<PAGE>
[GRAPHIC APPEARS HERE]
PROFUNDS/SM/
Bull ProFund [GRAPHIC APPEARS HERE]
UltraBull ProFund
Bear ProFund
UltraBear ProFund
UltraOTC ProFund
UltraShort OTC ProFund
Money Market ProFund
Semi-Annual Report
June 30, 1998
<PAGE>
ProFunds
Table of Contents
================================================================================
Letter to Shareholders..............................................2
ProFunds
Schedules of Portfolio of Investments..............................3
Statements of Assets and Liabilities...............................9
Statements of Operations..........................................11
Statements of Changes in Net Assets...............................13
Notes to Financial Statements.....................................20
Financial Highlights..............................................27
Cash Management Portfolio
Statement of Net Assets...........................................34
Statement of Operations...........................................39
Statement of Changes in Net Assets................................40
Financial Highlights..............................................40
Notes to Financial Statements.....................................41
<PAGE>
Shareholder's Letter
- --------------------------------------------------------------------------------
Dear ProFunds Shareholder,
I am pleased to present the Semi-Annual Report to Shareholders of ProFunds
for the six-month period ended June 30, 1998.
One way to measure the success of ProFunds is to look at the satisfaction
of our shareholders as reflected by asset growth. Based on this measure,
ProFunds thrived during the first half of 1998. ProFunds' assets grew by more
than $78 million during the period with assets on the last day of the period of
more than seven times assets at the end of 1997.
Another gauge of the ProFunds' success is each ProFund's ability to
correlate with its benchmark. On this score, we believe that ProFunds deserves
high marks. Notwithstanding frequent large flows of money in and out of the
ProFunds and continued historic volatility in the equity markets during the
period, ProFunds was able to achieve high levels of correlation with their
benchmarks. All of the ProFunds with variable net asset values tracked their
benchmarks with a statistical correlation of greater than 96%.
The ProFunds concept, as well as the performance of individual funds,
received considerable interest from the media during the six-months. Diverse
publications--from Barron's (March 16, 1998 and April 6, 1998) to USA Today
(April 3, 1998) to the high-tech high-end magazine Wired (Issue 6.07), for
example--wrote about ProFunds. We were gratified when in its May issue, the
Time-Warner publication Mutual Funds Magazine named UltraBull ProFund and
UltraOTC ProFund as two of the five "Best Funds For the Bull Market."
We appreciate your confidence and support. We will continue to strive in
what promises to be a continuing time of volatility to offer the innovative
investment vehicles and services that give our investors the ability to pursue
their investment strategies.
Of course, we encourage your comments and suggestions, including any new
ProFunds or additional services you would like to see ProFunds offer.
Sincerely,
/s/ Michael Sapir
Michael Sapir
Chairman
2
<PAGE>
BULL PROFUND
Schedule of Portfolio Investments
June 30, 1998
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Total Investments (Cost $0) - 0.0% $ 0
Other assets in excess of liabilities 100.0% 6,425,648
----------
TOTAL NET ASSETS - 100.0% $6,425,648
==========
</TABLE>
- ---------------
Percentages indicated are based on net assets of $6,425,648.
<TABLE>
<CAPTION>
Market
Contracts Value
--------- ----------
<S> <C> <C>
Futures Purchased
S&P 500 Mini Future Contract expiring September 1998 2 $ 114,300
S&P 500 Future Contract expiring September 1998 22 6,286,500
----------
Total Futures Purchased (Cost $6,335,958) $6,400,800
==========
</TABLE>
See accompanying notes to the financial statements.
3
<PAGE>
ULTRABULL PROFUND
Schedule of Portfolio Investments
June 30, 1998
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Market
Shares Value
------ -----------
<S> <C> <C>
Options Purchased - 4.7%
S&P 500 Put Option expiring August 1998 @ 700 100 $ 2,500
S&P 500 Put Option expiring July 1998 @ 700 150 0
S&P 500 Call Option expiring July 1998 @ 800 20 1,715,000
-----------
Total Options Purchased (Cost $1,620,350) 1,717,500
-----------
Total Investments (Cost $1,620,350) (a) - 4.7% $ 1,717,500
Other assets in excess of liabilities 95.3% 34,549,211
-----------
TOTAL NET ASSETS - 100.0% $36,266,711
===========
</TABLE>
- ---------------
Percentages indicated are based on net assets of $36,266,711.
<TABLE>
<CAPTION>
Market
Contracts Value
--------- -----------
<S> <C> <C>
Futures Purchased
S&P 500 Future Contract expiring September 1998 225 $64,293,750
S&P 500 Mini Future Contract expiring September 1998 2 114,300
-----------
Total Futures Purchased (Cost $64,229,063) $64,408,050
===========
</TABLE>
(a) Represents cost for federal income tax purposes and differs from value by
net unrealized appreciation of securities as follows:
<TABLE>
<S> <C>
Unrealized Appreciation $104,650
Unrealized Depreciation (7,500)
--------
Net Unrealized Appreciation $ 97,150
========
</TABLE>
See accompanying notes to the financial statements.
4
<PAGE>
BEAR PROFUND
Schedule of Portfolio Investments
June 30, 1998
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Total Investments (Cost $0) - 0.0% $ 0
Liabilities in excess of other assets 100.0% 149,164
---------
TOTAL NET ASSETS - 100.0% $ 149,164
=========
</TABLE>
- ---------------
Percentages indicated are based on net assets of $149,164.
<TABLE>
<CAPTION>
Market
Contracts Value
--------- ---------
<S> <C> <C>
Futures Purchased
S&P 500 Mini Future Contract expiring September 1998 3 $ 171,450
---------
Total Futures Purchased (Cost $171,965) $ 171,450
=========
Futures Sold
S&P 500 Future Contract expiring September 1998 1 $(285,750)
---------
Total Futures Sold (Cost ($285,345)) $(285,750)
=========
</TABLE>
See accompanying notes to the financial statements.
5
<PAGE>
ULTRABEAR PROFUND
Schedule of Portfolio Investments
June 30, 1998
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Market
Shares Value
------ ---------
<S> <C> <C>
Options Purchased - 16.4%
S&P 500 Put Option expiring July 1998 @ 1210 35 $ 588,875
S&P 500 Call Option expiring August 1998 @ 1500 100 0
----------
Total Options Purchased (Cost $1,012,050) 588,875
----------
Total Investments (Cost $1,012,050)(a) - 16.4% 588,875
Other assets in excess of liabilities 83.6% 3,006,066
----------
TOTAL NET ASSETS - 100% $3,594,941
==========
</TABLE>
- ---------------
Percentages indicated are based on net assets of $3,594,941.
<TABLE>
<CAPTION>
Market
Contracts Value
--------- ----------
<S> <C> <C>
Futures Purchased
S&P 500 Future Contract expiring September 1998 10 $2,857,500
----------
Total Futures Purchased (Cost $2,871,050) $2,857,500
==========
Futures Sold
S&P 500 Mini Future Contract expiring September 1998 1 $ (57,150)
----------
Total Futures Sold (Cost ($55,118)) $ (57,150)
==========
Written Options Contracts
S&P 500 Call Option expiring July 1998 @ 1210 35 $ (3,938)
----------
Total Options Sold (Cost ($2,450)) $ (3,938)
==========
</TABLE>
(a) Represents cost for federal income tax purposes and differs from value by
net unrealized appreciation of securities as follows:
<TABLE>
<S> <C>
Unrealized Appreciation $ -
Unrealized Depreciation (423,175)
---------
Net Unrealized Depreciation $(423,175)
=========
</TABLE>
See accompanying notes to the financial statements.
6
<PAGE>
ULTRAOTC PROFUND
Schedule of Portfolio Investments
June 30, 1998
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Market
Shares Value
------ -----------
<S> <C> <C>
Options Purchased - 6.0%
Nasdaq Call Option expiring July 1998 @ 870 40 $ 1,936,000
Nasdaq Put Option expiring August 1998 @ 600 200 2,000
Nasdaq Put Option expiring July 1998 @ 600 300 0
-----------
Total Options Purchased (Cost $1,643,290) $ 1,938,000
-----------
Total Investments (Cost $1,643,290) (a) - 6.0% $ 1,938,000
Other assets in excess of liabilities 94.0% 30,367,120
-----------
TOTAL NET ASSETS - 100.0% $32,305,120
===========
</TABLE>
_______________
Percentages indicated are based on net assets of $32,305,120.
<TABLE>
<CAPTION>
Market
Contracts Value
--------- -----------
<S> <C> <C>
Futures Purchased
Nasdaq 100 Future Contract expiring September 1998 418 $56,597,200
-----------
Total Futures Purchased (Cost $55,634,950) $56,597,200
===========
</TABLE>
(a) Represents cost for federal income tax purposes and differs from value by
net unrealized appreciation of securities as follows:
<TABLE>
<S> <C>
Unrealized Appreciation $300,710
Unrealized Depreciation (6,000)
--------
Net Unrealized Appreciation $294,710
========
</TABLE>
See accompanying notes to the financial statements.
7
<PAGE>
ULTRASHORT OTC PROFUND
Schedule of Portfolio Investments
June 30, 1998
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Market
Shares Value
------ ----------
<S> <C> <C>
Options Purchased - 8.5%
Nasdaq Call Option expiring July 1998 @ 1700 125 $ 0
Nasdaq Put Option expiring July 1998 @ 1440 7 60,200
---------
Total Options Purchased (Cost $102,710) $ 60,200
---------
Total Investments (Cost $102,710) (a) - 8.5% $ 60,200
Other assets in excess of liabilities 91.5% 649,512
---------
TOTAL NET ASSETS - 100.0% $ 709,712
=========
</TABLE>
_______________
Percentages indicated are based on net assets of $709,712.
<TABLE>
<CAPTION>
Market
Contracts Value
--------- ----------
<S> <C> <C>
Futures Sold
Nasdaq 100 Future Contract expiring September 1998 3 $(406,200)
---------
Total Futures Purchased (Cost ($398,310)) $(406,200)
=========
</TABLE>
(a) Represents cost for federal income tax purposes and differs from value by
net unrealized appreciation of securities as follows:
<TABLE>
<S> <C>
Unrealized Appreciation $ -
Unrealized Depreciation (42,510)
--------
Net Unrealized Depreciation $(42,510)
========
</TABLE>
See accompanying notes to the financial statements.
8
<PAGE>
ProFunds
Statements of Assets and Liabilities
June 30, 1998
(Unaudited)
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Bull UltraBull Bear
ProFund ProFund ProFund
------------ ------------ ----------
<S> <C> <C> <C>
Assets:
Investments, at value (cost $0, $1,620,350, $0) $ - $ 1,717,500 $ -
Cash 279,014 883,470 5,304
Net receivable for variation margin on open futures contracts - - 850
Receivable for investments sold 6,157,678 34,098,370 119,603
Receivable for capital shares issued - - 2,346
Receivable from Investment Advisor and Administrator 10,524 - 14,481
Prepaid expenses 27,997 20,845 16,658
Deferred Organization Costs 11,940 11,910 12,155
----------- ------------ ----------
Total Assets 6,487,153 36,732,095 171,397
Liabilitites:
Payable for capital shares redeemed 1,602 - -
Net payable for variation margin on futures contracts 47,268 434,875 -
Investment advisory fees payable 286 - 151
Administration fees payable 2,000 2,000 600
Shareholder servicing fees payable - Service Class 1,336 8,086 1,110
Other payables and accrued expenses 9,013 20,423 20,372
----------- ------------ ----------
Total Liabilities 61,505 465,384 22,233
----------- ------------ ----------
Net Assets $ 6,425,648 $ 36,266,711 $ 149,164
=========== ============ ==========
Net Assets consist of:
Capital $ 6,347,429 $ 34,429,318 $ 436,914
Accumulated undistributed net investment income 25,284 143,489 25,150
Accumulated undistributed net realized gains/(losses) on
investments and futures contracts (11,907) 1,417,767 (311,980)
Net unrealized appreciation/(depreciation) on investments
and futures contracts 64,842 276,137 (920)
----------- ------------ ----------
Total Net Assets $ 6,425,648 $ 36,266,711 $ 149,164
=========== ============ ==========
Investor Shares:
Net Assets $ 6,350,090 $ 31,782,956 $ 149,155
Shares Outstanding 549,689 2,367,575 17,070
Net Asset Value $ 11.55 $ 13.42 $ 8.74
----------- ------------ ----------
Service Shares:
Net Assets $ 75,558 $ 4,483,755 $ 9
Shares Outstanding 6,548 335,230 1
Net Asset Value $ 11.54 $ 13.38 $ 8.74
----------- ------------ ----------
</TABLE>
See accompanying notes to the finanncial statements.
9
<PAGE>
ProFunds
Statements of Assets and Liabilities, Continued
June 30, 1998
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
UltraShort Money
UtraBear UltraOTC OTC Market
ProFund ProFund ProFund ProFund
----------- ------------- ------------ ------------
<S> <C> <C> <C> <C>
Assets:
Investments, at value (cost $1,012,050, $1,643,290,
$102,710, $0) $ 588,875 $ 1,938,000 $ 60,200 $ -
Investment in Cash Management Portfolio, at value
(cost $0, $0, $0, $11,541,065) - - - 11,541,065
Cash 420 518,317 5,769 -
Net receivable for variation margin on open futures contracts - - 4,716 -
Receivable for investments sold 3,038,497 29,993,564 643,581 -
Receivable for capital shares issued - 180 - -
Prepaid expenses 12,561 12,897 - -
Deferred Organization Costs 12,095 11,940 - 11,065
----------- ------------- ------------ ------------
Total Assets 3,652,448 32,474,898 714,266 11,552,130
Liabilities:
Payable for capital shares redeemed 1,514 - 2,859 -
Net payable for variation margin on futures contracts 20,825 149,495 - -
Written options at market value (proceeds, $2,450, $0, $0, $0) 3,938 - - -
Dividends payable - - - 68,059
Administration fees payable 2,600 2,600 400 1,200
Shareholder servicing fees payable - Service Class 2,787 14,858 137 12,265
Other payables and accrued expenses 25,843 2,825 1,158 3,147
----------- ------------- ------------ ------------
Total Liabilities 57,507 169,778 4,554 84,671
----------- ------------- ------------ ------------
Net Assets $ 3,594,941 $ 32,305,120 $ 709,712 $ 11,467,459
=========== ============= ============ ============
Net Assets consist of:
Capital 4,872,939 31,036,582 1,021,326 11,467,444
Accumulated undistributed net investment income 87,165 172,044 2,558 -
Accumulated undistributed net realized gains/(losses)
on investments and futures contracts (924,918) (160,466) (263,772) 15
Net unrealized appreciation/(depreciation) on investments
and futures contracts (440,245) 1,256,960 (50,400) -
----------- ------------- ------------ ------------
Total Net Assets $ 3,594,941 $ 32,305,120 $ 709,712 $ 11,467,459
=========== ============= ============ ============
Investor Shares
Net Assets $ 2,714,562 $ 24,911,817 $ 528,421 $ 10,442,530
Shares Outstanding 339,304 1,711,307 70,600 10,442,521
Net Asset Value $ 8.00 $ 14.56 $ 7.48 $ 1.00
----------- ------------- ------------ ------------
Service Shares
Net Assets $ 880,379 $ 7,393,303 $ 181,291 $ 1,024,929
Shares Outstanding 109,733 508,749 24,219 1,024,923
Net Asset Value $ 8.02 $ 14.53 $ 7.49 $ 1.00
----------- ------------- ------------ ------------
</TABLE>
See accompanying notes to the financial statements.
10
<PAGE>
ProFunds
Statements of Operations
Period ended June 30, 1998
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Bull UltraBull Bear
ProFund ProFund ProFund
------------------ ---------------- --------------
<S> <C> <C> <C>
Investment Income:
Interest $ 38,317 $ 216,908 $ 36,723
----------------- --------------- -------------
Total Income 38,317 216,908 36,723
Expenses:
Investment Advisory fees 5,817 41,041 5,559
Administration fees 2,876 8,321 1,544
Management service fees 1,164 8,208 1,112
Shareholder servicing fees - Service Class 1,344 11,809 1,116
Fund accounting fees 375 1,514 1,388
Transfer agent fees 296 997 1,219
Custody fees 1,489 3,993 1,427
Legal fees 2,074 4,076 1,602
Audit fees 1,770 4,023 1,802
Registration & filing fees 11,168 21,688 11,650
Printing fees 869 2,617 1,460
Insurance fees 1,660 1,822 1,752
Organizational costs 1,338 1,338 1,338
Other expenses 400 3,502 895
----------------- --------------- -------------
Total expenses before waivers/ reimbursements 32,640 114,949 33,864
Less expenses waived/ reimbursed (19,522) (39,631) (22,291)
----------------- --------------- -------------
Net expenses 13,118 75,318 11,573
----------------- --------------- -------------
Net Investment Income 25,199 141,590 25,150
----------------- --------------- -------------
Realized and Unrealized Gains/(Losses) on Investments:
Net realized gains/(losses) on investment transactions (11,061) 1,443,498 (312,117)
Net change in unrealized appreciation/(depreciation)
of investments 64,587 229,547 (1,353)
----------------- --------------- -------------
Net realized and unrealized gains/(losses) on investments 53,526 1,673,045 (313,470)
----------------- --------------- -------------
Increase in Net Assets resulting from Operations $ 78,725 $ 1,814,635 $ (288,320)
================= =============== =============
</TABLE>
See accompanying notes to the financial statements.
11
<PAGE>
ProFunds
Statements of Operations, Continued
For the period ended June 30, 1998
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
UltraShort Money
UltraBear UltraOTC OTC Market
ProFund ProFund ProFund ProFund
-------------- -------------- ------------ -----------
<S> <C> <C> <C> <C>
Investment Income:
Interest $ 133,490 $ 253,497 $ 4,250 $ -
Investment Income Allocated from Cash Management Fund - - - 337,862
Expenses Allocated from Cash Management Fund - - - (10,818)
-------------- -------------- ------------ -----------
Total Income 133,490 253,497 4,250 327,044
Expenses:
Investment Advisory fees 21,074 46,503 644 6,299
Administration fees 3,100 10,205 462 8,999
Management service fees 4,215 9,301 129 14,698
Shareholder servicing fees - Service Class 4,459 17,778 137 12,264
Fund accounting fees 900 1,775 167 -
Transfer agent fees 518 900 16 4,596
Custody fees 3,334 4,015 375 372
Legal fees 3,004 3,594 66 1,463
Audit fees 3,380 4,043 100 744
Registration & filing fees 16,628 22,706 70 19,372
Printing fees 4,250 1,897 285 3,041
Trustees fees 2,200 1,924 79 1,111
Organizational costs 1,338 1,338 - 1,341
Other expenses 2,152 2,724 63 3,287
-------------- -------------- ------------ -----------
Total expenses before waivers/ reimbursements 70,552 128,703 2,593 77,587
Less expenses waived/ reimbursed (24,227) (46,596) (901) (26,308)
-------------- -------------- ------------ -----------
Net expenses 46,325 82,107 1,692 51,279
-------------- -------------- ------------ -----------
Net Investment Income 87,165 171,390 2,558 275,765
-------------- -------------- ------------ -----------
Realized and Unrealized Gains/(Losses) on Investments:
Net realized gains/(losses) on investment transactions (924,918) 706,580 (263,772) 18
Net change in unrealized appreciation/(depreciation)
of investments (440,245) 1,276,720 (50,400) -
-------------- -------------- ------------ -----------
Net realized and unrealized gains/(losses) on investments (1,365,163) 1,983,300 (314,172) 18
-------------- -------------- ------------ -----------
Increase in Net Assets resulting from Operations $ (1,277,998) $ 2,154,690 $ (311,614) $ 275,783
============== ============== ============ ===========
</TABLE>
See accompanying notes to the financial statements.
12
<PAGE>
ProFunds
Statements of Changes in Net Assets
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Bull ProFund
------------------------------------------------------
Six months ended December 2, 1997(a)
June 30, 1998 through
(Unaudited) to December 31, 1997
------------------------------------------------------
<S> <C> <C>
Increase in Net Assets:
Operations:
Net investment income $ 25,199 $ 115
Net realized (losses) on investments and futures contracts (11,061) (846)
Net change in unrealized appreciation of investments
and futures contracts 64,587 255
-------------------- ---------------------
Net increase/(decrease) in net assets resulting from operations 78,725 (476)
Capital Share Transactions:
Proceeds from shares issued 31,874,274 99,897
Cost of shares redeemed (25,573,642) (53,130)
-------------------- ---------------------
Net increase in net assets from capital share transactions 6,300,632 46,767
-------------------- ---------------------
Total increase in net assets 6,379,357 46,291
Net Assets:
Beginning of period 46,291 -
-------------------- ---------------------
End of period $ 6,425,648 $ 46,291
==================== =====================
</TABLE>
(a) Commencement of operations
See accompanying notes to the financial statements.
13
<PAGE>
ProFunds
Statements of Changes in Net Assets, Continued
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
UltraBull ProFund
------------------------------------------------------
Six months ended November 28,1997(a)
June 30, 1998 through
(Unaudited) December 31,1997
------------------------------------------------------
<S> <C> <C>
Increase in Net Assets:
Operations:
Net investment income $ 141,590 $ 4,927
Net realized gains on investment transactions and futures contracts 1,443,498 7,528
Net change in unrealized appreciation of investments and
futures contracts 229,547 46,590
--------------------- ------------------------
Net increase in net assets resulting from operations 1,814,635 59,045
Capital Share Transactions:
Proceeds from shares issued 154,673,655 17,466,796
Cost of shares redeemed (128,659,616) (9,087,804)
--------------------- ------------------------
Net increase in net assets from capital share transactions 26,014,039 8,378,992
--------------------- ------------------------
Total increase in net assets 27,828,674 8,438,037
Net Assets:
Beginning of period 8,438,037 -
--------------------- ------------------------
End of period $ 36,266,711 $ 8,438,037
===================== ========================
</TABLE>
(a) Commencement of operations.
See accompanying notes to the financial statements.
14
<PAGE>
ProFunds
Statements of Changes in Net Assets, Continued
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Bear ProFund
-----------------------------------------------
Six months ended December 31, 1997(a)
June 30, 1998 through
(Unaudited) December 31, 1997
-----------------------------------------------
<S> <C> <C>
Decrease in Net Assets:
Operations:
Net investment income $ 25,150 $ -
Net realized (losses) on investment transactions and futures contracts (312,117) 137
Net change in unrealized appreciation of investments and
futures contracts (1,353) 433
----------------- -----------------
Net increase/(decrease) in net assets resulting from operations (288,320) 570
Capital Share Transactions:
Proceeds from shares issued 24,110,432 2,515,852
Cost of shares redeemed (26,189,370) -
----------------- -----------------
Net increase/(decrease) in net assets from capital share transactions (2,078,938) 2,515,852
----------------- -----------------
Total increase/(decrease) in net assets (2,367,258) 2,516,422
Net Assets:
Beginning of period 2,516,422 -
----------------- -----------------
End of period $ 149,164 $ 2,516,422
================= =================
</TABLE>
(a) Commencement of operations.
See accompanying notes to the financial statements.
15
<PAGE>
ProFunds
Statements of Changes in Net Assets, Continued
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
UltraBear ProFund
------------------------------------------------
Six months ended December 23, 1997(a)
June 30, 1998 through
(Unaudited) December 31, 1997
------------------------------------------------
<S> <C> <C>
Increase in Net Assets:
Operations:
Net investment income $ 87,165 $ 2,433
Net realized gains/(losses) on investment and futures contracts (924,918) 167,320
Net change in unrealized appreciation/(depreciation) of investments
and futures contracts (440,245) -
-------------------- ---------------------
Net increase/(decrease) in net assets resulting from operations (1,277,998) 169,753
Capital Share Transactions:
Proceeds from shares issued 114,560,469 4,806,030
Cost of shares redeemed (109,687,561) (4,975,752)
-------------------- ---------------------
Net Increase/(decrease) in net assets from capital share transactions 4,872,908 (169,722)
-------------------- ---------------------
Total increase/(decrease) in net assets 3,594,910 (169,722)
Net Assets:
Beginning of period 31 -
-------------------- ---------------------
End of period $ 3,594,941 $ 31
==================== =====================
</TABLE>
(a) Commencement of operations
See accompanying notes to the financial statements.
16
<PAGE>
ProFunds
Statements of Changes in Net Assets, Continued
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
UltraOTC ProFund
--------------------------------------------
Six months ended December 2, 1997(a)
June 30, 1998 through
(Unaudited) December 31, 1997
--------------------------------------------
<S> <C> <C>
Increase in Net Assets:
Operations:
Net investment income $ 171,390 $ 1,652
Net realized gains/(losses) on investment and futures contracts 706,580 (867,046)
Net change in unrealized depreciation of investments and futures contracts 1,276,720 (19,760)
------------------ ---------------
Net increase/(decrease) in net assets resulting from operations 2,154,690 (885,154)
Capital Share Transactions:
Proceeds from shares issued 258,740,178 9,874,239
Cost of shares redeemed (229,509,916) (8,068,917)
------------------ ---------------
Net increase in net assets from capital share transactions 29,230,262 1,805,322
------------------ ---------------
Total increase in net assets 31,384,952 920,168
Net Assets:
Beginning of period 920,168
------------------ ---------------
End of period $ 32,305,120 $ 920,168
================== ===============
</TABLE>
(a) Commencement of operations
See accompanying notes to the financial statements.
17
<PAGE>
ProFunds
Statements of Changes in Net Assets, Continued
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
UltraShort OTC ProFund
----------------------------
June 2, 1998(a)
through
June 30, 1998
----------------------------
<S> <C>
Increase in Net Assets:
Operations:
Net investment income $ 2,558
Net realized (losses) on investment and futures contracts (263,772)
Net change in unrealized (depreciation) of investments
and futures contracts (50,400)
----------------
Net decrease in net assets resulting from operations (311,614)
Capital Share Transactions:
Proceeds from shares issued 14,716,775
Cost of shares redeemed (13,695,449)
----------------
Net increase in net assets from capital share transactions 1,021,326
----------------
Total increase in net assets 709,712
Net Assets:
Beginning of period -
----------------
End of period $ 709,712
================
</TABLE>
(a) Commencement of operations.
See accompanying notes to the financial statements.
18
<PAGE>
ProFunds
Statements of Changes in Net Assets, Continued
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Money Market ProFund
---------------------------------------------------
Six months ended November 17, 1997(a)
to June 30, 1998 through
(Unaudited) December 31,1997
---------------------------------------------------
<S> <C> <C>
Increase in Net Assets:
Operations:
Net investment income $ 275,765 13,856
Net realized gains on investment 18 (3)
Net change in unrealized appreciation of investment - -
--------------------- --------------------
Net increase in net assets resulting from operations 275,783 13,853
Distributions to Shareholders:
Net investment income (275,765) (13,856)
Net realized gains - -
--------------------- --------------------
Total dividends and distributions to shareholders (275,765) (13,856)
Capital Share Transactions:
Proceeds from shares issued 278,722,808 5,454,779
Dividends reinvested 204,494 5,771
Cost of shares redeemed (267,749,333) (5,171,075)
--------------------- --------------------
Net increase in net assets from capital share transactions 11,177,969 289,475
--------------------- --------------------
Total increase in net assets 11,177,987 289,472
Net Assets:
Beginning of period 289,472 -
--------------------- --------------------
End of period $ 11,467,459 289,472
===================== ====================
</TABLE>
(a) Commencement of Operations
See accompanying notes to the financial statements.
19
<PAGE>
ProFunds
Notes to Financial Statements
June 30, 1998
(Unaudited)
1) Organization
ProFunds (the "Trust") is a registered open-end investment company under the
Investment Company Act of 1940 (the "1940 Act"). The Trust was organized as a
Delaware business trust on April 17, 1997, and has authorized capital of
unlimited shares of beneficial interest of no par value which may be issued in
more than one class or series. Currently, the Trust consists of seven
separately managed series: Bull ProFund, UltraBull ProFund, Bear ProFund,
UltraBear ProFund, UltraOTC ProFund, UltraShort OTC ProFund, and Money Market
ProFund (individually, a "ProFund"). Each ProFund offers two classes of shares:
the Service Shares and the Investor Shares.
The investment objectives of the ProFunds are as follows:
The Bull ProFund and the UltraBull ProFund. The Bull ProFund's investment
- ------------------------------------------
objective is to provide investment returns that correspond to the performance of
the S&P 500 Index. The UltraBull ProFund's investment objective is to provide
investment returns that correspond to 200% of the performance of the S&P 500
Index. The UltraBull ProFund should gain more than the Bull ProFund when the
prices of the securities in the S&P 500 Index rise and lose more when such
prices decline.
The Bear ProFund and the UltraBear ProFund. The Bear ProFund's investment
- ------------------------------------------
objective is to provide investment results that will inversely correlate to the
performance of the S&P 500 Index. The UltraBear ProFund's investment objective
is to provide investment results that will inversely correlate to 200% of the
performance of the S&P 500 Index.
If the Bear ProFund is successful in meeting its objective, the net asset value
of Bear ProFund shares will increase in direct proportion to any decrease in the
level of the S&P 500 Index. Conversely, the net asset value of Bear ProFund
shares will decrease in direct proportion to any increases in the level of the
S&P 500 Index. The percentage change of net asset value of shares of the
UltraBear ProFund should increase or decrease approximately twice as much as
does that of the Bear ProFund on any given day.
The UltraOTC ProFund and the UltraShort OTC ProFund. The investment objective
- ---------------------------------------------------
of the UltraOTC ProFund is to provide investment results that correspond to 200%
of the performance of the NASDAQ 100 Index. The NASDAQ 100 Index includes 100
of the largest non-financial domestic companies listed on the NASDAQ National
Market tier of The NASDAQ Stock Market. The UltraShort Profund seeks
investment results that correspond each day to twice of the inverse (opposite)
of the performance of the NASDAQ 100 Index. It is the policy of the UltraShort
OTC Profund to pursue its investment objective of correlating with its benchmark
regardless of market conditions, to remain fully invested and to not take
defensive positions.
If the UltraShort OTC Profund achieved a perfect inverse correlation for any
single trading day, the net asset value of the shares of this ProFund would
increase for that day proportional to twice any decrease in the level of the
NASDAQ 100 Index. Conversely, the net asset value of the shares of the ProFund
would decrease for that day proportional to twice any increase in the level of
the NASDAQ 100 Index for that day. The percentage change of net asset value of
shares of the UltraOTC ProFund should increase or decrease approximately twice
as much as does that of the UltraShort ProFund on any given day.
The Money Market ProFund. The Money Market ProFund seeks, as its investment
- ------------------------
objective, a high level of current income consistent with liquidity and
preservation of capital. To achieve its objective, the Money
20
<PAGE>
ProFunds
Notes to Financial Statements--Continued
June 30, 1998
(Unaudited)
Market ProFund invests all of its investable assets in the Cash Management
Portfolio ("Portfolio"), which has the same investment objective as the Money
Market ProFund.
The performance of the Money Market ProFund is directly affected by the
performance of the Portfolio. The financial statements of the Portfolio,
including its schedule of investments, are included elsewhere within this report
and should be read in conjunction with the Money Market ProFund's financial
statements.
2) Significant Accounting Policies
The following is a summary of significant accounting policies consistently
followed by each ProFund in preparation of its financial statements. These
policies are in conformity with generally accepted accounting principles. The
preparation of financial statements in accordance with generally accepted
accounting principles requires management to make estimates and assumptions that
effect the reported amount of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of income and expense during the reporting period. The
actual results could differ from those estimates.
a) Investment Valuation
The securities, except as otherwise noted, in the portfolio of a non-money
market ProFund that are listed or traded on a stock exchange, are valued on the
basis of the last sale on that day or, lacking any sales, at a price that is the
mean between the closing bid and asked prices. Other securities that are traded
on the OTC markets are priced using NASDAQ, which provides information on bid
and asked prices quoted by major dealers in such stocks. Bonds, other than
convertible bonds, are valued using a third-party pricing system. Convertible
bonds are valued using this pricing system only on days when there is no sale
reported. Short-term debt securities are valued at amortized cost, which
approximates market value.
Puts, calls and futures contracts purchased and held by the ProFunds are valued
at the close of the securities or commodities exchanges on which they are
traded. Options on securities and indices purchased by a ProFund generally are
valued at their last bid price in the case of exchange-traded options or, in the
case of options traded in the OTC market, the average of the last bid price as
obtained from two or more dealers unless there is only one dealer, in which case
that dealer's price is used. Futures contracts are valued with reference to
established futures exchanges. The value of a futures contract purchased by the
ProFunds will be either the closing price of that contract or the bid price.
Conversely, the value of a futures contract sold by the ProFunds will be either
the closing price or the asked price. The value of options on futures contracts
is determined based upon the current settlement price for a like option acquired
on the day on which the option is being valued. When market quotations are not
readily available, securities and other assets are valued at fair value as
determined in good faith under procedures established by and under general
supervision and responsibility of the ProFund's Board of Trustees.
Valuation of securities held by the Portfolio is discussed in Note 1 of the
notes to financial statements of the Portfolio, which are included elsewhere in
this report.
b) Repurchase Agreements
Under a repurchase agreement, a ProFund purchases a debt security and
simultaneously agrees to sell the security back to the seller at a mutually
agreed-upon future price and date, normally one day or a few days later. The
resale price is greater than the purchase price, reflecting an agreed-upon
market interest rate during the purchaser's holding period. While the
maturities of the underlying securities in repurchase transactions may be more
than one year, the term of each repurchase agreement will always be less than
one year. A ProFund will enter into repurchase agreements only with member
banks of the Federal Reserve System or primary dealers of U.S. government
securities. The Advisor and, with respect to the
21
<PAGE>
ProFunds
Notes to Financial Statements--Continued
June 30, 1998
(Unaudited)
Portfolio, Bankers Trust, will monitor the creditworthiness of each of the firms
which is a party to a repurchase agreement with any of the ProFunds.
The ProFunds require that the securities purchased in a repurchase agreement
transaction be transferred to the custodian in a manner sufficient to enable the
ProFund to obtain those securities in the event of a counterparty default. The
seller, under the repurchase agreement, is required to maintain the value of the
securities held at not less than the repurchase price, including accrued
interest. Repurchase agreements are considered to be loans under the 1940 Act.
c) Federal Income Tax
Each of the ProFunds intends to qualify each year as a regulated investment
company (a "RIC") under Subchapter M of the Internal Revenue Code of 1986, as
amended. A RIC generally is not subject to federal income tax on income and
gains distributed in a timely manner to its shareholders; the ProFunds intend to
make timely distributions in order to avoid tax liability.
d) Securities Transactions and Related Income
Securities transactions are accounted for on the date the security is purchased
or sold (trade date). Interest income is recognized on the accrual basis and
includes, where applicable, the pro rata amortization of premium or discount.
Dividend income is recorded on the ex-dividend date. Gains or losses realized
on sales of securities are determined by comparing the identified cost of the
security lot sold with the net sales proceeds.
e) Dividends, Distributions and Expenses
The ProFunds, other than the Money Market ProFund, will distribute net
investment income and net realized gains, if any, at least once a year. Each
ProFund bears expenses incurred specifically on its behalf as well as a portion
of general expenses.
The Money Market ProFund ordinarily (i) declares dividends of net investment
income (and net short-term capital gains, if any) for shares of the Money Market
ProFund on a daily basis and (ii) distributes such dividends to shareholders of
the Money Market ProFund on a monthly basis. Net realized capital gains will be
distributed annually.
f) Capital Accounts
The Trust follows the provisions of the AICPA's Statement of Position 93-2
"Determination, Disclosure and Financial Statement Presentation of Income,
Capital Gain and Return of Capital Distributions by Investment Companies"
("SOP"). The purpose of this SOP is to report undistributed net investment
income and accumulated net realized gain or loss in such a manner as to
approximate amounts available for future distributions to shareholders, if any.
g) Short Sales
When the Trust engages in a short sale, an amount equal to the proceeds received
by the Trust is reflected as an asset and an equivalent liability. The amount
of the liability is subsequently marked to market to reflect the market value of
the short sale. The Trust maintains a segregated account of securities as
collateral for the short sales. The Trust is exposed to market risk based on
the amount, if any, that the market value of the stock exceeds the market value
of the securities in the segregated account.
h) Options
When the Trust writes (sells) an option, an amount equal to the premium received
is entered in the Trust's accounting records as an asset and equivalent
liability. The amount of the liability is subsequently marked to market to
reflect the current value of the option written. When an option expires, or if
the Trust enters into a closing purchase transaction, the Trust realizes a gain
(or loss if the cost of a closing purchase transaction exceeds the premium
received with the option was sold).
22
<PAGE>
ProFunds
Notes to Financial Statements--Continued
June 30, 1998
(Unaudited)
The following is a summary of written option activity for the six months ended
June 30, 1998, for the UltraBear ProFund.
<TABLE>
<CAPTION>
UltraBear ProFund
-----------------
Shares Subject
to Contract Premiums
-------------- --------
<S> <C> <C>
Covered Call Options
Balance at beginning of period - $ -
Options written 79 44,930
Options expired (44) (42,480)
--- --------
Options outstanding at end of period 35 $ 2,450
=== ========
</TABLE>
i) Futures Contracts
The Trust may purchase or sell stock index futures contracts and options on such
futures contracts. Futures contracts are contracts for delayed delivery of
securities at a specified future delivery date and at a specific price. Upon
entering into a contract, the Trust deposits and maintains as collateral such
initial margin as required by the exchange on which the transaction is effected.
Pursuant to the contract, the Trust agrees to receive from or pay to the broker
an amount of cash equal to the daily fluctuation in value of the contract. Such
receipts or payments are known as variation margin and are recorded by the Trust
as unrealized gains or losses. When the contract is closed, the Trust records a
realized gain or loss equal to the difference between the value of the contract
at the time it was opened and the value at the time it was closed.
j) Risks of Futures Contracts and Options
Futures contracts and written options involve, to varying degrees, elements of
market risk and risks in excess of the amount recognized in the Statements of
Assets and Liabilities. The face or contract amounts reflect the extent of the
involvement each ProFund has in the particular classes of instruments. Risks
may be caused by an imperfect correlation between movements in the price of the
instruments and the price of the underlying securities.
k) Organization Costs
Costs incurred by the Trust in connection with its organization have been
deferred and are being amortized on the straight-line method over a five-year
period beginning on the date on which each ProFund commenced its investment
activities.
3) Shares of Beneficial Interest
On June 30, 1998 there was an unlimited number of no par value shares of
beneficial interest authorized. Transactions in shares of beneficial interest
were as follows for the period ended June 30, 1998.
<TABLE>
<CAPTION>
Bull ProFund
------------
Six months ended December 2, 1997
June 30, 1998 through December 31, 1997
------------------------------ -------------------------
Shares Amount Shares Amount
------------- --------------- ---------- -------------
<S> <C> <C> <C> <C>
Investor Shares Sold 2,276,766 $ 25,050,255 9,966 $ 99,886
Investor Shares Redeemed (1,731,756) (18,893,258) (5,287) (53,129)
---------- ------------- ------ --------
Net Increase 545,010 $ 6,156,997 4,679 $ 46,757
========== ============= ====== ========
Service Shares Sold 601,220 $ 6,824,019 1 $ 10
Service Shares Redeemed (594,673) (6,680,384) - -
---------- ------------- ------ --------
Net Increase 6,547 $ 143,635 1 $ 10
========== ============= ====== ========
</TABLE>
23
<PAGE>
ProFunds
Notes to Financial Statements--Continued
June 30, 1998
(Unaudited)
<TABLE>
<CAPTION>
UltraBull ProFund
-----------------
Six months ended November 28, 1997
June 30, 1998 through December 31, 1997
------------------------------ -------------------------
Shares Amount Shares Amount
------------- --------------- ---------- -------------
<S> <C> <C> <C> <C>
Investor Shares Sold 11,063,059 $ 141,202,280 1,421,658 $14,533,688
Investor Shares Redeemed (9,282,780) (116,792,897) (834,362) (8,590,224)
----------- ------------- --------- -----------
Net Increase 1,780,279 $ 24,409,383 587,296 $ 5,943,464
=========== ============= ========= ===========
Service Shares Sold 1,077,495 $ 13,471,375 282,999 $ 2,933,108
Service Shares Redeemed (974,868) (11,866,719) (50,396) (497,580)
----------- ------------- --------- -----------
Net Increase 102,627 $ 1,604,656 232,603 $ 2,435,528
=========== ============= ========= ===========
</TABLE>
<TABLE>
<CAPTION>
Bear ProFund
------------
Six months ended December 31, 1997
June 30, 1998 through December 31, 1997
------------------------------ -------------------------
Shares Amount Shares Amount
------------- --------------- ---------- -------------
<S> <C> <C> <C> <C>
Investor Shares Sold 2,105,297 $ 19,584,327 251,584 $ 2,515,842
Investor Shares Redeemed (2,339,811) (21,716,827) - -
---------- ------------- ------- -----------
Net Increase (234,514) $ (2,132,500) 251,584 $ 2,515,842
========== ============= ======= ===========
Service Shares Sold 505,813 $ 4,526,105 1 $ 10
Service Shares Redeemed (505,813) (4,472,543) - -
---------- ------------- ------- -----------
Net Increase/(Decrease) 0 $ 53,562 1 $ 10
========== ============== ======= ===========
</TABLE>
<TABLE>
<CAPTION>
UltraBear ProFund
-----------------
Six months ended December 23, 1997
June 30, 1998 through December 31, 1997
------------------------------ -------------------------
Shares Amount Shares Amount
------------- --------------- ---------- -------------
<S> <C> <C> <C> <C>
Investor Shares Sold 11,314,814 $ 99,418,295 480,602 $ 4,806,020
Investor Shares Redeemed (10,975,512) (95,276,522) (480,600) (4,975,752)
----------- ------------- --------- -----------
Net Increase 339,302 $ 4,141,773 2 $ 169,732
=========== ============= ========= ===========
Service Shares Sold 1,576,924 $ 15,142,174 1 $ 10
Service Shares Redeemed (1,467,192) (14,411,039) - -
----------- ------------- --------- -----------
Net Increase 109,732 $ 731,135 1 $ 10
=========== ============= ========= ===========
</TABLE>
<TABLE>
<CAPTION>
UltraOTC ProFund
----------------
Six months ended December 23, 1997
June 30, 1998 through December 31, 1997
------------------------------ -------------------------
Shares Amount Shares Amount
------------- --------------- ---------- -------------
<S> <C> <C> <C> <C>
Investor Shares Sold 14,693,138 $ 170,956,990 923,810 $ 9,080,432
Investor Shares Redeemed (13,012,482) (147,676,946) (893,159) (8,016,745)
----------- ------------- --------- -----------
Net Increase 1,680,656 $ 23,280,044 30,651 $ 1,063,687
=========== ============= ========= ===========
Service Shares Sold 7,159,577 $ 87,783,188 85,747 $ 793,807
Service Shares Redeemed (6,730,256) (81,832,970) (6,319) (52,172)
----------- ------------- --------- -----------
Net Increase 429,321 $ 5,950,218 79,428 $ 741,635
=========== ============= ========= ===========
</TABLE>
24
<PAGE>
ProFunds
Notes to Financial Statements--Continued
June 30, 1998
(Unaudited)
<TABLE>
<CAPTION>
UltraShort OTC ProFund
----------------------
June 2, 1998 through
June 30, 1998
-----------------------------
Shares Amount
----------- -------------
<S> <C> <C>
Investor Shares Sold 1,529,927 $ 13,625,772
Investor Shares Redeemed (1,459,327) (12,852,693)
---------- ------------
Net Increase 70,600 773,079
========== ============
Service Shares Sold 135,104 $ 1,091,003
Service Shares Redeemed (110,885) (842,756)
---------- ------------
Net Increase 24,219 248,247
========== ============
</TABLE>
<TABLE>
<CAPTION>
Money Market ProFund
--------------------
Six months ended November 17, 1997
June 30, 1998 through December 31, 1997
------------------------------ -------------------------
Shares Amount Shares Amount
------------- --------------- ---------- -------------
<S> <C> <C> <C> <C>
Investor Shares Sold 191,380,055 $ 191,380,055 5,452,268 $ 5,452,268
Investor Shares Reinvested 160,557 160,556 5,771 5,771
Investor Shares Redeemed (181,385,055) (181,385,055) (5,171,075) (5,171,075)
------------ ------------- ---------- -----------
Net Increase 10,155,557 10,155,556 286,964 $ 286,964
============ ============= ========== ===========
Service Shares Sold 87,342,752 $ 87,342,753 2,511 $ 2,511
Service Shares Reinvested 43,938 43,938 - -
Service Shares Redeemed (86,364,278 (86,364,278) - -
------------ ------------- ---------- -----------
Net Increase 1,022,412 1,022,413 2,511 $ 2,511
============ ============= ========== ===========
</TABLE>
4) Investment Advisory Fees, Administration Fees and Other Related Party
Transactions
The non-money market ProFunds have entered into an Investment Advisory Agreement
with ProFunds Advisors LLC (the "Advisor"). Under this agreement, dated October
28, 1997, the non-money market ProFunds each pay the Advisor a fee at an
annualized rate, based on the average daily net assets of each respective
ProFund, of 0.75%.
BISYS Fund Services Limited Partnership d/b/a BISYS Fund Services ("BISYS") acts
as Administrator to the ProFunds. For its services as Administrator, each
ProFund pays BISYS an annual fee ranging from 0.15% of average daily nets assets
of $0 to $300 million to 0.05% of average daily net assets of $1 billion and
over. BISYS Fund Services, Inc. ("BFSI"), an affiliate of BISYS, acts as
transfer agent and fund accounting agent for the ProFunds, for which it receives
additional fees. Additionally, ProFunds, BISYS and BFSI have entered into an
Omnibus Fee Agreement in which the amount of compensation due and payable to
BISYS shall be the greater of (i) the aggregate fee amount due and payable for
services pursuant to the Administration, Fund Accounting and Transfer Agency
Agreements and (ii) the minimum relationship fee described as specific dollar
amounts payable over a period of ten calendar quarters. BISYS began charging
for their services as of June 1, 1998.
ProFunds Advisors LLC, pursuant to a separate Management Services Agreement,
performs certain client support services and other administrative services on
behalf of the ProFunds. For these services, each non-
25
<PAGE>
ProFunds
Notes to Financial Statements--Continued
June 30, 1998
(Unaudited)
money market ProFund will pay to ProFunds Advisors LLC a fee at the annual rate
of 0.15% of its average daily net assets. Under this agreement, ProFunds
Advisors LLC may receive up to 0.35% of the Money Market ProFund's average daily
net assets for providing feeder fund management and administrative services to
the Money Market ProFund.
Each ProFund has adopted a Shareholder Services Plan (the "Plan") and related
agreement ("Shareholder Services Agreement"). The Plan provides that each
ProFund will make payments to Authorized Firms in amount up to 1.00% (on an
annual basis) of the average net assets of such ProFund's Service class of
shares attributable to or held in the name of an Authorized Firm for its
clients. The Plan provides that the fee will be paid to registered investment
advisors, banks, trust companies and other financial organizations for providing
account administration and other services to their clients who are beneficial
owners of such shares.
Certain Trustees of the Trust are Officers of ProFunds Advisors LLC.
Waivers and reimbursements are detailed as follows:
<TABLE>
<CAPTION>
Investment Shareholder Management Fund
Advisor Admin Servicing Service Accounting
Waiver Waiver Waiver Waiver Waiver
-------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Bull ProFund $ 5,817 $1,833 $ 9 $ 1,164 $ 175
UltraBull ProFund 20,116 6,321 3,722 8,208 1,264
Bear ProFund 5,559 944 6 1,112 189
UltraBear ProFund 17,040 800 1,672 4,215 500
UltraOTC ProFund 25,249 7,605 2,920 9,301 1,521
UltraShort OTC ProFund 644 107 0 129 21
Money Market ProFund 2,611 8,999 0 14,698 0
</TABLE>
The advisor and/or the administrator have voluntarily agreed to reimburse the
ProFunds for expenses incurred to maintain a competitive expense ratio for the
ProFunds. The total reimbursement payable to the Bull ProFund is $10,524 as of
June 30, 1998. The total reimbursement payable to the Bear ProFund is $14,481
as of June 30,1998.
26
<PAGE>
ProFunds
Financial Highlights
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Bull ProFund
--------------------------------------------------------------------------
Investor Class Service Class
------------------------------------ -----------------------------------
For the six For the period from For the six For the period from
months ended December 2, 1997(a) months ended December 2, 1997(a)
June 30, 1998 to December 31, 1997 June 30, 1998 to December 31, 1997
------------------------------------ ------------------------------------
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $ 9.89 $ 10.00 $ 9.89 $ 10.00
----------- ----------- ----------- -----------
Net investment income 0.19 (d) 0.02 0.13 (d) -
Net realized and unrealized gain/(loss) 1.47 (0.13) 1.52 (0.11)
----------- ----------- ----------- -----------
Total income from investment operations 1.66 (0.11) 1.65 (0.11)
----------- ----------- ----------- -----------
Net Asset Value, End of Period $ 11.55 $ 9.89 $ 11.54 $ 9.89
=========== =========== =========== ===========
Total Return 16.78% (b) (1.10%) (b) 16.68% (b) (1.10%) (b)
Ratios/Supplemental Data:
Net assets, end of year $ 6,350,090 $ 46,281 $ 75,558 $ 10
Ratio of expenses to average net assets 1.50% (c) 1.33% (c) 2.56% (c) 1.33% (c)
Ratio of net investment income to average net assets 3.43% (c) 2.97% (c) 2.27% (c) 0.00% (c)
Ratio of expenses to average net assets* 3.95% (c) 423.48% (c) 4.55% (c) 424.48% (c)
Ratio of net investment income to average net assets* 0.09% (c) (419.18%)(c) 0.28% (c) (424.48%)(c)
</TABLE>
-------------------------------------------------------
* During the period, certain fees were voluntarily reduced and/ or
reimbursed. If such voluntary fee reductions and/ or reimbursements
had not occurred, the ratio would have been as indicated.
(a) Commencement of operations.
(b) Not annualized.
(c) Annualized.
(d) Per share net investment income has been calculated using the daily
average shares method.
27
<PAGE>
ProFunds
Financial Highlights, Continued
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
UltraBull ProFund
-------------------------------------------------------------------------------------
Investor Class Service Class
------------------------------------------ -----------------------------------------
For the six For the period from For the six For the period from
months ended November 28, 1997(a) months ended November 28, 1997(a)
June 30, 1998 to December 31, 1997 June 30, 1998 to December 31, 1997
------------------------------------------ ------------------------------------------
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $ 10.29 $ 10.00 $ 10.29 $ 10.00
--------------- ------------ ------------- ------------
Net investment income 0.17(d) 0.01 0.11(d) 0.01
Net realized and unrealized gain 2.96 0.28 2.98 0.28
--------------- ------------ ------------- ------------
Total income from investment operations 3.13 0.29 3.09 0.29
--------------- ------------ ------------- ------------
Net Asset Value, End of Period $ 13.42 $ 10.29 $ 13.38 $ 10.29
=============== ============ ============= ============
Total Return 30.42%(b) 2.90%(b) 30.03%(b) 2.90%(b)
Ratios/Supplemental Data:
Net assets at end of period $ 31,782,956 $ 6,044,740 $ 4,483,755 $ 2,394,297
Ratio of expenses to average net assets 1.22%(c) 1.33%(c) 1.93%(c) 1.33%(c)
Ratio of net investment income to average
net assets 2.77%(c) 2.26%(c) 1.81%(c) 1.69%(c)
Ratio of expenses to average net assets* 1.73%(c) 12.69%(c) 2.79%(c) 13.69%(c)
Ratio of net investment income to average
net assets* 2.26%(c) (9.10%)(c) 0.95%(c) (10.67%)(c)
</TABLE>
- ------------------------------------------------------
* During the period, certain fees were voluntarily reduced and/or
reimbursed. If such voluntary fee reductions and/or reimbursements had not
occurred, the ratios would have been as indicated.
(a) Commencement of operations.
(b) Not annualized.
(c) Annualized.
(d) Per share net investment income has been calculated using the daily
average shares method.
28
<PAGE>
ProFunds
Financial Highlights, Continued
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Bear ProFund
-------------------------------------------------------------------------
Investor Class Service Class
----------------------------------- -----------------------------------
For the six For the period from For the six For the period from
months ended December 31, 1997(a) months ended December 31, 1997(a)
June 30, 1998 to December 31, 1997 June 30, 1998 to December 31, 1997
----------------------------------- -----------------------------------
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $ 10.00 $ 10.00 $ 10.00 $ 10.00
-------- ---------- -------- --------
Net investment income 0.16(d) - 0.11(d) -
Net realized and unrealized (loss) (1.42) - (1.37) -
-------- ---------- -------- --------
Total income from investment operations (1.26) - (1.26) -
-------- ---------- -------- --------
Net Asset Value, End of Period $ 8.74 10.00 8.74 10.00
======== ========== ======== ========
Total Return (12.60%)(b) 0.00%(b) (12.60%)(b) 0.00%(b)
Ratios/Supplemental Data:
Net assets at end of period $149,155 2,516,412 $ 9 $ 10
Ratio of expenses to average net assets 1.43%(c) 0.00%(c) 2.23%(c) 0.00%(c)
Ratio of net investment income to average net assets 3.48%(c) 0.00%(c) 2.59%(c) 0.00%(c)
Ratio of expenses to average net assets* 4.27%(c) 325.97%(c) 5.26%(c) 326.97%(c)
Ratio of net investment income to average net assets* 0.64%(c) (325.97%)(c) (0.35%)(c) (326.97%)(c)
</TABLE>
---------------------------------------------------------
* During the period, certain fees were voluntarily reduced and/or
reimbursed. If such voluntary fee reductions and/or reimbursements had
not occurred, the ratios would have been as indicated.
(a) Commencement of operations.
(b) Not annualized.
(c) Annualized.
(d) Per share net investment income has been calculated using the daily
average shares method.
29
<PAGE>
ProFunds
Financial Highlights, Continued
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
UltraBear ProFunds
--------------------------------------------------------------------------------
Investor Class Service Class
----------------------------------------- ------------------------------------
For the six For the period from For the six For the period from
months ended December 23, 1997(a) months ended December 23, 1997(a)
June 30, 1998 to December 31, 1997 June 30, 1998 to December 31, 1997
----------------------------------------- -------------------------------------
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $ 10.36 $ 10.00 $ 10.35 $ 10.00
--------------- -------------- ------------ --------------
Net investment income 0.14(d) 1,216.50(e) 0.12(d) -
Net realized and unrealized gain/(loss) (2.50) (1,216.14)(e) (2.45) 0.35
--------------- -------------- ------------ --------------
Total income from investment operations (2.36) 0.36 (2.33) 0.35
--------------- -------------- ------------ --------------
Net Asset Value, End of Period $ 8.00 $ 10.36 $ 8.02 $ 10.35
=============== ============== ============ ==============
Total Return (22.78%)(b) 3.60%(b) (22.51%)(b) (3.50%)(b)
Ratios/Supplemental Data:
Net assets, end of year $ 2,714,562 $ 21 $ 880,379 $ 10
Ratio of expenses to average net assets 1.59%(c) 1.33%(c) 1.98%(c) 1.33%(c)
Ratio of net investment income to average
net assets 3.20%(c) 2.97%(c) 2.55%(c) 0.00%(c)
Ratio of expenses to average net assets* 2.36%(c) 32.39%(c) 3.09%(c) 33.39%(c)
Ratio of net investment income to average
net assets* 2.43%(c) (28.09%)(c) 1.44%(c) (33.39%)(c)
</TABLE>
____________________
* During the period, certain fees were voluntarily reduced and/ or
reimbursed. If such voluntary fee reductions and/ or reimbursements had
not occurred, the ratio would have been as indicated.
(a) Commencement of operations.
(b) Not annualized.
(c) Annualized.
(d) Per share net investment income has been calculated using the daily
average shares method.
(e) The amount shown for a share outstanding throughout the period does not
accord with the earned income or the change in aggregate gains and losses
in the portfolio of securities during the period because of the timing of
sales and purchases of fund shares in relation to fluctuating market
values during the period.
30
<PAGE>
ProFunds
Financial Highlights, Continued
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
UltraOTC ProFund
----------------------------------------------------------------------------
Investor Class Service Class
-------------------------------------- ------------------------------------
For the six For the period from For the six For the period from
months ended December 2, 1997(a) months ended December 2, 1997(a)
June 30, 1998 to December 31, 1997 June 30, 1998 to December 31, 1997
-------------------------------------- ------------------------------------
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $ 8.36 $ 10.00 $ 8.36 $ 10.00
---------- ---------- --------- ----------
Net investment income 0.17(d) 0.06 0.13(d) -
Net realized and unrealized gain/(loss) 6.03 (1.70) 6.04 (1.64)
---------- ---------- --------- ----------
Total income from investment operations 6.20 (1.64) 6.17 (1.64)
---------- ---------- --------- ----------
Net Asset Value, End of Period $ 14.56 $ 8.36 $ 14.53 $ 8.36
========== ========== ========= ==========
Total Return 74.16%(b) (16.40%)(b) 73.80%(b) (16.40%)(b)
Ratios/Supplemental Data:
Net assets, end of year $24,911,817 $ 256,184 $7,393,303 $ 663,984
Ratio of expenses to average net assets 1.08%(c) 1.07% (c) 1.91%(c) 1.75% (c)
Ratio of net investment income to average net assets 2.97%(c) 2.73% (c) 2.19%(c) (0.06%)(c)
Ratio of expenses to average net assets* 1.63%(c) 21.74% (c) 2.63%(c) 23.42% (c)
Ratio of net investment income to average net assets* 2.42%(c) (17.94%)(c) 1.47%(c) (21.73%)(c)
</TABLE>
------------------------------------------------------
* During the period, certain fees were voluntarily reduced and/ or
reimbursed. If such voluntary fee reductions and/ or reimbursements
had not occurred, the ratio would have been as indicated.
(a) Commencement of operations.
(b) Not annualized.
(c) Annualized.
(d) Per share net investment income has been calculated using the daily
average shares method.
31
<PAGE>
ProFunds
Financial Highlights, Continued
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
UltraShort OTC ProFund
-----------------------------------------------------------
Investor Class Service Class
------------------------- -----------------------
For the period For the period
from June 2, 1998(a) from June 2, 1998(a)
through June 30, 1998 through June 30, 1998
------------------------- ----------------------
(Unaudited) (Unaudited)
<S> <C> <C>
Net Asset Value, Beginning of Period $ 10.00 $ 10.00
--------------- ----------------
Net investment income 0.02(d) 0.01(d)
Net realized and unrealized (loss) (2.54) (2.52)
--------------- ----------------
Total income from investment operations (2.52) (2.51)
--------------- ----------------
Net Asset Value, End of Period $ 7.48 $ 7.49
=============== ================
Total Return (25.20%)(b) (25.10%)(b)
Ratios/Supplemental Data:
Net assets, end of year $ 528,421 $ 181,291
Ratio of expenses to average net assets 1.74%(c) 2.84%(c)
Ratio of net investment income to average net assets 3.03%(c) 2.05%(c)
Ratio of expenses to average net assets* 2.60%(c) 3.74%(c)
Ratio of net investment income to average net assets* 2.17%(c) 1.15%(c)
</TABLE>
------------------------------------------------------------
* During the period, certain fees were voluntarily reduced and/ or
reimbursed. If such voluntary fee reductions and/ or reimbursements
had not occurred, the ratio would have been as indicated.
(a) Commencement of operations.
(b) Not annualized.
(c) Annualized.
(d) Per share net investment income has been calculated using the daily
average shares method.
32
<PAGE>
ProFunds
Financial Highlights, Continued
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Money Market ProFund
----------------------------------------------------------------------------
Investor Class Service Class
------------------------------------ -------------------------------------
For the six For the period from For the six For the period from
months ended November 17, 1997(a) months ended November 17, 1997(a)
June 30, 1998 to December 31, 1997 June 30, 1998 to December 31, 1997
------------------------------------ -------------------------------------
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $ 1.00 $ 1.00 $ 1.00 $ 1.00
---------- ----------- ---------- -------
Net investment income 0.02(e) 0.01 0.02(e) -
---------- ----------- ---------- -------
Less Distributions From:
Net investment income (0.02) (0.006) (0.02) -
---------- ----------- ---------- -------
Net change in net asset value per share - - - -
---------- ----------- ---------- -------
Net Asset Value, End of Period $ 1.00 $ 1.00 $ 1.00 $ 1.00
========== =========== ========== =======
Total Return 2.63%(b) 0.61%(b) 2.25%(b) $ 0.21%(b)
Ratios/Supplemental Data:
Net assets, end of year $10,442,530 $ 286,962 $ 1,024,929 $ 2,510
Ratio of expenses to average net assets 0.63%(c),(d) 0.63% (c),(d) 1.83%(c),(d) 1.83% (c),(d)
Ratio of net investment income to average net assets 4.85%(c) 4.92% (c) 3.79%(c) 2.53% (c)
Ratio of expenses to average net assets* 1.28%(c),(d) 9.52% (c),(d) 2.27%(c),(d) 10.52% (c),(d)
Ratio of net investment income to average net assets* 4.40%(c) (3.77%)(c) 3.35%(c) (6.16%)(c)
</TABLE>
-------------------------------------------------------
* During the period, certain fees were voluntarily reduced and/ or
reimbursed. If such voluntary fee reductions and/ or reimbursements
had not occurred, the ratio would have been as indicated.
(a) Commencement of operations.
(b) Not annualized.
(c) Annualized.
(d) The Money Market ProFund expense ratio includes the expense allocation
of the Cash Management Portfolio Master Fund.
(e) Per share net investment income has been calculated using the daily
average shares method.
33
<PAGE>
- --------------------------------------------------------------------------------
Cash Management Portfolio
Statement of Net Assets June 30, 1998 (unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal
Amount Description Value
--------- ----------- -----
<S> <C> <C>
CERTIFICATES OF DEPOSIT - 1.23%
NationsBank Corp.
$ 15,000,000 5.58%, 9/8/98......................... $ 15,000,000
45,000,000 5.58%, 8/7/98......................... 45,000,438
-------------
Total Certificates of Deposit
(Amortized Cost $60,000,438).......................... 60,000,438
-------------
COMMERCIAL PAPER - 48.08%*
7,000,000 Alcatel Alsthom,
5.52%, 8/20/98...................... 6,946,333
Asset Securitization:
10,000,000 5.53%, 8/25/98...................... 9,915,514
31,000,000 5.53%, 8/28/98...................... 30,723,807
32,000,000 5.54%, 9/2/98....................... 31,689,760
15,000,000 5.54%, 9/22/98...................... 14,808,408
Associates Corp.:
30,000,000 5.52%, 8/17/98...................... 29,783,800
39,400,000 5.51%, 8/21/98...................... 39,092,450
35,000,000 5.51%, 8/17/98...................... 34,748,224
14,000,000 BBL North America,
5.53%, 8/25/98...................... 13,881,719
3,000,000 British Gas Capital,
5.5%, 8/24/98....................... 2,975,250
CAFCO:
17,000,000 5.5%, 8/12/98....................... 16,890,917
21,500,000 5.52%, 9/25/98...................... 21,216,487
15,000,000 5.52%, 9/9/98....................... 14,839,000
35,000,000 5.52%, 8/14/98...................... 34,763,867
15,000,000 5.61%, 7/30/98...................... 14,932,213
60,000,000 5.49%, 7/10/98...................... 59,917,650
10,000,000 5.55%, 8/20/98...................... 9,922,917
4,700,000 Caterpillar Financial,
5.48%, 12/7/98...................... 4,586,244
30,000,000 CITGroup,
5.51%, 9/22/98...................... 29,618,892
Commonwealth Bank of Australia:
25,000,000 5.49%, 11/23/98..................... 24,447,188
25,000,000 5.5%, 8/5/98........................ 24,866,319
Credit Suisse:
13,000,000 5.5%, 8/10/98....................... 12,920,556
13,000,000 5.475%, 7/16/98..................... 12,970,344
10,000,000 5.5%, 7/10/98....................... 9,986,250
</TABLE>
<TABLE>
<CAPTION>
Principal
Amount Description Value
--------- ----------- -----
<S> <C> <C>
Daimler Benz:
$ 27,975,000 5.5%, 9/11/98....................... $ 27,667,275
30,000,000 5.5%, 7/15/98....................... 29,935,833
10,000,000 5.5%, 9/25/98....................... 9,868,611
Delaware Funding Corp.:
17,667,000 5.53%, 7/8/98....................... 17,648,003
20,000,000 5.58%, 7/23/98...................... 19,931,800
34,379,000 5.61%, 7/30/98...................... 34,223,636
Deutsche Bank:
10,800,000 5.51%, 7/23/98...................... 10,763,634
60,000,000 5.49%, 7/15/98...................... 59,871,900
Diageo Capital:
40,000,000 5.53%, 7/6/98....................... 39,969,278
15,000,000 5.51%, 9/29/98...................... 14,793,375
32,000,000 5.51%, 7/15/98...................... 31,931,431
17,000,000 5.5%, 9/14/98....................... 16,805,208
Eksportfinans:
19,285,000 5.65%, 7/14/98...................... 19,245,653
15,600,000 5.52%, 7/27/98...................... 15,537,808
11,000,000 5.54%, 8/10/98...................... 10,932,289
Ford Motor Credit:
33,000,000 5.48%, 7/8/98....................... 32,964,837
20,000,000 5.52%, 7/17/98...................... 19,950,933
55,000,000 5.52%, 7/24/98...................... 54,806,033
87,000,000 5.47%, 7/10/98...................... 86,881,028
General Electric Capital Corp.:
20,000,000 5.5%, 10/7/98....................... 19,700,556
25,000,000 5.49%, 11/20/98..................... 24,458,625
18,000,000 5.5%, 10/8/98....................... 17,727,750
17,000,000 5.51%, 9/11/98...................... 16,812,660
25,000,000 5.43%, 9/4/98....................... 24,754,896
7,000,000 5.52%, 8/17/98...................... 6,949,553
13,000,000 5.51%, 7/24/98...................... 12,954,236
21,000,000 5.5%, 10/19/98...................... 20,647,083
30,000,000 5.49%, 7/8/98....................... 29,967,975
General Electric Co.,
10,000,000 5.51%, 8/12/98...................... 9,935,717
General Motors Accept. Corp.,
13,000,000 5.51%, 8/24/98...................... 12,892,555
Generale Bank,
10,000,000 5.49%, 12/3/98...................... 9,763,625
</TABLE>
See Notes to Financial Statements on Page 15
34
<PAGE>
- --------------------------------------------------------------------------------
Cash Management Portfolio
Statement of Net Assets June 30, 1998 (unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal
Amount Description Value
--------- ----------- -----
<S> <C> <C>
Goldman Sachs:
$ 35,000,000 5.52%, 8/10/98...................... $ 34,785,333
35,000,000 5.5%, 10/14/98...................... 34,438,542
30,000,000 5.52%, 8/26/98...................... 29,742,400
30,000,000 5.52%, 8/28/98...................... 29,733,200
Hitachi America,
2,500,000 5.54%, 7/21/98...................... 2,492,306
J.P. Morgan,
8,000,000 5.5%, 11/10/98...................... 7,838,667
Manitoba Hydro Electric,
10,000,000 5.506%, 8/27/98..................... 9,912,822
Merrill Lynch & Co.:
23,000,000 5.52%, 10/16/98..................... 22,622,647
20,000,000 5.52%, 7/15/98...................... 19,957,067
32,000,000 5.5%, 7/27/98....................... 31,872,889
10,500,000 5.51%, 8/3/98....................... 10,446,966
23,000,000 5.53%, 9/11/98...................... 22,745,620
Metropolitan Life:
10,908,000 5.53%, 9/10/98...................... 10,789,033
35,884,000 5.54%, 9/9/98....................... 35,497,450
Monsanto Co.:
15,000,000 5.505%, 9/18/98..................... 14,818,794
15,000,000 5.51%, 9/24/98...................... 14,804,854
Morgan Stanley Group Inc.:
13,000,000 5.5%, 7/10/98....................... 12,982,120
100,000,000 6.25%, 7/1/98....................... 100,000,000
24,000,000 5.53%, 8/12/98...................... 23,845,160
40,000,000 5.52%, 8/27/98...................... 39,650,400
National Australia Funding,
18,500,000 5.5%, 8/3/98........................ 18,406,729
National Rural Utility Cooperative
Financial Corp.,
28,000,000 5.5%, 9/25/98....................... 27,632,111
Norwest,
40,000,000 5.55%, 8/14/98...................... 39,728,667
Panasonic Finance:
15,000,000 5.51%, 10/20/98..................... 14,745,163
5,000,000 5.52%, 11/3/98...................... 4,904,167
Paribas Finance,
20,000,000 5.51%, 7/21/98...................... 19,938,778
</TABLE>
<TABLE>
<CAPTION>
Principal
Amount Description Value
--------- ----------- -----
<S> <C> <C>
Province Of Quebec:
$ 11,000,000 5.5%, 10/16/98...................... $ 10,820,181
24,500,000 5.5%, 11/9/98....................... 24,009,660
20,000,000 5.52%, 10/27/98..................... 19,638,133
2,400,000 5.52%, 10/15/98..................... 2,360,992
10,000,000 5.505%, 11/5/98..................... 9,805,796
Receivables Capital Corp.:
30,000,000 5.53%, 8/14/98...................... 29,797,233
12,239,000 5.53%, 7/17/98...................... 12,208,919
50,000,000 5.53%, 8/26/98...................... 49,569,889
12,949,000 5.55%, 8/21/98...................... 12,847,188
10,000,000 5.53%, 8/3/98....................... 9,949,308
15,000,000 5.59%, 7/29/98...................... 14,934,783
20,000,000 5.57%, 7/27/98...................... 19,919,544
10,000,000 5.531%, 7/17/98..................... 9,975,418
13,000,000 5.61%, 7/10/98...................... 12,981,768
15,000,000 5.57%, 7/23/98...................... 14,948,942
Smith Barney Shearson:
20,000,000 5.52%, 10/7/98...................... 19,699,467
20,000,000 5.355%, 7/8/98...................... 19,979,175
25,000,000 5.5%, 7/10/98....................... 24,965,625
15,000,000 5.4%, 8/7/98........................ 14,916,750
35,000,000 5.49%, 7/21/98...................... 34,893,250
19,000,000 5.54%, 8/20/98...................... 18,853,806
14,000,000 5.53%, 9/15/98...................... 13,836,558
22,000,000 5.4%, 8/10/98....................... 21,868,000
10,000,000 Svenska Handelsbanken,
5.51%, 9/10/98...................... 9,891,331
8,000,000 Westpac Capitol Corp.,
5.49%, 10/1/98...................... 7,887,760
-------------
Total Commercial Paper
(Amortized Cost $2,341,629,266)....................... 2,341,629,266
-------------
EURODOLLAR CERTIFICATES OF
DEPOSIT - 13.51%
Abbey National:
15,000,000 5.59%, 9/8/98....................... 14,999,951
20,000,000 5.58%, 8/21/98...................... 19,999,831
40,000,000 5.55%, 7/14/98...................... 40,000,000
50,000,000 5.55%, 7/9/98....................... 50,000,000
30,000,000 5.59%, 8/14/98...................... 30,000,000
50,000,000 Bank Of Scotland,
5.59%, 9/25/98...................... 50,000,000
25,000,000 Bank Of Tokyo-Mitsubishi,
5.7%, 7/6/98........................ 25,000,000
</TABLE>
See Notes to Financial Statements on Page 15
35
<PAGE>
- --------------------------------------------------------------------------------
Cash Management Portfolio
Statement of Net Assets June 30, 1998 (unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal
Amount Description Value
--------- ----------- -----
<S> <C> <C>
$ 19,000,000 Banque Bruxelles,
5.59%, 8/24/98...................... $ 18,999,874
15,000,000 Banque Nationale de Paris,
5.61%, 7/31/98...................... 15,000,306
39,000,000 Barclays Bank,
5.57%, 7/24/98...................... 38,999,597
20,000,000 Bayerisch Vereinbank,
5.595%, 9/24/98..................... 20,000,466
8,000,000 Bayerisch Vereinbank,
5.6%, 12/7/98....................... 7,997,195
10,000,000 Canadian Imperial Bank,
5.635%, 11/5/98..................... 10,000,315
11,000,000 Credit Agricole,
5.8%, 7/31/98....................... 11,000,129
10,000,000 Creditanstalt Bankverein,
5.59%, 7/6/98....................... 10,000,014
10,000,000 Credito Italiano,
5.59%, 9/1/98....................... 9,999,941
75,000,000 Deutsche Bank:
5.57%, 7/6/98....................... 74,999,938
30,000,000 Halifax Building Society
5.59%, 9/22/98...................... 29,999,763
KBC Bank:
50,000,000 5.5725%, 7/7/98..................... 50,000,021
20,000,000 5.58%, 8/26/98...................... 19,999,920
Nordeutsche Landesbank:
10,000,000 5.66%, 12/10/98..................... 10,000,798
23,000,000 5.58%, 7/29/98...................... 22,999,863
24,000,000 5.57%, 7/24/98...................... 23,999,752
19,000,000 5.66%, 11/16/98..................... 19,000,354
35,000,000 Rabobank,
5.565%, 7/16/98..................... 35,000,072
-------------
Total Eurodollar Certificates of Deposit
(Amortized Cost $657,998,100)......................... 657,998,100
-------------
EURODOLLAR TIME DEPOSITS - 12.30%
Banco Bilbao Vizcaya,
25,000,000 5.64%, 10/7/98...................... 25,000,000
</TABLE>
<TABLE>
<CAPTION>
Principal
Amount Description Value
--------- ----------- -----
<S> <C> <C>
$ 20,000,000 Bank Of America,
5.5313%, 7/13/98.................... $ 20,000,000
22,000,000 Bank Of Austria,
5.78%, 11/18/98..................... 22,000,000
Bank Of Nova Scotia:
20,000,000 5.625%, 9/4/98...................... 20,000,000
50,000,000 6.125%, 7/1/98...................... 50,000,000
60,000,000 Bank Of Tokyo-Mitsubishi,
5.9375%, 7/14/98.................... 60,000,000
20,000,000 Barclays Bank,
5.67%, 12/3/98...................... 20,000,000
25,000,000 Bayerische Landesbank,
5.5625%, 7/9/98..................... 25,000,000
25,000,000 Deutsche Bank,
6.5%, 7/1/98........................ 25,000,000
40,000,000 International Nederlander Funding,
5.75%, 7/6/98....................... 40,000,000
50,000,000 Toronto Dominion Bank,
6.25%, 7/1/98....................... 50,000,000
132,148,756 Union Bank of Switzerland,
5.75%, 7/1/98....................... 132,148,756
West Deutsche Landesbank:
50,000,000 5.61%, 9/29/98...................... 50,000,000
35,000,000 5.5313%, 7/6/98..................... 35,000,000
25,000,000 5.625%, 8/6/98...................... 25,000,000
-------------
Total Eurodollar Time Deposits
(Amortized Cost $599,148,756)......................... 599,148,756
-------------
FLOATING RATE NOTES - 18.99%
20,000,000 American Express Centurion Bank:
Monthly Variable Rate,
5.616%, 9/25/98..................... 20,000,000
Associates Corp.:
Daily Variable Rate,
25,000,000 5.70%, 4/23/99...................... 24,980,157
20,000,000 5.71%, 6/29/99...................... 19,984,468
25,000,000 5.79%, 1/4/99....................... 24,993,798
Bank Of Nova Scotia:
Monthly Variable Rate,
35,000,000 5.5123%, 6/10/99.................... 34,975,009
</TABLE>
See Notes to Financial Statements on Page 15
36
<PAGE>
- --------------------------------------------------------------------------------
Cash Management Portfolio
Statement of Net Assets June 30, 1998 (unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal
Amount Description Value
--------- ----------- -----
<S> <C> <C>
40,000,000 Banque Nationale de Paris:
Monthly Variable Rate,
5.5323%, 6/1/99..................... $ 39,977,973
40,000,000 Bayerische Hypotheka:
Monthly Variable Rate,
5.5162%, 5/28/99.................... 39,971,410
Bayerische Landesbank:
Monthly Variable Rate,
25,000,000 5.521%, 6/29/99..................... 24,981,671
20,000,000 5.5262%, 2/25/99.................... 19,992,415
10,000,000 Bear Stearns Co.:
Monthly Variable Rate,
5.6262%, 6/4/99..................... 10,000,000
Chase Manhattan Bank:
Quarterly Variable Rate,
5,000,000 5.7875%, 11/10/98................... 5,003,189
5,000,000 5.6562%, 10/15/98................... 5,000,888
Commerz Bank:
30,000,000 Monthly Variable Rate,
5.5162%, 5/28/99.................... 29,978,558
30,000,000 CoreStates Bank:
Monthly Variable Rate,
5.6012%, 3/5/99..................... 30,000,000
20,000,000 Creditanstalt Bankverein:
Monthly Variable Rate,
5.5145%, 6/3/99..................... 19,987,294
40,000,000 Deutsche Bank:
Quarterly Variable Rate,
5.5275%, 6/1/99..................... 39,971,181
General Electric Capital Corporation:
Quarterly Variable Rate,
15,000,000 5.607%, 1/15/99..................... 15,000,000
10,000,000 5.6075%, 11/6/98.................... 10,000,000
55,000,000 J.P. Morgan:
Monthly Variable Rate,
5.5273%, 2/24/99.................... 54,973,723
10,000,000 Key Bank:
Daily Variable Rate,
5.54%, 1/29/99...................... 9,996,916
25,000,000 KBC Bank:
Quarterly Variable Rate,
5.5375%, 6/1/99..................... 24,984,239
</TABLE>
<TABLE>
<CAPTION>
Principal
Amount Description Value
--------- ----------- -----
<S> <C> <C>
$ 15,000,000 Mellon Bank:
Quarterly Variable Rate,
5.7792%, 11/17/98................... $ 15,000,000
Merrill Lynch & Co.:
Monthly Variable Rate,
20,000,000 5.606%, 4/13/99..................... 19,998,433
Daily Variable Rate,
12,000,000 5.90%, 4/7/99....................... 12,006,831
35,000,000 5.80%, 2/17/99...................... 34,996,713
35,000,000 Morgan Stanley Group Inc.:
Monthly Variable Rate,
5.6162%, 11/6/98.................... 35,000,000
15,000,000 National City Bank of Cleveland:
Monthly Variable Rate,
5.5462%, 3/5/99..................... 14,996,030
25,000,000 NationsBank Corp.:
Daily Variable Rate,
5.89%, 3/18/99...................... 25,015,517
Nordeutsche Landesbank:
Monthly Variable Rate,
17,000,000 5.5562%, 2/2/99..................... 16,995,145
20,000,000 5.5362%, 2/25/99.................... 19,993,596
Societe Generale:
Daily Variable Rate,
10,000,000 5.77%, 3/2/99....................... 9,996,738
40,000,000 5.78%, 2/9/99....................... 39,986,808
15,000,000 5.76%, 8/28/98...................... 14,998,353
Monthly Variable Rate,
25,000,000 5.5712%, 5/7/99..................... 24,986,393
10,000,000 5.5545%, 6/1/99..................... 9,992,877
25,000,000 Student Loan Marketing Association:
5.321%, 9/28/98..................... 24,999,391
20,000,000 Svenska Handelsbanken:
Monthly Variable Rate,
5.5362%, 6/2/99..................... 19,986,311
10,000,000 US Bank:
Monthly Variable Rate,
5.55323%, 9/17/98................... 9,999,039
Wachovia Bank:
Monthly Variable Rate,
21,000,000 5.5162%, 5/12/99.................... 20,987,497
25,000,000 5.5362%, 2/9/99..................... 24,991,141
</TABLE>
See Notes to Financial Statements on Page 15
37
<PAGE>
- --------------------------------------------------------------------------------
Cash Management Portfolio
Statement of Net Assets June 30, 1998 (unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal
Amount Description Value
------ ----------- -----
<S> <C> <C>
$ 20,000,000 Walt Disney Co.:
Quarterly Variable Rate,
5.5175%, 2/26/99.................. $ 19,988,824
5,000,000 Westpac Capitol Corp.:
Quarterly Variable Rate,
5.544%, 4/9/99.................... 4,998,107
--------------
Total Floating Rate Notes
(Amortized Cost $924,666,633)..................... 924,666,633
--------------
REPURCHASE AGREEMENTS - 1.54%
75,000,000 Tri-party Repurchase Agreement
with Goldman Sachs & Co.,
Dated 6/30/98, 6.25%,
Principal & Interest in the
amount of $75,013,021,
Due 7/01/98,
(Collateralized by FHLMC
Bonds, Par Value of $37,630,062
Coupon Rates of 6.00% to
7.00%, Due from 5/1/03 to
2/1/12, Value of $36,017,383);
Federal National Mortgage
Association Bonds,
Par Value of $190,562,931
Coupon rate of 7.00%, Due 8/1/26,
Value of $40,879,505.............. 75,000,000
Total Repurchase Agreements
(Amortized Cost $75,000,000)..................... 75,000,000
--------------
YANKEE CERTIFICATES OF DEPOSIT - 4.01%
11,000,000 Bank Of Montreal,
5.56%, 7/14/98.................... 10,999,974
12,000,000 Bank Of Nova Scotia,
5.55%, 7/6/98..................... 12,000,000
Banque Nationale de Paris:
5,000,000 5.59%, 8/21/98.................... 4,999,994
11,000,000 5.58%, 9/11/98.................... 10,999,557
13,000,000 5.8%, 10/5/98..................... 13,000,786
Deutsche Bank:
6,000,000 5.55%, 7/20/98.................... 5,999,848
22,000,000 5.58%, 8/6/98..................... 21,999,981
2,000,000 5.705%, 4/16/99................... 1,998,517
40,000,000 Paribas Finance,
5.585%, 9/17/98................... 40,000,000
10,000,000 Royal Bank Of Canada,
5.56%, 2/26/99.................... 9,996,846
2,000,000 Societe Generale Bank,
5.97%, 10/26/98................... 2,000,626
10,000,000 Swiss Bank,
5.75%, 5/7/99..................... 9,998,351
31,000,000 Toronto Dominion,
5.58%, 9/25/98.................... 30,998,222
20,000,000 Westpac Capitol Corp.,
5.67%, 3/23/99.................... 19,991,652
--------------
Total Yankee Certificates of Deposit
(Amortized Cost $194,984,354).................... 194,984,354
--------------
Total Investments
(Amortized Cost $4,853,427,547).......... 99.66% $4,853,427,547
Other Assets Less Liabilities.............. 0.34% 16,726,455
------- --------------
Net Assets................................. 100.00% $4,870,154,002
======= ==============
</TABLE>
* Interest rates for Commercial paper represent discount rates at the time of
purchase.
See Notes to Financial Statements on Page 15
38
<PAGE>
- --------------------------------------------------------------------------------
Cash Management Portfolio
Statement of Operations For the six months ended June 30, 1998 (unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Investment Income
Interest........................................ $140,067,522
------------
Expenses
Advisory Fees................................... 3,724,519
Administration and Services Fees................ 1,241,506
Professional Fees............................... 15,425
Trustees Fees................................... 1,037
Miscellaneous................................... 9,244
------------
Total Expenses.................................. 4,991,731
Less: Expenses Absorbed by Bankers Trust....... (522,308)
------------
Net Expenses.................................. 4,469,423
------------
Net Investment Income............................ 135,598,098
------------
Net Realized Gain from Investment Transactions... 83,981
------------
Net Increase in Net Assets from Operations....... $135,682,079
============
</TABLE>
See Notes to Financial Statements on Page 15
39
<PAGE>
- --------------------------------------------------------------------------------
Cash Management Portfolio
Statements of Changes in Net Assets
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the For the
six months ended year ended
June 30, 1998/1/ December 31, 1997
---------------- -----------------
<S> <C> <C>
Increase (Decrease) in Net Assets from:
Operations
Net Investment Income................................... $ 135,598,099 $ 237,022,519
Net Realized Gain (Loss) from Investment Transactions... 83,981 (41,207)
---------------- ----------------
Net Increase in Net Assets from Operations............... 135,682,080 236,981,312
---------------- ----------------
Capital Transactions
Proceeds from Capital Invested.......................... 16,108,662,027 25,687,643,529
Value of Capital Withdrawn.............................. (15,413,915,080) (25,146,809,558)
---------------- ----------------
Net Increase in Net Assets from Capital Transactions..... 694,746,947 540,833,971
---------------- ----------------
Total Increase in Net Assets............................. 830,429,027 777,815,283
Net Assets
Beginning of Period...................................... 4,039,724,975 3,261,909,692
---------------- ----------------
End of Period............................................ $ 4,870,154,002 $ 4,039,724,975
================ ================
</TABLE>
- ------------------
/1/ Unaudited
- --------------------------------------------------------------------------------
Financial Highlights
- --------------------------------------------------------------------------------
Contained below are selected ratios and supplemental data for each of the
periods indicated for the Cash Management Portfolio.
<TABLE>
<CAPTION>
For the
six months
ended For the years ended December 31,
June 30, ---------------------------------------------------------------
1998/1/ 1997 1996 1995 1994 1993
---------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Supplemental Data and Ratios:
Net Assets, End of Period (000s omitted)...... $4,870,154 $4,039,725 $3,261,910 $2,615,932 $2,735,025 $1,930,075
Ratios to Average Net Assets:
Net Investment Income....................... 5.46%/3/ 5.43% 5.27% 5.77% 4.24% 3.06%
Expenses.................................... 0.18%/3/ 0.18% 0.18% 0.18% 0.18% 0.20%
Decrease Reflected in Above Expense Ratio
Due to Absorption of Expenses by
Bankers Trust.............................. 0.02%/3/ 0.02% 0.02% 0.02% 0.02% 0.00%/2/
</TABLE>
- ----------------------
/1/ Unaudited
/2/ Less than 0.01%.
/3/ Annualized
See Notes to Financial Statements on Page 15
40
<PAGE>
- --------------------------------------------------------------------------------
Cash Management Portfolio
Notes to Financial Statements (unaudited)
- --------------------------------------------------------------------------------
Note 1--Organization and Significant Accounting Policies.
A. Organization
The Cash Management Portfolio (the "Portfolio") is registered under the
Investment Company Act of 1940 (the "Act"), as amended, as an open-end
management investment company. The Portfolio was organized on March 26, 1990, as
an unincorporated trust under the laws of New York, and commenced operations on
July 23, 1990. The Declaration of Trust permits the Board of Trustees (the
"Trustees") to issue beneficial interests in the Portfolio.
B. Security Valuation
Investments are valued at amortized cost, which is in accordance with 2a-7 of
the Investment Company Act of 1940 and represents the fair value of the
Portfolio's investments.
C. Security Transactions and Interest Income
Security transactions are accounted for on a trade date basis. Interest income
is recorded on the accrual basis and includes amortization of premium and
discount on investments. Realized gains and losses from securities transactions
are recorded on the identified cost basis.
All of the net investment income and realized and unrealized gains and losses
from the security transactions of the Portfolio are allocated pro rata among the
investors in the Portfolio at the time of such determination.
D. Repurchase Agreements
The Portfolio may enter into repurchase agreements with financial institutions
deemed to be creditworthy by the Portfolio's' Investment Advisor, subject to the
seller's agreement to repurchase such securities at a mutually agreed upon
price. Securities purchased subject to repurchase agreements are deposited with
the Portfolio's custodian, and pursuant to the terms of the repurchase must have
an aggregate market value greater than or equal to the repurchase price plus all
accrued interest at all times. If the value of the underlying securities falls
below the value of the repurchase price plus accrued interest, the Portfolio
will require the seller to deposit additional collateral by the next business
day. If the request for additional collateral is not met, or the seller defaults
on its repurchase obligation, the Portfolio maintains the right to sell the
underlying securities at market value and may claim any resulting loss against
the seller. However, in the event of a default or bankruptcy by the seller,
realization and/or retention of the collateral may be subject to legal
proceedings.
E. Federal Income Taxes
It is the Portfolio's policy to comply with the requirements of the Internal
Revenue Code. Therefore, no federal income tax provision is required.
F. Other
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts in the financial statements. Actual results could
differ from those estimates.
Note 2--Fees and Transactions with Affiliates
The Portfolio has entered into an Administration and Services Agreement with
Bankers Trust Company ("Bankers Trust"). Under this Administration and Services
Agreement, Bankers Trust provides administrative, custody, transfer agency and
shareholder services to the Portfolio in return for a fee computed daily and
paid monthly at an annual rate of .005% of the Portfolio's average daily net
assets. At June 30, 1998, amount owed under the Administration and Services
Agreement amounted to $189,913, net of waived fees of $18,952.
The Portfolio has entered into an Advisory Agreement with Bankers Trust. Under
this Advisory Agreement, the Portfolio pays Bankers Trust an advisory fee
computed daily and paid monthly at an annual rate of .15% of the Portfolio's
average daily net assets. At June 30, 1998, amounts owed under the Advisory
Agreement amounted to $557,741, net of waived fees of $68,855.
Bankers Trust has voluntarily undertaken to waive its fees and reimburse
expenses of the Portfolio, to the extent necessary, to limit all expenses to
.18% of the average daily net assets of the Portfolio. For the six-month period
ended June 30, 1998, expenses of the Portfolio have been reduced by $522,308.
In 1994, the Portfolio sold certain structured notes carried at par to an
unrelated third party financial institution at par plus accrued interest
pursuant to a put agreement and that third party financial institution
immediately resold such security to Banker Trust New York Corporation, the
parent of the Advisor, at the same price, also pursuant to a put agreement. As a
result of these transactions the Portfolio's Financial Highlights for the year
ended December 31, 1994, reflects the Portfolio's realized loss on the sale of
these securities and a capital contribution in the amount of $18,718,663. In
1996, Bankers Trust contributed capital in the amount of $1,113,488 to reimburse
the Cash Management Portfolio for capital losses incurred in prior years.
The Cash Management Portfolio is a participant with other affiliated entities in
a revolving credit facility ("the revolver") and a discretionary demand line of
credit facility ("collectively the credit facilities") in the amounts of
$50,000,000 and $100,000,000, respectively. A commitment fee of .07% per annum
on the average daily amount of the available commitment is payable on a
quarterly basis and apportioned equally among all participants. Amounts borrowed
under the credit facilities will bear interest at a rate per annum equal to the
Federal Funds Rate plus .45%. No amounts were drawn down or outstanding under
the credit facilities as of and for the period ended June 30, 1998.
Certain officers of the Portfolio are also directors, officers, and/or employees
of Edgewood Services Inc., distributor of the BT Pyramid Funds. None of the
officers so affiliated received compensation for services as officers of the
Portfolio.
Effective August 11, 1998, ICC Distributors, Inc. will replace Edgewood as
distributor of the Trust.
Note 3--Net Assets
At June 30, 1998 net assets consisted of:
Paid-in-Capital $4,870,154,002
==============
41
<PAGE>
Investment Advisor
- ------------------
All Non-Money Market ProFunds
ProFunds Advisors LLC
7900 Wisconsin Avenue, Suite 300
Bethesda, Maryland 20814
Money Market ProFund
Bankers Trust Company
130 Liberty Street
New York, New York 10006
Administrator, Transfer Agent, Fund Accounting Agent
- ----------------------------------------------------
BISYS Fund Services
3435 Stelzer Road
Columbus, Ohio 43219-3035
Fund Counsel
- ------------
Dechert Price & Rhoads
1775 Eye Street, N.W.
Washington, D.C. 20006
Independent Auditors
- --------------------
PricewaterhouseCoopers LLP
100 East Broad Street,
Suite 2100
Columbus, Ohio 43215-3671
Custodian
- ---------
UMB Bank, N.A.
928 Grand Avenue
Kansas City, Missouri 64141
Distributor
- -----------
Concord Financial Group, Inc.
3435 Stelzer Road
Columbus, Ohio 43219-3035
This report is submitted for the general information of the
shareholders of the ProFunds. It is not authorized for distribution
to prospective investors unless preceded or accompanied by an
effective prospectus.
8/98
