N-CSR 1 fp0063712_ncsr.htm

UNITED STATES
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)

 

702 King Farm Boulevard, Suite 200
Rockville, Maryland 20850
(Address of principal executive offices) (Zip code)

 

Amy J. Lee

Rydex Series Funds
702 King Farm Boulevard, Suite 200
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: April 1, 2020 - March 31, 2021

 

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:

 

 

3.31.2021

 

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

   

 

GuggenheimInvestments.com

RSECF-ANN-2-0321x0322

 

 

 

 

TABLE OF CONTENTS

 

   

DEAR SHAREHOLDER

2

ECONOMIC AND MARKET OVERVIEW

3

ABOUT SHAREHOLDERS’ FUND EXPENSES

5

BANKING FUND

10

BASIC MATERIALS FUND

18

BIOTECHNOLOGY FUND

26

CONSUMER PRODUCTS FUND

34

ELECTRONICS FUND

42

ENERGY FUND

50

ENERGY SERVICES FUND

58

FINANCIAL SERVICES FUND

66

HEALTH CARE FUND

76

INTERNET FUND

84

LEISURE FUND

92

PRECIOUS METALS FUND

101

REAL ESTATE FUND

109

RETAILING FUND

118

TECHNOLOGY FUND

126

TELECOMMUNICATIONS FUND

135

TRANSPORTATION FUND

143

UTILITIES FUND

151

NOTES TO FINANCIAL STATEMENTS

159

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

172

OTHER INFORMATION

173

INFORMATION ON BOARD OF TRUSTEES AND OFFICERS

175

GUGGENHEIM INVESTMENTS PRIVACY NOTICE

180

 

 

THE RYDEX FUNDS ANNUAL REPORT | 1

 

 

 

March 31, 2021

 

Dear Shareholder:

 

Security Investors, LLC (the “Investment Adviser”) is pleased to present the annual shareholder report for Rydex Sector Funds (the “Fund” or “Funds”). This report covers performance for the 12-month period ended March 31, 2021.

 

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,

 

Security Investors, LLC

 

April 30, 2021

 

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.

 

This material is not intended as a recommendation or as investment advice of any kind, including in connection with rollovers, transfers, and distributions. Such material is not provided in a fiduciary capacity, may not be relied upon for or in connection with the making of investment decisions, and does not constitute a solicitation of an offer to buy or sell securities. All content has been provided for informational or educational purposes only and is not intended to be and should not be construed as legal or tax advice and/or a legal opinion. Always consult a financial, tax and/or legal professional regarding your specific situation.

 

COVID-19. The global ongoing crisis caused by the outbreak of COVID-19 and the current recovery underway is causing disruption to consumer demand and economic output and supply chains. There are still travel restrictions and quarantines, and adverse impacts on local and global economies. Investors should be aware that in light of the current uncertainty, volatility and distress in economies, the financial markets, and labor and public health conditions around the world, the Funds’ investments and a shareholder’s investment in the Fund are subject to investment risk, including the possible loss of the entire principal amount invested. Firms through which investors invest with the Funds, the Funds, their service providers, the markets in which they invest and market intermediaries are also impacted by quarantines and similar measures intended to respond to and contain the ongoing pandemic, which can obstruct their functioning and subject them to heightened operational and other risks.

 

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 within the same sector or industry. Certain of the sector 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, 2021

 

In the 12 months ended March 31, 2021, the Standard & Poor’s 500® (“S&P 500®”) Index returned 56.35% as the equity market roared back to life after a sharp COVID-19-related selloff. This increase was in spite of ongoing personal and economic hardships imposed by COVID-19, highlighting the crucial role of policy support in the form of monetary and fiscal stimulus, which has succeeded in averting a lengthy recession in the U.S. These policy initiatives, particularly on the monetary side, increased market liquidity and lowered borrowing rates, reassuring equity investors that the Federal Reserve (the “Fed”) would do everything in its power to maintain market stability.

 

We upgraded our 2021 U.S. economic growth forecast during the first quarter from 5.5% to over 7%, factoring in more fiscal stimulus than previously anticipated. This forecast captures the effect of stimulus representing roughly 11% of 2020–2021 gross domestic product (“GDP”), versus the previous calculation of about 8%. We see strength in the consumer sector and in housing activity. In addition, U.S. vaccinations for COVID-19 continue to accelerate, nearing 3 million doses per day by the end of the first quarter. More than 213 million doses have been administered in the U.S. so far, and about 35% of the U.S. population has been fully vaccinated. The U.S. is seeing the best-case scenario unfold in its vaccine rollout, but other countries have not been as fortunate.

 

Europe’s vaccine rollout hit a major speedbump during the first quarter when questions surrounding the safety of the AstraZeneca vaccine led several major European countries to temporarily suspend distribution. Safety concerns, coupled with supply constraints, meant that less than 10% of the populations in Germany, France, and Italy had been vaccinated by the end of the first quarter, well under the pace needed to reach 70% inoculated by summer. Any delay in ending the pandemic on a global scale has implications for other countries too, including the U.S., where travel and hospitality workers represent a large share of the unemployed.

 

Despite vaccination delays in Europe and its implications abroad, we saw meaningful improvement in the labor market in the first quarter as states moved forward with business re-openings. Seasonally adjusted initial jobless claims fell by 97,000 to 684,000 in the week ending March 20, 2021 the lowest level since the pandemic began, before seeing an uptick the following week to 719,000. We saw more positive news across the board in the March payroll report with 916,000 jobs added, with 156,000 more from revisions. Standing in the way of additional labor market gains are local government restrictions on certain sectors, although easing of these restrictions is expected by summer.

 

Economic developments drove a sharp increase in U.S. Treasury yields. The market pulled forward expectations of the next Fed rate hike from December 2023 to December 2022, while repricing the long-run terminal fed funds rate estimate to 2.25% from just 0.55% last August. We do not expect the Fed to raise interest rates as early as the market is anticipating, even though we expect strong GDP growth in coming years.

 

Year-over-year inflation measures will rise over the next several months due to base effects, which may be compounded by supply chain disruptions in the goods sector and potential capacity constraints for certain services. However, we think these factors will prove to be short-lived, with base effects set to dampen inflation starting in the summer months. Moreover, the Fed is focused on generating sustainably higher inflation. Even if core inflation rises above the Fed’s 2% target in 2021, the Fed’s focus is on a long-term average of 2%. With years of shortfalls to make up, and the Fed now targeting labor market disparities as part of an expanded definition of full employment, we expect policymakers to remain resolutely patient. Any tapering of asset purchases will likely be deferred until later in 2022, with the first rate hike likely to come sometime after that.

 

We expect easy financial conditions and low rates to support credit over the next few years. With market optimism pulling forward rate hike expectations and causing bond yields to rise, we view this as an opportunity to add incremental yield to portfolios.

 

For the 12-month period ended March 31, 2021, the S&P 500® Index* returned, as noted, 56.35%. The MSCI Europe-Australasia-Far East (“EAFE”) Index* returned 44.57%. The return of the MSCI Emerging Markets Index* was 58.39%.

 

In the bond market, the Bloomberg Barclays U.S. Aggregate Bond Index* posted a 0.71% return for the 12-month period, while the Bloomberg Barclays U.S. Corporate High Yield Index* returned 23.72%. The return of the ICE Bank of America (“BofA”) Merrill Lynch 3-Month U.S. Treasury Bill Index* was 0.12% 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)(concluded)

March 31, 2021

 

*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.

 

Bloomberg Barclays U.S. Aggregate Bond Index is a broad-based flagship benchmark that measures the investment grade, U.S. dollar-denominated, fixed-rate taxable bond market, including U.S. Treasuries, government-related and corporate securities, mortgage-backed securities or “MBS” (agency fixed-rate and hybrid adjustable-rate mortgage, or “ARM”, pass-throughs), asset-backed securities (“ABS”), and commercial mortgage-backed securities (“CMBS”) (agency and non-agency).

 

Bloomberg Barclays U.S. Corporate High Yield Index measures the U.S. dollar-denominated, high yield, fixed-rate corporate bond market. Securities are classified as high yield if the middle rating of Moody’s, Fitch, and S&P is Ba1/BB +/BB + or below.

 

ICE 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® is a broad-based index, the performance of which is based on the performance of 500 widely held common stocks chosen for market size, liquidity, and industry group representation.

 

S&P 500® Consumer Discretionary Index is a sub-index of the S&P 500® . 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® . 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® . 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® . 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, and financial investment, and real estate, including REITs.

 

S&P 500® Health Care Index is a sub-index of the S&P 500® . 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® . 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® . 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® . 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.

 

S&P 500® Telecommunications Services Index is a sub-index of the S&P 500® . 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® . The Utilities index encompasses those companies considered electric, gas or water utilities, or companies that operate as independent producers and/or distributors of power.

 

4 | 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, 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, 2020 and ending March 31, 2021.

 

The following tables illustrate the Funds’ 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 fifth 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 the Funds’ expenses, including annual expense ratios for periods up to five years (subject to the Fund’s inception date), 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 | 5

 

 

ABOUT SHAREHOLDERS’ FUND EXPENSES (Unaudited)(continued)

 

 

 

Expense
Ratio
1

Fund
Return

Beginning
Account Value
September 30, 2020

Ending
Account Value
March 31, 2021

Expenses
Paid During
Period
2

Table 1. Based on actual Fund return3

         

Banking Fund

         

Investor Class

1.39%

71.65%

$ 1,000.00

$ 1,716.50

$ 9.41

A-Class

1.65%

71.40%

1,000.00

1,714.00

11.16

C-Class

2.40%

70.79%

1,000.00

1,707.90

16.20

H-Class

1.62%

71.39%

1,000.00

1,713.90

10.96

Basic Materials Fund

         

Investor Class

1.40%

32.16%

1,000.00

1,321.60

8.10

A-Class

1.65%

31.99%

1,000.00

1,319.90

9.54

C-Class

2.40%

31.50%

1,000.00

1,315.00

13.85

H-Class

1.67%

31.98%

1,000.00

1,319.80

9.66

Biotechnology Fund

         

Investor Class

1.40%

9.25%

1,000.00

1,092.50

7.30

A-Class

1.65%

9.10%

1,000.00

1,091.00

8.60

C-Class

2.40%

8.69%

1,000.00

1,086.90

12.49

H-Class

1.65%

9.11%

1,000.00

1,091.10

8.60

Consumer Products Fund

         

Investor Class

1.41%

13.31%

1,000.00

1,133.10

7.50

A-Class

1.65%

13.15%

1,000.00

1,131.50

8.77

C-Class

2.41%

12.73%

1,000.00

1,127.30

12.78

H-Class

1.65%

13.15%

1,000.00

1,131.50

8.77

Electronics Fund

         

Investor Class

1.39%

40.09%

1,000.00

1,400.90

8.32

A-Class

1.65%

39.92%

1,000.00

1,399.20

9.87

C-Class

2.40%

39.39%

1,000.00

1,393.90

14.32

H-Class

1.65%

39.91%

1,000.00

1,399.10

9.87

Energy Fund

         

Investor Class

1.38%

71.57%

1,000.00

1,715.70

9.34

A-Class

1.63%

71.37%

1,000.00

1,713.70

11.03

C-Class

2.40%

70.72%

1,000.00

1,707.20

16.20

H-Class

1.64%

71.34%

1,000.00

1,713.40

11.09

Energy Services Fund

         

Investor Class

1.39%

82.83%

1,000.00

1,828.30

9.80

A-Class

1.65%

82.59%

1,000.00

1,825.90

11.62

C-Class

2.39%

81.93%

1,000.00

1,819.30

16.80

H-Class

1.63%

82.59%

1,000.00

1,825.90

11.48

Financial Services Fund

         

Investor Class

1.38%

36.89%

1,000.00

1,368.90

8.15

A-Class

1.67%

36.72%

1,000.00

1,367.20

9.86

C-Class

2.39%

36.22%

1,000.00

1,362.20

14.08

H-Class

1.64%

36.71%

1,000.00

1,367.10

9.68

Health Care Fund

         

Investor Class

1.41%

12.36%

1,000.00

1,123.60

7.47

A-Class

1.65%

12.21%

1,000.00

1,122.10

8.73

C-Class

2.40%

11.79%

1,000.00

1,117.90

12.67

H-Class

1.65%

12.23%

1,000.00

1,122.30

8.73

 

6 | THE RYDEX FUNDS ANNUAL REPORT

 

 

 

ABOUT SHAREHOLDERS’ FUND EXPENSES (Unaudited)(continued)

 

 

 

Expense
Ratio
1

Fund
Return

Beginning
Account Value
September 30, 2020

Ending
Account Value
March 31, 2021

Expenses
Paid During
Period
2

Internet Fund

         

Investor Class

1.40%

20.37%

$ 1,000.00

$ 1,203.70

$ 7.69

A-Class

1.65%

20.22%

1,000.00

1,202.20

9.06

C-Class

2.40%

19.78%

1,000.00

1,197.80

13.15

H-Class

1.65%

20.21%

1,000.00

1,202.10

9.06

Leisure Fund

         

Investor Class

1.38%

32.62%

1,000.00

1,326.20

8.00

A-Class

1.65%

32.47%

1,000.00

1,324.70

9.56

C-Class

2.40%

31.96%

1,000.00

1,319.60

13.88

H-Class

1.64%

32.47%

1,000.00

1,324.70

9.51

Precious Metals Fund

         

Investor Class

1.30%

(7.99%)

1,000.00

920.10

6.22

A-Class

1.55%

(8.11%)

1,000.00

918.90

7.42

C-Class

2.30%

(8.45%)

1,000.00

915.50

10.98

H-Class

1.56%

(8.12%)

1,000.00

918.80

7.46

Real Estate Fund

         

A-Class

1.65%

25.55%

1,000.00

1,255.50

9.28

C-Class

2.40%

25.07%

1,000.00

1,250.70

13.47

H-Class

1.62%

25.58%

1,000.00

1,255.80

9.11

Retailing Fund

         

Investor Class

1.41%

25.57%

1,000.00

1,255.70

7.93

A-Class

1.65%

25.41%

1,000.00

1,254.10

9.27

C-Class

2.40%

24.91%

1,000.00

1,249.10

13.46

H-Class

1.67%

25.39%

1,000.00

1,253.90

9.38

Technology Fund

         

Investor Class

1.40%

22.55%

1,000.00

1,225.50

7.77

A-Class

1.65%

22.40%

1,000.00

1,224.00

9.15

C-Class

2.40%

21.95%

1,000.00

1,219.50

13.28

H-Class

1.67%

22.39%

1,000.00

1,223.90

9.26

Telecommunications Fund

         

Investor Class

1.42%

20.77%

1,000.00

1,207.70

7.82

A-Class

1.66%

20.60%

1,000.00

1,206.00

9.13

C-Class

2.40%

20.17%

1,000.00

1,201.70

13.17

H-Class

1.64%

20.63%

1,000.00

1,206.30

9.02

Transportation Fund

         

Investor Class

1.40%

42.56%

1,000.00

1,425.60

8.47

A-Class

1.65%

42.38%

1,000.00

1,423.80

9.97

C-Class

2.40%

41.85%

1,000.00

1,418.50

14.47

H-Class

1.65%

42.39%

1,000.00

1,423.90

9.97

Utilities Fund

         

Investor Class

1.41%

11.31%

1,000.00

1,113.10

7.43

A-Class

1.65%

11.19%

1,000.00

1,111.90

8.69

C-Class

2.41%

10.76%

1,000.00

1,107.60

12.66

H-Class

1.66%

11.19%

1,000.00

1,111.90

8.74

 

 

 

THE RYDEX FUNDS ANNUAL REPORT | 7

 

 

ABOUT SHAREHOLDERS’ FUND EXPENSES (Unaudited)(continued)

 

 

 

Expense
Ratio
1

Fund
Return

Beginning
Account Value
September 30, 2020

Ending
Account Value
March 31, 2021

Expenses
Paid During
Period
2

Table 2. Based on hypothetical 5% return (before expenses)

     

Banking Fund

         

Investor Class

1.39%

5.00%

$ 1,000.00

$ 1,018.00

$ 6.99

A-Class

1.65%

5.00%

1,000.00

1,016.70

8.30

C-Class

2.40%

5.00%

1,000.00

1,012.96

12.04

H-Class

1.62%

5.00%

1,000.00

1,016.85

8.15

Basic Materials Fund

         

Investor Class

1.40%

5.00%

1,000.00

1,017.95

7.04

A-Class

1.65%

5.00%

1,000.00

1,016.70

8.30

C-Class

2.40%

5.00%

1,000.00

1,012.96

12.04

H-Class

1.67%

5.00%

1,000.00

1,016.60

8.40

Biotechnology Fund

         

Investor Class

1.40%

5.00%

1,000.00

1,017.95

7.04

A-Class

1.65%

5.00%

1,000.00

1,016.70

8.30

C-Class

2.40%

5.00%

1,000.00

1,012.96

12.04

H-Class

1.65%

5.00%

1,000.00

1,016.70

8.30

Consumer Products Fund

         

Investor Class

1.41%

5.00%

1,000.00

1,017.90

7.09

A-Class

1.65%

5.00%

1,000.00

1,016.70

8.30

C-Class

2.41%

5.00%

1,000.00

1,012.91

12.09

H-Class

1.65%

5.00%

1,000.00

1,016.70

8.30

Electronics Fund

         

Investor Class

1.39%

5.00%

1,000.00

1,018.00

6.99

A-Class

1.65%

5.00%

1,000.00

1,016.70

8.30

C-Class

2.40%

5.00%

1,000.00

1,012.96

12.04

H-Class

1.65%

5.00%

1,000.00

1,016.70

8.30

Energy Fund

         

Investor Class

1.38%

5.00%

1,000.00

1,018.05

6.94

A-Class

1.63%

5.00%

1,000.00

1,016.80

8.20

C-Class

2.40%

5.00%

1,000.00

1,012.96

12.04

H-Class

1.64%

5.00%

1,000.00

1,016.75

8.25

Energy Services Fund

         

Investor Class

1.39%

5.00%

1,000.00

1,018.00

6.99

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

1.63%

5.00%

1,000.00

1,016.80

8.20

Financial Services Fund

         

Investor Class

1.38%

5.00%

1,000.00

1,018.05

6.94

A-Class

1.67%

5.00%

1,000.00

1,016.60

8.40

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

Health Care Fund

         

Investor Class

1.41%

5.00%

1,000.00

1,017.90

7.09

A-Class

1.65%

5.00%

1,000.00

1,016.70

8.30

C-Class

2.40%

5.00%

1,000.00

1,012.96

12.04

H-Class

1.65%

5.00%

1,000.00

1,016.70

8.30

 

8 | THE RYDEX FUNDS ANNUAL REPORT

 

 

 

ABOUT SHAREHOLDERS’ FUND EXPENSES (Unaudited)(concluded)

 

 

 

Expense
Ratio
1

Fund
Return

Beginning
Account Value
September 30, 2020

Ending
Account Value
March 31, 2021

Expenses
Paid During
Period
2

Internet Fund

         

Investor Class

1.40%

5.00%

$ 1,000.00

$ 1,017.95

$ 7.04

A-Class

1.65%

5.00%

1,000.00

1,016.70

8.30

C-Class

2.40%

5.00%

1,000.00

1,012.96

12.04

H-Class

1.65%

5.00%

1,000.00

1,016.70

8.30

Leisure Fund

         

Investor Class

1.38%

5.00%

1,000.00

1,018.05

6.94

A-Class

1.65%

5.00%

1,000.00

1,016.70

8.30

C-Class

2.40%

5.00%

1,000.00

1,012.96

12.04

H-Class

1.64%

5.00%

1,000.00

1,016.75

8.25

Precious Metals Fund

         

Investor Class

1.30%

5.00%

1,000.00

1,018.45

6.54

A-Class

1.55%

5.00%

1,000.00

1,017.20

7.80

C-Class

2.30%

5.00%

1,000.00

1,013.46

11.55

H-Class

1.56%

5.00%

1,000.00

1,017.15

7.85

Real Estate Fund

         

A-Class

1.65%

5.00%

1,000.00

1,016.70

8.30

C-Class

2.40%

5.00%

1,000.00

1,012.96

12.04

H-Class

1.62%

5.00%

1,000.00

1,016.85

8.15

Retailing Fund

         

Investor Class

1.41%

5.00%

1,000.00

1,017.90

7.09

A-Class

1.65%

5.00%

1,000.00

1,016.70

8.30

C-Class

2.40%

5.00%

1,000.00

1,012.96

12.04

H-Class

1.67%

5.00%

1,000.00

1,016.60

8.40

Technology Fund

         

Investor Class

1.40%

5.00%

1,000.00

1,017.95

7.04

A-Class

1.65%

5.00%

1,000.00

1,016.70

8.30

C-Class

2.40%

5.00%

1,000.00

1,012.96

12.04

H-Class

1.67%

5.00%

1,000.00

1,016.60

8.40

Telecommunications Fund

         

Investor Class

1.42%

5.00%

1,000.00

1,017.85

7.14

A-Class

1.66%

5.00%

1,000.00

1,016.65

8.35

C-Class

2.40%

5.00%

1,000.00

1,012.96

12.04

H-Class

1.64%

5.00%

1,000.00

1,016.75

8.25

Transportation Fund

         

Investor Class

1.40%

5.00%

1,000.00

1,017.95

7.04

A-Class

1.65%

5.00%

1,000.00

1,016.70

8.30

C-Class

2.40%

5.00%

1,000.00

1,012.96

12.04

H-Class

1.65%

5.00%

1,000.00

1,016.70

8.30

Utilities Fund

         

Investor Class

1.41%

5.00%

1,000.00

1,017.90

7.09

A-Class

1.65%

5.00%

1,000.00

1,016.70

8.30

C-Class

2.41%

5.00%

1,000.00

1,012.91

12.09

H-Class

1.66%

5.00%

1,000.00

1,016.65

8.35

 

1

Annualized and excludes expenses of the underlying funds in which the Funds invest, if any.

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, 2020 to March 31, 2021.

 

 

THE RYDEX FUNDS ANNUAL REPORT | 9

 

 

PERFORMANCE REPORT AND FUND PROFILE (Unaudited)

March 31, 2021

 

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, 2021, Banking Fund Investor Class returned 90.06%, compared with 67.50% for the S&P 500 Financials Index. The broader S&P 500 Index returned 56.35%.

 

All industries contributed to return, led by regional banks, diversified banks, and consumer finance.

 

Capital One Financial Corp., Truist Financial Corp., and Bank of America Corp. contributed the most to the Fund’s return for the period. HSBC Holdings plc ADR and CVB Financial Corp. detracted the most from return.

 

Performance displayed represents past performance, which is no guarantee of future results.

 

Holdings Diversification (Market Exposure as % of Net Assets)

 

 

“Holdings Diversification (Market Exposure as % of Net Assets)” excludes any temporary cash investments.

 

Inception Dates:

Investor Class

April 1, 1998

A-Class

September 1, 2004

C-Class

March 30, 2001

H-Class

April 1, 1998

 

Ten Largest Holdings (% of Total Net Assets)

Bank of America Corp.

4.1%

Citigroup, Inc.

4.1%

JPMorgan Chase & Co.

4.0%

Wells Fargo & Co.

4.0%

U.S. Bancorp

3.3%

Truist Financial Corp.

3.2%

PNC Financial Services Group, Inc.

3.1%

Capital One Financial Corp.

2.8%

Bank of New York Mellon Corp.

2.4%

State Street Corp.

2.0%

Top Ten Total

33.0%

   

“Ten Largest Holdings” excludes any temporary cash investments.

 

10 | THE RYDEX FUNDS ANNUAL REPORT

 

 

 

PERFORMANCE REPORT AND FUND PROFILE (Unaudited)(concluded)

March 31, 2021

 

Cumulative Fund Performance*

 

 

 

Average Annual Returns*

Periods Ended March 31, 2021

 

 

1 Year

5 Year

10 Year

Investor Class Shares

90.06%

12.72%

7.74%

A-Class Shares

88.72%

12.35%

7.42%

A-Class Shares with sales charge

79.77%

11.26%

6.90%

C-Class Shares

87.34%

11.51%

6.62%

C-Class Shares with CDSC§

86.34%

11.51%

6.62%

H-Class Shares**

88.66%

12.35%

7.32%

S&P 500 Financials Index

67.50%

15.67%

12.11%

S&P 500 Index

56.35%

16.29%

13.91%

 

*

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 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 C-Class and H-Class shares will vary due to differences in fee structures.

**

Effective September 30, 2015, the Fund’s Advisor Class shares were converted into H-Class shares.

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, 2021

BANKING FUND

 

 

 

 

Shares

   

Value

 

COMMON STOCKS - 99.5%

                 

Banks - 91.0%

Bank of America Corp.

    19,643     $ 759,988  

Citigroup, Inc.

    10,413       757,546  

JPMorgan Chase & Co.

    4,861       739,990  

Wells Fargo & Co.

    18,837       735,962  

U.S. Bancorp

    11,082       612,945  

Truist Financial Corp.

    10,220       596,030  

PNC Financial Services Group, Inc.

    3,294       577,800  

Bank of New York Mellon Corp.

    9,306       440,081  

State Street Corp.

    4,359       366,200  

First Republic Bank

    2,164       360,847  

Fifth Third Bancorp

    9,174       343,566  

SVB Financial Group*

    651       321,373  

Northern Trust Corp.

    3,012       316,591  

M&T Bank Corp.

    1,959       297,004  

Regions Financial Corp.

    14,349       296,450  

KeyCorp

    14,688       293,466  

Citizens Financial Group, Inc.

    6,571       290,110  

Huntington Bancshares, Inc.

    16,982       266,957  

Signature Bank

    1,067       241,249  

ICICI Bank Ltd. ADR*

    14,075       225,622  

HDFC Bank Ltd. ADR*

    2,833       220,096  

Comerica, Inc.

    3,018       216,511  

East West Bancorp, Inc.

    2,861       211,142  

Toronto-Dominion Bank

    3,138       204,629  

Western Alliance Bancorporation

    2,154       203,424  

Royal Bank of Canada

    2,204       203,231  

First Horizon Corp.

    11,935       201,821  

Bank of Nova Scotia

    3,226       201,786  

Zions Bancorp North America

    3,639       199,999  

Commerce Bancshares, Inc.

    2,581       197,730  

Bank of Montreal

    2,214       197,312  

HSBC Holdings plc ADR

    6,727       196,025  

Popular, Inc.

    2,752       193,521  

First Citizens BancShares, Inc. — Class A

    230       192,227  

UBS Group AG

    12,204       189,528  

Canadian Imperial Bank of Commerce

    1,888       184,779  

Deutsche Bank AG*

    14,880       178,560  

TCF Financial Corp.

    3,774       175,340  

Prosperity Bancshares, Inc.

    2,293       171,723  

Cullen/Frost Bankers, Inc.

    1,575       171,297  

Pinnacle Financial Partners, Inc.

    1,921       170,316  

Synovus Financial Corp.

    3,721       170,236  

First Financial Bankshares, Inc.

    3,617       169,022  

Credit Suisse Group AG ADR1

    14,667       155,470  

Glacier Bancorp, Inc.

    2,648       151,148  

South State Corp.

    1,920       150,739  

CIT Group, Inc.

    2,921       150,461  

Bank OZK

    3,643       148,817  

United Bankshares, Inc.

    3,829       147,723  

Webster Financial Corp.

    2,594       142,955  

Home BancShares, Inc.

    5,195       140,525  

UMB Financial Corp.

    1,504       138,864  

PacWest Bancorp

    3,615       137,912  

Wintrust Financial Corp.

    1,768       134,014  

Community Bank System, Inc.

    1,745       133,876  

BankUnited, Inc.

    2,981       131,015  

Umpqua Holdings Corp.

    7,367       129,291  

Ameris Bancorp

    2,418       126,969  

Hancock Whitney Corp.

    2,986       125,442  

Bank of Hawaii Corp.

    1,388       124,212  

First Hawaiian, Inc.

    4,503       123,247  

BancorpSouth Bank

    3,714       120,631  

Simmons First National Corp. — Class A

    3,981       118,116  

Old National Bancorp

    6,100       117,974  

Associated Banc-Corp.

    5,483       117,007  

Independent Bank Group, Inc.

    1,613       116,523  

United Community Banks, Inc.

    3,348       114,234  

Texas Capital Bancshares, Inc.*

    1,608       114,039  

Columbia Banking System, Inc.

    2,608       112,379  

Fulton Financial Corp.

    6,454       109,912  

Cadence BanCorp

    5,050       104,686  

Total Banks

            16,898,213  
                 

Savings & Loans - 3.3%

People’s United Financial, Inc.

    10,437       186,823  

New York Community Bancorp, Inc.

    13,076       165,019  

Sterling Bancorp

    5,902       135,864  

Investors Bancorp, Inc.

    8,819       129,551  

Total Savings & Loans

            617,257  
                 

Diversified Financial Services - 2.8%

Capital One Financial Corp.

    4,065       517,190  
                 

Insurance - 2.4%

Equitable Holdings, Inc.

    7,790       254,110  

Voya Financial, Inc.

    2,955       188,056  

Total Insurance

            442,166  
                 

Total Common Stocks

       

(Cost $13,133,740)

            18,474,826  
                 

 

12 | THE RYDEX FUNDS ANNUAL REPORT

SEE NOTES TO FINANCIAL STATEMENTS.

 

 

SCHEDULE OF INVESTMENTS (concluded)

March 31, 2021

BANKING FUND

 

 

 

 

Face
Amount

   

Value

 

REPURCHASE AGREEMENTS††,2 - 0.7%

J.P. Morgan Securities LLC
issued 03/31/21 at 0.01%
due 04/01/21

  $ 63,828     $ 63,828  

Barclays Capital, Inc.
issued 03/31/21 at 0.01%
due 04/01/21

    29,019       29,019  

BofA Securities, Inc.
issued 03/31/21 at 0.01%
due 04/01/21

    26,485       26,485  

Total Repurchase Agreements

       

(Cost $119,332)

            119,332  
                 

 

 

Shares

   

 

SECURITIES LENDING COLLATERAL†,3 - 0.6%

Money Market Fund

               

First American Government Obligations Fund — Class Z, 0.03%4

    115,144       115,144  

Total Securities Lending Collateral

       

(Cost $115,144)

            115,144  
                 

Total Investments - 100.8%

       

(Cost $13,368,216)

  $ 18,709,302  

Other Assets & Liabilities, net - (0.8)%

    (139,476 )

Total Net Assets - 100.0%

  $ 18,569,826  

 

*

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 on loan at March 31, 2021 — See Note 7.

2

Repurchase Agreements — See Note 6.

3

Securities lending collateral — See Note 7.

4

Rate indicated is the 7-day yield as of March 31, 2021.

 

ADR — American Depositary Receipt

 

plc — Public Limited Company

   
 

See Sector Classification in Other Information section.

 

The following table summarizes the inputs used to value the Fund’s investments at March 31, 2021 (See Note 4 in the Notes to Financial Statements):

 

Investments in Securities (Assets)

 

Level 1
Quoted
Prices

   

Level 2
Significant
Observable
Inputs

   

Level 3
Significant
Unobservable
Inputs

   

Total

 

Common Stocks

  $ 18,474,826     $     $     $ 18,474,826  

Repurchase Agreements

          119,332             119,332  

Securities Lending Collateral

    115,144                   115,144  

Total Assets

  $ 18,589,970     $ 119,332     $     $ 18,709,302  

 

SEE NOTES TO FINANCIAL STATEMENTS.

THE RYDEX FUNDS ANNUAL REPORT | 13

 

 

BANKING FUND

 

 

STATEMENT OF ASSETS AND LIABILITIES

March 31, 2021

 

Assets:

Investments, at value - including $108,491 of securities loaned (cost $13,248,884)

  $ 18,589,970  

Repurchase agreements, at value (cost $119,332)

    119,332  

Receivables:

Fund shares sold

    58,942  

Dividends

    45,480  

Foreign tax reclaims

    544  

Securities lending income

    11  

Total assets

    18,814,279  
         

Liabilities:

Payable for:

Return of securities lending collateral

    115,144  

Fund shares redeemed

    82,810  

Management fees

    14,702  

Transfer agent and administrative fees

    4,653  

Distribution and service fees

    2,533  

Portfolio accounting fees

    1,730  

Trustees’ fees*

    322  

Miscellaneous

    22,559  

Total liabilities

    244,453  

Commitments and contingent liabilities (Note 10)

     

Net assets

  $ 18,569,826  
         

Net assets consist of:

Paid in capital

  $ 26,457,104  

Total distributable earnings (loss)

    (7,887,278 )

Net assets

  $ 18,569,826  
         

Investor Class:

Net assets

  $ 9,027,335  

Capital shares outstanding

    94,321  

Net asset value per share

  $ 95.71  
         

A-Class:

Net assets

  $ 4,049,551  

Capital shares outstanding

    47,168  

Net asset value per share

  $ 85.85  

Maximum offering price per share (Net asset value divided by 95.25%)

  $ 90.13  
         

C-Class:

Net assets

  $ 892,089  

Capital shares outstanding

    11,884  

Net asset value per share

  $ 75.07  
         

H-Class:

Net assets

  $ 4,600,851  

Capital shares outstanding

    55,111  

Net asset value per share

  $ 83.48  

 

STATEMENT OF OPERATIONS

Year Ended March 31, 2021

 

Investment Income:

Dividends (net of foreign withholding tax of $5,081)

  $ 343,052  

Interest

    26  

Income from securities lending, net

    84  

Total investment income

    343,162  
         

Expenses:

Management fees

    90,392  

Distribution and service fees:

A-Class

    7,799  

C-Class

    7,684  

H-Class

    2,817  

Transfer agent and administrative fees

    30,713  

Portfolio accounting fees

    10,636  

Professional fees

    8,148  

Trustees’ fees*

    4,200  

Custodian fees

    1,882  

Miscellaneous

    5,848  

Total expenses

    170,119  

Net investment income

    173,043  
         

Net Realized and Unrealized Gain (Loss):

Net realized gain (loss) on:

Investments

    (10,139,015 )

Net realized loss

    (10,139,015 )

Net change in unrealized appreciation (depreciation) on:

Investments

    16,178,865  

Net change in unrealized appreciation (depreciation)

    16,178,865  

Net realized and unrealized gain

    6,039,850  

Net increase in net assets resulting from operations

  $ 6,212,893  

 

*

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.

 

 

BANKING FUND

 

 

STATEMENTS OF CHANGES IN NET ASSETS

 

 

 

Year Ended
March 31,
2021

   

Year Ended
March 31,
2020

 

Increase (Decrease) in Net Assets from Operations:

               

Net investment income

  $ 173,043     $ 273,567  

Net realized gain (loss) on investments

    (10,139,015 )     15,650  

Net change in unrealized appreciation (depreciation) on investments

    16,178,865       (12,335,006 )

Net increase (decrease) in net assets resulting from operations

    6,212,893       (12,045,789 )
                 

Distributions to shareholders:

               

Investor Class

    (123,639 )     (108,737 )

A-Class

    (109,741 )     (31,237 )

C-Class

    (28,038 )     (9,418 )

H-Class

    (12,149 )     (30,264 )

Total distributions to shareholders

    (273,567 )     (179,656 )
                 

Capital share transactions:

               

Proceeds from sale of shares

               

Investor Class

    100,467,394       97,783,948  

A-Class

    776,718       840,548  

C-Class

    1,445,210       1,729,649  

H-Class

    6,995,067       8,514,542  

Distributions reinvested

               

Investor Class

    120,914       108,041  

A-Class

    106,076       30,103  

C-Class

    27,016       9,418  

H-Class

    12,065       30,213  

Cost of shares redeemed

               

Investor Class

    (111,860,093 )     (75,479,771 )

A-Class

    (1,524,259 )     (1,702,700 )

C-Class

    (1,789,662 )     (1,910,665 )

H-Class

    (3,368,112 )     (10,167,108 )

Net increase (decrease) from capital share transactions

    (8,591,666 )     19,786,218  

Net increase (decrease) in net assets

    (2,652,340 )     7,560,773  
                 

Net assets:

               

Beginning of year

    21,222,166       13,661,393  

End of year

  $ 18,569,826     $ 21,222,166  
                 

Capital share activity:

               

Shares sold

               

Investor Class

    1,395,191       1,226,311  

A-Class

    10,123       11,635  

C-Class

    25,920       27,344  

H-Class

    102,619       120,683  

Shares issued from reinvestment of distributions

               

Investor Class

    1,596       1,272  

A-Class

    1,560       391  

C-Class

    453       138  

H-Class

    182       403  

Shares redeemed

               

Investor Class

    (1,640,247 )     (970,220 )

A-Class

    (23,881 )     (24,173 )

C-Class

    (32,869 )     (30,321 )

H-Class

    (51,236 )     (140,736 )

Net increase (decrease) in shares

    (210,589 )     222,727  

 

SEE NOTES TO FINANCIAL STATEMENTS.

THE RYDEX FUNDS ANNUAL REPORT | 15

 

 

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,
2021

   

Year Ended
March 31,
2020

   

Year Ended
March 31,
2019

   

Year Ended
March 29,
2018

   

Year Ended
March 31,
2017

 

Per Share Data

Net asset value, beginning of period

  $ 51.83     $ 74.58     $ 86.27     $ 76.86     $ 56.13  

Income (loss) from investment operations:

Net investment income (loss)a

    1.25       1.14       .81       .60       .53  

Net gain (loss) on investments (realized and unrealized)

    44.89       (23.38 )     (10.92 )     9.12       20.51  

Total from investment operations

    46.14       (22.24 )     (10.11 )     9.72       21.04  

Less distributions from:

Net investment income

    (2.26 )     (.51 )     (1.58 )     (.31 )     (.31 )

Total distributions

    (2.26 )     (.51 )     (1.58 )     (.31 )     (.31 )

Net asset value, end of period

  $ 95.71     $ 51.83     $ 74.58     $ 86.27     $ 76.86  

 

Total Return

    90.06 %     (30.08 %)     (11.63 %)     12.63 %     37.53 %

Ratios/Supplemental Data

Net assets, end of period (in thousands)

  $ 9,027     $ 17,507     $ 5,997     $ 26,209     $ 41,473  

Ratios to average net assets:

Net investment income (loss)

    1.79 %     1.47 %     0.97 %     0.73 %     0.74 %

Total expenses

    1.43 %     1.48 %     1.46 %     1.38 %     1.38 %

Portfolio turnover rate

    799 %     360 %     633 %     772 %     907 %

 

A-Class

 

Year Ended
March 31,
2021

   

Year Ended
March 31,
2020

   

Year Ended
March 31,
2019

   

Year Ended
March 29,
2018

   

Year Ended
March 31,
2017

 

Per Share Data

Net asset value, beginning of period

  $ 46.98     $ 67.81     $ 78.80     $ 70.41     $ 51.55  

Income (loss) from investment operations:

Net investment income (loss)a

    1.02       .87       .57       .37       .33  

Net gain (loss) on investments (realized and unrealized)

    40.11       (21.19 )     (9.98 )     8.33       18.84  

Total from investment operations

    41.13       (20.32 )     (9.41 )     8.70       19.17  

Less distributions from:

Net investment income

    (2.26 )     (.51 )     (1.58 )     (.31 )     (.31 )

Total distributions

    (2.26 )     (.51 )     (1.58 )     (.31 )     (.31 )

Net asset value, end of period

  $ 85.85     $ 46.98     $ 67.81     $ 78.80     $ 70.41  

 

Total Returnb

    88.72 %     (30.25 %)     (11.85 %)     12.37 %     37.21 %

Ratios/Supplemental Data

Net assets, end of period (in thousands)

  $ 4,050     $ 2,789     $ 4,849     $ 4,076     $ 5,934  

Ratios to average net assets:

Net investment income (loss)

    1.67 %     1.23 %     0.76 %     0.50 %     0.51 %

Total expenses

    1.69 %     1.73 %     1.72 %     1.63 %     1.63 %

Portfolio turnover rate

    799 %     360 %     633 %     772 %     907 %

 

16 | THE RYDEX FUNDS ANNUAL REPORT

SEE NOTES TO FINANCIAL STATEMENTS.

 

 

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.

 

C-Class

 

Year Ended
March 31,
2021

   

Year Ended
March 31,
2020

   

Year Ended
March 31,
2019

   

Year Ended
March 29,
2018

   

Year Ended
March 31,
2017

 

Per Share Data

Net asset value, beginning of period

  $ 41.57     $ 60.51     $ 71.05     $ 63.98     $ 47.22  

Income (loss) from investment operations:

Net investment income (loss)a

    .49       .31       (.05 )     (.17 )     (.05 )

Net gain (loss) on investments (realized and unrealized)

    35.27       (18.74 )     (8.91 )     7.55       17.12  

Total from investment operations

    35.76       (18.43 )     (8.96 )     7.38       17.07  

Less distributions from:

Net investment income

    (2.26 )     (.51 )     (1.58 )     (.31 )     (.31 )

Total distributions

    (2.26 )     (.51 )     (1.58 )     (.31 )     (.31 )

Net asset value, end of period

  $ 75.07     $ 41.57     $ 60.51     $ 71.05     $ 63.98  

 

Total Returnb

    87.34 %     (30.78 %)     (12.51 %)     11.54 %     36.18 %

Ratios/Supplemental Data

Net assets, end of period (in thousands)

  $ 892     $ 764     $ 1,284     $ 4,079     $ 5,634  

Ratios to average net assets:

Net investment income (loss)

    0.93 %     0.49 %     (0.07 %)     (0.25 %)     (0.09 %)

Total expenses

    2.45 %     2.48 %     2.46 %     2.38 %     2.37 %

Portfolio turnover rate

    799 %     360 %     633 %     772 %     907 %

 

H-Class

 

Year Ended
March 31,
2021

   

Year Ended
March 31,
2020

   

Year Ended
March 31,
2019

   

Year Ended
March 29,
2018

   

Year Ended
March 31,
2017

 

Per Share Data

Net asset value, beginning of period

  $ 45.73     $ 66.00     $ 76.78     $ 68.61     $ 50.22  

Income (loss) from investment operations:

Net investment income (loss)a

    .85       .74       .45       .39       .29  

Net gain (loss) on investments (realized and unrealized)

    39.16       (20.50 )     (9.65 )     8.09       18.41  

Total from investment operations

    40.01       (19.76 )     (9.20 )     8.48       18.70  

Less distributions from:

Net investment income

    (2.26 )     (.51 )     (1.58 )     (.31 )     (.31 )

Total distributions

    (2.26 )     (.51 )     (1.58 )     (.31 )     (.31 )

Net asset value, end of period

  $ 83.48     $ 45.73     $ 66.00     $ 76.78     $ 68.61  

 

Total Return

    88.66 %     (30.24 %)     (11.89 %)     12.38 %     37.26 %

Ratios/Supplemental Data

Net assets, end of period (in thousands)

  $ 4,601     $ 162     $ 1,531     $ 14,220     $ 8,467  

Ratios to average net assets:

Net investment income (loss)

    1.15 %     1.02 %     0.60 %     0.52 %     0.45 %

Total expenses

    1.63 %     1.74 %     1.70 %     1.62 %     1.63 %

Portfolio turnover rate

    799 %     360 %     633 %     772 %     907 %

 

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, 2021

 

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, 2021, Basic Materials Fund Investor Class returned 89.00%, compared with 78.29% for the S&P 500 Materials Index. The broader S&P 500 Index returned 56.35%.

 

All industries contributed to return, led by the specialty chemicals, steel, and gold industries.

 

Freeport-McMoRan, Inc., DuPont de Nemours, Inc., and Dow, Inc. contributed the most to the Fund’s return for the period. Arconic Corp., Coeur Mining, Inc., and Livent Corp. detracted the most from return.

 

Performance displayed represents past performance, which is no guarantee of future results.

 

Holdings Diversification (Market Exposure as % of Net Assets)

 

 

“Holdings Diversification (Market Exposure as % of Net Assets)” excludes any temporary cash investments.

 

Inception Dates:

Investor Class

April 1, 1998

A-Class

September 1, 2004

C-Class

May 3, 2001

H-Class

April 14, 1998

 

Ten Largest Holdings (% of Total Net Assets)

Sherwin-Williams Co.

3.0%

Air Products and Chemicals, Inc.

2.9%

Ecolab, Inc.

2.8%

Dow, Inc.

2.5%

Newmont Corp.

2.5%

Freeport-McMoRan, Inc.

2.4%

DuPont de Nemours, Inc.

2.3%

PPG Industries, Inc.

2.2%

International Flavors & Fragrances, Inc.

2.1%

Corteva, Inc.

2.1%

Top Ten Total

24.8%

   

“Ten Largest Holdings” excludes any temporary cash investments.

 

18 | THE RYDEX FUNDS ANNUAL REPORT

 

 

 

PERFORMANCE REPORT AND FUND PROFILE (Unaudited)(concluded)

March 31, 2021

 

Cumulative Fund Performance*

 

 

 

Average Annual Returns*

Periods Ended March 31, 2021

 

 

1 Year

5 Year

10 Year

Investor Class Shares

89.00%

13.84%

4.76%

A-Class Shares

88.52%

13.56%

4.50%

A-Class Shares with sales charge

79.54%

12.45%

3.99%

C-Class Shares

87.07%

12.71%

3.72%

C-Class Shares with CDSC§

86.07%

12.71%

3.72%

H-Class Shares**

88.51%

13.57%

4.39%

S&P 500 Materials Index

78.29%

14.31%

9.46%

S&P 500 Index

56.35%

16.29%

13.91%

 

*

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 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 C-Class shares and H-Class shares will vary due to differences in fee structures.

**

Effective September 30, 2015, the Fund’s Advisor Class shares were converted into H-Class shares.

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, 2021

BASIC MATERIALS FUND

 

 

 

 

Shares

   

Value

 

COMMON STOCKS - 98.6%

                 

Chemicals - 42.5%

Sherwin-Williams Co.

    1,959     $ 1,445,762  

Air Products and Chemicals, Inc.

    4,998       1,406,137  

Ecolab, Inc.

    6,434       1,377,326  

Dow, Inc.

    18,689       1,194,975  

DuPont de Nemours, Inc.

    14,379       1,111,209  

PPG Industries, Inc.

    6,926       1,040,701  

International Flavors & Fragrances, Inc.

    7,406       1,033,952  

LyondellBasell Industries N.V. — Class A

    9,684       1,007,620  

Linde plc

    3,361       941,551  

Celanese Corp. — Class A

    4,831       723,732  

Albemarle Corp.

    4,813       703,227  

Eastman Chemical Co.

    6,048       666,006  

FMC Corp.

    5,974       660,784  

RPM International, Inc.

    6,660       611,721  

Mosaic Co.

    18,535       585,891  

Westlake Chemical Corp.

    6,461       573,672  

CF Industries Holdings, Inc.

    11,588       525,863  

Axalta Coating Systems Ltd.*

    15,497       458,401  

Huntsman Corp.

    15,252       439,715  

Olin Corp.

    11,106       421,695  

Nutrien Ltd.

    7,747       417,486  

Sociedad Quimica y Minera de Chile S.A. ADR

    7,620       404,393  

Ashland Global Holdings, Inc.

    4,542       403,193  

Chemours Co.

    13,667       381,446  

Valvoline, Inc.

    14,425       376,060  

Element Solutions, Inc.

    19,379       354,442  

W R Grace & Co.

    5,804       347,428  

HB Fuller Co.

    5,100       320,841  

Sensient Technologies Corp.

    4,020       313,560  

Ingevity Corp.*

    4,120       311,184  

Total Chemicals

            20,559,973  
                 

Mining - 19.1%

Newmont Corp.

    19,753       1,190,513  

Freeport-McMoRan, Inc.*

    35,338       1,163,680  

Barrick Gold Corp.

    42,305       837,639  

Rio Tinto plc ADR

    6,595       512,102  

BHP Group Ltd. ADR1

    7,045       488,853  

Royal Gold, Inc.

    4,332       466,210  

Wheaton Precious Metals Corp.

    12,128       463,411  

Franco-Nevada Corp.

    3,663       458,937  

Agnico Eagle Mines Ltd.

    7,782       449,878  

AngloGold Ashanti Ltd. ADR1

    20,039       440,257  

Alcoa Corp.*

    13,462       437,380  

Kirkland Lake Gold Ltd.

    12,180       411,684  

Teck Resources Ltd. — Class B

    20,135       386,189  

First Majestic Silver Corp.*,1

    24,280       378,282  

Pan American Silver Corp.

    12,437       373,483  

Arconic Corp.*

    11,000       279,290  

Livent Corp.*

    15,940       276,081  

Coeur Mining, Inc.*

    27,220       245,797  

Total Mining

            9,259,666  

Packaging & Containers - 12.8%

Ball Corp.

    10,973     929,852  

Westrock Co.

    12,371       643,910  

Amcor plc

    54,544       637,074  

Crown Holdings, Inc.

    6,526       633,283  

Packaging Corporation of America

    4,637       623,584  

AptarGroup, Inc.

    3,734       528,996  

Berry Global Group, Inc.*

    8,319       510,786  

Sealed Air Corp.

    10,124       463,882  

Sonoco Products Co.

    6,929       438,606  

Graphic Packaging Holding Co.

    21,126       383,648  

Silgan Holdings, Inc.

    8,902       374,151  

Total Packaging & Containers

            6,167,772  
                 

Iron & Steel - 10.6%

Nucor Corp.

    11,337       910,021  

Vale S.A. ADR

    52,060       904,803  

Cleveland-Cliffs, Inc.*

    30,110       605,512  

Steel Dynamics, Inc.

    11,624       590,034  

Reliance Steel & Aluminum Co.

    3,599       548,092  

United States Steel Corp.

    18,977       496,628  

ArcelorMittal S.A.*

    15,363       448,139  

Commercial Metals Co.

    11,259       347,227  

Allegheny Technologies, Inc.*

    13,386       281,909  

Total Iron & Steel

            5,132,365  
                 

Building Materials - 5.8%

Vulcan Materials Co.

    4,890       825,188  

Martin Marietta Materials, Inc.

    2,354       790,520  

Louisiana-Pacific Corp.

    7,739       429,205  

Eagle Materials, Inc.

    3,110       418,015  

Summit Materials, Inc. — Class A*

    11,371       318,615  

Total Building Materials

            2,781,543  
                 

Forest Products & Paper - 2.2%

International Paper Co.

    14,863       803,643  

Domtar Corp.

    6,717       248,193  

Total Forest Products & Paper

            1,051,836  
                 

Biotechnology - 2.1%

Corteva, Inc.

    21,915       1,021,677  
                 

Household Products & Housewares - 1.4%

Avery Dennison Corp.

    3,727       684,464  
                 

Housewares - 1.4%

Scotts Miracle-Gro Co. — Class A

    2,720       666,319  
                 

Distribution & Wholesale - 0.7%

Avient Corp.

    7,360       347,907  
                 

Total Common Stocks

       

(Cost $30,008,400)

            47,673,522  
                 

 

20 | THE RYDEX FUNDS ANNUAL REPORT

SEE NOTES TO FINANCIAL STATEMENTS.

 

 

SCHEDULE OF INVESTMENTS (concluded)

March 31, 2021

BASIC MATERIALS FUND

 

 

 

 

Shares

   

Value

 

RIGHTS - 0.0%

Chemicals - 0.0%

Sociedad Quimica y Minera de Chile S.A. Expires 04/19/21*

    1,445     $ 4,479  

Total Rights

       

(Cost $2,642)

            4,479  
                 

EXCHANGE-TRADED FUNDS - 0.9%

VanEck Vectors Junior Gold Miners ETF

    10,371       466,798  

Total Exchange-Traded Funds

       

(Cost $484,048)

            466,798  
                 
   

Face
Amount

         

REPURCHASE AGREEMENTS††,2 - 1.5%

J.P. Morgan Securities LLC
issued 03/31/21 at 0.01%
due 04/01/21

  $ 381,120       381,120  

Barclays Capital, Inc.
issued 03/31/21 at 0.01%
due 04/01/21

    173,275       173,275  

BofA Securities, Inc.
issued 03/31/21 at 0.01%
due 04/01/21

    158,141       158,141  

Total Repurchase Agreements

       

(Cost $712,536)

            712,536  
                 

SECURITIES LENDING COLLATERAL†,3 - 1.8%

Money Market Fund

               

First American Government Obligations Fund — Class Z, 0.03%4

    850,597     $ 850,597  

Total Securities Lending Collateral

       

(Cost $850,597)

            850,597  
                 

Total Investments - 102.8%

       

(Cost $32,058,223)

  $ 49,707,932  

Other Assets & Liabilities, net - (2.8)%

    (1,354,150 )

Total Net Assets - 100.0%

  $ 48,353,782  

 

*

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 on loan at March 31, 2021 — See Note 7.

2

Repurchase Agreements — See Note 6.

3

Securities lending collateral — See Note 7.

4

Rate indicated is the 7-day yield as of March 31, 2021.

 

ADR — American Depositary Receipt

 

plc — Public Limited Company

   
 

See Sector Classification in Other Information section.

 

The following table summarizes the inputs used to value the Fund’s investments at March 31, 2021 (See Note 4 in the Notes to Financial Statements):

 

Investments in Securities (Assets)

 

Level 1
Quoted
Prices

   

Level 2
Significant
Observable
Inputs

   

Level 3
Significant
Unobservable
Inputs

   

Total

 

Common Stocks

  $ 47,673,522     $     $     $ 47,673,522  

Rights

    4,479                   4,479  

Exchange-Traded Funds

    466,798                   466,798  

Repurchase Agreements

          712,536             712,536  

Securities Lending Collateral

    850,597                   850,597  

Total Assets

  $ 48,995,396     $ 712,536     $     $ 49,707,932  

 

SEE NOTES TO FINANCIAL STATEMENTS.

THE RYDEX FUNDS ANNUAL REPORT | 21

 

 

BASIC MATERIALS FUND

 

 

STATEMENT OF ASSETS AND LIABILITIES

March 31, 2021

 

Assets:

Investments, at value - including $844,355 of securities loaned (cost $31,345,687)

  $ 48,995,396  

Repurchase agreements, at value (cost $712,536)

    712,536  

Cash

    724  

Receivables:

Securities sold

    3,408,063  

Dividends

    81,847  

Fund shares sold

    50,512  

Securities lending income

    915  

Foreign tax reclaims

    611  

Total assets

    53,250,604  
         

Liabilities:

Payable for:

Fund shares redeemed

    3,810,327  

Return of securities lending collateral

    850,597  

Deferred foreign capital gain taxes

    130,382  

Management fees

    34,575  

Transfer agent and administrative fees

    10,942  

Portfolio accounting fees

    4,068  

Distribution and service fees

    3,687  

Trustees’ fees*

    735  

Miscellaneous

    51,509  

Total liabilities

    4,896,822  

Commitments and contingent liabilities (Note 10)

     

Net assets

  $ 48,353,782  
         

Net assets consist of:

Paid in capital

  $ 33,681,154  

Total distributable earnings (loss)

    14,672,628  

Net assets

  $ 48,353,782  
         

Investor Class:

Net assets

  $ 38,112,065  

Capital shares outstanding

    486,319  

Net asset value per share

  $ 78.37  
         

A-Class:

Net assets

  $ 5,599,300  

Capital shares outstanding

    77,176  

Net asset value per share

  $ 72.55  

Maximum offering price per share (Net asset value divided by 95.25%)

  $ 76.17  
         

C-Class:

Net assets

  $ 2,533,942  

Capital shares outstanding

    40,751  

Net asset value per share

  $ 62.18  
         

H-Class:

Net assets

  $ 2,108,475  

Capital shares outstanding

    30,047  

Net asset value per share

  $ 70.17  

 

STATEMENT OF OPERATIONS

Year Ended March 31, 2021

 

Investment Income:

Dividends (net of foreign withholding tax of $8,493)

  $ 764,231  

Interest

    172  

Income from securities lending, net

    4,853  

Total investment income

    769,256  
         

Expenses:

Management fees

    311,527  

Distribution and service fees:

A-Class

    10,306  

C-Class

    21,836  

H-Class

    5,068  

Transfer agent and administrative fees

    101,847  

Portfolio accounting fees

    36,657  

Professional fees

    14,676  

Trustees’ fees*

    6,028  

Custodian fees

    5,344  

Line of credit fees

    27  

Miscellaneous

    48,737  

Total expenses

    562,053  

Net investment income

    207,203  
         

Net Realized and Unrealized Gain (Loss):

Net realized gain (loss) on:

Investments

    2,888,261  

Net realized gain

    2,888,261  

Net change in unrealized appreciation (depreciation) on:

Investments

    18,305,356  

Net change in unrealized appreciation (depreciation)

    18,305,356  

Net realized and unrealized gain

    21,193,617  

Net increase in net assets resulting from operations

  $ 21,400,820  

 

*

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.

 

 

BASIC MATERIALS FUND

 

 

STATEMENTS OF CHANGES IN NET ASSETS

 

 

 

Year Ended
March 31,
2021

   

Year Ended
March 31,
2020

 

Increase (Decrease) in Net Assets from Operations:

               

Net investment income

  $ 207,203     $ 207,953  

Net realized gain on investments

    2,888,261       1,496,946  

Net change in unrealized appreciation (depreciation) on investments

    18,305,356       (7,784,086 )

Net increase (decrease) in net assets resulting from operations

    21,400,820       (6,079,187 )
                 

Distributions to shareholders:

               

Investor Class

    (971,597 )     (1,041,004 )

A-Class

    (108,312 )     (222,796 )

C-Class

    (69,007 )     (126,761 )

H-Class

    (111,942 )     (70,981 )

Total distributions to shareholders

    (1,260,858 )     (1,461,542 )
                 

Capital share transactions:

               

Proceeds from sale of shares

               

Investor Class

    64,177,984       29,131,033  

A-Class

    2,021,511       1,863,446  

C-Class

    1,944,229       1,431,379  

H-Class

    4,011,677       5,043,330  

Distributions reinvested

               

Investor Class

    960,891       1,023,950  

A-Class

    104,132       212,298  

C-Class

    68,486       125,218  

H-Class

    111,869       70,857  

Cost of shares redeemed

               

Investor Class

    (55,658,771 )     (37,986,062 )

A-Class

    (1,861,864 )     (4,863,920 )

C-Class

    (2,232,010 )     (2,316,529 )

H-Class

    (4,064,114 )     (5,432,603 )

Net increase (decrease) from capital share transactions

    9,584,020       (11,697,603 )

Net increase (decrease) in net assets

    29,723,982       (19,238,332 )
                 

Net assets:

               

Beginning of year

    18,629,800       37,868,132  

End of year

  $ 48,353,782     $ 18,629,800  
                 

Capital share activity:

               

Shares sold

               

Investor Class

    1,007,217       497,060  

A-Class

    31,548       33,828  

C-Class

    37,998       30,294  

H-Class

    72,683       97,382  

Shares issued from reinvestment of distributions

               

Investor Class

    13,676       17,636  

A-Class

    1,600       3,930  

C-Class

    1,225       2,668  

H-Class

    1,777       1,355  

Shares redeemed

               

Investor Class

    (848,607 )     (660,790 )

A-Class

    (31,218 )     (87,985 )

C-Class

    (43,144 )     (49,672 )

H-Class

    (66,030 )     (104,189 )

Net increase (decrease) in shares

    178,725       (218,483 )

 

SEE NOTES TO FINANCIAL STATEMENTS.

THE RYDEX FUNDS ANNUAL REPORT | 23

 

 

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,
2021

   

Year Ended
March 31,
2020

   

Year Ended
March 31,
2019

   

Year Ended
March 29,
2018

   

Year Ended
March 31,
2017

 

Per Share Data

Net asset value, beginning of period

  $ 42.39     $ 58.04     $ 60.37     $ 55.71     $ 45.18  

Income (loss) from investment operations:

Net investment income (loss)a

    .43       .43       .35       .11       .18  

Net gain (loss) on investments (realized and unrealized)

    37.12       (13.42 )     (1.85 )     4.80       10.92  

Total from investment operations

    37.55       (12.99 )     (1.50 )     4.91       11.10  

Less distributions from:

Net investment income

    (.54 )     (.90 )     (.24 )     (.25 )     (.57 )

Net realized gains

    (1.03 )     (1.76 )     (.59 )            

Total distributions

    (1.57 )     (2.66 )     (.83 )     (.25 )     (.57 )

Net asset value, end of period

  $ 78.37     $ 42.39     $ 58.04     $ 60.37     $ 55.71  

 

Total Return

    89.00 %     (23.61 %)     (2.36 %)     8.81 %     24.65 %

Ratios/Supplemental Data

Net assets, end of period (in thousands)

  $ 38,112     $ 13,313     $ 26,704     $ 51,589     $ 56,854  

Ratios to average net assets:

Net investment income (loss)

    0.67 %     0.74 %     0.59 %     0.18 %     0.35 %

Total expensesb

    1.43 %     1.48 %     1.47 %     1.38 %     1.37 %

Portfolio turnover rate

    162 %     67 %     247 %     257 %     361 %

 

A-Class

 

Year Ended
March 31,
2021

   

Year Ended
March 31,
2020

   

Year Ended
March 31,
2019

   

Year Ended
March 29,
2018

   

Year Ended
March 31,
2017

 

Per Share Data

Net asset value, beginning of period

  $ 39.41     $ 54.27     $ 56.66     $ 52.42     $ 42.65  

Income (loss) from investment operations:

Net investment income (loss)a

    .25       .26       .25       (.01 )     .03  

Net gain (loss) on investments (realized and unrealized)

    34.46       (12.46 )     (1.81 )     4.50       10.31  

Total from investment operations

    34.71       (12.20 )     (1.56 )     4.49       10.34  

Less distributions from:

Net investment income

    (.54 )     (.90 )     (.24 )     (.25 )     (.57 )

Net realized gains

    (1.03 )     (1.76 )     (.59 )            

Total distributions

    (1.57 )     (2.66 )     (.83 )     (.25 )     (.57 )

Net asset value, end of period

  $ 72.55     $ 39.41     $ 54.27     $ 56.66     $ 52.42  

 

Total Returnc

    88.52 %     (23.80 %)     (2.60 %)     8.56 %     24.33 %

Ratios/Supplemental Data

Net assets, end of period (in thousands)

  $ 5,599     $ 2,966     $ 6,810     $ 9,070     $ 16,355  

Ratios to average net assets:

Net investment income (loss)

    0.44 %     0.48 %     0.45 %     (0.02 %)     0.06 %

Total expensesb

    1.69 %     1.73 %     1.72 %     1.63 %     1.62 %

Portfolio turnover rate

    162 %     67 %     247 %     257 %     361 %

 

24 | THE RYDEX FUNDS ANNUAL REPORT

SEE NOTES TO FINANCIAL STATEMENTS.

 

 

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.

 

C-Class

 

Year Ended
March 31,
2021

   

Year Ended
March 31,
2020

   

Year Ended
March 31,
2019

   

Year Ended
March 29,
2018

   

Year Ended
March 31,
2017

 

Per Share Data

Net asset value, beginning of period

  $ 34.17     $ 47.73     $ 50.32     $ 46.93     $ 38.52  

Income (loss) from investment operations:

Net investment income (loss)a

    (.17 )     (.11 )     (.21 )     (.38 )     (.29 )

Net gain (loss) on investments (realized and unrealized)

    29.75       (10.79 )     (1.55 )     4.02       9.27  

Total from investment operations

    29.58       (10.90 )     (1.76 )     3.64       8.98  

Less distributions from:

Net investment income

    (.54 )     (.90 )     (.24 )     (.25 )     (.57 )

Net realized gains

    (1.03 )     (1.76 )     (.59 )            

Total distributions

    (1.57 )     (2.66 )     (.83 )     (.25 )     (.57 )

Net asset value, end of period

  $ 62.18     $ 34.17     $ 47.73     $ 50.32     $ 46.93  

 

Total Returnc

    87.07 %     (24.35 %)     (3.35 %)     7.75 %     23.41 %

Ratios/Supplemental Data

Net assets, end of period (in thousands)

  $ 2,534     $ 1,526     $ 2,930     $ 5,494     $ 5,824  

Ratios to average net assets:

Net investment income (loss)

    (0.34 %)     (0.23 %)     (0.42 %)     (0.75 %)     (0.66 %)

Total expensesb

    2.44 %     2.47 %     2.47 %     2.38 %     2.37 %

Portfolio turnover rate

    162 %     67 %     247 %     257 %     361 %

 

H-Class

 

Year Ended
March 31,
2021

   

Year Ended
March 31,
2020

   

Year Ended
March 31,
2019

   

Year Ended
March 29,
2018

   

Year Ended
March 31,
2017

 

Per Share Data

Net asset value, beginning of period

  $ 38.15     $ 52.62     $ 54.95     $ 50.84     $ 41.37  

Income (loss) from investment operations:

Net investment income (loss)a

    .19       .27       .12       (.05 )     .01  

Net gain (loss) on investments (realized and unrealized)

    33.40       (12.08 )     (1.62 )     4.41       10.03  

Total from investment operations

    33.59       (11.81 )     (1.50 )     4.36       10.04  

Less distributions from:

Net investment income

    (.54 )     (.90 )     (.24 )     (.25 )     (.57 )

Net realized gains

    (1.03 )     (1.76 )     (.59 )            

Total distributions

    (1.57 )     (2.66 )     (.83 )     (.25 )     (.57 )

Net asset value, end of period

  $ 70.17     $ 38.15     $ 52.62     $ 54.95     $ 50.84  

 

Total Return

    88.51 %     (23.81 %)     (2.59 %)     8.57 %     24.36 %

Ratios/Supplemental Data

Net assets, end of period (in thousands)

  $ 2,108     $ 825     $ 1,424     $ 9,220     $ 8,077  

Ratios to average net assets:

Net investment income (loss)

    0.33 %     0.51 %     0.21 %     (0.09 %)     0.03 %

Total expensesb

    1.68 %     1.72 %     1.71 %     1.62 %     1.62 %

Portfolio turnover rate

    162 %     67 %     247 %     257 %     361 %

 

a

Net investment income (loss) per share was computed using average shares outstanding throughout the period.

b

Does not include expenses of the underlying funds in which the Fund invests.

c

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, 2021

 

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 other 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, 2021, Biotechnology Fund Investor Class returned 40.80%, compared with 34.04% for the S&P 500 Health Care Index. The broader S&P 500 Index returned 56.35%.

 

All industries contributed to return, led by biotechnology, life sciences tools & services and pharmaceuticals.

 

Immunomedics, Inc., Moderna, Inc., and AbbVie, Inc. contributed the most to the Fund’s return for the period. Biogen Inc., Amicus Therapeutics, Inc., and Inovio Pharmaceuticals, Inc. detracted the most from return.

 

Performance displayed represents past performance, which is no guarantee of future results.

 

Holdings Diversification (Market Exposure as % of Net Assets)

 

 

“Holdings Diversification (Market Exposure as % of Net Assets)” excludes any temporary cash investments.

 

Inception Dates:

Investor Class

April 1, 1998

A-Class

September 1, 2004

C-Class

March 30, 2001

H-Class

April 1, 1998

 

Ten Largest Holdings (% of Total Net Assets)

AbbVie, Inc.

6.2%

Amgen, Inc.

5.3%

Gilead Sciences, Inc.

4.0%

Vertex Pharmaceuticals, Inc.

3.3%

Illumina, Inc.

3.2%

Regeneron Pharmaceuticals, Inc.

3.1%

Moderna, Inc.

3.1%

Biogen, Inc.

3.0%

Corteva, Inc.

2.6%

Alexion Pharmaceuticals, Inc.

2.6%

Top Ten Total

36.4%

   

“Ten Largest Holdings” excludes any temporary cash investments.

 

26 | THE RYDEX FUNDS ANNUAL REPORT

 

 

 

PERFORMANCE REPORT AND FUND PROFILE (Unaudited)(concluded)

March 31, 2021

 

Cumulative Fund Performance*

 

 

 

Average Annual Returns*

Periods Ended March 31, 2021

 

 

1 Year

5 Year

10 Year

Investor Class Shares

40.80%

13.01%

16.37%

A-Class Shares

40.44%

12.72%

16.08%

A-Class Shares with sales charge

33.76%

11.63%

15.51%

C-Class Shares

39.39%

11.88%

15.21%

C-Class Shares with CDSC§

38.39%

11.88%

15.21%

H-Class Shares**

40.45%

12.72%

15.96%

S&P 500 Health Care Index

34.04%

13.61%

15.61%

S&P 500 Index

56.35%

16.29%

13.91%

 

*

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 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 C-Class shares and H-Class shares will vary due to differences in fee structures.

**

Effective September 30, 2015, the Fund’s Advisor Class shares were converted into H-Class shares.

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, 2021

BIOTECHNOLOGY FUND

 

 

 

 

Shares

   

Value

 

COMMON STOCKS - 99.5%

                 

Biotechnology - 73.4%

Amgen, Inc.

    41,014     $ 10,204,693  

Gilead Sciences, Inc.

    118,157       7,636,487  

Vertex Pharmaceuticals, Inc.*

    29,460       6,330,659  

Illumina, Inc.*

    15,933       6,119,228  

Regeneron Pharmaceuticals, Inc.*

    12,686       6,002,254  

Moderna, Inc.*

    44,894       5,878,869  

Biogen, Inc.*

    20,330       5,687,318  

Corteva, Inc.

    106,161       4,949,226  

Alexion Pharmaceuticals, Inc.*

    32,150       4,916,057  

Seagen, Inc.*

    29,839       4,143,444  

Exact Sciences Corp.*

    30,664       4,040,902  

Incyte Corp.*

    44,724       3,634,719  

Bio-Rad Laboratories, Inc. — Class A*

    6,140       3,506,984  

Alnylam Pharmaceuticals, Inc.*

    24,388       3,443,342  

Guardant Health, Inc.*

    22,476       3,430,961  

CRISPR Therapeutics AG*

    25,540       3,112,049  

BioMarin Pharmaceutical, Inc.*

    40,899       3,088,283  

BioNTech SE ADR*,1

    26,220       2,862,962  

Novavax, Inc.*

    15,550       2,819,370  

BeiGene Ltd. ADR*

    7,020       2,443,522  

Mirati Therapeutics, Inc.*

    14,233       2,438,113  

Acceleron Pharma, Inc.*

    17,962       2,435,827  

Fate Therapeutics, Inc.*

    27,870       2,297,882  

United Therapeutics Corp.*

    13,638       2,281,228  

Ultragenyx Pharmaceutical, Inc.*

    19,929       2,269,116  

TG Therapeutics, Inc.*

    46,620       2,247,084  

Exelixis, Inc.*

    98,564       2,226,561  

Arrowhead Pharmaceuticals, Inc.*

    32,997       2,188,031  

Twist Bioscience Corp.*

    16,700       2,068,462  

Blueprint Medicines Corp.*

    20,430       1,986,409  

Halozyme Therapeutics, Inc.*

    47,420       1,976,940  

Ionis Pharmaceuticals, Inc.*

    43,579       1,959,312  

Emergent BioSolutions, Inc.*

    20,730       1,926,024  

Iovance Biotherapeutics, Inc.*

    57,964       1,835,140  

Sage Therapeutics, Inc.*

    23,526       1,760,921  

Biohaven Pharmaceutical Holding Company Ltd.*

    25,170       1,720,370  

Arena Pharmaceuticals, Inc.*

    24,270       1,684,095  

ACADIA Pharmaceuticals, Inc.*

    64,903       1,674,497  

ChemoCentryx, Inc.*

    30,430       1,559,233  

PTC Therapeutics, Inc.*

    30,028       1,421,826  

Editas Medicine, Inc.*

    33,300       1,398,600  

Amicus Therapeutics, Inc.*

    136,080       1,344,470  

Global Blood Therapeutics, Inc.*

    32,095       1,307,871  

Bluebird Bio, Inc.*

    39,725       1,197,709  

Inovio Pharmaceuticals, Inc.*,1

    122,560       1,137,357  

Total Biotechnology

            140,594,407  
                 

Pharmaceuticals - 17.2%

AbbVie, Inc.

    110,062       11,910,910  

Horizon Therapeutics plc*

    42,545       3,915,842  

Viatris, Inc.*

    242,687       3,390,337  

PRA Health Sciences, Inc.*

    17,635       2,703,975  

Neurocrine Biosciences, Inc.*

    27,296       2,654,536  

Jazz Pharmaceuticals plc*

    16,047       2,637,645  

Intellia Therapeutics, Inc.*

    27,870       2,236,707  

Sarepta Therapeutics, Inc.*

    26,089       1,944,413  

Pacira BioSciences, Inc.*

    21,190       1,485,207  

Total Pharmaceuticals

            32,879,572  
                 

Healthcare-Products - 5.4%

Bio-Techne Corp.

    8,588       3,280,015  

Novocure Ltd.*

    19,933       2,634,744  

Natera, Inc.*

    24,960       2,534,438  

Adaptive Biotechnologies Corp.*

    48,760       1,963,078  

Total Healthcare-Products

            10,412,275  
                 

Healthcare-Services - 3.5%

Syneos Health, Inc.*

    31,060       2,355,901  

Invitae Corp.*,1

    59,390       2,269,292  

Medpace Holdings, Inc.*

    12,570       2,062,108  

Total Healthcare-Services

            6,687,301  
                 

Total Common Stocks

       

(Cost $103,366,793)

            190,573,555  
                 

RIGHTS††† - 0.0%

Biotechnology - 0.0%

Clinical Data, Inc.*

    24,000        

Total Rights

       

(Cost $—)

             
                 
   

Face
Amount