||||||||||||||||
Net asset value, beginning of period | $ | 17.40 | $ | 14.16 | $ | 12.57 | $ | 14.06 | $ | 14.18 | ||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||
Net investment income (loss)a | .05 | .16 | (.03 | ) | .10 | .08 | ||||||||||||||
Net gain (loss) on investments (realized and unrealized) | (1.85 | ) | 3.08 | 1.65 | (1.59 | ) | (.20 | ) | ||||||||||||
Total from investment operations | (1.80 | ) | 3.24 | 1.62 | (1.49 | ) | (.12 | ) | ||||||||||||
Less distributions from: | ||||||||||||||||||||
Net investment income | (.05 | ) | — | (.03 | ) | — | — | |||||||||||||
Total distributions | (.05 | ) | — | (.03 | ) | — | — | |||||||||||||
Net asset value, end of period | $ | 15.55 | $ | 17.40 | $ | 14.16 | $ | 12.57 | $ | 14.06 | ||||||||||
Total Returnb | (10.33 | %) | 22.88 | % | 12.92 | % | (10.60 | %) | (0.85 | %) | ||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||
Net assets, end of period (in thousands) | $ | 1,165 | $ | 2,551 | $ | 3,916 | $ | 694 | $ | 455 | ||||||||||
Ratios to average net assets: | ||||||||||||||||||||
Net investment income (loss) | 0.33 | % | 1.00 | % | (0.23 | %) | 0.77 | % | 0.66 | % | ||||||||||
Total expensesc | 1.72 | % | 1.72 | % | 1.67 | % | 1.67 | % | 1.69 | % | ||||||||||
Portfolio turnover rate | 608 | % | 654 | % | 903 | % | 318 | % | 515 | % |
C-Class | Year Ended March 31, 2015 | Year Ended March 31, 2014 | Year Ended March 28, 2013 | Year Ended March 31, 2012 | Year Ended March 31, 2011 | |||||||||||||||
Per Share Data | ||||||||||||||||||||
Net asset value, beginning of period | $ | 15.52 | $ | 12.89 | $ | 11.53 | $ | 12.97 | $ | 13.17 | ||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||
Net investment income (loss)a | (.08 | ) | (.07 | ) | (.10 | ) | — | d | .03 | |||||||||||
Net gain (loss) on investments (realized and unrealized) | (1.62 | ) | 2.70 | 1.49 | (1.44 | ) | (.23 | ) | ||||||||||||
Total from investment operations | (1.70 | ) | 2.63 | 1.39 | (1.44 | ) | (.20 | ) | ||||||||||||
Less distributions from: | ||||||||||||||||||||
Net investment income | (.05 | ) | — | (.03 | ) | — | — | |||||||||||||
Total distributions | (.05 | ) | — | (.03 | ) | — | — | |||||||||||||
Net asset value, end of period | $ | 13.77 | $ | 15.52 | $ | 12.89 | $ | 11.53 | $ | 12.97 | ||||||||||
Total Returnc | (10.94 | %) | 20.40 | % | 12.09 | % | (11.10 | %) | (1.52 | %) | ||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||
Net assets, end of period (in thousands) | $ | 1,023 | $ | 535 | $ | 402 | $ | 439 | $ | 638 | ||||||||||
Ratios to average net assets: | ||||||||||||||||||||
Net investment income (loss) | (0.50 | %) | (0.48 | %) | (0.83 | %) | 0.03 | % | 0.22 | % | ||||||||||
Total expensesd | 2.48 | % | 2.47 | % | 2.42 | % | 2.43 | % | 2.43 | % | ||||||||||
Portfolio turnover rate | 608 | % | 654 | % | 903 | % | 318 | % | 515 | % |
66 | THE RYDEX FUNDS ANNUAL REPORT | SEE NOTES TO FINANCIAL STATEMENTS. |
EUROPE 1.25x STRATEGY FUND |
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.
H-Class | Year Ended March 31, 2015 | Year Ended March 31, 2014 | Year Ended March 28, 2013 | Year Ended March 31, 2012 | Year Ended March 31, 2011 | |||||||||||||||
Per Share Data | ||||||||||||||||||||
Net asset value, beginning of period | $ | 17.26 | $ | 14.20 | $ | 12.59 | $ | 14.06 | $ | 14.20 | ||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||
Net investment income (loss)a | .10 | .03 | (.02 | ) | .16 | .09 | ||||||||||||||
Net gain (loss) on investments (realized and unrealized) | (1.89 | ) | 3.03 | 1.66 | (1.63 | ) | (.23 | ) | ||||||||||||
Total from investment operations | (1.79 | ) | 3.06 | 1.64 | (1.47 | ) | (.14 | ) | ||||||||||||
Less distributions from: | ||||||||||||||||||||
Net investment income | (.05 | ) | — | (.03 | ) | — | — | |||||||||||||
Total distributions | (.05 | ) | — | (.03 | ) | — | — | |||||||||||||
Net asset value, end of period | $ | 15.42 | $ | 17.26 | $ | 14.20 | $ | 12.59 | $ | 14.06 | ||||||||||
Total Returnb | (10.36 | %) | 21.55 | % | 13.06 | % | (10.46 | %) | (0.99 | %) | ||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||
Net assets, end of period (in thousands) | $ | 9,719 | $ | 11,553 | $ | 10,752 | $ | 7,759 | $ | 23,238 | ||||||||||
Ratios to average net assets: | ||||||||||||||||||||
Net investment income (loss) | 0.62 | % | 0.19 | % | (0.18 | %) | 1.22 | % | 0.70 | % | ||||||||||
Total expensesc | 1.72 | % | 1.71 | % | 1.67 | % | 1.68 | % | 1.69 | % | ||||||||||
Portfolio turnover rate | 608 | % | 654 | % | 903 | % | 318 | % | 515 | % |
a | Net investment income (loss) per share was computed using average shares outstanding throughout the period. |
b | Total return does not reflect the impact of any applicable sales charges. |
c | Does not include expenses of the underlying funds in which the Fund invests. |
d | Net investment income is less than $0.01 per share. |
SEE NOTES TO FINANCIAL STATEMENTS. | THE RYDEX FUNDS ANNUAL REPORT | 67 |
PERFORMANCE REPORT AND FUND PROFILE (Unaudited) | March 31, 2015 |
JAPAN 2x STRATEGY FUND
OBJECTIVE: Seeks to provide investment results that correlate, before fees and expenses, to the performance of a specific benchmark. The Fund’s current benchmark is 200% of the fair value of the Nikkei-225 Stock Average Index (the “underlying index”).
For the one-year period ended March 31, 2015, Japan 2x Strategy Fund maintained a daily correlation of over 99% to its benchmark of 200% of the daily price movement of the fair value of the Nikkei-225 Stock Average Index. Japan 2x Strategy Fund H-Class returned 20.64%, while the Nikkei-225 Stock Average Index returned 11.30% over the same time period.
The sectors that contributed most to performance of the underlying index were Information Technology and Industrials. Telecommunications Services detracted most from performance, followed by Energy.
Stocks that contributed most to return of the underlying index were Fanuc Corp., TDK Corp., and Eisai Co Ltd. Those that detracted most from performance of the underlying index were Yokogawa Electric Corp., JGC Corp. and SoftBank Corp.
Derivatives in the Fund were used to help provide exposure to the composition of the benchmark in the highest efficient manner and to provide leverage, not for hedging purposes. The results of derivatives use during the period were within our expectations and contributed to the Fund’s performance.
Due to the compounding of daily returns, leveraged and inverse funds’ returns over periods other than one day will likely differ in amount and possibly direction from the benchmark return for the same period. Investors should monitor their leveraged and inverse funds’ holdings to ensure that they are consistent with their strategies, as frequently as daily.
The effects of compounding may cause the longer-term correlation of the Fund to its benchmark to diminish. The apparent discrepancy between the leveraged and unleveraged indices is the result of compounding, which is described briefly on page 6 of this report.
The Fund invests excess cash into the Guggenheim Strategy Funds which, in turn, invest in a diversified portfolio of debt securities and financial instruments providing exposure to fixed-income markets. The investment objective of the Guggenheim Strategy Funds is to seek a high level of income consistent with the preservation of capital. For the one-year period ended March 31, 2015, investment in the Guggenheim Strategy Funds benefited Fund performance relative to investing in other short-term investments such as overnight repurchase agreements.
Performance displayed represents past performance, which is no guarantee of future results.
Holdings Diversification (Market Exposure as % of Net Assets)
![](https://capedge.com/proxy/N-CSR/0001398344-15-003814/rtb2_22.jpg)
“Holdings Diversification (Market Exposure as % of Net Assets)” excludes any temporary cash investments or investments in Guggenheim Strategy Funds Trust mutual funds. Investments in those Funds do not provide “market exposure” to meet the fund’s investment objective, but will significantly increase the portfolio’s exposure to certain other asset categories (and their associated risks), which may cause the Fund to deviate from its principal investment strategy, including: (i) high yield, high risk debt securities rated below the top four long-term rating categories by a nationally recognized statistical rating organization (also known as “junk bonds”); (ii) securities issued by the U.S. government or its agencies and instrumentalities; (iii) CLOs and similar investments; and (iv) other short-term fixed income securities.
68 | THE RYDEX FUNDS ANNUAL REPORT |
PERFORMANCE REPORT AND FUND PROFILE (Unaudited)(concluded) | March 31, 2015 |
Inception Dates: | |
A-Class | February 22, 2008 |
C-Class | February 22, 2008 |
H-Class | February 22, 2008 |
The Fund invests principally in derivative investments such as swap agreements and futures contracts.
Cumulative Fund Performance*
![](https://capedge.com/proxy/N-CSR/0001398344-15-003814/rtb2_23.jpg)
![](https://capedge.com/proxy/N-CSR/0001398344-15-003814/rtb2_24.jpg)
Largest Holding (% of Total Net Assets) | |
Guggenheim Strategy Fund I | 8.0% |
Total | 8.0% |
“Largest Holding” excludes any temporary cash or derivative investments. |
Average Annual Returns*
Periods Ended March 31, 2015
1 Year | 5 Year | Since Inception (02/22/08) | |
A-Class Shares | 20.61% | 7.15% | -0.98% |
A-Class Shares with sales charge† | 14.90% | 6.11% | -1.66% |
C-Class Shares | 20.23% | 6.49% | -1.63% |
C-Class Shares with CDSC‡ | 19.23% | 6.49% | -1.63% |
H-Class Shares | 20.64% | 7.25% | -0.93% |
Nikkei-225 Stock Average Index | 11.30% | 6.17% | 3.39% |
* | The performance data above represents past performance that is not predictive of future results. The investment return and principal value of an investment in the Fund will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Returns are historical and include changes in principal and reinvested dividends and capital gains and do not reflect the effect of taxes. The Nikkei-225 Stock Average Index is an unmanaged index and, unlike the Fund, has no management fees or operating expenses to reduce its reported return. The graphs are based on A-Class and H-Class shares only; performance for C-Class shares will vary due to differences in fee structure. |
† | Fund returns are calculated using the maximum sales charge of 4.75%. |
‡ | Fund returns include a CDSC of 1% if redeemed within 12 months of purchase. |
THE RYDEX FUNDS ANNUAL REPORT | 69 |
SCHEDULE OF INVESTMENTS | March 31, 2015 |
JAPAN 2x STRATEGY FUND |
Shares | Value | |||||||
MUTUAL FUNDS† - 8.0% | ||||||||
Guggenheim Strategy Fund I1 | 56,666 | $ | 1,410,987 | |||||
Total Mutual Funds | ||||||||
(Cost $1,408,156) | 1,410,987 | |||||||
Face Amount | ||||||||
REPURCHASE AGREEMENTS††,2 - 91.5% | ||||||||
HSBC Group issued 03/31/15 at 0.03% due 04/01/15 | $ | 12,646,676 | 12,646,676 | |||||
RBC Capital Markets issued 03/31/15 at 0.05% due 04/01/15 | 1,932,681 | 1,932,681 | ||||||
UMB Financial Corp. issued 03/31/15 at 0.03% due 04/01/15 | 1,551,294 | 1,551,294 | ||||||
Total Repurchase Agreements | ||||||||
(Cost $16,130,651) | 16,130,651 | |||||||
Total Investments - 99.5% | ||||||||
(Cost $17,538,807) | $ | 17,541,638 | ||||||
Other Assets & Liabilities, net - 0.5% | 84,016 | |||||||
Total Net Assets - 100.0% | $ | 17,625,654 | ||||||
Contracts | Unrealized Gain (Loss) | |||||||
CURRENCY FUTURES CONTRACTS PURCHASED† | ||||||||
June 2015 Japanese Yen Futures Contracts (Aggregate Value of Contracts $35,261,850) | 338 | $ | 76,588 | |||||
EQUITY FUTURES CONTRACTS PURCHASED† | ||||||||
June 2015 Nikkei-225 (CME) Index Futures Contracts (Aggregate Value of Contracts $35,291,550) | 366 | $ | (63,016 | ) |
† | Value determined based on Level 1 inputs — See Note 4. |
†† | Value determined based on Level 2 inputs — See Note 4. |
1 | Investment in a product that is managed by and/or pays a management fee to a party related to the Adviser — See Note 12. |
2 | Repurchase Agreements — See Note 5. |
70 | THE RYDEX FUNDS ANNUAL REPORT | SEE NOTES TO FINANCIAL STATEMENTS. |
JAPAN 2x STRATEGY FUND |
STATEMENT OF ASSETS AND LIABILITIES
March 31, 2015
Assets: | ||||
Investments, at value (cost $1,408,156) | $ | 1,410,987 | ||
Repurchase agreements, at value (cost $16,130,651) | 16,130,651 | |||
Total investments (cost $17,538,807) | 17,541,638 | |||
Segregated cash with broker | 1,132,245 | |||
Receivables: | ||||
Fund shares sold | 374,550 | |||
Swap settlement | 2,746 | |||
Dividends | 1,531 | |||
Interest | 14 | |||
Total assets | 19,052,724 | |||
Liabilities: | ||||
Payable for: | ||||
Fund shares redeemed | 831,017 | |||
Variation margin | 579,781 | |||
Management fees | 5,156 | |||
Distribution and service fees | 1,858 | |||
Transfer agent and administrative fees | 1,719 | |||
Securities purchased | 1,531 | |||
Portfolio accounting fees | 688 | |||
Miscellaneous | 5,320 | |||
Total liabilities | 1,427,070 | |||
Commitments and contingent liabilities (Note 14) | — | |||
Net assets | $ | 17,625,654 | ||
Net assets consist of: | ||||
Paid in capital | $ | 19,466,389 | ||
Undistributed net investment income | — | |||
Accumulated net realized loss on investments | (1,857,138 | ) | ||
Net unrealized appreciation on investments | 16,403 | |||
Net assets | $ | 17,625,654 | ||
A-Class: | ||||
Net assets | $ | 446,696 | ||
Capital shares outstanding | 19,183 | |||
Net asset value per share | $ | 23.29 | ||
Maximum offering price per share (Net asset value divided by 95.25%) | $ | 24.45 | ||
C-Class: | ||||
Net assets | $ | 317,145 | ||
Capital shares outstanding | 14,267 | |||
Net asset value per share | $ | 22.23 | ||
H-Class: | ||||
Net assets | $ | 16,861,813 | ||
Capital shares outstanding | 721,228 | |||
Net asset value per share | $ | 23.38 |
STATEMENT OF OPERATIONS
Year Ended March 31, 2015
Investment Income: | ||||
Dividends | $ | 12,631 | ||
Interest | 896 | |||
Total investment income | 13,527 | |||
Expenses: | ||||
Management fees | 39,214 | |||
Transfer agent and administrative fees | 13,071 | |||
Distribution and service fees: | ||||
A-Class | 2,713 | |||
C-Class | 1,702 | |||
H-Class | 9,933 | |||
Portfolio accounting fees | 5,229 | |||
Custodian fees | 609 | |||
Trustees’ fees* | 389 | |||
Miscellaneous | 8,916 | |||
Total expenses | 81,776 | |||
Net investment loss | (68,249 | ) | ||
Net Realized and Unrealized Gain (Loss): | ||||
Net realized gain (loss) on: | ||||
Investments | (4,476 | ) | ||
Swap agreements | 4,886 | |||
Futures contracts | (181,931 | ) | ||
Net realized loss | (181,521 | ) | ||
Net change in unrealized appreciation (depreciation) on: | ||||
Investments | 2,831 | |||
Futures contracts | (252,230 | ) | ||
Net change in unrealized appreciation (depreciation) | (249,399 | ) | ||
Net realized and unrealized loss | (430,920 | ) | ||
Net decrease in net assets resulting from operations | $ | (499,169 | ) |
* | Relates to Trustees not deemed “interested persons” within the meaning of Section 2(a)(19) of the 1940 Act. |
SEE NOTES TO FINANCIAL STATEMENTS. | THE RYDEX FUNDS ANNUAL REPORT | 71 |
JAPAN 2x STRATEGY FUND |
STATEMENTS OF CHANGES IN NET ASSETS
Year Ended March 31, 2015 | Year Ended March 31, 2014 | |||||||
Increase (Decrease) in Net Assets from Operations: | ||||||||
Net investment loss | $ | (68,249 | ) | $ | (137,800 | ) | ||
Net realized gain (loss) on investments | (181,521 | ) | 1,292,015 | |||||
Net change in unrealized appreciation (depreciation) on investments | (249,399 | ) | (1,252,929 | ) | ||||
Net decrease in net assets resulting from operations | (499,169 | ) | (98,714 | ) | ||||
Capital share transactions: | ||||||||
Proceeds from sale of shares | ||||||||
A-Class | 14,492,697 | 8,428,575 | ||||||
C-Class | 10,475,739 | 9,557,083 | ||||||
H-Class | 76,998,182 | 130,777,601 | ||||||
Cost of shares redeemed | ||||||||
A-Class | (14,473,442 | ) | (10,200,315 | ) | ||||
C-Class | (10,254,244 | ) | (9,548,823 | ) | ||||
H-Class | (62,946,467 | ) | (136,373,860 | ) | ||||
Net increase (decrease) from capital share transactions | 14,292,465 | (7,359,739 | ) | |||||
Net increase (decrease) in net assets | 13,793,296 | (7,458,453 | ) | |||||
Net assets: | ||||||||
Beginning of year | 3,832,358 | 11,290,811 | ||||||
End of year | $ | 17,625,654 | $ | 3,832,358 | ||||
Undistributed net investment income/(Accumulated net investment loss) at end of year | $ | — | $ | (21,490 | ) | |||
Capital share activity: | ||||||||
Shares sold | ||||||||
A-Class | 736,387 | 414,164 | ||||||
C-Class | 545,198 | 492,346 | ||||||
H-Class | 3,746,308 | 6,516,305 | ||||||
Shares redeemed | ||||||||
A-Class | (749,545 | ) | (498,277 | ) | ||||
C-Class | (536,530 | ) | (501,406 | ) | ||||
H-Class | (3,185,268 | ) | (6,873,237 | ) | ||||
Net increase (decrease) in shares | 556,550 | (450,105 | ) |
72 | THE RYDEX FUNDS ANNUAL REPORT | SEE NOTES TO FINANCIAL STATEMENTS. |
JAPAN 2x STRATEGY FUND |
FINANCIAL HIGHLIGHTS
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.
A-Class | Year Ended March 31, 2015 | Year Ended March 31, 2014 | Year Ended March 28, 2013 | Year Ended March 31, 2012 | Year Ended March 31, 2011 | |||||||||||||||
Per Share Data | ||||||||||||||||||||
Net asset value, beginning of period | $ | 19.31 | $ | 17.39 | $ | 15.45 | $ | 14.95 | $ | 16.49 | ||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||
Net investment income (loss)a | (.25 | ) | (.31 | ) | (.20 | ) | (.22 | ) | (.24 | ) | ||||||||||
Net gain (loss) on investments (realized and unrealized) | 4.23 | 2.23 | 2.14 | .72 | (1.30 | ) | ||||||||||||||
Total from investment operations | 3.98 | 1.92 | 1.94 | .50 | (1.54 | ) | ||||||||||||||
Net asset value, end of period | $ | 23.29 | $ | 19.31 | $ | 17.39 | $ | 15.45 | $ | 14.95 | ||||||||||
Total Returnb | 20.61 | % | 11.04 | % | 12.56 | % | 3.34 | % | (9.34 | %) | ||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||
Net assets, end of period (in thousands) | $ | 447 | $ | 624 | $ | 2,025 | $ | 1,428 | $ | 5,931 | ||||||||||
Ratios to average net assets: | ||||||||||||||||||||
Net investment income (loss) | (1.27 | %) | (1.50 | %) | (1.40 | %) | (1.49 | %) | (1.45 | %) | ||||||||||
Total expensesc | 1.54 | % | 1.52 | % | 1.51 | % | 1.51 | % | 1.55 | % | ||||||||||
Portfolio turnover rate | 405 | % | — | — | — | — |
C-Class | Year Ended March 31, 2015 | Year Ended March 31, 2014 | Year Ended March 28, 2013 | Year Ended March 31, 2012 | Year Ended March 31, 2011 | |||||||||||||||
Per Share Data | ||||||||||||||||||||
Net asset value, beginning of period | $ | 18.49 | $ | 16.76 | $ | 14.99 | $ | 14.60 | $ | 16.23 | ||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||
Net investment income (loss)a | (.39 | ) | (.43 | ) | (.29 | ) | (.31 | ) | (.31 | ) | ||||||||||
Net gain (loss) on investments (realized and unrealized) | 4.13 | 2.16 | 2.06 | .70 | (1.32 | ) | ||||||||||||||
Total from investment operations | 3.74 | 1.73 | 1.77 | .39 | (1.63 | ) | ||||||||||||||
Net asset value, end of period | $ | 22.23 | $ | 18.49 | $ | 16.76 | $ | 14.99 | $ | 14.60 | ||||||||||
Total Returnb | 20.23 | % | 10.32 | % | 11.81 | % | 2.67 | % | (10.04 | %) | ||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||
Net assets, end of period (in thousands) | $ | 317 | $ | 104 | $ | 246 | $ | 140 | $ | 189 | ||||||||||
Ratios to average net assets: | ||||||||||||||||||||
Net investment income (loss) | (2.04 | %) | (2.25 | %) | (2.15 | %) | (2.23 | %) | (2.18 | %) | ||||||||||
Total expensesc | 2.30 | % | 2.27 | % | 2.25 | % | 2.26 | % | 2.29 | % | ||||||||||
Portfolio turnover rate | 405 | % | — | — | — | — |
SEE NOTES TO FINANCIAL STATEMENTS. | THE RYDEX FUNDS ANNUAL REPORT | 73 |
JAPAN 2x STRATEGY FUND |
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.
H-Class | Year Ended March 31, 2015 | Year Ended March 31, 2014 | Year Ended March 28, 2013 | Year Ended March 31, 2012 | Year Ended March 31, 2011 | |||||||||||||||
Per Share Data | ||||||||||||||||||||
Net asset value, beginning of period | $ | 19.38 | $ | 17.44 | $ | 15.49 | $ | 14.98 | $ | 16.48 | ||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||
Net investment income (loss)a | (.26 | ) | (.30 | ) | (.20 | ) | (.22 | ) | (.23 | ) | ||||||||||
Net gain (loss) on investments (realized and unrealized) | 4.26 | 2.24 | 2.15 | .73 | (1.27 | ) | ||||||||||||||
Total from investment operations | 4.00 | 1.94 | 1.95 | .51 | (1.50 | ) | ||||||||||||||
Net asset value, end of period | $ | 23.38 | $ | 19.38 | $ | 17.44 | $ | 15.49 | $ | 14.98 | ||||||||||
Total Returnb | 20.64 | % | 11.12 | % | 12.59 | % | 3.40 | % | (9.10 | %) | ||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||
Net assets, end of period (in thousands) | $ | 16,862 | $ | 3,104 | $ | 9,020 | $ | 4,574 | $ | 5,356 | ||||||||||
Ratios to average net assets: | ||||||||||||||||||||
Net investment income (loss) | (1.28 | %) | (1.50 | %) | (1.40 | %) | (1.48 | %) | (1.44 | %) | ||||||||||
Total expensesc | 1.54 | % | 1.52 | % | 1.50 | % | 1.51 | % | 1.54 | % | ||||||||||
Portfolio turnover rate | 405 | % | — | — | — | — |
a | Net investment income (loss) per share was computed using average shares outstanding throughout the period. |
b | Total return does not reflect the impact of any applicable sales charges. |
c | Does not include expenses of the underlying funds in which the Fund invests. |
74 | THE RYDEX FUNDS ANNUAL REPORT | SEE NOTES TO FINANCIAL STATEMENTS. |
PERFORMANCE REPORT AND FUND PROFILE (Unaudited) | March 31, 2015 |
STRENGTHENING DOLLAR 2x STRATEGY FUND
OBJECTIVE: Seeks to provide investment results that match the performance of a specific benchmark, before fees and expenses, on a daily basis. The Fund’s current benchmark is 200% of the performance of the U.S. Dollar Index® (the “underlying index”). The Fund does not seek to achieve its investment objective over a period of time greater than one day.
For the one-year period ended March 31, 2015, Strengthening Dollar 2x Strategy Fund maintained a daily correlation of over 99% to its benchmark of 200% of the daily price movement of the U.S. Dollar Index. Strengthening Dollar 2x Strategy Fund H-Class returned 45.33%, compared with a return of 22.80% for its benchmark, the U.S. Dollar Index.
The currencies that contributed most to performance of the underlying index for the period were the euro and the Japanese yen. No currency detracted from performance of the underlying index for the period, but the Canadian dollar and Swedish krona were the currencies that contributed least.
Derivatives in the Fund were used to help provide exposure to the composition of the benchmark in the highest efficient manner and to provide leverage, not for hedging purposes. The results of derivatives use during the period were within our expectations and contributed to the Fund’s performance.
Due to the compounding of daily returns, leveraged and inverse funds’ returns over periods other than one day will likely differ in amount and possibly direction from the benchmark return for the same period. Investors should monitor their leveraged and inverse funds’ holdings to ensure that they are consistent with their strategies, as frequently as daily.
The effects of compounding may cause the longer-term correlation of the Fund to its benchmark to diminish. The apparent discrepancy between the leveraged and unleveraged indices is the result of compounding, which is described briefly on page 6 of this report.
The Fund invests excess cash into the Guggenheim Strategy Funds which, in turn, invest in a diversified portfolio of debt securities and financial instruments providing exposure to fixed-income markets. The investment objective of the Guggenheim Strategy Funds is to seek a high level of income consistent with the preservation of capital. For the one-year period ended March 31, 2015, investment in the Guggenheim Strategy Funds benefited Fund performance relative to investing in other short-term investments such as overnight repurchase agreements.
Performance displayed represents past performance, which is no guarantee of future results.
Holdings Diversification (Market Exposure as % of Net Assets)
![](https://capedge.com/proxy/N-CSR/0001398344-15-003814/rtb2_25.jpg)
“Holdings Diversification (Market Exposure as % of Net Assets)” excludes any temporary cash investments or investments in Guggenheim Strategy Funds Trust mutual funds. Investments in those Funds do not provide “market exposure” to meet the fund’s investment objective, but will significantly increase the portfolio’s exposure to certain other asset categories (and their associated risks), which may cause the Fund to deviate from its principal investment strategy, including: (i) high yield, high risk debt securities rated below the top four long-term rating categories by a nationally recognized statistical rating organization (also known as “junk bonds”); (ii) securities issued by the U.S. government or its agencies and instrumentalities; (iii) CLOs and similar investments; and (iv) other short-term fixed income securities.
THE RYDEX FUNDS ANNUAL REPORT | 75 |
PERFORMANCE REPORT AND FUND PROFILE (Unaudited)(concluded) | March 31, 2015 |
Inception Dates: | |
A-Class | May 25, 2005 |
C-Class | May 25, 2005 |
H-Class | May 25, 2005 |
The Fund invests principally in derivative investments such as swap agreements and futures contracts.
Cumulative Fund Performance*
![](https://capedge.com/proxy/N-CSR/0001398344-15-003814/rtb2_26.jpg)
![](https://capedge.com/proxy/N-CSR/0001398344-15-003814/rtb2_27.jpg)
Largest Holdings (% of Total Net Assets) | |
Guggenheim Strategy Fund I | 14.9% |
Guggenheim Strategy Fund II | 14.3% |
Total | 29.2% |
“Largest Holdings” exclude any temporary cash or derivative investments. |
Average Annual Returns*
Periods Ended March 31, 2015
1 Year | 5 Year | Since Inception (05/25/05) | |
A-Class Shares | 45.33% | 2.56% | -0.15% |
A-Class Shares with sales charge† | 38.44% | 1.56% | -0.64% |
C-Class Shares | 44.24% | 1.77% | -0.85% |
C-Class Shares with CDSC‡ | 43.24% | 1.77% | -0.85% |
H-Class Shares | 45.33% | 2.56% | -0.18% |
U.S. Dollar Index | 22.80% | 3.94% | 1.33% |
* | The performance data above represents past performance that is not predictive of future results. The investment return and principal value of an investment in the Fund will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Returns are historical and include changes in principal and reinvested dividends and capital gains and do not reflect the effect of taxes. The U.S. Dollar Index is an unmanaged index and, unlike the Fund, has no management fees or operating expenses to reduce its reported return. The graphs are based on A-Class and H-Class shares only; performance for C-Class shares will vary due to differences in fee structure. |
† | Fund returns are calculated using the maximum sales charge of 4.75%. |
‡ | Fund returns include a CDSC of 1% if redeemed within 12 months of purchase. |
76 | THE RYDEX FUNDS ANNUAL REPORT |
SCHEDULE OF INVESTMENTS | March 31, 2015 |
STRENGTHENING DOLLAR 2x STRATEGY FUND |
Shares | Value | |||||||
MUTUAL FUNDS† - 29.2% | ||||||||
Guggenheim Strategy Fund I1 | 1,064,184 | $ | 26,498,191 | |||||
Guggenheim Strategy Fund II2 | 1,016,998 | 25,333,425 | ||||||
Total Mutual Funds | ||||||||
(Cost $51,761,785) | 51,831,616 | |||||||
Face Amount | ||||||||
REPURCHASE AGREEMENTS††,3 - 57.6% | ||||||||
HSBC Group issued 03/31/15 at 0.03% due 04/01/15 | $ | 80,270,830 | 80,270,830 | |||||
RBC Capital Markets issued 03/31/15 at 0.05% due 04/01/15 | 12,267,087 | 12,267,087 | ||||||
UMB Financial Corp. issued 03/31/15 at 0.03% due 04/01/15 | 9,846,354 | 9,846,354 | ||||||
Total Repurchase Agreements | ||||||||
(Cost $102,384,271) | 102,384,271 | |||||||
Total Investments - 86.8% | ||||||||
(Cost $154,146,056) | $ | 154,215,887 | ||||||
Other Assets & Liabilities, net - 13.2% | 23,482,650 | |||||||
Total Net Assets - 100.0% | $ | 177,698,537 | ||||||
Contracts | Unrealized Gain (Loss) | |||||||
CURRENCY FUTURES CONTRACTS PURCHASED† | ||||||||
June 2015 U.S. Dollar Index Futures Contracts (Aggregate Value of Contracts $301,246,560) | 3,054 | $ | (3,152,360 | ) | ||||
Units | ||||||||
OTC CURRENCY INDEX SWAP AGREEMENTS†† | ||||||||
Goldman Sachs International May 2015 U.S. Dollar Index Swap, Terminating 05/15/154 (Notional Value $54,204,217) | 550,034 | $ | 1,964,456 |
† | Value determined based on Level 1 inputs — See Note 4. |
†† | Value determined based on Level 2 inputs — See Note 4. |
1 | Investment in a product that is managed by and/or pays a management fee to a party related to the Adviser — See Note 12. |
2 | Affiliated issuer — See Note 12. |
3 | Repurchase Agreements — See Note 5. |
4 | Total Return based on U.S. Dollar Index +/- financing at a variable rate. |
SEE NOTES TO FINANCIAL STATEMENTS. | THE RYDEX FUNDS ANNUAL REPORT | 77 |
STRENGTHENING DOLLAR 2x STRATEGY FUND |
STATEMENT OF ASSETS AND LIABILITIES
March 31, 2015
Assets: | ||||
Investments in unaffiliated issuers, at value (cost $26,462,002) | $ | 26,498,191 | ||
Investments in affiliated issuers, at value (cost $25,299,783) | 25,333,425 | |||
Repurchase agreements, at value (cost $102,384,271) | 102,384,271 | |||
Total investments (cost $154,146,056) | 154,215,887 | |||
Segregated cash with broker | 9,195,111 | |||
Unrealized appreciation on swap agreements | 1,964,456 | |||
Receivables: | ||||
Fund shares sold | 11,710,529 | |||
Variation margin | 1,001,780 | |||
Swap settlement | 117,595 | |||
Dividends | 62,787 | |||
Interest | 92 | |||
Total assets | 178,268,237 | |||
Liabilities: | ||||
Payable for: | ||||
Fund shares redeemed | 161,889 | |||
Management fees | 142,969 | |||
Securities purchased | 62,868 | |||
Distribution and service fees | 42,097 | |||
Transfer agent and administrative fees | 39,714 | |||
Portfolio accounting fees | 15,864 | |||
Licensing fees | 45,567 | |||
Miscellaneous | 58,732 | |||
Total liabilities | 569,700 | |||
Commitments and contingent liabilities (Note 14) | — | |||
Net assets | $ | 177,698,537 | ||
Net assets consist of: | ||||
Paid in capital | $ | 171,100,785 | ||
Accumulated net investment loss | (455,964 | ) | ||
Accumulated net realized gain on investments | 8,171,789 | |||
Net unrealized depreciation on investments | (1,118,073 | ) | ||
Net assets | $ | 177,698,537 | ||
A-Class: | ||||
Net assets | $ | 15,764,771 | ||
Capital shares outstanding | 282,799 | |||
Net asset value per share | $ | 55.75 | ||
Maximum offering price per share (Net asset value divided by 95.25%) | $ | 58.53 | ||
C-Class: | ||||
Net assets | $ | 3,835,880 | ||
Capital shares outstanding | 74,413 | |||
Net asset value per share | $ | 51.55 | ||
H-Class: | ||||
Net assets | $ | 158,097,886 | ||
Capital shares outstanding | 2,847,020 | |||
Net asset value per share | $ | 55.53 |
STATEMENT OF OPERATIONS
Year Ended March 31, 2015
Investment Income: | ||||
Dividends from securities of unaffiliated issuers | $ | 230,106 | ||
Dividends from securities of affiliated issuers | 191,684 | |||
Interest | 11,496 | |||
Total investment income | 433,286 | |||
Expenses: | ||||
Management fees | 797,847 | |||
Transfer agent and administrative fees | 221,624 | |||
Distribution and service fees: | ||||
A-Class | 30,279 | |||
C-Class | 27,171 | |||
H-Class | 184,552 | |||
Portfolio accounting fees | 88,627 | |||
Custodian fees | 10,311 | |||
Trustees’ fees* | 3,140 | |||
Miscellaneous | 148,762 | |||
Total expenses | 1,512,313 | |||
Net investment loss | (1,079,027 | ) | ||
Net Realized and Unrealized Gain (Loss): | ||||
Net realized gain (loss) on: | ||||
Investments in unaffiliated issuers | (43,221 | ) | ||
Investments in affiliated issuers | (41,866 | ) | ||
Swap agreements | 6,431,435 | |||
Futures contracts | 35,932,141 | |||
Net realized gain | 42,278,489 | |||
Net change in unrealized appreciation (depreciation) on: | ||||
Investments in unaffiliated issuers | 36,189 | |||
Investments in affiliated issuers | 33,642 | |||
Swap agreements | 1,982,005 | |||
Futures contracts | (3,325,685 | ) | ||
Net change in unrealized appreciation (depreciation) | (1,273,849 | ) | ||
Net realized and unrealized gain | 41,004,640 | |||
Net increase in net assets resulting from operations | $ | 39,925,613 |
* | Relates to Trustees not deemed “interested persons” within the meaning of Section 2(a)(19) of the 1940 Act. |
78 | THE RYDEX FUNDS ANNUAL REPORT | SEE NOTES TO FINANCIAL STATEMENTS. |
STRENGTHENING DOLLAR 2x STRATEGY FUND |
STATEMENTS OF CHANGES IN NET ASSETS
Year Ended March 31, 2015 | Year Ended March 31, 2014 | |||||||
Increase (Decrease) in Net Assets from Operations: | ||||||||
Net investment loss | $ | (1,079,027 | ) | $ | (387,321 | ) | ||
Net realized gain (loss) on investments | 42,278,489 | (3,258,413 | ) | |||||
Net change in unrealized appreciation (depreciation) on investments | (1,273,849 | ) | (133,507 | ) | ||||
Net increase (decrease) in net assets resulting from operations | 39,925,613 | (3,779,241 | ) | |||||
Capital share transactions: | ||||||||
Proceeds from sale of shares | ||||||||
A-Class | 67,660,509 | 32,997,383 | ||||||
C-Class | 13,335,647 | 13,018,069 | ||||||
H-Class | 803,295,701 | 97,506,138 | ||||||
Cost of shares redeemed | ||||||||
A-Class | (61,334,808 | ) | (38,741,873 | ) | ||||
C-Class | (12,659,892 | ) | (14,153,109 | ) | ||||
H-Class | (687,933,691 | ) | (97,374,129 | ) | ||||
Net increase (decrease) from capital share transactions | 122,363,466 | (6,747,521 | ) | |||||
Net increase (decrease) in net assets | 162,289,079 | (10,526,762 | ) | |||||
Net assets: | ||||||||
Beginning of year | 15,409,458 | 25,936,220 | ||||||
End of year | $ | 177,698,537 | $ | 15,409,458 | ||||
Accumulated net investment loss at end of year | $ | (455,964 | ) | $ | (99,577 | ) | ||
Capital share activity: | ||||||||
Shares sold | ||||||||
A-Class | 1,496,935 | 815,939 | * | |||||
C-Class | 313,093 | 341,309 | * | |||||
H-Class | 17,612,624 | 2,436,518 | * | |||||
Shares redeemed | ||||||||
A-Class | (1,306,603 | ) | (967,356 | )* | ||||
C-Class | (297,401 | ) | (370,508 | )* | ||||
H-Class | (15,021,156 | ) | (2,462,181 | )* | ||||
Net increase (decrease) in shares | 2,797,492 | (206,279 | )* |
* | Reverse share split — Capital share activity for the period presented through February 7, 2014 has been restated to reflect a 1:3 reverse share split effective February 7, 2014. See Note 13 in Notes to Financial Statements. |
SEE NOTES TO FINANCIAL STATEMENTS. | THE RYDEX FUNDS ANNUAL REPORT | 79 |
STRENGTHENING DOLLAR 2x STRATEGY FUND |
FINANCIAL HIGHLIGHTS
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.
A-Class | Year Ended March 31, 2015 | Year Ended March 31, 2014d | Year Ended March 28, 2013d | Year Ended March 31, 2012d | Year Ended March 31, 2011d | |||||||||||||||
Per Share Data | ||||||||||||||||||||
Net asset value, beginning of period | $ | 38.36 | $ | 42.75 | $ | 40.35 | $ | 40.39 | $ | 49.15 | ||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||
Net investment income (loss)a | (.56 | ) | (.69 | ) | (.63 | ) | (.66 | ) | (.75 | ) | ||||||||||
Net gain (loss) on investments (realized and unrealized) | 17.95 | (3.70 | ) | 3.03 | .62 | (8.01 | ) | |||||||||||||
Total from investment operations | 17.39 | (4.39 | ) | 2.40 | (.04 | ) | (8.76 | ) | ||||||||||||
Net asset value, end of period | $ | 55.75 | $ | 38.36 | $ | 42.75 | $ | 40.35 | $ | 40.39 | ||||||||||
Total Returnb | 45.33 | % | (10.27 | %) | 5.95 | % | (0.07 | %) | (17.83 | %) | ||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||
Net assets, end of period (in thousands) | $ | 15,765 | $ | 3,547 | $ | 10,427 | $ | 6,875 | $ | 6,115 | ||||||||||
Ratios to average net assets: | ||||||||||||||||||||
Net investment income (loss) | (1.19 | %) | (1.72 | %) | (1.53 | %) | (1.62 | %) | (1.55 | %) | ||||||||||
Total expensesc | 1.68 | % | 1.74 | % | 1.66 | % | 1.68 | % | 1.71 | % | ||||||||||
Portfolio turnover rate | 299 | % | — | — | — | — |
C-Class | Year Ended March 31, 2015 | Year Ended March 31, 2014d | Year Ended March 28, 2013d | Year Ended March 31, 2012d | Year Ended March 31, 2011d | |||||||||||||||
Per Share Data | ||||||||||||||||||||
Net asset value, beginning of period | $ | 35.74 | $ | 40.15 | $ | 38.14 | $ | 38.48 | $ | 47.21 | ||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||
Net investment income (loss)a | (.81 | ) | (.94 | ) | (.90 | ) | (.90 | ) | (1.05 | ) | ||||||||||
Net gain (loss) on investments (realized and unrealized) | 16.62 | (3.47 | ) | 2.91 | .56 | (7.68 | ) | |||||||||||||
Total from investment operations | 15.81 | (4.41 | ) | 2.01 | (.34 | ) | (8.73 | ) | ||||||||||||
Net asset value, end of period | $ | 51.55 | $ | 35.74 | $ | 40.15 | $ | 38.14 | $ | 38.48 | ||||||||||
Total Returnb | 44.24 | % | (10.96 | %) | 5.27 | % | (0.94 | %) | (18.49 | %) | ||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||
Net assets, end of period (in thousands) | $ | 3,836 | $ | 2,099 | $ | 3,530 | $ | 4,091 | $ | 4,028 | ||||||||||
Ratios to average net assets: | ||||||||||||||||||||
Net investment income (loss) | (1.96 | %) | (2.48 | %) | (2.29 | %) | (2.36 | %) | (2.29 | %) | ||||||||||
Total expensesc | 2.44 | % | 2.50 | % | 2.42 | % | 2.44 | % | 2.46 | % | ||||||||||
Portfolio turnover rate | 299 | % | — | — | — | — |
80 | THE RYDEX FUNDS ANNUAL REPORT | SEE NOTES TO FINANCIAL STATEMENTS. |
STRENGTHENING DOLLAR 2x STRATEGY FUND |
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.
H-Class | Year Ended March 31, 2015 | Year Ended March 31, 2014d | Year Ended March 28, 2013d | Year Ended March 31, 2012d | Year Ended March 31, 2011d | |||||||||||||||
Per Share Data | ||||||||||||||||||||
Net asset value, beginning of period | $ | 38.21 | $ | 42.60 | $ | 40.17 | $ | 40.20 | $ | 48.92 | ||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||
Net investment income (loss)a | (.56 | ) | (.69 | ) | (.63 | ) | (.66 | ) | (.75 | ) | ||||||||||
Net gain (loss) on investments (realized and unrealized) | 17.88 | (3.70 | ) | 3.06 | .63 | (7.97 | ) | |||||||||||||
Total from investment operations | 17.32 | (4.39 | ) | 2.43 | (.03 | ) | (8.72 | ) | ||||||||||||
Net asset value, end of period | $ | 55.53 | $ | 38.21 | $ | 42.60 | $ | 40.17 | $ | 40.20 | ||||||||||
Total Returnb | 45.33 | % | (10.31 | %) | 6.05 | % | (0.07 | %) | (17.84 | %) | ||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||
Net assets, end of period (in thousands) | $ | 158,098 | $ | 9,764 | $ | 11,979 | $ | 21,982 | $ | 20,733 | ||||||||||
Ratios to average net assets: | ||||||||||||||||||||
Net investment income (loss) | (1.19 | %) | (1.72 | %) | (1.53 | %) | (1.62 | %) | (1.55 | %) | ||||||||||
Total expensesc | 1.68 | % | 1.74 | % | 1.66 | % | 1.69 | % | 1.72 | % | ||||||||||
Portfolio turnover rate | 299 | % | — | — | — | — |
a | Net investment income (loss) per share was computed using average shares outstanding throughout the period. |
b | Total return does not reflect the impact of any applicable sales charges. |
c | Does not include expenses of the underlying funds in which the Fund invests. |
d | Reverse share split — Per share amounts for the periods presented through February 7, 2014 have been restated to reflect a 1:3 reverse share split effective February 7, 2014. See Note 13 in Notes to Financial Statements. |
SEE NOTES TO FINANCIAL STATEMENTS. | THE RYDEX FUNDS ANNUAL REPORT | 81 |
PERFORMANCE REPORT AND FUND PROFILE (Unaudited) | March 31, 2015 |
WEAKENING DOLLAR 2x STRATEGY FUND
OBJECTIVE: Seeks to provide investment results that match, before fees and expenses, the performance of a specific benchmark on a daily basis. The Fund’s current benchmark is 200% of the inverse (opposite) of the performance of the U.S. Dollar Index® (the “underlying index”). The Fund does not seek to achieve its investment objective over a period of time greater than one day.
For the one-year period ended March 31, 2015, Weakening Dollar 2x Strategy Fund maintained a daily correlation of over 99% to its benchmark of -200% of the daily price movement of the U.S. Dollar Index. Weakening Dollar 2x Strategy Fund H-Class returned -33.99%, compared with a return of 22.80% for its benchmark, the U.S. Dollar Index.
The currencies that contributed most to performance of the underlying index for the period were the euro and the Japanese yen. No currency detracted from performance of the underlying index for the period, but the Canadian dollar and Swedish krona were the currencies that contributed least.
Derivatives in the Fund were used to help provide exposure to the composition of the benchmark in the highest efficient manner and to provide leverage, not for hedging purposes. The results of derivatives use during the period were within our expectations and contributed to the Fund’s performance.
Due to the compounding of daily returns, leveraged and inverse funds’ returns over periods other than one day will likely differ in amount and possibly direction from the benchmark return for the same period. Investors should monitor their leveraged and inverse funds’ holdings to ensure that they are consistent with their strategies, as frequently as daily.
The effects of compounding may cause the longer-term correlation of the Fund to its benchmark to diminish. The apparent discrepancy between the leveraged and unleveraged indices is the result of compounding, which is described briefly on page 6 of this report.
The Fund invests excess cash into the Guggenheim Strategy Funds which, in turn, invest in a diversified portfolio of debt securities and financial instruments providing exposure to fixed-income markets. The investment objective of the Guggenheim Strategy Funds is to seek a high level of income consistent with the preservation of capital. For the one-year ended March 31, 2015, investment in the Guggenheim Strategy Funds benefited Fund performance relative to investing in other short-term investments such as overnight repurchase agreements.
Performance displayed represents past performance, which is no guarantee of future results.
Holdings Diversification (Market Exposure as % of Net Assets)
![](https://capedge.com/proxy/N-CSR/0001398344-15-003814/rtb2_28.jpg)
“Holdings Diversification (Market Exposure as % of Net Assets)” excludes any temporary cash investments or investments in Guggenheim Strategy Funds Trust mutual funds. Investments in those Funds do not provide “market exposure” to meet the fund’s investment objective, but will significantly increase the portfolio’s exposure to certain other asset categories (and their associated risks), which may cause the Fund to deviate from its principal investment strategy, including: (i) high yield, high risk debt securities rated below the top four long-term rating categories by a nationally recognized statistical rating organization (also known as “junk bonds”); (ii) securities issued by the U.S. government or its agencies and instrumentalities; (iii) CLOs and similar investments; and (iv) other short-term fixed income securities.
82 | THE RYDEX FUNDS ANNUAL REPORT |
PERFORMANCE REPORT AND FUND PROFILE (Unaudited)(concluded) | March 31, 2015 |
Inception Dates: | |
A-Class | May 25, 2005 |
C-Class | May 25, 2005 |
H-Class | May 25, 2005 |
The Fund invests principally in derivative investments such as swap agreements and futures contracts.
Cumulative Fund Performance*
![](https://capedge.com/proxy/N-CSR/0001398344-15-003814/rtb2_29.jpg)
![](https://capedge.com/proxy/N-CSR/0001398344-15-003814/rtb2_30.jpg)
Largest Holdings (% of Total Net Assets) | |
Guggenheim Strategy Fund II | 15.7% |
Guggenheim Strategy Fund I | 15.4% |
Total | 31.1% |
“Largest Holdings” exclude any temporary cash or derivative investments. |
Average Annual Returns*
Periods Ended March 31, 2015
1 Year | 5 Year | Since Inception (05/25/05) | |
A-Class Shares | -34.04% | -8.11% | -3.50% |
A-Class Shares with sales charge† | -37.17% | -9.00% | -3.98% |
C-Class Shares | -34.52% | -8.79% | -4.23% |
C-Class Shares with CDSC‡ | -35.18% | -8.79% | -4.23% |
H-Class Shares | -33.99% | -8.10% | -3.51% |
U.S. Dollar Index | 22.80% | 3.94% | 1.33% |
* | The performance data above represents past performance that is not predictive of future results. The investment return and principal value of an investment in the Fund will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Returns are historical and include changes in principal and reinvested dividends and capital gains and do not reflect the effect of taxes. The U.S. Dollar Index is an unmanaged index and, unlike the Fund, has no management fees or operating expenses to reduce its reported return. The graphs are based on A-Class and H-Class shares only; performance for C-Class shares will vary due to differences in fee structure. |
† | Fund returns are calculated using the maximum sales charge of 4.75%. |
‡ | Fund returns include a CDSC of 1% if redeemed within 12 months of purchase. |
THE RYDEX FUNDS ANNUAL REPORT | 83 |
SCHEDULE OF INVESTMENTS | March 31, 2015 |
WEAKENING DOLLAR 2x STRATEGY FUND |
Shares | Value | |||||||
MUTUAL FUNDS† - 31.1% | ||||||||
Guggenheim Strategy Fund II1 | 27,227 | $ | 678,219 | |||||
Guggenheim Strategy Fund I1 | 26,738 | 665,787 | ||||||
Total Mutual Funds | ||||||||
(Cost $1,343,385) | 1,344,006 | |||||||
Face Amount | ||||||||
REPURCHASE AGREEMENTS††,2 - 95.3% | ||||||||
HSBC Group issued 03/31/15 at 0.03% due 04/01/15 | $ | 3,230,336 | 3,230,336 | |||||
RBC Capital Markets issued 03/31/15 at 0.05% due 04/01/15 | 493,664 | 493,664 | ||||||
UMB Financial Corp. issued 03/31/15 at 0.03% due 04/01/15 | 396,247 | 396,247 | ||||||
Total Repurchase Agreements | ||||||||
(Cost $4,120,247) | 4,120,247 | |||||||
Total Investments - 126.4% | ||||||||
(Cost $5,463,632) | $ | 5,464,253 | ||||||
Other Assets & Liabilities, net - (26.4)% | (1,142,697 | ) | ||||||
Total Net Assets - 100.0% | $ | 4,321,556 | ||||||
Contracts | Unrealized Gain | |||||||
CURRENCY FUTURES CONTRACTS SOLD SHORT† | ||||||||
June 2015 U.S. Dollar Index Futures Contracts (Aggregate Value of Contracts $7,989,840) | 81 | $ | 52,612 | |||||
Units | ||||||||
OTC CURRENCY INDEX SWAP AGREEMENTS SOLD SHORT†† | ||||||||
Goldman Sachs International May 2015 U.S. Dollar Index Swap, Terminating 05/15/153 (Notional Value $677,377) | 6,874 | $ | 6,899 |
† | Value determined based on Level 1 inputs — See Note 4. |
†† | Value determined based on Level 2 inputs — See Note 4. |
1 | Investment in a product that is managed by and/or pays a management fee to a party related to the Adviser — See Note 12. |
2 | Repurchase Agreements — See Note 5. |
3 | Total Return based on U.S. Dollar Index +/- financing at a variable rate. |
84 | THE RYDEX FUNDS ANNUAL REPORT | SEE NOTES TO FINANCIAL STATEMENTS. |
WEAKENING DOLLAR 2x STRATEGY FUND |
STATEMENT OF ASSETS AND LIABILITIES
March 31, 2015
Assets: | ||||
Investments, at value (cost $1,343,385) | $ | 1,344,006 | ||
Repurchase agreements, at value (cost $4,120,247) | 4,120,247 | |||
Total investments (cost $5,463,632) | 5,464,253 | |||
Segregated cash with broker | 381,914 | |||
Unrealized appreciation on swap agreements | 6,899 | |||
Receivables: | ||||
Fund shares sold | 36,465 | |||
Dividends | 1,637 | |||
Interest | 4 | |||
Total assets | 5,891,172 | |||
Liabilities: | ||||
Payable for: | ||||
Fund shares redeemed | 1,324,698 | |||
Swap settlement | 199,766 | |||
Variation margin | 30,864 | |||
Management fees | 3,319 | |||
Securities purchased | 1,637 | |||
Distribution and service fees | 1,025 | |||
Transfer agent and administrative fees | 922 | |||
Portfolio accounting fees | 369 | |||
Miscellaneous | 7,016 | |||
Total liabilities | 1,569,616 | |||
Commitments and contingent liabilities (Note 14) | — | |||
Net assets | $ | 4,321,556 | ||
Net assets consist of: | ||||
Paid in capital | $ | 22,069,349 | ||
Undistributed net investment income | 1 | |||
Accumulated net realized loss on investments | (17,807,926 | ) | ||
Net unrealized appreciation on investments | 60,132 | |||
Net assets | $ | 4,321,556 | ||
A-Class: | ||||
Net assets | $ | 508,314 | ||
Capital shares outstanding | 43,143 | |||
Net asset value per share | $ | 11.78 | ||
Maximum offering price per share (Net asset value divided by 95.25%) | $ | 12.37 | ||
C-Class: | ||||
Net assets | $ | 162,578 | ||
Capital shares outstanding | 15,035 | |||
Net asset value per share | $ | 10.81 | ||
H-Class: | ||||
Net assets | $ | 3,650,664 | ||
Capital shares outstanding | 310,287 | |||
Net asset value per share | $ | 11.77 |
STATEMENT OF OPERATIONS
Year Ended March 31, 2015
Investment Income: | ||||
Dividends | $ | 33,624 | ||
Interest | 677 | |||
Total investment income | 34,301 | |||
Expenses: | ||||
Management fees | 61,980 | |||
Transfer agent and administrative fees | 17,217 | |||
Distribution and service fees: | ||||
A-Class | 2,863 | |||
C-Class | 5,618 | |||
H-Class | 12,949 | |||
Portfolio accounting fees | 6,887 | |||
Registration fees | 6,269 | |||
Custodian fees | 804 | |||
Trustees’ fees* | 637 | |||
Miscellaneous | 6,243 | |||
Total expenses | 121,467 | |||
Net investment loss | (87,166 | ) | ||
Net Realized and Unrealized Gain (Loss): | ||||
Net realized gain (loss) on: | ||||
Investments | (10,240 | ) | ||
Swap agreements | (643,293 | ) | ||
Futures contracts | (1,977,311 | ) | ||
Net realized loss | (2,630,844 | ) | ||
Net change in unrealized appreciation (depreciation) on: | ||||
Investments | 621 | |||
Swap agreements | (8,930 | ) | ||
Futures contracts | 118,925 | |||
Net change in unrealized appreciation (depreciation) | 110,616 | |||
Net realized and unrealized loss | (2,520,228 | ) | ||
Net decrease in net assets resulting from operations | $ | (2,607,394 | ) |
* | Relates to Trustees not deemed “interested persons” within the meaning of Section 2(a)(19) of the 1940 Act. |
SEE NOTES TO FINANCIAL STATEMENTS. | THE RYDEX FUNDS ANNUAL REPORT | 85 |
WEAKENING DOLLAR 2x STRATEGY FUND |
STATEMENTS OF CHANGES IN NET ASSETS
Year Ended March 31, 2015 | Year Ended March 31, 2014 | |||||||
Increase (Decrease) in Net Assets from Operations: | ||||||||
Net investment loss | $ | (87,166 | ) | $ | (188,856 | ) | ||
Net realized gain (loss) on investments | (2,630,844 | ) | 175,390 | |||||
Net change in unrealized appreciation (depreciation) on investments | 110,616 | 64,739 | ||||||
Net increase (decrease) in net assets resulting from operations | (2,607,394 | ) | 51,273 | |||||
Capital share transactions: | ||||||||
Proceeds from sale of shares | ||||||||
A-Class | 13,033,004 | 24,041,632 | ||||||
C-Class | 1,510,966 | 6,428,661 | ||||||
H-Class | 51,409,264 | 31,158,919 | ||||||
Cost of shares redeemed | ||||||||
A-Class | (13,313,243 | ) | (24,071,521 | ) | ||||
C-Class | (1,961,174 | ) | (7,316,759 | ) | ||||
H-Class | (51,148,755 | ) | (35,984,350 | ) | ||||
Net decrease from capital share transactions | (469,938 | ) | (5,743,418 | ) | ||||
Net decrease in net assets | (3,077,332 | ) | (5,692,145 | ) | ||||
Net assets: | ||||||||
Beginning of year | 7,398,888 | 13,091,033 | ||||||
End of year | $ | 4,321,556 | $ | 7,398,888 | ||||
Undistributed net investment income/(Accumulated net investment loss) at end of year | $ | 1 | $ | (44,928 | ) | |||
Capital share activity: | ||||||||
Shares sold | ||||||||
A-Class | 799,412 | 1,367,080 | ||||||
C-Class | 119,140 | 398,681 | ||||||
H-Class | 3,382,831 | 1,777,634 | ||||||
Shares redeemed | ||||||||
A-Class | (819,501 | ) | (1,383,231 | ) | ||||
C-Class | (153,809 | ) | (455,811 | ) | ||||
H-Class | (3,378,114 | ) | (2,066,133 | ) | ||||
Net decrease in shares | (50,041 | ) | (361,780 | ) |
86 | THE RYDEX FUNDS ANNUAL REPORT | SEE NOTES TO FINANCIAL STATEMENTS. |
WEAKENING DOLLAR 2x STRATEGY FUND |
FINANCIAL HIGHLIGHTS
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.
A-Class | Year Ended March 31, 2015 | Year Ended March 31, 2014 | Year Ended March 28, 2013 | Year Ended March 31, 2012 | Year Ended March 31, 2011 | |||||||||||||||
Per Share Data | ||||||||||||||||||||
Net asset value, beginning of period | $ | 17.86 | $ | 16.95 | $ | 18.95 | $ | 20.34 | $ | 17.98 | ||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||
Net investment income (loss)a | (.20 | ) | (.30 | ) | (.28 | ) | (.33 | ) | (.28 | ) | ||||||||||
Net gain (loss) on investments (realized and unrealized) | (5.88 | ) | 1.21 | (1.72 | ) | (1.06 | ) | 2.64 | ||||||||||||
Total from investment operations | (6.08 | ) | .91 | (2.00 | ) | (1.39 | ) | 2.36 | ||||||||||||
Net asset value, end of period | $ | 11.78 | $ | 17.86 | $ | 16.95 | $ | 18.95 | $ | 20.34 | ||||||||||
Total Returnb | (34.04 | %) | 5.37 | % | (10.55 | %) | (6.83 | %) | 13.13 | % | ||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||
Net assets, end of period (in thousands) | $ | 508 | $ | 1,129 | $ | 1,346 | $ | 2,881 | $ | 5,576 | ||||||||||
Ratios to average net assets: | ||||||||||||||||||||
Net investment income (loss) | (1.23 | %) | (1.73 | %) | (1.53 | %) | (1.62 | %) | (1.54 | %) | ||||||||||
Total expensesc | 1.70 | % | 1.75 | % | 1.65 | % | 1.70 | % | 1.71 | % | ||||||||||
Portfolio turnover rate | 219 | % | — | — | — | — |
C-Class | Year Ended March 31, 2015 | Year Ended March 31, 2014 | Year Ended March 28, 2013 | Year Ended March 31, 2012 | Year Ended March 31, 2011 | |||||||||||||||
Per Share Data | ||||||||||||||||||||
Net asset value, beginning of period | $ | 16.51 | $ | 15.79 | $ | 17.79 | $ | 19.23 | $ | 17.12 | ||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||
Net investment income (loss)a | (.29 | ) | (.40 | ) | (.38 | ) | (.44 | ) | (.39 | ) | ||||||||||
Net gain (loss) on investments (realized and unrealized) | (5.41 | ) | 1.12 | (1.62 | ) | (1.00 | ) | 2.50 | ||||||||||||
Total from investment operations | (5.70 | ) | .72 | (2.00 | ) | (1.44 | ) | 2.11 | ||||||||||||
Net asset value, end of period | $ | 10.81 | $ | 16.51 | $ | 15.79 | $ | 17.79 | $ | 19.23 | ||||||||||
Total Returnb | (34.52 | %) | 4.56 | % | (11.24 | %) | (7.49 | %) | 12.32 | % | ||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||
Net assets, end of period (in thousands) | $ | 163 | $ | 821 | $ | 1,687 | $ | 2,826 | $ | 3,963 | ||||||||||
Ratios to average net assets: | ||||||||||||||||||||
Net investment income (loss) | (1.94 | %) | (2.49 | %) | (2.27 | %) | (2.36 | %) | (2.29 | %) | ||||||||||
Total expensesc | 2.46 | % | 2.52 | % | 2.39 | % | 2.44 | % | 2.46 | % | ||||||||||
Portfolio turnover rate | 219 | % | — | — | — | — |
SEE NOTES TO FINANCIAL STATEMENTS. | THE RYDEX FUNDS ANNUAL REPORT | 87 |
WEAKENING DOLLAR 2x STRATEGY FUND |
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.
H-Class | Year Ended March 31, 2015 | Year Ended March 31, 2014 | Year Ended March 28, 2013 | Year Ended March 31, 2012 | Year Ended March 31, 2011 | |||||||||||||||
Per Share Data | ||||||||||||||||||||
Net asset value, beginning of period | $ | 17.83 | $ | 16.93 | $ | 18.93 | $ | 20.32 | $ | 17.96 | ||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||
Net investment income (loss)a | (.19 | ) | (.30 | ) | (.27 | ) | (.32 | ) | (.28 | ) | ||||||||||
Net gain (loss) on investments (realized and unrealized) | (5.87 | ) | 1.20 | (1.73 | ) | (1.07 | ) | 2.64 | ||||||||||||
Total from investment operations | (6.06 | ) | .90 | (2.00 | ) | (1.39 | ) | 2.36 | ||||||||||||
Net asset value, end of period | $ | 11.77 | $ | 17.83 | $ | 16.93 | $ | 18.93 | $ | 20.32 | ||||||||||
Total Returnb | (33.99 | %) | 5.32 | % | (10.57 | %) | (6.84 | %) | 13.14 | % | ||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||
Net assets, end of period (in thousands) | $ | 3,651 | $ | 5,449 | $ | 10,058 | $ | 13,551 | $ | 23,432 | ||||||||||
Ratios to average net assets: | ||||||||||||||||||||
Net investment income (loss) | (1.20 | %) | (1.74 | %) | (1.52 | %) | (1.61 | %) | (1.54 | %) | ||||||||||
Total expensesc | 1.70 | % | 1.76 | % | 1.64 | % | 1.69 | % | 1.71 | % | ||||||||||
Portfolio turnover rate | 219 | % | — | — | — | — |
a | Net investment income (loss) per share was computed using average shares outstanding throughout the period. |
b | Total return does not reflect the impact of any applicable sales charges. |
c | Does not include expenses of the underlying funds in which the Fund invests. |
88 | THE RYDEX FUNDS ANNUAL REPORT | SEE NOTES TO FINANCIAL STATEMENTS. |
NOTES TO FINANCIAL STATEMENTS
1. Organization and Significant Accounting Policies
Organization
The Rydex Series Funds (the “Trust”), a Delaware business trust, is registered with the SEC under the Investment Company Act of 1940 (”1940 Act”), as a non-diversified, open-ended investment company of the series type. Each series, in effect, is representing a separate Fund. The Trust is authorized to issue an unlimited number of no par value shares. The Trust accounts for the assets of each fund separately.
The Trust offers a combination of eight separate classes of shares: Investor Class shares, Advisor Class shares, A-Class shares, C-Class shares, H-Class shares, Y-Class shares, Institutional Class shares and Money Market Class shares. Sales of shares of each Class are made without a front-end sales charge at the net asset value per share (“NAV”), with the exception of A-Class shares. A-Class shares are sold at the NAV, plus the applicable front-end sales charge. The sales charge varies depending on the amount purchased, but will not exceed 4.75%. A-Class share purchases of $1 million or more are exempt from the front-end sales charge but have a 1% contingent deferred sales charge (“CDSC”) if shares are redeemed within 12 months of purchase. C-Class shares have a 1% CDSC if shares are redeemed within 12 months of purchase. Institutional Class shares are offered primarily for direct investment by institutions such as pension and profit sharing plans, endowments, foundations and corporations. Institutional Class shares have a minimum initial investment of $2 million and a minimum account balance of $1 million. Institutional Class shares are offered without a front-end sales charge or CDSC. At March 31, 2015, the Trust consisted of fifty-two funds.
This report covers the S&P 500® Pure Growth Fund, S&P 500® Pure Value Fund, S&P MidCap 400® Pure Growth Fund, S&P MidCap 400® Pure Value Fund, S&P SmallCap 600® Pure Growth Fund, S&P SmallCap 600® Pure Value Fund, Europe 1.25x Strategy Fund, Japan 2x Strategy Fund, Strenghtening Dollar 2x Strategy Fund and the Weakening Dollar 2x Strategy Fund (the “Funds”). Only A-Class, C-Class and H-Class shares had been issued by the Funds.
The Funds are designed and operated to accommodate frequent trading by shareholders and, unlike most mutual funds, offer unlimited exchange privileges with no minimum holding periods or transactions fees, which may cause the Funds to experience high portfolio turnover.
Guggenheim Investments (“GI”) provides advisory services, and Rydex Fund Services, LLC (“RFS”) provides transfer agent, administrative and accounting services to the Trust. Guggenheim Funds Distributors, LLC (“GFD”) acts as principal underwriter for the Trust. GI, RFS and GFD are affiliated entities.
Significant Accounting Policies
The Funds operate as investment companies and accordingly follow the investment company accounting and reporting guidance of the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification Topic 946 Financial Services – Investment Companies.
The following significant accounting policies are in conformity with U.S. generally accepted accounting principles (“U.S. GAAP”) and are consistently followed by the Trust. This requires management to make estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates. All time references are based on Eastern Time.
The NAV of each Class of the Funds is calculated by dividing the market value of the Fund’s securities and other assets, less all liabilities, attributable to the Class by the number of outstanding shares of the Class.
A. The Board of Trustees of the Funds (the “Board”) has adopted policies and procedures for the valuation of the Funds’ investments (the “Valuation Procedures”). Pursuant to the Valuation Procedures, the Board has delegated to a valuation committee, consisting of representatives from Guggenheim’s investment management, fund administration, legal and compliance departments (the “Valuation Committee”), the day-to-day responsibility for implementing the Valuation Procedures, including, under most circumstances, the responsibility for determining the fair value of the Funds' securities or other assets.
Valuations of the Funds’ securities are supplied primarily by pricing services appointed pursuant to the processes set forth in the Valuation Procedures. The Valuation Committee convenes monthly, or more frequently as needed and will review the valuation of all assets which have been fair valued for reasonableness. The Funds’ officers, through the Valuation Committee and consistent with the monitoring and review
THE RYDEX FUNDS ANNUAL REPORT | 89 |
NOTES TO FINANCIAL STATEMENTS (continued)
responsibilities set forth in the Valuation Procedures, regularly review procedures used by, and valuations provided by, the pricing services.
If the pricing service cannot or does not provide a valuation for a particular investment or such valuation is deemed unreliable, such investment is fair valued by the Valuation Committee.
Equity securities listed on an exchange (New York Stock Exchange (“NYSE”) or American Stock Exchange) are valued at the last quoted sales price as of the close of business on the NYSE, usually 4:00 p.m. on the valuation date. Equity securities listed on the NASDAQ market system are valued at the NASDAQ Official Closing Price on the valuation date, which may not necessarily represent the last sale price. If there has been no sale on such exchange or NASDAQ on a given day, the security is valued at the closing bid price on that day.
Open-end investment companies ("Mutual Funds") are valued at their NAV as of the close of business, on the valuation date. Exchange-traded funds ("ETFs") and closed-end investment companies ("CEFs") are valued at the last quoted sales price.
Repurchase agreements are valued at amortized cost, which approximates market value.
The value of futures contracts is accounted for using the unrealized gain or loss on the contracts that is determined by marking the contracts to their current realized settlement prices. Financial futures contracts are valued at the 4:00 p.m. price on the valuation date. In the event that the exchange for a specific futures contract closes earlier than 4:00 p.m., the futures contract is valued at the Official Settlement Price of the exchange. However, the underlying securities from which the futures contract value is derived are monitored until 4:00 p.m. to determine if fair valuation would provide a more accurate valuation.
The value of currency index swap agreements entered into by a Fund is accounted for using the unrealized gain or loss on the agreements that is determined by marking the agreements to the broker quote.
Investments for which market quotations are not readily available are fair valued as determined in good faith by GI under the direction of the Board of Trustees using methods established or ratified by the Board of Trustees.
Valuations in accordance with these methods are intended to reflect each security’s (or asset’s) “fair value.” Each such determination is based on a consideration of all relevant factors, which are likely to vary from one pricing context to another. Examples of such factors may include, but are not limited to: (i) the type of security, (ii) the initial cost of the security, (iii) the existence of any contractual restrictions on the security’s disposition, (iv) the price and extent of public trading in similar securities of the issuer or of comparable companies, (v) quotations or evaluated prices from broker-dealers and/or pricing services, (vi) information obtained from the issuer, analysts, and/or the appropriate stock exchange (for exchange-traded securities), (vii) an analysis of the company’s financial statements, and (viii) an evaluation of the forces that influence the issuer and the market(s) in which the security is purchased and sold (e.g. the existence of pending merger activity, public offerings or tender offers that might affect the value of the security).
In connection with futures contracts and other derivative investments, such factors may include obtaining information as to how (a) these contracts and other derivative investments trade in the futures or other derivative markets, respectively, and (b) the securities underlying these contracts and other derivative investments trade in the cash market.
B. When a Fund engages in a short sale of a security, an amount equal to the proceeds is reflected as an asset and an equivalent liability. The amount of the liability is subsequently marked-to-market to reflect the market value of the short sale. The Fund maintains a segregated account of cash and/or securities as collateral for short sales.
Fees, if any, paid to brokers to borrow securities in connection with short sales are recorded as interest expense. In addition, the Fund must pay out the dividend rate of the equity or coupon rate of the obligation to the lender and record this as an expense. Short dividend or interest expense is a cost associated with the investment objective of short sales transactions, rather than an operational cost associated with the day-to-day management of any mutual fund. The Funds may also receive rebate income from the broker resulting from the investment of the proceeds from securities sold short.
C. Upon entering into a futures contract, a Fund deposits and maintains as collateral such initial margin as required by the exchange on which the transaction is affected. Pursuant to the contract, the Fund agrees to receive from or pay to the broker an amount of cash
90 | THE RYDEX FUNDS ANNUAL REPORT |
NOTES TO FINANCIAL STATEMENTS (continued)
equal to the daily fluctuation in value of the contract. Such receipts or payments are known as variation margin and are recorded by the Fund as unrealized gains or losses. When the contract is closed, the Fund records a realized gain or loss equal to the difference between the value of the contract at the time it was opened and the value at the time it was closed.
D. Swap agreements are marked-to-market daily and the change, if any, is recorded as unrealized gain or loss. Payments received or made as a result of an agreement or termination of the agreement are recognized as realized gains or losses.
E. Investment securities and other assets and liabilities denominated in foreign currencies are translated into U.S. dollar amounts at the date of valuation. Purchases and sales of investment securities and income and expense items denominated in foreign currencies are translated into U.S. dollar amounts on the respective dates of such transactions. The Trust does not isolate that portion of the results of operations resulting from changes in foreign exchange rates on investments from the fluctuations arising from changes in market prices of securities held. Such fluctuations are included with the net realized and unrealized gain and loss from investments.
Reported net realized foreign exchange gains or losses arise from sales of foreign currencies and currency gains or losses realized between the trade and settlement dates on investment transactions. Net unrealized exchange gains and losses arise from changes in the fair values of assets and liabilities other than investments in securities at the fiscal period end, resulting from changes in exchange rates.
F. Security transactions are recorded on the trade date for financial reporting purposes. Realized gains and losses from securities transactions are recorded using the identified cost basis. Proceeds from lawsuits related to investment holdings are recorded as realized gains in the respective Fund. Dividend income is recorded on the ex-dividend date, net of applicable taxes withheld by foreign countries. Taxable non-cash dividends are recorded as dividend income. Interest income, including amortization of premiums and accretion of discounts, is accrued on a daily basis. Dividend income from REITs is recorded based on the income included in the distributions received from the REIT investments using published REIT classifications, including some management estimates when actual amounts are not available. Distributions received in excess of this estimated amount are recorded as a reduction of the cost of investments or reclassified to capital gains. The actual amounts of income, return of capital, and capital gains are only determined by each REIT after its fiscal year-end, and may differ from the estimated amounts.
G. Distributions of net investment income and net realized gains, if any, are declared and paid at least annually. Dividends are reinvested in additional shares unless shareholders request payment in cash. Distributions are recorded on the ex-dividend date and are determined in accordance with income tax regulations which may differ from U.S. GAAP.
H. Interest and dividend income, most expenses, all realized gains and losses, and all unrealized gains and losses are allocated to the classes based upon the value of the outstanding shares in each Class. Certain costs, such as distribution and service fees are charged directly to specific classes. In addition, certain expenses have been allocated to the individual Funds in the Trust on a pro rata basis upon the respective aggregate net assets of each Fund included in the Trust.
I. The Funds may leave cash overnight in their cash account with the custodian. Periodically, a Fund may have cash due to the custodian bank as an overdraft balance. A fee is incurred on this overdraft, calculated by multiplying the overdraft by a rate based on the federal funds rate.
J. Under the Funds’ organizational documents, their Trustees and Officers are indemnified against certain liabilities arising out of the performance of their duties to the Trust. In addition, throughout the normal course of business, the Funds enter into contracts that contain a variety of representations and warranties which provide general indemnifications. The Funds’ maximum exposure under these arrangements is unknown, as this would involve future claims that may be made against the Funds and/or their affiliates that have not yet occurred. However, based on experience, the Funds expect the risk of loss to be remote.
2. Financial Instruments
As part of their investment strategy, the Funds utilize short sales and a variety of derivative instruments. These investments involve, to varying degrees, elements of market risk and risks in excess of the amounts recognized in the Statements of Assets and Liabilities.
THE RYDEX FUNDS ANNUAL REPORT | 91 |
NOTES TO FINANCIAL STATEMENTS (continued)
A short sale is a transaction in which a Fund sells a security it does not own. If the security sold short decreases in price between the time the Fund sells the security and closes its short position, that Fund will realize a gain on the transaction. Conversely, if the security increases in price during the period, that Fund will realize a loss on the transaction. The risk of such price increases is the principal risk of engaging in short sales.
A futures contract is an agreement to purchase (long) or sell (short) an agreed amount of securities or other instruments at a set price for delivery at a future date. There are significant risks associated with a Fund’s use of futures contracts, including (i) there may be an imperfect or no correlation between the changes in market value of the underlying asset and the prices of futures contracts; (ii) there may not be a liquid secondary market for a futures contract; (iii) trading restrictions or limitations may be imposed by an exchange; and (iv) government regulations may restrict trading in futures contracts. When investing in futures, there is minimal counterparty credit risk to the Fund because futures are exchange-traded and the exchange’s clearinghouse, as counterparty to all exchange-traded futures, guarantees against default. Cash deposits are shown as segregated cash with broker on the Statement of Assets and Liabilities; securities held as collateral are noted on the Schedule of Investments.
A swap is an agreement that obligates two parties to exchange a series of cash flows at specified intervals based upon or calculated by reference to changes in specified prices or rates for a specified amount of an underlying asset. A Fund utilizing OTC swaps bears the risk of loss of the amount expected to be received under a swap agreement in the event of the default or bankruptcy of a swap agreement counterparty. Additionally, there is no guarantee that a Fund or an underlying fund could eliminate its exposure under an outstanding swap agreement by entering into an offsetting swap agreement with the same or another party.
The Europe 1.25x Strategy Fund, Japan 2x Strategy Fund, Strengthening Dollar 2x Strategy Fund and Weakening Dollar 2x Strategy Fund use derivative instruments to achieve leveraged exposure to their respective underlying indices. Since these Funds’ investment strategies involve consistently applied leverage, the value of the Fund’s shares will tend to increase or decrease more than the value of any increase or decrease in the underlying index. In addition, as investment in derivative instruments generally requires a small investment relative to the amount of investment exposure assumed, this creates an opportunity for increased net income but, at the same time, additional leverage risk. The Funds’ use of leverage, through borrowings or instruments such as derivatives, may cause the Funds to be more volatile and riskier than if they had not been leveraged.
In conjunction with the use of short sales and derivative instruments, the Funds are required to maintain collateral in various forms. The Funds use, where appropriate, depending on the financial instrument utilized and the broker involved, margin deposits at the broker, cash and/or securities segregated at the custodian bank, discount notes or the repurchase agreements allocated to each Fund.
The Trust has established counterparty credit guidelines and enters into transactions only with financial institutions of investment grade or better. The Trust monitors the counterparty credit risk.
3. Fees and Other Transactions with Affiliates
Under the terms of an investment advisory contract, the Funds pay GI investment advisory fees calculated at their annualized rates below, based on the average daily net assets of the Funds:
Fund | Management Fees (as a % of Net Assets) |
S&P 500® Pure Growth Fund | 0.75% |
S&P 500® Pure Value Fund | 0.75% |
S&P MidCap 400® Pure Growth Fund | 0.75% |
S&P MidCap 400® Pure Value Fund | 0.75% |
S&P SmallCap 600® Pure Growth Fund | 0.75% |
S&P SmallCap 600® Pure Value Fund | 0.75% |
Europe 1.25x Strategy Fund | 0.90% |
Japan 2x Strategy Fund | 0.75% |
Strengthening Dollar 2x Strategy Fund | 0.90% |
Weakening Dollar 2x Strategy Fund | 0.90% |
RFS provides transfer agent and administrative services to the Funds for fees calculated at the annualized rate of 0.25% based on the average daily net assets of each Fund.
92 | THE RYDEX FUNDS ANNUAL REPORT |
NOTES TO FINANCIAL STATEMENTS (continued)
RFS also provides accounting services to the Funds for fees calculated at annualized rates below, based on the average daily net assets of each Fund.
Fund Accounting Fees | (as a % of Net Assets) |
On the first $250 million | 0.10% |
On the next $250 million | 0.075% |
On the next $250 million | 0.05% |
Over $750 million | 0.03% |
RFS engages external service providers to perform other necessary services for the Trust, such as audit and accounting related services, legal services, custody, printing and mailing, etc., on a pass-through basis. Such expenses are allocated to various Funds within the complex based on relative net assets.
The Trust has adopted a Distribution Plan applicable to A-Class shares and H-Class shares for which GFD and other firms that provide distribution and/or shareholder services (“Service Providers”) may receive compensation. If a Service Provider provides distribution services, the Funds will pay distribution fees to GFD at an annual rate not to exceed 0.25% of average daily net assets, pursuant to Rule 12b-1 of the 1940 Act. GFD, in turn, will pay the Service Provider out of its fees. GFD may, at its discretion, retain a portion of such payments to compensate itself for distribution services.
The Trust has adopted a separate Distribution and Shareholder Services Plan applicable to its C-Class shares that allows the Funds to pay annual distribution and service fees of 1.00% of the Funds’ C-Class shares average daily net assets. The annual 0.25% service fee compensates a shareholder’s financial adviser for providing ongoing services to the shareholder. The annual distribution fee of 0.75% reimburses GFD for paying the shareholder’s financial adviser an ongoing sales commission. GFD advances the first year’s service and distribution fees to the financial adviser. GFD retains the service and distribution fees on accounts with no authorized dealer of record.
For the year ended March 31, 2015, GFD retained sales charges of $360,571 relating to sales of A-Class shares of the Trust.
Certain trustees and officers of the Trust are also officers of GI, RFS and GFD.
4. Fair Value Measurement
In accordance with U.S. GAAP, fair value is defined as the price that the Funds would receive to sell an investment or pay to transfer a liability in an orderly transaction with an independent buyer in the principal market, or in the absence of a principal market, the most advantageous market for the investment or liability. U.S. GAAP establishes a three-tier fair value hierarchy based on the types of inputs used to value assets and liabilities and requires corresponding disclosure. The hierarchy and the corresponding inputs are summarized below:
Level 1 — quoted prices in active markets for identical assets or liabilities.
Level 2 — significant other observable inputs (for example quoted prices for securities that are similar based on characteristics such as interest rates, prepayment speeds, credit risk, etc.).
Level 3 — significant unobservable inputs based on the best information available under the circumstances, to the extent observable inputs are not available, which may include assumptions.
The types of inputs available depend on a variety of factors, such as the type of security and the characteristics of the markets in which it trades, if any. Fair valuation determinations that rely on fewer or no observable inputs require greater judgment. Accordingly, fair value determinations for Level 3 securities require the greatest amount of judgment.
THE RYDEX FUNDS ANNUAL REPORT | 93 |
NOTES TO FINANCIAL STATEMENTS (continued)
The following table summarizes the inputs used to value the Funds’ investments at March 31, 2015:
Level 1 Investments In Securities | Level 1 Other Financial Instruments* | Level 2 Investments In Securities | Level 2 Other Financial Instruments* | Level 3 Investments In Securities | Total | |||||||||||||||||||
Assets | ||||||||||||||||||||||||
S&P 500® Pure Growth Fund | $ | 151,604,064 | $ | — | $ | 1,304,212 | $ | — | $ | — | $ | 152,908,276 | ||||||||||||
S&P 500® Pure Value Fund | 71,141,693 | — | 2,466,330 | — | — | 73,608,023 | ||||||||||||||||||
S&P MidCap 400® Pure Growth Fund | 191,119,547 | — | 636,145 | — | — | 191,755,692 | ||||||||||||||||||
S&P MidCap 400® Pure Value Fund | 13,829,899 | — | 526,982 | — | — | 14,356,881 | ||||||||||||||||||
S&P SmallCap 600® Pure Growth Fund | 58,773,047 | — | 2,029,724 | — | — | 60,802,771 | ||||||||||||||||||
S&P SmallCap 600® Pure Value Fund | 15,893,467 | — | 579,706 | — | — | 16,473,173 | ||||||||||||||||||
Europe 1.25x Strategy Fund | 4,979,345 | — | 6,056,535 | — | — | 11,035,880 | ||||||||||||||||||
Japan 2x Strategy Fund | 1,410,987 | 76,588 | 16,130,651 | — | — | 17,618,226 | ||||||||||||||||||
Strengthening Dollar 2x Strategy Fund | 51,831,616 | — | 102,384,271 | 1,964,456 | — | 156,180,343 | ||||||||||||||||||
Weakening Dollar 2x Strategy Fund | 1,344,006 | 52,612 | 4,120,247 | 6,899 | — | 5,523,764 | ||||||||||||||||||
Liabilities | ||||||||||||||||||||||||
S&P SmallCap 600® Pure Growth Fund | $ | 29,384 | $ | — | $ | — | $ | — | $ | — | $ | 29,384 | ||||||||||||
Europe 1.25x Strategy Fund | — | 69,326 | — | 91,708 | — | 161,034 | ||||||||||||||||||
Japan 2x Strategy Fund | — | 63,016 | — | — | — | 63,016 | ||||||||||||||||||
Strengthening Dollar 2x Strategy Fund | — | 3,152,360 | — | — | — | 3,152,360 |
* | Other financial instruments may include futures contracts and/or swaps, which are reported as unrealized gain/loss at period end. |
For the year ended March 31, 2015, there were no transfers between levels.
The inputs or methodologies used for valuing securities are not necessarily an indication of the risk associated with investing in those securities. The suitability of the techniques and sources employed to determine fair valuation are regularly monitored and subject to change.
5. Repurchase Agreements
The Funds transfer 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 Funds’ custodian and is evaluated to ensure that its market value exceeds, at a minimum, 102% of the original face amount of the repurchase agreements. Each Fund holds a pro rata share of the collateral based on the dollar amount of the repurchase agreement entered into by each Fund.
At March 31, 2015, the repurchase agreements in the joint account were as follows:
Counterparty and Terms of Agreement | Face Value | Repurchase Price | Collateral | Par Value | Fair Value | |
HSBC Group | U.S. Treasury Strips | |||||
0.03% | 0.00% | |||||
Due 04/01/15 | $922,646,685 | $922,647,454 | 02/15/24 - 05/15/44 | $1,876,361,900 | $941,099,692 | |
RBC Capital Markets | U.S. Treasury Note | |||||
0.05% | 2.13% | |||||
Due 04/01/15 | 141,000,000 | 141,000,196 | 12/31/21 | 92,325,000 | 95,818,749 | |
U.S. TIP Bond | ||||||
3.88% | ||||||
04/25/29 | 22,465,400 | 48,001,266 | ||||
UMB Financial Corp. | U.S. Treasury Notes | |||||
0.03% | 1.38% - 3.25% | |||||
Due 04/01/15 | 113,175,677 | 113,175,772 | 11/30/15 - 12/31/16 | 109,984,100 | 115,439,211 |
94 | THE RYDEX FUNDS ANNUAL REPORT |
NOTES TO FINANCIAL STATEMENTS (continued)
In the event of counterparty default, the Funds have the right to collect the collateral to offset losses incurred. There is potential loss to the Funds in the event the Funds are delayed or prevented from exercising their 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 Funds seek to assert their rights. The Funds’ investment adviser, acting under the supervision of the Board of Trustees, reviews the value of the collateral and the creditworthiness of those banks and dealers with which the Funds enter into repurchase agreements to evaluate potential risks.
6. Portfolio Securities Loaned
The Funds may lend their securities to approved brokers to earn additional income. Security lending income shown on the Statements of Operations is shown net of rebates paid to the borrowers and earnings on cash collateral investments shared with the lending agent. Within this arrangement, the Funds act as the lender, Credit Suisse acts as the lending agent, and other approved registered broker dealers act as the borrowers. The Funds receive cash collateral, valued at 102% of the value of the securities on loan. Under the terms of the Funds’ securities lending agreement with Credit Suisse, cash collateral is invested in one or more joint repurchase agreements collateralized by obligations of the U.S. Treasury or Government Agencies and cash. The Funds bear the risk of loss on cash collateral investments. 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 Funds the next business day. Although the collateral mitigates the risk, the Funds 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 Funds have the right under the securities lending agreement to recover the securities from the borrower on demand.
At March 31, 2015, the Funds participated in securities lending as follows:
Fund | Value of Securities Loaned | Cash Collateral Received | ||||||
S&P 500® Pure Value Fund | $ | 2,235,256 | $ | 2,273,900 | ||||
S&P MidCap 400® Pure Value Fund | 411,361 | 435,660 | ||||||
S&P SmallCap 600® Pure Growth Fund | 1,834,303 | 1,882,725 | ||||||
S&P SmallCap 600® Pure Value Fund | 457,313 | 482,245 | ||||||
Europe 1.25x Strategy Fund | 54,160 | 56,550 |
Cash collateral received was invested in the following joint repurchase agreements at March 31, 2015:
Counterparty and Terms of Agreement | Face Value | Repurchase Price | Collateral | Par Value | Fair Value | |
HSBC Securities, Inc. | Fannie Mae Strips | |||||
0.10% | 0.00% | |||||
Due 04/01/15 | $3,323,672 | $3,323,681 | 11/15/17 - 07/15/37 | $3,706,931 | $2,551,343 | |
Federal Farm Credit Bank | ||||||
0.19% | ||||||
06/12/17 | 838,762 | 838,873 | ||||
BNP Paribas Securities Corp. | U.S. Treasury Note | |||||
0.10% | 2.13% | |||||
Due 04/01/15 | 1,143,343 | 1,143,346 | 12/31/21 | 525,555 | 541,717 | |
U.S. Treasury Bond | ||||||
4.38% | ||||||
05/15/41 | 453,575 | 624,494 | ||||
Barclays Capital Corp. | U.S. Treasury Strips | |||||
0.10% | 0.00% | |||||
Due 04/01/15 | 590,151 | 590,153 | 05/15/20 - 05/15/44 | 912,950 | 542,423 | |
U.S. Treasury Bond | ||||||
4.75% | ||||||
02/15/41 | 41,424 | 59,533 |
THE RYDEX FUNDS ANNUAL REPORT | 95 |
NOTES TO FINANCIAL STATEMENTS (continued)
There was also $73,914 in segregated cash held as collateral.
7. Derivative Investment Holdings Categorized by Risk Exposure
U.S. GAAP requires disclosures to enable investors to better understand how and why the Funds use derivative instruments, how these derivative instruments are accounted for and their effects on the Funds’ financial position and results of operations.
The following Funds utilized derivatives for the following purposes:
Fund | Index Exposure | Liquidity | Leverage |
Europe 1.25x Strategy Fund | x | x | x |
Japan 2x Strategy Fund | x | x | x |
Strengthening Dollar 2x Strategy Fund | x | x | x |
Weakening Dollar 2x Strategy Fund | x | x | x |
The following table represents the notional amount of derivative instruments outstanding as an approximate percentage of the Funds’ net assets on a daily basis.
Approximate percentage of Fund’s Net Assets on a daily basis | ||
Fund | Long | Short |
Europe 1.25x Strategy Fund* | 70% | — |
Japan 2x Strategy Fund* | 200% | — |
Strengthening Dollar 2x Strategy Fund | 200% | — |
Weakening Dollar 2x Strategy Fund | — | 200% |
* | These Funds utilize a combination of currency and/or financial-linked derivatives to obtain exposure to their benchmark. The gross derivative instrument exposure is 135% and 400% for the Europe 1.25x Strategy Fund and the Japan 2x Strategy Fund, respectively. |
The following is a summary of the location of derivative investments on the Funds’ Statements of Assets and Liabilities as of March 31, 2015:
Derivative Investment Type | Asset Derivatives | Liability Derivatives |
Equity/Currency contracts | Variation margin | Variation margin |
Unrealized appreciation on swap agreements | Unrealized depreciation on swap agreements |
The following table sets forth the fair value of the Funds’ derivative investments categorized by primary risk exposure at March 31, 2015:
Asset Derivative Investments Value | ||||||||||||||||
Fund | Futures Equity Contracts* | Futures Currency Contracts* | Swaps Currency Contracts | Total Value at March 31, 2015 | ||||||||||||
Japan 2x Strategy Fund | $ | — | $ | 76,588 | $ | — | $ | 76,588 | ||||||||
Strengthening Dollar 2x Strategy Fund | — | — | 1,964,456 | 1,964,456 | ||||||||||||
Weakening Dollar 2x Strategy Fund | — | 52,612 | 6,899 | 59,511 |
96 | THE RYDEX FUNDS ANNUAL REPORT |
NOTES TO FINANCIAL STATEMENTS (continued)
Liability Derivative Investments Value | ||||||||||||||||
Fund | Futures Equity Contracts* | Futures Currency Contracts* | Swaps Currency Contracts | Total Value at March 31, 2015 | ||||||||||||
Europe 1.25x Strategy Fund | $ | 91,708 | $ | 69,326 | $ | — | $ | 161,034 | ||||||||
Japan 2x Strategy Fund | 63,016 | — | — | 63,016 | ||||||||||||
Strengthening Dollar 2x Strategy Fund | — | 3,152,360 | — | 3,152,360 |
* | Includes cumulative appreciation (depreciation) of futures contracts as reported on the Schedules of Investments. Only current day’s variation margin is reported within the Statements of Assets and Liabilities. |
The following is a summary of the location of derivative investments on the Funds’ Statements of Operations for the year ended March 31, 2015:
Derivative Investment Type | Location of Gain (Loss) on Derivatives |
Equity/Currency contracts | Net realized gain (loss) on futures contracts |
Net realized gain (loss) on swap agreements | |
Net change in unrealized appreciation (depreciation) on futures contracts | |
Net change in unrealized appreciation (depreciation) on swap agreements |
The following is a summary of the Funds’ realized gains (losses) and changes in unrealized appreciation (depreciation) on derivative investments recognized on the Statements of Operations categorized by primary risk exposure for the year ended March 31, 2015:
Realized Gain (Loss) on Derivative Investments Recognized on the Statements of Operations | ||||||||||||||||||||
Fund | Futures Equity Contracts | Swaps Equity Contracts | Futures Currency Contracts | Swaps Currency Contracts | Total | |||||||||||||||
Europe 1.25x Strategy Fund | $ | 2,023,661 | $ | 4,023 | $ | (2,009,064 | ) | $ | — | $ | 18,620 | |||||||||
Japan 2x Strategy Fund | 1,738,002 | 4,886 | (1,919,933 | ) | — | (177,045 | ) | |||||||||||||
Strengthening Dollar 2x Strategy Fund | — | — | 35,932,141 | 6,431,435 | 42,363,576 | |||||||||||||||
Weakening Dollar 2x Strategy Fund | — | — | (1,977,311 | ) | (643,293 | ) | (2,620,604 | ) |
Change in Unrealized Appreciation (Depreciation) on Derivative Investments Recognized on the Statements of Operations | ||||||||||||||||||||
Fund | Futures Equity Contracts | Swaps Equity Contracts | Futures Currency Contracts | Swaps Currency Contracts | Total | |||||||||||||||
Europe 1.25x Strategy Fund | $ | (302,959 | ) | $ | — | $ | (22,353 | ) | $ | — | $ | (325,312 | ) | |||||||
Japan 2x Strategy Fund | (372,610 | ) | — | 120,380 | — | (252,230 | ) | |||||||||||||
Strengthening Dollar 2x Strategy Fund | — | — | (3,325,685 | ) | 1,982,005 | (1,343,680 | ) | |||||||||||||
Weakening Dollar 2x Strategy Fund | — | — | 118,925 | (8,930 | ) | 109,995 |
8. Offsetting
In the normal course of business, the Funds enter into transactions subject to enforceable master netting arrangements or other similar arrangements. Generally, the right to offset in those agreements allows the Funds to counteract the exposure to a specific counterparty with collateral received or delivered to that counterparty based on the terms of the arrangements. These arrangements provide for the right to liquidate upon the occurrence of an event of default, credit event upon merger or additional termination event.
THE RYDEX FUNDS ANNUAL REPORT | 97 |
NOTES TO FINANCIAL STATEMENTS (continued)
In order to better define their contractual rights and to secure rights that will help the Funds mitigate their counterparty risk, the Funds may enter into an International Swaps and Derivatives Association, Inc. Master Agreement (“ISDA Master Agreement”) or similar agreement with their derivative contract counterparties. An ISDA Master Agreement is a bilateral agreement between a Fund and a counterparty that governs OTC derivatives, including foreign exchange contracts, and typically contains, among other things, collateral posting terms and netting provisions in the event of a default and/or termination event. The provisions of the ISDA Master Agreement typically permit a single net payment in the event of a default (close-out netting) or similar event, including the bankruptcy or insolvency of the counterparty.
For derivatives traded under an ISDA Master Agreement, the collateral requirements are typically calculated by netting the mark to market amount for each transaction under such agreement and comparing that amount to the value of any collateral currently pledged by the Funds and the counterparty. For financial reporting purposes, cash collateral that has been pledged to cover obligations of the Funds and cash collateral received from the counterparty, if any, is reported separately on the Statement of Assets and Liabilities as segregated cash with broker/receivable for variation margin, or payable for swap settlement/variation margin. Generally, the amount of collateral due from or to a counterparty must exceed a minimum transfer amount threshold (e.g., $300,000) before a transfer is required to be made. To the extent amounts due to the Funds from their counterparties are not fully collateralized, contractually or otherwise, the Funds bear the risk of loss from counterparty nonperformance. The Funds attempt to mitigate counterparty risk by only entering into agreements with counterparties that they believe to be of good standing and by monitoring the financial stability of those counterparties.
For financial reporting purposes, the Funds do not offset derivative assets and derivative liabilities that are subject to netting arrangements in the Statements of Assets and Liabilities.
The following tables present derivative financial instruments and secured financing transactions that are subject to enforceable netting arrangements and offset in the Statements of Assets and Liabilities in conformity with U.S. GAAP.
Gross Amounts Not Offset in the Statements of Assets and Liabilities | |||||||||||||||||||||||||
Fund | Instrument | Gross Amounts of Recognized Assets1 | Gross Amounts Offset In the Statements of Assets and Liabilities | Net Amount of Assets Presented on the Statements of Assets and Liabilities | Financial Instruments | Cash Collateral Received | Net Amount | ||||||||||||||||||
Strengthening Dollar 2x Strategy Fund | Swap currency contracts | $ | 1,964,456 | $ | — | $ | 1,964,456 | $ | — | $ | ��� | $ | 1,964,456 | ||||||||||||
Weakening Dollar 2x Strategy Fund | Swap currency contracts | 6,899 | — | 6,899 | — | — | 6,899 |
1 | Exchange-traded futures are excluded from these reported amounts. |
9. Federal Income Tax Information
The Funds intend to comply with the provisions of Subchapter M of the Internal Revenue Code applicable to regulated investment companies and will distribute substantially all taxable net investment income and capital gains sufficient to relieve the Funds from all, or substantially all, federal income, excise and state income taxes. Therefore, no provision for federal or state income tax is required.
Tax positions taken or expected to be taken in the course of preparing the Funds’ tax returns are evaluated 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. Management has analyzed the Funds’ tax positions taken, or to be taken, on Federal income tax returns for all open tax years, and has concluded that no provision for income tax is required in the Funds’ financial statements. The Funds’ federal tax returns are subject to examination by the Internal Revenue Service for a period of three years after they are filed.
98 | THE RYDEX FUNDS ANNUAL REPORT |
NOTES TO FINANCIAL STATEMENTS (continued)
Tax basis capital losses in excess of capital gains are carried forward to offset future net capital gains. For the year ended March 31, 2015, the following capital loss carryforward amounts were expired or used:
Fund | Amount | |||
S&P MidCap 400® Pure Value Fund | $ | 1,863,575 | ||
S&P SmallCap 600® Pure Growth Fund | 3,447,313 | |||
S&P SmallCap 600® Pure Value Fund | 2,338,136 | |||
Strengthening Dollar 2x Strategy Fund | 23,329,425 |
The tax character of distributions paid during the year ended March 31, 2015 was as follows:
Fund | Ordinary Income | Long-Term Capital Gain | Total Distributions | |||||||||
S&P 500® Pure Growth Fund | $ | 4,463,896 | $ | — | $ | 4,463,896 | ||||||
S&P 500® Pure Value Fund | 2,272,512 | 1,746,579 | 4,019,091 | |||||||||
S&P MidCap 400® Pure Growth Fund | 15,520,167 | 17,684,250 | 33,204,417 | |||||||||
S&P MidCap 400® Pure Value Fund | 18,945 | — | 18,945 | |||||||||
S&P SmallCap 600® Pure Growth Fund | — | — | — | |||||||||
S&P SmallCap 600® Pure Value Fund | — | — | — | |||||||||
Europe 1.25x Strategy Fund | 26,435 | — | 26,435 | |||||||||
Japan 2x Strategy Fund | — | — | — | |||||||||
Strengthening Dollar 2x Strategy Fund | — | — | — | |||||||||
Weakening Dollar 2x Strategy Fund | — | — | — |
The tax character of distributions paid during the year ended March 31, 2014 was as follows:
Fund | Ordinary Income | Long-Term Capital Gain | Total Distributions | |||||||||
S&P 500® Pure Growth Fund | $ | — | $ | — | $ | — | ||||||
S&P 500® Pure Value Fund | 4,326,572 | — | 4,326,572 | |||||||||
S&P MidCap 400® Pure Growth Fund | 3,996,960 | 5,466,643 | 9,463,603 | |||||||||
S&P MidCap 400® Pure Value Fund | 52,110 | — | 52,110 | |||||||||
S&P SmallCap 600® Pure Growth Fund | — | — | — | |||||||||
S&P SmallCap 600® Pure Value Fund | — | — | — | |||||||||
Europe 1.25x Strategy Fund | — | — | — | |||||||||
Japan 2x Strategy Fund | — | — | — | |||||||||
Strengthening Dollar 2x Strategy Fund | — | — | — | |||||||||
Weakening Dollar 2x Strategy Fund | — | — | — |
Note: For federal income tax purposes, short-term capital gain distributions are treated as ordinary income distributions.
The tax character of distributable earnings/(accumulated losses) at March 31, 2015 was as follows:
Fund | Undistributed Ordinary Income | Undistributed Long-Term Capital Gain | Net Unrealized Appreciation/ (Depreciation) | Capital Loss Carryforward and Other Losses | ||||||||||||
S&P 500® Pure Growth Fund | $ | — | $ | 5,021,680 | $ | 24,159,829 | $ | (363,241 | ) | |||||||
S&P 500® Pure Value Fund | 2,879,737 | — | 5,165,460 | — | ||||||||||||
S&P MidCap 400® Pure Growth Fund | — | 8,958,015 | 29,445,227 | (1,196,573 | ) | |||||||||||
S&P MidCap 400® Pure Value Fund | 28,715 | — | 692,185 | (1,389,782 | ) | |||||||||||
S&P SmallCap 600® Pure Growth Fund | — | — | 5,658,439 | (188,353 | ) | |||||||||||
S&P SmallCap 600® Pure Value Fund | — | — | 646,457 | (25,498,182 | ) | |||||||||||
Europe 1.25x Strategy Fund | 63,417 | — | 45,644 | (11,423,238 | ) | |||||||||||
Japan 2x Strategy Fund | — | — | 2,831 | (1,843,566 | ) | |||||||||||
Strengthening Dollar 2x Strategy Fund | — | 6,983,885 | 69,831 | (455,964 | ) | |||||||||||
Weakening Dollar 2x Strategy Fund | — | — | 622 | (17,748,415 | ) |
THE RYDEX FUNDS ANNUAL REPORT | 99 |
NOTES TO FINANCIAL STATEMENTS (continued)
Capital Loss Carryforward amounts may be limited due to Federal income tax regulations.
For Federal income tax purposes, capital loss carryforwards represent realized losses of the Funds that may be carried forward and applied against future capital gains. For taxable years beginning on or before December 22, 2010, such capital losses may be carried forward for a maximum of eight years. Under the RIC Modernization Act of 2010, the Funds are permitted to carry forward capital losses incurred in taxable years beginning after December 22, 2010 for an unlimited period. However, any losses incurred during those taxable years must be utilized prior to the losses incurred in pre-enactment taxable years. As a result of this ordering rule, pre-enactment capital loss carryforwards may be more likely to expire unused. Additionally, post-enactment capital losses that are carried forward will retain their character as either short-term or long-term capital losses rather than being considered all short-term as under previous law. As of March 31, 2015, capital loss carryforwards for the Funds were as follows:
Expires in | Expires in | Expires in | Unlimited | Total Capital Loss | ||||||||||||||||||||
Fund | 2017 | 2018 | 2019 | Short-Term | Long-Term | Carryforward | ||||||||||||||||||
S&P 500® Pure Growth Fund | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | ||||||||||||
S&P 500® Pure Value Fund | — | — | — | — | — | — | ||||||||||||||||||
S&P MidCap 400® Pure Growth Fund | — | — | — | — | — | — | ||||||||||||||||||
S&P MidCap 400® Pure Value Fund | — | — | (1,389,782 | ) | — | — | (1,389,782 | ) | ||||||||||||||||
S&P SmallCap 600® Pure Growth Fund | (131,829 | ) | (56,524 | ) | — | — | — | (188,353 | ) | |||||||||||||||
S&P SmallCap 600® Pure Value Fund | — | — | (25,498,182 | ) | — | — | (25,498,182 | ) | ||||||||||||||||
Europe 1.25x Strategy Fund | (8,826,483 | ) | — | (2,098,062 | ) | (209,748 | ) | (288,945 | ) | (11,423,238 | ) | |||||||||||||
Japan 2x Strategy Fund | (973,570 | ) | — | — | (325,513 | ) | (544,483 | ) | (1,843,566 | ) | ||||||||||||||
Strengthening Dollar 2x Strategy Fund | — | — | — | — | — | — | ||||||||||||||||||
Weakening Dollar 2x Strategy Fund | (6,635,880 | ) | — | (3,988,430 | ) | (2,855,784 | ) | (4,268,321 | ) | (17,748,415 | ) |
Net investment income and net realized gains (losses) may differ for financial statement and tax purposes because of temporary or permanent book/tax differences. These differences are typically due to late year loss deferrals, losses deferred due to wash sales, utilization of earnings and profits on shareholder redemptions, foreign currency gains and losses, and the “mark to market” of futures contracts for tax purposes. Additional differences may result from tax treatment of net investment losses and expired capital loss carryforwards. To the extent these differences are permanent, reclassifications are made to the appropriate equity accounts in the period that the differences arise. These reclassifications have no effect on the net assets or NAV per share.
On the Statements of Assets and Liabilities the following adjustments were made for permanent book/tax differences:
Fund | Paid In Capital | Undistributed Net Investment Income | Accumulated Net Realized Gain (Loss) | |||||||||
S&P 500® Pure Growth Fund | $ | 2,452,475 | $ | 834,481 | $ | (3,286,956 | ) | |||||
S&P 500® Pure Value Fund | 9,982,405 | — | (9,982,405 | ) | ||||||||
S&P MidCap 400® Pure Growth Fund | 19,638,794 | 1,378,718 | (21,017,512 | ) | ||||||||
S&P MidCap 400® Pure Value Fund | — | — | — | |||||||||
S&P SmallCap 600® Pure Growth Fund | (284,087 | ) | 284,087 | — | ||||||||
S&P SmallCap 600® Pure Value Fund | (70,999 | ) | 70,999 | — | ||||||||
Europe 1.25x Strategy Fund | — | 627 | (627 | ) | ||||||||
Japan 2x Strategy Fund | (89,739 | ) | 89,739 | — | ||||||||
Strengthening Dollar 2x Strategy Fund | 9,898,859 | 722,640 | (10,621,499 | ) | ||||||||
Weakening Dollar 2x Strategy Fund | (132,095 | ) | 132,095 | — |
100 | THE RYDEX FUNDS ANNUAL REPORT |
NOTES TO FINANCIAL STATEMENTS (continued)
At March 31, 2015, 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:
Fund | Tax Cost | Tax Unrealized Gain | Tax Unrealized Loss | Net Unrealized Gain | ||||||||||||
S&P 500® Pure Growth Fund | $ | 128,748,447 | $ | 26,164,527 | $ | (2,004,698 | ) | $ | 24,159,829 | |||||||
S&P 500® Pure Value Fund | 68,442,563 | 6,440,623 | (1,275,163 | ) | 5,165,460 | |||||||||||
S&P MidCap 400® Pure Growth Fund | 162,310,465 | 31,513,166 | (2,067,939 | ) | 29,445,227 | |||||||||||
S&P MidCap 400® Pure Value Fund | 13,664,696 | 822,401 | (130,216 | ) | 692,185 | |||||||||||
S&P SmallCap 600® Pure Growth Fund | 55,144,348 | 6,611,621 | (953,198 | ) | 5,658,423 | |||||||||||
S&P SmallCap 600® Pure Value Fund | 15,826,716 | 1,058,199 | (411,742 | ) | 646,457 | |||||||||||
Europe 1.25x Strategy Fund | 10,991,067 | 112,934 | (68,121 | ) | 44,813 | |||||||||||
Japan 2x Strategy Fund | 17,538,807 | 2,831 | — | 2,831 | ||||||||||||
Strengthening Dollar 2x Strategy Fund | 154,146,056 | 69,831 | — | 69,831 | ||||||||||||
Weakening Dollar 2x Strategy Fund | 5,463,632 | 704 | (83 | ) | 621 |
Pursuant to Federal income tax regulations applicable to investment companies, the Funds have elected to treat net capital losses and certain ordinary losses realized between November 1 and March 31 of each year as occurring on the first day of the following tax year. The Funds have also elected to treat certain ordinary losses realized between January 1 and March 31 of each year as occurring on the first day of the following tax year. For the year ended March 31, 2015, the following losses reflected in the accompanying financial statements were deferred for Federal income tax purposes until April 1, 2015:
Fund | Ordinary | Capital | ||||||
S&P 500® Pure Growth Fund | $ | (363,241 | ) | $ | — | |||
S&P MidCap 400® Pure Growth Fund | — | (1,196,573 | ) | |||||
Strengthening Dollar 2x Strategy Fund | (455,964 | ) | — |
10. Securities Transactions
For the year ended March 31, 2015, the cost of purchases and proceeds from sales of investment securities, excluding government securities, short-term investments and derivatives, were as follows:
Fund | Purchases | Sales | ||||||
S&P 500® Pure Growth Fund | $ | 449,093,687 | $ | 451,746,179 | ||||
S&P 500® Pure Value Fund | 473,547,691 | 530,479,924 | ||||||
S&P MidCap 400® Pure Growth Fund | 303,595,925 | 397,378,941 | ||||||
S&P MidCap 400® Pure Value Fund | 123,340,362 | 125,270,954 | ||||||
S&P SmallCap 600® Pure Growth Fund | 130,204,367 | 105,237,051 | ||||||
S&P SmallCap 600® Pure Value Fund | 108,832,364 | 121,557,586 | ||||||
Europe 1.25x Strategy Fund | 56,742,641 | 60,761,594 | ||||||
Japan 2x Strategy Fund | 5,413,986 | 4,000,000 | ||||||
Strengthening Dollar 2x Strategy Fund | 137,363,596 | 85,500,000 | ||||||
Weakening Dollar 2x Strategy Fund | 7,207,965 | 5,850,000 |
THE RYDEX FUNDS ANNUAL REPORT | 101 |
NOTES TO FINANCIAL STATEMENTS (continued)
11. Line of Credit
The Trust, along with other affiliated trusts, secured an uncommitted, $75,000,000 line of credit from U.S. Bank, N.A., which expires June 13, 2015. This line of credit is reserved for emergency or temporary purposes. Borrowings, if any, under this arrangement bear interest equal to the Prime Rate, minus 2%, which shall be paid monthly, averaging 1.25% for the year ended March 31, 2015. The Funds did not have any borrowings under this agreement at March 31, 2015.
The average daily balances borrowed for the year ended March 31, 2015, were as follows:
Fund | Average Daily Balance | |||
S&P 500® Pure Growth Fund | $ | 53,267 | ||
S&P 500® Pure Value Fund | 28,730 | |||
S&P MidCap 400® Pure Growth Fund | 30,208 | |||
S&P MidCap 400® Pure Value Fund | 14,105 | |||
S&P SmallCap 600® Pure Growth Fund | 22,605 | |||
S&P SmallCap 600® Pure Value Fund | 20,412 | |||
Europe 1.25x Strategy Fund | 10,351 |
12. Affiliated and/or Related Transactions
Investments representing 5% or more of the outstanding voting shares of a portfolio company of a fund, or control of or by, or common control under GI, result in that portfolio company being considered an affiliated company of such fund, as defined in the 1940 Act.
The Funds may invest in the Guggenheim Strategy Funds Trust consisting of Guggenheim Strategy Fund I, Guggenheim Strategy Fund II, and Guggenheim Strategy Fund III (collectively, the “Cash Management Funds”), open-end management investment companies managed by GI. The Cash Management Funds, which launched on March 11, 2014, are offered as cash management options only to mutual funds, trusts, and other accounts managed by GI and/or its affiliates, and are not available to the public. The Cash Management Funds pay no investment management fees. The Cash Management Funds’ annual report on Form N-CSR dated September 30, 2014 is available publicly or upon request. This information is also available from the EDGAR database on the SEC’s website at http://www.sec.gov.
Transactions during the period ended March 31, 2015, in which the portfolio company is an “affiliated person” are as follows:
Affiliated issuers by Fund | Value 03/31/14 | Additions | Reductions | Value 03/31/15 | Shares 03/31/15 | Investment Income | Realized Loss | Capital Gain Distributions | ||||||||||||||||||||||||
Strengthening Dollar 2x Strategy Fund | ||||||||||||||||||||||||||||||||
Guggenheim Strategy Fund II | $ | — | $ | 60,191,649 | $ | (34,850,000 | ) | $ | 25,333,425 | 1,016,998 | $ | 191,684 | $ | (41,866 | ) | $ | — |
13. Reverse Share Split
Effective February 7, 2014, the Strengthening Dollar 2x Strategy Fund underwent a one-for-three reverse share split. The effect of this transaction was to divide the number of outstanding shares of the Fund by the split ratio, resulting in a corresponding increase in net asset value per share. The share transactions presented in the statement of changes in net assets and the per share data in the financial highlights for each of the periods presented prior to the effective date have been restated to reflect this reverse share split. There were no changes in net assets, results of operations or total return as a result of this transaction.
102 | THE RYDEX FUNDS ANNUAL REPORT |
NOTES TO FINANCIAL STATEMENTS (continued)
14. Legal Proceedings
Tribune Company
Rydex Series Funds has been named as a defendant and a putative member of the proposed defendant class of shareholders in the case entitled Kirschner v. FitzSimons, No. 12-2652 (S.D.N.Y.) (formerly Official Committee of Unsecured Creditors of Tribune Co. v. FitzSimons, Adv. Pro. No. 10-54010 (Bankr. D. Del.)) (the “FitzSimons action”), as a result of ownership by certain series of the Rydex Series Funds of shares in the Tribune Company (“Tribune”) in 2007, when Tribune effected a leveraged buyout transaction (“LBO”) by which Tribune converted to a privately-held company. In his complaint, the plaintiff has alleged that, in connection with the LBO, Tribune insiders and shareholders were overpaid for their Tribune stock using financing that the insiders knew would, and ultimately did, leave the Tribune Company insolvent. The plaintiff has asserted claims against certain insiders, major shareholders, professional advisers, and others involved in the LBO. The plaintiff is also attempting to obtain from former Tribune shareholders, including the Rydex Series Funds, the proceeds they received in connection with the LBO.
In June 2011, a group of Tribune creditors filed multiple actions against former Tribune shareholders involving state law constructive fraudulent conveyance claims arising out of the 2007 LBO (the “SLCFC actions”). Rydex Series Funds has been named as a defendant in one of the SLCFC actions: Deutsche Bank Trust Co. Americas v. McGurn, No. 11-1510 (S.D.N.Y.). In those actions, the creditors seek to recover from Tribune’s former shareholders the proceeds received in connection with the 2007 LBO.
The FitzSimons action and the SLCFC actions have been consolidated with the majority of the other Tribune LBO-related lawsuits in a multidistrict litigation proceeding captioned In re Tribune Company Fraudulent Conveyance Litig., No. 11-md-2696 (S.D.N.Y.) (the “MDL Proceeding”).
On September 23, 2013, the District Court granted the defendants’ omnibus motion to dismiss the SLCFC actions, on the basis that the creditors lacked standing. On September 30, 2013, the creditors filed a notice of appeal of the September 23 order. On October 28, 2013, the defendants filed a joint notice of cross-appeal of that same order.
The SLCFC appeals have been fully briefed, and oral argument in front of the U.S. Court of Appeals for the Second Circuit occurred on November 5, 2014. The Court has not yet issued a decision on the appeals.
On May 23, 2014, the defendants filed motions to dismiss the FitzSimons action, including a global motion to dismiss Count I, which is the claim brought against former Tribune shareholders for intentional fraudulent conveyance under U.S. federal law. The Court has not yet issued a decision on any of these motions.
None of these lawsuits alleges any wrongdoing on the part of Rydex Series Funds. The following series of Rydex Series Funds held shares of Tribune and tendered these shares as part of Tribune’s LBO: Nova Fund, S&P 500® Pure Value Fund, Multi-Cap Core Equity Fund, S&P 500® Fund, Multi-Hedge Strategies Fund and Hedged Equity Fund (the “Funds”). The value of the proceeds received by the foregoing Funds was $28,220, $109,242, $9,860, $3,400, $1,181,160, and $10,880, respectively. At this stage of the proceedings, Rydex Series Funds is not able to make a reliable predication as to the outcome of these lawsuits or the effect, if any, on a Fund’s net asset value.
Lyondell Chemical Company
In December 2011, Rydex Series Funds was named as a defendant in Weisfelner, as Trustee of the LB Creditor Trust, v. Fund 1 (In re Lyondell Chemical Co.), Adv. Pro. No. 10-4609 (Bankr. S.D.N.Y.) (the “Creditor Trust action”).
Similar to the claims made in the Tribune matter, the Weisfelner complaint seeks to have set aside and recovered as fraudulent transfers from former Lyondell Chemical Company (“Lyondell”) shareholders the consideration paid to them pursuant to the cash out merger of Lyondell shareholders in connection with the combination of Lyondell and Basell AF in 2007. Lyondell filed for bankruptcy in 2008.
On April 7, 2014, the plaintiff filed a Third Amended Complaint. In the related action entitled Weisfelner, as Trustee of the LB Litigation Trust v. A. Holmes & H. Holmes TTEE (In re Lyondell Co.), Adversary Proceeding No. 10-5525 (Bankr. S.D.N.Y.) (the “Litigation Trust action”), the plaintiff also filed a Second Amended Complaint that alleges a claim against the former
THE RYDEX FUNDS ANNUAL REPORT | 103 |
NOTES TO FINANCIAL STATEMENTS (concluded)
Lyondell shareholders under federal law for intentional fraudulent transfer. A third related action against the former Lyondell shareholders, Weisfelner, as Trustee of the LB Creditor Trust v. Reichman, Adversary Proceeding No. 12-1570 (Bankr. S.D.N.Y.) (the “Reichman action”), is pending as well.
On May 8, 2014, the plaintiff in the Litigation Trust action filed a motion to certify a defendant class generally comprised of all former Lyondell shareholders that received proceeds in exchange for their shares in the 2007 merger transaction.
On July 30, 2014, the defendants filed a motion to dismiss these lawsuits. The Court held oral argument on the motions to dismiss and on the motion for class certification on January 14 and January 15, 2015. The Court has not yet issued decisions on these motions. Discovery has commenced in these lawsuits.
These lawsuits do not allege any wrongdoing on the part of Rydex Series Funds. The following series of Rydex Series Funds received cash proceeds from the cash out merger in the following amounts: Basic Materials Fund - $1,725,168; Long Short Equity Fund f/k/a U.S. Long Short Momentum Fund - $2,193,600; Global 130/30 Strategy Fund - $37,920; Hedged Equity Fund - $1,440; and Multi-Hedge Strategies Fund - $1,116,480. At this stage of the proceedings, Rydex Series Funds is not able to make a reliable predication as to the outcome of these lawsuits or the effect, if any, on a Fund’s net asset value.
104 | THE RYDEX FUNDS ANNUAL REPORT |
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Board of Trustees and
Shareholders of Rydex Series Funds:
We have audited the accompanying statements of assets and liabilities, including the schedules of investments, of S&P 500® Pure Growth Fund, S&P 500® Pure Value Fund, S&P MidCap 400® Pure Growth Fund, S&P MidCap 400® Pure Value Fund, S&P SmallCap 600® Pure Growth Fund, S&P SmallCap 600® Pure Value Fund, Europe 1.25x Strategy Fund, Japan 2x Strategy Fund, Strengthening Dollar 2x Strategy Fund and Weakening Dollar 2x Strategy Fund (ten of the series constituting the Rydex Series Funds) (the “Funds”) as of March 31, 2015, and the related statements of operations for the year then ended, the statements of changes in 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. These financial statements and financial highlights are the responsibility of the Funds’ management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. We were not engaged to perform an audit of the Funds’ internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Funds’ internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements and financial highlights, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of March 31, 2015, by correspondence with the custodian, transfer agent, and brokers or by other appropriate auditing procedures where replies from brokers were not received. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of the above listed Funds (ten of the series constituting the Rydex Series Funds) at March 31, 2015, the results of their operations for the year then ended, the changes in their net assets for each of the two years in the period then ended, and their financial highlights for each of the five years in the period then ended, in conformity with U.S. generally accepted accounting principles.
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McLean, Virginia
May 21, 2015
THE RYDEX FUNDS ANNUAL REPORT | 105 |
OTHER INFORMATION (Unaudited)
Tax Information
This information is being provided as required by the Internal Revenue Code (IRC). Amounts shown may differ from those elsewhere in the report because of differences in tax and financial reporting practice.
Of the taxable ordinary income distributions paid during the fiscal year ending March 31, 2015, the following funds had the corresponding percentages qualify for the dividends received deduction for corporations:
Fund | % Qualifying |
S&P 500® Pure Growth Fund | 11.90% |
S&P 500® Pure Value Fund | 13.82% |
S&P MidCap 400® Pure Growth Fund | 16.98% |
S&P MidCap 400® Pure Value Fund | 100.00% |
The following amounts of taxable ordinary income dividends paid during the fiscal year qualified for the lower income tax rate available to individuals under the Jobs and Growth Tax Relief Reconciliation Act of 2003:
Fund | % Qualifying |
S&P 500® Pure Growth Fund | 10.56% |
S&P 500® Pure Value Fund | 12.86% |
S&P MidCap 400® Pure Growth Fund | 15.15% |
S&P MidCap 400® Pure Value Fund | 100.00% |
Europe 1.25x Strategy Fund | 100.00% |
Additionally, of the taxable ordinary income distributions paid during the fiscal year ending March 31, 2015, the following funds had the corresponding percentages qualify as interest related dividends and qualified short-term capital gains as permitted by IRC Section 871(k)(1) and IRC Section 871(k)(2), respectively:
Fund | % Qualifying | % STCG Qualifying |
S&P 500® Pure Growth Fund | 0.00% | 100.00% |
S&P 500® Pure Value Fund | 0.00% | 100.00% |
S&P MidCap 400® Pure Growth Fund | 0.00% | 100.00% |
With respect to the taxable year ended March 31, 2015, the Funds hereby designate as capital gain dividends the amounts listed below, or, if subsequently determined to be different, the net capital gain of such year:
Fund | From long-term capital gains, subject to the 15% rate gains category: | From long-term capital gains, using proceeds from shareholder redemptions: | ||||||
S&P 500® Pure Growth Fund | $ | — | $ | 3,286,956 | ||||
S&P 500® Pure Value Fund | 1,746,579 | 5,033,030 | ||||||
S&P MidCap 400® Pure Growth Fund | 17,684,250 | 19,638,792 | ||||||
Strengthening Dollar 2x Strategy Fund | — | 10,621,499 |
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 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 800.820.0888. This information is also available from the EDGAR database on the SEC’s website at http://www.sec.gov.
106 | THE RYDEX FUNDS ANNUAL REPORT |
OTHER INFORMATION (Unaudited)(concluded) |
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 are 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 800-SEC-0330. Copies of the portfolio holdings are also available to shareholders, without charge and upon request, by calling 800.820.0888.
THE RYDEX FUNDS ANNUAL REPORT | 107 |
INFORMATION ON BOARD OF TRUSTEES AND OFFICERS (Unaudited)
A Board of Trustees oversees the Trust, as well as other trusts of GI, 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 800.820.0888.
Name, Address* and Year of Birth of Trustee | Position(s) Held with the Trust, Term of Office and Length of Time Served | Principal Occupation(s) During Past 5 Years | Number of Portfolios in Fund Complex Overseen by Trustee*** | Other Directorships Held by Trustee |
INTERESTED TRUSTEE | ||||
Donald C. Cacciapaglia** (1951) | Trustee from 2012 to present. | Current: President and CEO, certain other funds in the Fund Complex (2012-present); Vice Chairman, Guggenheim Investments (2010-present). Former: Chairman and CEO, Channel Capital Group, Inc. (2002-2010). | 221 | Clear Spring Life Insurance Company (2015-present); Guggenheim Partners Japan, Ltd. (2014-present); Delaware Life (2013-present); Guggenheim Life and Annuity Company (2011-present); Paragon Life Insurance Company of Indiana (2011-present). |
INDEPENDENT TRUSTEES | ||||
Corey A. Colehour (1945) | Trustee and Member of the Audit, Governance, Nominating, and Investment and Performance Committees from 1998 to present. | Retired. | 133 | None. |
J. Kenneth Dalton (1941) | Trustee, Member and Chairman of the Audit Committee, and Member of the Governance and Nominating Committees from 1998 to present; and Member of the Risk Oversight Committee from 2010 to present. | Retired. | 133 | Epiphany Funds (4) (2009-present). |
John O. Demaret (1940) | Vice Chairman of the Board of Trustees from 2014 to present; Trustee from 1998 to present and Chairman of the Board from 2006 to 2014; Member and Chairman of the Audit Committee from 1998 to present; and Member of the Risk Oversight Committee from 2010 to present. | Retired. | 133 | None. |
108 | THE RYDEX FUNDS ANNUAL REPORT |
INFORMATION ON BOARD OF TRUSTEES AND OFFICERS (Unaudited)(continued)
Name, Address* and Year of Birth of Trustee | Position(s) Held with the Trust, Term of Office and Length of Time Served | Principal Occupation(s) During Past 5 Years | Number of Portfolios in Fund Complex Overseen by Trustee*** | Other Directorships Held by Trustee |
INDEPENDENT TRUSTEES - concluded | ||||
Werner E. Keller (1940) | Chairman of the Board from 2014 to present; Vice Chairman of the Board of Trustees from 2010 to 2014; Trustee and Member of the Audit, Governance, and Nominating Committees from 2005 to present; and Chairman and Member of the Risk Oversight Committee from 2010 to present. | Current: Founder and President, Keller Partners, LLC (investment research firm) (2005-present). | 133 | None. |
Thomas F. Lydon, Jr. (1960) | Trustee and Member of the Audit, Governance, and Nominating Committees from 2005 to present. | Current: President, Global Trends Investments (registered investment adviser) (1996-present). | 133 | US Global Investors (GROW) (1995-present). |
Patrick T. McCarville (1942) | Trustee, Member of the Audit Committee, and Chairman and Member of the Governance and Nominating Committees from 1998 to present. | Retired. Former: Chief Executive Officer, Par Industries, Inc., d/b/a Par Leasing (1977-2010). | 133 | None. |
Name, Address* and Year of Birth | Position(s) Held with the Trust, Term of Office and Length of Time Served | Principal Occupation(s) During Past 5 Years |
OFFICERS | ||
Donald C. Cacciapaglia (1951) | President (2012-present). | Current: President and CEO, certain other funds in the Fund Complex (2012-present); Vice Chairman, Guggenheim Investments (2010-present). Former: Chairman and CEO, Channel Capital Group Inc. (2002-2010). |
Michael P. Byrum (1970) | Vice President (1999-present). | Current: Senior Vice President, Security Investors, LLC (2010-present); President and Chief Investment Officer, Rydex Holdings, LLC (2008-present); Director and Chairman, Advisory Research Center, Inc. (2006-present); Manager, Guggenheim Specialized Products, LLC (2005-present). Former: Vice President, Guggenheim Distributors, LLC (2009); Director (2009-2010) and Secretary (2002-2010), Rydex Fund Services, LLC; Director (2008-2010), Chief Investment Officer (2006-2010), President (2004-2010) and Secretary (2002-2010), Rydex Advisors, LLC; Director (2008-2010), Chief Investment Officer (2006-2010), President (2004-2010) and Secretary (2002-2010), Rydex Advisors II, LLC. |
THE RYDEX FUNDS ANNUAL REPORT | 109 |
INFORMATION ON BOARD OF TRUSTEES AND OFFICERS (Unaudited)(concluded)
Name, Address* and Year of Birth | Position(s) Held with the Trust, Term of Office and Length of Time Served | Principal Occupation(s) During Past 5 Years |
OFFICERS - concluded | ||
Nikolaos Bonos (1963) | Vice President and Treasurer (2003-present). | Current: Senior Vice President, Security Investors, LLC (2010-present); Chief Executive Officer, Guggenheim Specialized Products, LLC (2009-present); Chief Executive Officer & President, Rydex Fund Services, LLC (2009-present); Vice President, Rydex Holdings, LLC (2008-present). Former: Senior Vice President, Security Global Investors, LLC (2010-2011); and Senior Vice President, Rydex Advisors, LLC and Rydex Advisors II, LLC (2006-2011). |
Elisabeth Miller (1968) | Chief Compliance Officer (2012-present). | Current: CCO, certain other funds in the Fund Complex (2012-present); CCO, Security Investors, LLC (2012-present); CCO, Guggenheim Funds Investment Advisors, LLC (2012-present); Managing Director, Guggenheim Investments (2012-present); Vice President, Guggenheim Funds Distributors, LLC (March 2014-present). Former: CCO, Guggenheim Distributors, LLC (2009-March 2014); Senior Manager, Security Investors, LLC (2004-2009); Senior Manager, Guggenheim Distributors, LLC (2004-2009). |
Joseph M. Arruda (1966) | Assistant Treasurer (2006-present). | Current: Assistant Treasurer, certain other funds in the Fund Complex (2006-present); Vice President, Security Investors, LLC (2010-present); CFO and Manager, Guggenheim Specialized Products, LLC (2009-present). Former: Vice President, Security Global Investors, LLC (2010-2011); Vice President, Rydex Advisors, LLC (2010); Vice President, Rydex Advisors II, LLC (2010). |
Paul J. Davio (1972) | Assistant Treasurer (2014-present). | Current: Assistant Treasurer, certain other funds in the Fund Complex (2014-present); Director, Guggenheim Investments (2006-present). Former: Manager, Mutual Fund Administration, Guggenheim Investments (2003-2006). |
Amy J. Lee (1961) | Vice President (2009-present) and Secretary (2012-present). | Current: Chief Legal Officer, certain other funds in the Fund Complex (2013-present); Senior Managing Director, Guggenheim Investments (2012-present). Former: Vice President, Associate General Counsel and Assistant Secretary, Security Benefit Life Insurance Company and Security Benefit Corporation (2004-2012). |
* | All Trustees and Officers may be reached c/o Guggenheim Investments, 805 King Farm Boulevard, Suite 600, Rockville, MD 20850. |
** | Mr. Cacciapaglia is an “interested” person of the Trust, as that term is defined in the 1940 Act by virtue of his affiliation with the Adviser’s parent company. |
*** | The “Fund Complex” includes all closed-end and open-end funds (including all of their portfolios) advised by the Adviser and any funds that have an investment adviser or servicing agent that is an affiliated person of the Adviser. Information provided is as of the date of this report. |
110 | THE RYDEX FUNDS ANNUAL REPORT |
GUGGENHEIM INVESTMENTS PRIVACY POLICIES (Unaudited)
Rydex Funds, Guggenheim Funds, Rydex Investments, Guggenheim Funds Distributors, LLC, Security Investors, LLC, Security Distributors, Inc., Guggenheim Partners Investment Managers, LLC, and Rydex Advisory Services (Collectively “Guggenheim Investments”).
Our Commitment to You
When you become a Guggenheim Investments investor, you entrust us with not only your hard-earned money but also with personal and financial information about you. We recognize that your relationship with us is based on trust and that you expect us to act responsibly and in your best interests. Because we have access to this private information about you, we hold ourselves to the highest standards in its safekeeping and use. This means, most importantly, that we do not sell client information to anyone—whether it is your personal information or if you are a current or former Guggenheim Investments client.
The Information We Collect About You
In the course of doing business with shareholders and investors, we collect nonpublic personal information about you. You typically provide personal information when you complete a Guggenheim Investments account application or when you request a transaction that involves Rydex and Guggenheim Investments funds or one of the Guggenheim Investments affiliated companies. “Nonpublic personal information” is personally identifiable private information about you. For example, it includes information regarding your name and address, Social Security or taxpayer identification number, assets, income, account balance, bank account information and investment activity (e.g., purchase and redemption history).
How We Handle Your Personal Information
As emphasized above, we do not sell information about current or former clients or their accounts to third parties. Nor do we share such information, except when necessary to complete transactions at your request or to make you aware of related investment products and services that we offer. Additional details about how we handle your personal information are provided below. To complete certain transactions or account changes that you direct, it may be necessary to provide identifying information to companies, individuals or groups that are not affiliated with Guggenheim Investments. For example, if you ask to transfer assets from another financial institution to Guggenheim Investments, we will need to provide certain information about you to that company to complete the transaction. To alert you to other Guggenheim Investments investment products and services, we may share your information within the Guggenheim Investments family of affiliated companies. This would include, for example, sharing your information within Guggenheim Investments so we can make you aware of new Rydex and Guggenheim Investments funds or the services offered through another Guggenheim Investments affiliated company. In certain instances, we may contract with nonaffiliated companies to perform services for us. Where necessary, we will disclose information we have about you to these third parties. In all such cases, we provide the third party with only the information necessary to carry out its assigned responsibilities and only for that purpose. And we require these third parties to treat your private information with the same high degree of confidentiality that we do. In certain instances, we may share information with other financial institutions regarding individuals and entities in response to the U.S.A. Patriot Act. Finally, we will release information about you if you direct us to do so, if we are compelled by law to do so or in other circumstances permitted by law.
Opt Out Provisions
We do not sell your personal information to anyone. The law allows you to “opt out” of only certain kinds of information sharing with third parties. The firm does not share personal information about you with any third parties that triggers this opt-out right. This means YOU ARE ALREADY OPTED OUT.
THE RYDEX FUNDS ANNUAL REPORT | 111 |
GUGGENHEIM INVESTMENTS PRIVACY POLICIES (Unaudited)(concluded)
How We Protect Privacy Online
Our concern for the privacy of our shareholders also extends to those who use our web site, guggenheiminvestments.com. Our web site uses some of the most secure forms of online communication available, including encryption technology, Secure Socket Layer (SSL) protocol, firewalls and user names and passwords. These technologies provide a high level of security and privacy when you access your account information or initiate online transactions. The Guggenheim Investments web site offers customized features that require our use of “http cookies”—tiny pieces of information that we ask your browser to store. However, we make very limited use of these cookies. We only use cookies for session management and security features on the Guggenheim Investments web site. We do not use them to pull data from your hard drive, to learn your email address, or to view data in cookies created by other web sites. We will not share the information in our cookies or give others access to it. See the legal information area on our web site for more details about web site security and privacy features.
How We Safeguard Your Personal Information
We restrict access to nonpublic personal information about shareholders to our employees and in some cases to third parties (for example, the service providers described above) as permitted by law. We maintain strict physical, electronic and procedural safeguards that comply with federal standards to guard your nonpublic personal information.
We’ll Keep You Informed
As required by federal law, we will notify shareholders of our privacy policy annually. We reserve the right to modify this policy at any time, but rest assured that if we do change it, we will tell you promptly. You will also be able to access our privacy policy from our web site at guggenheiminvestments.com. Should you have any questions regarding our privacy policy, contact us at 800.820.0888 or 301.296.5100.
112 | THE RYDEX FUNDS ANNUAL REPORT |
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3.31.2015
Rydex Funds Annual Report
Domestic Equity Fund | ||
NASDAQ-100® Fund |
ROTC-ANN-2-0315x0316 | guggenheiminvestments.com |
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TABLE OF CONTENTS |
DEAR SHAREHOLDER | 2 |
ECONOMIC AND MARKET OVERVIEW | 3 |
ABOUT SHAREHOLDERS’ FUND EXPENSES | 6 |
NASDAQ-100® FUND | 9 |
NOTES TO FINANCIAL STATEMENTS | 25 |
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM | 45 |
OTHER INFORMATION | 46 |
INFORMATION ON BOARD OF TRUSTEES AND OFFICERS | 48 |
GUGGENHEIM INVESTMENTS PRIVACY POLICIES | 53 |
THE RYDEX FUNDS ANNUAL REPORT | 1 |
March 31, 2015 |
Dear Shareholder:
Security Investors, LLC (the “Investment Adviser”) is pleased to present the annual shareholder report for one of our Rydex Funds (the “Fund”). This report covers performance for the one-year period ended March 31, 2015.
The Investment Adviser is part of Guggenheim Investments, which represents the investment management businesses of Guggenheim Partners, LLC, (“Guggenheim”) a global, diversified financial services firm.
Guggenheim Funds Distributors, LLC is the distributor of the Funds. Guggenheim Funds Distributors, LLC is affiliated with Guggenheim and the Investment Adviser.
We encourage you to read the Economic and Market Overview section of the report, which follows this letter, and then the Performance Report and Fund Profile for the Fund.
We are committed to providing innovative investment solutions and appreciate the trust you place in us.
Sincerely,
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Donald C. Cacciapaglia
President
April 30, 2015
Read a prospectus and summary prospectus (if available) carefully before investing. It contains the investment objectives, risks, charges, expenses, and other information, which should be considered carefully before investing. Obtain a prospectus and summary prospectus (if available) at guggenheiminvestments.com or call 800.820.0888.
There can be no assurance that any investment product will achieve its investment objective(s). There are risks associated with investing, including the entire loss of principal invested. Investing involves market risks. The investment return and principal value of any investment product will fluctuate with changes in market conditions. The Fund is subject to the risk that large-capitalization stocks may underperform other segments of the equity market or the equity markets as a whole.
2 | THE RYDEX FUNDS ANNUAL REPORT |
ECONOMIC AND MARKET OVERVIEW (Unaudited) | March 31, 2015 |
The U.S. continued to enjoy a self-sustaining economic expansion for the 12-month period ended March 31, 2015, although winter weather was likely to distort first-quarter economic data. In addition, U.S. companies scaled back hiring in the last month of the period, adding to evidence that the domestic economy has lost some momentum since the turn of the year. The March increase in payrolls was the smallest since December 2013 and broke a 12-month run of gains above 200,000.
Despite this short-term dislocation, the economy remains on track. Indeed, many other labor market indicators, such as initial jobless claims and the job openings rate, suggest that the U.S. labor market remains quite strong, supporting the conclusion that March’s payroll report was just a temporary blip, similar to the one witnessed last winter. As soon as temporary seasonal factors have dissipated, economic data is likely to bounce back. The labor market has improved over the past year, as subdued mortgage rates and tight housing inventory continue to point to fairly stable appreciation in the housing market, which is key to the ongoing recovery. Consumers are also being helped by lower fuel prices, which are acting as a tax cut for U.S. consumers, freeing up discretionary spending in other areas and acting as a support for consumption.
In Europe, economic data has been surprisingly good and should continue along that path on the back of the European Central Bank’s program of quantitative easing and depreciation of the euro. Japan’s economy remains weak and, without more structural reform, continued monetary accommodation could lead to stagflation. China’s policymakers appear likely to continue the supply of credit and do whatever else is necessary to maintain growth there at an acceptable pace for the near term.
Given weakness overseas and the effect of a stronger U.S. dollar on international earnings, some stocks could face a more challenging environment in the near term, but our research shows that equity markets tend to perform quite well in the periods leading up to a U.S. Federal Reserve (the “Fed”) rate increase. The yield on the 10-year Treasury note declined in January by more than 50 basis points before rebounding in February, echoing the pattern since 2009—Treasury yields decline and a sell-off ensues, driving rates higher. Then conditions stabilize, and rates test their previous lows. Liquidity from foreign central banks and comparatively attractive U.S. yields continue to push global investors to U.S. Treasuries, which should hold down U.S. interest rates in the near term.
Against this backdrop, the U.S. central bank feels pressure to raise its key rate above zero, but insists the decision will be data-dependent and not occur prematurely. With a secular inflation increase unlikely in the near term, slack in the economy, and disinflation being imported from abroad, the Fed may not hike rates until later in the year. The Fed for now appears to be focused on wage growth,
THE RYDEX FUNDS ANNUAL REPORT | 3 |
ECONOMIC AND MARKET OVERVIEW (Unaudited)(continued) | March 31, 2015 |
which is key for sustaining the expansion but also an indicator of inflationary pressure. The lack of sustained wage growth has been a topic that has confounded the Fed lately. Given the strengthening employment numbers and the apparent reduction in labor market slack, wages should start to increase more steadily across the board. This is one of the most important data points at the moment for the Fed.
The underlying U.S. economy remains strong and investors should avoid being panicked by seasonal setbacks. Indeed, considering the strength of the economy and the wave of liquidity emanating from various central banks around the world, the general investment environment should remain attractive.
For the 12 months ended March 31, 2015, the Standard & Poor’s 500® (“S&P 500”) Index* returned 12.73%. The Morgan Stanley Capital International (“MSCI”) Europe-Australasia-Far East (“EAFE”) Index* returned -0.92%. The return of the MSCI Emerging Markets Index* was 0.44%.
In the bond market, the Barclays U.S. Aggregate Bond Index* posted a 5.72% return for the period, while the Barclays U.S. Corporate High Yield Index* returned 2.00%. The return of the Bank of America Merrill Lynch 3-Month U.S. Treasury Bill Index* was 0.03% for the 12-month period.
The opinions and forecasts expressed may not actually come to pass. This information is subject to change at any time, based on market and other conditions, and should not be construed as a recommendation of any specific security or strategy.
*Index Definitions:
The following indices are referenced throughout this report. Indices are unmanaged and not available for direct investment. Index performance does not reflect transaction costs, fees, or expenses.
Barclays U.S. Aggregate Bond Index is a broad-based benchmark that measures the investment grade, U.S. dollar-denominated, fixed-rate taxable bond market, including U.S. Treasuries, government-related and corporate securities, MBS (agency fixed-rate and hybrid ARM pass-throughs), ABS, and CMBS.
Barclays U.S. Corporate High Yield Index measures the market of U.S. dollar-denominated, non-investment grade, fixed-rate, taxable corporate bonds. Securities are classified as high yield if the middle rating of Moody’s, Fitch, and S&P is Ba1/BB+/BB+ or below.
Bank of America (“BofA”) Merrill Lynch 3-Month U.S. Treasury Bill Index is an unmanaged market index of U.S. Treasury securities maturing in 90 days that assumes reinvestment of all income.
MSCI EAFE Index is a free float-adjusted market capitalization index that is designed to measure the equity market performance of developed markets, excluding the U.S. & Canada.
4 | THE RYDEX FUNDS ANNUAL REPORT |
ECONOMIC AND MARKET OVERVIEW (Unaudited)(concluded) | March 31, 2015 |
MSCI Emerging Markets Index is a free float-adjusted market capitalization weighted index that is designed to measure equity market performance in the global emerging markets.
NASDAQ-100® Index includes 100 of the largest domestic and international non-financial securities listed on The Nasdaq Stock Market based on market capitalization. The index reflects companies across major industry groups including computer hardware and software, telecommunications, retail/wholesale trade, and biotechnology. It does not contain securities of financial companies, including investment companies.
S&P 500® Index is a capitalization-weighted index of 500 stocks designed to measure the performance of the broad economy, representing all major industries and is considered a representation of the U.S. stock market.
THE RYDEX FUNDS ANNUAL REPORT | 5 |
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; 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 September 30, 2014 and ending March 31, 2015.
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.
6 | THE RYDEX FUNDS ANNUAL REPORT |
ABOUT SHAREHOLDERS’ FUND EXPENSES (Unaudited)(continued)
The calculations illustrated 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.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads) on purchase payments, and contingent deferred sales charges ("CDSC") on redemptions, if any. Therefore, the second table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
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 FUNDS ANNUAL REPORT | 7 |
ABOUT SHAREHOLDERS’ FUND EXPENSES (Unaudited)(concluded)
Expense Ratio1 | Fund Return | Beginning Account Value September 30, 2014 | Ending Account Value March 31, 2015 | Expenses Paid During Period2 | |
Table 1. Based on actual Fund return3 | |||||
NASDAQ-100® Fund | |||||
Investor Class | 1.24% | 7.01% | $1,000.00 | $1,070.10 | $6.40 |
Advisor Class | 1.74% | 6.78% | 1,000.00 | 1,067.80 | 8.97 |
A-Class | 1.48% | 6.89% | 1,000.00 | 1,068.90 | 7.63 |
C-Class | 2.23% | 6.48% | 1,000.00 | 1,064.80 | 11.48 |
H-Class | 1.47% | 6.76% | 1,000.00 | 1,067.60 | 7.58 |
Table 2. Based on hypothetical 5% return (before expenses) | |||||
NASDAQ-100® Fund | |||||
Investor Class | 1.24% | 5.00% | $1,000.00 | $1,018.75 | $6.24 |
Advisor Class | 1.74% | 5.00% | 1,000.00 | 1,016.26 | 8.75 |
A-Class | 1.48% | 5.00% | 1,000.00 | 1,017.55 | 7.44 |
C-Class | 2.23% | 5.00% | 1,000.00 | 1,013.81 | 11.20 |
H-Class | 1.47% | 5.00% | 1,000.00 | 1,017.60 | 7.39 |
1 | Annualized and excludes expenses of the underlying funds in which the Fund invests. |
2 | Expenses are equal to the Fund's annualized expense ratio, net of any applicable fee waivers, multiplied by the average account value over the period, multiplied by 182/365 (to reflect the one-half year period). |
3 | Actual cumulative return at net asset value for the period September 30, 2014 to March 31, 2015. |
8 | THE RYDEX FUNDS ANNUAL REPORT |
PERFORMANCE REPORT AND FUND PROFILE (Unaudited) | March 31, 2015 |
NASDAQ-100® FUND
OBJECTIVE: Seeks to provide investment results that correspond, before fees and expenses, to a benchmark for over-the-counter securities on a daily basis. The Fund’s current benchmark is the NASDAQ-100® Index (the “underlying index”).
For the one-year period ended March 31, 2015, NASDAQ-100® Fund maintained a daily correlation of over 99% to its benchmark of 100% of the daily price movement of the NASDAQ-100 Index. The NASDAQ-100® Fund Investor Class rose 20.53%, while the NASDAQ-100 Index returned 22.03% over the same period.
The Information Technology sector contributed most to performance of the underlying index, followed by the Health Care sector. Telecommunications Services was the only sector that detracted from performance. The Materials sector contributed least, followed by the Industrials sector.
Apple, Inc., Gilead Sciences, Inc., and Facebook, Inc. — Class A were the holdings contributing most to performance of the underlying index for the year. Wynn Resorts Ltd., Google, Inc. — Class C, and QUALCOMM, Inc. detracted most from performance of the underlying index for the year.
Derivatives in the Fund were used to help provide exposure to the composition of the benchmark in the highest efficient manner and not for hedging purposes. The results of derivatives used during the period were within our expectations and contributed to the Fund’s performance.
The Fund invests excess cash into the Guggenheim Strategy Funds, which, in turn, invest in a diversified portfolio of debt securities and financial instruments providing exposure to fixed-income markets. The investment objective of the Guggenheim Strategy Funds is to seek a high level of income consistent with the preservation of capital. For the one year period ended March 31, 2015, investment in the Guggenheim Strategy Funds benefited Fund performance relative to investing in other short-term investments such as overnight repurchase agreements.
Performance displayed represents past performance, which is no guarantee of future results.
THE RYDEX FUNDS ANNUAL REPORT | 9 |
PERFORMANCE REPORT AND FUND PROFILE (Unaudited)(continued) | March 31, 2015 |
Holdings Diversification (Market Exposure as % of Net Assets)
![](https://capedge.com/proxy/N-CSR/0001398344-15-003814/rotc_01.jpg)
“Holdings Diversification (Market Exposure as % of Net Assets)” excludes any temporary cash investments or investments in Guggenheim Strategy Funds Trust mutual funds. Investments in those Funds do not provide “market exposure” to meet the Fund’s investment objective, but will significantly increase the portfolio’s exposure to certain other asset categories (and their associated risks), which may cause the Fund to deviate from its principal investment strategy, including: (i) high yield, high risk debt securities rated below the top four long-term rating categories by a nationally recognized statistical rating organization (also known as “junk bonds”); (ii) securities issued by the U.S. government or its agencies and instrumentalities; (iii) CLOs and similar investments; and (iv) other short-term fixed income securities.
Inception Dates: | |
Investor Class | February 14, 1994 |
Advisor Class | September 22, 1998 |
A-Class | March 31, 2004 |
C-Class | March 26, 2001 |
H-Class | September 18, 2014 |
Ten Largest Holdings (% of Total Net Assets) | |
Guggenheim Strategy Fund I | 14.6% |
Apple, Inc. | 10.8% |
Microsoft Corp. | 5.0% |
Google, Inc. — Class C | 2.8% |
Facebook, Inc. — Class A | 2.7% |
Amazon.com, Inc. | 2.6% |
Google, Inc. — Class A | 2.4% |
Intel Corp. | 2.2% |
Gilead Sciences, Inc. | 2.2% |
Cisco Systems, Inc. | 2.1% |
Top Ten Total | 47.4% |
“Ten Largest Holdings” exclude any temporary cash or derivative investments. |
10 | THE RYDEX FUNDS ANNUAL REPORT |
PERFORMANCE REPORT AND FUND PROFILE (Unaudited)(continued) | March 31, 2015 |
Cumulative Fund Performance*
![](https://capedge.com/proxy/N-CSR/0001398344-15-003814/rotc_02.jpg)
![](https://capedge.com/proxy/N-CSR/0001398344-15-003814/rotc_03.jpg)
THE RYDEX FUNDS ANNUAL REPORT | 11 |
PERFORMANCE REPORT AND FUND PROFILE (Unaudited)(concluded) | March 31, 2015 |
Average Annual Returns*
Periods Ended March 31, 2015
1 Year | 5 Year | 10 Year | |
Investor Class Shares | 20.53% | 17.14% | 11.06% |
Advisor Class Shares | 19.94% | 16.51% | 10.50% |
A-Class Shares | 20.24% | 16.82% | 10.77% |
A-Class Shares with sales charge† | 14.54% | 15.69% | 10.23% |
C-Class Shares | 19.37% | 15.97% | 9.97% |
C-Class Shares with CDSC‡ | 18.37% | 15.97% | 9.97% |
NASDAQ-100 Index | 22.03% | 18.59% | 12.27% |
Since Inception (09/18/14) | |||
H-Class Shares | 5.40% | ||
NASDAQ-100 Index | 6.29% |
* | The performance data above represents past performance that is not predictive of future results. The investment return and principal value of an investment in the Fund will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Returns are historical and include changes in principal and reinvested dividends and capital gains and do not reflect the effect of taxes. The NASDAQ-100 Index is an unmanaged index and, unlike the Fund, has no management fees or operating expenses to reduce its reported return. The graphs are based on the Investor Class shares and A-Class shares only; performance for Advisor Class shares, C-Class shares and H-Class shares will vary due to differences in fee structures. |
† | Fund returns are calculated using the maximum sales charge of 4.75%. |
‡ | Fund returns include a CDSC of 1% if redeemed within 12 months of purchase. |
12 | THE RYDEX FUNDS ANNUAL REPORT |
SCHEDULE OF INVESTMENTS | March 31, 2015 |
NASDAQ-100® FUND |
Shares | Value | |||||||
COMMON STOCKS† - 74.2% | ||||||||
TECHNOLOGY - 28.7% | ||||||||
Apple, Inc. | 825,435 | $ | 102,708,876 | |||||
Microsoft Corp. | 1,162,431 | 47,258,632 | ||||||
Intel Corp. | 671,066 | 20,984,234 | ||||||
QUALCOMM, Inc. | 233,735 | 16,207,185 | ||||||
Texas Instruments, Inc. | 148,375 | 8,484,824 | ||||||
Cognizant Technology Solutions Corp. — Class A* | 86,380 | 5,389,248 | ||||||
Adobe Systems, Inc.* | 70,978 | 5,248,113 | ||||||
Avago Technologies Ltd. | 36,327 | 4,612,802 | ||||||
Micron Technology, Inc.* | 152,650 | 4,141,395 | ||||||
Applied Materials, Inc. | 174,100 | 3,927,696 | ||||||
Intuit, Inc. | 39,211 | 3,801,899 | ||||||
Cerner Corp.* | 48,544 | 3,556,333 | ||||||
Broadcom Corp. — Class A | 77,933 | 3,374,109 | ||||||
NXP Semiconductor N.V.* | 32,696 | 3,281,371 | ||||||
Western Digital Corp. | 32,736 | 2,979,304 | ||||||
Analog Devices, Inc. | 44,156 | 2,781,828 | ||||||
Fiserv, Inc.* | 33,821 | 2,685,388 | ||||||
Electronic Arts, Inc.* | 43,931 | 2,583,802 | ||||||
Paychex, Inc. | 51,456 | 2,552,989 | ||||||
Seagate Technology plc | 46,525 | 2,420,696 | ||||||
Activision Blizzard, Inc. | 102,435 | 2,327,835 | ||||||
Check Point Software Technologies Ltd.* | 26,043 | 2,134,745 | ||||||
CA, Inc. | 62,744 | 2,046,082 | ||||||
SanDisk Corp. | 30,183 | 1,920,242 | ||||||
Autodesk, Inc.* | 32,239 | 1,890,495 | ||||||
Altera Corp. | 42,635 | 1,829,468 | ||||||
Akamai Technologies, Inc.* | 25,221 | 1,791,826 | ||||||
NVIDIA Corp. | 77,016 | 1,611,560 | ||||||
Linear Technology Corp. | 33,893 | 1,586,192 | ||||||
Lam Research Corp. | 22,576 | 1,585,625 | ||||||
Xilinx, Inc. | 37,045 | 1,567,004 | ||||||
NetApp, Inc. | 44,176 | 1,566,481 | ||||||
Citrix Systems, Inc.* | 22,647 | 1,446,464 | ||||||
KLA-Tencor Corp. | 23,048 | 1,343,468 | ||||||
Total Technology | 273,628,211 | |||||||
COMMUNICATIONS - 23.5% | ||||||||
Google, Inc. — Class C* | 48,272 | 26,453,056 | ||||||
Facebook, Inc. — Class A* | 316,877 | 26,052,043 | ||||||
Amazon.com, Inc.* | 65,801 | 24,484,552 | ||||||
Google, Inc. — Class A* | 40,659 | 22,553,547 | ||||||
Cisco Systems, Inc. | 723,314 | 19,909,218 | ||||||
Comcast Corp. — Class A | 301,971 | 17,052,302 | ||||||
eBay, Inc.* | 171,459 | 9,889,755 | ||||||
Priceline Group, Inc.* | 7,360 | 8,568,144 | ||||||
Baidu, Inc. ADR* | 39,259 | 8,181,576 | ||||||
Twenty-First Century Fox, Inc. — Class A | 188,115 | 6,365,812 | ||||||
DIRECTV* | 71,246 | 6,063,035 | ||||||
Yahoo!, Inc.* | 132,644 | 5,894,036 | ||||||
Liberty Global plc* | 88,665 | 4,416,404 | ||||||
Twenty-First Century Fox, Inc. — Class B | 113,146 | 3,720,240 | ||||||
Netflix, Inc.* | 8,573 | 3,572,283 | ||||||
Viacom, Inc. — Class B | 50,324 | 3,437,129 | ||||||
Comcast Corp. — Class A | 56,746 | 3,181,464 | ||||||
Charter Communications, Inc. — Class A* | 15,870 | 3,064,656 | ||||||
Sirius XM Holdings, Inc.* | 790,859 | 3,021,081 | ||||||
Symantec Corp. | 96,690 | 2,259,162 | ||||||
DISH Network Corp. — Class A* | 31,654 | 2,217,679 | ||||||
Vodafone Group plc ADR | 61,083 | 1,996,192 | ||||||
Liberty Interactive Corp. — Class A* | 63,127 | 1,842,677 | ||||||
Liberty Global plc — Class A* | 35,608 | 1,832,744 | ||||||
TripAdvisor, Inc.* | 18,439 | 1,533,572 | ||||||
VimpelCom Ltd. ADR | 248,850 | 1,303,974 | ||||||
Liberty Media Corp. — Class C* | 32,348 | 1,235,694 | ||||||
Discovery Communications, Inc. — Class C* | 40,251 | 1,186,398 | ||||||
Liberty Ventures* | 19,063 | 800,837 | ||||||
Discovery Communications, Inc. — Class A* | 21,061 | 647,836 | ||||||
Liberty Media Corp. — Class A* | 14,809 | 570,887 | ||||||
Total Communications | 223,307,985 |
SEE NOTES TO FINANCIAL STATEMENTS. | THE RYDEX FUNDS ANNUAL REPORT | 13 |
SCHEDULE OF INVESTMENTS (continued) | March 31, 2015 |
NASDAQ-100® FUND |
Shares | Value | |||||||
CONSUMER, NON-CYCLICAL - 14.1% | ||||||||
Gilead Sciences, Inc.* | 211,042 | $ | 20,709,550 | |||||
Amgen, Inc. | 107,526 | 17,188,031 | ||||||
Biogen, Inc.* | 33,244 | 14,036,947 | ||||||
Celgene Corp.* | 113,439 | 13,077,248 | ||||||
Express Scripts Holding Co.* | 102,997 | 8,937,049 | ||||||
Mondelez International, Inc. — Class A | 233,724 | 8,435,098 | ||||||
Kraft Foods Group, Inc. | 83,317 | 7,258,160 | ||||||
Regeneron Pharmaceuticals, Inc.* | 14,260 | 6,438,105 | ||||||
Automatic Data Processing, Inc. | 67,326 | 5,765,798 | ||||||
Alexion Pharmaceuticals, Inc.* | 28,643 | 4,963,832 | ||||||
Vertex Pharmaceuticals, Inc.* | 34,303 | 4,046,725 | ||||||
Illumina, Inc.* | 20,376 | 3,782,601 | ||||||
Monster Beverage Corp.* | 23,764 | 3,288,819 | ||||||
Mylan N.V.* | 53,142 | 3,153,978 | ||||||
Whole Foods Market, Inc. | 51,119 | 2,662,278 | ||||||
Intuitive Surgical, Inc.* | 5,186 | 2,619,086 | ||||||
Keurig Green Mountain, Inc. | 22,909 | 2,559,623 | ||||||
Catamaran Corp.* | 29,401 | 1,750,536 | ||||||
Henry Schein, Inc.* | 11,875 | 1,657,988 | ||||||
Verisk Analytics, Inc. — Class A* | 22,404 | 1,599,646 | ||||||
Total Consumer, Non-cyclical | 133,931,098 | |||||||
CONSUMER, CYCLICAL - 6.9% | ||||||||
Walgreens Boots Alliance, Inc. | 154,443 | 13,078,233 | ||||||
Starbucks Corp. | 106,242 | 10,061,117 | ||||||
Costco Wholesale Corp. | 62,419 | 9,456,166 | ||||||
American Airlines Group, Inc. | 98,713 | 5,210,072 | ||||||
Tesla Motors, Inc.*,1 | 17,820 | 3,363,881 | ||||||
PACCAR, Inc. | 50,233 | 3,171,712 | ||||||
Marriott International, Inc. — Class A | 39,185 | 3,147,339 | ||||||
O’Reilly Automotive, Inc.* | 14,403 | 3,114,505 | ||||||
Ross Stores, Inc. | 29,541 | 3,112,440 | ||||||
Dollar Tree, Inc.* | 29,140 | 2,364,565 | ||||||
Bed Bath & Beyond, Inc.* | 26,300 | 2,019,183 | ||||||
Wynn Resorts Ltd. | 14,386 | 1,810,910 | ||||||
Fastenal Co. | 41,871 | 1,734,925 | ||||||
Tractor Supply Co. | 19,299 | 1,641,573 | ||||||
Staples, Inc. | 90,731 | 1,477,554 | ||||||
Mattel, Inc. | 47,929 | 1,095,178 | ||||||
Total Consumer, Cyclical | 65,859,353 | |||||||
INDUSTRIAL - 0.8% | ||||||||
SBA Communications Corp. — Class A* | 18,298 | 2,142,696 | ||||||
Stericycle, Inc.* | 12,034 | 1,689,935 | ||||||
CH Robinson Worldwide, Inc. | 20,753 | 1,519,534 | ||||||
Expeditors International of Washington, Inc. | 27,170 | 1,309,051 | ||||||
Garmin Ltd. | 27,179 | 1,291,546 | ||||||
Total Industrial | 7,952,762 | |||||||
BASIC MATERIALS - 0.2% | ||||||||
Sigma-Aldrich Corp. | 16,923 | 2,339,605 | ||||||
Total Common Stocks | ||||||||
(Cost $298,897,283) | 707,019,014 | |||||||
MUTUAL FUNDS† - 15.1% | ||||||||
Guggenheim Strategy Fund I2 | 5,591,468 | 139,227,564 | ||||||
Guggenheim Strategy Fund II3 | 160,062 | 3,987,152 | ||||||
Total Mutual Funds | ||||||||
(Cost $142,966,534) | 143,214,716 | |||||||
Face Amount | ||||||||
REPURCHASE AGREEMENTS††,4 - 10.4% | ||||||||
HSBC Group issued 03/31/15 at 0.03% due 04/01/15 | $ | 77,233,046 | 77,233,046 | |||||
RBC Capital Markets issued 03/31/15 at 0.05% due 04/01/15 | 11,802,849 | 11,802,849 |
14 | THE RYDEX FUNDS ANNUAL REPORT | SEE NOTES TO FINANCIAL STATEMENTS. |
SCHEDULE OF INVESTMENTS (concluded) | March 31, 2015 |
NASDAQ-100® FUND |
Face Amount | Value | |||||||
UMB Financial Corp. issued 03/31/15 at 0.03% due 04/01/15 | $ | 9,473,727 | $ | 9,473,727 | ||||
Total Repurchase Agreements | ||||||||
(Cost $98,509,622) | 98,509,622 | |||||||
SECURITIES LENDING COLLATERAL††,5 - 0.3% | ||||||||
Repurchase Agreements | ||||||||
HSBC Securities, Inc. issued 03/31/15 at 0.10% due 04/01/15 | 1,625,277 | 1,625,277 | ||||||
BNP Paribas Securities Corp. issued 03/31/15 at 0.10% due 04/01/15 | 559,095 | 559,095 | ||||||
Barclays Capital, Inc. issued 03/31/15 at 0.10% due 04/01/15 | 288,584 | 288,584 | ||||||
Total Securities Lending Collateral | ||||||||
(Cost $2,472,956) | 2,472,956 | |||||||
Total Investments - 100.0% | ||||||||
(Cost $542,846,395) | $ | 951,216,308 | ||||||
Other Assets & Liabilities, net - 0.0% | 196,765 | |||||||
Total Net Assets - 100.0% | $ | 951,413,073 | ||||||
Contracts | Unrealized Gain (Loss) | |||||||
EQUITY FUTURES CONTRACTS PURCHASED† | ||||||||
June 2015 NASDAQ-100 Index Mini Futures Contracts (Aggregate Value of Contracts $181,699,935) | 2,099 | $ | 1,035,096 | |||||
Units | ||||||||
OTC EQUITY INDEX SWAP AGREEMENTS†† | ||||||||
Goldman Sachs International April 2015 NASDAQ-100 Index Swap, Terminating 04/28/156 (Notional Value $25,655,951) | 5,920 | $ | 118,356 | |||||
Credit Suisse Capital, LLC April 2015 NASDAQ-100 Index Swap, Terminating 04/28/156 (Notional Value $4,196,576) | 968 | 19,347 | ||||||
Barclays Bank plc April 2015 NASDAQ-100 Index Swap, Terminating 04/30/156 (Notional Value $34,752,147) | 8,019 | (30,008 | ) | |||||
(Total Notional Value $64,604,674) | $ | 107,695 |
* | Non-income producing security. |
† | Value determined based on Level 1 inputs — See Note 4. |
†† | Value determined based on Level 2 inputs — See Note 4. |
1 | All or portion of this security is on loan at March 31, 2015 — See Note 6. |
2 | Affiliated issuer — See Note 12. |
3 | Investment in a product that is managed by and/or pays a management fee to a party related to the Adviser — See Note 12. |
4 | Repurchase Agreements — See Note 5. |
5 | Securities lending collateral — See Note 6. |
6 | Total Return based on NASDAQ-100 Index +/- financing at a variable rate. |
ADR — American Depositary Receipt | |
plc — Public Limited Company |
SEE NOTES TO FINANCIAL STATEMENTS. | THE RYDEX FUNDS ANNUAL REPORT | 15 |
STATEMENT OF ASSETS AND LIABILITIES |
NASDAQ-100® FUND |
March 31, 2015
Assets: | ||||
Investments in unaffiliated issuers, at value – including $2,435,133 of securities loaned (cost $302,875,249) | $ | 711,006,166 | ||
Investments in affiliated issuers, at value (cost $138,988,568) | 139,227,564 | |||
Repurchase agreements, at value (cost $100,982,578) | 100,982,578 | |||
Total investments (cost $542,846,395) | 951,216,308 | |||
Segregated cash with broker | 15,165,820 | |||
Unrealized appreciation on swap agreements | 137,703 | |||
Cash | 23,491 | |||
Receivables: | ||||
Fund shares sold | 7,739,578 | |||
Dividends | 585,271 | |||
Swap settlement | 143,040 | |||
Securities lending income | 627 | |||
Interest | 89 | |||
Total assets | 975,011,927 | |||
Liabilities: | ||||
Unrealized depreciation on swap agreements | 30,008 | |||
Payable for: | ||||
Securities purchased | 10,032,075 | |||
Fund shares redeemed | 7,794,993 | |||
Return of securities loaned | 2,509,100 | |||
Variation margin | 1,769,197 | |||
Management fees | 599,002 | |||
Transfer agent and administrative fees | 199,667 | |||
Distribution and service fees | 74,035 | |||
Portfolio accounting fees | 51,700 | |||
Miscellaneous | 539,077 | |||
Total liabilities | 23,598,854 | |||
Commitments and contingent liabilities (Note 13) | — | |||
Net assets | $ | 951,413,073 | ||
Net assets consist of: | ||||
Paid in capital | $ | 542,505,104 | ||
Accumulated net investment income | — | |||
Accumulated net realized loss on investments | (604,735 | ) | ||
Net unrealized appreciation on investments | 409,512,704 | |||
Net assets | $ | 951,413,073 | ||
Investor Class: | ||||
Net assets | $ | 769,256,933 | ||
Capital shares outstanding | 30,308,944 | |||
Net asset value per share | $ | 25.38 | ||
Advisor Class: | ||||
Net assets | $ | 67,002,133 | ||
Capital shares outstanding | 2,905,465 | |||
Net asset value per share | $ | 23.06 | ||
A-Class: | ||||
Net assets | $ | 70,820,622 | ||
Capital shares outstanding | 2,978,334 | |||
Net asset value per share | $ | 23.78 | ||
Maximum offering price per share (Net asset value divided by 95.25%) | $ | 24.97 | ||
C-Class: | ||||
Net assets | $ | 32,324,422 | ||
Capital shares outstanding | 1,496,403 | |||
Net asset value per share | $ | 21.60 | ||
H-Class: | ||||
Net assets | $ | 12,008,963 | ||
Capital shares outstanding | 505,455 | |||
Net asset value per share | $ | 23.76 |
16 | THE RYDEX FUNDS ANNUAL REPORT | SEE NOTES TO FINANCIAL STATEMENTS. |
STATEMENT OF OPERATIONS |
NASDAQ-100® FUND |
Year Ended March 31, 2015
Investment Income: | ||||
Dividends from securities of unaffiliated issuers (net of foreign withholding tax of $9,352) | $ | 8,895,722 | ||
Dividends from securities of affiliated issuers | 1,821,180 | |||
Income from securities lending, net | 10,952 | |||
Interest | 10,766 | |||
Total investment income | 10,738,620 | |||
Expenses: | ||||
Management fees | 6,621,043 | |||
Transfer agent and administrative fees | 2,207,014 | |||
Distribution and service fees: | ||||
Advisor Class | 455,838 | |||
A-Class | 101,398 | |||
C-Class | 236,879 | |||
H-Class** | 69,811 | |||
Portfolio accounting fees | 601,265 | |||
Custodian fees | 102,854 | |||
Trustees’ fees* | 56,966 | |||
Line of credit fees | 4,333 | |||
Miscellaneous | 1,475,616 | |||
Total expenses | 11,933,017 | |||
Net investment loss | (1,194,397 | ) | ||
Net Realized and Unrealized Gain (Loss): | ||||
Net realized gain (loss) on: | ||||
Investments in unaffiliated issuers | $ | 68,298,965 | ||
Investments in affiliated issuers | (732,612 | ) | ||
Swap agreements | 35,794,059 | |||
Futures contracts | 2,316,996 | |||
Net realized gain | 105,677,408 | |||
Net change in unrealized appreciation (depreciation) on: | ||||
Investments in unaffiliated issuers | 62,274,002 | |||
Investments in affiliated issuers | 238,996 | |||
Swap agreements | 40,731 | |||
Futures contracts | 1,086,931 | |||
Net change in unrealized appreciation (depreciation) | 63,640,660 | |||
Net realized and unrealized gain | 169,318,068 | |||
Net increase in net assets resulting from operations | $ | 168,123,671 |
* | Relates to Trustees not deemed "interested persons" within the meaning of Section 2(a)(19) of the 1940 Act. |
** | Since commencement of operations: September 18, 2014. |
SEE NOTES TO FINANCIAL STATEMENTS. | THE RYDEX FUNDS ANNUAL REPORT | 17 |
STATEMENTS OF CHANGES IN NET ASSETS | |
NASDAQ-100® FUND |
Year Ended March 31, 2015 | Year Ended March 31, 2014 | |||||||
Increase (Decrease) in Net Assets from Operations: | ||||||||
Net investment income (loss) | $ | (1,194,397 | ) | $ | 358,208 | |||
Net realized gain on investments | 105,677,408 | 94,903,636 | ||||||
Net change in unrealized appreciation (depreciation) on investments | 63,640,660 | 67,794,671 | ||||||
Net increase in net assets resulting from operations | 168,123,671 | 163,056,515 | ||||||
Distributions to shareholders from: | ||||||||
Net realized gains | ||||||||
Investor Class | (11,799,003 | ) | (52,374,827 | ) | ||||
Advisor Class | (844,563 | ) | (3,185,736 | ) | ||||
A-Class | (713,323 | ) | (2,215,102 | ) | ||||
C-Class | (455,105 | ) | (1,712,829 | ) | ||||
H-Class* | (13,134 | ) | — | |||||
Total distributions to shareholders | (13,825,128 | ) | (59,488,494 | ) | ||||
Capital share transactions: | ||||||||
Proceeds from sale of shares | ||||||||
Investor Class | 1,029,136,798 | 797,805,960 | ||||||
Advisor Class | 977,291,285 | 747,398,780 | ||||||
A-Class | 126,142,545 | 65,905,567 | ||||||
C-Class | 31,988,339 | 26,628,147 | ||||||
H-Class* | 1,146,379,957 | — | ||||||
Distributions reinvested | ||||||||
Investor Class | 10,894,558 | 46,546,535 | ||||||
Advisor Class | 841,695 | 3,164,981 | ||||||
A-Class | 687,698 | 2,113,562 | ||||||
C-Class | 439,832 | 1,686,286 | ||||||
H-Class* | 13,134 | — | ||||||
Cost of shares redeemed | ||||||||
Investor Class | (1,013,748,379 | ) | (743,050,821 | ) | ||||
Advisor Class | (984,316,693 | ) | (761,022,258 | ) | ||||
A-Class | (83,648,854 | ) | (71,718,486 | ) | ||||
C-Class | (22,518,343 | ) | (23,621,291 | ) | ||||
H-Class* | (1,132,744,353 | ) | — | |||||
Net increase from capital share transactions | 86,839,219 | 91,836,962 | ||||||
Net increase in net assets | 241,137,762 | 195,404,983 | ||||||
Net assets: | ||||||||
Beginning of year | 710,275,311 | 514,870,328 | ||||||
End of year | $ | 951,413,073 | $ | 710,275,311 | ||||
Accumulated net investment income at end of year | $ | — | $ | — |
18 | THE RYDEX FUNDS ANNUAL REPORT | SEE NOTES TO FINANCIAL STATEMENTS. |
STATEMENTS OF CHANGES IN NET ASSETS (concluded) | |
NASDAQ-100® FUND |
Year Ended March 31, 2015 | Year Ended March 31, 2014 | |||||||
Capital share activity: | ||||||||
Shares sold | ||||||||
Investor Class | 43,087,905 | 38,652,000 | ||||||
Advisor Class | 47,220,519 | 40,432,732 | ||||||
A-Class | 5,505,586 | 3,476,725 | ||||||
C-Class | 1,558,513 | 1,472,390 | ||||||
H-Class* | 49,097,507 | — | ||||||
Shares issued from reinvestment of distributions | ||||||||
Investor Class | 438,589 | 2,248,625 | ||||||
Advisor Class | 37,226 | 166,841 | ||||||
A-Class | 29,528 | 108,499 | ||||||
C-Class | 20,727 | 94,206 | ||||||
H-Class* | 563 | — | ||||||
Shares redeemed | ||||||||
Investor Class | (42,808,208 | ) | (36,409,149 | ) | ||||
Advisor Class | (46,232,015 | ) | (39,713,114 | ) | ||||
A-Class | (3,638,949 | ) | (3,861,027 | ) | ||||
C-Class | (1,123,559 | ) | (1,328,165 | ) | ||||
H-Class* | (48,592,615 | ) | — | |||||
Net increase in shares | 4,601,317 | 5,340,563 |
* | Since commencement of operations: September 18, 2014. |
SEE NOTES TO FINANCIAL STATEMENTS. | THE RYDEX FUNDS ANNUAL REPORT | 19 |
FINANCIAL HIGHLIGHTS | |
NASDAQ-100® FUND |
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.
Investor Class | Year Ended March 31, 2015 | Year Ended March 31, 2014 | Year Ended March 28, 2013 | Year Ended March 31, 2012 | Year Ended March 31, 2011 | |||||||||||||||
Per Share Data | ||||||||||||||||||||
Net asset value, beginning of period | $ | 21.38 | $ | 18.38 | $ | 17.92 | $ | 15.23 | $ | 12.83 | ||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||
Net investment income (loss)a | (.01 | ) | .02 | .02 | (.05 | ) | (.07 | ) | ||||||||||||
Net gain (loss) on investments (realized and unrealized) | 4.39 | 5.01 | .44 | 2.74 | 2.47 | |||||||||||||||
Total from investment operations | 4.38 | 5.03 | .46 | 2.69 | 2.40 | |||||||||||||||
Less distributions from: | ||||||||||||||||||||
Net realized gains | (.38 | ) | (2.03 | ) | — | — | — | |||||||||||||
Total distributions | (.38 | ) | (2.03 | ) | — | — | — | |||||||||||||
Net asset value, end of period | $ | 25.38 | $ | 21.38 | $ | 18.38 | $ | 17.92 | $ | 15.23 | ||||||||||
Total Returnb | 20.53 | % | 27.74 | % | 2.57 | % | 17.66 | % | 18.71 | % | ||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||
Net assets, end of period (in thousands) | $ | 769,257 | $ | 632,598 | $ | 461,269 | $ | 770,626 | $ | 579,925 | ||||||||||
Ratios to average net assets: | ||||||||||||||||||||
Net investment income (loss) | (0.05 | %) | 0.10 | % | 0.13 | % | (0.34 | %) | (0.50 | %) | ||||||||||
Total expensesc | 1.26 | % | 1.29 | % | 1.26 | % | 1.27 | % | 1.31 | % | ||||||||||
Portfolio turnover rate | 267 | % | 141 | % | 94 | % | 94 | % | 39 | % |
20 | THE RYDEX FUNDS ANNUAL REPORT | SEE NOTES TO FINANCIAL STATEMENTS. |
FINANCIAL HIGHLIGHTS (continued) |
NASDAQ-100® FUND |
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.
Advisor Class | Year Ended March 31, 2015 | Year Ended March 31, 2014 | Year Ended March 28, 2013 | Year Ended March 31, 2012 | Year Ended March 31, 2011 | |||||||||||||||
Per Share Data | ||||||||||||||||||||
Net asset value, beginning of period | $ | 19.55 | $ | 17.04 | $ | 16.70 | $ | 14.27 | $ | 12.09 | ||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||
Net investment income (loss)a | (.11 | ) | (.01 | ) | (.08 | ) | (.13 | ) | (.12 | ) | ||||||||||
Net gain (loss) on investments (realized and unrealized) | 4.00 | 4.55 | .42 | 2.56 | 2.30 | |||||||||||||||
Total from investment operations | 3.89 | 4.54 | .34 | 2.43 | 2.18 | |||||||||||||||
Less distributions from: | ||||||||||||||||||||
Net realized gains | (.38 | ) | (2.03 | ) | — | — | — | |||||||||||||
Total distributions | (.38 | ) | (2.03 | ) | — | — | — | |||||||||||||
Net asset value, end of period | $ | 23.06 | $ | 19.55 | $ | 17.04 | $ | 16.70 | $ | 14.27 | ||||||||||
Total Returnb | 19.94 | % | 27.02 | % | 2.04 | % | 17.03 | % | 18.03 | % | ||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||
Net assets, end of period (in thousands) | $ | 67,002 | $ | 36,751 | $ | 16,930 | $ | 65,970 | $ | 120,277 | ||||||||||
Ratios to average net assets: | ||||||||||||||||||||
Net investment income (loss) | (0.53 | %) | (0.05 | %) | (0.51 | %) | (0.87 | %) | (1.00 | %) | ||||||||||
Total expensesc | 1.75 | % | 1.79 | % | 1.75 | % | 1.76 | % | 1.80 | % | ||||||||||
Portfolio turnover rate | 267 | % | 141 | % | 94 | % | 94 | % | 39 | % |
SEE NOTES TO FINANCIAL STATEMENTS. | THE RYDEX FUNDS ANNUAL REPORT | 21 |
FINANCIAL HIGHLIGHTS (continued) |
NASDAQ-100® FUND |
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.
A-Class | Year Ended March 31, 2015 | Year Ended March 31, 2014 | Year Ended March 28, 2013 | Year Ended March 31, 2012 | Year Ended March 31, 2011 | |||||||||||||||
Per Share Data | ||||||||||||||||||||
Net asset value, beginning of period | $ | 20.10 | $ | 17.42 | $ | 17.03 | $ | 14.52 | $ | 12.27 | ||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||
Net investment income (loss)a | (.06 | ) | (.03 | ) | (.02 | ) | (.09 | ) | (.11 | ) | ||||||||||
Net gain (loss) on investments (realized and unrealized) | 4.12 | 4.74 | .41 | 2.60 | 2.36 | |||||||||||||||
Total from investment operations | 4.06 | 4.71 | .39 | 2.51 | 2.25 | |||||||||||||||
Less distributions from: | ||||||||||||||||||||
Net realized gains | (.38 | ) | (2.03 | ) | — | — | — | |||||||||||||
Total distributions | (.38 | ) | (2.03 | ) | — | — | — | |||||||||||||
Net asset value, end of period | $ | 23.78 | $ | 20.10 | $ | 17.42 | $ | 17.03 | $ | 14.52 | ||||||||||
Total Returnb | 20.24 | % | 27.42 | % | 2.29 | % | 17.29 | % | 18.34 | % | ||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||
Net assets, end of period (in thousands) | $ | 70,821 | $ | 21,751 | $ | 23,656 | $ | 14,553 | $ | 19,806 | ||||||||||
Ratios to average net assets: | ||||||||||||||||||||
Net investment income (loss) | (0.29 | %) | (0.14 | %) | (0.09 | %) | (0.61 | %) | (0.81 | %) | ||||||||||
Total expensesc | 1.50 | % | 1.54 | % | 1.52 | % | 1.53 | % | 1.56 | % | ||||||||||
Portfolio turnover rate | 267 | % | 141 | % | 94 | % | 94 | % | 39 | % |
22 | THE RYDEX FUNDS ANNUAL REPORT | SEE NOTES TO FINANCIAL STATEMENTS. |
FINANCIAL HIGHLIGHTS (continued) |
NASDAQ-100® FUND |
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.
C-Class | Year Ended March 31, 2015 | Year Ended March 31, 2014 | Year Ended March 28, 2013 | Year Ended March 31, 2012 | Year Ended March 31, 2011 | |||||||||||||||
Per Share Data | ||||||||||||||||||||
Net asset value, beginning of period | $ | 18.42 | $ | 16.22 | $ | 15.97 | $ | 13.72 | $ | 11.67 | ||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||
Net investment income (loss)a | (.21 | ) | (.16 | ) | (.13 | ) | (.19 | ) | (.19 | ) | ||||||||||
Net gain (loss) on investments (realized and unrealized) | 3.77 | 4.39 | .38 | 2.44 | 2.24 | |||||||||||||||
Total from investment operations | 3.56 | 4.23 | .25 | 2.25 | 2.05 | |||||||||||||||
Less distributions from: | ||||||||||||||||||||
Net realized gains | (.38 | ) | (2.03 | ) | — | — | — | |||||||||||||
Total distributions | (.38 | ) | (2.03 | ) | — | — | — | |||||||||||||
Net asset value, end of period | $ | 21.60 | $ | 18.42 | $ | 16.22 | $ | 15.97 | $ | 13.72 | ||||||||||
Total Returnb | 19.37 | % | 26.46 | % | 1.57 | % | 16.40 | % | 17.57 | % | ||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||
Net assets, end of period (in thousands) | $ | 32,324 | $ | 19,175 | $ | 13,015 | $ | 15,177 | $ | 11,864 | ||||||||||
Ratios to average net assets: | ||||||||||||||||||||
Net investment income (loss) | (1.05 | %) | (0.89 | %) | (0.84 | %) | (1.35 | %) | (1.52 | %) | ||||||||||
Total expensesc | 2.25 | % | 2.29 | % | 2.26 | % | 2.27 | % | 2.31 | % | ||||||||||
Portfolio turnover rate | 267 | % | 141 | % | 94 | % | 94 | % | 39 | % |
SEE NOTES TO FINANCIAL STATEMENTS. | THE RYDEX FUNDS ANNUAL REPORT | 23 |
FINANCIAL HIGHLIGHTS (concluded) |
NASDAQ-100® FUND |
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.
H-Class | Period Ended March 31, 2015d | |||
Per Share Data | ||||
Net asset value, beginning of period | $ | 22.91 | ||
Income (loss) from investment operations: | ||||
Net investment income (loss)a | .01 | |||
Net gain (loss) on investments (realized and unrealized) | 1.22 | |||
Total from investment operations | 1.23 | |||
Less distributions from: | ||||
Net realized gains | (.38 | ) | ||
Total distributions | (.38 | ) | ||
Net asset value, end of period | $ | 23.76 | ||
Total Returnb | 5.40 | % | ||
Ratios/Supplemental Data | ||||
Net assets, end of period (in thousands) | $ | 12,009 | ||
Ratios to average net assets: | ||||
Net investment income (loss) | 0.07 | % | ||
Total expensesc | 1.47 | % | ||
Portfolio turnover rate | 267 | % |
a | Net investment income (loss) per share was computed using average shares outstanding throughout the period. |
b | Total return does not reflect the impact of any applicable sales charges. |
c | Does not include expenses of the underlying funds in which the Fund invests. |
d | Since commencement of operations: September 18, 2014. Percentage amounts for the period, except total return and portfolio turnover rate, have been annualized. The portfolio turnover rate stated is for the entire period of the Fund, not since commencement of operations of the class. |
24 | THE RYDEX FUNDS ANNUAL REPORT | SEE NOTES TO FINANCIAL STATEMENTS. |
NOTES TO FINANCIAL STATEMENTS |
1. Organization and Significant Accounting Policies
Organization
The Rydex Series Funds (the “Trust”), a Delaware business trust, is registered with the SEC under the Investment Company Act of 1940 (”1940 Act”), as a non-diversified, open-ended investment company of the series type. Each series, in effect, is representing a separate Fund. The Trust is authorized to issue an unlimited number of no par value shares. The Trust accounts for the assets of each fund separately.
The Trust offers a combination of eight separate classes of shares: Investor Class shares, Advisor Class shares, A-Class shares, C-Class shares, H-Class shares, Y-Class shares, Institutional Class shares and Money Market Class shares. Sales of shares of each Class are made without a front-end sales charge at the net asset value per share (“NAV”), with the exception of A-Class shares. A-Class shares are sold at the NAV, plus the applicable front-end sales charge. The sales charge varies depending on the amount purchased, but will not exceed 4.75%. A-Class share purchases of $1 million or more are exempt from the front-end sales charge but have a 1% contingent deferred sales charge (“CDSC”) if shares are redeemed within 12 months of purchase. C-Class shares have a 1% CDSC if shares are redeemed within 12 months of purchase. Institutional Class shares are offered primarily for direct investment by institutions such as pension and profit sharing plans, endowments, foundations and corporations. Institutional Class shares have a minimum initial investment of $2 million and a minimum account balance of $1 million. Institutional Class shares are offered without a front-end sales charge or CDSC. At March 31, 2015, the Trust consisted of fifty-two funds (the "Funds").
This report covers the NASDAQ-100® Fund (the “Fund”). Only Investor Class, Advisor Class, A-Class, C-Class, and H-Class shares had been issued by the Fund.
The Fund is designed and operated to accommodate frequent trading by shareholders and, unlike most mutual funds, offers unlimited exchange privileges with no minimum holding periods or transactions fees, which may cause the Fund to experience high portfolio turnover.
Guggenheim Investments (“GI”) provides advisory services, and Rydex Fund Services, LLC (“RFS”) provides transfer agent, administrative and accounting services to the Trust. Guggenheim Funds Distributors, LLC (“GFD”) acts as principal underwriter for the Trust. GI, RFS and GFD are affiliated entities.
THE RYDEX FUNDS ANNUAL REPORT | 25 |
NOTES TO FINANCIAL STATEMENTS (continued)
Significant Accounting Policies
The Fund operates as an investment company and accordingly follows the investment company accounting and reporting guidance of the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification Topic 946 Financial Services – Investment Companies.
The following significant accounting policies are in conformity with U.S. generally accepted accounting principles ("U.S. GAAP") and are consistently followed by the Trust. This requires management to make estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates. All time references are based on Eastern Time.
The NAV of each Class of the Fund is calculated by dividing the market value of the Fund’s securities and other assets, less all liabilities, attributable to the Class by the number of outstanding shares of the Class.
A. The Board of Trustees of the Fund (the “Board”) has adopted policies and procedures for the valuation of the Fund's investments (the “Valuation Procedures”). Pursuant to the Valuation Procedures, the Board has delegated to a valuation committee, consisting of representatives from Guggenheim’s investment management, fund administration, legal and compliance departments (the “Valuation Committee”), the day-to-day responsibility for implementing the Valuation Procedures, including, under most circumstances, the responsibility for determining the fair value of the Fund’s securities or other assets.
Valuations of the Fund's securities are supplied primarily by pricing services appointed pursuant to the processes set forth in the Valuation Procedures. The Valuation Committee convenes monthly, or more frequently as needed and will review the valuation of all assets which have been fair valued for reasonableness. The Fund's officers, through the Valuation Committee and consistent with the monitoring and review responsibilities set forth in the Valuation Procedures, regularly review procedures used by, and valuations provided by, the pricing services.
If the pricing service cannot or does not provide a valuation for a particular investment or such valuation is deemed unreliable, such investment is fair valued by the Valuation Committee.
Equity securities listed on an exchange (New York Stock Exchange (“NYSE”) or American Stock Exchange) are valued at the last quoted sales price as of the close of business on the NYSE, usually 4:00 p.m. on the valuation date. Equity securities listed on the NASDAQ market system are valued at the NASDAQ Official Closing
26 | THE RYDEX FUNDS ANNUAL REPORT |
NOTES TO FINANCIAL STATEMENTS (continued)
Price on the valuation date, which may not necessarily represent the last sale price. If there has been no sale on such exchange or NASDAQ on a given day, the security is valued at the closing bid price on that day.
Open-end investment companies ("Mutual Funds") are valued at their NAV as of the close of business, on the valuation date. Exchange-traded funds ("ETFs") and closed-end investment companies ("CEFs") are valued at the last quoted sales price.
Repurchase agreements are valued at amortized cost, which approximates market value.
The value of futures contracts is accounted for using the unrealized gain or loss on the contracts that is determined by marking the contracts to their current realized settlement prices. Financial futures contracts are valued at the 4:00 p.m. price on the valuation date. In the event that the exchange for a specific futures contract closes earlier than 4:00 p.m., the futures contract is valued at the Official Settlement Price of the exchange. However, the underlying securities from which the futures contract value is derived are monitored until 4:00 p.m. to determine if fair valuation would provide a more accurate valuation.
The value of OTC swap agreements entered into by a Fund is accounted for using the unrealized gain or loss on the agreements that is determined by marking the agreements to the last quoted value of the index that the swap pertains to at the close of the NYSE. The swap's value is then adjusted to include dividends accrued, and financing charges and/or interest associated with the swap agreements.
Investments for which market quotations are not readily available are fair valued as determined in good faith by GI under the direction of the Board of Trustees using methods established or ratified by the Board of Trustees.
Valuations in accordance with these methods are intended to reflect each security’s (or asset’s) “fair value.” Each such determination is based on a consideration of all relevant factors, which are likely to vary from one pricing context to another. Examples of such factors may include, but are not limited to: (i) the type of security, (ii) the initial cost of the security, (iii) the existence of any contractual restrictions on the security’s disposition, (iv) the price and extent of public trading in similar securities of the issuer or of comparable companies, (v) quotations or evaluated prices from broker-dealers and/or pricing services, (vi) information obtained from the issuer, analysts, and/or the appropriate stock exchange (for exchange-traded securities), (vii) an analysis of the company’s financial statements, and (viii) an evaluation of the forces that influence the issuer
THE RYDEX FUNDS ANNUAL REPORT | 27 |
NOTES TO FINANCIAL STATEMENTS (continued)
and the market(s) in which the security is purchased and sold (e.g. the existence of pending merger activity, public offerings or tender offers that might affect the value of the security).
In connection with futures contracts and other derivative investments, such factors may include obtaining information as to how (a) these contracts and other derivative investments trade in the futures or other derivative markets, respectively, and (b) the securities underlying these contracts and other derivative investments trade in the cash market.
B. Upon entering into a futures contract, the Fund deposits and maintains as collateral such initial margin as required by the exchange on which the transaction is affected. Pursuant to the contract, the Fund agrees to receive from or pay to the broker an amount of cash equal to the daily fluctuation in value of the contract. Such receipts or payments are known as variation margin and are recorded by the Fund as unrealized gains or losses. When the contract is closed, the Fund records a realized gain or loss equal to the difference between the value of the contract at the time it was opened and the value at the time it was closed.
C. Swap agreements are marked-to-market daily and the change, if any, is recorded as unrealized gain or loss. Payments received or made as a result of an agreement or termination of the agreement are recognized as realized gains or losses.
D. Security transactions are recorded on the trade date for financial reporting purposes. Realized gains and losses from securities transactions are recorded using the identified cost basis. Proceeds from lawsuits related to investment holdings are recorded as realized gains in the Fund. Dividend income is recorded on the ex-dividend date, net of applicable taxes withheld by foreign countries. Taxable non-cash dividends are recorded as dividend income. Interest income, including amortization of premiums and accretion of discounts, is accrued on a daily basis. Dividend income from REITs is recorded based on the income included in the distributions received from the REIT investments using published REIT classifications, including some management estimates when actual amounts are not available. Distributions received in excess of this estimated amount are recorded as a reduction of the cost of investments or reclassified to capital gains. The actual amounts of income, return of capital, and capital gains are only determined by each REIT after its fiscal year-end, and may differ from the estimated amounts.
28 | THE RYDEX FUNDS ANNUAL REPORT |
NOTES TO FINANCIAL STATEMENTS (continued)
E. Distributions of net investment income and net realized gains, if any, are declared and paid at least annually. Dividends are reinvested in additional shares unless shareholders request payment in cash. Distributions are recorded on the ex-dividend date and are determined in accordance with income tax regulations which may differ from U.S. GAAP.
F. Interest and dividend income, most expenses, all realized gains and losses, and all unrealized gains and losses are allocated to the classes based upon the value of the outstanding shares in each Class. Certain costs, such as distribution and service fees are charged directly to specific classes. In addition, certain expenses have been allocated to the individual Funds in the Trust on a pro rata basis upon the respective aggregate net assets of each Fund included in the Trust.
G. The Fund may leave cash overnight in its cash account with the custodian. Periodically, the Fund may have cash due to the custodian bank as an overdraft balance. A fee is incurred on this overdraft, calculated by multiplying the overdraft by a rate based on the federal funds rate.
H. Under the Fund's organizational documents, its Trustees and Officers are indemnified against certain liabilities arising out of the performance of their duties to the Trust. In addition, throughout the normal course of business, the Fund enters into contracts that contain a variety of representations and warranties which provide general indemnifications. The Fund's maximum exposure under these arrangements is unknown, as this would involve future claims that may be made against the Fund and/or its affiliates that have not yet occurred. However, based on experience, the Fund expects the risk of loss to be remote.
2. Financial Instruments
As part of its investment strategy, the Fund utilizes a variety of derivative instruments. These investments involve, to varying degrees, elements of market risk and risks in excess of the amounts recognized in the Statement of Assets and Liabilities.
A futures contract is an agreement to purchase (long) or sell (short) an agreed amount of securities or other instruments at a set price for delivery at a future date. There are significant risks associated with a Fund’s use of futures contracts, including (i) there may be an imperfect or no correlation between the changes in market value of the underlying asset and the prices of futures contracts; (ii) there may not be a liquid secondary market for a futures contract; (iii) trading restrictions or limitations may be imposed by an exchange; and (iv) government regulations may restrict trading in futures contracts. When investing in futures, there is minimal counterparty credit risk to the Fund because futures are exchange-traded and the exchange’s clearinghouse, as counterparty to all
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NOTES TO FINANCIAL STATEMENTS (continued)
exchange-traded futures, guarantees against default. Cash deposits are shown as segregated cash with broker on the Statement of Assets and Liabilities; securities held as collateral are noted on the Schedule of Investments.
A swap is an agreement that obligates two parties to exchange a series of cash flows at specified intervals based upon or calculated by reference to changes in specified prices or rates for a specified amount of an underlying asset. A Fund utilizing OTC swaps bears the risk of loss of the amount expected to be received under a swap agreement in the event of the default or bankruptcy of a swap agreement counterparty. Additionally, there is no guarantee that a Fund or an underlying fund could eliminate its exposure under an outstanding swap agreement by entering into an offsetting swap agreement with the same or another party.
In conjunction with the use of derivative instruments, the Fund is required to maintain collateral in various forms. The Fund uses, where appropriate, depending on the financial instrument utilized and the broker involved, margin deposits at the broker, cash and/or securities segregated at the custodian bank, discount notes or the repurchase agreements allocated to the Fund.
The Trust has established counterparty credit guidelines and enters into transactions only with financial institutions of investment grade or better. The Trust monitors the counterparty credit risk.
3. Fees and Other Transactions with Affiliates
Under the terms of an investment advisory contract, the Fund pays GI investment advisory fees calculated at an annualized rate of 0.75% of the average daily net assets of the Fund.
RFS provides transfer agent and administrative services to the Fund calculated at the annualized rate of 0.25% based on the average daily net assets of the Fund.
RFS also provides accounting services to the Fund for fees calculated at annualized rates below, based on the average daily net assets of the Fund.
Fund Accounting Fees | (as a % of Net Assets) |
On the first $250 million | 0.10% |
On the next $250 million | 0.075% |
On the next $250 million | 0.05% |
Over $750 million | 0.03% |
30 | THE RYDEX FUNDS ANNUAL REPORT |
NOTES TO FINANCIAL STATEMENTS (continued)
RFS engages external service providers to perform other necessary services for the Trust, such as audit and accounting related services, legal services, custody, printing and mailing, etc., on a pass-through basis. Such expenses are allocated to various Funds within the complex based on relative net assets.
The Trust has adopted a Distribution and Shareholder Services Plan applicable to its Advisor Class shares and a Distribution Plan applicable to A-Class shares and H-Class shares for which GFD and other firms that provide distribution and/or shareholder services (“Service Providers”) may receive compensation. If a Service Provider provides distribution services, the Fund will pay distribution fees to GFD at an annual rate not to exceed 0.25% of average daily net assets, pursuant to Rule 12b-1 of the 1940 Act. GFD, in turn, will pay the Service Provider out of its fees. GFD may, at its discretion, retain a portion of such payments to compensate itself for distribution services. With regard to Advisor Class shares only, if a Service Provider provides shareholder services, GFD will receive shareholder servicing fees from the Fund at an annual rate not to exceed 0.25% of average daily net assets. GFD, in turn, will compensate Service Providers for providing such services, while retaining a portion of such payments to compensate itself for shareholder services it performs.
The Trust has adopted a separate Distribution and Shareholder Services Plan applicable to its C-Class shares that allows the Fund to pay annual distribution and service fees of 1.00% of the Fund's C-Class shares average daily net assets. The annual 0.25% service fee compensates a shareholder’s financial adviser for providing ongoing services to the shareholder. The annual distribution fee of 0.75% reimburses GFD for paying the shareholder’s financial adviser an ongoing sales commission. GFD advances the first year’s service and distribution fees to the financial adviser. GFD retains the service and distribution fees on accounts with no authorized dealer of record.
For the year ended March 31, 2015, GFD retained sales charges of $360,571 relating to sales of A-Class shares of the Trust.
Certain trustees and officers of the Trust are also officers of GI, RFS and GFD.
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NOTES TO FINANCIAL STATEMENTS (continued)
4. Fair Value Measurement
In accordance with U.S. GAAP, fair value is defined as the price that the Fund would receive to sell an investment or pay to transfer a liability in an orderly transaction with an independent buyer in the principal market, or in the absence of a principal market, the most advantageous market for the investment or liability. U.S. GAAP establishes a three-tier fair value hierarchy based on the types of inputs used to value assets and liabilities and requires corresponding disclosure. The hierarchy and the corresponding inputs are summarized below:
Level 1 — quoted prices in active markets for identical assets or liabilities.
Level 2 — significant other observable inputs (for example quoted prices for securities that are similar based on characteristics such as interest rates, prepayment speeds, credit risk, etc.).
Level 3 — significant unobservable inputs based on the best information available under the circumstances, to the extent observable inputs are not available, which may include assumptions.
The types of inputs available depend on a variety of factors, such as the type of security and the characteristics of the markets in which it trades, if any. Fair valuation determinations that rely on fewer or no observable inputs require greater judgment. Accordingly, fair value determinations for Level 3 securities require the greatest amount of judgment.
The following table summarizes the inputs used to value the Fund's investments at March 31, 2015:
Level 1 Investments In Securities | Level 1 Other Financial Instruments* | Level 2 Investments In Securities | Level 2 Other Financial Instruments* | Level 3 Investments In Securities | Total | |||||||||||||||||||
Assets | ||||||||||||||||||||||||
NASDAQ-100® Fund | $ | 850,233,730 | $ | 1,035,096 | $ | 100,982,578 | $ | 137,703 | $ | — | $ | 952,389,107 | ||||||||||||
Liabilities | ||||||||||||||||||||||||
NASDAQ-100® Fund | $ | — | $ | — | $ | — | $ | 30,008 | $ | — | $ | 30,008 |
* | Other financial instruments may include futures contracts and/or swaps, which are reported as unrealized gain/loss at period end. |
For the year ended March 31, 2015, there were no transfers between levels.
32 | THE RYDEX FUNDS ANNUAL REPORT |
NOTES TO FINANCIAL STATEMENTS (continued)
The inputs or methodologies used for valuing securities are not necessarily an indication of the risk associated with investing in those securities. The suitability of the techniques and sources employed to determine fair valuation are regularly monitored and subject to change.
5. Repurchase Agreements
The Funds transfer 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 Funds’ custodian and is evaluated to ensure that its market value exceeds, at a minimum, 102% of the original face amount of the repurchase agreements. Each Fund holds a pro rata share of the collateral based on the dollar amount of the repurchase agreement entered into by each Fund.
At March 31, 2015, the repurchase agreements in the joint account were as follows:
Counterparty and Terms of Agreement | Face Value | Repurchase Price | Collateral | Par Value | Fair Value | |
HSBC Group | U.S. Treasury Strips | |||||
0.03% | 0.00% | |||||
Due 04/01/15 | $922,646,685 | $922,647,454 | 02/15/24 - 05/15/44 | $1,876,361,900 | $941,099,692 | |
RBC Capital Markets | U.S. Treasury Note | |||||
0.05% | 2.13% | |||||
Due 04/01/15 | 141,000,000 | 141,000,196 | 12/31/21 | 92,325,000 | 95,818,749 | |
U.S. TIP Bond | ||||||
3.88% | ||||||
04/25/29 | 22,465,400 | 48,001,266 | ||||
UMB Financial Corp. | U.S. Treasury Notes | |||||
0.03% | 1.38% - 3.25% | |||||
Due 04/01/15 | 113,175,677 | 113,175,772 | 11/30/15 - 12/31/16 | 109,984,100 | 115,439,211 |
In the event of counterparty default, the Funds have the right to collect the collateral to offset losses incurred. There is potential loss to the Funds in the event the Funds are delayed or prevented from exercising their 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 Funds seek to assert their rights. The Funds’ investment adviser, acting under the supervision of the Board of Trustees, reviews the value of the collateral and the creditworthiness of those banks and dealers with which the Funds enter into repurchase agreements to evaluate potential risks.
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NOTES TO FINANCIAL STATEMENTS (continued)
6. Portfolio Securities Loaned
The Funds may lend their securities to approved brokers to earn additional income. Security lending income shown on the Statement of Operations is shown net of rebates paid to the borrowers and earnings on cash collateral investments shared with the lending agent. Within this arrangement, the Funds act as the lender, Credit Suisse acts as the lending agent, and other approved registered broker dealers act as the borrowers. The Funds receive cash collateral, valued at 102% of the value of the securities on loan. Under the terms of the Funds’ securities lending agreement with Credit Suisse, cash collateral is invested in one or more joint repurchase agreements collateralized by obligations of the U.S. Treasury or Government Agencies and cash. The Funds bear the risk of loss on cash collateral investments. 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 Funds the next business day. Although the collateral mitigates the risk, the Funds 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 Funds have the right under the securities lending agreement to recover the securities from the borrower on demand.
At March 31, 2015, the Fund participated in securities lending as follows:
Fund | Value of Securities Loaned | Cash Collateral Received | ||||||
NASDAQ-100® Fund | $ | 2,435,133 | $ | 2,509,100 |
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NOTES TO FINANCIAL STATEMENTS (continued)
Cash collateral received was invested in the following joint repurchase agreements at March 31, 2015:
Counterparty and Terms of Agreement | Face Value | Repurchase Price | Collateral | Par Value | Fair Value | |
HSBC Securities, Inc. | Fannie Mae Strips | |||||
0.10% | 0.00% | |||||
Due 04/01/15 | $1,625,277 | $1,625,281 | 11/15/17 - 07/15/37 | $1,812,691 | $1,247,608 | |
Federal Farm Credit Bank | ||||||
0.19% | ||||||
06/12/17 | 410,155 | 410,209 | ||||
BNP Paribas Securities Corp. | U.S. Treasury Note | |||||
0.10% | 2.13% | |||||
Due 04/01/15 | 559,095 | 559,097 | 12/31/21 | 256,997 | 264,900 | |
U.S. Treasury Bond | ||||||
4.38% | ||||||
05/15/41 | 221,798 | 305,378 | ||||
Barclays Capital Corp. | U.S. Treasury Strips | |||||
0.10% | 0.00% | |||||
Due 04/01/15 | 288,584 | 288,585 | 05/15/20 - 05/15/44 | 446,433 | 265,245 | |
U.S. Treasury Bond | ||||||
4.75% | ||||||
02/15/41 | 20,256 | 29,112 |
There is also a $36,144 in segregated cash held as collateral.
7. Derivative Investment Holdings Categorized by Risk Exposure
U.S. GAAP requires disclosures to enable investors to better understand how and why the Fund uses derivative instruments, how these derivative instruments are accounted for and their effects on the Fund's financial position and results of operations.
The Fund utilized derivatives for the following purposes:
Fund | Index Exposure | Liquidity |
NASDAQ-100® Fund | x | x |
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NOTES TO FINANCIAL STATEMENTS (continued)
The following table represents the notional amount of derivative instruments outstanding as an approximate percentage of the Fund’s net assets on a daily basis.
Approximate percentage of Fund's Net Assets on a daily basis | ||
Fund | Long | Short |
NASDAQ-100® Fund | 25% | — |
The following is a summary of the location of derivative investments on the Fund's Statement of Assets and Liabilities as of March 31, 2015:
Derivative Investment Type | Asset Derivatives | Liability Derivatives |
Equity contracts | Variation margin | |
Unrealized appreciation on swap agreements | Unrealized depreciation on swap agreements |
The following table sets forth the fair value of the Fund's derivative investments categorized by primary risk exposure at March 31, 2015:
Asset Derivative Investments Value | ||||||||||||
Fund | Futures Equity Contracts* | Swaps Equity Contracts | Total Value at March 31, 2015 | |||||||||
NASDAQ-100® Fund | $ | 1,035,096 | $ | 137,703 | $ | 1,172,799 |
Liability Derivative Investments Value | ||||||||||||
Fund | Futures Equity Contracts* | Swaps Equity Contracts | Total Value at March 31, 2015 | |||||||||
NASDAQ-100® Fund | $ | — | $ | 30,008 | $ | 30,008 |
* | Includes cumulative appreciation (depreciation) of futures contracts as reported on the Schedule of Investments. Only current day’s variation margin is reported within the Statement of Assets and Liabilities. |
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NOTES TO FINANCIAL STATEMENTS (continued)
The following is a summary of the location of derivative investments on the Fund's Statement of Operations for the year ended March 31, 2015:
Derivative Investment Type | Location of Gain (Loss) on Derivatives |
Equity contracts | Net realized gain (loss) on futures contracts |
Net realized gain (loss) on swap agreements | |
Net change in unrealized appreciation (depreciation) on futures contracts | |
Net change in unrealized appreciation (depreciation) on swap agreements |
The following is a summary of the Fund's realized gain (loss) and change in unrealized appreciation (depreciation) on derivative investments recognized on the Statement of Operations categorized by primary risk exposure for the year ended March 31, 2015:
Realized Gain (Loss) on Derivative Investments Recognized on the Statement of Operations | ||||||||||||
Fund | Futures Equity Contracts | Swaps Equity Contracts | Total | |||||||||
NASDAQ-100® Fund | $ | 2,316,996 | $ | 35,794,059 | $ | 38,111,055 |
Change in Unrealized Appreciation (Depreciation) on Derivative Investments Recognized on the Statement of Operations | ||||||||||||
Fund | Futures Equity Contracts | Swaps Equity Contracts | Total | |||||||||
NASDAQ-100® Fund | $ | 1,086,931 | $ | 40,731 | $ | 1,127,662 |
8. Offsetting
In the normal course of business, the Fund enters into transactions subject to enforceable master netting arrangements or other similar arrangements. Generally, the right to offset in those agreements allows the Fund to counteract the exposure to a specific counterparty with collateral received or delivered to that counterparty based on the terms of the arrangements. These arrangements provide for the right to liquidate upon the occurrence of an event of default, credit event upon merger or additional termination event.
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NOTES TO FINANCIAL STATEMENTS (continued)
In order to better define their contractual rights and to secure rights that will help the Fund mitigate its counterparty risk, the Fund may enter into an International Swaps and Derivatives Association, Inc. Master Agreement (“ISDA Master Agreement”) or similar agreement with its derivative contract counterparties. An ISDA Master Agreement is a bilateral agreement between a Fund and a counterparty that governs OTC derivatives, including foreign exchange contracts, and typically contains, among other things, collateral posting terms and netting provisions in the event of a default and/or termination event. The provisions of the ISDA Master Agreement typically permit a single net payment in the event of a default (close-out netting) or similar event, including the bankruptcy or insolvency of the counterparty.
For derivatives traded under an ISDA Master Agreement, the collateral requirements are typically calculated by netting the mark to market amount for each transaction under such agreement and comparing that amount to the value of any collateral currently pledged by the Fund and the counterparty. For financial reporting purposes, cash collateral that has been pledged to cover obligations of the Fund and cash collateral received from the counterparty, if any, is reported separately on the Statement of Assets and Liabilities as segregated cash with broker/receivable for variation margin, or payable for swap settlement/variation margin. Generally, the amount of collateral due from or to a counterparty must exceed a minimum transfer amount threshold (e.g., $300,000) before a transfer is required to be made. To the extent amounts due to the Fund from its counterparties are not fully collateralized, contractually or otherwise, the Fund bears the risk of loss from counterparty nonperformance. The Fund attempts to mitigate counterparty risk by only entering into agreements with counterparties that they believe to be of good standing and by monitoring the financial stability of those counterparties.
For financial reporting purposes, the Fund does not offset derivative assets and derivative liabilities that are subject to netting arrangements in the Statement of Assets and Liabilities.
38 | THE RYDEX FUNDS ANNUAL REPORT |
NOTES TO FINANCIAL STATEMENTS (continued)
The following tables present derivative financial instruments and secured financing transactions that are subject to enforceable netting arrangements and offset in the Statement of Assets and Liabilities in conformity with U.S. GAAP.
Gross Amounts Not Offset in the Statement of Assets and Liabilities | |||||||||||||||||||||||||
Fund | Instrument | Gross Amounts of Recognized Assets1 | Gross Amounts Offset In the Statement of Assets and Liabilities | Net Amount of Assets Presented on the Statement of Assets and Liabilities | Financial Instruments | Cash Collateral Received | Net Amount | ||||||||||||||||||
NASDAQ-100® Fund | Swap equity contracts | $ | 137,703 | $ | — | $ | 137,703 | $ | — | $ | — | $ | 137,703 |
Gross Amounts Not Offset in the Statement of Assets and Liabilities | |||||||||||||||||||||||||
Fund | Instrument | Gross Amounts of Recognized Liabilities1 | Gross Amounts Offset In the Statement of Assets and Liabilities | Net Amount of Liabilities Presented on the Statement of Assets and Liabilities | Financial Instruments | Cash Collateral Pledged | Net Amount | ||||||||||||||||||
NASDAQ-100® Fund | Swap equity contracts | $ | 30,008 | $ | — | $ | 30,008 | $ | — | $ | 30,008 | $ | — |
1 | Exchange-traded futures are excluded from these reported amounts. |
9. Federal Income Tax Information
The Fund intends to comply with the provisions of Subchapter M of the Internal Revenue Code applicable to regulated investment companies and will distribute substantially all taxable net investment income and capital gains sufficient to relieve the Fund from all, or substantially all, federal income, excise and state income taxes. Therefore, no provision for federal or state income tax is required.
Tax positions taken or expected to be taken in the course of preparing the Fund’s tax returns are evaluated 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
THE RYDEX FUNDS ANNUAL REPORT | 39 |
NOTES TO FINANCIAL STATEMENTS (continued)
tax benefit or expense in the current year. Management has analyzed the Fund’s tax positions taken, or to be taken, on Federal income tax returns for all open tax years, and has concluded that no provision for income tax is required in the Fund’s financial statements. The Fund’s federal tax returns are subject to examination by the Internal Revenue Service for a period of three years after they are filed.
The tax character of distributions paid during the year ended March 31, 2015 was as follows:
Fund | Ordinary Income | Long-Term Capital Gain | Total Distributions | |||||||||
NASDAQ-100® Fund | $ | 13,825,128 | $ | — | $ | 13,825,128 |
The tax character of distributions paid during the year ended March 31, 2014 was as follows:
Fund | Ordinary Income | Long-Term Capital Gain | Total Distributions | |||||||||
NASDAQ-100® Fund | $ | — | $ | 59,488,494 | $ | 59,488,494 |
Note: For federal income tax purposes, short-term capital gain distributions are treated as ordinary income distributions.
The tax character of distributable earnings/(accumulated losses) at March 31, 2015 was as follows:
Fund | Undistributed Ordinary Income | Undistributed Long-Term Capital Gain | Net Unrealized Appreciation/ (Depreciation) | Capital Loss Carryforward | ||||||||||||
NASDAQ-100® Fund | $ | 26,051,997 | $ | — | $ | 382,855,972 | $ | — |
For Federal income tax purposes, capital loss carryforwards represent realized losses of the Funds that may be carried forward and applied against future capital gains. Under the RIC Modernization Act of 2010, the Funds are permitted to carry forward capital losses incurred in taxable years beginning after December 22, 2010 for an unlimited period and such capital loss carryforwards will retain their character as either short-term or long-term capital losses. As of March 31, 2015, the Fund had no capital loss carryforwards.
Net investment income and net realized gains (losses) may differ for financial statement and tax purposes because of temporary or permanent book/tax differences. These differences are typically due to wash sales, mark-to-market on futures contracts, and utilization of earnings and profits on shareholder redemptions. Additional differences may result from tax treatment of net
40 | THE RYDEX FUNDS ANNUAL REPORT |
NOTES TO FINANCIAL STATEMENTS (continued)
investment losses and expired capital loss carryforwards. To the extent these differences are permanent, reclassifications are made to the appropriate equity accounts in the period that the differences arise. These reclassifications have no effect on the net assets or NAV per share.
On the Statement of Assets and Liabilities the following adjustments were made for permanent book/tax differences:
Fund | Paid In Capital | Undistributed Net Investment Income | Accumulated Net Realized Gain (Loss) | |||||||||
NASDAQ-100® Fund | $ | 85,260,255 | $ | 1,194,397 | $ | (86,454,652 | ) |
At March 31, 2015, 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:
Fund | Tax Cost | Tax Unrealized Gain | Tax Unrealized Loss | Net Unrealized Gain | ||||||||||||
NASDAQ-100® Fund | $ | 568,468,031 | $ | 385,599,882 | $ | (2,851,605 | ) | $ | 382,748,277 |
10. Securities Transactions
For the year ended March 31, 2015, the cost of purchases and proceeds from sales of investment securities, excluding government securities, short-term investments and derivatives, were as follows:
Fund | Purchases | Sales | ||||||
NASDAQ-100® Fund | $ | 2,144,783,279 | $ | 2,072,231,587 |
11. Line of Credit
The Trust, along with other affiliated trusts, secured an uncommitted, $75,000,000 line of credit from U.S. Bank, N.A., which expires June 13, 2015. This line of credit is reserved for emergency or temporary purposes. Borrowings, if any, under this arrangement bear interest equal to the Prime Rate, minus 2%, which shall be paid monthly, averaging 1.25% for the year ended March 31, 2015. The Fund did not have any borrowings under this agreement at March 31, 2015.
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NOTES TO FINANCIAL STATEMENTS (continued)
The average daily balances borrowed for the year ended March 31, 2015 were as follows:
Fund | Average Daily Balance | |||
NASDAQ-100® Fund | $ | 341,854 |
12. Affiliated and/or Related Transactions
Investments representing 5% or more of the outstanding voting shares of a portfolio company of a fund, or control of or by, or common control under GI, result in that portfolio company being considered an affiliated company of such fund, as defined in the 1940 Act.
The Funds may invest in the Guggenheim Strategy Funds Trust consisting of Guggenheim Strategy Fund I, Guggenheim Strategy Fund II, and Guggenheim Strategy Fund III (collectively, the “Cash Management Funds”), open-end management investment companies managed by GI. The Cash Management Funds, which launched on March 11, 2014, are offered as cash management options only to mutual funds, trusts, and other accounts managed by GI and/or its affiliates, and are not available to the public. The Cash Management Funds pay no investment management fees. The Cash Management Funds’ annual report on Form N-CSR dated September 30, 2014 is available publicly or upon request. This information is also available from the EDGAR database on the SEC’s website at http://www.sec.gov.
Transactions during the period ended March 31, 2015, in which the portfolio company is an “affiliated person” are as follows:
Affiliated issuers by Fund | Value 03/31/14 | Additions | Reductions | Value 03/31/15 | Shares 03/31/15 | Investment Income | Realized Loss | Capital Gain Distributions | ||||||||||||||||||||||||
NASDAQ-100® Fund | ||||||||||||||||||||||||||||||||
Guggenheim Strategy Fund I | $ | — | $ | 463,721,180 | $ | (324,000,000 | ) | $ | 139,227,564 | 5,591,468 | $ | 1,821,180 | $ | (732,612 | ) | $ | — |
13. Legal Proceedings
Tribune Company
Rydex Series Funds has been named as a defendant and a putative member of the proposed defendant class of shareholders in the case entitled Kirschner v. FitzSimons, No. 12-2652 (S.D.N.Y.) (formerly Official Committee of Unsecured Creditors of Tribune Co. v. FitzSimons, Adv. Pro. No. 10-54010 (Bankr. D. Del.)) (the “FitzSimons action”), as a result of ownership by certain series of the Rydex Series Funds of shares in the Tribune Company (“Tribune”) in 2007, when Tribune
42 | THE RYDEX FUNDS ANNUAL REPORT |
NOTES TO FINANCIAL STATEMENTS (continued)
effected a leveraged buyout transaction (“LBO”) by which Tribune converted to a privately-held company. In his complaint, the plaintiff has alleged that, in connection with the LBO, Tribune insiders and shareholders were overpaid for their Tribune stock using financing that the insiders knew would, and ultimately did, leave the Tribune Company insolvent. The plaintiff has asserted claims against certain insiders, major shareholders, professional advisers, and others involved in the LBO. The plaintiff is also attempting to obtain from former Tribune shareholders, including the Rydex Series Funds, the proceeds they received in connection with the LBO.
In June 2011, a group of Tribune creditors filed multiple actions against former Tribune shareholders involving state law constructive fraudulent conveyance claims arising out of the 2007 LBO (the “SLCFC actions”). Rydex Series Funds has been named as a defendant in one of the SLCFC actions: Deutsche Bank Trust Co. Americas v. McGurn, No. 11-1510 (S.D.N.Y.). In those actions, the creditors seek to recover from Tribune’s former shareholders the proceeds received in connection with the 2007 LBO.
The FitzSimons action and the SLCFC actions have been consolidated with the majority of the other Tribune LBO-related lawsuits in a multidistrict litigation proceeding captioned In re Tribune Company Fraudulent Conveyance Litig., No. 11-md-2696 (S.D.N.Y.) (the “MDL Proceeding”).
On September 23, 2013, the District Court granted the defendants’ omnibus motion to dismiss the SLCFC actions, on the basis that the creditors lacked standing. On September 30, 2013, the creditors filed a notice of appeal of the September 23 order. On October 28, 2013, the defendants filed a joint notice of cross-appeal of that same order.
The SLCFC appeals have been fully briefed, and oral argument in front of the U.S. Court of Appeals for the Second Circuit occurred on November 5, 2014. The Court has not yet issued a decision on the appeals.
On May 23, 2014, the defendants filed motions to dismiss the FitzSimons action, including a global motion to dismiss Count I, which is the claim brought against former Tribune shareholders for intentional fraudulent conveyance under U.S. federal law. The Court has not yet issued a decision on any of these motions.
None of these lawsuits alleges any wrongdoing on the part of Rydex Series Funds. The following series of Rydex Series Funds held shares of Tribune and tendered these shares as part of Tribune’s LBO: Nova Fund, S&P 500® Pure Value Fund, Multi-Cap Core Equity Fund, S&P 500® Fund, Multi-Hedge Strategies Fund and Hedged Equity Fund (the “Funds”). The value of the proceeds received by the foregoing Funds was $28,220, $109,242, $9,860, $3,400, $1,181,160, and $10,880,
THE RYDEX FUNDS ANNUAL REPORT | 43 |
NOTES TO FINANCIAL STATEMENTS (concluded)
respectively. At this stage of the proceedings, Rydex Series Funds is not able to make a reliable predication as to the outcome of these lawsuits or the effect, if any, on a Fund’s net asset value.
Lyondell Chemical Company
In December 2011, Rydex Series Funds was named as a defendant in Weisfelner, as Trustee of the LB Creditor Trust, v. Fund 1 (In re Lyondell Chemical Co.), Adv. Pro. No. 10-4609 (Bankr. S.D.N.Y.) (the “Creditor Trust action”).
Similar to the claims made in the Tribune matter, the Weisfelner complaint seeks to have set aside and recovered as fraudulent transfers from former Lyondell Chemical Company (“Lyondell”) shareholders the consideration paid to them pursuant to the cash out merger of Lyondell shareholders in connection with the combination of Lyondell and Basell AF in 2007. Lyondell filed for bankruptcy in 2008.
On April 7, 2014, the plaintiff filed a Third Amended Complaint. In the related action entitled Weisfelner, as Trustee of the LB Litigation Trust v. A. Holmes & H. Holmes TTEE (In re Lyondell Co.), Adversary Proceeding No. 10-5525 (Bankr. S.D.N.Y.) (the “Litigation Trust action”), the plaintiff also filed a Second Amended Complaint that alleges a claim against the former Lyondell shareholders under federal law for intentional fraudulent transfer. A third related action against the former Lyondell shareholders, Weisfelner, as Trustee of the LB Creditor Trust v. Reichman, Adversary Proceeding No. 12-1570 (Bankr. S.D.N.Y.) (the “Reichman action”), is pending as well.
On May 8, 2014, the plaintiff in the Litigation Trust action filed a motion to certify a defendant class generally comprised of all former Lyondell shareholders that received proceeds in exchange for their shares in the 2007 merger transaction.
On July 30, 2014, the defendants filed a motion to dismiss these lawsuits. The Court held oral argument on the motions to dismiss and on the motion for class certification on January 14 and January 15, 2015. The Court has not yet issued decisions on these motions. Discovery has commenced in these lawsuits.
These lawsuits do not allege any wrongdoing on the part of Rydex Series Funds. The following series of Rydex Series Funds received cash proceeds from the cash out merger in the following amounts: Basic Materials Fund - $1,725,168; Long Short Equity Fund f/k/a U.S. Long Short Momentum Fund - $2,193,600; Global 130/30 Strategy Fund - $37,920; Hedged Equity Fund - $1,440; and Multi-Hedge Strategies Fund - $1,116,480. At this stage of the proceedings, Rydex Series Funds is not able to make a reliable predication as to the outcome of these lawsuits or the effect, if any, on a Fund’s net asset value.
44 | THE RYDEX FUNDS ANNUAL REPORT |
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Board of Trustees and
Shareholders of Rydex Series Funds:
We have audited the accompanying statement of assets and liabilities, including the schedule of investments, of NASDAQ-100® Fund (one of the series constituting the Rydex Series Funds) (the “Fund”) as of March 31, 2015, and the related statement of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the years or periods indicated therein. These financial statements and financial highlights are the responsibility of the Fund’s management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. We were not engaged to perform an audit of the Fund’s internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Fund’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements and financial highlights, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of March 31, 2015, by correspondence with the custodian, transfer agent, and brokers or by other appropriate auditing procedures where replies from brokers were not received. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of NASDAQ-100® Fund (one of the series constituting the Rydex Series Funds) at March 31, 2015, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended, and its financial highlights for each of the years or periods indicated therein, in conformity with U.S. generally accepted accounting principles.
![](https://capedge.com/proxy/N-CSR/0001398344-15-003814/ncsr_05.jpg)
McLean, Virginia
May 21, 2015
THE RYDEX FUNDS ANNUAL REPORT | 45 |
OTHER INFORMATION (Unaudited)
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 fund had the corresponding percentage qualify for the dividends received deduction for corporations:
Fund | % Qualifying |
NASDAQ-100® Fund | 20.44% |
Additionally, the following amounts of taxable ordinary income dividends paid during the fiscal year qualified for the lower income tax rate available to individuals under the Jobs and Growth Tax Relief Reconciliation Act of 2003:
Fund | % Qualifying |
NASDAQ-100® Fund | 19.41% |
Additionally, of the taxable ordinary income distributions paid during the fiscal year ending March 31, 2015, the following fund had the corresponding percentages qualify as interest related dividends and qualified short-term capital gains as permitted by IRC Section 871(k)(1) and IRC Section 871(k)(2), respectively:
Fund | % Qualifying | % STCG Qualifying |
NASDAQ-100® Fund | 0.00% | 100.00% |
With respect to the taxable year ended March 31, 2015, the Fund hereby designates as capital gain dividends the amount listed below, or, if subsequently determined to be different, the net capital gain of such year:
Fund | From long-term capital gains, using proceeds from shareholder redemptions: | |||
NASDAQ-100® Fund | $ | 44,371,323 |
46 | THE RYDEX FUNDS ANNUAL REPORT |
OTHER INFORMATION (Unaudited)(concluded)
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 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 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 are 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 800-SEC-0330. Copies of the portfolio holdings are also available to shareholders, without charge and upon request, by calling 800.820.0888.
THE RYDEX FUNDS ANNUAL REPORT | 47 |
INFORMATION ON BOARD OF TRUSTEES AND OFFICERS (Unaudited)
A Board of Trustees oversees the Trust, as well as other trusts of GI, 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 800.820.0888.
Name, Address* and Year of Birth of Trustee | Position(s) Held with the Trust, Term of Office and Length of Time Served | Principal Occupation(s) During Past 5 Years | Number of Portfolios in Fund Complex Overseen by Trustee*** | Other Directorships Held by Trustee |
INTERESTED TRUSTEE | ||||
Donald C. Cacciapaglia** (1951) | Trustee from 2012 to present. | Current: President and CEO, certain other funds in the Fund Complex (2012-present); Vice Chairman, Guggenheim Investments (2010-present). Former: Chairman and CEO, Channel Capital Group, Inc. (2002-2010). | 221 | Clear Spring Life Insurance Company (2015-present); Guggenheim Partners Japan, Ltd. (2014-present); Delaware Life (2013-present); Guggenheim Life and Annuity Company (2011-present); Paragon Life Insurance Company of Indiana (2011-present). |
INDEPENDENT TRUSTEES | ||||
Corey A. Colehour (1945) | Trustee and Member of the Audit, Governance, Nominating, and Investment and Performance Committees from 1998 to present. | Retired. | 133 | None. |
48 | THE RYDEX FUNDS ANNUAL REPORT |
INFORMATION ON BOARD OF TRUSTEES AND OFFICERS (Unaudited)(continued)
Name, Address* and Year of Birth of Trustee | Position(s) Held with the Trust, Term of Office and Length of Time Served | Principal Occupation(s) During Past 5 Years | Number of Portfolios in Fund Complex Overseen by Trustee*** | Other Directorships Held by Trustee |
INDEPENDENT TRUSTEES - continued | ||||
J. Kenneth Dalton (1941) | Trustee, Member and Chairman of the Audit Committee, and Member of the Governance and Nominating Committees from 1998 to present; and Member of the Risk Oversight Committee from 2010 to present. | Retired. | 133 | Epiphany Funds (4) (2009-present). |
John O. Demaret (1940) | Vice Chairman of the Board of Trustees from 2014 to present; Trustee from 1998 to present and Chairman of the Board from 2006 to 2014; Member and Chairman of the Audit Committee from 1998 to present; and Member of the Risk Oversight Committee from 2010 to present. | Retired. | 133 | None. |
Werner E. Keller (1940) | Chairman of the Board from 2014 to present; Vice Chairman of the Board of Trustees from 2010 to 2014; Trustee and Member of the Audit, Governance, and Nominating Committees from 2005 to present; and Chairman and Member of the Risk Oversight Committee from 2010 to present. | Current: Founder and President, Keller Partners, LLC (investment research firm) (2005-present). | 133 | None. |
THE RYDEX FUNDS ANNUAL REPORT | 49 |
INFORMATION ON BOARD OF TRUSTEES AND OFFICERS (Unaudited)(continued)
Name, Address* and Year of Birth of Trustee | Position(s) Held with the Trust, Term of Office and Length of Time Served | Principal Occupation(s) During Past 5 Years | Number of Portfolios in Fund Complex Overseen by Trustee*** | Other Directorships Held by Trustee |
INDEPENDENT TRUSTEES - concluded | ||||
Thomas F. Lydon, Jr. (1960) | Trustee and Member of the Audit, Governance, and Nominating Committees from 2005 to present. | Current: President, Global Trends Investments (registered investment adviser) (1996-present). | 133 | US Global Investors (GROW) (1995-present). |
Patrick T. McCarville (1942) | Trustee, Member of the Audit Committee, and Chairman and Member of the Governance and Nominating Committees from 1998 to present. | Retired. Former: Chief Executive Officer, Par Industries, Inc., d/b/a Par Leasing (1977-2010). | 133 | None. |
Name, Address* and Year of Birth | Position(s) Held with the Trust, Term of Office and Length of Time Served | Principal Occupation(s) During Past 5 Years |
OFFICERS | ||
Donald C. Cacciapaglia (1951) | President (2012-present). | Current: President and CEO, certain other funds in the Fund Complex (2012-present); Vice Chairman, Guggenheim Investments (2010-present). Former: Chairman and CEO, Channel Capital Group Inc. (2002-2010). |
50 | THE RYDEX FUNDS ANNUAL REPORT |
INFORMATION ON BOARD OF TRUSTEES AND OFFICERS (Unaudited)(continued)
Name, Address* and Year of Birth | Position(s) Held with the Trust, Term of Office and Length of Time Served | Principal Occupation(s) During Past 5 Years |
OFFICERS - continued | ||
Michael P. Byrum (1970) | Vice President (1999-present). | Current: Senior Vice President, Security Investors, LLC (2010-present); President and Chief Investment Officer, Rydex Holdings, LLC (2008-present); Director and Chairman, Advisory Research Center, Inc. (2006-present); Manager, Guggenheim Specialized Products, LLC (2005-present). Former: Vice President, Guggenheim Distributors, LLC (2009); Director (2009-2010) and Secretary (2002-2010), Rydex Fund Services, LLC; Director (2008-2010), Chief Investment Officer (2006-2010), President (2004-2010) and Secretary (2002-2010), Rydex Advisors, LLC; Director (2008-2010), Chief Investment Officer (2006-2010), President (2004-2010) and Secretary (2002-2010), Rydex Advisors II, LLC. |
Nikolaos Bonos (1963) | Vice President and Treasurer (2003-present). | Current: Senior Vice President, Security Investors, LLC (2010-present); Chief Executive Officer, Guggenheim Specialized Products, LLC (2009-present); Chief Executive Officer & President, Rydex Fund Services, LLC (2009-present); Vice President, Rydex Holdings, LLC (2008-present). Former: Senior Vice President, Security Global Investors, LLC (2010-2011); and Senior Vice President, Rydex Advisors, LLC and Rydex Advisors II, LLC (2006-2011). |
Elisabeth Miller (1968) | Chief Compliance Officer (2012-present). | Current: CCO, certain other funds in the Fund Complex (2012-present); CCO, Security Investors, LLC (2012-present); CCO, Guggenheim Funds Investment Advisors, LLC (2012-present); Managing Director, Guggenheim Investments (2012-present); Vice President, Guggenheim Funds Distributors, LLC (March 2014-present). Former: CCO, Guggenheim Distributors, LLC (2009-March 2014); Senior Manager, Security Investors, LLC (2004-2009); Senior Manager, Guggenheim Distributors, LLC (2004-2009). |
THE RYDEX FUNDS ANNUAL REPORT | 51 |
INFORMATION ON BOARD OF TRUSTEES AND OFFICERS (Unaudited)(concluded)
Name, Address* and Year of Birth | Position(s) Held with the Trust, Term of Office and Length of Time Served | Principal Occupation(s) During Past 5 Years |
OFFICERS - concluded | ||
Joseph M. Arruda (1966) | Assistant Treasurer (2006-present). | Current: Assistant Treasurer, certain other funds in the Fund Complex (2006-present); Vice President, Security Investors, LLC (2010-present); CFO and Manager, Guggenheim Specialized Products, LLC (2009-present). Former: Vice President, Security Global Investors, LLC (2010-2011); Vice President, Rydex Advisors, LLC (2010); Vice President, Rydex Advisors II, LLC (2010). |
Paul J. Davio (1972) | Assistant Treasurer (2014-present). | Current: Assistant Treasurer, certain other funds in the Fund Complex (2014-present); Director, Guggenheim Investments (2006-present). Former: Manager, Mutual Fund Administration, Guggenheim Investments (2003-2006). |
Amy J. Lee (1961) | Vice President (2009-present) and Secretary (2012-present). | Current: Chief Legal Officer, certain other funds in the Fund Complex (2013-present); Senior Managing Director, Guggenheim Investments (2012-present). Former: Vice President, Associate General Counsel and Assistant Secretary, Security Benefit Life Insurance Company and Security Benefit Corporation (2004-2012). |
* | All Trustees and Officers may be reached c/o Guggenheim Investments, 805 King Farm Boulevard, Suite 600, Rockville, MD 20850. |
** | Mr. Cacciapaglia is an “interested” person of the Trust, as that term is defined in the 1940 Act by virtue of his affiliation with the Adviser’s parent company. |
*** | The “Fund Complex” includes all closed-end and open-end funds (including all of their portfolios) advised by the Adviser and any funds that have an investment adviser or servicing agent that is an affiliated person of the Adviser. Information provided is as of the date of this report. |
52 | THE RYDEX FUNDS ANNUAL REPORT |
GUGGENHEIM INVESTMENTS PRIVACY POLICIES (Unaudited)
Rydex Funds, Guggenheim Funds, Rydex Investments, Guggenheim Funds Distributors, LLC, Security Investors, LLC, Security Distributors, Inc., Guggenheim Partners Investment Managers, LLC, and Rydex Advisory Services (Collectively “Guggenheim Investments”).
Our Commitment to You
When you become a Guggenheim Investments investor, you entrust us with not only your hard-earned money but also with personal and financial information about you. We recognize that your relationship with us is based on trust and that you expect us to act responsibly and in your best interests. Because we have access to this private information about you, we hold ourselves to the highest standards in its safekeeping and use. This means, most importantly, that we do not sell client information to anyone—whether it is your personal information or if you are a current or former Guggenheim Investments client.
The Information We Collect About You
In the course of doing business with shareholders and investors, we collect nonpublic personal information about you. You typically provide personal information when you complete a Guggenheim Investments account application or when you request a transaction that involves Rydex and Guggenheim Investments funds or one of the Guggenheim Investments affiliated companies. “Nonpublic personal information” is personally identifiable private information about you. For example, it includes information regarding your name and address, Social Security or taxpayer identification number, assets, income, account balance, bank account information and investment activity (e.g., purchase and redemption history).
How We Handle Your Personal Information
As emphasized above, we do not sell information about current or former clients or their accounts to third parties. Nor do we share such information, except when necessary to complete transactions at your request or to make you aware of related investment products and services that we offer. Additional details about how we handle your personal information are provided below. To complete certain transactions or account changes that you direct, it may be necessary to provide identifying information to companies, individuals or groups that are not affiliated with Guggenheim Investments. For example, if you ask to transfer assets from another financial institution to Guggenheim Investments, we will need to provide certain information about you to that company to complete the transaction. To alert you to other Guggenheim Investments investment products and services, we may share your information within the Guggenheim Investments family of affiliated companies. This would include, for example, sharing your information within Guggenheim Investments so we can make you aware of
THE RYDEX FUNDS ANNUAL REPORT | 53 |
GUGGENHEIM INVESTMENTS PRIVACY POLICIES (Unaudited)(continued)
new Rydex and Guggenheim Investments funds or the services offered through another Guggenheim Investments affiliated company. In certain instances, we may contract with nonaffiliated companies to perform services for us. Where necessary, we will disclose information we have about you to these third parties. In all such cases, we provide the third party with only the information necessary to carry out its assigned responsibilities and only for that purpose. And we require these third parties to treat your private information with the same high degree of confidentiality that we do. In certain instances, we may share information with other financial institutions regarding individuals and entities in response to the U.S.A. Patriot Act. Finally, we will release information about you if you direct us to do so, if we are compelled by law to do so or in other circumstances permitted by law.
Opt Out Provisions
We do not sell your personal information to anyone. The law allows you to “opt out” of only certain kinds of information sharing with third parties. The firm does not share personal information about you with any third parties that triggers this opt-out right. This means YOU ARE ALREADY OPTED OUT.
How We Protect Privacy Online
Our concern for the privacy of our shareholders also extends to those who use our web site, guggenheiminvestments.com. Our web site uses some of the most secure forms of online communication available, including encryption technology, Secure Socket Layer (SSL) protocol, firewalls and user names and passwords. These technologies provide a high level of security and privacy when you access your account information or initiate online transactions. The Guggenheim Investments web site offers customized features that require our use of “http cookies”—tiny pieces of information that we ask your browser to store. However, we make very limited use of these cookies. We only use cookies for session management and security features on the Guggenheim Investments web site. We do not use them to pull data from your hard drive, to learn your email address, or to view data in cookies created by other web sites. We will not share the information in our cookies or give others access to it. See the legal information area on our web site for more details about web site security and privacy features.
How We Safeguard Your Personal Information
We restrict access to nonpublic personal information about shareholders to our employees and in some cases to third parties (for example, the service providers described above) as permitted by law. We maintain strict physical, electronic and procedural safeguards that comply with federal standards to guard your nonpublic personal information.
54 | THE RYDEX FUNDS ANNUAL REPORT |
GUGGENHEIM INVESTMENTS PRIVACY POLICIES (Unaudited)(concluded)
We’ll Keep You Informed
As required by federal law, we will notify shareholders of our privacy policy annually. We reserve the right to modify this policy at any time, but rest assured that if we do change it, we will tell you promptly. You will also be able to access our privacy policy from our web site at guggenheiminvestments.com. Should you have any questions regarding our privacy policy, contact us at 800.820.0888 or 301.296.5100.
THE RYDEX FUNDS ANNUAL REPORT | 55 |
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3.31.2015
Rydex Funds Annual Report
Guggenheim Alternatives Funds | ||
Guggenheim Long Short Equity Fund | ||
Guggenheim Event Driven and Distressed Strategies Fund | ||
Rydex International Equity Funds | ||
Rydex Emerging Markets 2x Strategy Fund | ||
Rydex Inverse Emerging Markets 2x Strategy Fund | ||
Rydex Fixed Income Fund | ||
Rydex Emerging Markets Bond Strategy Fund |
RSTF-ANN-0315x0316 | guggenheiminvestments.com |
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TABLE OF CONTENTS
DEAR SHAREHOLDER | 2 |
ECONOMIC AND MARKET OVERVIEW | 4 |
A BRIEF NOTE ON THE COMPOUNDING OF RETURNS | 6 |
ABOUT SHAREHOLDERS’ FUND EXPENSES | 7 |
LONG SHORT EQUITY FUND | 10 |
EVENT DRIVEN AND DISTRESSED STRATEGIES FUND | 22 |
EMERGING MARKETS 2x STRATEGY FUND | 37 |
INVERSE EMERGING MARKETS 2x STRATEGY FUND | 45 |
EMERGING MARKETS BOND STRATEGY FUND | 52 |
NOTES TO FINANCIAL STATEMENTS | 59 |
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM | 76 |
OTHER INFORMATION | 77 |
INFORMATION ON BOARD OF TRUSTEES AND OFFICERS | 79 |
GUGGENHEIM INVESTMENTS PRIVACY POLICIES | 82 |
THE RYDEX FUNDS ANNUAL REPORT | 1 |
March 31, 2015
Dear Shareholder:
Security Investors, LLC (the “Investment Adviser”) is pleased to present the annual shareholder report for a selection of our alternative strategy Funds (the “Funds”) for the one-year period ended March 31, 2015.
The Investment Adviser is part of Guggenheim Investments, which represents the investment management businesses of Guggenheim Partners, LLC (“Guggenheim”), a global, diversified financial services firm.
Guggenheim Funds Distributors, LLC is the distributor of the Funds. Guggenheim Funds Distributors, LLC is affiliated with Guggenheim and the Investment Adviser.
We encourage you to read the Economic and Market Overview section of the report, which follows this letter, and then the Performance Report and Fund Profile for each Fund.
We are committed to providing innovative investment solutions and appreciate the trust you place in us.
Sincerely,
![](https://capedge.com/proxy/N-CSR/0001398344-15-003814/ncsr_02.jpg)
Donald C. Cacciapaglia
President
April 30, 2015
Read a prospectus and summary prospectus (if available) carefully before investing. It contains the investment objectives, risks, charges, expenses and other information, which should be considered carefully before investing. Obtain a prospectus and summary prospectus (if available) at guggenheiminvestments.com or call 800.820.0888.
Alternative funds may not be suitable for all investors because of the sophisticated and aggressive investment techniques the funds employ, such as leverage, derivatives and short selling. • The more you invest in leveraged instruments, the more the leverage will magnify any gains or losses on those investments. • The use of short selling involves increased risks and costs. You risk paying more for a security than you received from its sale. Theoretically, stocks sold short have the risk of unlimited losses. • The use of derivatives such as futures, options and swap agreements may expose an investment to additional risks that it would not be subject to if you invested directly in the securities underlying those derivatives. • Additionally, certain alternative strategies tied to hard assets such as commodities, currencies and real estate, may be subject to greater volatility as they may be affected by overall market movements, changes in interest rates or factors affecting a particular industry, commodity or currency, such as droughts, floods, weather, livestock disease, embargos, tariffs and international economic, political and regulatory developments. • No investment strategy can guarantee a return in a declining market. Additionally, an investor could lose all or a substantial amount of their investment.
The Long Short Equity Fund may not be suitable for all investors. • The Fund is subject to the risk that the Adviser’s use of a momentum-driven investment strategy may cause the Fund to underperform other types of mutual funds that use different investment strategies during periods when momentum investing is out of favor. • It is possible that the stocks the Fund holds long will decline in value at the same time that the stocks or indices being shorted increase in value, thereby increasing potential losses to the Fund. • The Fund’s loss on a short sale is potentially unlimited because there is no upper limit on the price a borrowed security could attain. • The more the Fund invests in leveraged instruments, the more the leverage will magnify any gains or losses on those investments. • The use of derivatives, such as futures, options and swap agreements, may expose the Fund to additional risks that it would not be subject to if it invested directly in the securities underlying those derivatives. • The Fund may invest in American Depositary Receipts (“ADRs”) therefore subjecting the value of the Fund’s portfolio to fluctuations in foreign exchange rates. • This Fund is considered non-diversified and can invest a greater portion of its assets in securities of individual issuers than a diversified fund. As a result, changes in the market value of a single security could cause greater fluctuations in the value of Fund shares than would occur in a more diversified fund. See the prospectus for more information on these and additional risks.
The Event Driven and Distressed Strategies Fund is subject to a number of risks and is not suitable for all investors. • The Fund’s use of derivatives such as futures, options, structured notes, exchange-traded notes and swap agreements may expose the Fund to additional risks that it would not be subject to if it invested directly in the securities underlying those derivatives. • Certain of the derivative instruments, such as swaps and structured notes, are also subject to the risks of counterparty default and adverse tax treatment. • The Fund’s use of short selling involves increased risk and costs, including paying more for a security than it received from its sale and the risk of unlimited losses. • The more the Fund invests in leveraged instruments, the more the leverage will magnify any gains or losses on those investments. • The Fund’s investments in foreign markets may increase the Fund’s volatility due to the impact of diplomatic, political or economic developments on the country in question. • Additionally, the Fund’s exposure to foreign currencies subjects the fund to the risk that those currencies will decline in value relative to the U.S. dollar, or, in the case of short positions, that the U.S. dollar will decline in value relative to the currencies. • The Fund’s fixed income investments will change in value in response to interest rate changes and other factors. • The Fund’s exposure to the high yield bond market may subject the Fund to greater volatility because (i) it will be affected by the ability
2 | THE RYDEX FUNDS ANNUAL REPORT |
March 31, 2015
of high yield security issuers’ ability to make principal and interest payments and (ii) the prices of derivatives linked to high yield bonds may fluctuate unpredictably and not necessarily in relation to interest rates. • The Fund’s exposure to the event driven market is considered speculative and may subject the Fund to additional losses. • In certain circumstances the Fund may be subject to liquidity risk and it may be difficult for the Fund to purchase and sell particular investments within a reasonable time at a fair price. • This Fund is considered non-diversified and can invest a greater portion of its assets in securities of individual issuers than a diversified fund. As a result, changes in the market value of a single security could cause greater fluctuations in the value of Fund shares than would occur in a more diversified Fund. See the prospectus for more information on these and additional risks.
Inverse and leveraged Funds are not suitable for all investors. • These Funds should be utilized only by investors who (a) understand the risks associated with the use of leverage, (b) understand the consequences of seeking daily leveraged investment results, (c) understand the risk of shorting, and (d) intend to actively monitor and manage their investments. • The more a Fund invests in leveraged instruments, the more the leverage will magnify any gains or losses on those investments. • Inverse Funds involve certain risks, which include increased volatility due to the Funds’ possible use of short sales of securities and derivatives, such as options and futures. • The Funds’ use of derivatives, such as futures, options and swap agreements, may expose the Funds’ shareholders to additional risks that they would not be subject to if they invested directly in the securities underlying those derivatives. • Short-selling involves increased risks and costs. You risk paying more for a security than you received from its sale. • Leveraged and inverse Funds seek to provide investment results that match the performance of a specific benchmark, before fees and expenses, on a daily basis. Because the Funds seek to track the performance of their benchmark on a daily basis, mathematical compounding, especially with respect to those Funds that use leverage as part of their investment strategy, may prevent a fund from correlating with the monthly, quarterly, annual or other period performance of its benchmark. Due to the compounding of daily returns, leveraged and inverse Funds’ returns over periods other than one day will likely differ in amount and possibly direction from the benchmark return for the same period. For those Funds that consistently apply leverage, the value of the fund’s shares will tend to increase or decrease more than the value of any increase or decrease in its benchmark index. The Funds rebalance their portfolios on a daily basis, increasing exposure in response to that day’s gains or reducing exposure in response to that day’s losses. Daily rebalancing will impair a fund’s performance if the benchmark experiences volatility. Investors should monitor their leveraged and inverse Funds’ holdings consistent with their strategies, as frequently as daily. • For more on these and other risks, please read the prospectus. • The leveraged and Inverse Emerging Markets Funds’ investments in developed and emerging foreign markets may increase the Funds’ volatility due to the impact of diplomatic, political or economic developments on the country in question. • Additionally, the Funds’ direct and indirect exposure to foreign currencies subjects the Funds to the risk that those currencies will decline in value relative to the U.S. dollar, or, in the case of short positions, that the U.S. dollar will decline in value relative to the currencies. • A Fund’s investment in the securities of non-U.S. companies in the form of American Depositary Receipts (ADRs) poses special risks associated with international investing, including fluctuating exchange rates, government regulations and differences in liquidity, which may affect the volatility and performance of a fund.
The Emerging Markets Bond Strategy Fund may not be suitable for all investors. Investments in securities, in general, are subject to market risks that may cause their prices to fluctuate over time. An investment in the Fund may lose money. • The Fund’s investments in bonds and financial instruments that in combination have economic characteristics similar to emerging markets bonds carries additional risks when compared to investing in U.S. securities, due to the impact of diplomatic, political or economic developments in the country in question. • The Fund’s investments in derivatives, including credit default swaps, may pose risks in addition to those associated with investing directly in securities or other investments, including illiquidity of the derivatives, imperfect correlations with underlying investments or the Fund’s other portfolio holdings, lack of availability and counterparty risk. To the extent the Fund invests in derivatives to seek to hedge risk or limit leveraged exposure created by other investments, there is no guarantee that such hedging strategies will be effective at managing risk or limiting exposure to leveraged investments. • The Fund’s exposure to high yield securities may subject the Fund to greater volatility. • The Fund’s market value will change in response to interest rate changes and market conditions among other factors. In general, bond prices rise when interest rates fall and vice versa. • The Fund’s investments in bank obligations may expose it to adverse developments in or related to the banking industry. • The Funds use of leverage will exaggerate the effect on net asset value of any increase or decrease in the market value of the Fund’s portfolio. • The Fund’s indirect and direct exposure to foreign currencies subjects the Fund to the risk that those currencies will decline in value relative to the U.S. dollar, or, in the case of short positions, that the U.S. dollar will decline in value relative to the currency being hedged. • The Fund’s investments in other investment vehicles subject the Fund to those risks and expenses affecting the investment vehicle. • This Fund is considered non-diversified and can invest a greater portion of its assets in securities of individual issuers than a diversified fund. As a result, changes in the market value of a single security could cause greater fluctuations in the value of fund shares than would occur in a more diversified fund. • See the prospectus for more information on these and other risks.
THE RYDEX FUNDS ANNUAL REPORT | 3 |
ECONOMIC AND MARKET OVERVIEW (Unaudited) | March 31, 2015 |
The U.S. continued to enjoy a self-sustaining economic expansion for the 12-month period ended March 31, 2015, although winter weather was likely to distort first-quarter economic data. In addition, U.S. companies scaled back hiring in the last month of the period, adding to evidence that the domestic economy has lost some momentum since the turn of the year. The March increase in payrolls was the smallest since December 2013 and broke a 12-month run of gains above 200,000.
Despite this short-term dislocation, the economy remains on track. Indeed, many other labor market indicators, such as initial jobless claims and the job openings rate, suggest that the U.S. labor market remains quite strong, supporting the conclusion that March’s payroll report was just a temporary blip, similar to the one witnessed last winter. As soon as temporary seasonal factors have dissipated, economic data is likely to bounce back. The labor market has improved over the past year, as subdued mortgage rates and tight housing inventory continue to point to fairly stable appreciation in the housing market, which is key to the ongoing recovery. Consumers are also being helped by lower fuel prices, which are acting as a tax cut for U.S. consumers, freeing up discretionary spending in other areas and acting as a support for consumption.
In Europe, economic data has been surprisingly good and should continue along that path on the back of the European Central Bank’s program of quantitative easing and depreciation of the euro. Japan’s economy remains weak and, without more structural reform, continued monetary accommodation could lead to stagflation. China’s policymakers appear likely to continue the supply of credit and do whatever else is necessary to maintain growth there at an acceptable pace for the near term.
Given weakness overseas and the effect of a stronger U.S. dollar on international earnings, some stocks could face a more challenging environment in the near term, but our research shows that equity markets tend to perform quite well in the periods leading up to a U.S. Federal Reserve (the “Fed”) rate increase. The yield on the 10-year Treasury note declined in January by more than 50 basis points before rebounding in February, echoing the pattern since 2009—Treasury yields decline and a sell-off ensues, driving rates higher. Then conditions stabilize, and rates test their previous lows. Liquidity from foreign central banks and comparatively attractive U.S. yields continue to push global investors to U.S. Treasuries, which should hold down U.S. interest rates in the near term.
Against this backdrop, the U.S. central bank feels pressure to raise its key rate above zero, but insists the decision will be data-dependent and not occur prematurely. With a secular inflation increase unlikely in the near term, slack in the economy, and disinflation being imported from abroad, the Fed may not hike rates until later in the year. The Fed for now appears to be focused on wage growth, which is key for sustaining the expansion but also an indicator of inflationary pressure. The lack of sustained wage growth has been a topic that has confounded the Fed lately. Given the strengthening employment numbers and the apparent reduction in labor market slack, wages should start to increase more steadily across the board. This is one of the most important data points at the moment for the Fed.
The underlying U.S. economy remains strong and investors should avoid being panicked by seasonal setbacks. Indeed, considering the strength of the economy and the wave of liquidity emanating from various central banks around the world, the general investment environment should remain attractive.
For the 12 months ended March 31, 2015, the Standard & Poor’s 500® (“S&P 500”) Index* returned 12.73%. The Morgan Stanley Capital International (“MSCI”) Europe-Australasia-Far East (“EAFE”) Index* returned -0.92%. The return of the MSCI Emerging Markets Index* was 0.44%.
In the bond market, the Barclays U.S. Aggregate Bond Index* posted a 5.72% return for the period, while the Barclays U.S. Corporate High Yield Index* returned 2.00%. The return of the Bank of America Merrill Lynch 3-Month U.S. Treasury Bill Index* was 0.03% for the 12-month period.
The opinions and forecasts expressed may not actually come to pass. This information is subject to change at any time, based on market and other conditions, and should not be construed as a recommendation of any specific security or strategy.
4 | THE RYDEX FUNDS ANNUAL REPORT |
ECONOMIC AND MARKET OVERVIEW (Unaudited)(concluded) | March 31, 2015 |
*Index Definitions:
The following indices are referenced throughout this report. Indices are unmanaged and not available for direct investment. Index performance does not reflect transaction costs, fees, or expenses.
Barclays U.S. Aggregate Bond Index is a broad-based benchmark that measures the investment grade, U.S. dollar-denominated, fixed-rate taxable bond market, including U.S. Treasuries, government-related and corporate securities, MBS (agency fixed-rate and hybrid ARM pass-throughs), ABS, and CMBS.
Barclays U.S. Corporate High Yield Index measures the market of U.S. dollar-denominated, non-investment grade, fixed-rate, taxable corporate bonds. Securities are classified as high yield if the middle rating of Moody’s, Fitch, and S&P is Ba1/BB+/BB+ or below.
Bank of America (“BofA”) Merrill Lynch 3-Month U.S. Treasury Bill Index is an unmanaged market index of U.S. Treasury securities maturing in 90 days that assumes reinvestment of all income.
MSCI EAFE Index is a free float-adjusted market capitalization index that is designed to measure the equity market performance of developed markets, excluding the US & Canada.
MSCI Emerging Markets Index is a free float-adjusted market capitalization weighted index that is designed to measure equity market performance in the global emerging markets.
S&P 500® Index is a capitalization-weighted index of 500 stocks designed to measure the performance of the broad economy, representing all major industries and is considered a representation of the U.S. stock market.
BofA Merrill Lynch U.S. Dollar Emerging Markets Sovereign Plus Index tracks the performance of U.S. dollar-denominated emerging market and cross-over sovereign debt publicly issued in the eurobond or U.S. domestic market. Qualifying countries must have a BBB1 or lower foreign currency long-term sovereign debt rating (based on an average of Moody’s, S&P and Fitch). Countries that are not rated, or that are rated “D” or “SD” by one or several rating agencies qualify for inclusion in the index but individual non-performing securities are removed. Qualifying securities must have at least one year remaining term to final maturity, at least 18 months to maturity at point of issuance, a fixed or floating coupon and a minimum amount outstanding of $250 million. Local currency debt is excluded from the Index. Index constituents are capitalization-weighted based on their current amount outstanding times the market price plus accrued interest.
BNY Mellon Emerging Markets 50 ADR Index is capitalization-weighted and designed to track the performance of approximately 50 emerging market-based depositary receipts.
Credit Suisse Event Driven Liquid Index reflects the returns of a dynamic basket of liquid, investable market factors selected and weighted in accordance with an algorithm that aims to approximate the aggregate returns of the universe of event driven hedge fund managers, as represented by the Event Driven sector of the Dow Jones Credit Suisse Hedge Fund Index.
HFRX Equity Hedge Index is designed to be representative of the overall composition of the equity hedge segment of the hedge fund universe. In an equity hedge strategy both long and short positions primarily in equities are maintained. Equities which are believed to be undervalued are bought and equities which are believed to be overvalued are sold.
Russell 3000® Index measures the performance of the largest 3000 U.S. companies, representing approximately 98% of the investable U.S. equity market.
THE RYDEX FUNDS ANNUAL REPORT | 5 |
A BRIEF NOTE ON THE COMPOUNDING OF RETURNS (Unaudited)
Rydex Emerging Markets 2x Strategy Fund and Rydex Inverse Emerging Markets 2x Strategy Fund described in this report are benchmarked daily to leveraged and/or inverse leveraged versions of published indices. To properly evaluate the performance of these funds, it is essential to understand the effect of mathematical compounding on their respective returns.
Because of the nonlinear effects of leverage applied over time, it is possible for a fund to perform in line with its benchmark for several individual periods in a row, yet seem to trail the benchmark over the entire period. It is also possible that a fund that performs in line with its benchmark on a daily basis may seem to outperform its benchmark over longer periods.
An Example of Compounding
For example, consider a hypothetical fund that is designed to produce returns that correspond to 150% of an index. On the first day of a period, the index rises from a level of 100 to a level of 106, producing a 6.0% gain and an expectation that the fund will rise by 9.0%. On the same day, the fund’s net asset value per share (“NAV”) increases from $10.00 to $10.90 for a gain of 9.0% — in line with its benchmark.
On day two, assume the index falls from 106 to 99 for a loss of about 6.6%. The fund, as expected, falls 9.9% to a price of $9.82. On each day, the fund performed exactly in line with its benchmark, but for the two-day period, the fund was down 1.8%, while the index was down only 1.0%. Without taking into account the daily compounding of returns, one would expect the fund to lose 1.5% and would see the fund as trailing by 0.3% when in fact it had performed perfectly. This example is summarized in the table below.
Index Level | Index Performance | Fund Expectation | Fund NAV | Fund Performance | Assessment | |
Start | 100 | $10.00 | ||||
Day 1 | 106 | 6.0% | 9.0% | $10.90 | 9.0% | In line |
Day 2 | 99 | -6.6% | -9.9% | $ 9.82 | -9.9% | In line |
Cumulative | -1.0% | -1.5% | -1.8% | -0.3% |
As illustrated by this simple example, the effect of leverage can make it difficult to form expectations or judgments about fund performance given only the returns of the unleveraged index.
Because certain funds seek to track the performance of their benchmark on a daily basis, mathematical compounding, especially with respect to those funds that use leverage as part of their investment strategy, may prevent a fund from correlating with the monthly, quarterly, annual or other period performance of its benchmark. Due to the compounding of daily returns, leveraged and inverse funds’ returns over periods other than one day will likely differ in amount and possibly direction from the benchmark return for the same period. Investors should monitor their leveraged and inverse funds’ holdings consistent with their strategies, as frequently as daily. For those funds that consistently apply leverage, the value of the fund’s shares will tend to increase or decrease more than the value of any increase or decrease in its benchmark index. For more on correlation, leverage and other risks, please read the prospectus.
In general, any change in direction in an index will produce compounding that seems to work against an investor. Were the index to move in the same direction (either up or down) for two or more periods in a row, the compounding of those returns would work in an investor’s favor, causing the fund to seemingly beat its benchmark.
As a general rule of thumb, more leverage in a fund will magnify the compounding effect, while less leverage will generally produce results that are more in line with expectations. In addition, periods of high volatility in an underlying index will also cause the effects of compounding to be more pronounced, while lower volatility will produce a more muted effect.
6 | THE RYDEX FUNDS 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; 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 September 30, 2014 and ending March 31, 2015.
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 illustrated 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.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads) on purchase payments, and contingent deferred sales charges (“CDSC”) on redemptions, if any. Therefore, the second table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
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 FUNDS ANNUAL REPORT | 7 |
ABOUT SHAREHOLDERS’ FUND EXPENSES (Unaudited)(continued)
Expense Ratio1 | Fund Return | Beginning Account Value September 30, 2014 | Ending Account Value March 31, 2015 | Expenses Paid During Period2 | |
Table 1. Based on actual Fund return3 | |||||
Long Short Equity Fund | |||||
A-Class | 2.19% | 10.38% | $1,000.00 | $1,103.80 | $11.49 |
C-Class | 2.94% | 9.99% | 1,000.00 | 1,099.90 | 15.39 |
H-Class | 2.19% | 10.42% | 1,000.00 | 1,104.20 | 11.49 |
Institutional Class | 1.94% | 10.53% | 1,000.00 | 1,105.30 | 10.18 |
Event Driven and Distressed Strategies Fund | |||||
A-Class | 1.91% | 1.61% | 1,000.00 | 1,016.10 | 9.60 |
C-Class | 2.66% | 1.21% | 1,000.00 | 1,012.10 | 13.34 |
H-Class | 1.91% | 1.57% | 1,000.00 | 1,015.70 | 9.60 |
Institutional Class | 1.66% | 1.70% | 1,000.00 | 1,017.00 | 8.35 |
Emerging Markets 2x Strategy Fund | |||||
A-Class | 1.73% | (20.70%) | 1,000.00 | 793.00 | 7.73 |
C-Class | 2.45% | (20.96%) | 1,000.00 | 790.40 | 10.94 |
H-Class | 1.74% | (20.72%) | 1,000.00 | 792.80 | 7.78 |
Inverse Emerging Markets 2x Strategy Fund | |||||
A-Class | 1.75% | 13.67% | 1,000.00 | 1,136.70 | 9.32 |
C-Class | 2.46% | 13.02% | 1,000.00 | 1,130.20 | 13.06 |
H-Class | 1.72% | 13.13% | 1,000.00 | 1,131.30 | 9.14 |
Emerging Markets Bond Strategy Fund | |||||
A-Class | 1.54% | (3.54%) | 1,000.00 | 964.60 | 7.54 |
C-Class | 2.15% | (3.89%) | 1,000.00 | 961.10 | 10.51 |
H-Class | 1.52% | (3.56%) | 1,000.00 | 964.40 | 7.44 |
8 | THE RYDEX FUNDS ANNUAL REPORT |
ABOUT SHAREHOLDERS’ FUND EXPENSES (Unaudited)(concluded)
Expense Ratio1 | Fund Return | Beginning Account Value September 30, 2014 | Ending Account Value March 31, 2015 | Expenses Paid During Period2 | |
Table 2. Based on hypothetical 5% return (before expenses) | |||||
Long Short Equity Fund | |||||
A-Class | 2.19% | 5.00% | $1,000.00 | $1,014.01 | $11.00 |
C-Class | 2.94% | 5.00% | 1,000.00 | 1,010.27 | 14.74 |
H-Class | 2.19% | 5.00% | 1,000.00 | 1,014.01 | 11.00 |
Institutional Class | 1.94% | 5.00% | 1,000.00 | 1,015.26 | 9.75 |
Event Driven and Distressed Strategies Fund | |||||
A-Class | 1.91% | 5.00% | 1,000.00 | 1,015.41 | 9.60 |
C-Class | 2.66% | 5.00% | 1,000.00 | 1,011.67 | 13.34 |
H-Class | 1.91% | 5.00% | 1,000.00 | 1,015.41 | 9.60 |
Institutional Class | 1.66% | 5.00% | 1,000.00 | 1,016.65 | 8.35 |
Emerging Markets 2x Strategy Fund | |||||
A-Class | 1.73% | 5.00% | 1,000.00 | 1,016.31 | 8.70 |
C-Class | 2.45% | 5.00% | 1,000.00 | 1,012.72 | 12.29 |
H-Class | 1.74% | 5.00% | 1,000.00 | 1,016.26 | 8.75 |
Inverse Emerging Markets 2x Strategy Fund | |||||
A-Class | 1.75% | 5.00% | 1,000.00 | 1,016.21 | 8.80 |
C-Class | 2.46% | 5.00% | 1,000.00 | 1,012.67 | 12.34 |
H-Class | 1.72% | 5.00% | 1,000.00 | 1,016.36 | 8.65 |
Emerging Markets Bond Strategy Fund | |||||
A-Class | 1.54% | 5.00% | 1,000.00 | 1,017.25 | 7.75 |
C-Class | 2.15% | 5.00% | 1,000.00 | 1,014.21 | 10.80 |
H-Class | 1.52% | 5.00% | 1,000.00 | 1,017.35 | 7.64 |
1 | Annualized and excludes expenses of the underlying funds in which the Funds invest. This ratio represents Net Expenses, which includes interest and dividend expense related to securities sold short. Excluding these expenses the operating expense ratios would be: |
Long Short Equity Fund | |
A-Class | 1.64% |
C-Class | 2.39% |
H-Class | 1.39% |
Institutional Class | 1.64% |
2 | Expenses are equal to the Fund's annualized expense ratio, net of any applicable fee waivers, multiplied by the average account value over the period, multiplied by 182/365 (to reflect the one-half year period). |
3 | Actual cumulative return at net asset value for the period September 30, 2014 to March 31, 2015. |
THE RYDEX FUNDS ANNUAL REPORT | 9 |
PERFORMANCE REPORT AND FUND PROFILE (Unaudited) | March 31, 2015 |
LONG SHORT EQUITY FUND
OBJECTIVE: Seeks long-term capital appreciation.
For the one-year period ended March 31, 2015, the Long Short Equity Fund H-Class returned 7.21%. The Fund’s benchmark, the HFRX Equity Hedge Index, returned 2.37%, while the long-only Russell 3000 Index returned 12.36% over the same period.
The annualized risk for the fund was 7.5%, which was higher than the 5.1% annualized risk of the HFRX Equity Hedge Index, but still lower than the risk level of the Russell 3000 Index, which came in at 12.1%. On a risk-adjusted basis, the fund produced 4.55% of annual alpha relative to the HFRX Equity Hedge Index as the realized beta for the period was 1.13.
Both the factor and industry trend-based strategies used in the Fund contributed positively during the period. Risk factors contributed 2.29% to gross fund returns. Average long exposure to Relative Strength (a measure of momentum) contributed 1.69%, while average short exposure to Price Volatility (a measure of stock level standard deviation) contributed 0.61%. Average long exposures to Trading Activity (a measure of liquidity) and Market Capitalization (large capitalization equities) detracted -0.22% and -0.77%, respectively. Industry exposures contributed 1.84% to gross Fund returns, with average long exposures to Drug companies and Airlines contributing 1.55% and 0.44%, respectively, while average long exposures to Electrical Equipment and Oil Extraction companies detracted -0.28% and -0.33%, respectively.
Stock-specific risk (the residual return of each equity after accounting for the risk factor and industry exposures) contributed 2.34% to gross fund returns for the period. The Fund generally maintains a positive equity market bias and, given the strong equity returns over the period, resulted in equity market beta contributing 3.59% to gross fund return.
For the period, the Fund’s average long exposure was 78.6%, while its short exposure was -25.0%. This resulted in average gross exposure of 1.04% and net exposure of 53.6%. The Fund ended the period with long exposure of 85.3% and short exposure of -27.8%, which resulted in gross (net) exposure of 1.13% (57.5%). The Fund’s long exposures contributed slightly more than 10% to gross fund returns, while its short exposures marginally detracted more than -0.20%.
The Fund invests excess cash into the Guggenheim Strategy Funds which, in turn, invest in a diversified portfolio of debt securities and financial instruments providing exposure to fixed-income markets. The investment objective of the Guggenheim Strategy Funds is to seek a high level of income consistent with the preservation of capital. For the one-year period ended March 31, 2015, investment in the Guggenheim Strategy Funds has benefited Fund performance relative to investing in other short-term investments such as overnight repurchase agreements.
Performance displayed represents past performance which is no guarantee of future results.
Holdings Diversification (Market Exposure as % of Net Assets)
![](https://capedge.com/proxy/N-CSR/0001398344-15-003814/rstf_01.jpg)
“Holdings Diversification (Market Exposure as % of Net Assets)” excludes any temporary cash investments or investments in Guggenheim Strategy Funds Trust mutual funds. Investments in those Funds do not provide “market exposure” to meet the fund’s investment objective, but will significantly increase the portfolio’s exposure to certain other asset categories (and their associated risks), which may cause the Fund to deviate from its principal investment strategy, including: (i) high yield, high risk debt securities rated below the top four long-term rating categories by a nationally recognized statistical rating organization (also known as “junk bonds”); (ii) securities issued by the U.S. government or its agencies and instrumentalities; (iii) CLOs and similar investments; and (iv) other short-term fixed income securities.
10 | THE RYDEX FUNDS ANNUAL REPORT |
PERFORMANCE REPORT AND FUND PROFILE (Unaudited)(concluded) | March 31, 2015 |
Inception Dates: | |
A-Class | March 31, 2004 |
C-Class | March 22, 2002 |
H-Class | March 22, 2002 |
Institutional Class | November 30, 2011 |
Ten Largest Long Holdings (% of Total Net Assets) | |
Guggenheim Strategy Fund I | 6.5% |
AutoZone, Inc. | 0.6% |
Catamaran Corp. | 0.6% |
Rite Aid Corp. | 0.6% |
Sabre Corp. | 0.6% |
ResMed, Inc. | 0.6% |
AmerisourceBergen Corp. — Class A | 0.6% |
Pinnacle Foods, Inc. | 0.5% |
Rollins, Inc. | 0.5% |
Analog Devices, Inc. | 0.5% |
Top Ten Total | 11.6% |
“Ten Largest Long Holdings” exclude any temporary cash or derivative investments. |
Cumulative Fund Performance*
![](https://capedge.com/proxy/N-CSR/0001398344-15-003814/rstf_02.jpg)
![](https://capedge.com/proxy/N-CSR/0001398344-15-003814/rstf_03.jpg)
Average Annual Returns*
Periods Ended March 31, 2015
1 Year | 5 Year | 10 Year | |
A-Class Shares | 7.23% | 5.20% | 4.83% |
A-Class Shares with sales charge† | 2.15% | 4.18% | 4.33% |
C-Class Shares | 6.40% | 4.40% | 4.06% |
C-Class Shares with CDSC‡ | 5.40% | 4.40% | 4.06% |
H-Class Shares | 7.21% | 5.20% | 4.84% |
HFRX Equity Hedge Index | 2.37% | 1.19% | 0.69% |
1 Year | Since Inception (11/30/11) | ||
Institutional Class Shares | 7.48% | 8.77% | |
HFRX Equity Hedge Index | 2.37% | 5.54% |
* | The performance data above represents past performance that is not predictive of future results. The investment return and principal value of an investment in the Fund will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Returns are historical and include changes in principal and reinvested dividends and capital gains and do not reflect the effect of taxes. The HFRX Equity Hedge Index is an unmanaged index and, unlike the Fund, has no management fees or operating expenses to reduce its reported return. The graphs are based on A-Class shares and H-Class shares only; performance for C-Class shares and Institutional Class shares will vary due to differences in fee structures. |
† | Fund returns are calculated using the maximum sales charge of 4.75%. |
‡ | Fund returns include a CDSC of 1% if redeemed within 12 months of purchase. |
THE RYDEX FUNDS ANNUAL REPORT | 11 |
SCHEDULE OF INVESTMENTS | March 31, 2015 |
LONG SHORT EQUITY FUND |
Shares | Value | |||||||
COMMON STOCKS† - 86.1% | ||||||||
CONSUMER, NON-CYCLICAL - 33.3% | ||||||||
Catamaran Corp.*,1 | 4,411 | $ | 262,633 | |||||
Sabre Corp. | 10,699 | 259,986 | ||||||
ResMed, Inc.1 | 3,564 | 255,824 | ||||||
AmerisourceBergen Corp. — Class A1 | 2,244 | 255,075 | ||||||
Pinnacle Foods, Inc.1 | 6,226 | 254,083 | ||||||
Rollins, Inc.1 | 10,200 | 252,246 | ||||||
Flowers Foods, Inc.1 | 11,007 | 250,299 | ||||||
BioMarin Pharmaceutical, Inc.*,1 | 2,000 | 249,241 | ||||||
Health Net, Inc.*,1 | 4,110 | 248,615 | ||||||
Anthem, Inc.1 | 1,600 | 247,056 | ||||||
Envision Healthcare Holdings, Inc.*,1 | 6,400 | 245,440 | ||||||
Mylan N.V.*,1 | 4,114 | 244,165 | ||||||
Alere, Inc.*,1 | 4,978 | 243,424 | ||||||
Halyard Health, Inc.*,1 | 4,911 | 241,622 | ||||||
Teleflex, Inc.1 | 1,999 | 241,539 | ||||||
Premier, Inc. — Class A*,1 | 6,405 | 240,700 | ||||||
Kroger Co.1 | 3,129 | 239,869 | ||||||
Hill-Rom Holdings, Inc.1 | 4,862 | 238,238 | ||||||
Cardinal Health, Inc.1 | 2,637 | 238,042 | ||||||
Towers Watson & Co. — Class A1 | 1,800 | 237,933 | ||||||
Jazz Pharmaceuticals plc*,1 | 1,367 | 236,204 | ||||||
Hologic, Inc.*,1 | 7,139 | 235,765 | ||||||
KAR Auction Services, Inc.1 | 6,200 | 235,166 | ||||||
Gartner, Inc.*,1 | 2,803 | 235,032 | ||||||
LifePoint Hospitals, Inc.*,1 | 3,170 | 232,837 | ||||||
Total System Services, Inc.1 | 6,100 | 232,715 | ||||||
Monster Beverage Corp.*,1 | 1,679 | 232,366 | ||||||
Medivation, Inc.*,1 | 1,796 | 231,810 | ||||||
Church & Dwight Company, Inc.1 | 2,710 | 231,488 | ||||||
Aaron’s, Inc.1 | 8,167 | 231,208 | ||||||
Myriad Genetics, Inc.* | 6,500 | 230,100 | ||||||
Booz Allen Hamilton Holding Corp.1 | 7,946 | 229,957 | ||||||
Constellation Brands, Inc. — Class A*,1 | 1,978 | 229,863 | ||||||
Eli Lilly & Co.1 | 3,163 | 229,792 | ||||||
Seattle Genetics, Inc.*,1 | 6,498 | 229,704 | ||||||
Incyte Corp.*,1 | 2,500 | 229,150 | ||||||
Sprouts Farmers Market, Inc.*,1 | 6,498 | 228,925 | ||||||
Brown-Forman Corp. — Class B1 | 2,531 | 228,676 | ||||||
Coca-Cola Enterprises, Inc.1 | 5,167 | 228,381 | ||||||
Clorox Co.1 | 2,066 | 228,066 | ||||||
Centene Corp.*,1 | 3,218 | 227,480 | ||||||
Alnylam Pharmaceuticals, Inc.*,1 | 2,175 | 227,114 | ||||||
Community Health Systems, Inc.*,1 | 4,340 | 226,895 | ||||||
Dr Pepper Snapple Group, Inc.1 | 2,880 | 226,022 | ||||||
Sysco Corp.1 | 5,984 | 225,776 | ||||||
Regeneron Pharmaceuticals, Inc.*,1 | 500 | 225,740 | ||||||
Alexion Pharmaceuticals, Inc.*,1 | 1,300 | 225,290 | ||||||
Sirona Dental Systems, Inc.*,1 | 2,485 | 223,625 | ||||||
Patterson Companies, Inc.1 | 4,470 | 218,091 | ||||||
Molson Coors Brewing Co. — Class B1 | 2,926 | 217,841 | ||||||
ServiceMaster Global Holdings, Inc.*,1 | 6,432 | 217,080 | ||||||
Philip Morris International, Inc.1 | 2,860 | 215,444 | ||||||
Whole Foods Market, Inc.1 | 4,123 | 214,726 | ||||||
Henry Schein, Inc.*,1 | 1,534 | 214,177 | ||||||
Aetna, Inc.1 | 1,999 | 212,953 | ||||||
Ingredion, Inc.1 | 2,734 | 212,760 | ||||||
Vertex Pharmaceuticals, Inc.*,1 | 1,800 | 212,346 | ||||||
Omnicare, Inc.1 | 2,691 | 207,368 | ||||||
Align Technology, Inc.*,1 | 3,752 | 201,801 | ||||||
Vectrus, Inc.*,1 | 7,321 | 186,612 | ||||||
DeVry Education Group, Inc.1 | 5,147 | 171,704 | ||||||
Zoetis, Inc.1 | 3,391 | 156,969 | ||||||
Graham Holdings Co. — Class B1 | 149 | 156,395 | ||||||
Altria Group, Inc.1 | 2,945 | 147,309 | ||||||
Pilgrim’s Pride Corp.2 | 6,155 | 139,041 | ||||||
Johnson & Johnson1 | 1,300 | 130,780 | ||||||
DENTSPLY International, Inc.1 | 2,238 | 113,892 | ||||||
WhiteWave Foods Co. — Class A*,1 | 2,334 | 103,490 | ||||||
Service Corporation International1 | 3,589 | 93,493 | ||||||
VCA, Inc.*,1 | 1,593 | 87,328 | ||||||
Quest Diagnostics, Inc.1 | 791 | 60,788 | ||||||
Bristol-Myers Squibb Co.1 | 711 | 45,860 | ||||||
Perrigo Company plc1 | 161 | 26,654 | ||||||
Morningstar, Inc.1 | 300 | 22,473 | ||||||
Hain Celestial Group, Inc.*,1 | 318 | 20,368 | ||||||
Mallinckrodt plc*,1 | 136 | 17,224 | ||||||
Total Consumer, Non-cyclical | 15,406,144 | |||||||
CONSUMER, CYCLICAL - 17.2% | ||||||||
AutoZone, Inc.*,1 | 400 | 272,864 | ||||||
Rite Aid Corp.*,1 | 30,001 | 260,708 | ||||||
Ulta Salon Cosmetics & Fragrance, Inc.*,1 | 1,668 | 251,618 | ||||||
Gaming and Leisure Properties, Inc.1 | 6,729 | 248,098 | ||||||
Ascena Retail Group, Inc.*,1 | 17,013 | 246,858 | ||||||
Brinker International, Inc.1 | 4,000 | 246,240 | ||||||
Taylor Morrison Home Corp. — Class A*,1 | 11,806 | 246,156 | ||||||
Kohl’s Corp.1 | 3,128 | 244,766 | ||||||
Sears Holdings Corp.*,2 | 5,883 | 243,439 | ||||||
JC Penney Company, Inc.* | 28,939 | 243,377 | ||||||
Leggett & Platt, Inc.1 | 5,173 | 238,424 | ||||||
Dillard’s, Inc. — Class A1 | 1,739 | 237,391 | ||||||
Jarden Corp.*,1 | 4,487 | 237,362 | ||||||
Choice Hotels International, Inc.1 | 3,700 | 237,059 | ||||||
NVR, Inc.*,1 | 178 | 236,501 | ||||||
GNC Holdings, Inc. — Class A1 | 4,819 | 236,468 | ||||||
Penske Automotive Group, Inc.1 | 4,592 | 236,442 | ||||||
Walgreens Boots Alliance, Inc.1 | 2,787 | 236,003 | ||||||
Sally Beauty Holdings, Inc.*,1 | 6,850 | 235,435 | ||||||
Tractor Supply Co.1 | 2,766 | 235,276 | ||||||
Newell Rubbermaid, Inc.1 | 6,017 | 235,084 | ||||||
Tempur Sealy International, Inc.*,1 | 4,021 | 232,173 | ||||||
CVS Health Corp.1 | 2,249 | 232,119 | ||||||
Chico’s FAS, Inc.1 | 13,115 | 232,004 | ||||||
Michaels Companies, Inc.*,1 | 8,539 | 231,065 |
12 | THE RYDEX FUNDS ANNUAL REPORT | SEE NOTES TO FINANCIAL STATEMENTS. |
SCHEDULE OF INVESTMENTS (continued) | March 31, 2015 |
LONG SHORT EQUITY FUND |
Shares | Value | |||||||
Harman International Industries, Inc.1 | 1,717 | $ | 229,443 | |||||
DSW, Inc. — Class A1 | 6,202 | 228,730 | ||||||
Regal Entertainment Group — Class A1 | 10,000 | 228,400 | ||||||
Big Lots, Inc.1 | 4,753 | 228,287 | ||||||
Whirlpool Corp.1 | 1,054 | 212,971 | ||||||
CST Brands, Inc.1 | 4,701 | 206,045 | ||||||
Nordstrom, Inc.1 | 2,348 | 188,591 | ||||||
Hyatt Hotels Corp. — Class A*,1 | 2,700 | 159,894 | ||||||
Restaurant Brands International, Inc.1 | 3,700 | 142,117 | ||||||
O’Reilly Automotive, Inc.*,1 | 300 | 64,872 | ||||||
Dick’s Sporting Goods, Inc.1 | 1,085 | 61,834 | ||||||
Total Consumer, Cyclical | 7,984,114 | |||||||
TECHNOLOGY - 11.1% | ||||||||
Analog Devices, Inc.1 | 4,000 | 251,999 | ||||||
MSCI, Inc. — Class A1 | 4,100 | 251,371 | ||||||
DST Systems, Inc.1 | 2,256 | 249,763 | ||||||
Jack Henry & Associates, Inc.1 | 3,492 | 244,056 | ||||||
Pitney Bowes, Inc.1 | 10,400 | 242,528 | ||||||
Amdocs Ltd.1 | 4,400 | 239,360 | ||||||
Broadridge Financial Solutions, Inc.1 | 4,333 | 238,358 | ||||||
Fidelity National Information Services, Inc.1 | 3,500 | 238,210 | ||||||
VeriFone Systems, Inc.*,1 | 6,744 | 235,298 | ||||||
Teradyne, Inc.1 | 11,984 | 225,898 | ||||||
Linear Technology Corp.1 | 4,800 | 224,640 | ||||||
Maxim Integrated Products, Inc.1 | 6,434 | 223,968 | ||||||
KLA-Tencor Corp.1 | 3,800 | 221,502 | ||||||
Microchip Technology, Inc.1 | 4,522 | 221,126 | ||||||
Altera Corp.1 | 5,100 | 218,841 | ||||||
Leidos Holdings, Inc.1 | 5,200 | 218,192 | ||||||
Zayo Group Holdings, Inc.*,1 | 7,715 | 215,711 | ||||||
Atmel Corp.1 | 26,110 | 214,885 | ||||||
NVIDIA Corp.1 | 10,200 | 213,435 | ||||||
Advanced Micro Devices, Inc.*,1 | 78,600 | 210,648 | ||||||
Teradata Corp.*,1 | 4,416 | 194,922 | ||||||
ON Semiconductor Corp.*,1 | 15,054 | 182,304 | ||||||
Cree, Inc.*,1 | 4,700 | 166,803 | ||||||
Marvell Technology Group Ltd.1 | 1,178 | 17,317 | ||||||
Total Technology | 5,161,135 | |||||||
FINANCIAL - 9.9% | ||||||||
CoreLogic, Inc.*,1 | 6,718 | 236,943 | ||||||
Plum Creek Timber Company, Inc.1 | 5,407 | 234,935 | ||||||
Two Harbors Investment Corp.1 | 21,762 | 231,113 | ||||||
Starwood Property Trust, Inc.1 | 9,434 | 229,246 | ||||||
Outfront Media, Inc.1 | 7,624 | 228,110 | ||||||
First Niagara Financial Group, Inc.1 | 25,800 | 228,071 | ||||||
Rayonier, Inc.1 | 8,441 | 227,569 | ||||||
Artisan Partners Asset Management, Inc. — Class A1 | 4,804 | 218,390 | ||||||
FNFV Group*,1 | 15,465 | 218,057 | ||||||
MFA Financial, Inc.1 | 27,618 | 217,077 | ||||||
Piedmont Office Realty Trust, Inc. — Class A1 | 11,564 | 215,206 | ||||||
Home Properties, Inc.1 | 3,088 | 213,968 | ||||||
Chimera Investment Corp.1 | 67,955 | 213,379 | ||||||
American Homes 4 Rent — Class A1 | 12,800 | 211,840 | ||||||
American National Insurance Co.1 | 2,137 | 210,259 | ||||||
CBOE Holdings, Inc.1 | 3,513 | 201,664 | ||||||
Old Republic International Corp.1 | 12,418 | 185,525 | ||||||
Weyerhaeuser Co.1 | 5,559 | 184,281 | ||||||
Corporate Office Properties Trust1 | 5,749 | 168,906 | ||||||
Columbia Property Trust, Inc.1 | 4,795 | 129,561 | ||||||
Genworth Financial, Inc. — Class A*,1 | 16,991 | 124,204 | ||||||
American Realty Capital Properties, Inc.1 | 9,565 | 94,215 | ||||||
Interactive Brokers Group, Inc. — Class A1 | 2,654 | 90,289 | ||||||
NASDAQ OMX Group, Inc.1 | 1,334 | 67,954 | ||||||
American Capital Agency Corp.1 | 600 | 12,798 | ||||||
Total Financial | 4,593,560 | |||||||
INDUSTRIAL - 9.6% | ||||||||
Hexcel Corp.1 | 4,800 | 246,816 | ||||||
Spirit AeroSystems Holdings, Inc. — Class A*,1 | 4,702 | 245,491 | ||||||
TransDigm Group, Inc.1 | 1,112 | 243,217 | ||||||
Huntington Ingalls Industries, Inc.1 | 1,700 | 238,255 | ||||||
Energizer Holdings, Inc.1 | 1,716 | 236,894 | ||||||
Covanta Holding Corp.1 | 10,528 | 236,143 | ||||||
Eagle Materials, Inc.1 | 2,800 | 233,968 | ||||||
Gentex Corp.1 | 12,785 | 233,966 | ||||||
Con-way, Inc.1 | 5,200 | 229,476 | ||||||
Triumph Group, Inc.1 | 3,840 | 229,325 | ||||||
Greif, Inc. — Class A1 | 5,833 | 229,062 | ||||||
Clean Harbors, Inc.*,1 | 4,019 | 228,199 | ||||||
Sonoco Products Co.1 | 5,014 | 227,936 | ||||||
Vulcan Materials Co.1 | 2,700 | 227,610 | ||||||
Textron, Inc.1 | 5,100 | 226,083 | ||||||
Martin Marietta Materials, Inc.1 | 1,600 | 223,680 | ||||||
Rockwell Collins, Inc.1 | 2,300 | 222,065 | ||||||
Tech Data Corp.*,1 | 3,771 | 217,851 | ||||||
Garmin Ltd.1 | 4,256 | 202,245 | ||||||
GoPro, Inc. — Class A*,2 | 1,410 | 61,208 | ||||||
Total Industrial | 4,439,490 | |||||||
COMMUNICATIONS - 2.8% | ||||||||
Clear Channel Outdoor Holdings, Inc. — Class A1 | 24,108 | 243,973 | ||||||
Starz — Class A*,1 | 6,900 | 237,429 | ||||||
News Corp. — Class A*,1 | 13,600 | 217,736 | ||||||
Windstream Holdings, Inc.2 | 28,190 | 208,605 | ||||||
CenturyLink, Inc.1 | 5,749 | 198,628 | ||||||
JDS Uniphase Corp.*,1 | 13,200 | 173,184 | ||||||
Total Communications | 1,279,555 | |||||||
ENERGY - 1.0% | ||||||||
CVR Energy, Inc. | 5,700 | 242,591 | ||||||
Murphy USA, Inc.*,1 | 3,288 | 237,953 | ||||||
Total Energy | 480,544 |
SEE NOTES TO FINANCIAL STATEMENTS. | THE RYDEX FUNDS ANNUAL REPORT | 13 |
SCHEDULE OF INVESTMENTS (continued) | March 31, 2015 |
LONG SHORT EQUITY FUND |
Shares | Value | |||||||
UTILITIES - 0.4% | ||||||||
Great Plains Energy, Inc.1 | 7,792 | $ | 207,890 | |||||
DIVERSIFIED - 0.4% | ||||||||
Leucadia National Corp.1 | 7,800 | 173,862 | ||||||
BASIC MATERIALS - 0.4% | ||||||||
Axalta Coating Systems Ltd.*,1 | 6,100 | 168,482 | ||||||
Total Common Stocks | ||||||||
(Cost $37,831,629) | 39,894,776 | |||||||
MUTUAL FUNDS†,3 - 6.6% | ||||||||
Guggenheim Strategy Fund I | 121,862 | 3,034,367 | ||||||
Guggenheim Strategy Fund II | 561 | 13,978 | ||||||
Total Mutual Funds | ||||||||
(Cost $3,056,748) | 3,048,345 | |||||||
Face Amount | ||||||||
REPURCHASE AGREEMENTS††,4 - 5.8% | ||||||||
HSBC Group issued 03/31/15 at 0.03% due 04/01/15 | $ | 2,130,485 | 2,130,485 | |||||
RBC Capital Markets issued 03/31/15 at 0.05% due 04/01/15 | 325,583 | 325,583 | ||||||
UMB Financial Corp. issued 03/31/15 at 0.03% due 04/01/15 | 261,334 | 261,334 | ||||||
Total Repurchase Agreements | ||||||||
(Cost $2,717,402) | 2,717,402 | |||||||
SECURITIES LENDING COLLATERAL††,5 - 1.3% | ||||||||
Repurchase Agreements | ||||||||
HSBC Securities, Inc. issued 03/31/15 at 0.10% due 04/01/15 | 385,251 | 385,251 | ||||||
BNP Paribas Securities Corp. issued 03/31/15 at 0.10% due 04/01/15 | 132,526 | 132,526 | ||||||
Barclays Capital, Inc. issued 03/31/15 at 0.10% due 04/01/15 | 68,406 | 68,406 | ||||||
Total Securities Lending Collateral | ||||||||
(Cost $586,183) | 586,183 | |||||||
Total Investments - 99.8% | ||||||||
(Cost $44,191,962) | $ | 46,246,706 | ||||||
Shares | ||||||||
COMMON STOCKS SOLD SHORT† - (25.0)% | ||||||||
UTILITIES - (0.5)% | ||||||||
AES Corp. | 7,868 | (101,104 | ) | |||||
Calpine Corp.* | 5,158 | (117,963 | ) | |||||
Total Utilities | (219,067 | ) | ||||||
TECHNOLOGY - (1.0)% | ||||||||
EMC Corp. | 2,189 | (55,951 | ) | |||||
SanDisk Corp. | 1,404 | (89,322 | ) | |||||
athenahealth, Inc.* | 860 | (102,675 | ) | |||||
Cerner Corp.* | 1,500 | (109,890 | ) | |||||
Apple, Inc. | 904 | (112,485 | ) | |||||
Total Technology | (470,323 | ) | ||||||
CONSUMER, NON-CYCLICAL - (1.3)% | ||||||||
Avon Products, Inc. | 12,788 | (102,176 | ) | |||||
United Rentals, Inc.* | 1,257 | (114,588 | ) | |||||
Quanta Services, Inc.* | 4,041 | (115,290 | ) | |||||
Estee Lauder Companies, Inc. — Class A | 1,395 | (116,008 | ) | |||||
Coty, Inc. — Class A* | 5,088 | (123,486 | ) | |||||
Total Consumer, Non-cyclical | (571,548 | ) | ||||||
CONSUMER, CYCLICAL - (1.7)% | ||||||||
Tesla Motors, Inc.* | 90 | (16,989 | ) | |||||
TJX Companies, Inc. | 782 | (54,779 | ) | |||||
WESCO International, Inc.* | 1,050 | (73,385 | ) | |||||
Allison Transmission Holdings, Inc. | 3,252 | (103,869 | ) | |||||
MSC Industrial Direct Company, Inc. — Class A | 1,460 | (105,412 | ) | |||||
Fossil Group, Inc.* | 1,300 | (107,185 | ) | |||||
Fastenal Co. | 2,651 | (109,844 | ) | |||||
Ford Motor Co. | 6,821 | (110,091 | ) | |||||
WW Grainger, Inc. | 481 | (113,424 | ) | |||||
Total Consumer, Cyclical | (794,978 | ) | ||||||
BASIC MATERIALS - (2.1)% | ||||||||
Freeport-McMoRan, Inc. | 3,487 | (66,079 | ) | |||||
Alcoa, Inc. | 7,260 | (93,799 | ) | |||||
Newmont Mining Corp. | 4,835 | (104,968 | ) | |||||
Southern Copper Corp. | 3,650 | (106,507 | ) | |||||
Nucor Corp. | 2,438 | (115,878 | ) | |||||
Compass Minerals International, Inc. | 1,247 | (116,233 | ) | |||||
United States Steel Corp. | 4,949 | (120,756 | ) | |||||
Reliance Steel & Aluminum Co. | 1,986 | (121,305 | ) | |||||
Steel Dynamics, Inc. | 6,285 | (126,328 | ) | |||||
Total Basic Materials | (971,853 | ) |
14 | THE RYDEX FUNDS ANNUAL REPORT | SEE NOTES TO FINANCIAL STATEMENTS. |
SCHEDULE OF INVESTMENTS (continued) | March 31, 2015 |
LONG SHORT EQUITY FUND |
Shares | Value | |||||||
COMMUNICATIONS - (2.3)% | ||||||||
Liberty Global plc — Class A* | 1,057 | $ | (54,404 | ) | ||||
Liberty Global plc* | 1,097 | (54,641 | ) | |||||
Google, Inc. — Class A* | 99 | (54,915 | ) | |||||
United States Cellular Corp.* | 1,725 | (61,617 | ) | |||||
Sprint Corp.* | 17,422 | (82,580 | ) | |||||
Yahoo!, Inc.* | 2,004 | (89,048 | ) | |||||
Netflix, Inc.* | 230 | (95,839 | ) | |||||
T-Mobile US, Inc.* | 3,506 | (111,105 | ) | |||||
Amazon.com, Inc.* | 302 | (112,374 | ) | |||||
Walt Disney Co. | 1,106 | (116,008 | ) | |||||
Facebook, Inc. — Class A* | 1,432 | (117,732 | ) | |||||
Priceline Group, Inc.* | 103 | (119,907 | ) | |||||
Total Communications | (1,070,170 | ) | ||||||
FINANCIAL - (3.5)% | ||||||||
CIT Group, Inc. | 191 | (8,618 | ) | |||||
Equity Residential | 539 | (41,967 | ) | |||||
General Growth Properties, Inc. | 1,761 | (52,038 | ) | |||||
Bank of America Corp. | 6,272 | (96,526 | ) | |||||
Discover Financial Services | 1,790 | (100,867 | ) | |||||
Air Lease Corp. — Class A | 2,770 | (104,540 | ) | |||||
Capital One Financial Corp. | 1,330 | (104,831 | ) | |||||
JPMorgan Chase & Co. | 1,776 | (107,590 | ) | |||||
Simon Property Group, Inc. | 551 | (107,797 | ) | |||||
Public Storage | 548 | (108,033 | ) | |||||
American International Group, Inc. | 1,979 | (108,429 | ) | |||||
American Express Co. | 1,406 | (109,836 | ) | |||||
Wells Fargo & Co. | 2,020 | (109,888 | ) | |||||
Citigroup, Inc. | 2,161 | (111,335 | ) | |||||
People’s United Financial, Inc. | 7,582 | (115,246 | ) | |||||
New York Community Bancorp, Inc. | 6,903 | (115,487 | ) | |||||
TFS Financial Corp. | 7,953 | (116,750 | ) | |||||
Total Financial | (1,619,778 | ) | ||||||
INDUSTRIAL - (4.6)% | ||||||||
Caterpillar, Inc. | 821 | (65,705 | ) | |||||
Flowserve Corp. | 1,519 | (85,808 | ) | |||||
Xylem, Inc. | 2,476 | (86,710 | ) | |||||
Teekay Corp. | 2,022 | (94,165 | ) | |||||
General Electric Co. | 4,099 | (101,696 | ) | |||||
GATX Corp. | 1,770 | (102,625 | ) | |||||
KBR, Inc. | 7,326 | (106,080 | ) | |||||
Hubbell, Inc. — Class B | 970 | (106,331 | ) | |||||
Dover Corp. | 1,547 | (106,929 | ) | |||||
SBA Communications Corp. — Class A* | 946 | (110,777 | ) | |||||
AMETEK, Inc. | 2,109 | (110,807 | ) | |||||
Stanley Black & Decker, Inc. | 1,168 | (111,380 | ) | |||||
Middleby Corp.* | 1,089 | (111,786 | ) | |||||
Kirby Corp.* | 1,503 | (112,800 | ) | |||||
Wabtec Corp. | 1,196 | (113,632 | ) | |||||
Fluor Corp. | 2,002 | (114,434 | ) | |||||
Jacobs Engineering Group, Inc.* | 2,662 | (120,216 | ) | |||||
AECOM* | 3,905 | (120,353 | ) | |||||
Acuity Brands, Inc. | 723 | (121,580 | ) | |||||
Chicago Bridge & Iron Company N.V. | 2,853 | (140,538 | ) | |||||
Total Industrial | (2,144,352 | ) | ||||||
ENERGY - (8.0)% | ||||||||
California Resources Corp. | 480 | (3,653 | ) | |||||
Phillips 66 | 159 | (12,497 | ) | |||||
WPX Energy, Inc.* | 2,334 | (25,511 | ) | |||||
Cimarex Energy Co. | 342 | (39,361 | ) | |||||
Range Resources Corp. | 1,200 | (62,448 | ) | |||||
Marathon Petroleum Corp. | 682 | (69,830 | ) | |||||
Rowan Companies plc — Class A | 4,489 | (79,500 | ) | |||||
Southwestern Energy Co.* | 3,542 | (82,139 | ) | |||||
Tesoro Corp. | 937 | (85,539 | ) | |||||
Atwood Oceanics, Inc. | 3,449 | (96,951 | ) | |||||
MRC Global, Inc.* | 8,320 | (98,592 | ) | |||||
CONSOL Energy, Inc. | 3,584 | (99,958 | ) | |||||
Occidental Petroleum Corp. | 1,383 | (100,959 | ) | |||||
Cabot Oil & Gas Corp. — Class A | 3,487 | (102,971 | ) | |||||
Oil States International, Inc.* | 2,592 | (103,084 | ) | |||||
Dril-Quip, Inc.* | 1,514 | (103,542 | ) | |||||
Exxon Mobil Corp. | 1,222 | (103,870 | ) | |||||
Antero Resources Corp.* | 2,949 | (104,159 | ) | |||||
Marathon Oil Corp. | 3,999 | (104,414 | ) | |||||
Hess Corp. | 1,553 | (105,402 | ) | |||||
Devon Energy Corp. | 1,750 | (105,543 | ) | |||||
ConocoPhillips | 1,698 | (105,717 | ) | |||||
Kosmos Energy Ltd.* | 13,366 | (105,725 | ) | |||||
Murphy Oil Corp. | 2,275 | (106,015 | ) | |||||
National Oilwell Varco, Inc. | 2,139 | (106,929 | ) | |||||
FMC Technologies, Inc.* | 2,893 | (107,070 | ) | |||||
Chevron Corp. | 1,027 | (107,814 | ) | |||||
EOG Resources, Inc. | 1,176 | (107,827 | ) | |||||
QEP Resources, Inc. | 5,280 | (110,088 | ) | |||||
Continental Resources, Inc.* | 2,535 | (110,703 | ) | |||||
Energen Corp. | 1,695 | (111,870 | ) |
SEE NOTES TO FINANCIAL STATEMENTS. | THE RYDEX FUNDS ANNUAL REPORT | 15 |
SCHEDULE OF INVESTMENTS (concluded) | March 31, 2015 |
LONG SHORT EQUITY FUND |
Shares | Value | |||||||
Gulfport Energy Corp.* | 2,522 | $ | (115,785 | ) | ||||
Patterson-UTI Energy, Inc. | 6,211 | (116,612 | ) | |||||
Spectra Energy Corp. | 3,230 | (116,829 | ) | |||||
ONEOK, Inc. | 2,433 | (117,368 | ) | |||||
Concho Resources, Inc.* | 1,016 | (117,775 | ) | |||||
Equities Corp. | 1,442 | (119,498 | ) | |||||
Williams Companies, Inc. | 2,400 | (121,416 | ) | |||||
Newfield Exploration Co.* | 3,584 | (125,764 | ) | |||||
Total Energy | (3,720,728 | ) | ||||||
Total Common Stocks Sold Short | ||||||||
(Proceeds $12,074,857) | (11,582,797 | ) | ||||||
Total Securities Sold Short- (25.0)% | ||||||||
(Proceeds $12,074,857) | $ | (11,582,797 | ) | |||||
Other Assets & Liabilities, net - 25.2% | 11,672,868 | |||||||
Total Net Assets - 100.0% | $ | 46,336,777 |
* | Non-income producing security. |
† | Value determined based on Level 1 inputs — See Note 4. |
†† | Value determined based on Level 2 inputs — See Note 4. |
1 | All or a portion of this security is pledged as short security collateral at March 31, 2015. |
2 | All or a portion of this security is on loan at March 31, 2015 — See Note 6. |
3 | Investment in a product that is managed by and/or pays a management fee to a party related to the Adviser — See Note 12. |
4 | Repurchase Agreements — See Note 5. |
5 | Securities lending collateral — See Note 6. |
plc — Public Limited Company |
16 | THE RYDEX FUNDS ANNUAL REPORT | SEE NOTES TO FINANCIAL STATEMENTS. |
LONG SHORT EQUITY FUND |
STATEMENT OF ASSETS AND LIABILITIES
March 31, 2015
Assets: | ||||
Investments, at value - including $566,423 of securities loaned (cost $40,888,377) | $ | 42,943,121 | ||
Repurchase agreements, at value (cost $3,303,585) | 3,303,585 | |||
Total investments (cost $44,191,962) | 46,246,706 | |||
Segregated cash with broker | 12,322,772 | |||
Cash | 1,860 | |||
Receivables: | ||||
Fund shares sold | 72,380 | |||
Dividends | 65,618 | |||
Securities lending income | 4,396 | |||
Interest | 2 | |||
Total assets | 58,713,734 | |||
Liabilities: | ||||
Securities sold short, at value (proceeds $12,074,857) | 11,582,797 | |||
Payable for: | ||||
Return of securities loaned | 594,750 | |||
Fund shares redeemed | 87,693 | |||
Management fees | 34,207 | |||
Distribution and service fees | 21,703 | |||
Transfer agent and administrative fees | 9,502 | |||
Portfolio accounting fees | 3,801 | |||
Securities purchased | 3,635 | |||
Miscellaneous | 38,869 | |||
Total liabilities | 12,376,957 | |||
Commitments and contingent liabilities (Note 15) | — | |||
Net assets | $ | 46,336,777 | ||
Net assets consist of: | ||||
Paid in capital | $ | 110,163,669 | ||
Accumulated net investment loss | (164,159 | ) | ||
Accumulated net realized loss on investments | (66,209,537 | ) | ||
Net unrealized appreciation on investments | 2,546,804 | |||
Net assets | $ | 46,336,777 | ||
A-Class: | ||||
Net assets | $ | 6,062,975 | ||
Capital shares outstanding | 375,248 | |||
Net asset value per share | $ | 16.16 | ||
Maximum offering price per share (Net asset value divided by 95.25%) | $ | 16.97 | ||
C-Class: | ||||
Net assets | $ | 19,951,548 | ||
Capital shares outstanding | 1,362,885 | |||
Net asset value per share | $ | 14.64 | ||
H-Class: | ||||
Net assets | $ | 20,020,071 | ||
Capital shares outstanding | 1,234,980 | |||
Net asset value per share | $ | 16.21 | ||
Institutional Class: | ||||
Net assets | $ | 302,183 | ||
Capital shares outstanding | 18,452 | |||
Net asset value per share | $ | 16.38 |
STATEMENT OF OPERATIONS
Year Ended March 31, 2015
Investment Income: | ||||
Dividends (net of foreign withholding tax of $1,208) | $ | 771,567 | ||
Income from securities lending, net | 66,871 | |||
Interest | 865 | |||
Total investment income | 839,303 | |||
Expenses: | ||||
Management fees | 432,133 | |||
Transfer agent and administrative fees | 120,037 | |||
Distribution and service fees: | ||||
A-Class | 14,926 | |||
C-Class | 203,473 | |||
H-Class | 53,723 | |||
Portfolio accounting fees | 48,014 | |||
Short sales dividend expense | 176,876 | |||
Prime broker interest expense | 69,268 | |||
Custodian fees | 6,297 | |||
Trustees’ fees* | 3,868 | |||
Line of credit fees | 89 | |||
Miscellaneous | 64,411 | |||
Total expenses | 1,193,115 | |||
Net investment loss | (353,812 | ) | ||
Net Realized and Unrealized Gain (Loss): | ||||
Net realized gain (loss) on: | ||||
Investments | 4,354,224 | |||
Futures contracts | (77,572 | ) | ||
Securities sold short | (662,373 | ) | ||
Net realized gain | 3,614,279 | |||
Net change in unrealized appreciation (depreciation) on: | ||||
Investments | (1,183,744 | ) | ||
Securities sold short | 746,484 | |||
Net change in unrealized appreciation (depreciation) | (437,260 | ) | ||
Net realized and unrealized gain | 3,177,019 | |||
Net increase in net assets resulting from operations | $ | 2,823,207 |
* | Relates to Trustees not deemed “interested persons” within the meaning of Section 2(a)(19) of the 1940 Act. |
SEE NOTES TO FINANCIAL STATEMENTS. | THE RYDEX FUNDS ANNUAL REPORT | 17 |
LONG SHORT EQUITY FUND |
STATEMENTS OF CHANGES IN NET ASSETS
Year Ended March 31, 2015 | Year Ended March 31, 2014 | |||||||
Increase (Decrease) in Net Assets from Operations: | ||||||||
Net investment loss | $ | (353,812 | ) | $ | (773,445 | ) | ||
Net realized gain on investments | 3,614,279 | 7,362,587 | ||||||
Net change in unrealized appreciation (depreciation) on investments | (437,260 | ) | (488,800 | ) | ||||
Net increase in net assets resulting from operations | 2,823,207 | 6,100,342 | ||||||
Capital share transactions: | ||||||||
Proceeds from sale of shares | ||||||||
A-Class | 2,265,846 | 4,913,621 | ||||||
C-Class | 789,638 | 1,459,676 | ||||||
H-Class | 3,875,899 | 16,322,796 | ||||||
Institutional Class | 380,674 | 1,001 | ||||||
Cost of shares redeemed | ||||||||
A-Class | (4,148,005 | ) | (11,324,362 | ) | ||||
C-Class | (4,392,338 | ) | (5,045,687 | ) | ||||
H-Class | (14,347,395 | ) | (16,148,434 | ) | ||||
Institutional Class | (116,016 | ) | (1,055 | ) | ||||
Net decrease from capital share transactions | (15,691,697 | ) | (9,822,444 | ) | ||||
Net decrease in net assets | (12,868,490 | ) | (3,722,102 | ) | ||||
Net assets: | ||||||||
Beginning of year | 59,205,267 | 62,927,369 | ||||||
End of year | $ | 46,336,777 | $ | 59,205,267 | ||||
Accumulated net investment loss at end of year | $ | (164,159 | ) | $ | (238,102 | ) | ||
Capital share activity: | ||||||||
Shares sold | ||||||||
A-Class | 147,669 | 345,762 | ||||||
C-Class | 58,483 | 110,051 | ||||||
H-Class | 251,585 | 1,125,572 | ||||||
Institutional Class | 25,112 | 69 | ||||||
Shares redeemed | ||||||||
A-Class | (273,585 | ) | (816,705 | ) | ||||
C-Class | (320,706 | ) | (384,136 | ) | ||||
H-Class | (953,740 | ) | (1,129,156 | ) | ||||
Institutional Class | (7,468 | ) | (69 | ) | ||||
Net decrease in shares | (1,072,650 | ) | (748,612 | ) |
18 | THE RYDEX FUNDS ANNUAL REPORT | SEE NOTES TO FINANCIAL STATEMENTS. |
LONG SHORT EQUITY FUND |
FINANCIAL HIGHLIGHTS
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.
A-Class | Year Ended March 31, 2015 | Year Ended March 31, 2014 | Year Ended March 28, 2013 | Year Ended March 31, 2012 | Year Ended March 31, 2011 | |||||||||||||||
Per Share Data | ||||||||||||||||||||
Net asset value, beginning of period | $ | 15.07 | $ | 13.48 | $ | 13.28 | $ | 14.28 | $ | 12.59 | ||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||
Net investment income (loss)b | (.06 | ) | (.13 | ) | (.05 | ) | .03 | (.04 | ) | |||||||||||
Net gain (loss) on investments (realized and unrealized) | 1.15 | 1.72 | .30 | (1.03 | ) | 1.73 | ||||||||||||||
Total from investment operations | 1.09 | 1.59 | .25 | (1.00 | ) | 1.69 | ||||||||||||||
Less distributions from: | ||||||||||||||||||||
Net investment income | — | — | (.05 | ) | — | — | ||||||||||||||
Total distributions | — | — | (.05 | ) | — | — | ||||||||||||||
Redemption fees collected | — | — | — | — | — | c | ||||||||||||||
Net asset value, end of period | $ | 16.16 | $ | 15.07 | $ | 13.48 | $ | 13.28 | $ | 14.28 | ||||||||||
Total Returnd | 7.23 | % | 11.80 | % | 1.89 | % | (7.00 | %) | 13.42 | % | ||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||
Net assets, end of period (in thousands) | $ | 6,063 | $ | 7,552 | $ | 13,106 | $ | 16,510 | $ | 25,447 | ||||||||||
Ratios to average net assets: | ||||||||||||||||||||
Net investment income (loss) | (0.42 | %) | (0.91 | %) | (0.35 | %) | 0.21 | % | (0.33 | %) | ||||||||||
Total expensesf,g | 2.17 | % | 2.34 | % | 1.92 | % | 1.66 | % | 1.71 | % | ||||||||||
Portfolio turnover rate | 331 | % | 256 | % | 183 | % | 190 | % | 231 | % |
C-Class | Year Ended March 31, 2015 | Year Ended March 31, 2014 | Year Ended March 28, 2013 | Year Ended March 31, 2012 | Year Ended March 31, 2011 | |||||||||||||||
Per Share Data | ||||||||||||||||||||
Net asset value, beginning of period | $ | 13.76 | $ | 12.40 | $ | 12.31 | $ | 13.33 | $ | 11.85 | ||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||
Net investment income (loss)b | (.16 | ) | (.24 | ) | (.14 | ) | (.07 | ) | (.13 | ) | ||||||||||
Net gain (loss) on investments (realized and unrealized) | 1.04 | 1.60 | .28 | (.95 | ) | 1.61 | ||||||||||||||
Total from investment operations | .88 | 1.36 | .14 | (1.02 | ) | 1.48 | ||||||||||||||
Less distributions from: | ||||||||||||||||||||
Net investment income | — | — | (.05 | ) | — | — | ||||||||||||||
Total distributions | — | — | (.05 | ) | — | — | ||||||||||||||
Redemption fees collected | — | — | — | — | — | c | ||||||||||||||
Net asset value, end of period | $ | 14.64 | $ | 13.76 | $ | 12.40 | $ | 12.31 | $ | 13.33 | ||||||||||
Total Returnd | 6.40 | % | 10.97 | % | 1.14 | % | (7.65 | %) | 12.49 | % | ||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||
Net assets, end of period (in thousands) | $ | 19,952 | $ | 22,354 | $ | 23,554 | $ | 32,503 | $ | 50,381 | ||||||||||
Ratios to average net assets: | ||||||||||||||||||||
Net investment income (loss) | (1.16 | %) | (1.79 | %) | (1.12 | %) | (0.54 | %) | (1.08 | %) | ||||||||||
Total expensesf,g | 2.92 | % | 3.11 | % | 2.69 | % | 2.41 | % | 2.46 | % | ||||||||||
Portfolio turnover rate | 331 | % | 256 | % | 183 | % | 190 | % | 231 | % |
SEE NOTES TO FINANCIAL STATEMENTS. | THE RYDEX FUNDS ANNUAL REPORT | 19 |
LONG SHORT EQUITY FUND |
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.
H-Class | Year Ended March 31, 2015 | Year Ended March 31, 2014 | Year Ended March 28, 2013 | Year Ended March 31, 2012 | Year Ended March 31, 2011 | |||||||||||||||
Per Share Data | ||||||||||||||||||||
Net asset value, beginning of period | $ | 15.12 | $ | 13.53 | $ | 13.33 | $ | 14.32 | $ | 12.63 | ||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||
Net investment income (loss)b | (.07 | ) | (.16 | ) | (.04 | ) | .03 | (.04 | ) | |||||||||||
Net gain (loss) on investments (realized and unrealized) | 1.16 | 1.75 | .29 | (1.02 | ) | 1.73 | ||||||||||||||
Total from investment operations | 1.09 | 1.59 | .25 | (.99 | ) | 1.69 | ||||||||||||||
Less distributions from: | ||||||||||||||||||||
Net investment income | — | — | (.05 | ) | — | — | ||||||||||||||
Total distributions | — | — | (.05 | ) | — | — | ||||||||||||||
Redemption fees collected | — | — | — | — | — | c | ||||||||||||||
Net asset value, end of period | $ | 16.21 | $ | 15.12 | $ | 13.53 | $ | 13.33 | $ | 14.32 | ||||||||||
Total Returnd | 7.21 | % | 11.75 | % | 1.88 | % | (6.91 | %) | 13.38 | % | ||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||
Net assets, end of period (in thousands) | $ | 20,020 | $ | 29,287 | $ | 26,257 | $ | 54,589 | $ | 87,212 | ||||||||||
Ratios to average net assets: | ||||||||||||||||||||
Net investment income (loss) | (0.43 | %) | (1.07 | %) | (0.29 | %) | 0.20 | % | (0.31 | %) | ||||||||||
Total expensesf,g | 2.17 | % | 2.36 | % | 1.88 | % | 1.66 | % | 1.70 | % | ||||||||||
Portfolio turnover rate | 331 | % | 256 | % | 183 | % | 190 | % | 231 | % |
20 | THE RYDEX FUNDS ANNUAL REPORT | SEE NOTES TO FINANCIAL STATEMENTS. |
LONG SHORT EQUITY FUND |
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.
Institutional Class | Year Ended March 31, 2015 | Year Ended March 31, 2014 | Year Ended March 28, 2013 | Period Ended March 31, 2012a | ||||||||||||||
Per Share Data | ||||||||||||||||||
Net asset value, beginning of period | $ | 15.24 | $ | 13.60 | $ | 13.33 | $ | 12.39 | ||||||||||
Income (loss) from investment operations: | ||||||||||||||||||
Net investment income (loss)b | (— | )e | (.12 | ) | (.02 | ) | .06 | |||||||||||
Net gain (loss) on investments (realized and unrealized) | 1.14 | 1.76 | .31 | .88 | ||||||||||||||
Total from investment operations | 1.14 | 1.64 | .29 | .94 | ||||||||||||||
Less distributions from: | ||||||||||||||||||
Net investment income | — | — | (.02 | ) | — | |||||||||||||
Total distributions | — | — | (.02 | ) | — | |||||||||||||
Net asset value, end of period | $ | 16.38 | $ | 15.24 | $ | 13.60 | $ | 13.33 | ||||||||||
Total Returnd | 7.48 | % | 12.06 | % | 2.15 | % | 7.59 | % | ||||||||||
Ratios/Supplemental Data | ||||||||||||||||||
Net assets, end of period (in thousands) | $ | 302 | $ | 12 | $ | 11 | $ | 11 | ||||||||||
Ratios to average net assets: | ||||||||||||||||||
Net investment income (loss) | (0.01 | %) | (0.82 | %) | (0.17 | %) | 1.29 | % | ||||||||||
Total expensesf,g | 1.95 | % | 2.11 | % | 1.72 | % | 1.36 | % | ||||||||||
Portfolio turnover rate | 331 | % | 256 | % | 183 | % | 190 | % |
a | Since commencement of operations: November 30, 2011. Percentage amounts for the period, except total return and portfolio turnover rate, have been annualized. The portfolio turnover rate stated is for the entire period of the Fund, not since commencement of operations of the class. |
b | Net investment income (loss) per share was computed using average shares outstanding throughout the period. |
c | Redemption fees collected are less than $0.01 per share. |
d | Total return does not reflect the impact of any applicable sales charges. |
e | Net investment loss is less than $0.01 per share. |
f | Does not include expenses of the underlying funds in which the Fund invests. |
g | Excluding interest and dividend expense related to short sales, the operating ratios for the years or periods presented would be: |
3/31/15 | 3/31/14 | 3/28/13 | 3/31/12 | 3/31/11 | |
A-Class | 1.66% | 1.68% | 1.65% | 1.66% | 1.69% |
C-Class | 2.41% | 2.42% | 2.40% | 2.41% | 2.44% |
H-Class | 1.66% | 1.67% | 1.65% | 1.66% | 1.69% |
Institutional Class | 1.40% | 1.42% | 1.41% | N/A | N/A |
SEE NOTES TO FINANCIAL STATEMENTS. | THE RYDEX FUNDS ANNUAL REPORT | 21 |
PERFORMANCE REPORT AND FUND PROFILE (Unaudited) | March 31, 2015 |
EVENT DRIVEN AND DISTRESSED STRATEGIES FUND
OBJECTIVE: Seeks to achieve capital growth.
The Event Driven and Distressed Strategies Fund H-Class returned -1.18% for the one-year period ended March 31, 2015. By comparison, the S&P 500 Index returned 12.73% and the Credit Suisse Event Driven Liquid Index returned -1.02%.
The Fund gains exposure to event driven and distressed situations through various exposures, such as merger arbitrage, high yield, equities, and volatility. During the period, the Fund used derivatives, such as swaps and futures, as the primary instrument to gain exposure to these factors. The results of derivatives use during the period were within our expectations and contributed to the Fund’s performance.
The main positive drivers of performance were the illiquidity factor high yield and distressed equity exposures. Merger arbitrage was the main factor that contributed negatively to performance for the year. Throughout the year, the largest exposures were to high yield followed up by merger arbitrage and the illiquidity factor.
The Fund invests excess cash into the Guggenheim Strategy Funds which, in turn, invest in a diversified portfolio of debt securities and financial instruments providing exposure to fixed-income markets. The investment objective of the Guggenheim Strategy Funds is to seek a high level of income consistent with the preservation of capital. For the one-year period ended March 31, 2015, investment in the Guggenheim Strategy Funds has benefited Fund performance relative to investing in other short-term investments such as overnight repurchase agreements.
Performance displayed represents past performance, which is no guarantee of future results.
Holdings Diversification (Market Exposure as % of Net Assets)
![](https://capedge.com/proxy/N-CSR/0001398344-15-003814/rstf_04.jpg)
“Holdings Diversification (Market Exposure as % of Net Assets)” excludes any temporary cash investments or investments in Guggenheim Strategy Funds Trust mutual funds. Investments in those Funds do not provide “market exposure” to meet the fund’s investment objective, but will significantly increase the portfolio’s exposure to certain other asset categories (and their associated risks), which may cause the Fund to deviate from its principal investment strategy, including: (i) high yield, high risk debt securities rated below the top four long-term rating categories by a nationally recognized statistical rating organization (also known as “junk bonds”); (ii) securities issued by the U.S. government or its agencies and instrumentalities; (iii) CLOs and similar investments; and (iv) other short-term fixed income securities.
Inception Dates: | |
A-Class | June 30, 2010 |
C-Class | June 30, 2010 |
H-Class | June 30, 2010 |
Institutional Class | June 30, 2010 |
The Fund invests principally in derivative investments such as swap agreements and futures contracts.
Ten Largest Holdings (% of Total Net Assets) | |
iShares iBoxx $ High Yield Corporate Bond ETF | 21.3% |
Guggenheim Strategy Fund II | 11.7% |
Guggenheim Strategy Fund I | 11.6% |
Lloyds Banking Group plc | 0.5% |
Valeant Pharmaceuticals International, Inc. | 0.4% |
General Motors Co. | 0.3% |
Royal Bank of Scotland Group plc | 0.3% |
Williams Companies, Inc. | 0.2% |
American Airlines Group, Inc. | 0.2% |
Delta Air Lines, Inc. | 0.2% |
Top Ten Total | 46.7% |
“Ten Largest Holdings” exclude any temporary cash or derivative investments. |
22 | THE RYDEX FUNDS ANNUAL REPORT |
PERFORMANCE REPORT AND FUND PROFILE (Unaudited)(concluded) | March 31, 2015 |
Cumulative Fund Performance*
![](https://capedge.com/proxy/N-CSR/0001398344-15-003814/rstf_05.jpg)
![](https://capedge.com/proxy/N-CSR/0001398344-15-003814/rstf_06.jpg)
Average Annual Returns*
Periods Ended March 31, 2015
1 Year | Since Inception (06/30/10) | |
A-Class Shares | -1.18% | 6.22% |
A-Class Shares with sales charge† | -5.88% | 5.13% |
C-Class Shares | -1.92% | 5.40% |
C-Class Shares with CDSC‡ | -2.85% | 5.40% |
H-Class Shares | -1.18% | 6.22% |
Institutional Class Shares | -0.96% | 6.48% |
Credit Suisse Event Driven Liquid Index | -1.02% | 7.50% |
S&P 500 Index | 12.73% | 18.26% |
* | The performance data above represents past performance that is not predictive of future results. The investment return and principal value of an investment in the Fund will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Returns are historical and include changes in principal and reinvested dividends and capital gains and do not reflect the effect of taxes. The Credit Suisse Event Driven Liquid Index and the S&P 500 Index are unmanaged indices and, unlike the Fund, have no management fees or operating expenses to reduce their reported returns. The graphs are based on A-Class shares and H-Class shares only; performance for C-Class shares and Institutional Class shares will vary due to differences in fee structures. |
† | Fund returns are calculated using the maximum sales charge of 4.75%. |
‡ | Fund returns include a CDSC of 1% if redeemed within 12 months of purchase. |
THE RYDEX FUNDS ANNUAL REPORT | 23 |
SCHEDULE OF INVESTMENTS | March 31, 2015 |
EVENT DRIVEN AND DISTRESSED STRATEGIES FUND |
Shares | Value | |||||||
COMMON STOCKS† - 15.5% | ||||||||
CONSUMER, CYCLICAL - 3.3% | ||||||||
General Motors Co. | 880 | $ | 32,999 | |||||
American Airlines Group, Inc. | 380 | 20,056 | ||||||
Delta Air Lines, Inc. | 440 | 19,782 | ||||||
Hilton Worldwide Holdings, Inc.* | 530 | 15,698 | ||||||
L Brands, Inc. | 160 | 15,086 | ||||||
United Continental Holdings, Inc.* | 200 | 13,450 | ||||||
Royal Caribbean Cruises Ltd. | 120 | 9,822 | ||||||
Best Buy Company, Inc. | 190 | 7,180 | ||||||
Hanesbrands, Inc. | 200 | 6,702 | ||||||
Wynn Resorts Ltd. | 50 | 6,294 | ||||||
TRW Automotive Holdings Corp.* | 60 | 6,290 | ||||||
Norwegian Cruise Line Holdings Ltd.* | 110 | 5,941 | ||||||
Lennar Corp. — Class A | 110 | 5,699 | ||||||
DR Horton, Inc. | 200 | 5,696 | ||||||
Signet Jewelers Ltd. | 40 | 5,552 | ||||||
MGM Resorts International* | 250 | 5,258 | ||||||
Foot Locker, Inc. | 80 | 5,040 | ||||||
Jarden Corp.* | 95 | 5,026 | ||||||
Darden Restaurants, Inc. | 70 | 4,854 | ||||||
Rite Aid Corp.* | 540 | 4,693 | ||||||
PulteGroup, Inc. | 200 | 4,446 | ||||||
Lear Corp. | 40 | 4,433 | ||||||
PVH Corp. | 40 | 4,262 | ||||||
LKQ Corp.* | 160 | 4,089 | ||||||
Goodyear Tire & Rubber Co. | 140 | 3,791 | ||||||
Toll Brothers, Inc.* | 90 | 3,540 | ||||||
HD Supply Holdings, Inc.* | 110 | 3,427 | ||||||
Allison Transmission Holdings, Inc. | 90 | 2,875 | ||||||
Carter’s, Inc. | 30 | 2,774 | ||||||
Sally Beauty Holdings, Inc.* | 80 | 2,750 | ||||||
Dillard’s, Inc. — Class A | 20 | 2,730 | ||||||
Cinemark Holdings, Inc. | 60 | 2,704 | ||||||
Office Depot, Inc.* | 290 | 2,668 | ||||||
Penske Automotive Group, Inc. | 50 | 2,575 | ||||||
Brunswick Corp. | 50 | 2,573 | ||||||
Six Flags Entertainment Corp. | 50 | 2,421 | ||||||
GameStop Corp. — Class A | 60 | 2,278 | ||||||
Gaming and Leisure Properties, Inc. | 60 | 2,212 | ||||||
Wendy’s Co. | 190 | 2,071 | ||||||
Sears Holdings Corp.* | 50 | 2,069 | ||||||
Vail Resorts, Inc. | 20 | 2,068 | ||||||
Scotts Miracle-Gro Co. — Class A | 30 | 2,015 | ||||||
Allegiant Travel Co. — Class A | 10 | 1,923 | ||||||
Choice Hotels International, Inc. | 30 | 1,922 | ||||||
Dana Holding Corp. | 90 | 1,904 | ||||||
Brinker International, Inc. | 30 | 1,847 | ||||||
Regal Entertainment Group — Class A | 80 | 1,827 | ||||||
AMC Entertainment Holdings, Inc. — Class A | 50 | 1,775 | ||||||
CST Brands, Inc. | 40 | 1,753 | ||||||
Tempur Sealy International, Inc.* | 30 | 1,732 | ||||||
Tenneco, Inc.* | 30 | 1,723 | ||||||
Cedar Fair, LP | 30 | 1,722 | ||||||
Wolverine World Wide, Inc. | 50 | 1,673 | ||||||
Asbury Automotive Group, Inc.* | 20 | 1,662 | ||||||
Men’s Wearhouse, Inc. | 30 | 1,566 | ||||||
Ryland Group, Inc. | 30 | 1,462 | ||||||
Taylor Morrison Home Corp. — Class A* | 70 | 1,460 | ||||||
WESCO International, Inc.* | 20 | 1,398 | ||||||
TRI Pointe Homes, Inc.* | 90 | 1,389 | ||||||
Standard Pacific Corp.* | 150 | 1,350 | ||||||
JC Penney Company, Inc.* | 160 | 1,346 | ||||||
Cooper Tire & Rubber Co. | 30 | 1,285 | ||||||
DreamWorks Animation SKG, Inc. — Class A* | 50 | 1,210 | ||||||
Navistar International Corp.* | 40 | 1,180 | ||||||
Churchill Downs, Inc. | 10 | 1,150 | ||||||
Pinnacle Entertainment, Inc.* | 30 | 1,083 | ||||||
American Axle & Manufacturing Holdings, Inc.* | 40 | 1,033 | ||||||
Ferrellgas Partners, LP | 40 | 975 | ||||||
Meritage Homes Corp.* | 20 | 973 | ||||||
First Cash Financial Services, Inc.* | 20 | 930 | ||||||
Group 1 Automotive, Inc. | 10 | 863 | ||||||
MDC Holdings, Inc. | 30 | 855 | ||||||
Mobile Mini, Inc. | 20 | 853 | ||||||
Boyd Gaming Corp.* | 60 | 852 | ||||||
KB Home | 50 | 781 | ||||||
Sonic Automotive, Inc. — Class A | 30 | 747 | ||||||
Outerwall, Inc. | 10 | 661 | ||||||
Brown Shoe Company, Inc. | 20 | 656 | ||||||
Meritor, Inc.* | 50 | 630 | ||||||
Penn National Gaming, Inc.* | 40 | 626 | ||||||
Conn’s, Inc.* | 20 | 606 | ||||||
Scientific Games Corp. — Class A* | 50 | 524 | ||||||
William Lyon Homes — Class A* | 20 | 516 | ||||||
H&E Equipment Services, Inc. | 20 | 500 | ||||||
Perry Ellis International, Inc.* | 20 | 463 | ||||||
National CineMedia, Inc. | 30 | 453 | ||||||
Gol Linhas Aereas Inteligentes S.A. ADR* | 160 | 389 | ||||||
Carmike Cinemas, Inc.* | 10 | 336 | ||||||
Hovnanian Enterprises, Inc. — Class A* | 80 | 285 | ||||||
Isle of Capri Casinos, Inc.* | 20 | 281 | ||||||
Titan International, Inc. | 30 | 281 | ||||||
WCI Communities, Inc.* | 10 | 240 | ||||||
M/I Homes, Inc.* | 10 | 238 | ||||||
Ruby Tuesday, Inc.* | 30 | 180 | ||||||
Beazer Homes USA, Inc.* | 10 | 177 | ||||||
Quiksilver, Inc.* | 90 | 167 | ||||||
Christopher & Banks Corp.* | 20 | 111 | ||||||
Bon-Ton Stores, Inc. | 10 | 70 | ||||||
Total Consumer, Cyclical | 320,483 | |||||||
CONSUMER, NON-CYCLICAL - 2.5% | ||||||||
Valeant Pharmaceuticals International, Inc.* | 180 | 35,751 | ||||||
HCA Holdings, Inc.* | 220 | 16,550 | ||||||
Fresenius Medical Care AG & Company KGaA ADR | 330 | 13,678 |
24 | THE RYDEX FUNDS ANNUAL REPORT | SEE NOTES TO FINANCIAL STATEMENTS. |
SCHEDULE OF INVESTMENTS (continued) | March 31, 2015 |
EVENT DRIVEN AND DISTRESSED STRATEGIES FUND |
Shares | Value | |||||||
Constellation Brands, Inc. — Class A* | 100 | $ | 11,621 | |||||
DaVita HealthCare Partners, Inc.* | 120 | 9,754 | ||||||
ConAgra Foods, Inc. | 240 | 8,767 | ||||||
Hospira, Inc.* | 90 | 7,906 | ||||||
Mallinckrodt plc* | 60 | 7,599 | ||||||
Endo International plc* | 80 | 7,176 | ||||||
Grifols S.A. ADR | 200 | 6,562 | ||||||
Catamaran Corp.* | 110 | 6,550 | ||||||
Universal Health Services, Inc. — Class B | 50 | 5,886 | ||||||
Hertz Global Holdings, Inc.* | 240 | 5,203 | ||||||
Salix Pharmaceuticals Ltd.* | 30 | 5,184 | ||||||
Hologic, Inc.* | 150 | 4,954 | ||||||
United Rentals, Inc.* | 50 | 4,558 | ||||||
Centene Corp.* | 60 | 4,241 | ||||||
WhiteWave Foods Co. — Class A* | 90 | 3,990 | ||||||
Omnicare, Inc. | 50 | 3,853 | ||||||
ADT Corp. | 90 | 3,737 | ||||||
Avis Budget Group, Inc.* | 60 | 3,541 | ||||||
Community Health Systems, Inc.* | 60 | 3,137 | ||||||
Service Corporation International | 110 | 2,866 | ||||||
Live Nation Entertainment, Inc.* | 110 | 2,774 | ||||||
Spectrum Brands Holdings, Inc. | 30 | 2,687 | ||||||
Tenet Healthcare Corp.* | 50 | 2,476 | ||||||
Pinnacle Foods, Inc. | 60 | 2,449 | ||||||
Health Net, Inc.* | 40 | 2,420 | ||||||
Teleflex, Inc. | 20 | 2,416 | ||||||
ServiceMaster Global Holdings, Inc.* | 70 | 2,363 | ||||||
HealthSouth Corp. | 50 | 2,218 | ||||||
Acadia Healthcare Company, Inc.* | 30 | 2,148 | ||||||
WEX, Inc.* | 20 | 2,147 | ||||||
Deluxe Corp. | 30 | 2,079 | ||||||
Alere, Inc.* | 40 | 1,956 | ||||||
RR Donnelley & Sons Co. | 100 | 1,919 | ||||||
Amsurg Corp. — Class A* | 30 | 1,846 | ||||||
Avon Products, Inc. | 230 | 1,838 | ||||||
WellCare Health Plans, Inc.* | 20 | 1,829 | ||||||
TreeHouse Foods, Inc.* | 20 | 1,700 | ||||||
Sotheby’s | 40 | 1,690 | ||||||
SUPERVALU, Inc.* | 140 | 1,628 | ||||||
LifePoint Hospitals, Inc.* | 20 | 1,469 | ||||||
Post Holdings, Inc.* | 30 | 1,405 | ||||||
Owens & Minor, Inc. | 40 | 1,354 | ||||||
Vector Group Ltd. | 60 | 1,318 | ||||||
Prestige Brands Holdings, Inc.* | 30 | 1,287 | ||||||
Darling Ingredients, Inc.* | 90 | 1,261 | ||||||
Revlon, Inc. — Class A* | 30 | 1,236 | ||||||
Kindred Healthcare, Inc. | 47 | 1,118 | ||||||
Select Medical Holdings Corp. | 70 | 1,038 | ||||||
B&G Foods, Inc. | 30 | 883 | ||||||
ExamWorks Group, Inc.* | 20 | 832 | ||||||
Dean Foods Co. | 50 | 827 | ||||||
Rent-A-Center, Inc. | 30 | 823 | ||||||
Cardtronics, Inc.* | 20 | 752 | ||||||
FTI Consulting, Inc.* | 20 | 749 | ||||||
Multi-Color Corp. | 10 | 693 | ||||||
Quad/Graphics, Inc. | 30 | 689 | ||||||
Diamond Foods, Inc.* | 20 | 651 | ||||||
Stonemor Partners, LP | 20 | 576 | ||||||
ACCO Brands Corp.* | 60 | 499 | ||||||
Ingles Markets, Inc. — Class A | 10 | 495 | ||||||
Cott Corp. | 50 | 469 | ||||||
Hanger, Inc.* | 20 | 454 | ||||||
Elizabeth Arden, Inc.* | 20 | 312 | ||||||
SFX Entertainment, Inc.* | 50 | 205 | ||||||
Great Lakes Dredge & Dock Corp.* | 30 | 180 | ||||||
BioScrip, Inc.* | 40 | 177 | ||||||
Total Consumer, Non-cyclical | 245,399 | |||||||
FINANCIAL - 2.2% | ||||||||
Lloyds Banking Group plc ADR* | 9,330 | 43,570 | ||||||
Royal Bank of Scotland Group plc ADR* | 3,030 | 30,573 | ||||||
Crown Castle International Corp. | 180 | 14,856 | ||||||
Discover Financial Services | 250 | 14,088 | ||||||
Regions Financial Corp. | 740 | 6,993 | ||||||
CBRE Group, Inc. — Class A* | 180 | 6,968 | ||||||
SL Green Realty Corp. | 50 | 6,419 | ||||||
Icahn Enterprises, LP | 70 | 6,276 | ||||||
AerCap Holdings N.V.* | 110 | 4,802 | ||||||
Unum Group | 140 | 4,723 | ||||||
Navient Corp. | 230 | 4,676 | ||||||
E*TRADE Financial Corp.* | 160 | 4,569 | ||||||
CIT Group, Inc. | 100 | 4,512 | ||||||
Iron Mountain, Inc. | 110 | 4,013 | ||||||
Lazard Ltd. — Class A | 70 | 3,681 | ||||||
Realogy Holdings Corp.* | 80 | 3,638 | ||||||
Howard Hughes Corp.* | 20 | 3,100 | ||||||
Lamar Advertising Co. — Class A | 50 | 2,963 | ||||||
Omega Healthcare Investors, Inc. | 70 | 2,840 | ||||||
Corrections Corporation of America | 60 | 2,416 | ||||||
American Capital Ltd.* | 150 | 2,219 | ||||||
Popular, Inc.* | 60 | 2,063 | ||||||
Synovus Financial Corp. | 70 | 1,961 | ||||||
Credit Acceptance Corp.* | 10 | 1,950 | ||||||
CNO Financial Group, Inc. | 110 | 1,894 | ||||||
First Horizon National Corp. | 130 | 1,858 | ||||||
Ryman Hospitality Properties, Inc. | 30 | 1,828 | ||||||
CoreLogic, Inc.* | 50 | 1,763 | ||||||
GEO Group, Inc. | 40 | 1,750 | ||||||
First Niagara Financial Group, Inc. | 190 | 1,680 | ||||||
Radian Group, Inc. | 100 | 1,679 | ||||||
Medical Properties Trust, Inc. | 110 | 1,621 | ||||||
Hanover Insurance Group, Inc. | 20 | 1,452 | ||||||
DuPont Fabros Technology, Inc. | 40 | 1,307 | ||||||
Kennedy-Wilson Holdings, Inc. | 50 | 1,307 | ||||||
Nationstar Mortgage Holdings, Inc.* | 50 | 1,239 | ||||||
American Equity Investment Life Holding Co. | 40 | 1,165 |
SEE NOTES TO FINANCIAL STATEMENTS. | THE RYDEX FUNDS ANNUAL REPORT | 25 |
SCHEDULE OF INVESTMENTS (continued) | March 31, 2015 |
EVENT DRIVEN AND DISTRESSED STRATEGIES FUND |
Shares | Value | |||||||
Ladder Capital Corp. — Class A* | 60 | $ | 1,111 | |||||
Aviv REIT, Inc. | 30 | 1,095 | ||||||
Sabra Health Care REIT, Inc. | 30 | 995 | ||||||
Aircastle Ltd. | 40 | 898 | ||||||
Potlatch Corp. | 20 | 801 | ||||||
KCG Holdings, Inc. — Class A* | 60 | 736 | ||||||
QTS Realty Trust, Inc. — Class A | 20 | 728 | ||||||
PHH Corp.* | 30 | 725 | ||||||
FelCor Lodging Trust, Inc. | 60 | 689 | ||||||
iStar Financial, Inc.* | 50 | 650 | ||||||
CyrusOne, Inc. | 20 | 622 | ||||||
GFI Group, Inc. | 70 | 415 | ||||||
Ladenburg Thalmann Financial Services, Inc.* | 100 | 386 | ||||||
Walter Investment Management Corp.* | 20 | 323 | ||||||
Forestar Group, Inc.* | 20 | 315 | ||||||
Fly Leasing Ltd. ADR | 20 | 291 | ||||||
Total Financial | 215,192 | |||||||
COMMUNICATIONS - 2.0% | ||||||||
DISH Network Corp. — Class A* | 250 | 17,514 | ||||||
Nokia Oyj ADR | 1,980 | 15,009 | ||||||
T-Mobile US, Inc.* | 440 | 13,944 | ||||||
Netflix, Inc.* | 30 | 12,500 | ||||||
Charter Communications, Inc. — Class A* | 60 | 11,587 | ||||||
Sirius XM Holdings, Inc.* | 2,950 | 11,269 | ||||||
CenturyLink, Inc. | 320 | 11,056 | ||||||
Level 3 Communications, Inc.* | 180 | 9,691 | ||||||
Nielsen N.V. | 200 | 8,914 | ||||||
Liberty Interactive Corp. — Class A* | 260 | 7,589 | ||||||
Equinix, Inc. | 30 | 6,986 | ||||||
Expedia, Inc. | 70 | 6,589 | ||||||
Alcatel-Lucent ADR* | 1,510 | 5,632 | ||||||
Interpublic Group of Companies, Inc. | 220 | 4,866 | ||||||
Gannett Company, Inc. | 120 | 4,450 | ||||||
VeriSign, Inc.* | 60 | 4,018 | ||||||
Frontier Communications Corp. | 550 | 3,878 | ||||||
CDW Corp. | 90 | 3,352 | ||||||
AMC Networks, Inc. — Class A* | 40 | 3,065 | ||||||
CommScope Holding Company, Inc.* | 100 | 2,854 | ||||||
Cablevision Systems Corp. — Class A | 150 | 2,745 | ||||||
IAC/InterActiveCorp | 40 | 2,699 | ||||||
EchoStar Corp. — Class A* | 50 | 2,586 | ||||||
Starz — Class A* | 60 | 2,065 | ||||||
j2 Global, Inc. | 30 | 1,970 | ||||||
Clear Channel Outdoor Holdings, Inc. — Class A | 180 | 1,822 | ||||||
United States Cellular Corp.* | 50 | 1,786 | ||||||
West Corp. | 50 | 1,686 | ||||||
Sinclair Broadcast Group, Inc. — Class A | 50 | 1,571 | ||||||
Anixter International, Inc.* | 20 | 1,523 | ||||||
DigitalGlobe, Inc.* | 40 | 1,363 | ||||||
New York Times Co. — Class A | 90 | 1,238 | ||||||
ViaSat, Inc.* | 20 | 1,192 | ||||||
Nexstar Broadcasting Group, Inc. — Class A | 20 | 1,144 | ||||||
Media General, Inc.* | 68 | 1,121 | ||||||
MDC Partners, Inc. — Class A | 30 | 851 | ||||||
NeuStar, Inc. — Class A* | 30 | 739 | ||||||
Cogent Communications Holdings, Inc. | 20 | 707 | ||||||
Bankrate, Inc.* | 60 | 680 | ||||||
Consolidated Communications Holdings, Inc. | 30 | 612 | ||||||
Gray Television, Inc.* | 30 | 415 | ||||||
Cincinnati Bell, Inc.* | 110 | 388 | ||||||
Cumulus Media, Inc. — Class A* | 130 | 321 | ||||||
General Communication, Inc. — Class A* | 20 | 315 | ||||||
EarthLink Holdings Corp. | 50 | 222 | ||||||
McClatchy Co. — Class A* | 50 | 92 | ||||||
Dex Media, Inc.* | 10 | 42 | ||||||
Total Communications | 196,658 | |||||||
ENERGY - 2.0% | ||||||||
Williams Companies, Inc. | 410 | 20,783 | ||||||
Energy Transfer Equity, LP | 290 | 18,374 | ||||||
Concho Resources, Inc.* | 60 | 6,954 | ||||||
MarkWest Energy Partners, LP | 100 | 6,610 | ||||||
Cimarex Energy Co. | 50 | 5,754 | ||||||
Tesoro Corp. | 60 | 5,477 | ||||||
Cheniere Energy Partners, LP | 180 | 5,393 | ||||||
ONEOK, Inc. | 110 | 5,306 | ||||||
Chesapeake Energy Corp. | 360 | 5,098 | ||||||
Regency Energy Partners, LP | 220 | 5,031 | ||||||
Antero Resources Corp.* | 140 | 4,945 | ||||||
Range Resources Corp. | 90 | 4,684 | ||||||
Targa Resources Partners, LP | 89 | 3,691 | ||||||
CONSOL Energy, Inc. | 120 | 3,346 | ||||||
Dresser-Rand Group, Inc.* | 40 | 3,214 | ||||||
Whiting Petroleum Corp.* | 88 | 2,719 | ||||||
Energen Corp. | 40 | 2,640 | ||||||
Western Refining, Inc. | 50 | 2,470 | ||||||
Newfield Exploration Co.* | 70 | 2,456 | ||||||
NuStar Energy, LP | 40 | 2,428 | ||||||
Genesis Energy, LP | 50 | 2,350 | ||||||
Equities Midstream Partners, LP | 30 | 2,330 | ||||||
Diamondback Energy, Inc.* | 30 | 2,305 | ||||||
Gulfport Energy Corp.* | 50 | 2,296 | ||||||
TerraForm Power, Inc. — Class A | 60 | 2,191 | ||||||
Tesoro Logistics, LP | 40 | 2,152 | ||||||
CVR Energy, Inc. | 50 | 2,129 | ||||||
Boardwalk Pipeline Partners, LP | 130 | 2,093 | ||||||
QEP Resources, Inc. | 100 | 2,085 | ||||||
SM Energy Co. | 40 | 2,067 | ||||||
Memorial Resource Development Corp.* | 110 | 1,951 | ||||||
SemGroup Corp. — Class A | 20 | 1,627 | ||||||
Crestwood Midstream Partners, LP | 110 | 1,596 | ||||||
Rice Energy, Inc.* | 70 | 1,523 | ||||||
Carrizo Oil & Gas, Inc.* | 30 | 1,490 | ||||||
Murphy USA, Inc.* | 20 | 1,447 | ||||||
Baytex Energy Corp. | 90 | 1,422 | ||||||
Ultra Petroleum Corp.* | 90 | 1,407 | ||||||
Denbury Resources, Inc. | 190 | 1,385 |
26 | THE RYDEX FUNDS ANNUAL REPORT | SEE NOTES TO FINANCIAL STATEMENTS. |
SCHEDULE OF INVESTMENTS (continued) | March 31, 2015 |
EVENT DRIVEN AND DISTRESSED STRATEGIES FUND |
Shares | Value | |||||||
Exterran Holdings, Inc. | 40 | $ | 1,342 | |||||
Suburban Propane Partners, LP | 30 | 1,289 | ||||||
Northern Tier Energy, LP | 50 | 1,267 | ||||||
WPX Energy, Inc.* | 110 | 1,202 | ||||||
Bristow Group, Inc. | 20 | 1,088 | ||||||
PDC Energy, Inc.* | 20 | 1,081 | ||||||
Clayton Williams Energy, Inc.* | 20 | 1,013 | ||||||
RSP Permian, Inc.* | 40 | 1,008 | ||||||
Forum Energy Technologies, Inc.* | 50 | 980 | ||||||
Summit Midstream Partners, LP | 30 | 965 | ||||||
Calumet Specialty Products Partners, LP | 40 | 962 | ||||||
Precision Drilling Corp. | 150 | 951 | ||||||
Rose Rock Midstream, LP | 20 | 950 | ||||||
Holly Energy Partners, LP | 30 | 943 | ||||||
Laredo Petroleum, Inc.* | 70 | 913 | ||||||
Atwood Oceanics, Inc. | 30 | 843 | ||||||
Unit Corp.* | 30 | 839 | ||||||
Memorial Production Partners, LP | 50 | 811 | ||||||
Exterran Partners, LP | 30 | 748 | ||||||
Bonanza Creek Energy, Inc.* | 30 | 740 | ||||||
Peabody Energy Corp. | 150 | 737 | ||||||
Oasis Petroleum, Inc.* | 50 | 711 | ||||||
Vanguard Natural Resources LLC | 50 | 699 | ||||||
SEACOR Holdings, Inc.* | 10 | 697 | ||||||
LinnCo LLC | 70 | 670 | ||||||
SunCoke Energy, Inc. | 40 | 598 | ||||||
BreitBurn Energy Partners, LP | 109 | 597 | ||||||
Rosetta Resources, Inc.* | 30 | 511 | ||||||
McDermott International, Inc.* | 130 | 499 | ||||||
Natural Resource Partners, LP | 70 | 475 | ||||||
Ocean Rig UDW, Inc. | 70 | 462 | ||||||
Stone Energy Corp.* | 30 | 440 | ||||||
Pacific Drilling S.A.* | 110 | 428 | ||||||
SunCoke Energy Partners, LP | 20 | 426 | ||||||
SandRidge Energy, Inc.* | 230 | 409 | ||||||
Legacy Reserves, LP | 40 | 405 | ||||||
EV Energy Partners, LP | 30 | 400 | ||||||
Sanchez Energy Corp.* | 30 | 390 | ||||||
CSI Compressco, LP | 20 | 385 | ||||||
Halcon Resources Corp.* | 230 | 354 | ||||||
Atlas Resource Partners, LP | 40 | 308 | ||||||
Magnum Hunter Resources Corp.* | 110 | 294 | ||||||
EXCO Resources, Inc. | 160 | 293 | ||||||
Jones Energy, Inc. — Class A* | 30 | 269 | ||||||
Westmoreland Coal Co.* | 10 | 268 | ||||||
Gulfmark Offshore, Inc. — Class A | 20 | 261 | ||||||
Penn Virginia Corp.* | 40 | 259 | ||||||
Bill Barrett Corp.* | 30 | 249 | ||||||
Northern Oil and Gas, Inc.* | 30 | 231 | ||||||
Parker Drilling Co.* | 60 | 209 | ||||||
W&T Offshore, Inc. | 40 | 204 | ||||||
Triangle Petroleum Corp.* | 40 | 201 | ||||||
ION Geophysical Corp.* | 90 | 195 | ||||||
Cloud Peak Energy, Inc.* | 30 | 175 | ||||||
Pioneer Energy Services Corp.* | 30 | 163 | ||||||
Key Energy Services, Inc.* | 80 | 146 | ||||||
Basic Energy Services, Inc.* | 20 | 139 | ||||||
Approach Resources, Inc.* | 20 | 132 | ||||||
Seventy Seven Energy, Inc.* | 30 | 125 | ||||||
Rex Energy Corp.* | 30 | 112 | ||||||
Alpha Natural Resources, Inc.*,1 | 110 | 110 | ||||||
Comstock Resources, Inc. | 30 | 107 | ||||||
Gastar Exploration, Inc.* | 40 | 105 | ||||||
Arch Coal, Inc.* | 100 | 100 | ||||||
PetroQuest Energy, Inc.* | 40 | 92 | ||||||
Goodrich Petroleum Corp.* | 20 | 71 | ||||||
Paragon Offshore plc | 50 | 65 | ||||||
Swift Energy Co.* | 20 | 43 | ||||||
Warren Resources, Inc.* | 40 | 36 | ||||||
Walter Energy, Inc. | 40 | 25 | ||||||
Resolute Energy Corp.* | 40 | 23 | ||||||
Niska Gas Storage Partners LLC — Class U | 10 | 18 | ||||||
Total Energy | 188,475 | |||||||
INDUSTRIAL - 1.4% | ||||||||
SBA Communications Corp. — Class A* | 70 | 8,197 | ||||||
TransDigm Group, Inc. | 30 | 6,562 | ||||||
Vulcan Materials Co. | 70 | 5,901 | ||||||
Martin Marietta Materials, Inc. | 40 | 5,592 | ||||||
Sensata Technologies Holding N.V.* | 90 | 5,171 | ||||||
Masco Corp. | 190 | 5,073 | ||||||
Sealed Air Corp. | 110 | 5,011 | ||||||
Ball Corp. | 70 | 4,945 | ||||||
Huntington Ingalls Industries, Inc. | 30 | 4,205 | ||||||
Flextronics International Ltd.* | 310 | 3,929 | ||||||
Crown Holdings, Inc.* | 70 | 3,781 | ||||||
Spirit AeroSystems Holdings, Inc. — Class A* | 70 | 3,655 | ||||||
Trinity Industries, Inc. | 80 | 2,842 | ||||||
Zebra Technologies Corp. — Class A* | 30 | 2,721 | ||||||
Owens Corning | 60 | 2,604 | ||||||
Graphic Packaging Holding Co. | 170 | 2,472 | ||||||
AECOM* | 80 | 2,465 | ||||||
Exelis, Inc. | 100 | 2,436 | ||||||
Jabil Circuit, Inc. | 100 | 2,338 | ||||||
Orbital ATK, Inc. | 30 | 2,299 | ||||||
Esterline Technologies Corp.* | 20 | 2,288 | ||||||
USG Corp.* | 80 | 2,136 | ||||||
Owens-Illinois, Inc.* | 90 | 2,099 | ||||||
Oshkosh Corp. | 40 | 1,951 | ||||||
Belden, Inc. | 20 | 1,871 | ||||||
Teekay Corp. | 40 | 1,863 | ||||||
XPO Logistics, Inc.* | 40 | 1,819 | ||||||
Triumph Group, Inc. | 30 | 1,792 | ||||||
Nortek, Inc.* | 20 | 1,765 | ||||||
Silgan Holdings, Inc. | 30 | 1,744 | ||||||
Clean Harbors, Inc.* | 30 | 1,703 |
SEE NOTES TO FINANCIAL STATEMENTS. | THE RYDEX FUNDS ANNUAL REPORT | 27 |
SCHEDULE OF INVESTMENTS (continued) | March 31, 2015 |
EVENT DRIVEN AND DISTRESSED STRATEGIES FUND |
Shares | Value | |||||||
SPX Corp. | 20 | $ | 1,698 | |||||
Abengoa S.A. ADR | 90 | 1,631 | ||||||
Covanta Holding Corp. | 70 | 1,570 | ||||||
Manitowoc Company, Inc. | 70 | 1,509 | ||||||
Moog, Inc. — Class A* | 20 | 1,501 | ||||||
Masonite International Corp.* | 20 | 1,345 | ||||||
Terex Corp. | 50 | 1,330 | ||||||
Louisiana-Pacific Corp.* | 80 | 1,321 | ||||||
Greif, Inc. — Class A | 30 | 1,178 | ||||||
Park-Ohio Holdings Corp. | 20 | 1,053 | ||||||
Dycom Industries, Inc.* | 20 | 977 | ||||||
Sanmina Corp.* | 40 | 968 | ||||||
Hillenbrand, Inc. | 30 | 926 | ||||||
MasTec, Inc.* | 40 | 772 | ||||||
Boise Cascade Co.* | 20 | 749 | ||||||
Headwaters, Inc.* | 40 | 734 | ||||||
Actuant Corp. — Class A | 30 | 712 | ||||||
Martin Midstream Partners, LP | 20 | 709 | ||||||
Tutor Perini Corp.* | 30 | 701 | ||||||
GenCorp, Inc.* | 30 | 696 | ||||||
NCI Building Systems, Inc.* | 40 | 691 | ||||||
Harsco Corp. | 40 | 690 | ||||||
EnPro Industries, Inc. | 10 | 660 | ||||||
AAR Corp. | 20 | 614 | ||||||
Griffon Corp. | 30 | 523 | ||||||
Ply Gem Holdings, Inc.* | 40 | 520 | ||||||
Ducommun, Inc.* | 20 | 518 | ||||||
General Cable Corp. | 30 | 517 | ||||||
LSB Industries, Inc.* | 10 | 413 | ||||||
Briggs & Stratton Corp. | 20 | 411 | ||||||
Hornbeck Offshore Services, Inc.* | 20 | 376 | ||||||
Builders FirstSource, Inc.* | 50 | 334 | ||||||
Gibraltar Industries, Inc.* | 20 | 328 | ||||||
GrafTech International Ltd.* | 80 | 311 | ||||||
Navios Maritime Acquisition Corp. | 80 | 283 | ||||||
Columbus McKinnon Corp. | 10 | 269 | ||||||
Navios Maritime Holdings, Inc. | 60 | 251 | ||||||
Era Group, Inc.* | 10 | 208 | ||||||
Kratos Defense & Security Solutions, Inc.* | 30 | 166 | ||||||
Quality Distribution, Inc.* | 10 | 103 | ||||||
CHC Group Ltd.* | 40 | 53 | ||||||
AM Castle & Co.* | 10 | 37 | ||||||
Total Industrial | 133,586 | |||||||
TECHNOLOGY - 0.7% | ||||||||
Micron Technology, Inc.* | 570 | 15,463 | ||||||
NXP Semiconductor N.V.* | 120 | 12,043 | ||||||
Activision Blizzard, Inc. | 380 | 8,636 | ||||||
Freescale Semiconductor Ltd.* | 170 | 6,929 | ||||||
IHS, Inc. — Class A* | 40 | 4,551 | ||||||
Open Text Corp. | 70 | 3,702 | ||||||
MSCI, Inc. — Class A | 60 | 3,679 | ||||||
Brocade Communications Systems, Inc. | 230 | 2,729 | ||||||
NCR Corp.* | 90 | 2,656 | ||||||
Nuance Communications, Inc.* | 180 | 2,583 | ||||||
Solera Holdings, Inc. | 40 | 2,066 | ||||||
IGATE Corp.* | 40 | 1,706 | ||||||
ACI Worldwide, Inc.* | 60 | 1,300 | ||||||
Amkor Technology, Inc.* | 130 | 1,149 | ||||||
Entegris, Inc.* | 70 | 959 | ||||||
MedAssets, Inc.* | 40 | 753 | ||||||
Unisys Corp.* | 30 | 696 | ||||||
Magnachip Semiconductor Corp.* | 20 | 109 | ||||||
Total Technology | 71,709 | |||||||
BASIC MATERIALS - 0.7% | ||||||||
Alcoa, Inc. | 650 | 8,398 | ||||||
ArcelorMittal1 | 890 | 8,384 | ||||||
Ashland, Inc. | 40 | 5,091 | ||||||
Celanese Corp. — Class A | 80 | 4,468 | ||||||
WR Grace & Co.* | 40 | 3,955 | ||||||
Huntsman Corp. | 140 | 3,104 | ||||||
Steel Dynamics, Inc. | 130 | 2,613 | ||||||
Platform Specialty Products Corp.* | 100 | 2,566 | ||||||
United States Steel Corp. | 80 | 1,952 | ||||||
Axiall Corp. | 40 | 1,878 | ||||||
PolyOne Corp. | 50 | 1,868 | ||||||
Compass Minerals International, Inc. | 20 | 1,864 | ||||||
Eldorado Gold Corp. | 360 | 1,653 | ||||||
Chemtura Corp.* | 50 | 1,365 | ||||||
Olin Corp. | 40 | 1,282 | ||||||
Neenah Paper, Inc. | 20 | 1,250 | ||||||
Tronox Ltd. — Class A | 60 | 1,220 | ||||||
Constellium N.V. — Class A* | 60 | 1,219 | ||||||
Commercial Metals Co. | 60 | 971 | ||||||
New Gold, Inc.* | 280 | 949 | ||||||
Resolute Forest Products, Inc.* | 50 | 863 | ||||||
Kaiser Aluminum Corp. | 10 | 769 | ||||||
Century Aluminum Co.* | 50 | 690 | ||||||
Clearwater Paper Corp.* | 10 | 653 | ||||||
Hecla Mining Co. | 200 | 596 | ||||||
PH Glatfelter Co. | 20 | 551 | ||||||
Mercer International, Inc.* | 30 | 461 | ||||||
AK Steel Holding Corp.* | 100 | 447 | ||||||
Kraton Performance Polymers, Inc.* | 20 | 404 | ||||||
AuRico Gold, Inc. | 140 | 388 | ||||||
Cliffs Natural Resources, Inc. | 80 | 385 | ||||||
Horsehead Holding Corp.* | 30 | 380 | ||||||
IAMGOLD Corp.* | 190 | 355 | ||||||
Rentech Nitrogen Partners, LP | 20 | 301 | ||||||
Coeur Mining, Inc.* | 60 | 283 | ||||||
Koppers Holdings, Inc. | 10 | 197 | ||||||
Thompson Creek Metals Company, Inc.* | 110 | 145 | ||||||
Ryerson Holding Corp.* | 20 | 127 | ||||||
Noranda Aluminum Holding Corp. | 40 | 119 | ||||||
Total Basic Materials | 64,164 |
28 | THE RYDEX FUNDS ANNUAL REPORT | SEE NOTES TO FINANCIAL STATEMENTS. |
SCHEDULE OF INVESTMENTS (continued) | March 31, 2015 |
EVENT DRIVEN AND DISTRESSED STRATEGIES FUND |
Shares | Value | |||||||
UTILITIES - 0.6% | ||||||||
Exelon Corp. | 460 | $ | 15,460 | |||||
Eversource Energy | 170 | 8,588 | ||||||
FirstEnergy Corp. | 230 | 8,064 | ||||||
AES Corp. | 380 | 4,883 | ||||||
Calpine Corp.* | 200 | 4,574 | ||||||
NRG Energy, Inc. | 180 | 4,534 | ||||||
AmeriGas Partners, LP | 50 | 2,387 | ||||||
Dynegy, Inc.* | 70 | 2,200 | ||||||
NRG Yield, Inc. — Class A | 40 | 2,029 | ||||||
NGL Energy Partners, LP | 50 | 1,312 | ||||||
Global Partners, LP | 20 | 696 | ||||||
Atlantic Power Corp. | 60 | 169 | ||||||
Total Utilities | 54,896 | |||||||
DIVERSIFIED - 0.1% | ||||||||
Leucadia National Corp. | 200 | 4,458 | ||||||
HRG Group, Inc.* | 110 | 1,373 | ||||||
Total Diversified | 5,831 | |||||||
Total Common Stocks | ||||||||
(Cost $1,412,603) | 1,496,393 | |||||||
EXCHANGE-TRADED FUNDS† - 21.3% | ||||||||
iShares iBoxx $ High Yield Corporate Bond ETF | 22,700 | 2,056,847 | ||||||
Total Exchange-Traded Funds | ||||||||
(Cost $1,984,813) | 2,056,847 | |||||||
MUTUAL FUNDS†,2 - 23.2% | ||||||||
Guggenheim Strategy Fund II | 45,233 | 1,126,742 | ||||||
Guggenheim Strategy Fund I | 44,935 | 1,118,885 | ||||||
Total Mutual Funds | ||||||||
(Cost $2,251,121) | 2,245,627 | |||||||
Face Amount | ||||||||
REPURCHASE AGREEMENTS††,3 - 28.8% | ||||||||
HSBC Group issued 03/31/15 at 0.03% due 04/01/15 | $ | 2,182,160 | 2,182,160 | |||||
RBC Capital Markets issued 03/31/15 at 0.05% due 04/01/15 | 333,480 | 333,480 | ||||||
UMB Financial Corp. issued 03/31/15 at 0.03% due 04/01/15 | 267,673 | 267,673 | ||||||
Total Repurchase Agreements | ||||||||
(Cost $2,783,313) | 2,783,313 | |||||||
SECURITIES LENDING COLLATERAL††,4 - 0.0% | ||||||||
Repurchase Agreements | ||||||||
HSBC Securities, Inc. issued 03/31/15 at 0.10% due 04/01/15 | 2,656 | 2,656 | ||||||
BNP Paribas Securities Corp. issued 03/31/15 at 0.10% due 04/01/15 | 914 | 914 | ||||||
Barclays Capital, Inc. issued 03/31/15 at 0.10% due 04/01/15 | 471 | 471 | ||||||
Total Securities Lending Collateral | ||||||||
(Cost $4,041) | 4,041 | |||||||
Total Investments - 88.8% | ||||||||
(Cost $8,435,891) | $ | 8,586,221 | ||||||
Other Assets & Liabilities, net - 11.2% | 1,078,233 | |||||||
Total Net Assets - 100.0% | $ | 9,664,454 | ||||||
SEE NOTES TO FINANCIAL STATEMENTS. | THE RYDEX FUNDS ANNUAL REPORT | 29 |
SCHEDULE OF INVESTMENTS (concluded) | March 31, 2015 |
EVENT DRIVEN AND DISTRESSED STRATEGIES FUND |
Contracts | Unrealized Gain (Loss) | |||||||
INTEREST RATE FUTURES CONTRACTS PURCHASED† | ||||||||
June 2015 U.S. Treasury 5 Year Note Futures Contracts (Aggregate Value of Contracts $5,649,547) | 47 | $ | 32,784 | |||||
EQUITY FUTURES CONTRACTS PURCHASED† | ||||||||
June 2015 Russell 2000 Index Mini Futures Contracts (Aggregate Value of Contracts $749,520) | 6 | $ | 23,371 | |||||
Units | ||||||||
OTC EQUITY INDEX SWAP AGREEMENTS†† | ||||||||
Credit Suisse International, LLC June 2015 Credit Suisse Merger Arbitrage Liquid Index Swap, Terminating 06/19/155 (Notional Value $3,581,682) | 3,278 | $ | (2,040 | ) |
CENTRALLY CLEARED CREDIT DEFAULT SWAP AGREEMENTS PROTECTION SOLD††,6 | |||||||
Index | Counterparty | Protection Premium Rate | Maturity Date | Notional Principal | Notional Value | Upfront Premiums Paid | Unrealized Appreciation |
CDX.HY-23 Index | Barclays Bank plc | 5.00% | 06/20/20 | $ 1,900,000 | $ (2,034,212) | $ 127,784 | $ 6,428 |
CDX.HY-23 Index | Goldman Sachs International | 5.00% | 06/20/20 | 4,600,000 | (4,924,936) | 313,734 | 11,202 |
* | Non-income producing security. |
† | Value determined based on Level 1 inputs — See Note 4. |
†† | Value determined based on Level 2 inputs — See Note 4. |
1 | All or portion of this security is on loan at March 31, 2015 — See Note 6. |
2 | Investment in a product that is managed by and/or pays a management fee to a party related to the Adviser — See Note 12. |
3 | Repurchase Agreements — See Note 5. |
4 | Securities lending collateral — See Note 6. |
5 | Total Return based on Credit Suisse Merger Arbitrage Liquid Index +/- financing at a variable rate. |
6 | Credit Default Swaps — See Note 7. |
ADR — American Depositary Receipt | |
plc — Public Limited Company | |
REIT — Real Estate Investment Trust |
30 | THE RYDEX FUNDS ANNUAL REPORT | SEE NOTES TO FINANCIAL STATEMENTS. |
EVENT DRIVEN AND DISTRESSED STRATEGIES FUND |
STATEMENT OF ASSETS AND LIABILITIES
March 31, 2015
Assets: | ||||
Investments, at value - including $3,868 of securities loaned (cost $5,648,537) | $ | 5,798,867 | ||
Repurchase agreements, at value (cost $2,787,354) | 2,787,354 | |||
Total investments (cost $8,435,891) | 8,586,221 | |||
Foreign currency, at value (cost $1) | 1 | |||
Segregated cash with broker | 790,241 | |||
Unamortized upfront premiums paid on credit default swaps | 441,518 | |||
Unrealized appreciation on swap agreements | 17,630 | |||
Receivables: | ||||
Fund shares sold | 57,882 | |||
Protection fees on credit default swaps | 10,836 | |||
Variation margin | 7,740 | |||
Dividends | 3,578 | |||
Investment adviser | 291 | |||
Securities lending income | 3 | |||
Total assets | 9,915,941 | |||
Liabilities: | ||||
Segregated cash due to broker | 137,913 | |||
Unrealized depreciation on swap agreements | 2,040 | |||
Payable for: | ||||
Fund shares redeemed | 79,970 | |||
Management fees | 7,076 | |||
Return of securities loaned | 4,100 | |||
Securities purchased | 2,735 | |||
Distribution and service fees | 1,966 | |||
Transfer agent and administrative fees | 1,966 | |||
Portfolio accounting fees | 786 | |||
Miscellaneous | 12,935 | |||
Total liabilities | 251,487 | |||
Commitments and contingent liabilities (Note 15) | — | |||
Net assets | $ | 9,664,454 | ||
Net assets consist of: | ||||
Paid in capital | $ | 9,954,072 | ||
Undistributed net investment income | 121,207 | |||
Accumulated net realized loss on investments | (632,900 | ) | ||
Net unrealized appreciation on investments | 222,075 | |||
Net assets | $ | 9,664,454 | ||
A-Class: | ||||
Net assets | $ | 1,370,896 | ||
Capital shares outstanding | 51,118 | |||
Net asset value per share | $ | 26.82 | ||
Maximum offering price per share (Net asset value divided by 95.25%) | $ | 28.16 | ||
C-Class: | ||||
Net assets | $ | 1,230,245 | ||
Capital shares outstanding | 47,799 | |||
Net asset value per share | $ | 25.74 | ||
H-Class: | ||||
Net assets | $ | 3,317,805 | ||
Capital shares outstanding | 123,711 | |||
Net asset value per share | $ | 26.82 | ||
Institutional Class: | ||||
Net assets | $ | 3,745,508 | ||
Capital shares outstanding | 137,842 | |||
Net asset value per share | $ | 27.17 |
SEE NOTES TO FINANCIAL STATEMENTS. | THE RYDEX FUNDS ANNUAL REPORT | 31 |
EVENT DRIVEN AND DISTRESSED STRATEGIES FUND |
STATEMENT OF OPERATIONS
Year Ended March 31, 2015
Investment Income: | ||||
Dividends (net of foreign withholding tax of $46) | $ | 106,572 | ||
Income from securities lending, net | 1,052 | |||
Interest | 677 | |||
Total investment income | 108,301 | |||
Expenses: | ||||
Management fees | 107,721 | |||
Transfer agent and administrative fees | 29,922 | |||
Distribution and service fees: | ||||
A-Class | 7,284 | |||
C-Class | 13,220 | |||
H-Class | 12,608 | |||
Portfolio accounting fees | 11,969 | |||
Licensing fees | 41,891 | |||
Custodian fees | 1,512 | |||
Trustees’ fees* | 947 | |||
Line of credit fees | 127 | |||
Miscellaneous | 15,771 | |||
Total expenses | 242,972 | |||
Less: | ||||
Expenses waived by Adviser | (12,120 | ) | ||
Net expenses | 230,852 | |||
Net investment loss | (122,551 | ) | ||
Net Realized and Unrealized Gain (Loss): | ||||
Net realized gain (loss) on: | ||||
Investments | $ | (36,230 | ) | |
Swap agreements | (533,658 | ) | ||
Futures contracts | 109,950 | |||
Net realized loss | (459,938 | ) | ||
Net change in unrealized appreciation (depreciation) on: | ||||
Investments | 150,330 | |||
Swap agreements | 40,698 | |||
Futures contracts | 126,950 | |||
Net change in unrealized appreciation (depreciation) | 317,978 | |||
Net realized and unrealized loss | (141,960 | ) | ||
Net decrease in net assets resulting from operations | $ | (264,511 | ) |
* | Relates to Trustees not deemed “interested persons” within the meaning of Section 2(a)(19) of the 1940 Act. |
32 | THE RYDEX FUNDS ANNUAL REPORT | SEE NOTES TO FINANCIAL STATEMENTS. |
EVENT DRIVEN AND DISTRESSED STRATEGIES FUND |
STATEMENTS OF CHANGES IN NET ASSETS
Year Ended March 31, 2015 | Year Ended March 31, 2014 | |||||||
Increase (Decrease) in Net Assets from Operations: | ||||||||
Net investment loss | $ | (122,551 | ) | $ | (198,852 | ) | ||
Net realized gain (loss) on investments | (459,938 | ) | 1,377,099 | |||||
Net change in unrealized appreciation (depreciation) on investments | 317,978 | (170,825 | ) | |||||
Net increase (decrease) in net assets resulting from operations | (264,511 | ) | 1,007,422 | |||||
Distributions to shareholders from: | ||||||||
Net investment income | ||||||||
A-Class | (3,504 | ) | — | |||||
C-Class | (3,120 | ) | — | |||||
H-Class | (7,993 | ) | — | |||||
Institutional Class | (7,317 | ) | — | |||||
Net realized gains | ||||||||
A-Class | (66,854 | ) | (170,099 | ) | ||||
C-Class | (59,527 | ) | (44,651 | ) | ||||
H-Class | (152,483 | ) | (394,614 | ) | ||||
Institutional Class | (139,593 | ) | (60,484 | ) | ||||
Total distributions to shareholders | (440,391 | ) | (669,848 | ) | ||||
Capital share transactions: | ||||||||
Proceeds from sale of shares | ||||||||
A-Class | 2,380,986 | 3,375,449 | ||||||
C-Class | 524,109 | 843,617 | ||||||
H-Class | 2,315,469 | 2,523,264 | ||||||
Institutional Class | 3,241,410 | 256,708 | ||||||
Distributions reinvested | ||||||||
A-Class | 58,305 | 163,722 | ||||||
C-Class | 61,687 | 44,596 | ||||||
H-Class | 157,641 | 389,688 | ||||||
Institutional Class | 146,099 | 59,898 | ||||||
Cost of shares redeemed | ||||||||
A-Class | (5,215,772 | ) | (1,418,770 | ) | ||||
C-Class | (517,330 | ) | (690,580 | ) | ||||
H-Class | (5,658,844 | ) | (2,423,769 | ) | ||||
Institutional Class | (465,399 | ) | (263,890 | ) | ||||
Net increase (decrease) from capital share transactions | (2,971,639 | ) | 2,859,933 | |||||
Net increase (decrease) in net assets | (3,676,541 | ) | 3,197,507 | |||||
Net assets: | ||||||||
Beginning of year | 13,340,995 | 10,143,488 | ||||||
End of year | $ | 9,664,454 | $ | 13,340,995 | ||||
Undistributed net investment income at end of year | $ | 121,207 | $ | 21,935 | ||||
Capital share activity: | ||||||||
Shares sold | ||||||||
A-Class | 85,090 | 119,577 | ||||||
C-Class | 19,302 | 30,556 | ||||||
H-Class | 83,244 | 89,167 | ||||||
Institutional Class | 115,101 | 8,974 | ||||||
Shares issued from reinvestment of distributions | ||||||||
A-Class | 2,286 | 5,879 | ||||||
C-Class | 2,515 | 1,649 | ||||||
H-Class | 6,180 | 13,992 | ||||||
Institutional Class | 5,658 | 2,130 | ||||||
Shares redeemed | ||||||||
A-Class | (187,661 | ) | (49,520 | ) | ||||
C-Class | (19,532 | ) | (25,215 | ) | ||||
H-Class | (205,278 | ) | (86,131 | ) | ||||
Institutional Class | (16,890 | ) | (9,210 | ) | ||||
Net increase (decrease) in shares | (109,985 | ) | 101,848 |
SEE NOTES TO FINANCIAL STATEMENTS. | THE RYDEX FUNDS ANNUAL REPORT | 33 |
EVENT DRIVEN AND DISTRESSED STRATEGIES FUND |
FINANCIAL HIGHLIGHTS
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.
A-Class | Year Ended March 31, 2015 | Year Ended March 31, 2014 | Year Ended March 28, 2013 | Year Ended March 31, 2012 | Period Ended March 31, 2011a | |||||||||||||||
Per Share Data | ||||||||||||||||||||
Net asset value, beginning of period | $ | 28.42 | $ | 27.56 | $ | 25.37 | $ | 26.86 | $ | 25.00 | ||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||
Net investment income (loss)b | (.31 | ) | (.49 | ) | (.21 | ) | (.37 | ) | (.33 | ) | ||||||||||
Net gain (loss) on investments (realized and unrealized) | (.09 | ) | 3.09 | 2.40 | (.36 | ) | 4.27 | |||||||||||||
Total from investment operations | (.40 | ) | 2.60 | 2.19 | (.73 | ) | 3.94 | |||||||||||||
Less distributions from: | ||||||||||||||||||||
Net investment income | (.06 | ) | — | — | — | — | ||||||||||||||
Net realized gains | (1.14 | ) | (1.74 | ) | — | (.76 | ) | (2.08 | ) | |||||||||||
Total distributions | (1.20 | ) | (1.74 | ) | — | (.76 | ) | (2.08 | ) | |||||||||||
Net asset value, end of period | $ | 26.82 | $ | 28.42 | $ | 27.56 | $ | 25.37 | $ | 26.86 | ||||||||||
Total Returnc | (1.18 | %) | 9.58 | % | 8.63 | % | (2.60 | %) | 16.24 | % | ||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||
Net assets, end of period (in thousands) | $ | 1,371 | $ | 4,303 | $ | 2,080 | $ | 2,595 | $ | 11,591 | ||||||||||
Ratios to average net assets: | ||||||||||||||||||||
Net investment income (loss) | (1.10 | %) | (1.73 | %) | (0.80 | %) | (1.43 | %) | (1.65 | %) | ||||||||||
Total expensesd | 2.01 | % | 2.02 | % | 2.03 | % | 1.93 | % | 2.03 | % | ||||||||||
Net expensese | 1.90 | % | 1.90 | % | 1.91 | % | 1.85 | % | 1.89 | % | ||||||||||
Portfolio turnover rate | 107 | % | 161 | % | 228 | % | 513 | % | — |
C-Class | Year Ended March 31, 2015 | Year Ended March 31, 2014 | Year Ended March 28, 2013 | Year Ended March 31, 2012 | Period Ended March 31, 2011a | |||||||||||||||
Per Share Data | ||||||||||||||||||||
Net asset value, beginning of period | $ | 27.53 | $ | 26.95 | $ | 24.99 | $ | 26.67 | $ | 25.00 | ||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||
Net investment income (loss)b | (.45 | ) | (.67 | ) | (.43 | ) | (.52 | ) | (.48 | ) | ||||||||||
Net gain (loss) on investments (realized and unrealized) | (.14 | ) | 2.99 | 2.39 | (.40 | ) | 4.23 | |||||||||||||
Total from investment operations | (.59 | ) | 2.32 | 1.96 | (.92 | ) | 3.75 | |||||||||||||
Less distributions from: | ||||||||||||||||||||
Net investment income | (.06 | ) | — | — | — | — | ||||||||||||||
Net realized gains | (1.14 | ) | (1.74 | ) | — | (.76 | ) | (2.08 | ) | |||||||||||
Total distributions | (1.20 | ) | (1.74 | ) | — | (.76 | ) | (2.08 | ) | |||||||||||
Net asset value, end of period | $ | 25.74 | $ | 27.53 | $ | 26.95 | $ | 24.99 | $ | 26.67 | ||||||||||
Total Returnc | (1.92 | %) | 8.74 | % | 7.89 | % | (3.38 | %) | 15.46 | % | ||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||
Net assets, end of period (in thousands) | $ | 1,230 | $ | 1,253 | $ | 1,038 | $ | 1,022 | $ | 1,363 | ||||||||||
Ratios to average net assets: | ||||||||||||||||||||
Net investment income (loss) | (1.68 | %) | (2.45 | %) | (1.67 | %) | (2.04 | %) | (2.42 | %) | ||||||||||
Total expensesd | 2.75 | % | 2.77 | % | 2.79 | % | 2.66 | % | 2.79 | % | ||||||||||
Net expensese | 2.65 | % | 2.65 | % | 2.66 | % | 2.60 | % | 2.65 | % | ||||||||||
Portfolio turnover rate | 107 | % | 161 | % | 228 | % | 513 | % | — |
34 | THE RYDEX FUNDS ANNUAL REPORT | SEE NOTES TO FINANCIAL STATEMENTS. |
EVENT DRIVEN AND DISTRESSED STRATEGIES FUND |
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.
H-Class | Year Ended March 31, 2015 | Year Ended March 31, 2014 | Year Ended March 28, 2013 | Year Ended March 31, 2012 | Period Ended March 31, 2011a | |||||||||||||||
Per Share Data | ||||||||||||||||||||
Net asset value, beginning of period | $ | 28.42 | $ | 27.57 | $ | 25.37 | $ | 26.86 | $ | 25.00 | ||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||
Net investment income (loss)b | (.29 | ) | (.49 | ) | (.23 | ) | (.34 | ) | (.33 | ) | ||||||||||
Net gain (loss) on investments (realized and unrealized) | (.11 | ) | 3.08 | 2.43 | (.39 | ) | 4.27 | |||||||||||||
Total from investment operations | (.40 | ) | 2.59 | 2.20 | (.73 | ) | 3.94 | |||||||||||||
Less distributions from: | ||||||||||||||||||||
Net investment income | (.06 | ) | — | — | — | — | ||||||||||||||
Net realized gains | (1.14 | ) | (1.74 | ) | — | (.76 | ) | (2.08 | ) | |||||||||||
Total distributions | (1.20 | ) | (1.74 | ) | — | (.76 | ) | (2.08 | ) | |||||||||||
Net asset value, end of period | $ | 26.82 | $ | 28.42 | $ | 27.57 | $ | 25.37 | $ | 26.86 | ||||||||||
Total Returnc | (1.18 | %) | 9.54 | % | 8.67 | % | (2.60 | %) | 16.24 | % | ||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||
Net assets, end of period (in thousands) | $ | 3,318 | $ | 6,809 | $ | 6,134 | $ | 6,183 | $ | 8,886 | ||||||||||
Ratios to average net assets: | ||||||||||||||||||||
Net investment income (loss) | (1.05 | %) | (1.72 | %) | (0.88 | %) | (1.33 | %) | (1.67 | %) | ||||||||||
Total expensesd | 2.01 | % | 2.02 | % | 2.03 | % | 1.91 | % | 2.04 | % | ||||||||||
Net expensese | 1.90 | % | 1.90 | % | 1.91 | % | 1.85 | % | 1.90 | % | ||||||||||
Portfolio turnover rate | 107 | % | 161 | % | 228 | % | 513 | % | — |
SEE NOTES TO FINANCIAL STATEMENTS. | THE RYDEX FUNDS ANNUAL REPORT | 35 |
EVENT DRIVEN AND DISTRESSED STRATEGIES FUND |
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.
Institutional Class | Year Ended March 31, 2015 | Year Ended March 31, 2014 | Year Ended March 28, 2013 | Year Ended March 31, 2012 | Period Ended March 31, 2011a | |||||||||||||||
Per Share Data | ||||||||||||||||||||
Net asset value, beginning of period | $ | 28.71 | $ | 27.76 | $ | 25.49 | $ | 26.91 | $ | 25.00 | ||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||
Net investment income (loss)b | (.16 | ) | (.42 | ) | (.19 | ) | (.23 | ) | (.27 | ) | ||||||||||
Net gain (loss) on investments (realized and unrealized) | (.18 | ) | 3.11 | 2.46 | (.43 | ) | 4.26 | |||||||||||||
Total from investment operations | (.34 | ) | 2.69 | 2.27 | (.66 | ) | 3.99 | |||||||||||||
Less distributions from: | ||||||||||||||||||||
Net investment income | (.06 | ) | — | — | — | — | ||||||||||||||
Net realized gains | (1.14 | ) | (1.74 | ) | — | (.76 | ) | (2.08 | ) | |||||||||||
Total distributions | (1.20 | ) | (1.74 | ) | — | (.76 | ) | (2.08 | ) | |||||||||||
Net asset value, end of period | $ | 27.17 | $ | 28.71 | $ | 27.76 | $ | 25.49 | $ | 26.91 | ||||||||||
Total Returnc | (0.96 | %) | 9.84 | % | 8.91 | % | (2.34 | %) | 16.45 | % | ||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||
Net assets, end of period (in thousands) | $ | 3,746 | $ | 975 | $ | 891 | $ | 329 | $ | 59 | ||||||||||
Ratios to average net assets: | ||||||||||||||||||||
Net investment income (loss) | (0.57 | %) | (1.46 | %) | (0.70 | %) | (0.90 | %) | (1.42 | %) | ||||||||||
Total expensesd | 1.75 | % | 1.77 | % | 1.80 | % | 1.61 | % | 1.79 | % | ||||||||||
Net expensese | 1.65 | % | 1.65 | % | 1.67 | % | 1.58 | % | 1.65 | % | ||||||||||
Portfolio turnover rate | 107 | % | 161 | % | 228 | % | 513 | % | — |
a | Since commencement of operations: June 30, 2010. Percentage amounts for the period, except total return and portfolio turnover rate, have been annualized. |
b | Net investment income (loss) per share was computed using average shares outstanding throughout the period. |
c | Total return does not reflect the impact of any applicable sales charges. |
d | Does not include expenses of the underlying funds in which the Fund invests. |
e | Net expense information reflects the expense ratios after expense waivers. |
36 | THE RYDEX FUNDS ANNUAL REPORT | SEE NOTES TO FINANCIAL STATEMENTS. |
PERFORMANCE REPORT AND FUND PROFILE (Unaudited) | March 31, 2015 |
EMERGING MARKETS 2x STRATEGY FUND
OBJECTIVE: Seeks to provide investment results that correlate, before fees and expenses, to the performance of a specific benchmark on a daily basis. The Fund’s current benchmark is 200% of the performance of the BNY Mellon Emerging Markets 50 ADR Index (the “underlying index”). The Fund does not seek to achieve its investment objective over a period of time greater than one day.
For the one-year period ended March 31, 2015, Emerging Markets 2x Strategy Fund H-Class returned -8.71%, while the BNY Mellon Emerging Markets 50 ADR Index returned -1.95% over the same period. For comparison, the S&P 500 Index returned 12.73%.
For the period, Emerging Markets 2x Strategy Fund maintained a daily correlation of over 99% to its benchmark of 200% of the daily price movement of the BNY Mellon Emerging Markets 50 ADR Index.
For the period, the sectors contributing most to the performance of the underlying index were Information Technology and Telecommunications Services. Sectors that detracted most from performance of the underlying index were Energy and Materials.
The holdings contributing most to the performance of the underlying index for the period were China Mobile Ltd. ADR, Taiwan Semiconductor Manufacturing Company Ltd. ADR, and Baidu, Inc. ADR. The holdings detracting most from return were Vale S.A. ADR, Petroleo Braileiro S.A. Pref ADR, and Vale S.A. Pref ADR.
Derivatives in the Fund were used to help provide exposure to the composition of the benchmark in the highest efficient manner and to provide leverage, not for hedging purposes. The results of derivatives use during the period were within our expectations and contributed to the Fund’s performance.
Due to the compounding of daily returns, leveraged and inverse funds’ returns over periods other than one day will likely differ in amount and possibly direction from the benchmark return for the same period. Investors should monitor their leveraged and inverse funds’ holdings to ensure that they are consistent with their strategies, as frequently as daily.
The effects of compounding may cause the longer-term correlation of the Fund to its benchmark to diminish. The apparent discrepancy between the leveraged and unleveraged indices is the result of compounding, which is described briefly on page 6 of this report.
Performance displayed represents past performance, which is no guarantee of future results.
Holdings Diversification (Market Exposure as % of Net Assets)
![](https://capedge.com/proxy/N-CSR/0001398344-15-003814/rstf_07.jpg)
“Holdings Diversification (Market Exposure as % of Net Assets)” excludes any temporary cash investments.
Inception Dates: | |
A-Class | October 29, 2010 |
C-Class | October 29, 2010 |
H-Class | October 29, 2010 |
THE RYDEX FUNDS ANNUAL REPORT | 37 |
PERFORMANCE REPORT AND FUND PROFILE (Unaudited)(concluded) | March 31, 2015 |
COUNTRY DIVERSIFICATION
At March 31, 2015, the investment diversification of the Fund by country was as follows:
Country | % of Common Stocks | Value |
Brazil | 18% | $249,303 |
Cayman Islands | 14% | 198,081 |
Taiwan, Province of China | 14% | 197,050 |
Hong Kong | 12% | 166,607 |
India | 10% | 146,034 |
China | 10% | 140,651 |
Republic of Korea | 9% | 124,016 |
Other | 13% | 197,102 |
Total Common Stocks | 100% | $1,418,844 |
The chart above reflects percentages of the value of common stocks.
Ten Largest Holdings (% of Total Net Assets) | |
Taiwan Semiconductor Manufacturing Company Ltd. ADR | 3.8% |
China Mobile Ltd. ADR | 3.1% |
Baidu, Inc. ADR | 2.5% |
America Movil SAB de C.V. — Class L ADR | 1.5% |
Infosys Ltd. ADR | 1.5% |
China Life Insurance Company Ltd. ADR | 1.4% |
Alibaba Group Holding Ltd. ADR | 1.3% |
Itau Unibanco Holding S.A. ADR | 1.3% |
Ambev S.A. ADR | 1.1% |
HDFC Bank Ltd. ADR | 1.0% |
Top Ten Total | 18.5% |
“Ten Largest Holdings” exclude any temporary cash or derivative investments. |
Cumulative Fund Performance*
![](https://capedge.com/proxy/N-CSR/0001398344-15-003814/rstf_08.jpg)
![](https://capedge.com/proxy/N-CSR/0001398344-15-003814/rstf_09.jpg)
Average Annual Returns*
Periods Ended March 31, 2015
1 Year | Since Inception (10/29/10) | |
A-Class Shares | -8.72% | -13.67% |
A-Class Shares with sales charge† | -13.05% | -14.62% |
C-Class Shares | -9.32% | -14.03% |
C-Class Shares with CDSC‡ | -10.23% | -14.03% |
H-Class Shares | -8.71% | -13.64% |
BNY Mellon Emerging Markets 50 ADR Index | -1.95% | -3.51% |
S&P 500 Index | 12.73% | 15.91% |
* | The performance data above represents past performance that is not predictive of future results. The investment return and principal value of an investment in the Fund will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Returns are historical and include changes in principal and reinvested dividends and capital gains and do not reflect the effect of taxes. The BNY Mellon Emerging Markets 50 ADR Index and the S&P 500 Index are unmanaged indices and, unlike the Fund, have no management fees or operating expenses to reduce their reported returns. The graphs are based on A-Class shares and H-Class shares only; performance for C-Class shares will vary due to differences in fee structure. |
† | Fund returns are calculated using the maximum sales charge of 4.75%. |
‡ | Fund returns include a CDSC of 1% if redeemed within 12 months of purchase. |
38 | THE RYDEX FUNDS ANNUAL REPORT |
SCHEDULE OF INVESTMENTS | March 31, 2015 |
EMERGING MARKETS 2x STRATEGY FUND |
Shares | Value | |||||||
COMMON STOCKS† - 37.3% | ||||||||
COMMUNICATIONS - 12.4% | ||||||||
China Mobile Ltd. ADR | 1,811 | $ | 117,768 | |||||
Baidu, Inc. ADR* | 449 | 93,572 | ||||||
America Movil SAB de C.V. — Class L ADR | 2,878 | 58,884 | ||||||
Alibaba Group Holding Ltd. ADR* | 608 | 50,610 | ||||||
Grupo Televisa SAB ADR* | 711 | 23,470 | ||||||
Chunghwa Telecom Company Ltd. ADR | 625 | 20,044 | ||||||
Telekomunikasi Indonesia Persero Tbk PT ADR | 406 | 17,677 | ||||||
SK Telecom Company Ltd. ADR | 586 | 15,945 | ||||||
China Telecom Corporation Ltd. ADR | 228 | 14,670 | ||||||
JD.com, Inc. ADR* | 490 | 14,396 | ||||||
Vipshop Holdings Ltd. ADR* | 465 | 13,690 | ||||||
Ctrip.com International Ltd. ADR* | 223 | 13,072 | ||||||
China Unicom Hong Kong Ltd. ADR | 747 | 11,399 | ||||||
Philippine Long Distance Telephone Co. ADR | 120 | 7,499 | ||||||
Total Communications | 472,696 | |||||||
TECHNOLOGY - 6.8% | ||||||||
Taiwan Semiconductor Manufacturing Company Ltd. ADR | 6,141 | 144,191 | ||||||
Infosys Ltd. ADR | 1,586 | 55,637 | ||||||
Advanced Semiconductor Engineering, Inc. ADR | 2,067 | 14,882 | ||||||
Wipro Ltd. ADR | 966 | 12,867 | ||||||
NetEase, Inc. ADR | 121 | 12,741 | ||||||
United Microelectronics Corp. ADR | 3,913 | 9,548 | ||||||
Siliconware Precision Industries Company Ltd. ADR1 | 1,025 | 8,385 | ||||||
Total Technology | 258,251 | |||||||
FINANCIAL - 6.8% | ||||||||
China Life Insurance Company Ltd. ADR | 816 | 53,921 | ||||||
Itau Unibanco Holding S.A. ADR | 4,541 | 50,223 | ||||||
HDFC Bank Ltd. ADR | 673 | 39,633 | ||||||
Banco Bradesco S.A. ADR | 4,152 | 38,531 | ||||||
Shinhan Financial Group Company Ltd. ADR | 780 | 29,094 | ||||||
ICICI Bank Ltd. ADR | 2,314 | 23,973 | ||||||
KB Financial Group, Inc. ADR | 636 | 22,349 | ||||||
Total Financial | 257,724 | |||||||
ENERGY - 4.8% | ||||||||
PetroChina Company Ltd. ADR | 347 | 38,590 | ||||||
CNOOC Ltd. ADR | 264 | 37,440 | ||||||
China Petroleum & Chemical Corp. ADR | 420 | 33,470 | ||||||
Sasol Ltd. ADR | 835 | 28,423 | ||||||
Petroleo Brasileiro S.A. Pref ADR | 3,363 | 20,481 | ||||||
Petroleo Brasileiro S.A. ADR | 2,448 | 14,712 | ||||||
YPF S.A. ADR | 317 | 8,702 | ||||||
Total Energy | 181,818 | |||||||
CONSUMER, NON-CYCLICAL - 2.4% | ||||||||
Ambev S.A. ADR | 7,495 | 43,171 | ||||||
BRF S.A. ADR | 1,091 | 21,580 | ||||||
Fomento Economico Mexicano SAB de CV ADR* | 217 | 20,290 | ||||||
Cia Brasileira de Distribuicao ADR | 272 | 8,111 | ||||||
Total Consumer, Non-cyclical | 93,152 | |||||||
BASIC MATERIALS - 2.0% | ||||||||
POSCO ADR | 528 | 28,860 | ||||||
Vale S.A. Pref ADR | 3,334 | 16,170 | ||||||
Ultrapar Participacoes S.A. ADR | 714 | 14,423 | ||||||
Vale S.A. ADR | 2,434 | 13,752 | ||||||
Sociedad Quimica y Minera de Chile S.A. ADR | 152 | 2,774 | ||||||
Total Basic Materials | 75,979 | |||||||
INDUSTRIAL - 1.0% | ||||||||
Cemex SAB de CV ADR* | 2,021 | 19,139 | ||||||
LG Display Company Ltd. ADR | 730 | 10,446 | ||||||
Embraer S.A. ADR | 265 | 8,149 | ||||||
Total Industrial | 37,734 | |||||||
UTILITIES - 0.7% | ||||||||
Korea Electric Power Corp. ADR | 845 | 17,322 | ||||||
Enersis S.A. ADR | 630 | 10,244 | ||||||
Total Utilities | 27,566 | |||||||
CONSUMER, CYCLICAL - 0.4% | ||||||||
Tata Motors Ltd. ADR | 309 | 13,924 | ||||||
Total Common Stocks | ||||||||
(Cost $1,363,404) | 1,418,844 | |||||||
Face Amount | ||||||||
REPURCHASE AGREEMENTS††,2 - 60.8% | ||||||||
HSBC Group issued 03/31/15 at 0.03% due 04/01/15 | $ | 1,814,807 | 1,814,807 | |||||
RBC Capital Markets issued 03/31/15 at 0.05% due 04/01/15 | 277,341 | 277,341 | ||||||
UMB Financial Corp. issued 03/31/15 at 0.03% due 04/01/15 | 222,612 | 222,612 | ||||||
Total Repurchase Agreements | ||||||||
(Cost $2,314,760) | 2,314,760 |
SEE NOTES TO FINANCIAL STATEMENTS. | THE RYDEX FUNDS ANNUAL REPORT | 39 |
SCHEDULE OF INVESTMENTS (concluded) | March 31, 2015 |
EMERGING MARKETS 2x STRATEGY FUND |
Face Amount | Value | |||||||
SECURITIES LENDING COLLATERAL††,3 - 0.1% | ||||||||
Repurchase Agreements | ||||||||
HSBC Securities, Inc. issued 03/31/15 at 0.10% due 04/01/15 | $ | 2,834 | $ | 2,834 | ||||
BNP Paribas Securities Corp. issued 03/31/15 at 0.10% due 04/01/15 | 975 | 975 | ||||||
Barclays Capital, Inc. issued 03/31/15 at 0.10% due 04/01/15 | 503 | 503 | ||||||
Total Securities Lending Collateral | ||||||||
(Cost $4,312) | 4,312 | |||||||
Total Investments - 98.2% | ||||||||
(Cost $3,682,476) | $ | 3,737,916 | ||||||
Other Assets & Liabilities, net - 1.8% | 66,981 | |||||||
Total Net Assets - 100.0% | $ | 3,804,897 | ||||||
Contracts | Unrealized Gain (Loss) | |||||||
EQUITY FUTURES CONTRACTS PURCHASED† | ||||||||
June 2015 MSCI Emerging Markets Index Mini Futures Contracts (Aggregate Value of Contracts $145,860) | 3 | $ | (11 | ) | ||||
Units | ||||||||
OTC EQUITY INDEX SWAP AGREEMENTS†† | ||||||||
Goldman Sachs International April 2015 Bank of New York Mellon Emerging Markets 50 ADR Index Swap, Terminating 04/28/154 (Notional Value $6,079,045) | 2,752 | $ | 71,525 |
* | Non-income producing security. |
† | Value determined based on Level 1 inputs — See Note 4. |
†† | Value determined based on Level 2 inputs — See Note 4. |
1 | All or portion of this security is on loan at March 31, 2015 — See Note 6. |
2 | Repurchase Agreements — See Note 5. |
3 | Securities lending collateral — See Note 6. |
4 | Total Return based on Bank of New York Mellon Emerging Markets 50 ADR Index +/- financing at a variable rate. |
ADR — American Depositary Receipt |
40 | THE RYDEX FUNDS ANNUAL REPORT | SEE NOTES TO FINANCIAL STATEMENTS. |
EMERGING MARKETS 2x STRATEGY FUND |
STATEMENT OF ASSETS AND LIABILITIES
March 31, 2015
Assets: | ||||
Investments, at value - including $4,090 of securities loaned (cost $1,363,404) | $ | 1,418,844 | ||
Repurchase agreements, at value (cost $2,319,072) | 2,319,072 | |||
Total investments (cost $3,682,476) | 3,737,916 | |||
Segregated cash with broker | 2,579,858 | |||
Unrealized appreciation on swap agreements | 71,525 | |||
Cash | 462 | |||
Receivables: | ||||
Securities sold | 4,990,676 | |||
Fund shares sold | 1,249,996 | |||
Swap settlement | 66,445 | |||
Variation margin | 2,003 | |||
Dividends | 1,065 | |||
Securities lending income | 112 | |||
Interest | 2 | |||
Total assets | 12,700,060 | |||
Liabilities: | ||||
Payable for: | ||||
Fund shares redeemed | 8,873,036 | |||
Return of securities loaned | 4,375 | |||
Management fees | 3,582 | |||
Distribution and service fees | 1,428 | |||
Transfer agent and administrative fees | 995 | |||
Portfolio accounting fees | 597 | |||
Miscellaneous | 11,150 | |||
Total liabilities | 8,895,163 | |||
Commitments and contingent liabilities (Note 15) | — | |||
Net assets | $ | 3,804,897 | ||
Net assets consist of: | ||||
Paid in capital | $ | 15,124,052 | ||
Undistributed net investment income | 53,210 | |||
Accumulated net realized loss on investments | (11,499,319 | ) | ||
Net unrealized appreciation on investments | 126,954 | |||
Net assets | $ | 3,804,897 | ||
A-Class: | ||||
Net assets | $ | 381,544 | ||
Capital shares outstanding | 6,307 | |||
Net asset value per share | $ | 60.50 | ||
Maximum offering price per share (Net asset value divided by 95.25%) | $ | 63.51 | ||
C-Class: | ||||
Net assets | $ | 1,287,249 | ||
Capital shares outstanding | 21,682 | |||
Net asset value per share | $ | 59.37 | ||
H-Class: | ||||
Net assets | $ | 2,136,104 | ||
Capital shares outstanding | 35,244 | |||
Net asset value per share | $ | 60.61 |
STATEMENT OF OPERATIONS
Year Ended March 31, 2015
Investment Income: | ||||
Dividends (net of foreign withholding tax of $16,173) | $ | 725,949 | ||
Income from securities lending, net | 3,772 | |||
Interest | 1,115 | |||
Total investment income | 730,836 | |||
Expenses: | ||||
Management fees | 332,566 | |||
Transfer agent and administrative fees | 92,381 | |||
Distribution and service fees: | ||||
A-Class | 1,887 | |||
C-Class | 8,428 | |||
H-Class | 88,389 | |||
Portfolio accounting fees | 55,430 | |||
Custodian fees | 4,418 | |||
Trustees’ fees* | 2,724 | |||
Line of credit fees | 734 | |||
Miscellaneous | 67,373 | |||
Total expenses | 654,330 | |||
Net investment income | 76,506 | |||
Net Realized and Unrealized Gain (Loss): | ||||
Net realized gain (loss) on: | ||||
Investments | (4,894,928 | ) | ||
Swap agreements | (1,745,144 | ) | ||
Futures contracts | (1,439,020 | ) | ||
Net realized loss | (8,079,092 | ) | ||
Net change in unrealized appreciation (depreciation) on: | ||||
Investments | (206,972 | ) | ||
Swap agreements | (146,150 | ) | ||
Futures contracts | (11 | ) | ||
Net change in unrealized appreciation (depreciation) | (353,133 | ) | ||
Net realized and unrealized loss | (8,432,225 | ) | ||
Net decrease in net assets resulting from operations | $ | (8,355,719 | ) |
* | Relates to Trustees not deemed “interested persons” within the meaning of Section 2(a)(19) of the 1940 Act. |
SEE NOTES TO FINANCIAL STATEMENTS. | THE RYDEX FUNDS ANNUAL REPORT | 41 |
EMERGING MARKETS 2x STRATEGY FUND |
STATEMENTS OF CHANGES IN NET ASSETS
Year Ended March 31, 2015 | Year Ended March 31, 2014 | |||||||
Increase (Decrease) in Net Assets from Operations: | ||||||||
Net investment income (loss) | $ | 76,506 | $ | (34,514 | ) | |||
Net realized loss on investments | (8,079,092 | ) | (1,947,172 | ) | ||||
Net change in unrealized appreciation (depreciation) on investments | (353,133 | ) | 348,749 | |||||
Net decrease in net assets resulting from operations | (8,355,719 | ) | (1,632,937 | ) | ||||
Capital share transactions: | ||||||||
Proceeds from sale of shares | ||||||||
A-Class | 34,963,639 | 8,531,963 | ||||||
C-Class | 43,038,252 | 34,714,451 | ||||||
H-Class | 445,957,288 | 183,477,671 | ||||||
Cost of shares redeemed | ||||||||
A-Class | (35,480,152 | ) | (7,561,718 | ) | ||||
C-Class | (42,085,644 | ) | (34,363,190 | ) | ||||
H-Class | (440,104,061 | ) | (179,596,460 | ) | ||||
Net increase from capital share transactions | 6,289,322 | 5,202,717 | ||||||
Net increase (decrease) in net assets | (2,066,397 | ) | 3,569,780 | |||||
Net assets: | ||||||||
Beginning of year | 5,871,294 | 2,301,514 | ||||||
End of year | $ | 3,804,897 | $ | 5,871,294 | ||||
Undistributed net investment income/(Accumulated net investment loss) at end of year | $ | 53,210 | $ | (23,296 | ) | |||
Capital share activity: | ||||||||
Shares sold | ||||||||
A-Class | 525,431 | 126,244 | * | |||||
C-Class | 596,138 | 529,047 | * | |||||
H-Class | 6,042,313 | 2,825,051 | * | |||||
Shares redeemed | ||||||||
A-Class | (530,350 | ) | (116,456 | )* | ||||
C-Class | (580,699 | ) | (524,287 | )* | ||||
H-Class | (6,078,169 | ) | (2,782,209 | )* | ||||
Net increase (decrease) in shares | (25,336 | ) | 57,390 | * |
* | Capital share activity for the year ended presented through February 21, 2014 has been restated to reflect a 1:5 reverse share split effective February 21, 2014. See Note 14 in Notes to Financial Statements. |
42 | THE RYDEX FUNDS ANNUAL REPORT | SEE NOTES TO FINANCIAL STATEMENTS. |
EMERGING MARKETS 2x STRATEGY FUND |
FINANCIAL HIGHLIGHTS
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.
A-Class | Year Ended March 31, 2015 | Year Ended March 31, 2014f | Year Ended March 28, 2013f | Year Ended March 31, 2012f | Period Ended March 31, 2011a,f | |||||||||||||||
Per Share Data | ||||||||||||||||||||
Net asset value, beginning of period | $ | 66.27 | $ | 73.59 | $ | 87.40 | $ | 134.76 | $ | 125.00 | ||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||
Net investment income (loss)b | (.37 | ) | (.54 | ) | (.35 | ) | (— | )e | (.65 | ) | ||||||||||
Net gain (loss) on investments (realized and unrealized) | (5.40 | ) | (6.78 | ) | (13.46 | ) | (41.76 | ) | 10.41 | |||||||||||
Total from investment operations | (5.77 | ) | (7.32 | ) | (13.81 | ) | (41.76 | ) | 9.76 | |||||||||||
Less distributions from: | ||||||||||||||||||||
Net realized gains | — | — | — | (5.60 | ) | — | ||||||||||||||
Total distributions | — | — | — | (5.60 | ) | — | ||||||||||||||
Net asset value, end of period | $ | 60.50 | $ | 66.27 | $ | 73.59 | $ | 87.40 | $ | 134.76 | ||||||||||
Total Returnc | (8.72 | %) | (9.96 | %) | (15.79 | %) | (30.00 | %) | 7.80 | % | ||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||
Net assets, end of period (in thousands) | $ | 382 | $ | 744 | $ | 106 | $ | 363 | $ | 992 | ||||||||||
Ratios to average net assets: | ||||||||||||||||||||
Net investment income (loss) | (0.53 | %) | (0.82 | %) | (0.51 | %) | (0.01 | %) | (1.42 | %) | ||||||||||
Total expenses | 1.75 | % | 1.81 | % | 1.88 | % | 1.77 | % | 1.85 | % | ||||||||||
Net expensesd | 1.75 | % | 1.76 | % | 1.75 | % | 1.69 | % | 1.73 | % | ||||||||||
Portfolio turnover rate | 1,085 | % | 1,412 | % | 730 | % | 883 | % | 58 | % |
C-Class | Year Ended March 31, 2015 | Year Ended March 31, 2014f | Year Ended March 28, 2013f | Year Ended March 31, 2012f | Period Ended March 31, 2011a,f | |||||||||||||||
Per Share Data | ||||||||||||||||||||
Net asset value, beginning of period | $ | 65.46 | $ | 72.92 | $ | 87.31 | $ | 134.13 | $ | 125.00 | ||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||
Net investment income (loss)b | (.73 | ) | (1.04 | ) | (1.25 | ) | (.90 | ) | (1.55 | ) | ||||||||||
Net gain (loss) on investments (realized and unrealized) | (5.36 | ) | (6.42 | ) | (13.14 | ) | (40.32 | ) | 10.68 | |||||||||||
Total from investment operations | (6.09 | ) | (7.46 | ) | (14.39 | ) | (41.22 | ) | 9.13 | |||||||||||
Less distributions from: | ||||||||||||||||||||
Net realized gains | — | — | — | (5.60 | ) | — | ||||||||||||||
Total distributions | — | — | — | (5.60 | ) | — | ||||||||||||||
Net asset value, end of period | $ | 59.37 | $ | 65.46 | $ | 72.92 | $ | 87.31 | $ | 134.13 | ||||||||||
Total Returnc | (9.32 | %) | (10.21 | %) | (16.49 | %) | (29.75 | %) | 7.32 | % | ||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||
Net assets, end of period (in thousands) | $ | 1,287 | $ | 409 | $ | 108 | $ | 62 | $ | 726 | ||||||||||
Ratios to average net assets: | ||||||||||||||||||||
Net investment income (loss) | (0.99 | %) | (1.73 | %) | (1.61 | %) | (0.87 | %) | (1.98 | %) | ||||||||||
Total expenses | 2.48 | % | 2.66 | % | 2.59 | % | 2.54 | % | 2.60 | % | ||||||||||
Net expensesd | 2.48 | % | 2.61 | % | 2.46 | % | 2.46 | % | 2.49 | % | ||||||||||
Portfolio turnover rate | 1,085 | % | 1,412 | % | 730 | % | 883 | % | 58 | % |
SEE NOTES TO FINANCIAL STATEMENTS. | THE RYDEX FUNDS ANNUAL REPORT | 43 |
EMERGING MARKETS 2x STRATEGY FUND |
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.
H-Class | Year Ended March 31, 2015 | Year Ended March 31, 2014f | Year Ended March 28, 2013f | Year Ended March 31, 2012f | Period Ended March 31, 2011a,f | |||||||||||||||
Per Share Data | ||||||||||||||||||||
Net asset value, beginning of period | $ | 66.37 | $ | 73.87 | $ | 87.74 | $ | 134.69 | $ | 125.00 | ||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||
Net investment income (loss)b | .20 | (.34 | ) | (.35 | ) | (.35 | ) | (.55 | ) | |||||||||||
Net gain (loss) on investments (realized and unrealized) | (5.96 | ) | (7.16 | ) | (13.52 | ) | (41.00 | ) | 10.24 | |||||||||||
Total from investment operations | (5.76 | ) | (7.50 | ) | (13.87 | ) | (41.35 | ) | 9.69 | |||||||||||
Less distributions from: | ||||||||||||||||||||
Net realized gains | — | — | — | (5.60 | ) | — | ||||||||||||||
Total distributions | — | — | — | (5.60 | ) | — | ||||||||||||||
Net asset value, end of period | $ | 60.61 | $ | 66.37 | $ | 73.87 | $ | 87.74 | $ | 134.69 | ||||||||||
Total Returnc | (8.71 | %) | (10.19 | %) | (15.78 | %) | (29.70 | %) | 7.76 | % | ||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||
Net assets, end of period (in thousands) | $ | 2,136 | $ | 4,719 | $ | 2,087 | $ | 4,713 | $ | 3,705 | ||||||||||
Ratios to average net assets: | ||||||||||||||||||||
Net investment income (loss) | 0.25 | % | (0.51 | %) | (0.49 | %) | (0.37 | %) | (1.05 | %) | ||||||||||
Total expenses | 1.75 | % | 1.80 | % | 1.83 | % | 1.77 | % | 1.85 | % | ||||||||||
Net expensesd | 1.75 | % | 1.74 | % | 1.69 | % | 1.69 | % | 1.74 | % | ||||||||||
Portfolio turnover rate | 1,085 | % | 1,412 | % | 730 | % | 883 | % | 58 | % |
a | Since commencement of operations: October 29, 2010. Percentage amounts for the period, except total return and portfolio turnover rate, have been annualized. |
b | Net investment income (loss) per share was computed using average shares outstanding throughout the period. |
c | Total return does not reflect the impact of any applicable sales charges and has not been annualized. |
d | Net expense information reflects the expense ratios after expense waivers. |
e | Net investment loss is less than $0.01 per share. |
f | Reverse share split — Per share amounts for the periods presented through February 21, 2014 have been restated to reflect a 1:5 reverse share split effective February 21, 2014. See Note 14 in Notes to Financial Statements. |
44 | THE RYDEX FUNDS ANNUAL REPORT | SEE NOTES TO FINANCIAL STATEMENTS. |
PERFORMANCE REPORT AND FUND PROFILE (Unaudited) | March 31, 2015 |
INVERSE EMERGING MARKETS 2x STRATEGY FUND
OBJECTIVE: Seeks to provide investment results that correlate, before fees and expenses, to the performance of a specific benchmark on a daily basis. The Fund’s current benchmark is 200% of the inverse (opposite) of the performance of the BNY Mellon Emerging Markets 50 ADR Index (the “underlying index”). The Fund does not seek to achieve its investment objective over a period of time greater than one day.
For the one-year period ended March 31, 2015, Inverse Emerging Markets 2x Strategy Fund H-Class returned -8.35%, while the BNY Mellon Emerging Markets 50 ADR Index returned -1.95% over the same period. For comparison, the S&P 500 Index returned 12.73%.
For the period, Inverse Emerging Markets 2x Strategy Fund maintained a daily correlation of over 99% to its benchmark of -200% of the daily price movement of the BNY Mellon Emerging Markets 50 ADR Index.
For the period, the sectors contributing most to the performance of the underlying index were Information Technology and Telecommunications Services. Sectors that detracted most from performance of the underlying index were Energy and Materials.
The holdings contributing most to the performance of the underlying index for the period were China Mobile Ltd. ADR, Taiwan Semiconductor Manufacturing Company Ltd. ADR, and Baidu, Inc. ADR. The holdings detracting most from return were Vale S.A. ADR, Petroleo Braileiro S.A. Pref ADR, and Vale S.A. Pref ADR.
Derivatives in the Fund were used to help provide exposure to the composition of the benchmark in the highest efficient manner and to provide leverage, not for hedging purposes. The results of derivatives use during the period were within our expectations and contributed to the Fund’s performance.
Due to the compounding of daily returns, leveraged and inverse funds’ returns over periods other than one day will likely differ in amount and possibly direction from the benchmark return for the same period. Investors should monitor their leveraged and inverse funds’ holdings to ensure that they are consistent with their strategies, as frequently as daily.
The effects of compounding may cause the longer-term correlation of the Fund to its benchmark to diminish. The apparent discrepancy between the leveraged and unleveraged indices is the result of compounding, which is described briefly on page 6 of this report.
Performance displayed represents past performance, which is no guarantee of future results.
THE RYDEX FUNDS ANNUAL REPORT | 45 |
PERFORMANCE REPORT AND FUND PROFILE (Unaudited)(concluded) | March 31, 2015 |
Holdings Diversification (Market Exposure as % of Net Assets)
![](https://capedge.com/proxy/N-CSR/0001398344-15-003814/rstf_10.jpg)
“Holdings Diversification (Market Exposure as % of Net Assets)” excludes any temporary cash investments.
Cumulative Fund Performance*
![](https://capedge.com/proxy/N-CSR/0001398344-15-003814/rstf_11.jpg)
![](https://capedge.com/proxy/N-CSR/0001398344-15-003814/rstf_12.jpg)
Inception Dates: | |
A-Class | October 29, 2010 |
C-Class | October 29, 2010 |
H-Class | October 29, 2010 |
The Fund invests principally in derivative investments such as swap agreements and futures contracts.
Average Annual Returns*
Periods Ended March 31, 2015
1 Year | Since Inception (10/29/10) | |
A-Class Shares | -7.96% | -8.50% |
A-Class Shares with sales charge† | -12.31% | -9.51% |
C-Class Shares | -8.78% | -7.92% |
C-Class Shares with CDSC‡ | -9.69% | -7.92% |
H-Class Shares | -8.35% | -8.60% |
BNY Mellon Emerging Markets 50 ADR Index | -1.95% | -3.51% |
S&P 500 Index | 12.73% | 15.91% |
* | The performance data above represents past performance that is not predictive of future results. The investment return and principal value of an investment in the Fund will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Returns are historical and include changes in principal and reinvested dividends and capital gains and do not reflect the effect of taxes. The BNY Mellon Emerging Markets 50 ADR Index and the S&P 500 Index are unmanaged indices and, unlike the Fund, have no management fees or operating expenses to reduce their reported returns. The graphs are based on A-Class shares and H-Class shares only; performance for C-Class shares will vary due to differences in fee structure. |
† | Fund returns are calculated using the maximum sales charge of 4.75%. |
‡ | Fund returns include a CDSC of 1% if redeemed within 12 months of purchase. |
46 | THE RYDEX FUNDS ANNUAL REPORT |
SCHEDULE OF INVESTMENTS | March 31, 2015 |
INVERSE EMERGING MARKETS 2x STRATEGY FUND |
Face Amount | Value | |||||||
REPURCHASE AGREEMENTS††,1 - 75.8% | ||||||||
HSBC Group issued 03/31/15 at 0.03% due 04/01/15 | $ | 13,812,975 | $ | 13,812,975 | ||||
RBC Capital Markets issued 03/31/15 at 0.05% due 04/01/15 | 2,110,916 | 2,110,916 | ||||||
UMB Financial Corp. issued 03/31/15 at 0.03% due 04/01/15 | 1,694,357 | 1,694,357 | ||||||
Total Repurchase Agreements | ||||||||
(Cost $17,618,248) | 17,618,248 | |||||||
Total Investments - 75.8% | ||||||||
(Cost $17,618,248) | $ | 17,618,248 | ||||||
Other Assets & Liabilities, net - 24.2% | 5,636,847 | |||||||
Total Net Assets - 100.0% | $ | 23,255,095 | ||||||
Contracts | Unrealized Loss | |||||||
EQUITY FUTURES CONTRACTS SOLD SHORT† | ||||||||
June 2015 MSCI Emerging Markets Index Mini Futures Contracts (Aggregate Value of Contracts $6,417,840) | 132 | $ | (106,907 | ) | ||||
Units | ||||||||
OTC EQUITY INDEX SWAP AGREEMENTS SOLD SHORT†† | ||||||||
Goldman Sachs International April 2015 Bank of New York Mellon Emerging Markets 50 ADR Index Swap, Terminating 04/28/152 (Notional Value $40,064,274) | 18,136 | $ | (475,806 | ) |
† | Value determined based on Level 1 inputs — See Note 4. |
†† | Value determined based on Level 2 inputs — See Note 4. |
1 | Repurchase Agreements — See Note 5. |
2 | Total Return based on Bank of New York Mellon Emerging Markets 50 ADR Index +/- financing at a variable rate. |
ADR — American Depositary Receipt |
SEE NOTES TO FINANCIAL STATEMENTS. | THE RYDEX FUNDS ANNUAL REPORT | 47 |
INVERSE EMERGING MARKETS 2x STRATEGY FUND |
STATEMENT OF ASSETS AND LIABILITIES
March 31, 2015
Assets: | ||||
Repurchase agreements, at value (cost $17,618,248) | $ | 17,618,248 | ||
Segregated cash with broker | 6,679,624 | |||
Receivables: | ||||
Fund shares sold | 468,791 | |||
Variation margin | 19,524 | |||
Interest | 16 | |||
Total assets | 24,786,203 | |||
Liabilities: | ||||
Unrealized depreciation on swap agreements | 475,806 | |||
Payable for: | ||||
Fund shares redeemed | 1,001,131 | |||
Swap settlement | 33,280 | |||
Management fees | 5,579 | |||
Distribution and service fees | 1,999 | |||
Transfer agent and administrative fees | 1,550 | |||
Portfolio accounting fees | 930 | |||
Miscellaneous | 10,833 | |||
Total liabilities | 1,531,108 | |||
Commitments and contingent liabilities (Note 15) | — | |||
Net assets | $ | 23,255,095 | ||
Net assets consist of: | ||||
Paid in capital | $ | 36,143,889 | ||
Accumulated net investment loss | (106,562 | ) | ||
Accumulated net realized loss on investments | (12,199,519 | ) | ||
Net unrealized depreciation on investments | (582,713 | ) | ||
Net assets | $ | 23,255,095 | ||
A-Class: | ||||
Net assets | $ | 61,979 | ||
Capital shares outstanding | 3,673 | |||
Net asset value per share | $ | 16.87 | ||
Maximum offering price per share (Net asset value divided by 95.25%) | $ | 17.72 | ||
C-Class: | ||||
Net assets | $ | 102,312 | ||
Capital shares outstanding | 5,890 | |||
Net asset value per share | $ | 17.37 | ||
H-Class: | ||||
Net assets | $ | 23,090,804 | ||
Capital shares outstanding | 1,374,488 | |||
Net asset value per share | $ | 16.80 |
STATEMENT OF OPERATIONS
Year Ended March 31, 2015
Investment Income: | ||||
Interest | $ | 2,291 | ||
Total investment income | 2,291 | |||
Expenses: | ||||
Management fees | 108,972 | |||
Transfer agent and administrative fees | 30,272 | |||
Distribution and service fees: | ||||
A-Class | 2,179 | |||
C-Class | 5,120 | |||
H-Class | 26,815 | |||
Portfolio accounting fees | 18,164 | |||
Custodian fees | 1,453 | |||
Trustees’ fees* | 759 | |||
Miscellaneous | 19,717 | |||
Total expenses | 213,451 | |||
Net investment loss | (211,160 | ) | ||
Net Realized and Unrealized Gain (Loss): | ||||
Net realized gain (loss) on: | ||||
Swap agreements | (6,830,122 | ) | ||
Futures contracts | 204,831 | |||
Net realized loss | (6,625,291 | ) | ||
Net change in unrealized appreciation (depreciation) on: | ||||
Swap agreements | 182,167 | |||
Futures contracts | (107,821 | ) | ||
Net change in unrealized appreciation (depreciation) | 74,346 | |||
Net realized and unrealized loss | (6,550,945 | ) | ||
Net decrease in net assets resulting from operations | $ | (6,762,105 | ) |
* | Relates to Trustees not deemed “interested persons” within the meaning of Section 2(a)(19) of the 1940 Act. |
48 | THE RYDEX FUNDS ANNUAL REPORT | SEE NOTES TO FINANCIAL STATEMENTS. |
INVERSE EMERGING MARKETS 2x STRATEGY FUND |
STATEMENTS OF CHANGES IN NET ASSETS
Year Ended March 31, 2015 | Year Ended March 31, 2014 | |||||||
Increase (Decrease) in Net Assets from Operations: | ||||||||
Net investment loss | $ | (211,160 | ) | $ | (151,694 | ) | ||
Net realized loss on investments | (6,625,291 | ) | (4,448,146 | ) | ||||
Net change in unrealized appreciation (depreciation) on investments | 74,346 | (632,299 | ) | |||||
Net decrease in net assets resulting from operations | (6,762,105 | ) | (5,232,139 | ) | ||||
Capital share transactions: | ||||||||
Proceeds from sale of shares | ||||||||
A-Class | 11,215,785 | 8,057,592 | ||||||
C-Class | 33,937,543 | 43,930,520 | ||||||
H-Class | 297,810,126 | 163,931,981 | ||||||
Cost of shares redeemed | ||||||||
A-Class | (15,735,897 | ) | (2,627,231 | ) | ||||
C-Class | (34,133,165 | ) | (43,874,699 | ) | ||||
H-Class | (274,012,457 | ) | (155,566,471 | ) | ||||
Net increase from capital share transactions | 19,081,935 | 13,851,692 | ||||||
Net increase in net assets | 12,319,830 | 8,619,553 | ||||||
Net assets: | ||||||||
Beginning of year | 10,935,265 | 2,315,712 | ||||||
End of year | $ | 23,255,095 | $ | 10,935,265 | ||||
Accumulated net investment loss at end of year | $ | (106,562 | ) | $ | (108,307 | ) | ||
Capital share activity: | ||||||||
Shares sold | ||||||||
A-Class | 737,908 | 380,799 | ||||||
C-Class | 2,098,236 | 2,127,776 | ||||||
H-Class | 18,525,000 | 8,074,671 | ||||||
Shares redeemed | ||||||||
A-Class | (999,205 | ) | (129,267 | ) | ||||
C-Class | (2,106,091 | ) | (2,119,778 | ) | ||||
H-Class | (17,467,759 | ) | (7,858,474 | ) | ||||
Net increase in shares | 788,089 | 475,727 |
SEE NOTES TO FINANCIAL STATEMENTS. | THE RYDEX FUNDS ANNUAL REPORT | 49 |
INVERSE EMERGING MARKETS 2x STRATEGY FUND |
FINANCIAL HIGHLIGHTS
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.
A-Class | Year Ended March 31, 2015 | Year Ended March 31, 2014 | Year Ended March 28, 2013 | Year Ended March 31, 2012 | Period Ended March 31, 2011a | |||||||||||||||
Per Share Data | ||||||||||||||||||||
Net asset value, beginning of period | $ | 18.34 | $ | 19.23 | $ | 19.29 | $ | 21.15 | $ | 25.00 | ||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||
Net investment income (loss)b | (.29 | ) | (.35 | ) | (.33 | ) | (.39 | ) | (.16 | ) | ||||||||||
Net gain (loss) on investments (realized and unrealized) | (1.18 | ) | (.54 | ) | .27 | (1.47 | ) | (3.69 | ) | |||||||||||
Total from investment operations | (1.47 | ) | (.89 | ) | (.06 | ) | (1.86 | ) | (3.85 | ) | ||||||||||
Net asset value, end of period | $ | 16.87 | $ | 18.34 | $ | 19.23 | $ | 19.29 | $ | 21.15 | ||||||||||
Total Returnc | (7.96 | %) | (4.63 | %) | (0.26 | %) | (8.84 | %) | (15.40 | %) | ||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||
Net assets, end of period (in thousands) | $ | 62 | $ | 4,859 | $ | 258 | $ | 8 | $ | 34 | ||||||||||
Ratios to average net assets: | ||||||||||||||||||||
Net investment income (loss) | (1.74 | %) | (1.74 | %) | (1.60 | %) | (1.66 | %) | (1.61 | %) | ||||||||||
Total expenses | 1.75 | % | 1.78 | % | 1.85 | % | 1.78 | % | 1.85 | % | ||||||||||
Net expensesd | 1.75 | % | 1.75 | % | 1.71 | % | 1.69 | % | 1.73 | % | ||||||||||
Portfolio turnover rate | — | — | — | — | — |
C-Class | Year Ended March 31, 2015 | Year Ended March 31, 2014 | Year Ended March 28, 2013 | Year Ended March 31, 2012 | Period Ended March 31, 2011a | |||||||||||||||
Per Share Data | ||||||||||||||||||||
Net asset value, beginning of period | $ | 19.03 | $ | 20.07 | $ | 20.25 | $ | 21.33 | $ | 25.00 | ||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||
Net investment income (loss)b | (.39 | ) | (.52 | ) | (.49 | ) | (.55 | ) | (.25 | ) | ||||||||||
Net gain (loss) on investments (realized and unrealized) | (1.27 | ) | (.52 | ) | .31 | (.53 | ) | (3.42 | ) | |||||||||||
Total from investment operations | (1.66 | ) | (1.04 | ) | (.18 | ) | (1.08 | ) | (3.67 | ) | ||||||||||
Net asset value, end of period | $ | 17.37 | $ | 19.03 | $ | 20.07 | $ | 20.25 | $ | 21.33 | ||||||||||
Total Returnc | (8.78 | %) | (5.23 | %) | (0.84 | %) | (5.06 | %)e | (14.68 | %) | ||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||
Net assets, end of period (in thousands) | $ | 102 | $ | 262 | $ | 115 | $ | 1,261 | $ | 15 | ||||||||||
Ratios to average net assets: | ||||||||||||||||||||
Net investment income (loss) | (2.47 | %) | (2.44 | %) | (2.41 | %) | (2.41 | %) | (2.37 | %) | ||||||||||
Total expenses | 2.48 | % | 2.48 | % | 2.65 | % | 2.53 | % | 2.57 | % | ||||||||||
Net expensesd | 2.48 | % | 2.46 | % | 2.51 | % | 2.44 | % | 2.46 | % | ||||||||||
Portfolio turnover rate | — | — | — | — | — |
50 | THE RYDEX FUNDS ANNUAL REPORT | SEE NOTES TO FINANCIAL STATEMENTS. |
INVERSE EMERGING MARKETS 2x STRATEGY FUND |
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.
H-Class | Year Ended March 31, 2015 | Year Ended March 31, 2014 | Year Ended March 28, 2013 | Year Ended March 31, 2012 | Period Ended March 31, 2011a | |||||||||||||||
Per Share Data | ||||||||||||||||||||
Net asset value, beginning of period | $ | 18.33 | $ | 19.22 | $ | 19.29 | $ | 21.15 | $ | 25.00 | ||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||
Net investment income (loss)b | (.28 | ) | (.35 | ) | (.33 | ) | (.38 | ) | (.16 | ) | ||||||||||
Net gain (loss) on investments (realized and unrealized) | (1.25 | ) | (.54 | ) | .26 | (1.48 | ) | (3.69 | ) | |||||||||||
Total from investment operations | (1.53 | ) | (.89 | ) | (.07 | ) | (1.86 | ) | (3.85 | ) | ||||||||||
Net asset value, end of period | $ | 16.80 | $ | 18.33 | $ | 19.22 | $ | 19.29 | $ | 21.15 | ||||||||||
Total Returnc | (8.35 | %) | (4.63 | %) | (0.36 | %) | (8.79 | %) | (15.40 | %) | ||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||
Net assets, end of period (in thousands) | $ | 23,091 | $ | 5,815 | $ | 1,942 | $ | 2,215 | $ | 2,892 | ||||||||||
Ratios to average net assets: | ||||||||||||||||||||
Net investment income (loss) | (1.71 | %) | (1.74 | %) | (1.56 | %) | (1.67 | %) | (1.63 | %) | ||||||||||
Total expenses | 1.73 | % | 1.78 | % | 1.82 | % | 1.79 | % | 1.85 | % | ||||||||||
Net expensesd | 1.73 | % | 1.76 | % | 1.68 | % | 1.70 | % | 1.74 | % | ||||||||||
Portfolio turnover rate | — | — | — | — | — |
a | Since commencement of operations: October 29, 2010. Percentage amounts for the period, except total return and portfolio turnover rate, have been annualized. |
b | Net investment income (loss) per share was computed using average shares outstanding throughout the period. |
c | Total return does not reflect the impact of any applicable sales charges and has not been annualized. |
d | Net expense information reflects the expense ratios after expense waivers. |
e | Generally, the performance of the Fund’s C-Class shares will underperform the Fund’s H-Class shares and A-Class shares due to the C-Class shares’ higher expense ratio. However, the performance of the Fund’s C-Class shares is greater than that of the H-Class shares and A-Class shares due to the impact large redemptions of C-Class shares had on the expense accruals for C-Class shares. The effect of the expense accruals on the performance of the C-Class shares of the Fund was magnified by the small asset base of the C-Class shares. |
SEE NOTES TO FINANCIAL STATEMENTS. | THE RYDEX FUNDS ANNUAL REPORT | 51 |
PERFORMANCE REPORT AND FUND PROFILE (Unaudited) | March 31, 2015 |
EMERGING MARKETS BOND STRATEGY FUND
OBJECTIVE: Seeks to provide investment results that correlate, before fees and expenses, to the performance of the emerging markets bond market as defined by the Adviser.
The Emerging Markets Bond Fund H-Class returned -5.74% for the one-year period ended March 31, 2015. By comparison, the Bank of America Merrill Lynch U.S. Dollar Emerging Markets Sovereign Plus Index returned 5.59% over the same period.
Increased global instability over the past year led to increasing credit spreads across most countries, and in Argentina defaulted. Political tensions between Russia and Ukraine saw both of those countries credit default swap rates rise. The drop in oil prices affected the credit spreads of countries with a high dependency to oil revenues. As a result, Venezuela saw credit default spreads soar over the past year.
Derivatives in the Fund were used to help provide exposure to the emerging market bond market in the highest efficient manner, not for hedging purposes. The results of derivatives use during the period were within our expectations and contributed to the Fund’s performance.
Performance displayed represents past performance, which is no guarantee of future results.
Holdings Diversification (Market Exposure as % of Net Assets)
![](https://capedge.com/proxy/N-CSR/0001398344-15-003814/rstf_13.jpg)
“Holdings Diversification (Market Exposure as % of Net Assets)” excludes any temporary cash investments.
Inception Dates: | |
A-Class | October 8, 2013 |
C-Class | October 8, 2013 |
H-Class | October 8, 2013 |
The Fund invests principally in derivative instruments such as swap agreements and futures contracts.
Largest Holdings (% of Total Net Assets) | |
PowerShares Emerging Markets Sovereign Debt Portfolio | 11.0% |
iShares JP Morgan USD Emerging Markets Bond ETF | 10.9% |
Total | 21.9% |
“Largest Holdings” exclude any temporary cash or derivative investments. |
52 | THE RYDEX FUNDS ANNUAL REPORT |
PERFORMANCE REPORT AND FUND PROFILE (Unaudited)(concluded) | March 31, 2015 |
Cumulative Fund Performance*
![](https://capedge.com/proxy/N-CSR/0001398344-15-003814/rstf_14.jpg)
![](https://capedge.com/proxy/N-CSR/0001398344-15-003814/rstf_15.jpg)
Average Annual Returns*
Periods Ended March 31, 2015
1 Year | Since Inception (10/08/13) | |
A-Class Shares | -5.31% | -3.16% |
A-Class Shares with sales charge† | -9.82% | -6.30% |
C-Class Shares | -6.19% | -3.97% |
C-Class Shares with CDSC‡ | -6.99% | -3.97% |
H-Class Shares | -5.74% | -3.40% |
BofA ML U.S. Dollar Emerging Markets Sovereign Plus Index | 5.59% | 6.61% |
* | The performance data above represents past performance that is not predictive of future results. The investment return and principal value of an investment in the Fund will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Returns are historical and include changes in principal and reinvested dividends and capital gains and do not reflect the effect of taxes. The BofA ML U.S. Dollar Emerging Markets Sovereign Plus Index is an unmanaged index and, unlike the Fund, has no management fees or operating expenses to reduce its reported return. The graphs are based on A-Class shares and H-Class shares only; performance for C-Class shares will vary due to differences in fee structures. |
† | Fund returns are calculated using the maximum sales charge of 4.75%. |
‡ | Fund returns include a CDSC of 1% if redeemed within 12 months of purchase. |
THE RYDEX FUNDS ANNUAL REPORT | 53 |
SCHEDULE OF INVESTMENTS | March 31, 2015 |
EMERGING MARKETS BOND STRATEGY FUND |
Shares | Value | |||||||
EXCHANGE-TRADED FUNDS† - 21.9% | ||||||||
PowerShares Emerging Markets Sovereign Debt Portfolio | 870 | $ | 24,726 | |||||
iShares JP Morgan USD Emerging Markets Bond ETF | 220 | 24,666 | ||||||
Total Exchange-Traded Funds | ||||||||
(Cost $48,802) | 49,392 | |||||||
Face Amount | ||||||||
REPURCHASE AGREEMENTS††,1 - 55.3% | ||||||||
HSBC Group issued 03/31/15 at 0.03% due 04/01/15 | $ | 97,763 | 97,763 | |||||
RBC Capital Markets issued 03/31/15 at 0.05% due 04/01/15 | 14,940 | 14,940 | ||||||
UMB Financial Corp. issued 03/31/15 at 0.03% due 04/01/15 | 11,992 | 11,992 | ||||||
Total Repurchase Agreements | ||||||||
(Cost $124,695) | 124,695 | |||||||
Total Investments - 77.2% | ||||||||
(Cost $173,497) | $ | 174,087 | ||||||
Other Assets & Liabilities, net - 22.8% | 51,488 | |||||||
Total Net Assets - 100.0% | $ | 225,575 | ||||||
Contracts | Unrealized Gain (Loss) | |||||||
INTEREST RATE FUTURES CONTRACTS PURCHASED† | ||||||||
June 2015 U.S. Treasury 5 Year Note Futures Contracts (Aggregate Value of Contracts $120,203) | 1 | $ | 1,092 | |||||
June 2015 U.S. Treasury 10 Year Note Futures Contracts (Aggregate Value of Contracts $128,906) | 1 | (298 | ) | |||||
(Total Aggregate Value of Contracts $249,109) | $ | 794 |
CENTRALLY CLEARED CREDIT DEFAULT SWAP AGREEMENT PROTECTION SOLD††,2 | |||||||
Index | Counterparty | Protection Premium Rate | Maturity Date | Notional Principal | Notional Value | Upfront Premiums Received | Unrealized Depreciation |
CDX.EM-23 Index | Barclays Bank plc | 1.00% | 06/20/20 | $ 300,000 | $ (269,625) | $ (29,503) | $ (872) |
† | Value determined based on Level 1 inputs — See Note 4. |
†† | Value determined based on Level 2 inputs — See Note 4. |
1 | Repurchase Agreements — See Note 5. |
2 | Credit Default Swaps — See Note 7. |
plc — Public Limited Company |
54 | THE RYDEX FUNDS ANNUAL REPORT | SEE NOTES TO FINANCIAL STATEMENTS. |
EMERGING MARKETS BOND STRATEGY FUND |
STATEMENT OF ASSETS AND LIABILITIES
March 31, 2015
Assets: | ||||
Investments, at value (cost $48,802) | $ | 49,392 | ||
Repurchase agreements, at value (cost $124,695) | 124,695 | |||
Total investments (cost $173,497) | 174,087 | |||
Segregated cash with broker | 82,285 | |||
Cash | 104 | |||
Receivables: | ||||
Variation margin | 508 | |||
Protection fees on credit default swaps | 100 | |||
Total assets | 257,084 | |||
Liabilities: | ||||
Unamortized upfront premiums received on credit default swaps | 29,503 | |||
Unrealized depreciation on swap agreements | 872 | |||
Payable for: | ||||
Management fees | 203 | |||
Distribution and service fees | 89 | |||
Transfer agent and administrative fees | 68 | |||
Portfolio accounting fees | 40 | |||
Miscellaneous | 734 | |||
Total liabilities | 31,509 | |||
Commitments and contingent liabilities (Note 15) | — | |||
Net assets | $ | 225,575 | ||
Net assets consist of: | ||||
Paid in capital | $ | 699,888 | ||
Undistributed net investment income | 5,111 | |||
Accumulated net realized loss on investments | (479,936 | ) | ||
Net unrealized appreciation on investments | 512 | |||
Net assets | $ | 225,575 | ||
A-Class: | ||||
Net assets | $ | 38,764 | ||
Capital shares outstanding | 1,902 | |||
Net asset value per share | $ | 20.38 | ||
Maximum offering price per share (Net asset value divided by 95.25%) | $ | 21.40 | ||
C-Class: | ||||
Net assets | $ | 33,541 | ||
Capital shares outstanding | 1,670 | |||
Net asset value per share | $ | 20.08 | ||
H-Class: | ||||
Net assets | $ | 153,270 | ||
Capital shares outstanding | 7,554 | |||
Net asset value per share | $ | 20.29 |
STATEMENT OF OPERATIONS
Year Ended March 31, 2015
Investment Income: | ||||
Dividends | $ | 7,074 | ||
Interest | 774 | |||
Total investment income | 7,848 | |||
Expenses: | ||||
Management fees | 40,426 | |||
Transfer agent and administrative fees | 13,477 | |||
Distribution and service fees: | ||||
A-Class | 6,779 | |||
C-Class | 239 | |||
H-Class | 6,641 | |||
Portfolio accounting fees | 8,087 | |||
Registration fees | 4,500 | |||
Tax expense | 1,431 | |||
Custodian fees | 626 | |||
Trustees’ fees* | 584 | |||
Miscellaneous | 3,145 | |||
Total expenses | 85,935 | |||
Net investment loss | (78,087 | ) | ||
Net Realized and Unrealized Gain (Loss): | ||||
Net realized gain (loss) on: | ||||
Investments | (13,328 | ) | ||
Swap agreements | (250,336 | ) | ||
Futures contracts | 61,942 | |||
Net realized loss | (201,722 | ) | ||
Net change in unrealized appreciation (depreciation) on: | ||||
Investments | 590 | |||
Swap agreements | (81,868 | ) | ||
Futures contracts | 42,027 | |||
Net change in unrealized appreciation (depreciation) | (39,251 | ) | ||
Net realized and unrealized loss | (240,973 | ) | ||
Net decrease in net assets resulting from operations | $ | (319,060 | ) |
* | Relates to Trustees not deemed “interested persons” within the meaning of Section 2(a)(19) of the 1940 Act. |
SEE NOTES TO FINANCIAL STATEMENTS. | THE RYDEX FUNDS ANNUAL REPORT | 55 |
EMERGING MARKETS BOND STRATEGY FUND |
STATEMENTS OF CHANGES IN NET ASSETS
Year Ended March 31, 2015 | Period Ended March 31, 2014a | |||||||
Increase (Decrease) in Net Assets from Operations: | ||||||||
Net investment loss | $ | (78,087 | ) | $ | (42,569 | ) | ||
Net realized gain (loss) on investments | (201,722 | ) | 34,169 | |||||
Net change in unrealized appreciation (depreciation) on investments | (39,251 | ) | 39,763 | |||||
Net increase (decrease) in net assets resulting from operations | (319,060 | ) | 31,363 | |||||
Distributions to shareholders from: | ||||||||
Net investment income | ||||||||
A-Class | (7,457 | ) | — | |||||
C-Class | (2,377 | ) | — | |||||
H-Class | (181,291 | ) | — | |||||
Total distributions to shareholders | (191,125 | ) | — | |||||
Capital share transactions: | ||||||||
Proceeds from sale of shares | ||||||||
A-Class | 18,252,568 | 650,358 | ||||||
C-Class | 1,144,653 | 10,789 | ||||||
H-Class | 3,651,528 | 12,337,077 | ||||||
Distributions reinvested | ||||||||
A-Class | 6,103 | — | ||||||
C-Class | 2,377 | — | ||||||
H-Class | 33,679 | — | ||||||
Cost of shares redeemed | ||||||||
A-Class | (18,413,103 | ) | (147,681 | ) | ||||
C-Class | (1,123,838 | ) | (759 | ) | ||||
H-Class | (8,907,076 | ) | (6,792,278 | ) | ||||
Net increase (decrease) from capital share transactions | (5,353,109 | ) | 6,057,506 | |||||
Net increase (decrease) in net assets | (5,863,294 | ) | 6,088,869 | |||||
Net assets: | ||||||||
Beginning of period | 6,088,869 | — | ||||||
End of period | $ | 225,575 | $ | 6,088,869 | ||||
Undistributed net investment income at end of period | $ | 5,111 | $ | 73,498 | ||||
Capital share activity: | ||||||||
Shares sold | ||||||||
A-Class | 689,810 | 25,874 | ||||||
C-Class | 44,326 | 431 | ||||||
H-Class | 149,092 | 490,331 | ||||||
Shares issued from reinvestment of distributions | ||||||||
A-Class | 297 | — | ||||||
C-Class | 117 | — | ||||||
H-Class | 1,645 | — | ||||||
Shares redeemed | ||||||||
A-Class | (708,041 | ) | (6,038 | ) | ||||
C-Class | (43,173 | ) | (31 | ) | ||||
H-Class | (364,753 | ) | (268,761 | ) | ||||
Net increase (decrease) in shares | (230,680 | ) | 241,806 |
a | Since commencement of operations: October 8, 2013. |
56 | THE RYDEX FUNDS ANNUAL REPORT | SEE NOTES TO FINANCIAL STATEMENTS. |
EMERGING MARKETS BOND STRATEGY FUND |
FINANCIAL HIGHLIGHTS
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.
A-Class | Year Ended March 31, 2015 | Period Ended March 31, 2014a | ||||||
Per Share Data | ||||||||
Net asset value, beginning of period | $ | 25.17 | $ | 25.00 | ||||
Income (loss) from investment operations: | ||||||||
Net investment income (loss)b | (.36 | ) | (.21 | ) | ||||
Net gain (loss) on investments (realized and unrealized) | (.94 | ) | .38 | |||||
Total from investment operations | (1.30 | ) | .17 | |||||
Less distributions from: | ||||||||
Net investment income | (3.49 | ) | — | |||||
Total distributions | (3.49 | ) | — | |||||
Net asset value, end of period | $ | 20.38 | $ | 25.17 | ||||
Total Returnc | (5.31 | %) | 0.72 | % | ||||
Ratios/Supplemental Data | ||||||||
Net assets, end of period (in thousands) | $ | 39 | $ | 499 | ||||
Ratios to average net assets: | ||||||||
Net investment income (loss) | (1.50 | %) | (1.78 | %) | ||||
Total expenses | 1.71 | % | 1.83 | % | ||||
Portfolio turnover rate | 655 | % | — |
C-Class | Year Ended March 31, 2015 | Period Ended March 31, 2014a | ||||||
Per Share Data | ||||||||
Net asset value, beginning of period | $ | 25.09 | $ | 25.00 | ||||
Income (loss) from investment operations: | ||||||||
Net investment income (loss)b | (.45 | ) | (.28 | ) | ||||
Net gain (loss) on investments (realized and unrealized) | (1.07 | ) | .37 | |||||
Total from investment operations | (1.52 | ) | .09 | |||||
Less distributions from: | ||||||||
Net investment income | (3.49 | ) | — | |||||
Total distributions | (3.49 | ) | — | |||||
Net asset value, end of period | $ | 20.08 | $ | 25.09 | ||||
Total Returnc | (6.19 | %) | 0.40 | % | ||||
Ratios/Supplemental Data | ||||||||
Net assets, end of period (in thousands) | $ | 34 | $ | 10 | ||||
Ratios to average net assets: | ||||||||
Net investment income (loss) | (1.85 | %) | (2.34 | %) | ||||
Total expenses | 2.24 | % | 2.39 | % | ||||
Portfolio turnover rate | 655 | % | — |
SEE NOTES TO FINANCIAL STATEMENTS. | THE RYDEX FUNDS ANNUAL REPORT | 57 |
EMERGING MARKETS BOND STRATEGY FUND |
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.
H-Class | Year Ended March 31, 2015 | Period Ended March 31, 2014a | ||||||
Per Share Data | ||||||||
Net asset value, beginning of period | $ | 25.18 | $ | 25.00 | ||||
Income (loss) from investment operations: | ||||||||
Net investment income (loss)b | (.39 | ) | (.19 | ) | ||||
Net gain (loss) on investments (realized and unrealized) | (1.01 | ) | .37 | |||||
Total from investment operations | (1.40 | ) | .18 | |||||
Less distributions from: | ||||||||
Net investment income | (3.49 | ) | — | |||||
Total distributions | (3.49 | ) | — | |||||
Net asset value, end of period | $ | 20.29 | $ | 25.18 | ||||
Total Returnc | (5.74 | %) | 0.80 | % | ||||
Ratios/Supplemental Data | ||||||||
Net assets, end of period (in thousands) | $ | 153 | $ | 5,580 | ||||
Ratios to average net assets: | ||||||||
Net investment income (loss) | (1.64 | %) | (1.62 | %) | ||||
Total expenses | 1.74 | % | 1.64 | % | ||||
Portfolio turnover rate | 655 | % | — |
a | Since commencement of operations: October 8, 2013. Percentage amounts for the period, except total return and portfolio turnover rate, have been annualized. |
b | Net investment income (loss) per share was computed using average shares outstanding throughout the period. |
c | Total return does not reflect the impact of any applicable sales charges and has not been annualized. |
58 | THE RYDEX FUNDS ANNUAL REPORT | SEE NOTES TO FINANCIAL STATEMENTS. |
NOTES TO FINANCIAL STATEMENTS
1. Organization and Significant Accounting Policies
Organization
The Rydex Series Funds (the “Trust”), a Delaware business trust, is registered with the SEC under the Investment Company Act of 1940 (”1940 Act”), as a non-diversified, open-ended investment company of the series type. Each series, in effect, is representing a separate Fund. The Trust is authorized to issue an unlimited number of no par value shares. The Trust accounts for the assets of each fund separately.
The Trust offers a combination of eight separate classes of shares: Investor Class shares, Advisor Class shares, A-Class shares, C-Class shares, H-Class shares, Y-Class shares, Institutional Class shares and Money Market Class shares. Sales of shares of each Class are made without a front-end sales charge at the net asset value per share (“NAV”), with the exception of A-Class shares. A-Class shares are sold at the NAV, plus the applicable front-end sales charge. The sales charge varies depending on the amount purchased, but will not exceed 4.75%. A-Class share purchases of $1 million or more are exempt from the front-end sales charge but have a 1% contingent deferred sales charge (“CDSC”) if shares are redeemed within 12 months of purchase. C-Class shares have a 1% CDSC if shares are redeemed within 12 months of purchase. Institutional Class shares are offered primarily for direct investment by institutions such as pension and profit sharing plans, endowments, foundations and corporations. Institutional Class shares have a minimum initial investment of $2 million and a minimum account balance of $1 million. Institutional Class shares are offered without a front-end sales charge or CDSC. At March 31, 2015, the Trust consisted of fifty-two funds.
This report covers the Long Short Equity Fund, Event Driven and Distressed Strategies Fund, Emerging Markets 2x Strategy Fund, Inverse Emerging Markets 2x Strategy Fund and Emerging Markets Bond Strategy Fund (the “Funds”). Only A-Class, C-Class, H-Class and Institutional Class shares had been issued by the Funds.
The International Equity Funds and Fixed Income Fund are designed and operated to accommodate frequent trading by shareholders and, unlike most mutual funds, offer unlimited exchange privileges with no minimum holding periods or transactions fees, which may cause the Funds to experience high portfolio turnover.
Guggenheim Investments (“GI”) provides advisory services, and Rydex Fund Services, LLC (“RFS”) provides transfer agent, administrative and accounting services to the Trust. Guggenheim Funds Distributors, LLC (“GFD”) acts as principal underwriter for the Trust. GI, RFS and GFD are affiliated entities.
Significant Accounting Policies
The Funds operate as investment companies and accordingly follow the investment company accounting and reporting guidance of the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification Topic 946 Financial Services – Investment Companies.
The following significant accounting policies are in conformity with U.S. generally accepted accounting principles (“U.S. GAAP”) and are consistently followed by the Trust. This requires management to make estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates. All time references are based on Eastern Time.
The NAV of each Class of the Funds is calculated by dividing the market value of the Fund’s securities and other assets, less all liabilities, attributable to the Class by the number of outstanding shares of the Class.
The Trust calculates a NAV twice each business day; at 10:45 a.m. and at the close of the New York Stock Exchange (“NYSE”), usually 4:00 p.m. for the Emerging Markets 2x Strategy Fund, Inverse Emerging Markets 2x Strategy Fund and Emerging Markets Bond Strategy Fund. All other Funds in this report will price at the afternoon NAV. The NAV is calculated using the current market value of each Fund’s total assets as of the respective time of calculation. These financial statements are based on the March 31, 2015, afternoon NAV.
A. The Board of Trustees of the Funds (the “Board”) has adopted policies and procedures for the valuation of the Funds’ investments (the “Valuation Procedures”). Pursuant to the Valuation Procedures, the Board has delegated to a valuation committee, consisting of representatives from Guggenheim’s investment management, fund administration, legal and compliance departments (the “Valuation Committee”), the day-to-day responsibility for implementing the Valuation Procedures, including, under most circumstances, the responsibility for determining the fair value of the Funds' securities or other assets.
THE RYDEX FUNDS ANNUAL REPORT | 59 |
NOTES TO FINANCIAL STATEMENTS (continued)
Valuations of the Funds’ securities are supplied primarily by pricing services appointed pursuant to the processes set forth in the Valuation Procedures. The Valuation Committee convenes monthly, or more frequently as needed and will review the valuation of all assets which have been fair valued for reasonableness. The Funds’ officers, through the Valuation Committee and consistent with the monitoring and review responsibilities set forth in the Valuation Procedures, regularly review procedures used by, and valuations provided by, the pricing services.
If the pricing service cannot or does not provide a valuation for a particular investment or such valuation is deemed unreliable, such investment is fair valued by the Valuation Committee.
Equity securities listed on an exchange (NYSE or American Stock Exchange) are valued at the last quoted sales price as of the close of business on the NYSE, usually 4:00 p.m. on the valuation date. Equity securities listed on the NASDAQ market system are valued at the NASDAQ Official Closing Price on the valuation date, which may not necessarily represent the last sale price. If there has been no sale on such exchange or NASDAQ on a given day, the security is valued at the closing bid price on that day.
Open-end investment companies (“Mutual Funds”) are valued at their NAV as of the close of business, on the valuation date. Exchange-traded funds (“ETFs”) and closed-end investment companies (“CEFs”) are valued at the last quoted sales price.
Repurchase agreements are valued at amortized cost, which approximates market value.
The value of futures contracts is accounted for using the unrealized gain or loss on the contracts that is determined by marking the contracts to their current realized settlement prices. Financial futures contracts are valued at the 4:00 p.m. price on the valuation date. In the event that the exchange for a specific futures contract closes earlier than 4:00 p.m., the futures contract is valued at the Official Settlement Price of the exchange. However, the underlying securities from which the futures contract value is derived are monitored until 4:00 p.m. to determine if fair valuation would provide a more accurate valuation.
The value of OTC swap agreements and credit default swap agreements entered into by a Fund is accounted for using the unrealized gain or loss on the agreements that is determined by marking the agreements to the last quoted value of the index that the swap pertains to at the close of the NYSE. The swap's value is then adjusted to include dividends accrued, and financing charges and/or interest associated with the swap agreements.
Investments for which market quotations are not readily available are fair valued as determined in good faith by GI under the direction of the Board of Trustees using methods established or ratified by the Board of Trustees.
Valuations in accordance with these methods are intended to reflect each security’s (or asset’s) “fair value.” Each such determination is based on a consideration of all relevant factors, which are likely to vary from one pricing context to another. Examples of such factors may include, but are not limited to: (i) the type of security, (ii) the initial cost of the security, (iii) the existence of any contractual restrictions on the security’s disposition, (iv) the price and extent of public trading in similar securities of the issuer or of comparable companies, (v) quotations or evaluated prices from broker-dealers and/or pricing services, (vi) information obtained from the issuer, analysts, and/or the appropriate stock exchange (for exchange-traded securities), (vii) an analysis of the company’s financial statements, and (viii) an evaluation of the forces that influence the issuer of pending merger activity, public offerings or tender offers that might affect the value of the security).
In connection with futures contracts and other derivative investments such factors may include, obtaining information as to how (a) these contracts and other derivative investments trade in the futures or other derivative markets, respectively, and (b) the securities underlying these contracts and other derivative investments trade in the cash market.
B. When a Fund engages in a short sale of a security, an amount equal to the proceeds is reflected as an asset and an equivalent liability. The amount of the liability is subsequently marked-to-market to reflect the market value of the short sale. The Fund maintains a segregated account of cash and/or securities as collateral for short sales.
Fees, if any, paid to brokers to borrow securities in connection with short sales are recorded as interest expense. In addition, the Fund must pay out the dividend rate of the equity or coupon rate of the obligation to the lender and record this as an expense. Short dividend or interest expense is a cost associated with the investment objective of short sales transactions, rather
60 | THE RYDEX FUNDS ANNUAL REPORT |
NOTES TO FINANCIAL STATEMENTS (continued)
than an operational cost associated with the day-to-day management of any mutual fund. The Funds may also receive rebate income from the broker resulting from the investment of the proceeds from securities sold short.
C. Upon entering into a futures contract, a Fund deposits and maintains as collateral such initial margin as required by the exchange on which the transaction is affected. Pursuant to the contract, the Fund agrees to receive from or pay to the broker an amount of cash equal to the daily fluctuation in value of the contract. Such receipts or payments are known as variation margin and are recorded by the Fund as unrealized gains or losses. When the contract is closed, the Fund records a realized gain or loss equal to the difference between the value of the contract at the time it was opened and the value at the time it was closed.
D. Swap agreements are marked-to-market daily and the change, if any, is recorded as unrealized gain or loss. Payments received or made as a result of an agreement or termination of the agreement are recognized as realized gains or losses.
Credit default swap agreements are marked-to-market daily and the change, if any, is recorded as unrealized gain or loss. Upfront payments received or made by a Fund on credit default swap agreements are amortized over the expected life of the agreement. Periodic payments received or paid by a Fund are recorded as realized gains or losses. Payments received or made as a result of a credit event or termination of the contract are recognized, net of a proportional amount of the upfront payment, as realized gains or losses.
E. Investment securities and other assets and liabilities denominated in foreign currencies are translated into U.S. dollar amounts at the date of valuation. Purchases and sales of investment securities and income and expense items denominated in foreign currencies are translated into U.S. dollar amounts on the respective dates of such transactions. The Funds do not isolate that portion of the results of operations resulting from changes in foreign exchange rates on investments from the fluctuations arising from changes in market prices of securities held. Such fluctuations are included with the net realized and unrealized gain and loss from investments.
Reported net realized foreign exchange gains or losses arise from sales of foreign currencies and currency gains or losses realized between the trade and settlement dates on investment transactions. Net unrealized exchange gains and losses arise from changes in the fair values of assets and liabilities other than investments insecurities at the fiscal period end, resulting from changes in exchange rates.
F. Security transactions are recorded on the trade date for financial reporting purposes. Realized gains and losses from securities transactions are recorded using the identified cost basis. Proceeds from lawsuits related to investment holdings are recorded as realized gains in the respective Fund. Dividend income is recorded on the ex-dividend date, net of applicable taxes withheld by foreign countries. Taxable non-cash dividends are recorded as dividend income. Interest income, including amortization of premiums and accretion of discounts, is accrued on a daily basis. Dividend income from REITs is recorded based on the income included in the distributions received from the REIT investments using published REIT classifications, including some management estimates when actual amounts are not available. Distributions received in excess of this estimated amount are recorded as a reduction of the cost of investments or reclassified to capital gains. The actual amounts of income, return of capital, and capital gains are only determined by each REIT after its fiscal year-end, and may differ from the estimated amounts.
G. Distributions of net investment income and net realized gains, if any, are declared and paid at least annually. Dividends are reinvested in additional shares unless shareholders request payment in cash. Distributions are recorded on the ex-dividend date and are determined in accordance with income tax regulations which may differ from U.S. GAAP.
H. Interest and dividend income, most expenses, all realized gains and losses, and all unrealized gains and losses are allocated to the classes based upon the value of the outstanding shares in each Class. Certain costs, such as distribution and service fees are charged directly to specific classes. In addition, certain expenses have been allocated to the individual Funds in the Trust on a pro rata basis upon the respective aggregate net assets of each Fund included in the Trust.
I. The Funds may leave cash overnight in their cash account with the custodian. Periodically, a Fund may have cash due to the custodian bank as an overdraft balance. A fee is incurred on this overdraft, calculated by multiplying the overdraft by a rate based on the federal funds rate.
J. Under the Funds’ organizational documents, their Trustees and Officers are indemnified against certain liabilities arising out of the performance of their duties
THE RYDEX FUNDS ANNUAL REPORT | 61 |
NOTES TO FINANCIAL STATEMENTS (continued)
to the Trust. In addition, throughout the normal course of business, the Funds enter into contracts that contain a variety of representations and warranties which provide general indemnifications. The Funds’ maximum exposure under these arrangements is unknown, as this would involve future claims that may be made against the Funds and/or their affiliates that have not yet occurred. However, based on experience, the Funds expect the risk of loss to be remote.
2. Financial Instruments
As part of their investment strategy, the Funds utilize short sales and a variety of derivative instruments. These investments involve, to varying degrees, elements of market risk and risks in excess of the amounts recognized in the Statements of Assets and Liabilities.
A short sale is a transaction in which a Fund sells a security it does not own. If the security sold short decreases in price between the time the Fund sells the security and closes its short position, that Fund will realize a gain on the transaction. Conversely, if the security increases in price during the period, that Fund will realize a loss on the transaction. The risk of such price increases is the principal risk of engaging in short sales.
A futures contract is an agreement to purchase (long) or sell (short) an agreed amount of securities or other instruments at a set price for delivery at a future date. There are significant risks associated with a Fund’s use of futures contracts, including (i) there may be an imperfect or no correlation between the changes in market value of the underlying asset and the prices of futures contracts; (ii) there may not be a liquid secondary market for a futures contract; (iii) trading restrictions or limitations may be imposed by an exchange; and (iv) government regulations may restrict trading in futures contracts. When investing in futures, there is minimal counterparty credit risk to the Fund because futures are exchange-traded and the exchange’s clearinghouse, as counterparty to all exchange-traded futures, guarantees against default. Cash deposits are shown as segregated cash with broker on the Statement of Assets and Liabilities; securities held as collateral are noted on the Schedule of Investments.
A swap is an agreement that obligates two parties to exchange a series of cash flows at specified intervals based upon or calculated by reference to changes in specified prices or rates for a specified amount of an underlying asset. A Fund utilizing OTC swaps bears the risk of loss of the amount expected to be received under a swap agreement in the event of the default or bankruptcy of a swap agreement counterparty. Additionally, there is no guarantee that a Fund or an underlying fund could eliminate its exposure under an outstanding swap agreement by entering into an offsetting swap agreement with the same or another party.
A credit default swap enables a Fund to buy or sell protection against a defined credit event of an issuer or a basket of securities. Generally, the seller of credit protection against an issuer or basket of securities receives a periodic payment from the buyer to compensate against potential default events. If a default event occurs, the seller must pay the buyer the full notional value of the reference obligation in exchange for the reference obligation. If no default occurs, the counterparty will pay the stream of payments and have no further obligations to the Fund selling the credit protection. A Fund bears the risk of loss of the amount expected to be received under a swap agreement in the event of the default or bankruptcy of a swap agreement counterparty, or in the case of a credit default swap in which the Fund is selling credit protection, the default of a third party issuer.
The Emerging Markets 2x Strategy Fund and Inverse Emerging Markets 2x Strategy Fund use of derivative instruments provides leveraged exposure. Since these Funds’ investment strategies involve consistently applied leverage, the value of the Fund’s shares will tend to increase or decrease more than the value of any increase or decrease in the underlying index. In addition, as investment in derivative instruments generally requires a small investment relative to the amount of investment exposure assumed, this creates an opportunity for increased net income but, at the same time, additional leverage risk. The Funds’ use of leverage, through borrowings or instruments such as derivatives, may cause the Funds to be more volatile and riskier than if they had not been leveraged.
In conjunction with the use of short sales and derivative instruments, the Funds are required to maintain collateral in various forms. The Funds use, where appropriate, depending on the financial instrument utilized and the broker involved, margin deposits at the broker, cash and/or securities segregated at the custodian bank, discount notes or the repurchase agreements allocated to each Fund.
There are several risks associated with exposure to foreign currencies, foreign issuers and emerging markets. A Fund’s indirect and direct exposure to
62 | THE RYDEX FUNDS ANNUAL REPORT |
NOTES TO FINANCIAL STATEMENTS (continued)
foreign currencies subjects the Fund to the risk that those currencies will decline in value relative to the U.S. dollar, or, in the case of short positions, that the U.S. dollar will decline in value relative to the currency being hedged. Currency rates in foreign countries may fluctuate significantly over short periods of time for a number of reasons, including changes in interest rates and the imposition of currency controls or other political developments in the U.S. or abroad. In addition, the Fund may incur transaction costs in connection with conversions between various currencies. The Fund may, but is not obligated to, engage in currency hedging transactions, which generally involve buying currency forward, options or futures contracts. However, not all currency risk may be effectively hedged, and in some cases the costs of hedging techniques may outweigh expected benefits. In such instances, the value of securities denominated in foreign currencies can change significantly when foreign currencies strengthen or weaken relative to the U.S. dollar.
Certain Funds may invest in securities of foreign companies directly, or in financial instruments, such as ADRs and exchange-traded funds, which are indirectly linked to the performance of foreign issuers. Foreign markets can be more volatile than the U.S. market due to increased risks of adverse issuer, political, regulatory, market, or economic developments and can perform differently from the U.S. market. Investing in securities of foreign companies directly, or in financial instruments that are indirectly linked to the performance of foreign issuers, may involve risks not typically associated with investing in U.S. issuers. The value of securities denominated in foreign currencies, and of dividends from such securities, can change significantly when foreign currencies strengthen or weaken relative to the U.S. dollar. Foreign securities markets generally have less trading volume and less liquidity than U.S. markets, and prices in some foreign markets may fluctuate more than those of securities traded on U.S. markets. Many foreign countries lack accounting and disclosure standards comparable to those that apply to U.S. companies, and it may be more difficult to obtain reliable information regarding a foreign issuer’s financial condition and operations. Transaction costs and costs associated with custody services are generally higher for foreign securities than they are for U.S. securities. Some foreign governments levy withholding taxes against dividend and interest income. Although in some countries portions of these taxes are recoverable, the non-recovered portion will reduce the income received by the Fund.
Emerging markets, which consist of countries that have an emerging stock market as defined by Standard & Poor’s®, countries or markets with low- to middle-income economies as classified by the World Bank, and other countries or markets with similar characteristics as determined by GI, can be more volatile than the U.S. market due to increased risks of adverse issuer, political, regulatory, market, or economic developments and can perform differently from the U.S. market. Emerging markets can be subject to greater social, economic, regulatory, and political uncertainties and can be extremely volatile. As a result, the securities of emerging market issuers may present market, credit, currency, liquidity, legal, political and other risks different from, or greater than, the risks of investing in securities of developed foreign countries. In addition, the risks associated with investing in a narrowly defined geographic area are generally more pronounced with respect to investments in emerging market countries. The Fund may also be subject to this risk with respect to its investments in derivatives or other securities or financial instruments whose returns are related to the returns of emerging market securities.
The Trust has established counterparty credit guidelines and enters into transactions only with financial institutions of investment grade or better. The Trust monitors the counterparty credit risk.
3. Fees and Other Transactions with Affiliates
Under the terms of an investment advisory contract, the Funds pay GI investment advisory fees calculated at their annualized rates below, based on the average daily net assets of the Funds:
Fund | Management Fees (as a % of Net Assets) |
Long Short Equity Fund | 0.90% |
Event Driven and Distressed Strategies Fund | 0.90% |
Emerging Markets 2x Strategy Fund | 0.90% |
Inverse Emerging Markets 2x Strategy Fund | 0.90% |
Emerging Markets Bond Strategy Fund | 0.75% |
RFS provides transfer agent and administrative services to the Funds for fees calculated at the annualized rate of 0.25% based on the average daily net assets of each Fund.
THE RYDEX FUNDS ANNUAL REPORT | 63 |
NOTES TO FINANCIAL STATEMENTS (continued)
RFS also provides accounting services to the Funds for fees calculated at annualized rates below, based on the average daily net assets of each Fund.
Fund Accounting Fees | (as a % of Net Assets) |
Emerging Markets 2x Strategy Fund | 0.15% |
Inverse Emerging Markets 2x Strategy Fund | 0.15% |
Emerging Markets Bond Strategy Fund | 0.15% |
Remaining Funds | |
On the first $250 million | 0.10% |
On the next $250 million | 0.075% |
On the next $250 million | 0.05% |
Over $750 million | 0.03% |
RFS engages external service providers to perform other necessary services for the Trust, such as audit and accounting related services, legal services, custody, printing and mailing, etc., on a pass-through basis. Such expenses are allocated to various Funds within the complex based on relative net assets.
The Trust has adopted a Distribution Plan applicable to A-Class shares and H-Class shares for which GFD and other firms that provide distribution and/or shareholder services (“Service Providers”) may receive compensation. If a Service Provider provides distribution services, the Funds will pay distribution fees to GFD at an annual rate not to exceed 0.25% of average daily net assets, pursuant to Rule 12b-1 of the 1940 Act. GFD, in turn, will pay the Service Provider out of its fees. GFD may, at its discretion, retain a portion of such payments to compensate itself for distribution services.
The Trust has adopted a separate Distribution and Shareholder Services Plan applicable to its C-Class shares that allows the Funds to pay annual distribution and service fees of 1.00% of the Funds’ C-Class shares average daily net assets. The annual 0.25% service fee compensates a shareholder’s financial adviser for providing ongoing services to the shareholder. The annual distribution fee of 0.75% reimburses GFD for paying the shareholder’s financial adviser an ongoing sales commission. GFD advances the first year’s service and distribution fees to the financial adviser. GFD retains the service and distribution fees on accounts with no authorized dealer of record.
GI has contractually agreed to reduce fees and/or reimburse expenses for the Event Driven and Distressed Strategies Fund to the extent necessary to keep net operating expenses relative to the average daily net assets of A-Class, C-Class, H-Class, and Institutional Class shares (excluding interest, taxes, brokerage commissions, acquired fund fees and expenses, dividends on securities sold short, and extraordinary expenses) from exceeding 1.90%, 2.65%, 1.90%, and 1.65%, respectively. The total annual fund operating expenses after fee waiver and/or expense reimbursement includes excluded expenses and, thus, from time to time may be higher than 1.90%, 2.65%, 1.90% and 1.65%, respectively. This agreement may be terminated only with the approval of the Fund’s Board of Trustees.
For the year ended March 31, 2015, GFD retained sales charges of $360,571 relating to sales of A-Class shares of the Trust.
Certain trustees and officers of the Trust are also officers of GI, RFS and GFD.
4. Fair Value Measurement
In accordance with U.S. GAAP, fair value is defined as the price that the Funds would receive to sell an investment or pay to transfer a liability in an orderly transaction with an independent buyer in the principal market, or in the absence of a principal market, the most advantageous market for the investment or liability. U.S. GAAP establishes a three-tier fair value hierarchy based on the types of inputs used to value assets and liabilities and requires corresponding disclosure. The hierarchy and the corresponding inputs are summarized below:
Level 1 — quoted prices in active markets for identical assets or liabilities.
Level 2 — significant other observable inputs (for example quoted prices for securities that are similar based on characteristics such as interest rates, prepayment speeds, credit risk, etc.).
Level 3 — significant unobservable inputs based on the best information available under the circumstances, to the extent observable inputs are not available, which may include assumptions.
The types of inputs available depend on a variety of factors, such as the type of security and the characteristics of the markets in which it trades, if any. Fair valuation determinations that rely on fewer or no observable inputs require greater judgment. Accordingly, fair value determinations for Level 3 securities require the greatest amount of judgment.
64 | THE RYDEX FUNDS ANNUAL REPORT |
NOTES TO FINANCIAL STATEMENTS (continued)
The following table summarizes the inputs used to value the Funds’ investments at March 31, 2015:
Level 1 Investments In Securities | Level 1 Other Financial Instruments* | Level 2 Investments In Securities | Level 2 Other Financial Instruments* | Level 3 Investments In Securities | Total | |||||||||||||||||||
Assets | ||||||||||||||||||||||||
Long Short Equity Fund | $ | 42,943,121 | $ | — | $ | 3,303,585 | $ | — | $ | — | $ | 46,246,706 | ||||||||||||
Event Driven and Distressed Strategies Fund | 5,798,867 | 56,155 | 2,787,354 | 17,630 | — | 8,660,006 | ||||||||||||||||||
Emerging Markets 2x Strategy Fund | 1,418,844 | — | 2,319,072 | 71,525 | — | 3,809,441 | ||||||||||||||||||
Inverse Emerging Markets 2x Strategy Fund | — | — | 17,618,248 | — | — | 17,618,248 | ||||||||||||||||||
Emerging Markets Bond Strategy Fund | 49,392 | 1,092 | 124,695 | — | — | 175,179 | ||||||||||||||||||
Liabilities | ||||||||||||||||||||||||
Long Short Equity Fund | $ | 11,582,797 | $ | — | $ | — | $ | — | $ | — | $ | 11,582,797 | ||||||||||||
Event Driven and Distressed Strategies Fund | — | — | — | 2,040 | — | 2,040 | ||||||||||||||||||
Emerging Markets 2x Strategy Fund | — | 11 | — | — | — | 11 | ||||||||||||||||||
Inverse Emerging Markets 2x Strategy Fund | — | 106,907 | — | 475,806 | — | 582,713 | ||||||||||||||||||
Emerging Markets Bond Strategy Fund | — | 298 | — | 872 | — | 1,170 |
* | Other financial instruments may include futures contracts and/or swaps, which are reported as unrealized gain/loss at period end. |
For the year ended March 31, 2015, there were no transfers between levels.
The inputs or methodologies used for valuing securities are not necessarily an indication of the risk associated with investing in those securities. The suitability of the techniques and sources employed to determine fair valuation are regularly monitored and subject to change.
5. Repurchase Agreements
The Funds transfer 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 Funds’ custodian and is evaluated to ensure that its market value exceeds, at a minimum, 102% of the original face amount of the repurchase agreements. Each Fund holds a pro rata share of the collateral based on the dollar amount of the repurchase agreement entered into by each Fund.
At March 31, 2015, the repurchase agreements in the joint account were as follows:
Counterparty and Terms of Agreement | Face Value | Repurchase Price | Collateral | Par Value | Fair Value | |||||
HSBC Group | U.S. Treasury Strips | |||||||||
0.03% | 0.00% | |||||||||
Due 04/01/15 | $ | 922,646,685 | $ | 922,647,454 | 02/15/24 - 05/15/44 | $ | 1,876,361,900 | $ | 941,099,692 | |
RBC Capital Markets | U.S. Treasury Note | |||||||||
0.05% | 2.13% | |||||||||
Due 04/01/15 | 141,000,000 | 141,000,196 | 12/31/21 | 92,325,000 | 95,818,749 | |||||
U.S. TIP Bond | ||||||||||
3.88% | ||||||||||
04/25/29 | 22,465,400 | 48,001,266 | ||||||||
UMB Financial Corp. | U.S. Treasury Notes | |||||||||
0.03% | 1.38% - 3.25% | |||||||||
Due 04/01/15 | 113,175,677 | 113,175,772 | 11/30/15 - 12/31/16 | 109,984,100 | 115,439,211 |
In the event of counterparty default, the Funds have the right to collect the collateral to offset losses incurred. There is potential loss to the Funds in the event the Funds are delayed or prevented from exercising their 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 RYDEX FUNDS ANNUAL REPORT | 65 |
NOTES TO FINANCIAL STATEMENTS (continued)
the Funds seek to assert their rights. The Funds’ investment adviser, acting under the supervision of the Board of Trustees, reviews the value of the collateral and the creditworthiness of those banks and dealers with which the Funds enter into repurchase agreements to evaluate potential risks.
6. Portfolio Securities Loaned
The Funds may lend their securities to approved brokers to earn additional income. Security lending income shown on the Statements of Operations is shown net of rebates paid to the borrowers and earnings on cash collateral investments shared with the lending agent. Within this arrangement, the Funds act as the lender, Credit Suisse acts as the lending agent, and other approved registered broker dealers act as the borrowers. The Funds receive cash collateral, valued at 102% of the value of the securities on loan. Under the terms of the Funds’ securities lending agreement with Credit Suisse, cash collateral is invested in one or more joint repurchase agreements collateralized by obligations of the U.S. Treasury or Government Agencies and cash. The Funds bear the risk of loss on cash collateral investments. 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 Funds the next business day. Although the collateral mitigates the risk, the Funds 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 Funds have the right under the securities lending agreement to recover the securities from the borrower on demand.
At March 31, 2015, the Funds participated in securities lending as follows:
Fund | Value of Securities Loaned | Cash Collateral Received | ||||||
Long Short Equity Fund | $ | 566,423 | $ | 594,750 | ||||
Event Driven and Distressed Strategies Fund | 3,868 | 4,100 | ||||||
Emerging Markets 2x Strategy Fund | 4,090 | 4,375 |
Cash collateral received was invested in the following joint repurchase agreements at March 31, 2015:
Counterparty and Terms of Agreement | Face Value | Repurchase Price | Collateral | Par Value | Fair Value | |||||
HSBC Securities, Inc. | Fannie Mae Strips | |||||||||
0.10% | 0.00% | |||||||||
Due 04/01/15 | $ | 390,741 | $ | 390,742 | 11/15/17 - 07/15/37 | $ | 435,798 | $ | 299,943 | |
Federal Farm Credit Bank | ||||||||||
0.19% | ||||||||||
06/12/17 | 98,607 | 98,620 | ||||||||
BNP Paribas Securities Corp. | U.S. Treasury Note | |||||||||
0.10% | 2.13% | |||||||||
Due 04/01/15 | 134,415 | 134,415 | 12/31/21 | 61,786 | 63,686 | |||||
U.S. Treasury Bond | ||||||||||
4.38% | ||||||||||
05/15/41 | 53,324 | 73,417 | ||||||||
Barclays Capital Corp. | U.S. Treasury Strips | |||||||||
0.10% | 0.00% | |||||||||
Due 04/01/15 | 69,380 | 69,380 | 05/15/20 - 05/15/44 | 107,329 | 63,769 | |||||
U.S. Treasury Bond | ||||||||||
4.75% | ||||||||||
02/15/41 | 4,870 | 6,999 |
There was also $8,690 in segregated cash held as collateral.
66 | THE RYDEX FUNDS ANNUAL REPORT |
NOTES TO FINANCIAL STATEMENTS (continued)
7. Disclosures about Credit Derivatives
In accordance with their principal investment strategies, the Event Driven and Distressed Strategies Fund and the Emerging Markets Bond Strategy Fund enter into credit default swaps as a seller of protection primarily to gain exposure similar to the high yield bond market. Credit default swaps are instruments which allow for the full or partial transfer of third party credit risk, with respect to a particular entity or entities, from one counterparty to the other. A seller of credit default swaps is selling credit protection or assuming credit risk with respect to the underlying entity or entities. If a credit event occurs, as defined under the terms of the swap agreement, the Fund will either (i) pay to the buyer of protection an amount equal to the notional amount of the swap and take delivery of the referenced obligation or underlying securities comprising the referenced index or (ii) pay a net settlement amount in the form of cash or securities equal to the notional amount of the swap less the recovery value of the referenced obligation or underlying securities comprising the referenced index. The Notional Principal reflects the maximum potential amount the Fund could be required to make as a seller of credit protection if a credit event occurs. As the seller of protection, the Fund receives periodic premium payments from the counterparty and may also receive or pay an upfront premium adjustment to the stated periodic premium. In the event a credit event occurs, an adjustment will be made to any upfront premiums that were received by a reduction of 1.00% per credit event.
The quoted market prices and resulting market values for credit default swap agreements on securities and credit indices serve as an indicator of the current status of the payment/performance risk and represent the likelihood of an expected liability (or profit) for the credit derivative had the notional amount of the swap agreement been closed/sold as of the period end. Increasing market values, in absolute terms when compared to the notional amount of the swap, represent a deterioration of the referenced entity’s credit soundness and a greater likelihood or risk of default or other credit event occurring as defined under the terms of the agreement.
The tables on pages 30 and 54 included in the Schedules of Investments summarize the information with regard to sold protection on credit default swap contracts as of March 31, 2015.
8. Derivative Investment Holdings Categorized by Risk Exposure
U.S. GAAP requires disclosures to enable investors to better understand how and why the Funds use derivative instruments, how these derivative instruments are accounted for and their effects on the Funds’ financial position and results of operations.
The following Funds utilized derivatives for the following purposes:
Fund | Index Exposure | Liquidity | Leverage |
Long Short Equity Fund | — | x | — |
Event Driven and Distressed Strategies Fund | x | x | — |
Emerging Markets 2x Strategy Fund | x | x | x |
Inverse Emerging Markets 2x Strategy Fund | x | x | x |
Emerging Markets Bond Strategy Fund | x | x | — |
The following table represents the notional amount of derivative instruments outstanding as an approximate percentage of the Funds’ net assets on a daily basis.
Approximate percentage of Fund’s Net Assets on a daily basis | ||
Fund | Long | Short |
Event Driven and Distressed Strategies Fund* | 130% | — |
Emerging Markets 2x Strategy Fund | 150% | — |
Inverse Emerging Markets 2x Strategy Fund | — | 200% |
Emerging Markets Bond Strategy Fund* | 120% | — |
* | These Funds utilize a combination of interest rate and/or financial-linked derivatives to obtain exposure to their benchmarks. The gross derivative instrument exposure is 195% and 260% for the Event Driven and Distressed Strategies Fund and the Emerging Markets Bond Strategy Fund, respectively. |
THE RYDEX FUNDS ANNUAL REPORT | 67 |
NOTES TO FINANCIAL STATEMENTS (continued)
The following is a summary of the location of derivative investments on the Funds’ Statements of Assets and Liabilities as of March 31, 2015:
Derivative Investment Type | Asset Derivatives | Liability Derivatives |
Equity/Interest Rate contracts | Variation margin | Variation margin |
Equity/Credit contracts | Unrealized appreciation on swap agreements | Unrealized depreciation on swap agreements |
The following table sets forth the fair value of the Funds’ derivative investments categorized by primary risk exposure at March 31, 2015:
Asset Derivative Investments Value | ||||||||||||||||||||
Fund | Futures Equity Contracts* | Swaps Equity Contracts | Futures Interest Rate Contracts* | Swaps Credit Default Contracts | Total Value at March 31, 2015 | |||||||||||||||
Event Driven and Distressed Strategies Fund | $ | 23,371 | $ | — | $ | 32,784 | $ | 17,630 | $ | 73,785 | ||||||||||
Emerging Markets 2x Strategy Fund | — | 71,525 | — | — | 71,525 | |||||||||||||||
Emerging Markets Bond Strategy Fund | — | — | 1,092 | — | 1,092 |
Liability Derivative Investments Value | ||||||||||||||||||||
Fund | Futures Equity Contracts* | Swaps Equity Contracts | Futures Interest Rate Contracts* | Swaps Credit Default Contracts | Total Value at March 31, 2015 | |||||||||||||||
Event Driven and Distressed Strategies Fund | $ | — | $ | 2,040 | $ | — | $ | — | $ | 2,040 | ||||||||||
Emerging Markets 2x Strategy Fund | 11 | — | — | — | 11 | |||||||||||||||
Inverse Emerging Markets 2x Strategy Fund | 106,907 | 475,806 | — | — | 582,713 | |||||||||||||||
Emerging Markets Bond Strategy Fund | — | — | 298 | 872 | 1,170 |
* | Includes cumulative appreciation (depreciation) of futures contracts as reported on the Schedules of Investments. Only current day’s variation margin is reported within the Statements of Assets and Liabilities. |
The following is a summary of the location of derivative investments on the Funds’ Statements of Operations for the year ended March 31, 2015:
Derivative Investment Type | Location of Gain (Loss) on Derivatives |
Equity/Interest Rate contracts | Net realized gain (loss) on futures contracts |
Net change in unrealized appreciation (depreciation) on futures contracts | |
Equity/Credit contracts | Net realized gain (loss) on swap agreements |
Net change in unrealized appreciation (depreciation) on swap agreements |
68 | THE RYDEX FUNDS ANNUAL REPORT |
NOTES TO FINANCIAL STATEMENTS (continued)
The following is a summary of the Funds’ realized gain (loss) and change in unrealized appreciation (depreciation) on derivative investments recognized on the Statements of Operations categorized by primary risk exposure for the year ended March 31, 2015:
Realized Gain (Loss) on Derivative Investments Recognized on the Statements of Operations | ||||||||||||||||||||
Fund | Futures Equity Contracts | Swaps Equity Contracts | Futures Interest Rate Contracts | Swaps Credit Default Contracts | Total | |||||||||||||||
Long Short Equity Fund | $ | (77,572 | ) | $ | — | $ | — | $ | — | $ | (77,572 | ) | ||||||||
Event Driven and Distressed Strategies Fund | (43,520 | ) | (670,463 | ) | 153,470 | 136,805 | (423,708 | ) | ||||||||||||
Emerging Markets 2x Strategy Fund | (1,439,020 | ) | (1,745,144 | ) | — | — | (3,184,164 | ) | ||||||||||||
Inverse Emerging Markets 2x Strategy Fund | 204,831 | (6,830,122 | ) | — | — | (6,625,291 | ) | |||||||||||||
Emerging Markets Bond Strategy Fund | — | — | 61,942 | (250,336 | ) | (188,394 | ) |
Change in Unrealized Appreciation (Depreciation) on Derivative Investments Recognized on the Statements of Operations | ||||||||||||||||||||
Fund | Futures Equity Contracts | Swaps Equity Contract | Futures Interest Rate Contracts | Swaps Credit Default Contracts | Total | |||||||||||||||
Event Driven and Distressed Strategies Fund | $ | 51,776 | $ | 46,978 | $ | 75,174 | $ | (6,280 | ) | $ | 167,648 | |||||||||
Emerging Markets 2x Strategy Fund | (11 | ) | (146,150 | ) | — | — | (146,161 | ) | ||||||||||||
Inverse Emerging Markets 2x Strategy Fund | (107,821 | ) | 182,167 | — | — | 74,346 | ||||||||||||||
Emerging Markets Bond Strategy Fund | — | — | 42,027 | (81,868 | ) | (39,841 | ) |
9. Offsetting
In the normal course of business, the Funds enter into transactions subject to enforceable master netting arrangements or other similar arrangements. Generally, the right to offset in those agreements allows the Funds to counteract the exposure to a specific counterparty with collateral received or delivered to that counterparty based on the terms of the arrangements. These arrangements provide for the right to liquidate upon the occurrence of an event of default, credit event upon merger or additional termination event.
In order to better define their contractual rights and to secure rights that will help the Funds mitigate their counterparty risk, the Funds may enter into an International Swaps and Derivatives Association, Inc. Master Agreement (“ISDA Master Agreement”) or similar agreement with their derivative contract counterparties. An ISDA Master Agreement is a bilateral agreement between a Fund and a counterparty that governs OTC derivatives, including foreign exchange contracts, and typically contains, among other things, collateral posting terms and netting provisions in the event of a default and/or termination event. The provisions of the ISDA Master Agreement typically permit a single net payment in the event of a default (close-out netting) or similar event, including the bankruptcy or insolvency of the counterparty.
For derivatives traded under an ISDA Master Agreement, the collateral requirements are typically calculated by netting the mark to market amount for each transaction under such agreement and comparing that amount to the value of any collateral currently pledged by the Funds and the counterparty. For financial reporting purposes, cash collateral that has been pledged to cover obligations of the Funds and cash collateral received from the counterparty, if any, is reported separately on the Statement of Assets and Liabilities as segregated cash with broker/receivable for variation margin, or payable for swap settlement/variation margin. Generally, the amount of collateral due from or to a counterparty must exceed a minimum transfer amount threshold (e.g., $300,000) before a transfer is required to be made. To the extent amounts due to the Funds from their counterparties are not fully collateralized, contractually or otherwise, the Funds bear the risk of loss from counterparty nonperformance. The Funds attempt to mitigate counterparty risk by only entering into agreements with counterparties that they believe to be of good standing and by monitoring the financial stability of those counterparties.
For financial reporting purposes, the Funds do not offset derivative assets and derivative liabilities that are subject to netting arrangements in the Statements of Assets and Liabilities.
THE RYDEX FUNDS ANNUAL REPORT | 69 |
NOTES TO FINANCIAL STATEMENTS (continued)
The following tables present derivative financial instruments and secured financing transactions that are subject to enforceable netting arrangements and offset in the Statements of Assets and Liabilities in conformity with U.S. GAAP.
Gross Amounts Not Offset in the Statements of Assets and Liabilities | |||||||||||||||||||||||||
Fund | Instrument | Gross Amounts of Recognized Assets1 | Gross Amounts Offset In the Statements of Assets and Liabilities | Net Amount of Assets Presented on the Statements of Assets and Liabilities | Financial Instruments | Cash Collateral Received | Net Amount | ||||||||||||||||||
Emerging Markets 2x Strategy Fund | Swap equity contracts | $ | 71,525 | $ | — | $ | 71,525 | $ | — | $ | — | $ | 71,525 |
Gross Amounts Not Offset in the Statements of Assets and Liabilities | |||||||||||||||||||||||||
Fund | Instrument | Gross Amounts of Recognized Liabilities1 | Gross Amounts Offset In the Statements of Assets and Liabilities | Net Amount of Liabilities Presented on the Statements of Assets and Liabilities | Financial Instruments | Cash Collateral Pledged | Net Amount | ||||||||||||||||||
Event Driven and Distressed Strategies Fund | Swap equity contracts | $ | 2,040 | $ | — | $ | 2,040 | $ | — | $ | 2,040 | $ | — | ||||||||||||
Inverse Emerging Markets 2x Strategy Fund | Swap equity contracts | 475,806 | — | 475,806 | — | 475,806 | — |
1 | Exchange-traded futures and centrally cleared swaps are excluded from these reported amounts. |
10. Federal Income Tax Information
The Funds intend to comply with the provisions of Subchapter M of the Internal Revenue Code applicable to regulated investment companies and will distribute substantially all taxable net investment income and capital gains sufficient to relieve the Funds from all, or substantially all, federal income, excise and state income taxes. Therefore, no provision for federal or state income tax is required.
Tax positions taken or expected to be taken in the course of preparing the Funds' tax returns are evaluated 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. Management has analyzed the Funds' tax positions taken, or to be taken, on Federal income tax returns for all open tax years, and has concluded that no provision for income tax is required in the Funds' financial statements. The Funds' federal tax returns are subject to examination by the Internal Revenue Service for a period of three years after they are filed.
Tax basis capital losses in excess of capital gains are carried forward to offset future net capital gains.
For the year ended March 31, 2015, the following capital loss carryforward amounts were expired or used:
Fund | Amount | |||
Long Short Equity Fund | $ | 3,412,264 |
70 | THE RYDEX FUNDS ANNUAL REPORT |
NOTES TO FINANCIAL STATEMENTS (continued)
The tax character of distributions paid during the year ended March 31, 2015 was as follows:
Fund | Ordinary Income | Long-Term Capital Gain | Total Distributions | |||||||||
Long Short Equity Fund | $ | — | $ | — | $ | — | ||||||
Event Driven and Distressed Strategies Fund | 430,324 | 10,067 | 440,391 | |||||||||
Emerging Markets 2x Strategy Fund | — | — | — | |||||||||
Inverse Emerging Markets 2x Strategy Fund | — | — | — | |||||||||
Emerging Markets Bond Strategy Fund | 191,125 | — | 191,125 |
The tax character of distributions paid during the year ended March 31, 2014 was as follows:
Fund | Ordinary Income | Long-Term Capital Gain | Total Distributions | |||||||||
Long Short Equity Fund | $ | — | $ | — | $ | — | ||||||
Event Driven and Distressed Strategies Fund | 384,859 | 284,989 | 669,848 | |||||||||
Emerging Markets 2x Strategy Fund | — | — | — | |||||||||
Inverse Emerging Markets 2x Strategy Fund | — | — | — | |||||||||
Emerging Markets Bond Strategy Fund | — | — | — |
Note: For federal income tax purposes, short-term capital gain distributions are treated as ordinary income distributions.
The tax character of distributable earnings/(accumulated losses) at March 31, 2015 was as follows:
Fund | Undistributed Ordinary Income | Undistributed Long-Term Capital Gain | Net Unrealized Appreciation/ (Depreciation) | Capital Loss Carryforward and Other Losses | ||||||||||||
Long Short Equity Fund | $ | — | $ | — | $ | 2,521,824 | $ | (66,348,716 | ) | |||||||
Event Driven and Distressed Strategies Fund | 122,230 | — | 161,322 | (573,170 | ) | |||||||||||
Emerging Markets 2x Strategy Fund | 53,210 | — | (1,396,114 | ) | (9,976,251 | ) | ||||||||||
Inverse Emerging Markets 2x Strategy Fund | — | — | (475,806 | ) | (12,412,988 | ) | ||||||||||
Emerging Markets Bond Strategy Fund | 5,111 | — | (282 | ) | (479,142 | ) |
Capital Loss Carryforward amounts may be limited due to Federal income tax regulations.
For Federal income tax purposes, capital loss carryforwards represent realized losses of the Funds that may be carried forward and applied against future capital gains. For taxable years beginning on or before December 22, 2010, such capital losses may be carried forward for a maximum of eight years. Under the RIC Modernization Act of 2010, the Funds are permitted to carry forward capital losses incurred in taxable years beginning after December 22, 2010 for an unlimited period. However, any losses incurred during those taxable years must be utilized prior to the losses incurred in pre-enactment taxable years. As a result of this ordering rule, pre-enactment capital loss carryforwards may be more likely to expire unused. Additionally, post-enactment capital losses that are carried forward will retain their character as either short-term or long-term capital losses rather than being considered all short-term as under previous law. As of March 31, 2015, capital loss carryforwards for the Funds were as follows:
Expires in | Expires in | Unlimited | Total Capital Loss | |||||||||||||||||
Fund | 2017 | 2018 | Short-Term | Long-Term | Carryforward | |||||||||||||||
Long Short Equity Fund | $ | (46,806,630 | ) | $ | (19,377,927 | ) | $ | — | $ | — | $ | (66,184,557 | ) | |||||||
Event Driven and Distressed Strategies Fund | — | — | (573,170 | ) | — | (573,170 | ) | |||||||||||||
Emerging Markets 2x Strategy Fund | — | — | (8,556,910 | ) | (1,419,341 | ) | (9,976,251 | ) | ||||||||||||
Inverse Emerging Markets 2x Strategy Fund | — | — | (12,245,496 | ) | (60,930 | ) | (12,306,426 | ) | ||||||||||||
Emerging Markets Bond Strategy Fund | — | — | (479,142 | ) | — | (479,142 | ) |
THE RYDEX FUNDS ANNUAL REPORT | 71 |
NOTES TO FINANCIAL STATEMENTS (continued)
Net investment income and net realized gains (losses) may differ for financial statement and tax purposes because of temporary or permanent book/tax differences. These differences are typically due to late year loss deferrals, losses deferred due to wash sales, tax treatment of payments from credit default swaps, utilization of earnings and profits on shareholder redemptions, foreign currency gains and losses, and the “mark-to-market” of certain passive foreign investment companies (PFICs) for tax purposes. Additional differences may result from tax treatment of net investment losses and expired capital loss carryforwards. To the extent these differences are permanent, reclassifications are made to the appropriate equity accounts in the period that the differences arise. These reclassifications have no effect on net assets or NAV per share.
On the Statements of Assets and Liabilities the following adjustments were made for permanent book/tax differences:
Fund | Paid In Capital | Undistributed Net Investment Income | Accumulated Net Realized Loss | |||||||||
Long Short Equity Fund | $ | (427,755 | ) | $ | 427,755 | $ | — | |||||
Event Driven and Distressed Strategies Fund | — | 243,757 | (243,757 | ) | ||||||||
Emerging Markets 2x Strategy Fund | — | — | — | |||||||||
Inverse Emerging Markets 2x Strategy Fund | (212,905 | ) | 212,905 | — | ||||||||
Emerging Markets Bond Strategy Fund | — | 200,825 | (200,825 | ) |
At March 31, 2015, 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:
Fund | Tax Cost | Tax Unrealized Gain | Tax Unrealized Loss | Net Unrealized Gain (Loss) | ||||||||||||
Long Short Equity Fund | $ | 44,216,942 | $ | 2,915,050 | $ | (885,286 | ) | $ | 2,029,764 | |||||||
Event Driven and Distressed Strategies Fund | 8,440,489 | 221,324 | (75,592 | ) | 145,732 | |||||||||||
Emerging Markets 2x Strategy Fund | 5,205,556 | — | (1,467,640 | ) | (1,467,640 | ) | ||||||||||
Inverse Emerging Markets 2x Strategy Fund | 17,618,248 | — | — | — | ||||||||||||
Emerging Markets Bond Strategy Fund | 173,497 | 685 | (95 | ) | 590 |
Pursuant to Federal income tax regulations applicable to investment companies, the Funds have elected to treat net capital losses and certain ordinary losses realized between November 1 and March 31 of each year as occurring on the first day of the following tax year. The Funds have also elected to treat certain ordinary losses realized between January 1 and March 31 of each year as occurring on the first day of the following tax year. For the year ended March 31, 2015, the following losses reflected in the accompanying financial statements were deferred for Federal income tax purposes until April 1, 2015:
Fund | Ordinary | Capital | ||||||
Long Short Equity Fund | $ | (164,159 | ) | $ | — | |||
Inverse Emerging Markets 2x Strategy Fund | (106,562 | ) | — |
72 | THE RYDEX FUNDS ANNUAL REPORT |
NOTES TO FINANCIAL STATEMENTS (continued)
11. Securities Transactions
For the year ended March 31, 2015, the cost of purchases and proceeds from sales of investment securities, excluding government securities, short-term investments and derivatives, were as follows:
Fund | Purchases | Sales | ||||||
Long Short Equity Fund | $ | 104,721,086 | $ | 102,948,756 | ||||
Event Driven and Distressed Strategies Fund | 12,346,347 | 6,652,528 | ||||||
Emerging Markets 2x Strategy Fund | 280,598,502 | 277,856,900 | ||||||
Inverse Emerging Markets 2x Strategy Fund | — | — | ||||||
Emerging Markets Bond Strategy Fund | 1,353,305 | 1,291,175 |
12. Affiliated and/or Related Transactions
Investments representing 5% or more of the outstanding voting shares of a portfolio company of a fund, or control of or by, or common control under GI, result in that portfolio company being considered an affiliated company of such fund, as defined in the 1940 Act.
The Funds may invest in the Guggenheim Strategy Funds Trust consisting of Guggenheim Strategy Fund I, Guggenheim Strategy Fund II, and Guggenheim Strategy Fund III (collectively, the “Cash Management Funds”), open-end management investment companies managed by GI. The Cash Management Funds, which launched on March 11, 2014, are offered as cash management options only to mutual funds, trusts, and other accounts managed by GI and/or its affiliates, and are not available to the public. The Cash Management Funds pay no investment management fees. The Cash Management Funds’ annual report on Form N-CSR dated September 30, 2014 is available publicly or upon request. This information is also available from the EDGAR database on the SEC’s website at http://www.sec.gov.
13. Line of Credit
The Trust, along with other affiliated trusts, secured an uncommitted, $75,000,000 line of credit from U.S. Bank, N.A., which expires June 13, 2015. This line of credit is reserved for emergency or temporary purposes. Borrowings, if any, under this arrangement bear interest equal to the Prime Rate, minus 2%, which shall be paid monthly, averaging 1.25% for the year ended March 31, 2015. The Funds did not have any borrowings under this agreement at March 31, 2015.
The average daily balances borrowed for the year ended March 31, 2015, were as follows:
Fund | Average Daily Balance | |||
Long Short Equity Fund | $ | 6,994 | ||
Event Driven and Distressed Strategies Fund | 10,007 | |||
Emerging Markets 2x Strategy Fund | 57,931 |
14. Reverse Share Splits
A reverse share split occurred for the following Fund at the close of business:
Fund | Effective Date | Split Type |
Emerging Markets 2x Strategy Fund | February 21, 2014 | One-for-Five Reverse Split |
The effect of the transaction was to divide the number of outstanding shares of the Fund by the respective split ratio, resulting in a corresponding increase in the NAV. The share transactions presented in the statements of changes in net assets and the per share data in the financial highlights for each of the periods presented through February 21, 2014, have been restated to reflect the reverse share split. There were no changes in net assets, results of operations or total return as a result of this transaction.
THE RYDEX FUNDS ANNUAL REPORT | 73 |
NOTES TO FINANCIAL STATEMENTS (continued)
15. Legal Proceedings
Tribune Company
Rydex Series Funds has been named as a defendant and a putative member of the proposed defendant class of shareholders in the case entitled Kirschner v. FitzSimons, No. 12-2652 (S.D.N.Y.) (formerly Official Committee of Unsecured Creditors of Tribune Co. v. FitzSimons, Adv. Pro. No. 10-54010 (Bankr. D. Del.)) (the “FitzSimons action”), as a result of ownership by certain series of the Rydex Series Funds of shares in the Tribune Company (“Tribune”) in 2007, when Tribune effected a leveraged buyout transaction (“LBO”) by which Tribune converted to a privately-held company. In his complaint, the plaintiff has alleged that, in connection with the LBO, Tribune insiders and shareholders were overpaid for their Tribune stock using financing that the insiders knew would, and ultimately did, leave the Tribune Company insolvent. The plaintiff has asserted claims against certain insiders, major shareholders, professional advisers, and others involved in the LBO. The plaintiff is also attempting to obtain from former Tribune shareholders, including the Rydex Series Funds, the proceeds they received in connection with the LBO.
In June 2011, a group of Tribune creditors filed multiple actions against former Tribune shareholders involving state law constructive fraudulent conveyance claims arising out of the 2007 LBO (the “SLCFC actions”). Rydex Series Funds has been named as a defendant in one of the SLCFC actions: Deutsche Bank Trust Co. Americas v. McGurn, No. 11-1510 (S.D.N.Y.). In those actions, the creditors seek to recover from Tribune’s former shareholders the proceeds received in connection with the 2007 LBO.
The FitzSimons action and the SLCFC actions have been consolidated with the majority of the other Tribune LBO-related lawsuits in a multidistrict litigation proceeding captioned In re Tribune Company Fraudulent Conveyance Litig., No. 11-md-2696 (S.D.N.Y.) (the “MDL Proceeding”).
On September 23, 2013, the District Court granted the defendants’ omnibus motion to dismiss the SLCFC actions, on the basis that the creditors lacked standing. On September 30, 2013, the creditors filed a notice of appeal of the September 23 order. On October 28, 2013, the defendants filed a joint notice of cross-appeal of that same order.
The SLCFC appeals have been fully briefed, and oral argument in front of the U.S. Court of Appeals for the Second Circuit occurred on November 5, 2014. The Court has not yet issued a decision on the appeals.
On May 23, 2014, the defendants filed motions to dismiss the FitzSimons action, including a global motion to dismiss Count I, which is the claim brought against former Tribune shareholders for intentional fraudulent conveyance under U.S. federal law. The Court has not yet issued a decision on any of these motions.
None of these lawsuits alleges any wrongdoing on the part of Rydex Series Funds. The following series of Rydex Series Funds held shares of Tribune and tendered these shares as part of Tribune’s LBO: Nova Fund, S&P 500® Pure Value Fund, Multi-Cap Core Equity Fund, S&P 500® Fund, Multi-Hedge Strategies Fund and Hedged Equity Fund (the “Funds”). The value of the proceeds received by the foregoing Funds was $28,220, $109,242, $9,860, $3,400, $1,181,160, and $10,880, respectively. At this stage of the proceedings, Rydex Series Funds is not able to make a reliable predication as to the outcome of these lawsuits or the effect, if any, on a Fund’s net asset value.
Lyondell Chemical Company
In December 2011, Rydex Series Funds was named as a defendant in Weisfelner, as Trustee of the LB Creditor Trust, v. Fund 1 (In re Lyondell Chemical Co.), Adv. Pro. No. 10-4609 (Bankr. S.D.N.Y.) (the “Creditor Trust action”).
Similar to the claims made in the Tribune matter, the Weisfelner complaint seeks to have set aside and recovered as fraudulent transfers from former Lyondell Chemical Company (“Lyondell”) shareholders the consideration paid to them pursuant to the cash out merger of Lyondell shareholders in connection with the combination of Lyondell and Basell AF in 2007. Lyondell filed for bankruptcy in 2008.
On April 7, 2014, the plaintiff filed a Third Amended Complaint. In the related action entitled Weisfelner, as Trustee of the LB Litigation Trust v. A. Holmes & H. Holmes TTEE (In re Lyondell Co.), Adversary Proceeding No. 10-5525 (Bankr. S.D.N.Y.) (the “Litigation Trust action”), the plaintiff also filed a Second Amended Complaint that alleges a claim against the former
74 | THE RYDEX FUNDS ANNUAL REPORT |
NOTES TO FINANCIAL STATEMENTS (concluded)
Lyondell shareholders under federal law for intentional fraudulent transfer. A third related action against the former Lyondell shareholders, Weisfelner, as Trustee of the LB Creditor Trust v. Reichman, Adversary Proceeding No. 12-1570 (Bankr. S.D.N.Y.) (the “Reichman action”), is pending as well.
On May 8, 2014, the plaintiff in the Litigation Trust action filed a motion to certify a defendant class generally comprised of all former Lyondell shareholders that received proceeds in exchange for their shares in the 2007 merger transaction.
On July 30, 2014, the defendants filed a motion to dismiss these lawsuits. The Court held oral argument on the motions to dismiss and on the motion for class certification on January 14 and January 15, 2015. The Court has not yet issued decisions on these motions. Discovery has commenced in these lawsuits.
These lawsuits do not allege any wrongdoing on the part of Rydex Series Funds. The following series of Rydex Series Funds received cash proceeds from the cash out merger in the following amounts: Basic Materials Fund - $1,725,168; Long Short Equity Fund f/k/a U.S. Long Short Momentum Fund - $2,193,600; Global 130/30 Strategy Fund - $37,920; Hedged Equity Fund - $1,440; and Multi-Hedge Strategies Fund - $1,116,480. At this stage of the proceedings, Rydex Series Funds is not able to make a reliable predication as to the outcome of these lawsuits or the effect, if any, on a Fund’s net asset value.
16. Subsequent Event
H-Class Shares to be Redesignated P-Class Shares
Effective following the close of business on April 30, 2015, or such later date as may be determined appropriate by management (the “Redesignation Date”), all outstanding H-Class shares of the Guggenheim Event Driven and Distressed Strategies Fund and Guggenheim Long Short Equity Fund (collectively, the “Funds”), each of which is a separate series of Rydex Series Funds, will be redesignated as P-Class shares, and the Funds will no longer offer H-Class shares.
THE RYDEX FUNDS ANNUAL REPORT | 75 |
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Board of Trustees and Shareholders
of Rydex Series Funds:
of Rydex Series Funds:
We have audited the accompanying statements of assets and liabilities, including the schedules of investments, of Long Short Equity Fund, Event Driven and Distressed Strategies Fund, Emerging Markets 2x Strategy Fund, Inverse Emerging Markets 2x Strategy Fund and Emerging Markets Bond Strategy Fund (five of the series constituting the Rydex Series Funds) (the “Funds”) as of March 31, 2015, and the related statements of operations for the year then ended, and the statements of changes in net assets and the financial highlights for each of the years or periods indicated therein. These financial statements and financial highlights are the responsibility of the Funds’ management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. We were not engaged to perform an audit of the Funds’ internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Funds’ internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements and financial highlights, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of March 31, 2015, by correspondence with the custodian, transfer agent, and brokers. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of the above listed Funds (five of the series constituting the Rydex Series Funds) at March 31, 2015, the results of their operations for the year then ended, and the changes in their net assets and their financial highlights for each of the years or periods indicated therein, in conformity with U.S. generally accepted accounting principles.
![](https://capedge.com/proxy/N-CSR/0001398344-15-003814/ncsr_05.jpg)
McLean, Virginia
May 21, 2015
76 | THE RYDEX FUNDS ANNUAL REPORT |
OTHER INFORMATION (Unaudited)
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 taxable ordinary income distributions paid during the fiscal year ending March 31, 2015, the following fund had the corresponding percentage qualify for the dividends received deduction for corporations:
Fund | % Qualifying |
Event Driven and Distressed Strategies Fund | 1.22% |
Additionally, the following amount of taxable ordinary income dividends paid during the fiscal year qualified for the lower income tax rate available to individuals under the Jobs and Growth Tax Relief Reconciliation Act of 2003:
Fund | % Qualifying |
Event Driven and Distressed Strategies Fund | 1.22% |
Additionally, of the taxable ordinary income distributions paid during the fiscal year ending March 31, 2015, the following fund had the corresponding percentages qualify as interest related dividends and qualified short-term capital gains as permitted by IRC Section 871(k)(1) and IRC Section 871(k)(2), respectively:
Fund | % Qualifying | % STCG Qualifying |
Event Driven and Distressed Strategies Fund | 0.00% | 100.00% |
With respect to the taxable year ended March 31, 2015, the Fund hereby designates as capital gain dividends the amount listed below, or, if subsequently determined to be different, the net capital gain of such year:
Event Driven and Distressed Strategies Fund | ||||
From long-term capital gains, subject to the 15% rate gains category: | $ | 10,067 |
P-Class Share Information
P-Class shares of the Funds are offered primarily through broker/dealers and other financial intermediaries with which Guggenheim Funds Distributors, LLC has an agreement for the use of P-Class shares of the Funds in investment products, programs or accounts. P-Class shares do not have a minimum initial investment amount, subsequent investment amount or a minimum account balance. The Funds reserves the right to modify their minimum investment amount and account balance requirements at any time, with or without prior notice to you.
Following the redesignation of outstanding H-Class shares, H-Class shareholders who currently have accounts held directly at Guggenheim Investments will not be permitted to purchase additional P-Class shares or exchange their P-Class shares for P-Class shares or any other share class of other Guggenheim Funds. Guggenheim Investments will be separately notifying these shareholders of their redemption and exchange options should they decide they do not want to hold P-Class shares upon the redesignation of their H-Class shares. H-Class shareholders should contact Guggenheim Investments Client Services at 800.820.0888 or 301.296.5100 with any questions about the redesignation of their H-Class shares.
No action is required of H-Class shareholders to effect the redesignation of their current H-Class shares.
For more information, or to request copies of the Funds’ prospectuses, call Client Services at 800.820.0888 or visiting guggenheiminvestments.com.
THE RYDEX FUNDS ANNUAL REPORT | 77 |
OTHER INFORMATION (Unaudited)(concluded)
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 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 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 are 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 800-SEC-0330. Copies of the portfolio holdings are also available to shareholders, without charge and upon request, by calling 800.820.0888.
78 | THE RYDEX FUNDS ANNUAL REPORT |
INFORMATION ON BOARD OF TRUSTEES AND OFFICERS (Unaudited)
A Board of Trustees oversees the Trust, as well as other trusts of GI, 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 800.820.0888.
Name, Address* and Year of Birth of Trustee | Position(s) Held with the Trust, Term of Office and Length of Time Served | Principal Occupation(s) During Past 5 Years | Number of Portfolios in Fund Complex Overseen by Trustee*** | Other Directorships Held by Trustee | ||||
INTERESTED TRUSTEE | ||||||||
Donald C. Cacciapaglia** (1951) | Trustee from 2012 to present. | Current: President and CEO, certain other funds in the Fund Complex (2012-present); Vice Chairman, Guggenheim Investments (2010-present). Former: Chairman and CEO, Channel Capital Group, Inc. (2002-2010). | 221 | Clear Spring Life Insurance Company (2015-present); Guggenheim Partners Japan, Ltd. (2014-present); Delaware Life (2013-present); Guggenheim Life and Annuity Company (2011-present); Paragon Life Insurance Company of Indiana (2011-present). | ||||
INDEPENDENT TRUSTEES | ||||||||
Corey A. Colehour (1945) | Trustee and Member of the Audit, Governance, Nominating, and Investment and Performance Committees from 1998 to present. | Retired. | 133 | None. | ||||
J. Kenneth Dalton (1941) | Trustee, Member and Chairman of the Audit Committee, and Member of the Governance and Nominating Committees from 1998 to present; and Member of the Risk Oversight Committee from 2010 to present. | Retired. | 133 | Epiphany Funds (4) (2009-present). | ||||
John O. Demaret (1940) | Vice Chairman of the Board of Trustees from 2014 to present; Trustee from 1998 to present and Chairman of the Board from 2006 to 2014; Member and Chairman of the Audit Committee from 1998 to present; and Member of the Risk Oversight Committee from 2010 to present. | Retired. | 133 | None. |
THE RYDEX FUNDS ANNUAL REPORT | 79 |
INFORMATION ON BOARD OF TRUSTEES AND OFFICERS (Unaudited)(continued)
Name, Address* and Year of Birth of Trustee | Position(s) Held with the Trust, Term of Office and Length of Time Served | Principal Occupation(s) During Past 5 Years | Number of Portfolios in Fund Complex Overseen by Trustee*** | Other Directorships Held by Trustee | ||||
INDEPENDENT TRUSTEES - concluded | ||||||||
Werner E. Keller (1940) | Chairman of the Board from 2014 to present; Vice Chairman of the Board of Trustees from 2010 to 2014; Trustee and Member of the Audit, Governance, and Nominating Committees from 2005 to present; and Chairman and Member of the Risk Oversight Committee from 2010 to present. | Current: Founder and President, Keller Partners, LLC (investment research firm) (2005-present). | 133 | None. | ||||
Thomas F. Lydon, Jr. (1960) | Trustee and Member of the Audit, Governance, and Nominating Committees from 2005 to present. | Current: President, Global Trends Investments (registered investment adviser) (1996-present). | 133 | US Global Investors (GROW) (1995-present). | ||||
Patrick T. McCarville (1942) | Trustee, Member of the Audit Committee, and Chairman and Member of the Governance and Nominating Committees from 1998 to present. | Retired. Former: Chief Executive Officer, Par Industries, Inc., d/b/a Par Leasing (1977-2010). | 133 | None. |
Name, Address* and Year of Birth | Position(s) Held with the Trust, Term of Office and Length of Time Served | Principal Occupation(s) During Past 5 Years | ||
OFFICERS | ||||
Donald C. Cacciapaglia (1951) | President (2012-present). | Current: President and CEO, certain other funds in the Fund Complex (2012-present); Vice Chairman, Guggenheim Investments (2010-present). Former: Chairman and CEO, Channel Capital Group Inc. (2002-2010). | ||
Michael P. Byrum (1970) | Vice President (1999-present). | Current: Senior Vice President, Security Investors, LLC (2010-present); President and Chief Investment Officer, Rydex Holdings, LLC (2008-present); Director and Chairman, Advisory Research Center, Inc. (2006-present); Manager, Guggenheim Specialized Products, LLC (2005-present). Former: Vice President, Guggenheim Distributors, LLC (2009); Director (2009-2010) and Secretary (2002-2010), Rydex Fund Services, LLC; Director (2008-2010), Chief Investment Officer (2006-2010), President (2004-2010) and Secretary (2002-2010), Rydex Advisors, LLC; Director (2008-2010), Chief Investment Officer (2006-2010), President (2004-2010) and Secretary (2002-2010), Rydex Advisors II, LLC. |
80 | THE RYDEX FUNDS ANNUAL REPORT |
INFORMATION ON BOARD OF TRUSTEES AND OFFICERS (Unaudited)(concluded)
Name, Address* and Year of Birth | Position(s) Held with the Trust, Term of Office and Length of Time Served | Principal Occupation(s) During Past 5 Years | ||
OFFICERS - concluded | ||||
Nikolaos Bonos (1963) | Vice President and Treasurer (2003-present). | Current: Senior Vice President, Security Investors, LLC (2010-present); Chief Executive Officer, Guggenheim Specialized Products, LLC (2009-present); Chief Executive Officer & President, Rydex Fund Services, LLC (2009-present); Vice President, Rydex Holdings, LLC (2008-present). Former: Senior Vice President, Security Global Investors, LLC (2010-2011); and Senior Vice President, Rydex Advisors, LLC and Rydex Advisors II, LLC (2006-2011). | ||
Elisabeth Miller (1968) | Chief Compliance Officer (2012-present). | Current: CCO, certain other funds in the Fund Complex (2012-present); CCO, Security Investors, LLC (2012-present); CCO, Guggenheim Funds Investment Advisors, LLC (2012-present); Managing Director, Guggenheim Investments (2012-present); Vice President, Guggenheim Funds Distributors, LLC (March 2014-present). Former: CCO, Guggenheim Distributors, LLC (2009-March 2014); Senior Manager, Security Investors, LLC (2004-2009); Senior Manager, Guggenheim Distributors, LLC (2004-2009). | ||
Joseph M. Arruda (1966) | Assistant Treasurer (2006-present). | Current: Assistant Treasurer, certain other funds in the Fund Complex (2006-present); Vice President, Security Investors, LLC (2010-present); CFO and Manager, Guggenheim Specialized Products, LLC (2009-present). Former: Vice President, Security Global Investors, LLC (2010-2011); Vice President, Rydex Advisors, LLC (2010); Vice President, Rydex Advisors II, LLC (2010). | ||
Paul J. Davio (1972) | Assistant Treasurer (2014-present). | Current: Assistant Treasurer, certain other funds in the Fund Complex (2014-present); Director, Guggenheim Investments (2006-present). Former: Manager, Mutual Fund Administration, Guggenheim Investments (2003-2006). | ||
Amy J. Lee (1961) | Vice President (2009-present) and Secretary (2012-present). | Current: Chief Legal Officer, certain other funds in the Fund Complex (2013-present); Senior Managing Director, Guggenheim Investments (2012-present). Former: Vice President, Associate General Counsel and Assistant Secretary, Security Benefit Life Insurance Company and Security Benefit Corporation (2004-2012). |
* | All Trustees and Officers may be reached c/o Guggenheim Investments, 805 King Farm Boulevard, Suite 600, Rockville, MD 20850. |
** | Mr. Cacciapaglia is an “interested” person of the Trust, as that term is defined in the 1940 Act by virtue of his affiliation with the Adviser’s parent company. |
*** | The “Fund Complex” includes all closed-end and open-end funds (including all of their portfolios) advised by the Adviser and any funds that have an investment adviser or servicing agent that is an affiliated person of the Adviser. Information provided is as of the date of this report. |
THE RYDEX FUNDS ANNUAL REPORT | 81 |
GUGGENHEIM INVESTMENTS PRIVACY POLICIES (Unaudited)
Rydex Funds, Guggenheim Funds, Rydex Investments, Guggenheim Funds Distributors, LLC, Security Investors, LLC, Security Distributors, Inc., Guggenheim Partners Investment Managers, LLC, and Rydex Advisory Services (Collectively “Guggenheim Investments”).
Our Commitment to You
When you become a Guggenheim Investments investor, you entrust us with not only your hard-earned money but also with personal and financial information about you. We recognize that your relationship with us is based on trust and that you expect us to act responsibly and in your best interests. Because we have access to this private information about you, we hold ourselves to the highest standards in its safekeeping and use. This means, most importantly, that we do not sell client information to anyone—whether it is your personal information or if you are a current or former Guggenheim Investments client.
The Information We Collect About You
In the course of doing business with shareholders and investors, we collect nonpublic personal information about you. You typically provide personal information when you complete a Guggenheim Investments account application or when you request a transaction that involves Rydex and Guggenheim Investments funds or one of the Guggenheim Investments affiliated companies. “Nonpublic personal information” is personally identifiable private information about you. For example, it includes information regarding your name and address, Social Security or taxpayer identification number, assets, income, account balance, bank account information and investment activity (e.g., purchase and redemption history).
How We Handle Your Personal Information
As emphasized above, we do not sell information about current or former clients or their accounts to third parties. Nor do we share such information, except when necessary to complete transactions at your request or to make you aware of related investment products and services that we offer. Additional details about how we handle your personal information are provided below. To complete certain transactions or account changes that you direct, it may be necessary to provide identifying information to companies, individuals or groups that are not affiliated with Guggenheim Investments. For example, if you ask to transfer assets from another financial institution to Guggenheim Investments, we will need to provide certain information about you to that company to complete the transaction. To alert you to other Guggenheim Investments investment products and services, we may share your information within the Guggenheim Investments family of affiliated companies. This would include, for example, sharing your information within Guggenheim Investments so we can make you aware of new Rydex and Guggenheim Investments funds or the services offered through another Guggenheim Investments affiliated company. In certain instances, we may contract with nonaffiliated companies to perform services for us. Where necessary, we will disclose information we have about you to these third parties. In all such cases, we provide the third party with only the information necessary to carry out its assigned responsibilities and only for that purpose. And we require these third parties to treat your private information with the same high degree of confidentiality that we do. In certain instances, we may share information with other financial institutions regarding individuals and entities in response to the U.S.A. Patriot Act. Finally, we will release information about you if you direct us to do so, if we are compelled by law to do so or in other circumstances permitted by law.
Opt Out Provisions
We do not sell your personal information to anyone. The law allows you to “opt out” of only certain kinds of information sharing with third parties. The firm does not share personal information about you with any third parties that triggers this opt-out right. This means YOU ARE ALREADY OPTED OUT.
82 | THE RYDEX FUNDS ANNUAL REPORT |
GUGGENHEIM INVESTMENTS PRIVACY POLICIES (Unaudited)(concluded)
How We Protect Privacy Online
Our concern for the privacy of our shareholders also extends to those who use our web site, guggenheiminvestments.com. Our web site uses some of the most secure forms of online communication available, including encryption technology, Secure Socket Layer (SSL) protocol, firewalls and user names and passwords. These technologies provide a high level of security and privacy when you access your account information or initiate online transactions. The Guggenheim Investments web site offers customized features that require our use of “http cookies”—tiny pieces of information that we ask your browser to store. However, we make very limited use of these cookies. We only use cookies for session management and security features on the Guggenheim Investments web site. We do not use them to pull data from your hard drive, to learn your email address, or to view data in cookies created by other web sites. We will not share the information in our cookies or give others access to it. See the legal information area on our web site for more details about web site security and privacy features.
How We Safeguard Your Personal Information
We restrict access to nonpublic personal information about shareholders to our employees and in some cases to third parties (for example, the service providers described above) as permitted by law. We maintain strict physical, electronic and procedural safeguards that comply with federal standards to guard your nonpublic personal information.
We’ll Keep You Informed
As required by federal law, we will notify shareholders of our privacy policy annually. We reserve the right to modify this policy at any time, but rest assured that if we do change it, we will tell you promptly. You will also be able to access our privacy policy from our web site at guggenheiminvestments.com. Should you have any questions regarding our privacy policy, contact us at 800.820.0888 or 301.296.5100.
THE RYDEX FUNDS ANNUAL REPORT | 83 |
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Item 2. Code of Ethics.
The registrant’s Board of Trustees has adopted a code of ethics that applies to the registrant’s principal executive officer and principal financial officer. No substantive amendments were approved or waivers were granted to the Code during the period covered by this report. The Code is filed as an exhibit to this Form N-CSR.
Item 3. Audit Committee Financial Expert.
The registrant's Board of Trustees has determined that Werner Keller, an "independent" Trustee serving on the registrant's audit committee, is an "audit committee financial expert," as defined in Item 3 of Form N-CSR. Under applicable securities laws, a person who is determined to be an audit committee financial expert will not be deemed an "expert" for any purpose, including without limitation for the purposes of Section 11 of the Securities Act of 1933, as a result of being designated or identified as an audit committee financial expert. The designation or identification of a person as an audit committee financial expert does not impose on such person any duties, obligations, or liabilities that are greater than the duties, obligations, and liabilities imposed on such person as a member of the audit committee and Board of Trustees in the absence of such designation or identification.
Item 4. Principal Accountant Fees and Services.
(a) Audit Fees: The aggregate Audit Fees billed by the registrant’s principal accountant, for the audit of the annual financial statements in connection with statutory and regulatory filings for the fiscal years ended March 31, 2015 and March 31, 2014 were $744,325 and $694,276, respectively.
(b) Audit Related Fees: The aggregate Audit Related Fees by the registrant’s principal accountant billed for the fiscal years ended March 31, 2015 and March 31, 2014 were $0 and $0, respectively.
The aggregate fees billed in the Reporting Periods for assurance and related services by the Auditor to the registrant’s investment adviser (not including any sub‑investment adviser whose role is primarily portfolio management and is subcontracted with or overseen by another investment adviser), and any entity controlling, controlled by or under common control with the investment adviser that provides ongoing services to the registrant (“Service Affiliates”) which required pre‑approval by the Audit Committee which related to the review of the transfer agent function for the fiscal years ended March 31, 2015 and March 31, 2014 were $36,750 and $35,000, respectively.
(c) Tax Fees: The aggregate Tax Fees billed by the registrant’s principal accountant for professional services rendered for tax compliance, tax advice, and tax planning, including preparation of tax returns and distribution assistance, for the fiscal years ended March 31, 2015 and March 31, 2014 were $334,575 and $339,662, respectively.
(d) All Other Fees: The aggregate All Other Fees billed by the registrant’s principal accountant for products and services provided by the Auditor, other than the services reported in paragraphs (a) through (c) of this Item, for the fiscal years ended March 31, 2015 and March 31, 2014 were $0 and $0, respectively.
(e) The audit committee has adopted a policy whereby audit and non-audit services performed by the registrant’s principal accountant for the registrant, its investment advisor, and any entity controlling, controlled by, or under common control with the investment advisor that provides ongoing services to the registrant require pre-approval in advance at regularly scheduled audit committee meetings. If such service is required between regularly scheduled audit committee meetings, the chairman of the audit committee, J. Kenneth Dalton, is authorized to pre-approve the service with full committee approval at the next scheduled meeting. There shall be no waivers of the pre-approval process. No services described in (b)-(d) above were approved pursuant to paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X.
(f) Not applicable.
(g) The aggregate non-audit fees billed by the registrant’s accountant for the most recent fiscal year and the preceding fiscal year for services rendered to the registrant, the investment advisor, and any entity controlling, controlled by, or under common control with the advisor that provides ongoing services to the registrant were $371,325 and $374,662, respectively. These aggregate fees were less than the aggregate fees billed for the same periods by the registrant’s principal accountant for audit services rendered to the registrant, the investment advisor, and any entity controlling, controlled by, or under common control with the advisor that provides ongoing services to the registrant.
(h) All non-audit services rendered in (g) above were pre-approved by the registrant’s audit committee. As such, the audit committee has considered these services in maintaining the principal accountant’s independence.
Item 5. Audit Committee of Listed Registrants.
Not applicable.
Item 6. Investments.
Schedule of Investments is included as part of the report to shareholders filed under Item 1 of this form.
Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies.
Not applicable.
Item 8. Portfolio Managers of Closed-End Management Investment Companies.
Not applicable.
Item 9. Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers.
Not applicable.
Item 10. Submission of Matters to a Vote of Security Holders.
Not applicable.
Item 11. Controls and Procedures.
(a) The registrant’s President (principal executive officer) and Treasurer (principal financial officer) have evaluated the registrant’s disclosure controls and procedures within 90 days of this filing and have concluded that the registrant’s disclosure controls and procedures were effective as of that date in ensuring that information required to be disclosed by the registrant in this Form N-CSR was recorded, processed, summarized, and reported timely.
(b) The registrant’s principal executive officer and principal financial officer are aware of no change in the registrant’s internal control over financial reporting that occurred during the registrant’s second fiscal quarter covered by this report that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting.
Item 12. Exhibits.
(a)(1) The registrant’s code of ethics pursuant to Item 2 of Form N-CSR is attached.
(a)(2) Separate certifications by the President (principal executive officer) and Treasurer (principal financial officer) of the registrant as required by Rule 30a-2(a) under the Act (17 CFR 270.30a-2(a)) are attached.
(b) A certification by the registrant’s President (principal executive officer) and Treasurer (principal financial officer) as required by Rule 30a-2(b) under the Act (17 CFR 270.30a-2(b)) is attached.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
(Registrant) | Rydex Series Funds | |
By (Signature and Title)* | /s/ Donald C. Cacciapaglia | |
Donald C. Cacciapaglia, President and Chief Executive Officer | ||
Date | June 9, 2015 | |
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. | ||
By (Signature and Title)* | /s/ Donald C. Cacciapaglia | |
Donald C. Cacciapaglia, President and Chief Executive Officer | ||
Date | June 9, 2015 | |
By (Signature and Title)* | /s/ Nikolaos Bonos | |
Nikolaos Bonos, Vice President and Treasurer | ||
Date | June 9, 2015 |
* Print the name and title of each signing officer under his or her signature.