-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, MR6LuETOVl98cOR0RquwSd6NlUF+igFy1ERcGLiV65hUaHaJy7JDwyenTYvHVo3L KWdqYGbs+QWhcUwwY6/aWg== 0001047469-05-018467.txt : 20050630 0001047469-05-018467.hdr.sgml : 20050630 20050630105033 ACCESSION NUMBER: 0001047469-05-018467 CONFORMED SUBMISSION TYPE: N-CSRS PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20050430 FILED AS OF DATE: 20050630 DATE AS OF CHANGE: 20050630 EFFECTIVENESS DATE: 20050630 FILER: COMPANY DATA: COMPANY CONFORMED NAME: RYDEX ETF TRUST CENTRAL INDEX KEY: 0001208211 IRS NUMBER: 000000000 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: N-CSRS SEC ACT: 1940 Act SEC FILE NUMBER: 811-21261 FILM NUMBER: 05927102 MAIL ADDRESS: STREET 1: 9601 BLACKWELL RD STREET 2: STE 500 CITY: ROCKVILLE STATE: MD ZIP: 20850 N-CSRS 1 a2159081zn-csrs.txt N-CSRS 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 811-21261 --------------------------------------------- Rydex ETF Trust - ------------------------------------------------------------------------------- (Exact name of registrant as specified in charter) 9601 Blackwell Road, Suite 500 Rockville, Maryland 20850 - ------------------------------------------------------------------------------- (Address of principal executive offices) (Zip code) Carl Verboncoeur Rydex ETF Trust 9601 Blackwell Road, Suite 500 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: October 31, 2005 -------------------------- Date of reporting period: April 30, 2005 ------------------------- ITEM 1. REPORT TO STOCKHOLDERS. The registrant's annual report transmitted to shareholders pursuant to Rule 30e-1 under the Investment Company Act of 1940 is as follows: [GRAPHIC] APRIL 30, 2005 RYDEX ETF TRUST SEMI-ANNUAL REPORT RYDEX S&P EQUAL WEIGHT ETF [RYDEX INVESTMENTS ESSENTIAL FOR MODERN MARKETS(TM) LOGO] This report and the financial statements contained herein are submitted for the general information of our shareholders. The report is not authorized for distribution to prospective investors unless preceded or accompanied by an effective prospectus. Distributed by Rydex Distributors, Inc. 1 TABLE OF CONTENTS LETTER FROM THE CEO 2 FEES & EXPENSES 4 PORTFOLIO SUMMARY 5 SCHEDULE OF INVESTMENTS 6 STATEMENT OF ASSETS AND LIABILITIES 16 FINANCIAL HIGHLIGHTS 19 NOTES TO FINANCIAL STATEMENTS 20 SUPPLEMENTAL INFORMATION 24
2 DEAR SHAREHOLDERS: The period November 1, 2004 through April 30, 2005 was a difficult one for investors in almost all asset classes. Markets were - for the most part - range-bound as end of the year gains in November and December were offset by losses during the first four months of 2005. Following the election, there were some powerful positives as consumer sentiment and spending remained strong while interest rates and inflation remained low and equity valuations were in line with historical averages. This was offset during the period by concerns driven by widening deficits, record energy prices, inflation worries, slowing earnings growth, rising interest rates and the specter of continuing geopolitical dangers such as weapons proliferation and terrorism. Investment returns during this 6-month period reflected this tug-of-war. The S&P Equal Weight Index rose 3.98% just outperforming the cap-weighted S&P 500(R) Index, which rose 3.28%. Comparatively, Rydex S&P Equal Weight ETF (RSP) finished the six-month period up 3.81%. The small cap Russell 2000 Index returned -0.15%, trailing the large-cap and equal-weight S&P 500 by more than 3.40%. The challenge for stock investors was a distinct lack of market direction. Markets look forward and, although the earnings environment can be described as positive, it can also be described as slowing. S&P earnings for 2004 were up 20%, but by the first quarter, the year-over-year pace had slowed to 7.5%. Valuations did not represent a headwind, but higher energy prices certainly did. As oil prices rose to a record $57/barrel, stocks pulled back. The upcoming period could be more of the same. A substantial re-acceleration in corporate earnings growth, a precipitous decline in interest rates and/or energy prices and a rapid improvement in the federal budget and trade deficits could bring upside potential. Downside risks include a freefall in the exchange value of the U.S. dollar and a dramatic spike in inflation and interest rates (though this seems remote). Going forward, economic growth remains sound, inflation is tame and interest rates are at historical lows. The remainder of the year will undoubtedly be a challenge, but, as always, opportunities will exist for savvy investors. We appreciate the trust you have placed in our firm by investing with us. Sincerely, /s/ Carl G. Verboncoeur Carl G. Verboncoeur Chief Executive Officer Rydex Investments 3 TOP TEN HOLDINGS AS OF APRIL 30, 2005
STOCK % - ------------------------------------------ SUNGARD DATA SYSTEMS, INC. 0.28 CIENA CORP. 0.26 CORNING, INC. 0.26 ALLEGHENY ENERGY, INC. 0.24 SAFEWAY, INC. 0.24 SCHERING-PLOUGH CORP. 0.24 WYETH 0.24 FISERV, INC. 0.24 HCA, INC. 0.24 TENET HEALTHCARE CORP. 0.23
[CHART] SECTOR ALLOCATION AS OF APRIL 30, 2005 Consumer Discretionary 17.3% Financials 16.8% Information Technology 15.7% Health Care 11.7% Industrials 10.5% Consumer Staples 7.4% Utilities 6.8% Materials 6.1% Energy 5.6% Telecommunication Services 2.1%
4 FEES AND EXPENSES (UNAUDITED) As a shareholder of the Rydex ETF Trust, you incur advisory fees and distribution fees. All other Trust expenses are paid by the advisor. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these cost with the ongoing costs of investing in other mutual funds. The example is based on an investment of $1,000 invested at the beginning of the period and held through the six months ended April 30, 2005. ACTUAL EXPENSES The first line in the following table provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your 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 in the first line under the heading "Expenses Paid During the Six-Month Period" to estimate the expenses you paid on your account during this period. HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES The second line in the following table provides information about hypothetical account values and hypothetical expenses based on the Portfolio's actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Portfolio's actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. Please note that the expenses shown in the tables are meant to highlight your ongoing costs only, and do not reflect any transactional costs such as sales charges (loads). Therefore the second line in the 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.
BEGINNING ENDING ANNUALIZED ACCOUNT ACCOUNT EXPENSE RATIO EXPENSES PAID VALUE VALUE BASED ON THE DURING THE 11/01/04 04/30/05 SIX-MONTH PERIOD SIX-MONTH PERIOD* ----------- ----------- ---------------- ----------------- RYDEX S&P EQUAL WEIGHT ETF Actual $ 1,000.00 $ 1,038.06 0.40% $ 2.02 Hypothetical (5% return before expenses) $ 1,000.00 $ 1,022.82 0.40% $ 2.00
* EXPENSES ARE CALCULATED USING THE ANNUALIZED EXPENSE RATIO, WHICH REPRESENTS THE ONGOING EXPENSES AS A PERCENTAGE OF NET ASSETS FOR THE SIX-MONTHS ENDED 04/30/05. EXPENSES ARE CALCULATED BY MULTIPLYING THE ANNUALIZED EXPENSE RATIO BY THE AVERAGE ACCOUNT VALUE FOR THE PERIOD; THEN MULTIPLYING THE RESULT BY THE NUMBER OF DAYS IN THE MOST RECENT FISCAL HALF-YEAR; AND THEN DIVIDING THE RESULT BY THE NUMBER OF DAYS IN THE CALENDAR YEAR. 5 RYDEX S&P EQUAL WEIGHT ETF PORTFOLIO SUMMARY April 30, 2005 (Unaudited) INCEPTION DATE 4/24/03 PORTFOLIO STATISTICS Net Assets ($million): $708.0 SECTOR BREAKDOWN 0.6% Advertising and Marketing Services 1.9% Aerospace and Defense 0.2% Agricultural 0.4% Airlines 1.1% Aluminum, Steel and Other Metals 1.9% Automotive 5.6% Banking and Finance 4.0% Beverages, Food and Tobacco 0.8% Biosciences 1.4% Building and Building Products 0.8% Business Equipment and Services 2.1% Chemicals 1.8% Communications, Media and Entertainment 2.0% Computer Services 1.1% Computers - Micro 3.4% Computers - Software and Peripherals 0.4% Conglomerates 1.5% Consumer Goods and Services 0.8% Containers and Packaging 0.8% Data Processing Systems 0.2% Education 5.4% Electronic Equipment and Components 6.0% Financial Services 0.7% Forest and Paper Products 0.2% Health and Medical Facilities 6.2% Health Care Products and Services 0.6% Homebuilders 0.8% Hotels and Gaming 2.2% Household and Personal Care Products 0.2% Human Resources 4.6% Insurance 1.1% Machinery and Engineering 2.5% Manufacturing 0.2% Mining 0.7% Networking Products 6.2% Oil and Gas 3.2% Pharmaceuticals 1.0% Publishing 1.5% Real Estate Investment Trusts 0.2% Resorts and Entertainment 1.7% Retail - Apparel and Shoes 1.0% Retail - Department Stores 1.5% Retail - Discount Stores 0.7% Retail - Food Stores 0.8% Retail - Restaurants 2.4% Retail - Specialty Stores 0.6% Retail and Wholesale Distribution 0.2% Semiconductors & Semiconductor Equipment 4.5% Telecommunications 0.4% Tire and Rubber 0.2% Tobacco 1.2% Tools and Instruments 1.3% Transportation 0.4% Travel Services 6.2% Utilities - Gas and Electric 0.4% Waste Management 6 RYDEX S&P EQUAL WEIGHT ETF SCHEDULE OF INVESTMENTS April 30, 2005 (Unaudited)
MARKET SHARES VALUE - ------------------------------------------------------------------------------------------------------------- COMMON STOCKS--99.8% ADVERTISING AND MARKETING SERVICES 0.6% Monster Worldwide, Inc.* 51,510 $ 1,185,245 Omnicom Group, Inc. 16,662 1,381,280 The Interpublic Group of Cos., Inc.* 124,696 1,603,590 -------------- TOTAL ADVERTISING AND MARKETING SERVICES 4,170,115 -------------- AEROSPACE AND DEFENSE 1.9% General Dynamics Corp. 13,821 1,451,896 Goodrich Corp. 38,713 1,560,134 L-3 Communications Holdings, Inc. 19,539 1,386,683 Lockheed Martin Corp. 24,220 1,476,209 Northrop Grumman Corp. 27,994 1,535,191 Raytheon Co. 38,078 1,432,114 Rockwell Collins, Inc. 31,308 1,436,411 The Boeing Co. 25,656 1,527,045 United Technologies Corp. 14,135 1,437,812 -------------- TOTAL AEROSPACE AND DEFENSE 13,243,495 -------------- AGRICULTURAL 0.2% Monsanto Co. 24,287 1,423,704 -------------- TOTAL AGRICULTURAL 1,423,704 -------------- AIRLINES 0.4% Delta Air Lines, Inc.* 357,668 1,176,728 Southwest Airlines Co. 101,135 1,504,889 -------------- TOTAL AIRLINES 2,681,617 -------------- ALUMINUM, STEEL AND OTHER METALS 1.1% Alcoa, Inc. 46,289 1,343,307 Allegheny Technologies, Inc. 64,916 1,454,117 Freeport-McMoRan Copper & Gold, Inc., Class B 35,600 1,233,896 Nucor Corp. 23,785 1,215,414 Phelps Dodge Corp. 13,702 1,176,317 United States Steel Corp. 26,279 1,123,690 -------------- TOTAL ALUMINUM, STEEL AND OTHER METALS 7,546,741 -------------- AUTOMOTIVE 1.9% AutoNation, Inc.* 79,265 $ 1,448,173 AutoZone, Inc.* 16,947 1,406,601 Dana Corp. 106,649 1,217,932 Delphi Corp. 334,803 1,104,850 Ford Motor Co. 128,748 1,172,894 General Motors Corp. 51,236 1,366,976 Harley-Davidson, Inc. 24,216 1,138,636 Johnson Controls, Inc. 25,836 1,417,621 Navistar International Corp.* 36,844 1,088,003 PACCAR, Inc. 19,927 1,353,043 Visteon Corp.* 246,049 861,172 -------------- TOTAL AUTOMOTIVE 13,575,901 -------------- BANKING AND FINANCE 5.6% AmSouth Bancorp. 58,168 1,530,983 Bank of America Corp. 32,630 1,469,655 BB&T Corp. 37,834 1,483,471 Comerica, Inc. 26,000 1,488,760 Compass Bancshares, Inc. 32,075 1,379,867 Fifth Third Bancorp. 34,612 1,505,622 First Horizon National Corp. 35,714 1,483,202 Golden West Financial Corp. 24,528 1,528,830 Huntington Bancshares, Inc. 63,344 1,489,217 J.P. Morgan Chase & Co. 40,724 1,445,295 KeyCorp 45,262 1,500,888 M&T Bank Corp. 14,654 1,515,956 Marshall & Ilsley Corp. 35,439 1,511,119 Mellon Financial Corp. 49,966 1,383,559 National City Corp. 43,118 1,464,287 North Fork Bancorp., Inc. 51,293 1,443,898 Northern Trust Corp. 33,976 1,529,939 Regions Financial Corp. 44,612 1,494,056 Sovereign Bancorp, Inc. 64,860 1,334,170 State Street Corp. 32,529 1,503,816 SunTrust Banks, Inc. 20,254 1,475,099 The Bank of New York Co., Inc. 48,252 1,348,161
See Notes to Financial Statements. 7
MARKET SHARES VALUE - ------------------------------------------------------------------------------------------------------------- COMMON STOCKS (CONTINUED) U.S. Bancorp 50,069 $ 1,396,925 Wachovia Corp. 28,679 1,467,791 Washington Mutual, Inc. 35,592 1,470,661 Wells Fargo & Co. 24,697 1,480,338 Zions Bancorp. 21,102 1,477,773 -------------- TOTAL BANKING AND FINANCE 39,603,338 -------------- BEVERAGES, FOOD AND TOBACCO 4.0% Altria Group, Inc. 22,658 1,472,543 Anheuser-Busch Cos., Inc. 30,807 1,443,924 Archer-Daniels-Midland Co. 60,470 1,087,855 Brown-Forman Corp., Class B 27,604 1,532,022 Campbell Soup Co. 51,634 1,535,595 Coca-Cola Enterprises, Inc. 69,861 1,418,178 ConAgra Foods, Inc. 54,110 1,447,443 General Mills, Inc. 28,460 1,405,924 H.J. Heinz Co. 40,033 1,475,216 Hershey Foods Corp. 23,738 1,516,858 Kellogg Co. 34,253 1,539,672 McCormick & Co., Inc. 39,901 1,380,176 McDonald's Corp. 45,969 1,347,351 Molson Coors Brewing Co., Class B 19,321 1,193,072 PepsiCo, Inc. 27,869 1,550,632 SUPER VALU, INC. 45,150 1,424,934 The Coca-Cola Co. 35,372 1,536,560 The Pepsi Bottling Group, Inc. 52,712 1,511,253 UST, Inc. 27,129 1,242,508 Wm. Wrigley Jr. Co. 22,382 1,547,268 -------------- TOTAL BEVERAGES, FOOD AND TOBACCO 28,608,984 -------------- BIOSCIENCES 0.8% Amgen, Inc.* 24,916 1,450,360 Biogen Idec, Inc.* 38,329 1,389,043 Chiron Corp.* 40,984 1,399,604 Gilead Sciences, Inc.* 41,427 1,536,942 -------------- TOTAL BIOSCIENCES 5,775,949 -------------- BUILDING AND BUILDING PRODUCTS 1.4% Ecolab, Inc. 45,287 $ 1,481,338 Georgia-Pacific Group 39,871 1,366,379 Louisiana-Pacific Corp. 54,513 1,341,020 Masco Corp. 43,656 1,374,727 The Home Depot, Inc. 37,716 1,334,015 The Sherwin-Williams Co. 32,812 1,462,431 Vulcan Materials Co. 26,150 1,386,996 -------------- TOTAL BUILDING AND BUILDING PRODUCTS 9,746,906 -------------- BUSINESS EQUIPMENT AND SERVICES 0.8% Convergys Corp.* 98,883 1,281,524 Lexmark International, Inc.* 18,490 1,284,131 Pitney Bowes, Inc. 32,779 1,465,876 Xerox Corp.* 99,553 1,319,077 -------------- TOTAL BUSINESS EQUIPMENT AND SERVICES 5,350,608 -------------- CHEMICALS 2.1% Air Products and Chemicals, Inc. 23,176 1,361,126 Ashland, Inc. 21,827 1,467,648 duPont (E.I.) de Nemours & Co. 28,124 1,324,922 Eastman Chemical Co. 24,053 1,298,862 Great Lakes Chemical Corp. 44,436 1,379,293 Hercules, Inc.* 103,931 1,375,007 PPG Industries, Inc. 20,446 1,381,127 Praxair, Inc. 30,614 1,433,654 Rohm and Haas Co. 30,295 1,322,680 Sigma-Aldrich Corp. 23,457 1,370,593 The Dow Chemical Co. 27,937 1,283,146 -------------- TOTAL CHEMICALS 14,998,058 -------------- COMMUNICATIONS, MEDIA AND ENTERTAINMENT 1.8% Clear Channel Communications, Inc. 43,398 1,386,132 Comcast Corp., Class A* 43,247 1,388,661 Gannett Co., Inc. 18,434 1,419,418
See Notes to Financial Statements. 8
MARKET SHARES VALUE - ------------------------------------------------------------------------------------------------------------- COMMON STOCKS (CONTINUED) Meredith Corp. 31,136 $ 1,463,392 News Corp., Class A 81,471 1,244,877 The McGraw-Hill Cos., Inc. 16,534 1,439,781 Time Warner, Inc.* 78,418 1,318,207 Univision Communications, Inc.* 52,375 1,376,939 Viacom, Inc., Class B 39,970 1,383,761 -------------- TOTAL COMMUNICATIONS, MEDIA AND ENTERTAINMENT 12,421,168 -------------- COMPUTER SERVICES 2.0% Affiliated Computer Services, Inc., Class A* 29,183 1,391,154 Computer Sciences Corp.* 32,615 1,418,100 Compuware Corp.* 207,125 1,232,394 eBay, Inc.* 41,888 1,329,106 Electronic Data Systems Corp. 71,292 1,379,500 Intuit, Inc.* 33,764 1,360,689 Network Appliance, Inc.* 52,375 1,394,746 SunGard Data Systems, Inc.* 58,775 1,963,085 Unisys Corp.* 214,391 1,391,398 Yahoo!, Inc.* 47,137 1,626,698 -------------- TOTAL COMPUTER SERVICES 14,486,870 -------------- COMPUTERS - MICRO 1.1% Apple Computer, Inc.* 34,138 1,231,016 Dell, Inc.* 38,088 1,326,605 Gateway, Inc.* 354,212 1,207,863 Hewlett-Packard Co. 72,956 1,493,409 International Business Machines Corp. (IBM) 16,425 1,254,542 Sun Microsystems, Inc.* 345,858 1,255,465 -------------- TOTAL COMPUTERS - MICRO 7,768,900 -------------- COMPUTERS - SOFTWARE AND PERIPHERALS 3.4% Adobe Systems, Inc. 21,548 $ 1,281,460 Autodesk, Inc.* 49,406 1,572,592 BMC Software, Inc.* 94,428 1,529,734 Cisco Systems, Inc.* 82,385 1,423,613 Citrix Systems, Inc.* 63,153 1,420,943 Computer Associates International, Inc. 52,957 1,424,543 Electronic Arts, Inc.* 21,975 1,173,245 EMC Corp.* 117,974 1,547,819 Mercury Interactive Corp.* 32,310 1,335,372 Microsoft Corp. 60,324 1,526,197 NCR Corp.* 37,362 1,232,946 NVIDIA Corp.* 60,671 1,331,122 Parametric Technology Corp.* 279,322 1,485,993 Siebel Systems, Inc.* 164,584 1,481,256 Symantec Corp.* 71,084 1,334,958 VERITAS Software Corp.* 65,204 1,342,550 Xilinx, Inc. 50,221 1,352,954 -------------- TOTAL COMPUTERS - SOFTWARE AND PERIPHERALS 23,797,297 -------------- CONGLOMERATES 0.4% General Electric Co. 40,869 1,479,458 Textron, Inc. 19,444 1,465,105 -------------- TOTAL CONGLOMERATES 2,944,563 -------------- CONSUMER GOODS AND SERVICES 1.5% Avery Dennison Corp. 23,559 1,233,314 Brunswick Corp. 31,569 1,325,898 Cendant Corp. 69,861 1,390,933 Eastman Kodak Co. 45,302 1,132,550 Fortune Brands, Inc. 17,726 1,499,264 Hasbro, Inc. 71,465 1,352,118 Mattel, Inc. 72,417 1,307,127 Sara Lee Corp. 68,847 1,472,637 -------------- TOTAL CONSUMER GOODS AND SERVICES 10,713,841 --------------
See Notes to Financial Statements. 9
MARKET SHARES VALUE - ------------------------------------------------------------------------------------------------------------- COMMON STOCKS (CONTINUED) CONTAINERS AND PACKAGING 0.8% Ball Corp. 32,143 $ 1,269,649 Bemis Co., Inc. 47,196 1,300,722 Pactiv Corp.* 63,812 1,368,129 Sealed Air Corp.* 28,385 1,374,969 -------------- TOTAL CONTAINERS AND PACKAGING 5,313,469 -------------- DATA PROCESSING SYSTEMS 0.8% Automatic Data Processing, Inc. 32,748 1,422,573 First Data Corp. 36,073 1,371,856 Fiserv, Inc.* 39,507 1,671,147 Paychex, Inc. 47,062 1,440,097 -------------- TOTAL DATA PROCESSING SYSTEMS 5,905,673 -------------- EDUCATION 0.2% Apollo Group, Inc., Class A* 19,659 1,417,807 -------------- TOTAL EDUCATION 1,417,807 -------------- ELECTRONIC EQUIPMENT AND COMPONENTS 5.4% Advanced Micro Devices, Inc.* 91,195 1,297,705 Agilent Technologies, Inc.* 65,614 1,361,491 Altera Corp.* 75,983 1,575,127 American Power Conversion Corp. 60,825 1,475,614 Analog Devices, Inc. 40,929 1,396,088 Applied Materials, Inc. 91,710 1,363,728 Applied Micro Circuits Corp.* 454,007 1,212,199 Cooper Industries Ltd., Class A 20,651 1,314,643 Emerson Electric Co. 22,214 1,392,151 Intel Corp. 62,667 1,473,927 International Game Technology 54,173 1,456,712 Jabil Circuit, Inc.* 53,169 1,467,464 KLA-Tencor Corp. 32,529 1,269,282 Linear Technology Corp. 38,030 1,359,192 LSI Logic Corp.* 243,189 $ 1,303,493 Maxim Integrated Products, Inc. 35,093 1,312,478 Micron Technology, Inc.* 142,512 1,383,792 Molex, Inc. 56,705 1,440,874 National Semiconductor Corp. 71,919 1,372,215 Novellus Systems, Inc.* 54,534 1,277,732 PMC - Sierra, Inc.* 162,577 1,310,371 QLogic Corp.* 36,976 1,229,082 Rockwell Automation, Inc. 24,624 1,138,368 Sanmina-SCI Corp.* 268,088 1,075,033 Solectron Corp.* 326,603 1,077,790 Symbol Technologies, Inc. 97,960 1,309,725 Tektronix, Inc. 57,465 1,244,692 Teradyne, Inc.* 101,765 1,121,450 Texas Instruments, Inc. 57,644 1,438,794 -------------- TOTAL ELECTRONIC EQUIPMENT AND COMPONENTS 38,451,212 -------------- FINANCIAL SERVICES 6.0% Ambac Financial Group, Inc. 19,107 1,277,303 American Express Co. 27,988 1,474,968 Capital One Financial Corp. 19,135 1,356,480 CIT Group, Inc. 38,009 1,531,003 Citigroup, Inc. 31,300 1,469,848 Countrywide Financial Corp. 44,941 1,626,415 E*Trade Financial Corp.* 118,738 1,319,179 Equifax, Inc. 47,907 1,612,071 Fannie Mae 26,656 1,438,091 Federated Investors, Inc., Class B 50,688 1,442,074 Franklin Resources, Inc. 20,400 1,401,072 Freddie Mac 22,735 1,398,657 H&R Block, Inc. 29,245 1,456,693 Janus Capital Group, Inc. 103,931 1,350,064 Lehman Brothers Holdings, Inc. 15,242 1,397,996
See Notes to Financial Statements. 10
MARKET SHARES VALUE - ------------------------------------------------------------------------------------------------------------- COMMON STOCKS (CONTINUED) Marsh & McLennan Cos., Inc. 48,882 $ 1,370,162 MBIA, Inc. 25,506 1,336,004 MBNA Corp. 59,372 1,172,597 Merrill Lynch & Co., Inc. 24,624 1,327,972 MGIC Investment Corp. 24,082 1,420,838 Moody's Corp. 17,523 1,439,339 Morgan Stanley 25,381 1,335,548 PNC Financial Services Group 28,039 1,492,516 Providian Financial Corp.* 81,968 1,366,407 SLM Corp. 29,207 1,391,421 Synovus Financial Corp. 53,210 1,491,476 T. Rowe Price Group, Inc. 23,670 1,305,874 The Bear Stearns Cos., Inc. 14,371 1,360,359 The Charles Schwab Corp. 140,196 1,451,029 The Goldman Sachs Group, Inc. 13,333 1,423,831 -------------- TOTAL FINANCIAL SERVICES 42,237,287 -------------- FOREST AND PAPER PRODUCTS 0.7% International Paper Co. 37,670 1,291,704 MeadWestvaco Corp. 44,898 1,322,246 Temple-Inland, Inc. 35,529 1,199,104 Weyerhaeuser Co. 21,451 1,471,753 -------------- TOTAL FOREST AND PAPER PRODUCTS 5,284,807 -------------- HEALTH AND MEDICAL FACILITIES 0.2% Quest Diagnostics, Inc. 14,648 1,549,758 -------------- TOTAL HEALTH AND MEDICAL FACILITIES 1,549,758 -------------- HEALTH CARE PRODUCTS AND SERVICES 6.2% Abbott Laboratories 32,978 1,621,198 Allergan, Inc. 20,449 1,439,405 Applera Corp. - Applied Biosystems Group 71,465 1,515,058 Bausch & Lomb, Inc. 19,614 $ 1,471,050 Baxter International, Inc. 43,268 1,605,243 Becton, Dickinson & Co. 24,793 1,450,886 Biomet, Inc. 36,540 1,413,733 Boston Scientific Corp.* 49,096 1,452,260 C. R. Bard, Inc. 21,620 1,538,695 Cardinal Health, Inc. 26,131 1,452,100 Fisher Scientific International, Inc.* 24,732 1,468,586 Genzyme Corp.* 25,372 1,487,053 Guidant Corp. 19,692 1,458,783 HCA, Inc. 29,873 1,668,108 Health Management Associates, Inc., Class A 61,125 1,511,621 Humana, Inc.* 45,928 1,591,405 IMS Health, Inc. 60,099 1,441,174 Johnson & Johnson 21,806 1,496,546 Laboratory Corp. of America Holdings* 32,303 1,598,999 Manor Care, Inc. 41,635 1,388,527 McKesson Corp. 39,570 1,464,090 Medtronic, Inc. 27,483 1,448,354 St. Jude Medical, Inc.* 39,826 1,554,409 Stryker Corp. 30,870 1,498,739 Tenet Healthcare Corp.* 138,474 1,657,534 UnitedHealth Group, Inc. 16,073 1,519,059 WellPoint, Inc.* 12,088 1,544,242 Wyeth 37,599 1,689,699 Zimmer Holdings, Inc.* 18,002 1,465,723 -------------- TOTAL HEALTH CARE PRODUCTS AND SERVICES 43,912,279 -------------- HOMEBUILDERS 0.6% Centex Corp. 24,714 1,426,492 KB HOME 25,604 1,459,429 Pulte Homes, Inc. 20,341 1,453,364 -------------- TOTAL HOMEBUILDERS 4,339,285 --------------
See Notes to Financial Statements. 11
MARKET SHARES VALUE - ------------------------------------------------------------------------------------------------------------- COMMON STOCKS (CONTINUED) HOTELS AND GAMING 0.8% Harrah's Entertainment, Inc. 22,269 $ 1,461,291 Hilton Hotels Corp. 65,057 1,420,194 Marriott International, Inc., Class A 22,478 1,410,495 Starwood Hotels & Resorts Worldwide, Inc. 24,714 1,342,959 -------------- TOTAL HOTELS AND GAMING 5,634,939 -------------- HOUSEHOLD AND PERSONAL CARE PRODUCTS 2.2% Alberto-Culver Co., Class B 31,129 1,385,241 Avon Products, Inc. 36,289 1,454,463 Colgate-Palmolive Co. 28,124 1,400,294 International Flavors & Fragrances, Inc. 36,651 1,389,073 Kimberly-Clark Corp. 22,597 1,411,183 Leggett & Platt, Inc. 50,374 1,358,083 Maytag Corp. 108,866 1,054,912 The Clorox Co. 23,766 1,504,387 The Gillette Co. 28,781 1,486,251 The Procter & Gamble Co. 27,461 1,487,012 Whirlpool Corp. 22,961 1,424,960 -------------- TOTAL HOUSEHOLD AND PERSONAL CARE PRODUCTS 15,355,859 -------------- HUMAN RESOURCES 0.2% Robert Half International, Inc. 53,073 1,317,272 -------------- TOTAL HUMAN RESOURCES 1,317,272 -------------- INSURANCE 4.6% ACE Ltd. 34,063 1,463,346 Aetna, Inc. 19,842 1,455,808 AFLAC, Inc. 38,456 1,563,237 American International Group, Inc. 24,536 1,247,656 Aon Corp. 64,316 1,340,989 CIGNA Corp. 17,029 1,566,328 Cincinnati Financial Corp. 35,075 $ 1,411,418 Jefferson-Pilot Corp. 30,587 1,535,773 Lincoln National Corp. 31,612 1,421,592 Loews Corp. 20,705 1,467,570 MetLife, Inc. 37,173 1,446,030 Principal Financial Group, Inc. 37,640 1,470,971 Prudential Financial, Inc. 24,723 1,412,919 SAFECO Corp. 30,296 1,595,691 The Allstate Corp. 27,659 1,553,329 The Chubb Corp. 18,807 1,538,036 The Hartford Financial Services Group, Inc. 20,890 1,511,809 The Progressive Corp. 16,257 1,483,776 The St. Paul Travelers Cos., Inc. 39,678 1,420,472 Torchmark Corp. 28,303 1,512,229 UnumProvident Corp. 82,663 1,382,125 XL Capital Ltd., Class A 20,125 1,414,788 -------------- TOTAL INSURANCE 32,215,892 -------------- MACHINERY AND ENGINEERING 1.1% Caterpillar, Inc. 15,214 1,339,593 Cummins, Inc. 20,016 1,361,087 Deere & Co. 21,451 1,341,546 Eaton Corp. 21,563 1,265,748 Fluor Corp. 25,409 1,310,088 Ingersoll-Rand Co., Class A 17,418 1,338,922 -------------- TOTAL MACHINERY AND ENGINEERING 7,956,984 -------------- MANUFACTURING 2.5% 3M Co. 17,022 1,301,672 American Standard Cos., Inc. 31,430 1,405,235 Cintas Corp. 35,291 1,361,880 Danaher Corp. 27,003 1,367,162 Dover Corp. 37,594 1,366,918 Honeywell International, Inc. 38,166 1,364,816 Illinois Tool Works, Inc. 15,876 1,330,726 ITT Industries, Inc. 16,015 1,448,717
See Notes to Financial Statements. 12
MARKET SHARES VALUE - ------------------------------------------------------------------------------------------------------------- COMMON STOCKS (CONTINUED) Newell Rubbermaid, Inc. 69,997 $ 1,521,036 Pall Corp. 54,311 1,457,164 Parker-Hannifin Corp. 21,528 1,290,388 Tyco International Ltd. 42,320 1,325,039 Waters Corp.* 31,352 1,242,480 -------------- TOTAL MANUFACTURING 17,783,233 -------------- MINING 0.2% Newmont Mining Corp. 32,763 1,244,011 -------------- TOTAL MINING 1,244,011 -------------- NETWORKING PRODUCTS 0.7% CIENA Corp.* 792,671 1,823,143 Novell, Inc.* 269,072 1,590,216 Oracle Corp.* 116,941 1,351,838 -------------- TOTAL NETWORKING PRODUCTS 4,765,197 -------------- OIL AND GAS 6.2% Amerada Hess Corp. 15,357 1,438,183 Anadarko Petroleum Corp. 18,966 1,385,277 Apache Corp. 23,229 1,307,560 Baker Hughes, Inc. 33,571 1,481,153 BJ Services Co. 29,325 1,429,594 Burlington Resources, Inc. 29,022 1,410,759 ChevronTexaco Corp. 24,287 1,262,924 ConocoPhillips 13,299 1,394,400 Devon Energy Corp. 30,410 1,373,620 Dynegy, Inc., Class A* 357,668 1,198,188 El Paso Corp. 131,403 1,312,716 Engelhard Corp. 48,477 1,484,851 EOG Resources, Inc. 30,417 1,446,328 Exxon Mobil Corp. 23,405 1,334,787 Halliburton Co. 33,387 1,388,565 Kerr-McGee Corp. 17,816 1,382,522 Marathon Oil Corp. 31,243 1,454,987 Nabors Industries, Ltd.* 25,326 1,364,312 National-Oilwell Varco, Inc.* 29,732 1,181,550 NICOR, Inc. 39,211 1,449,631 Noble Corp. 25,951 1,320,906 Occidental Petroleum Corp. 19,813 $ 1,367,097 Peoples Energy Corp. 33,882 1,341,727 Rowan Cos., Inc.* 49,096 1,302,517 Schlumberger Ltd. 20,425 1,397,274 Sempra Energy 36,153 1,459,858 Sunoco, Inc. 14,282 1,417,631 The Williams Cos., Inc. 77,671 1,321,960 Transocean, Inc.* 29,680 1,376,262 Unocal Corp. 23,317 1,271,942 Valero Energy Corp. 21,099 1,445,914 XTO Energy, Inc. 43,255 1,305,003 -------------- TOTAL OIL AND GAS 43,809,998 -------------- PHARMACEUTICALS 3.2% AmerisourceBergen Corp. 24,095 1,476,542 Bristol-Myers Squibb Co. 60,027 1,560,702 Caremark Rx, Inc.* 38,266 1,532,553 Eli Lilly & Co. 27,921 1,632,541 Express Scripts, Inc., Class A* 17,764 1,592,365 Forest Laboratories, Inc.* 39,474 1,408,432 Hospira, Inc.* 47,212 1,583,963 King Pharmaceuticals, Inc.* 163,299 1,306,392 Medco Health Solutions, Inc,* 31,387 1,599,795 MedImmune, Inc.* 61,927 1,571,088 Merck & Co., Inc. 45,767 1,551,501 Mylan Laboratories, Inc. 82,017 1,353,281 Pfizer, Inc. 56,774 1,542,550 Schering-Plough Corp. 82,385 1,719,374 Watson Pharmaceuticals, Inc.* 46,320 1,389,600 -------------- TOTAL PHARMACEUTICALS 22,820,679 -------------- PUBLISHING 1.0% Dow Jones & Co., Inc. 39,106 1,307,705 Knight-Ridder, Inc. 21,783 1,409,360
See Notes to Financial Statements. 13
MARKET SHARES VALUE - ------------------------------------------------------------------------------------------------------------- COMMON STOCKS (CONTINUED) R. R. Donnelley & Sons Co. 48,460 $ 1,594,819 The New York Times Co., Class A 40,509 1,351,380 Tribune Co. 37,227 1,436,962 -------------- TOTAL PUBLISHING 7,100,226 -------------- REAL ESTATE INVESTMENT TRUSTS 1.5% Apartment Investment & Management Co., Class A 39,485 1,505,168 Archstone-Smith Trust 43,105 1,550,487 Equity Office Properties Trust 47,813 1,504,675 Equity Residential 45,400 1,559,489 Plum Creek Timber Co., Inc. 40,420 1,396,107 ProLogis 38,350 1,518,277 Simon Property Group, Inc. 23,594 1,558,856 -------------- TOTAL REAL ESTATE INVESTMENT TRUSTS 10,593,059 -------------- RESORTS AND ENTERTAINMENT 0.2% The Walt Disney Co. 52,204 1,378,186 -------------- TOTAL RESORTS AND ENTERTAINMENT 1,378,186 -------------- RETAIL - APPAREL AND SHOES 1.7% Coach, Inc.* 51,793 1,388,052 Jones Apparel Group, Inc. 45,843 1,395,919 Limited Brands 60,199 1,305,716 Liz Claiborne, Inc. 37,277 1,320,724 NIKE, Inc., Class B 17,170 1,318,828 Nordstrom, Inc. 27,719 1,408,957 Reebok International Ltd. 32,413 1,316,292 The GAP, Inc. 68,237 1,456,860 V.F. Corp. 25,006 1,415,090 -------------- TOTAL RETAIL - APPAREL AND SHOES 12,326,438 -------------- RETAIL - DEPARTMENT STORES 1.0% Dillard's, Inc., Class A 55,931 $ 1,301,514 Federated Department Stores, Inc. 23,267 1,337,853 J. C. Penney Co., Inc. (Holding Co.) 32,090 1,521,386 Kohl's Corp.* 28,738 1,367,929 The May Department Stores Co. 39,632 1,390,291 -------------- TOTAL RETAIL - DEPARTMENT STORES 6,918,973 -------------- RETAIL - DISCOUNT STORES 1.5% Big Lots, Inc.* 122,202 1,244,016 Costco Wholesale Corp. 33,560 1,361,865 Dollar General Corp. 67,670 1,377,085 Family Dollar Stores, Inc. 48,801 1,316,651 Sears Holding Corp.* 9,709 1,313,045 Target Corp. 28,889 1,340,450 The TJX Cos., Inc. 59,805 1,354,583 Wal-Mart Stores, Inc. 28,502 1,343,584 -------------- TOTAL RETAIL - DISCOUNT STORES 10,651,279 -------------- RETAIL - FOOD STORES 0.7% Albertson's, Inc. 75,514 1,494,422 Safeway, Inc.* 80,975 1,723,958 The Kroger Co.* 93,881 1,480,503 -------------- TOTAL RETAIL - FOOD STORES 4,698,883 -------------- RETAIL - RESTAURANTS 0.8% Darden Restaurants, Inc. 54,231 1,626,930 Starbucks Corp.* 27,921 1,382,648 Wendy's International, Inc. 37,362 1,603,951 Yum! Brands, Inc. 29,066 1,364,939 -------------- TOTAL RETAIL - RESTAURANTS 5,978,468 -------------- RETAIL - SPECIALTY STORES 2.4% Bed Bath & Beyond, Inc.* 40,521 1,507,786 Best Buy Co., Inc. 28,507 1,435,042
See Notes to Financial Statements. 14
MARKET SHARES VALUE - ------------------------------------------------------------------------------------------------------------- COMMON STOCKS (CONTINUED) Circuit City Stores-Circuit City Group 98,087 $ 1,549,776 CVS Corp. 27,747 1,431,190 Lowe's Cos., Inc. 25,722 1,340,373 Office Depot, Inc.* 64,178 1,256,605 OfficeMax, Inc. 43,132 1,400,927 RadioShack Corp. 59,611 1,488,487 Staples, Inc. 72,095 1,374,852 Tiffany & Co. 44,221 1,333,263 Toys "R" Us, Inc.* 56,141 1,423,174 Walgreen Co. 32,443 1,396,996 -------------- TOTAL RETAIL - SPECIALTY STORES 16,938,471 -------------- RETAIL AND WHOLESALE DISTRIBUTION 0.6% Genuine Parts Co. 34,595 1,484,126 SYSCO Corp. 44,749 1,548,315 W.W. Grainger, Inc. 22,790 1,260,059 -------------- TOTAL RETAIL AND WHOLESALE DISTRIBUTION 4,292,500 -------------- SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT 0.2% Freescale Semiconductor, Inc.* 83,224 1,569,605 -------------- TOTAL SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT 1,569,605 -------------- TELECOMMUNICATIONS 4.5% ADC Telecommunications, Inc.* 698,307 1,585,157 ALLTEL Corp. 26,303 1,498,219 Andrew Corp.* 119,124 1,461,651 AT&T Corp. 77,796 1,488,237 Avaya, Inc.* 115,014 998,322 BellSouth Corp. 58,009 1,536,658 Broadcom Corp., Class A* 49,594 1,483,357 CenturyTel, Inc. 43,929 1,348,181 Citizens Communications Co. 116,477 1,485,082 Comverse Technology, Inc.* 59,468 1,355,276 Corning, Inc.* 132,111 1,816,527 JDS Uniphase Corp.* 837,965 $ 1,240,188 Lucent Technologies, Inc.* 510,956 1,241,623 Motorola, Inc. 97,700 1,498,718 Nextel Communications, Inc.* 51,115 1,430,709 QUALCOMM, Inc. 39,970 1,394,553 Qwest Communications International, Inc.* 380,893 1,302,654 SBC Communications, Inc. 62,803 1,494,711 Scientific-Atlanta, Inc. 51,893 1,586,888 Sprint Corp. (FON Group) 64,316 1,431,674 Tellabs, Inc.* 201,987 1,567,419 Verizon Communications, Inc. 41,722 1,493,648 -------------- TOTAL TELECOMMUNICATIONS 31,739,452 -------------- TIRE AND RUBBER 0.4% Cooper Tire & Rubber Co. 78,629 1,372,076 The Goodyear Tire & Rubber Co.* 107,431 1,275,206 -------------- TOTAL TIRE AND RUBBER 2,647,282 -------------- TOBACCO 0.2% Reynolds American, Inc. 18,434 1,437,299 -------------- TOTAL TOBACCO 1,437,299 -------------- TOOLS AND INSTRUMENTS 1.2% Millipore Corp.* 33,427 1,611,849 PerkinElmer, Inc. 68,113 1,260,091 Snap-on, Inc. 46,218 1,533,051 The Black & Decker Corp. 18,582 1,554,013 The Stanley Works 32,228 1,386,771 Thermo Electron Corp.* 55,633 1,389,712 -------------- TOTAL TOOLS AND INSTRUMENTS 8,735,487 -------------- TRANSPORTATION 1.3% Burlington Northern Santa Fe Corp. 26,661 1,286,393 CSX Corp. 34,375 1,379,469
See Notes to Financial Statements. 15
MARKET SHARES VALUE - ------------------------------------------------------------------------------------------------------------- COMMON STOCKS (CONTINUED) FedEx Corp. 15,254 $ 1,295,827 Norfolk Southern Corp. 38,937 1,222,622 Ryder System, Inc. 34,552 1,276,005 Union Pacific Corp. 22,088 1,412,086 United Parcel Service, Inc., Class B 19,951 1,422,706 -------------- TOTAL TRANSPORTATION 9,295,108 -------------- TRAVEL SERVICES 0.4% Carnival Corp. 26,743 1,307,198 Sabre Holdings Corp. 67,642 1,323,077 -------------- TOTAL TRAVEL SERVICES 2,630,275 -------------- UTILITIES - GAS AND ELECTRIC 6.2% Allegheny Energy, Inc.* 70,672 1,727,225 Ameren Corp. 29,719 1,536,472 American Electric Power Co., Inc. 43,683 1,538,515 Calpine Corp.* 452,603 810,159 CenterPoint Energy, Inc. 119,513 1,415,034 Cinergy Corp. 36,937 1,462,705 CMS Energy Corp.* 111,094 1,435,334 Consolidated Edison, Inc. 35,040 1,516,531 Constellation Energy Group, Inc. 28,181 1,481,193 Dominion Resources, Inc. 19,346 1,458,688 DTE Energy Co. 32,272 1,482,898 Duke Energy Corp. 53,403 1,558,834 Edison International 42,841 1,555,128 Entergy Corp. 20,886 1,530,944 Exelon Corp. 32,090 1,588,455 FirstEnergy Corp. 35,466 1,543,480 FPL Group, Inc. 36,336 1,483,236 KeySpan Corp. 37,079 1,406,406 Kinder Morgan, Inc. 18,982 1,451,364 NiSource, Inc. 64,600 1,501,304 PG&E Corp. 41,862 1,453,449 Pinnacle West Capital Corp. 34,659 $ 1,452,212 PPL Corp. 27,549 1,494,809 Progress Energy, Inc. 34,740 1,458,733 Public Service Enterprise Group, Inc. 27,013 1,569,455 TECO Energy, Inc. 91,998 1,528,087 The AES Corp.* 84,328 1,355,994 The Southern Co. 45,698 1,505,749 TXU Corp. 18,337 1,573,131 Xcel Energy, Inc. 85,310 1,465,626 -------------- TOTAL UTILITIES - GAS AND ELECTRIC 44,341,150 -------------- WASTE MANAGEMENT 0.4% Allied Waste Industries, Inc.* 199,515 1,594,124 Waste Management, Inc. 50,393 1,435,697 -------------- TOTAL WASTE MANAGEMENT 3,029,821 -------------- TOTAL INVESTMENTS (Cost $711,428,768)--99.8% 706,475,658 Other Assets Less Liabilities--0.2% 1,521,474 -------------- NET ASSETS--100.0% $ 707,997,132 ==============
* Non-Income Producing Security See Notes to Financial Statements. 16 STATEMENT OF ASSETS AND LIABILITIES April 30, 2005 (Unaudited)
ASSETS Investments at Market Value, (Cost $711,428,768) $ 706,475,658 Cash 1,095,699 Receivables: Investments Sold 36,380,009 Dividends 727,979 --------------- TOTAL ASSETS 744,679,345 --------------- LIABILITIES Payables: Capital Stock Repurchased 36,459,019 Accrued Management Fees 223,194 --------------- TOTAL LIABILITIES 36,682,213 --------------- NET ASSETS $ 707,997,132 =============== NET ASSETS CONSIST OF Paid-in Capital $ 676,741,458 Undistributed Net Investment Income 770,534 Accumulated Net Realized Gain on Investments 35,438,250 Net Unrealized Depreciation on Investments (4,953,110) --------------- NET ASSETS $ 707,997,132 =============== Shares Outstanding (Unlimited Shares Authorized), No Par Value 4,801,000 =============== Net Asset Value, Offering Price and Repurchase Price Per Share $ 147.47 ===============
See Notes to Financial Statements. 17 STATEMENT OF OPERATIONS
SIX MONTHS ENDED APRIL 30, 2005 (UNAUDITED) --------------- INVESTMENT INCOME Dividends $ 5,738,381 Interest 41 --------------- Total Income 5,738,422 --------------- EXPENSES Management Fee 1,436,503 --------------- Net Investment Income 4,301,919 --------------- REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS Net Realized Gain (Loss) From: Investments (13,844,583) In-kind Redemptions 50,008,519 --------------- Net Realized Gain 36,163,936 Net Change in Unrealized Appreciation/Depreciation on Investments (25,889,642) --------------- Net Realized and Unrealized Gain on Investments 10,274,294 --------------- NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 14,576,213 ===============
See Notes to Financial Statements. 18 STATEMENT OF CHANGES IN NET ASSETS
SIX MONTHS ENDED APRIL 30, 2005 YEAR ENDED (UNAUDITED) OCTOBER 31, 2004 --------------- ---------------- OPERATIONS Net Investment Income $ 4,301,919 $ 3,357,469 Net Realized Gain 36,163,936 26,567,768 Net Change in Unrealized Appreciation/ Depreciation on Investments (25,889,642) 2,736,534 --------------- ---------------- Net Increase in Net Assets Resulting From Operations 14,576,213 32,661,771 --------------- ---------------- DISTRIBUTIONS TO SHAREHOLDERS FROM Net Investment Income (3,845,522) (3,196,596) --------------- ---------------- SHAREHOLDER TRANSACTIONS Proceeds From Shares Sold 354,684,526 423,777,066 Value of Shares Repurchased (143,054,375) (144,741,249) --------------- ---------------- Net Increase in Net Assets Resulting From Share Transactions 211,630,151 279,035,817 --------------- ---------------- Increase in Net Assets 222,360,842 308,500,992 NET ASSETS--BEGINNING OF PERIOD 485,636,290 177,135,298 --------------- ---------------- NET ASSETS--END OF PERIOD $ 707,997,132 $ 485,636,290 =============== ================ CHANGES IN SHARES OUTSTANDING: Shares Sold 2,350,000 3,050,000 Shares Repurchased (950,000) (1,050,000) Shares Outstanding, Beginning of Period 3,401,000 1,401,000 --------------- ---------------- Shares Outstanding, End of Period 4,801,000 3,401,000 =============== ================
See Notes to Financial Statements. 19 FINANCIAL HIGHLIGHTS
SIX MONTHS FOR THE PERIOD ENDED APRIL 24, 2003* APRIL 30, 2005 YEAR ENDED THROUGH (UNAUDITED) OCTOBER 31, 2004 OCTOBER 31, 2003 ---------------- ---------------- ---------------- PER SHARE OPERATING PERFORMANCE: NET ASSET VALUE AT BEGINNING OF PERIOD $ 142.79 $ 126.43 $ 101.03 ---------------- ---------------- ---------------- Net Investment Income** 0.93 1.48 0.70 Net Realized and Unrealized Gain on Investments 4.54 16.30 25.32 ---------------- ---------------- ---------------- TOTAL FROM INVESTMENT OPERATIONS 5.47 17.78 26.02 ---------------- ---------------- ---------------- DISTRIBUTIONS TO SHAREHOLDERS FROM: Net Investment Income (0.79) (1.42) (0.62) ---------------- ---------------- ---------------- NET ASSET VALUE AT END OF PERIOD $ 147.47 $ 142.79 $ 126.43 ================ ================ ================ TOTAL RETURN*** 3.81% 14.11% 25.77% RATIOS/SUPPLEMENTAL DATA: Net Assets at End of Period (000's omitted) $ 707,997 $ 485,636 $ 177,135 RATIO TO AVERAGE NET ASSETS OF: Expenses 0.40%**** 0.40% 0.40%**** Net Investment Income 1.19%**** 1.09% 1.13%**** Portfolio Turnover Rate+ 25% 55% 42%
* COMMENCEMENT OF INVESTMENT OPERATIONS. ** BASED ON AVERAGE SHARES OUTSTANDING. *** TOTAL INVESTMENT RETURN IS CALCULATED ASSUMING AN INITIAL INVESTMENT MADE AT THE NET ASSET VALUE AT THE BEGINNING OF THE PERIOD, REINVESTMENT OF ALL DIVIDENDS AND DISTRIBUTIONS AT NET ASSET VALUE DURING THE PERIOD, AND REDEMPTION ON THE LAST DAY OF THE PERIOD. TRANSACTION FEES ARE NOT REFLECTED IN THE CALCULATION OF TOTAL INVESTMENT RETURN. TOTAL INVESTMENT RETURN CALCULATED FOR A PERIOD OF LESS THAN ONE YEAR IS NOT ANNUALIZED. **** ANNUALIZED. + PORTFOLIO TURNOVER IS NOT ANNUALIZED AND INCLUDES SECURITIES RECEIVED OR DELIVERED FROM PROCESSING CREATIONS OR REDEMPTIONS. See Notes to Financial Statements. 20 NOTES TO FINANCIAL STATEMENTS April 30, 2005 (Unaudited) 1. ORGANIZATION Rydex ETF Trust (the "Trust") is an open-end, diversified, management investment company registered under the Investment Company Act of 1940, as amended (the "1940 Act"). The Trust was organized as a Delaware statutory trust on November 22, 2002 and commenced operations on April 24, 2003. The Trust currently consists of one series, Rydex S&P Equal Weight ETF (the "Fund"). The Fund's investment objective is to provide investment results that correspond generally to the price and yield performance, before fees and expenses, of the S&P Equal Weight Index (the "Underlying Index"), an index representing publicly traded equity securities. The Fund seeks to achieve its objective by investing in common stocks that comprise the Underlying Index. The Fund uses a "replication" strategy to track the Underlying Index. "Replication" refers to investing in substantially all of the securities in the Underlying Index in approximately the same proportions as in the Underlying Index. The Fund operates as an index fund and is not actively managed. Adverse performance of a security in the Fund's portfolio will ordinarily not result in the elimination of the security from the Fund's portfolio. The Fund issues and redeems shares on a continuous basis, at net asset value, only in aggregations of 50,000 shares called a "Creation Unit". Creation Units are issued and redeemed principally in-kind for securities included in the Underlying Index. 2. SIGNIFICANT ACCOUNTING POLICIES The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities and disclosures at the date of the financial statements and accompanying notes. Management believes that the estimates utilized in preparing the Fund's financial statements are reasonable and prudent; however, actual results could differ from these estimates. Under the Fund's organizational documents, its officers and trustees are indemnified against certain liabilities that may arise out of the performance of their duties to the Fund. Additionally, in the normal course of business, the Fund enters into contracts with service providers that contain general indemnification clauses. The Fund's maximum exposure under these arrangements is unknown, as this would involve future claims that may be made against the Fund that have not yet occurred. However, based on experience, the Fund expects the risk of loss to be remote. A. SECURITY VALUATION Securities listed on a domestic securities exchange are valued based on the last sale price as of the close of regular trading hours on the New York Stock Exchange or, in the absence of recorded sales, at the average of readily available closing bid and asked prices on such 21 exchange. Securities for which the primary market is the National Association of Securities Dealers Automated Quotations National Market System ("NASDAQ") are valued at the NASDAQ Official Closing Price. Securities, for which market quotations are not readily available, including investments that are subject to limitations as to their sale, are valued at fair value as determined in good faith by the Board of Trustees. In determining fair value, consideration is given to market conditions, relative benchmarks and other financial data. B. SECURITY TRANSACTIONS AND INCOME RECOGNITION Security transactions are recorded on the trade date. Realized gains and losses from portfolio fund transactions are calculated on the identified cost basis. Dividend income is recorded on the ex-dividend date. Interest income is recorded on the accrual basis. C. FUTURES AND PURCHASED OPTIONS The Fund may buy and sell stock index futures contracts with respect to any stock index traded on a recognized stock exchange or board of trade. A stock index futures contract is a contract to buy or sell units of an index at a specified future date at a price agreed upon when the contract is made. The stock index futures contract specifies that no delivery of the actual stocks making up the index will take place. Instead, settlement in cash must occur upon the termination of the contract, with the settlement being the difference between the contract price and the actual level of the stock index at the expiration of the contract. The Fund may enter into futures and option contracts for the purpose of either hedging its exposure to the market fluctuations of the portfolio or an individual security position. As of April 30, 2005, the Fund had not entered into any futures or options transactions. There are several risks in connection with the use of futures contracts. Futures contracts involve, in varying degrees, risk of loss in excess of amounts reflected in the financial statements. Risks may be caused by an imperfect correlation between movements in the price of the instruments and the price of the underlying securities. In addition, there is the risk that a fund may not be able to enter into a closing transaction because of an illiquid secondary market. D. REPURCHASE AGREEMENTS The Fund may enter into repurchase agreements with financial institutions. The Fund follows certain procedures designed to minimize the risks inherent in such agreements. These procedures include effecting repurchase transactions only with large, well-capitalized and well-established financial institutions whose condition will be continually monitored by Rydex Global Advisors, which acts as the Fund's investment advisor (the "Advisor"). In addition, the value of the collateral underlying the repurchase agreement will always be at least equal to the repurchase price, including any accrued interest earned on the repurchase agreement. In the event of a default or bankruptcy by a selling financial institution, the Fund 22 will seek to liquidate such collateral. However, the exercising of the Fund's right to liquidate such collateral could involve certain costs or delays and, to the extent that proceeds from any sale upon a default of the obligation to repurchase were less than the repurchase price, the Fund could suffer a loss. It is the current policy of the Fund not to invest in repurchase agreements that do not mature within seven days if any such investment, together with any other illiquid assets held by the Fund, amounts to more than 15% of the Fund's net assets. The investments of the Fund in repurchase agreements, at times, may be substantial when, in the view of the Advisor, liquidity or other considerations so warrant. For the six months ended April 30, 2005, the Fund had not engaged in repurchase transactions. E. FEDERAL INCOME TAXES The Fund's policy is to comply with the requirements of the Internal Revenue Code applicable to regulated investment companies and distribute all of the taxable income to the shareholders within the allowable time limits. Therefore, no provision for Federal income taxes is required. Income and capital gain distributions are determined in accordance with Federal income tax regulations, which may differ from accounting principles generally accepted in the United States. These differences are primarily due to differing treatments for in-kind redemptions, income reclassifications from real estate investment trusts, futures and options, losses deferred due to wash sales and excise tax regulations. For the six months ended April 30, 2005, the Fund realized net capital gains resulting from in-kind redemptions and other transactions. Because gains from in-kind redemptions are not taxable to the Fund, and are not distributed to existing Fund shareholders, the gains are reclassified from accumulated net realized gains to paid-in-capital at the end of the Fund's tax year. These reclassifications have no effect on net assets or net asset value per share. The in-kind gains for the six months ended April 30, 2005 are disclosed in the Fund's Statement of Operations. F. DIVIDENDS AND DISTRIBUTIONS The Fund declares and pays dividends from net investment income and distributes from net realized capital gains at least annually. 3. ADVISORY, ADMINISTRATION AND OTHER TRANSACTIONS WITH AFFILIATES The Advisor determines the composition of the portfolio of securities that must be delivered in exchange for the issuance of Creation Units and periodically adjusts the composition of the portfolio of the Fund to conform to changes in the composition of the relevant index. For these services, the Advisor receives an advisory fee at the annual rate of 0.40% of the average daily net assets of the Fund. 23 Under an Administration agreement, The Bank of New York (the "Administrator") provides various administrative and accounting services for the maintenance and operations of the Fund. Under a Custodian Agreement with the Trust, the Administrator maintains in separate accounts cash, securities and other assets of the Trust and the Fund, keeps all necessary accounts and records, and provides other services. The Administrator is required, upon the order of the Trust, to deliver securities held by the Custodian and to make payments for securities purchased by the Trust for the Fund. Pursuant to a Transfer Agency and Service Agreement with the Trust, the Administrator acts as a transfer agent for the Trust's authorized and issued shares of beneficial interest, and as dividend disbursing agent of the Trust. The Advisor compensates the Administrator directly for the foregoing services. The Advisor pays all expenses of the Fund, including the cost of transfer agency, custody, fund administration, legal, audit and other services except interest, taxes, brokerage commissions, and other expenses connected with the execution of portfolio transactions, any future distribution fees or expenses and extraordinary expenses. The Fund has adopted a Distribution Plan (the "Plan") that allows the Fund to pay distribution fees to Rydex Distributors, Inc. (the "Distributor") and other firms that provide distribution services ("Service Providers"). If a Service Provider provides distribution services, the Fund will pay distribution fees to the Distributor at an annual rate not to exceed 0.25% of average daily net assets, pursuant to Rule 12b-1 of the 1940 Act. The Distributor will, in turn, pay the Service Provider out of its fees. No such fee is currently charged to the Fund. 4. CAPITAL At April 30, 2005, there were an unlimited number of no par value shares of beneficial interest authorized. There is a minimum transaction fee of $2,000 per transaction to those persons purchasing or redeeming Creation Units. An additional charge of up to three times the standard transaction fee may be imposed for purchases and redemptions effected outside the National Securities Clearing Corporation usual clearing process or for cash. Such transactions are generally permitted on an in-kind basis, with a balancing cash component to equate the transaction to the net asset value per unit of the Fund on the transaction date. 5. INVESTMENT TRANSACTIONS Purchases and sales of investment securities (excluding short-term investments, U.S government and government agency obligations) aggregated $383,324,462 and $172,023,485, respectively, for the six months ended April 30, 2005. There were no purchases or sales of U.S. government or government agency obligations for the six months ended April 30, 2005. At April 30, 2005, gross unrealized appreciation of investments was $40,534,228 and gross unrealized depreciation of investments was $45,487,338, resulting in net unrealized depreciation of $4,953,110 based on cost for U.S. Federal income tax purposes. 24 SUPPLEMENTAL INFORMATION (Unaudited) MEMBERS OF THE BOARD. Set forth below are the names, ages, position with the Trust, length of term of office, and the principal occupations for a minimum of the last five years of each of the persons currently serving as Trustees of the Trust. Unless otherwise noted, the business address of each Trustee is 9601 Blackwell Road, Suite 500, Rockville, Maryland 20850. TRUSTEES CARL G. VERBONCOEUR (52) Trustee of Rydex Series Funds, 2004 to present; Trustee of Rydex Variable Trust, 2004 to present; Trustee of Rydex Dynamic Funds, 2004 to present; Trustee of Rydex ETF Trust, 2004 to present; President, Chief Executive Officer of Rydex Variable Trust, 2003 to present; President and Chief Executive Officer of Rydex Series Funds, 2003 to present; Treasurer of Rydex Series Funds, 1997 to 2003; Vice President of Rydex Series Funds, 1997 to 2003; President and Chief Executive Officer of Rydex Variable Trust, 2003 to present; Treasurer of Rydex Variable Trust, 1998 to 2003; Vice President Rydex Variable Trust, 1998 to 2003; Treasurer of Rydex Dynamic Funds, 1999 to 2003; Vice President of Rydex Dynamic Funds, 1999 to 2003; President and Chief Executive Officer of Rydex ETF Trust, 2003 to present. Vice President of Rydex ETF Trust, 2002 to 2003. President and Chief Executive Officer of Rydex Fund Services, Inc., 2003 to present; Executive Vice President of Rydex Fund Services, Inc., 2000 to 2003; President and Chief Executive Officer of Rydex Distributors, Inc., 2003 to present; Executive Vice President of Rydex Distributors, Inc., 1997 to 2003; Executive Vice President of Rydex Capital Partners I, LLC., investment advisor, 2003 to present; Executive Vice President of Rydex Capital Partners II, LLC., investment advisor, 2003 to present; Senior Vice President, Crestar Bank, 1995 to 1997; Senior Vice President, Crestar Asset Management Company, a registered investment advisor, 1993 to 1995; Vice President of Perpetual Savings Bank, 1987 to 1993. COREY A. COLEHOUR (59) Trustee of Rydex Series Funds, 1993 to present; Trustee of Rydex Variable Trust, 1998 to present; Trustee of Rydex Dynamic Funds, 1999 to present; Trustee of Rydex ETF Trust, 2003 to present; Senior Vice President of Marketing of Schield Management Company, a registered investment advisor, 1985 to present. J. KENNETH DALTON (64) Trustee of Rydex Series Funds, 1995 to present; Trustee of Rydex Variable Trust, 1998 to present; Trustee of Rydex Dynamic Funds, 1999 to present; Trustee of Rydex ETF Trust, 2003 to present; Mortgage Banking Consultant and Investor, The Dalton Group, a real estate company, 1995 to present; President, CRAM Mortgage Group, Inc., 1966 to 1995. 25 JOHN O. DEMARET (65) Trustee of Rydex Series Funds, 1997 to present; Trustee of Rydex Variable Trust, 1998 to present; Trustee of Rydex Dynamic Funds, 1999 to present; Trustee of Rydex ETF Trust, 2003 to present; Trustee, Rydex Capital Partners SPhinX Fund, 2003 to present. Founder and Chief Executive Officer, Health Cost Controls America, Chicago, Illinois, 1987 to 1996; sole practitioner, Chicago, Illinois, 1984 to 1987; General Counsel for the Chicago Transit Authority, 1981 to 1984; Senior Partner, O'Halloran, LaVarre & Demaret, Northbrook, Illinois, 1978 to 1981. PATRICK T. McCARVILLE (62) Trustee of Rydex Series Funds, 1997 to present; Trustee of Rydex Variable Trust, 1998 to present; Trustee of Rydex Dynamic Funds, 1999 to present; Trustee of Rydex ETF Trust, 2003 to present; Founder and Chief Executive Officer, Par Industries, Inc., Northbrook, Illinois, 1977 to present; President and Chief Executive Officer, American Health Resources, Northbrook, Illinois, 1984 to 1986. ROGER SOMERS (60) Trustee of Rydex Series Funds, 1993 to present; Trustee of Rydex Variable Trust, 1998 to present; Trustee of Rydex Dynamic Funds, 1999 to present; Trustee of Rydex ETF Trust, 2003 to present; President, Arrow Limousine, 1963 to present. 26 The Fund's Statement of Additional Information contains additional information about the Trustees and Officers and is available, without charge, upon request, by calling (800) 207-3390. INVESTMENT ADVISOR Rydex Global Advisors ADMINISTRATOR The Bank of New York CUSTODIAN The Bank of New York TRANSFER AGENT The Bank of New York DISTRIBUTOR Rydex Distributors, Inc. INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM PricewaterhouseCoopers LLP 27 PROXY VOTING POLICIES AND PROCEDURES A description of the Fund's proxy voting policies and procedures is available, without charge and upon request, by calling (800) 820-0888. This information is also available on the Securities and Exchange Commission's ("Commission") website at www.sec.gov. Information regarding how the Fund voted proxies for portfolio securities, if applicable, during the most recent 12-month period ended June 30, is also available, without charge and upon request, by (i) calling (800) 820-0888; or (ii) accessing the Fund's Form N-PX on the SEC's website at www.sec.gov. QUARTERLY PORTFOLIOS The Fund files its complete schedule of portfolio holdings with the Commission for the first and third quarters of each fiscal year on Form N-Q. The Fund's Forms N-Q are available on the Commission's website at www.sec.gov. The Fund's Forms N-Q may also be reviewed and copied at the Commission's Public Reference Room in Washington, DC; information on the operation of the Public Reference Room may be obtained by calling (800) SEC-0330. This page intentionally left blank. [GRAPHIC] [RYDEX INVESTMENTS ESSENTIAL FOR MODERN MARKETS(TM) LOGO] 9601 Blackwell Road - Suite 500 - Rockville, MD 20850 www.rydexinvestments.com - 800.820.0888 ETF-SEMI-ANN 0405 ITEM 2. CODE OF ETHICS. Not required for a semi-annual period. ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT. Not required for a semi-annual period. ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES. Not required for a semi-annual period. ITEMS 5. AUDIT COMMITTEE OF LISTED REGISTRANTS. Not required for a semi-annual period. ITEM 6. SCHEDULE OF INVESTMENTS. The Schedule of Investments is included as a 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) Based on their evaluation on June 28, 2005, the President (principal executive officer) and the Treasurer (principal financial officer) of the Rydex S&P Equal Weight ETF (the "Fund") believe that there were no significant deficiencies in the design or operation of the internal controls of the Fund or Rydex Global Advisors ("RGA"), the investment adviser, and The Bank of New York ("BNY"), administrator of the Fund, or Rydex Distributors, Inc. ("RD"), which acts as distributor for the Fund, including disclosure controls and procedures (as defined in Rule 30a-2(c) under the Investment Company Act of 1940) that adversely affected the ability of the Fund, or RGA, or BNY, on behalf of the Fund, to record, process, summarize, and report the subject matter contained in this Report, and the President and Treasurer of the Fund have identified no material weaknesses in such internal controls on behalf of the Fund. There was no fraud, whether or not material, involving officers or employees of RGA, or BNY, or RD, or the Fund who have a significant role in the Fund's internal controls, including disclosure controls and procedures (as defined in Rule 30a-2(c) under the Investment Company Act of 1940) that has come to the attention of the Adviser or the officers of the Fund, including its President and Treasurer. b) There were no significant changes in the Fund and the RGA's internal controls, including disclosure controls and procedures (as defined in Rule 30a-2(c) under the Investment Company Act of 1940) that apply to the Fund or in other factors with respect to the Fund that could have significantly affected the Fund's or the RGA's internal controls during the period covered by this Form N-CSR, and no corrective actions with regard to significant deficiencies or material weaknesses were taken by the Fund or the RGA during such period. ITEM 12. EXHIBITS. (a) Certification of principal executive officer and principal financial officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. (b) Certification of principal executive officer and principal financial officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. 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 ETF Trust ------------------- By: /s/ Carl Verboncoeur ------------------------ Name: Carl Verboncoeur Title: President Date: June 28, 2005 Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed by the following persons on behalf of the registrant and in the capacities and on the dates indicated. By: /s/ Carl Verboncoeur ------------------------ Name: Carl Verboncoeur Title: President Date: June 28, 2005 By: /s/ Nick Bonos ------------------- Name: Nick Bonos Title: Treasurer Date: June 28, 200 EX-99.CERT 2 a2159081zex-99_cert.txt EX-99.CERT Exhibit 99.Cert EXHIBIT(a) CERTIFICATIONS PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002 I, Carl Verboncoeur, certify that: 1. I have reviewed this report on Form N-CSR of Rydex ETF Trust; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) for the registrant and have: (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; (b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; (c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and (d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal half-year (the registrant's second fiscal half-year in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer(s) and I have disclosed to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize, and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: June 28, 2005 ------------- /s/ Carl Verboncoeur -------------------- Carl Verboncoeur, President CERTIFICATIONS PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002 I, Nick Bonos, certify that: 1. I have reviewed this report on Form N-CSR of Rydex ETF Trust; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) for the registrant and have: (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; (c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and (d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal half-year (the registrant's second fiscal half-year in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer(s) and I have disclosed to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize, and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: June 28, 2005 ------------- /s/ Nick Bonos -------------- Nick Bonos, Treasurer EX-99.906.CERT 3 a2159081zex-99_906cert.txt EX-99.906.CERT Exhibit 99.906.Cert EXHIBIT (b) CERTIFICATIONS PURSUANT TO SECTION 906 THE SARBANES-OXLEY ACT OF 2002 Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of section 1350, chapter 63 of title 18, United States Code), each of the undersigned officers of Rydex ETF Trust (the Registrant), do hereby certify, to such officer's knowledge, that: (1) the Rydex ETF Trust on Form N-CSR of the Registrant for the semi-annual period ended April 30, 2005 (the "Form N-CSR") fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (2) the information contained in the Form N-CSR fairly presents, in all material respects, the financial condition and results of operations of the Registrant. Dated: June 28, 2005 ----------------------- /s/ Carl Verboncoeur - --------------------------------- Name: Carl Verboncoeur Title: President Dated: June 28, 2005 ----------------------- /s/ Nick Bonos - --------------------------------- Name: Nick Bonos Title: Treasurer This certification is being furnished solely pursuant to 18 U.S.C. ss. 1350 and is not being filed as part of the Report or as a separate disclosure document. -----END PRIVACY-ENHANCED MESSAGE-----