<PAGE>
June 30, 1999
Semi-Annual Report
ProFunds No-Load Mutual Funds
Bull ProFund
UltraBull ProFund
UltraOTC ProFund
UltraEurope ProFund
Bear ProFund
UltraBear ProFund
UltraShort OTC ProFund
UltraShort Europe ProFund
Money Market ProFund
[LOGO OF PROFUNDS APPEARS HERE]
<PAGE>
Table of Contents
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Letter to Shareholders............................................. 1
Schedules of Portfolio Investments and Financial Statements
Bull ProFund...................................................... 2
UltraBull ProFund................................................. 6
UltraOTC ProFund.................................................. 10
UltraEurope ProFund............................................... 15
Bear ProFund...................................................... 19
UltraBear ProFund................................................. 23
UltraShort OTC ProFund............................................ 27
UltraShort Europe ProFund......................................... 31
Money Market ProFund.............................................. 35
Notes to Financial Statements...................................... 38
Cash Management Portfolio
Statement of Net Assets........................................... 46
Statement of Operations........................................... 52
Statement of Changes in Net Assets................................ 53
Financial Highlights.............................................. 53
Notes to Financial Statements..................................... 54
</TABLE>
<PAGE>
Shareholders' 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, 1999.
Our asset growth has continued at an impressive rate. As of June 30, 1999,
the seven ProFunds with which we started the year had $884 million under
management, a growth rate of 72% in six months. Moreover, the benchmarked
ProFunds continued to deliver, maintaining a statistical correlations of 99%
or better to their respective benchmarks.
Building on Success . . .
Responding to demand from our shareholders to apply the ProFunds' concept to
markets outside the U.S., we launched two new ProFunds: UltraEurope ProFund
and UltraShort Europe ProFund, benchmarked to "large cap" indexes from the
three largest economies of Europe. We are confident that these new ProFunds
will present attractive opportunities to our shareholders.
Media Continues to Notice . . .
The innovative ProFunds' investment approach--opportunities to double an
index or its inverse with no transaction fees or share exchange restrictions--
kept generating attention from a variety of media sources. Examples include
The Wall Street Journal (5/21/99), The New York Times (4/18/99), Mutual Fund
Magazine (5/99) and Money Magazine (3/99).
Top Performer . . .
ProFunds offered opportunities for top returns. UltraOTC ProFund placed #1
out of 3,064 funds in the diversified U.S. stock funds category with
Morningstar.*
Share Split . . .
The ensuing financial statements reflect a four for one share split on
shares of UltraBull ProFund and UltraOTC ProFund executed on July 19, 1999.
This split was designed to bring the values of these ProFunds in line with the
industry norms.
Finally . . .
First to the new investors of ProFunds, we hope to earn your respect by
providing the investment options you need to wade through these constantly
changing times. Second, to our long-term investors, we are confident you have
seen the value of investing in ProFunds and hope you will continue to support
us as we move forward. We welcome any comments or suggestions you may have.
Sincerely,
/s/ Michael Sapir
Michael Sapir
Chairman
- -----
* Morningstar ratings reflect historical risk-adjusted performance as of June
30, 1999. The ratings are subject to change every month. Past performance is
not a guarantee of future results. The funds are categorized on the fund
stated prospectus objective, as grouped by Morningstar.
1
<PAGE>
PROFUNDS Schedule of Portfolio Investments
Bull ProFund June 30, 1999
(Unaudited)
<TABLE>
<CAPTION>
Options Purchased (7.4%)
Contracts
or
Principal Market
Amount Value
----------- -----------
<S> <C> <C>
S&P 500 Call Option expiring July 1999 @ 700........... 7 $ 1,187,375
-----------
TOTAL OPTIONS PURCHASED (Cost $1,085,035).............. 1,187,375
-----------
U.S. Treasury Note (90.2%)
United States Treasury Note, 4.50%, 9/30/00............ $14,685,000 14,494,560
-----------
TOTAL U.S. TREASURY NOTE (Cost $14,494,970)............ 14,494,560
-----------
TOTAL INVESTMENTS (Cost $15,580,005)(a) (97.5%)........ 15,681,935
Other assets in excess of liabilities (2.5%)........... 395,622
-----------
TOTAL NET ASSETS (100.0%).............................. $16,077,557
===========
</TABLE>
- -----
Percentages indicated are based on net assets of $16,077,557.
<TABLE>
<CAPTION>
Futures Purchased
Number of Market
Contracts Value
--------- -----------
<S> <C> <C>
S&P 500 Future Contract expiring September 1999.......... 32 $11,028,000
-----------
TOTAL FUTURES PURCHASED (Cost $10,680,559)............... $11,028,000
===========
</TABLE>
- -----
(a) Represents cost for federal income tax purposes and differs from value by
net unrealized appreciation of securities as follows:
Unrealized appreciation...... $102,340
Unrealized depreciation...... (410)
--------
Net unrealized appreciation.. $101,930
========
See accompanying notes to the financial statements.
2
<PAGE>
PROFUNDS
Bull ProFund
(Unaudited)
<TABLE>
<CAPTION>
Statement of Assets and Liabilities
June 30, 1999
<S> <C>
Assets:
Investments, at value (cost $15,580,005)......................... $15,681,935
Cash............................................................. 56,395
Receivable from Investment Advisor............................... 661
Interest receivable.............................................. 166,109
Net receivable for variation margin on open futures contracts.... 173,200
Prepaid expenses................................................. 15,347
Deferred organization costs...................................... 589
-----------
Total Assets..................................................... 16,094,236
Liabilities:
Advisory fees payable............................................ 8,113
Management servicing fees payable................................ 1,645
Administration fees payable...................................... 713
Shareholder servicing fees payable--Service Class................ 3,873
Other payables and accrued expenses.............................. 2,335
-----------
Total Liabilities................................................ 16,679
-----------
Net Assets........................................................ $16,077,557
===========
Net Assets consist of:
Capital.......................................................... $16,013,430
Accumulated undistributed net investment income.................. 150,950
Accumulated undistributed net realized losses on investments and
futures contracts............................................... (536,194)
Net unrealized appreciation of investments and futures
contracts....................................................... 449,371
-----------
Total Net Assets.................................................. $16,077,557
===========
Investor Shares:
Net Assets....................................................... $14,455,043
Shares of Capital Stock Outstanding*............................. 211,203
Net Asset Value (offering and redemption price per share)*....... $ 68.44
===========
Service Shares:
Net Assets....................................................... $ 1,622,514
Shares of Capital Stock Outstanding*............................. 23,967
Net Asset Value (offering and redemption price per share)*....... $ 67.70
===========
</TABLE>
- -----
* Reflects 5 for 1 reverse stock split that occurred on January 15, 1999.
<TABLE>
<CAPTION>
Statement of Operations
For the six months ended June 30, 1999
<S> <C>
Investment Income:
Interest.......................................................... $ 268,133
Expenses:
Advisory fees..................................................... 50,986
Management servicing fees......................................... 10,209
Administration fees............................................... 13,339
Shareholder servicing fees--Service Class......................... 10,488
Fund accounting................................................... 2,042
Transfer agent fees............................................... 10,003
Custody fees...................................................... 3,759
Registration & filing fees........................................ 22,534
Other fees........................................................ 6,552
---------
Total expenses before waivers/reimbursements...................... 129,912
Less expenses waived/reimbursed................................... (12,729)
---------
Net expenses...................................................... 117,183
---------
Net Investment Income.............................................. 150,950
---------
Realized and Unrealized Gains (Losses) on Investments:
Net realized losses on investment transactions and futures con-
tracts........................................................... (287,027)
Net change in unrealized appreciation of investments and futures
contracts........................................................ 179,132
---------
Net realized and unrealized gains (losses) on investments and
futures contracts................................................ (107,895)
---------
Increase In Net Assets Resulting from Operations................... $ 43,055
=========
</TABLE>
See accompanying notes to the financial statements.
3
<PAGE>
PROFUNDS
Bull ProFund
(Unaudited)
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
For the period from
For the For the December 2, 1997 (a)
six months ended year ended through
June 30, 1999 December 31, 1998 December 31, 1997
---------------- ----------------- --------------------
<S> <C> <C> <C>
Change in Net Assets:
Operations:
Net investment income.. $ 150,950 $ 79,042 $ 115
Net realized gains
(losses) on
investments and
futures contracts..... (287,027) 456,309 (846)
Net change in
unrealized
appreciation of
investments and
futures contracts..... 179,132 269,984 255
------------- ------------- --------
Net increase (decrease)
in net assets
resulting from
operations............ 43,055 805,335 (476)
Distributions to
Shareholders from:
Net investment income
Investor shares........ -- (5,082) --
Service shares......... -- (4) --
Net realized gains on
investment
transactions and
futures contracts
Investor shares........ -- (6,056) --
Service shares......... -- (568) --
------------- ------------- --------
Net (decrease) in
assets resulting from
distributions......... -- (11,710) --
Capital Share
Transactions:
Proceeds from shares
issued................ 219,972,108 113,734,720 99,897
Dividends reinvested... -- 11,264 --
Cost of shares
redeemed.............. (212,071,075) (106,452,431) (53,130)
------------- ------------- --------
Net increase in net
assets resulting from
capital share
transactions.......... 7,901,033 7,293,553 46,767
------------- ------------- --------
Total increase in net
assets................ 7,944,088 8,087,178 46,291
Net Assets:
Beginning of period.... 8,133,469 46,291 --
------------- ------------- --------
End of period.......... $ 16,077,557 $ 8,133,469 $ 46,291
============= ============= ========
</TABLE>
- -----
(a) Commencement of operations
See accompanying notes to the financial statements.
4
<PAGE>
PROFUNDS
Bull ProFund
(Unaudited)
Financial Highlights
<TABLE>
<CAPTION>
For a share of beneficial
interest outstanding Adjusted for 5:1 reverse stock split on January 15, 1999
Investor Class Service Class
---------------------------------------------- --------------------------------------------
For the For the
For the period from For the period from
six months For the December 2, six months For the December 2,
ended year ended 1997 (a) ended year ended 1997 (a)
June 30, December 31, to December 31, June 30, December 31, to December 31,
1999 1998 1997 1999 1998 1997
----------- ------------ --------------- ---------- ------------ ---------------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period..... $ 62.48 $ 49.45 $ 50.00 $ 62.12 $ 49.45 $ 50.00
----------- ---------- ------- ---------- -------- -------
Net investment income... 0.65(d) 1.63(d) 0.10 0.35(d) 1.08(d) --
Net realized and
unrealized gain/(loss)
on investment
transactions and
futures contracts...... 5.31(f) 11.49 (0.65) 5.23(f) 11.64 (0.55)
----------- ---------- ------- ---------- -------- -------
Total income/(loss) from
investment operations.. 5.96 13.12 (0.55) 5.58 12.72 (0.55)
Distribution to
Shareholders from:
Net investment income... -- (0.04) -- -- --(e) --
Net realized gains on
investment transactions
and futures contracts.. -- (0.05) -- -- (0.05) --
----------- ---------- ------- ---------- -------- -------
Total distributions..... -- (0.09) -- -- (0.05) --
----------- ---------- ------- ---------- -------- -------
Net Asset Value, End of
Period.................. $ 68.44 $ 62.48 $ 49.45 $ 67.70 $ 62.12 $ 49.45
=========== ========== ======= ========== ======== =======
Total Return............. 9.50%(b) 26.57 % (1.10)%(b) 9.02%(b) 25.68 % (1.10)%(b)
Ratios/Supplemental Data:
Net assets, end of year.. $14,455,043 $7,543,922 $46,281 $1,622,514 $589,547 $ 10
Ratio of expenses to
average net assets...... 1.56%(c) 1.63 % 1.33 %(c) 2.59%(c) 2.67 % 1.33 %(c)
Ratio of net investment
income to average net
assets.................. 2.38%(c) 2.84 % 2.97 %(c) 1.31%(c) 1.89 % 0.00 %(c)
Ratio of expenses to
average net assets*..... 1.74%(c) 2.40 % 423.48 %(c) 2.81%(c) 3.30 % 424.48 %(c)
Portfolio turnover(g).... 441% 441%
</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) Distribution per share was less than $0.005
(f) The amount shown for a share outstanding throughout the period does not
accord with the aggregate realized, and change in unrealized, 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.
(g) Portfolio turnover is calculated on the basis of the fund as a whole
without distinguishing between the classes of shares issued.
5
<PAGE>
PROFUNDS Schedule of Portfolio Investments
UltraBull ProFund June 30, 1999
(Unaudited)
<TABLE>
<CAPTION>
Options Purchased (14.3%)
Contract
or
Principal Market
Amount Value
------------ ------------
<S> <C> <C>
S&P 500 Call Option expiring
July 1999 @ 700..................................... 150 $ 25,443,750
S&P 500 Put Option expiring
July 1999 @ 750..................................... 1,000 7,500
S&P 500 Put Option expiring
July 1999 @ 900..................................... 200 1,500
------------
TOTAL OPTIONS PURCHASED
(Cost $23,776,125).................................. 25,452,750
------------
U.S. Treasury Note (82.1%)
United States Treasury Note,
4.50%, 9/30/00...................................... $148,420,000 146,495,240
------------
TOTAL U.S. TREASURY NOTE
(Cost $146,499,381)................................. 146,495,240
------------
TOTAL INVESTMENTS
(Cost $170,275,506)(a) (96.4%)...................... 171,947,990
Other assets in excess of liabilities (3.6%)......... 6,410,185
------------
TOTAL NET ASSETS 100.0%.............................. $178,358,175
============
- -----
<CAPTION>
Percentages indicated are based on net assets of $178,358,175.
Futures Purchased
Number of Market
Contracts Value
---------- ------------
<S> <C> <C>
S&P 500 Future Contract expiring September 1999........ 877 $302,236,125
------------
TOTAL FUTURES PURCHASED
(Cost $295,323,197)................................... $302,236,125
============
</TABLE>
- -----
(a) Represents cost for federal income tax purposes differs from market value
by net unrealized appreciation of securities as follows:
Unrealized appreciation.... $1,693,000
Unrealized depreciation.... (20,516)
----------
Net unrealized apprecia-
tion...................... $1,672,484
==========
See accompanying notes to the financial statements.
6
<PAGE>
PROFUNDS
UltraBull ProFund
(Unaudited)
<TABLE>
<CAPTION>
Statement of Assets and Liabilities
June 30, 1999
<S> <C>
Assets:
Investments, at value (cost $170,275,506)....................... $171,947,990
Cash............................................................ 1,162,944
Variation margin receivable..................................... 3,617,625
Interest receivable............................................. 1,678,849
Prepaid expenses................................................ 77,478
Deferred organizational costs................................... 9,053
------------
Total Assets.................................................... 178,493,939
Liabilities:
Advisory fees payable........................................... 77,727
Management servicing fees payable............................... 15,546
Administration fees payable..................................... 2,641
Shareholder servicing fees payable--Service Class............... 26,134
Other payables and accrued expenses............................. 13,716
------------
Total Liabilities............................................... 135,764
------------
Net Assets....................................................... $178,358,175
============
Net Assets consist of:
Capital......................................................... $182,570,857
Accumulated undistributed net investment income................. 1,239,152
Accumulated net realized losses on investments and futures
transactions................................................... (14,037,246)
Net unrealized appreciation of investments and futures
contracts...................................................... 8,585,412
------------
Total Net Assets................................................. $178,358,175
============
Investor Shares:
Net Assets...................................................... $166,810,430
Shares of Capital Stock Outstanding*............................ 7,712,552
Net Asset Value (offering and redemption price per share)*...... $ 21.63
============
Service Shares:
Net Assets...................................................... $ 11,547,745
Shares of Capital Stock Outstanding*............................ 541,278
Net Asset Value (offering and redemption price per share)*...... $ 21.33
============
<CAPTION>
- -----
* Reflects 5 for 1 reverse stock split that occurred on January 15, 1999 and a
4 for 1 stock split that occurred on July 16, 1999.
Statement of Operations
For the six months ended June 30, 1999
<S> <C>
Investment Income:
Interest........................................................ $ 2,087,614
Expenses:
Advisory fees................................................... 430,609
Management servicing fees....................................... 86,122
Administration fees............................................. 98,827
Shareholder servicing fees--Service Class....................... 86,592
Fund accounting fees............................................ 17,224
Transfer agent fees............................................. 81,270
Custody fees.................................................... 8,625
Registration & filing fees...................................... 33,894
Other fees...................................................... 29,056
-----------
Total expenses before waivers/reimbursements.................... 872,219
Less expenses waived/reimbursed................................. (23,757)
-----------
Net expenses.................................................... 848,462
-----------
Net Investment Income............................................ 1,239,152
-----------
Realized and Unrealized Gains (Losses) on Investments:
Net realized losses on investment transactions and futures
contracts...................................................... (6,666,230)
Net change in unrealized appreciation of investments and futures
contracts...................................................... 262,752
-----------
Net realized and unrealized gains (losses) on investments and
futures contracts.............................................. (6,403,478)
-----------
Decrease in Net Assets Resulting from Operations................. $(5,164,326)
===========
</TABLE>
See accompanying notes to the financial statements.
7
<PAGE>
PROFUNDS
UltraBull ProFund
(Unaudited)
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
For the period from
For the For the November 28, 1997 (a)
six months ended year ended through
June 30, 1999 December 31, 1998 December 31, 1997
---------------- ----------------- ---------------------
<S> <C> <C> <C>
Change in Net Assets:
Operations:
Net investment income.. $ 1,239,152 $ 766,107 $ 4,927
Net realized gains on
investment
transactions and
futures contracts..... (6,666,230) 3,734,412 7,528
Net change in
unrealized
appreciation of
investments and
futures contracts..... 262,752 8,276,070 46,590
--------------- ------------- -----------
Net increase (decrease)
in net assets
resulting from
operations............ (5,164,326) 12,776,589 59,045
Distributions to
Shareholders from:
Net investment income
Investor shares........ -- (73,735) --
Service shares......... -- (191) --
Net realized gains on
investment
transactions and
futures contracts
Investor shares........ -- (18,756) --
Service shares......... -- (2,100) --
--------------- ------------- -----------
Net decrease in assets
resulting from
distributions......... -- (94,782) --
Capital Share
Transactions:
Proceeds from shares
issued................ 1,204,837,280 625,192,237 17,466,796
Dividends reinvested... -- 68,468 --
Cost of shares
redeemed.............. (1,123,160,660) (544,534,668) (9,087,804)
--------------- ------------- -----------
Net increase in net
assets resulting from
capital share
transactions.......... 81,676,620 80,726,037 8,378,992
--------------- ------------- -----------
Total increase in net
assets................ 76,512,294 93,407,844 8,438,037
Net Assets:
Beginning of period.... 101,845,881 8,438,037 --
--------------- ------------- -----------
End of period.......... $ 178,358,175 $ 101,845,881 $ 8,438,037
=============== ============= ===========
</TABLE>
- -----
(a) Commencement of operations
See accompanying notes to the financial statements.
8
<PAGE>
PROFUNDS
UltraBull ProFund
(Unaudited)
Financial Highlights
<TABLE>
<CAPTION>
For a share of beneficial Adjusted for 5:1 reverse stock split on January 15, 1999 and 4:1 stock split on
interest outstanding July 16, 1999
Investor Class Service Class
------------------------------------------------ -----------------------------------------------
For the For the
period from period from
For the For the November 28, For the For the November 28,
six months year ended 1997 (a) six months year ended 1997 (a)
June 30, December 31, to December 31, June 30, December 31, to December 31,
1999 1998 1997 1999 1998 1997
------------ ------------ --------------- ----------- ------------ ---------------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period..... $ 18.36 $ 12.86 $ 12.50 $ 18.19 $ 12.86 $ 12.50
------------ ----------- ---------- ----------- ----------- ----------
Net investment income... 0.14(d) 0.39(d) 0.01 0.10(d) 0.24(d) 0.01
Net realized and
unrealized gains on
investment transactions
and futures contracts.. 3.13(f) 5.13 0.35 3.04(f) 5.10 0.35
------------ ----------- ---------- ----------- ----------- ----------
Total income from
investment operations.. 3.27 5.52 0.36 3.14 5.34 0.36
Distribution to
Shareholders from:
Net investment income... -- (0.01) -- -- --(e) --
Net realized gains on
investment transactions
and futures contracts.. -- (0.01) -- -- (0.01) --
------------ ----------- ---------- ----------- ----------- ----------
Total distributions..... -- (0.02) -- -- (0.01) --
------------ ----------- ---------- ----------- ----------- ----------
Net Asset Value, End of
Period.................. $ 21.64 $ 18.36 $ 12.86 $ 21.33 $ 18.19 $ 12.86
============ =========== ========== =========== =========== ==========
Total Return............. 17.81%(b) 42.95 % 2.90%(b) 17.32%(b) 41.48 % 2.90%(b)
Ratios/Supplemental Data:
Net assets at end of
period.................. $166,810,430 $90,854,397 $6,043,740 $11,547,745 $10,991,484 $2,394,297
Ratio of expenses to
average net assets...... 1.33%(c) 1.50 % 1.33%(c) 2.33%(c) 2.39 % 1.33%(c)
Ratio of net investment
income to average net
assets.................. 2.31%(c) 2.43 % 2.26%(c) 1.30%(c) 1.53 % 1.69%(c)
Ratio of expenses to
average net assets*..... 1.37%(c) 1.70 % 12.69%(c) 2.37%(c) 2.84 % 13.69%(c)
Portfolio turnover(g).... 371% 371%
</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.
(e) Distribution per share was less than $0.005
(f) The amount shown for a share outstanding throughout the period does not
accord with the aggregate realized, and change in unrealized, 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.
(g) Portfolio turnover is calculated on the basis of the fund as a whole
without distinguishing between the classes of shares issued.
9
<PAGE>
PROFUNDS Schedule of Portfolio Investments
UltraOTC ProFund June 30, 1999
(Unaudited)
<TABLE>
<CAPTION>
Common Stocks (71.4%)
Market
Shares Value
------- ------------
<S> <C> <C>
Airlines (0.3%)
Comair Holdings, Inc....................................... 20,825 $ 433,420
Northwest Airlines Corp.--Class A*......................... 18,105 588,413
------------
1,021,833
------------
Auto Manufacturers (0.3%)
PACCAR, Inc................................................ 23,375 1,247,641
------------
Biotechnology (3.7%)
Amgen, Inc.*............................................... 64,005 3,896,303
Biogen, Inc.*.............................................. 48,280 3,105,008
Centocor, Inc.*............................................ 18,530 863,961
Chiron Corp.*.............................................. 66,130 1,372,198
Genzyme Corp.*............................................. 27,455 1,331,568
Immunex Corp.*............................................. 29,750 3,791,265
------------
14,360,303
------------
Chemicals (0.2%)
Sigma-Aldrich Corp......................................... 28,475 980,608
------------
Commercial Services (1.5%)
Concord EFS, Inc.*......................................... 38,335 1,622,050
Paychex, Inc............................................... 62,050 1,977,844
Quintiles Transnational Corp.*............................. 41,735 1,752,870
Stewart Enterprises, Inc.--Class A*........................ 24,310 354,014
------------
5,706,778
------------
Computer Software (18.9%)
Adobe Systems, Inc......................................... 15,980 1,312,857
Autodesk, Inc.............................................. 12,240 361,845
BMC Software, Inc.*........................................ 47,940 2,588,760
Cambridge Technology Partners, Inc.*....................... 10,285 180,630
Citrix Systems, Inc.*...................................... 27,370 1,546,405
Compuware Corp.*........................................... 60,775 1,933,405
Electronic Arts, Inc.*..................................... 16,235 880,749
Fiserv, Inc.*.............................................. 40,885 1,280,212
Intuit, Inc.*.............................................. 20,145 1,815,568
Microsoft Corp.*........................................... 470,730 42,453,961
Network Associates, Inc.*.................................. 36,635 538,077
Novell, Inc.*.............................................. 109,055 2,889,958
Oracle Corp.*.............................................. 161,670 6,001,998
Parametric Technology Corp.*............................... 96,815 1,343,308
Peoplesoft, Inc.*.......................................... 87,295 1,505,839
Siebel Systems, Inc.*...................................... 27,625 1,833,609
Yahoo!, Inc.*.............................................. 29,325 5,051,230
------------
73,518,411
------------
Computers (11.7%)
3COM Corp.*................................................ 48,875 1,304,352
Adaptec, Inc.*............................................. 23,630 834,434
Apple Computer, Inc.*...................................... 50,915 2,358,001
Cisco Systems, Inc.*....................................... 307,020 19,783,600
Comverse Technology, Inc.*................................. 19,295 1,456,773
Dell Computer Corp.*....................................... 251,940 9,321,780
Electronics for Imaging, Inc.*............................. 11,220 576,428
Micron Electronics, Inc.*.................................. 20,315 204,420
Quantum Corp.*............................................. 53,210 1,283,691
Sun Microsystems, Inc.*.................................... 89,930 6,193,929
Synopsys, Inc.*............................................ 21,420 1,182,116
Veritas Software Corp.*.................................... 13,005 1,234,662
------------
45,734,186
------------
<CAPTION>
Common Stocks, continued
Market
Shares Value
------- ------------
<S> <C> <C>
Distibution & Wholesale (0.1%)
Tech Data Corp.*.......................................... 11,475 $ 438,919
------------
Electrical & Electronic - Components & Equipment (1.5%)
American Power Conversion Corp.*.......................... 66,895 1,346,262
Molex, Inc................................................ 19,890 735,930
Uniphase Corp.*........................................... 12,835 2,130,610
Visx, Inc.*............................................... 18,785 1,487,537
------------
5,700,339
------------
Food - Distibution (0.2%)
Food Lion, Inc.--Class B.................................. 53,635 620,155
------------
Health Care (0.5%)
Biomet, Inc............................................... 40,715 1,618,422
First Health Group Corp.*................................. 8,925 192,445
Lincare Holdings Inc.*.................................... 12,325 308,125
------------
2,118,992
------------
Internet Services (3.3%)
Amazon.Com, Inc.*......................................... 28,645 3,584,206
At Home Corporation--Series A*............................ 70,040 3,777,782
CMGI, Inc.*............................................... 26,945 3,073,414
CNET, Inc.*............................................... 21,420 1,234,328
Lycos, Inc.*.............................................. 14,450 1,327,594
------------
12,997,324
------------
Media (2.1%)
Chancellor Media Corp.*................................... 46,835 2,581,779
Comcast Corp.--Special Class A............................ 92,225 3,544,899
Reuters Group PLC--ADR.................................... 7,480 606,348
USA Networks, Inc.*....................................... 37,655 1,510,907
------------
8,243,933
------------
Medical Instruments (0.0%)
Genzyme Surgical Products*................................ 4,626 20,381
------------
Medical - Hospital Management & Services (0.1%)
Pacificare Health Systems*................................ 7,480 538,093
------------
Metal Processing (0.1%)
Worthington Industries, Inc............................... 16,745 275,246
------------
Office Equipment & Services (0.1%)
Corporate Express, Inc.*.................................. 15,895 111,265
Miller Herman, Inc........................................ 16,405 344,505
------------
455,770
------------
Packaging (0.3%)
Smurfit-Stone Container Corp.*............................ 56,695 1,165,791
------------
Pharmaceuticals (0.1%)
Rexall Sundown, Inc.*..................................... 10,880 132,600
------------
Professional Schools (0.1%)
Apollo Group, Inc.--Class A*.............................. 19,465 517,039
------------
Restaurants (0.7%)
CBRL Group, Inc........................................... 10,455 181,002
Starbucks Corp.*.......................................... 66,895 2,512,744
------------
2,693,746
------------
</TABLE>
See accompanying notes to the financial statements.
10
<PAGE>
PROFUNDS Schedule of Portfolio Investments
UltraOTC ProFund June 30, 1999
(Unaudited)
<TABLE>
<CAPTION>
Common Stocks, continued
Market
Shares Value
------- ------------
<S> <C> <C>
Retail (2.2%)
Bed Bath & Beyond, Inc.*................................... 50,405 $ 1,940,593
Costco Companies, Inc.*.................................... 30,855 2,470,328
Dollar Tree Stores, Inc.*.................................. 14,110 620,840
Fastenal Co................................................ 7,395 387,775
Ross Stores, Inc........................................... 9,435 475,288
Staples, Inc.*............................................. 83,895 2,595,502
------------
8,490,326
------------
Semiconductors (10.5%)
Altera Corp.*.............................................. 73,185 2,694,123
Applied Materials, Inc.*................................... 51,765 3,824,139
Atmel Corp.*............................................... 18,955 496,384
Intel Corp................................................. 313,735 18,667,232
KLA-Tencor Corp.*.......................................... 28,305 1,836,287
Linear Technology Corp..................................... 53,805 3,618,386
Maxim Integrated Products*................................. 50,065 3,329,323
Microchip Technology, Inc.*................................ 11,050 523,494
Sanmina Corp.*............................................. 16,150 1,225,381
Vitesse Semiconductor Corp.*............................... 21,420 1,444,511
Xilinx, Inc.*.............................................. 55,165 3,158,196
------------
40,817,456
------------
Telecommunications - Services and Equipment (8.4%)
ADC Telecommunication, Inc.*............................... 45,390 2,068,082
Andrew Corp.*.............................................. 15,725 297,792
Ericsson (Lm) Telephone--ADR............................... 79,560 2,620,508
Level 3 Communications, Inc.*.............................. 63,070 3,788,142
Lucent Technologies, Inc................................... 66 17
McLeodUSA, Inc.--Class A*.................................. 15,810 869,550
Nextel Communications, Inc.--Class A*...................... 102,000 5,119,125
NTL, Inc.*................................................. 20,485 1,765,551
PanAmSat Corp.*............................................ 53,465 2,081,792
Qualcomm, Inc.*............................................ 46,410 6,659,834
Qwest Communications International, Inc.*.................. 104,635 3,459,495
Tellabs, Inc.*............................................. 59,585 4,025,712
------------
32,755,600
------------
Telephone (3.9%)
MCI Worldcom, Inc.*........................................ 177,395 15,300,319
------------
Textiles (0.6%)
Cintas Corp................................................ 35,615 2,392,883
------------
TOTAL COMMON STOCKS (Cost $264,407,158).................... 278,244,672
------------
<CAPTION>
Options Purchased (10.2%)
Market
Shares Value
----------- ------------
<S> <C> <C>
Nasdaq Call Option expiring July 1999 @ 1000.......... 300 $ 39,750,000
Nasdaq Put Option expiring July 1999 @ 1200........... 1,000 26,000
------------
TOTAL OPTIONS PURCHASED (Cost $30,050,000)............ 39,776,000
------------
U.S. Treasury Obligations (16.8%)
<CAPTION>
Principal
Amount
-----------
<S> <C> <C>
United States Treasury Notes, 4.50%, 9/30/00.......... $66,099,000 65,241,806
------------
TOTAL U.S. TREASURY OBLIGATIONS (Cost $65,243,650).... 65,241,806
------------
TOTAL INVESTMENTS (Cost $359,700,807)(a) (98.4%)...... 383,262,478
Other assets in excess of liabilities (1.6%).......... 6,271,532
------------
TOTAL NET ASSETS (100.0%)............................. $389,534,010
============
- -----
Percentages indicated are based on net assets of $389,534,010.
Futures Purchased
<CAPTION>
Number of
Contracts
-----------
<S> <C> <C>
Nasdaq 100 Future Contract expiring September 1999.... 1,831 425,707,500
------------
TOTAL FUTURES PURCHASED (Cost $389,921,279)........... $425,707,500
============
</TABLE>
- -----
* non-income producing
(a) Represents cost for federal income tax purposes and differs from value by
net unrealized appreciation of securities as follows:
Unrealized Appreciation... $26,975,255
Unrealized Depreciation... (3,413,584)
-----------
Net Unrealized Apprecia-
tion..................... $23,561,671
===========
ADR--American Depositary Receipt
PLC--Public Limited Company
See accompanying notes to the financial statements.
11
<PAGE>
PROFUNDS
UltraOTC ProFund
(Unaudited)
<TABLE>
<CAPTION>
Statement of Assets and Liabilities
June 30, 1999
<S> <C>
Assets:
Investments, at value (cost $359,700,807)....................... $383,262,478
Cash............................................................ 1,285,452
Receivable from Investment Advisor.............................. 1,105
Net receivable for variation margin on open futures contracts... 4,390,980
Interest and dividends receivable............................... 749,353
Prepaid expenses................................................ 146,838
Deferred organization costs..................................... 27,896
------------
Total Assets.................................................... 389,864,102
Liabilities:
Advisory fees payable........................................... 200,245
Management servicing fees payable............................... 40,049
Administration fees payable..................................... 5,969
Shareholder servicing--Service Class............................ 62,229
Other payables and accrued expenses............................. 21,600
------------
Total Liabilities............................................... 330,092
------------
Net Assets....................................................... $389,534,010
============
Net Assets consist of:
Capital......................................................... $328,893,242
Accumulated undistributed net investment income................. (429,010)
Accumulated undistributed net realized gains on investments and
futures contracts.............................................. 1,721,886
Net unrealized appreciation of investments and futures
contracts...................................................... 59,347,892
------------
Total Net Assets................................................. $389,534,010
============
Investor Shares:
Net Assets...................................................... $337,613,412
Shares of Capital Stock Outstanding*............................ 8,097,384
Net Asset Value (offering and redemption price per share)*...... $ 41.69
============
Service Shares:
Net Assets...................................................... $ 51,920,598
Shares of Capital Stock Outstanding*............................ 1,257,908
Net Asset Value (offering and redemption price per share)*...... $ 41.28
============
</TABLE>
- -----
* Reflects 5 for 1 reverse split that occurred on January 15, 1999 and a 4 for
1 stock split that occurred on July 16, 1999.
<TABLE>
<CAPTION>
Statement of Operations
For the six months ended June 30, 1999
<S> <C>
Investment Income:
Interest......................................................... $ 1,851,200
Dividends........................................................ 81,891
-----------
1,933,091
Expenses:
Advisory fees.................................................... 1,240,770
Management servicing fees........................................ 248,155
Administration fees.............................................. 306,847
Shareholder servicing fees--Service Class........................ 212,438
Fund accounting fees............................................. 50,628
Transfer agent fees.............................................. 218,859
Custody fees..................................................... 51,757
Registration & filing fees....................................... 57,817
Other fees....................................................... 88,620
-----------
Total expenses before waivers/reimbursements..................... 2,475,891
Less expenses waived/reimbursed.................................. (112,277)
-----------
Net expenses..................................................... 2,363,614
-----------
Net Investment Income (Loss)...................................... (430,523)
-----------
Realized and Unrealized Gains (Losses) on Investments:
Net realized gains on investment transactions and futures
contracts....................................................... 63,609,069
Net change in unrealized depreciation of investments and futures
contracts....................................................... (9,376,013)
-----------
Net realized and unrealized gains on investments and futures
contracts....................................................... 54,233,056
-----------
Increase in Net Assets Resulting from Operations.................. $53,802,533
===========
</TABLE>
See accompanying notes to the financial statements.
12
<PAGE>
PROFUNDS
UltraOTC ProFund
(Unaudited)
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
For the period from
For the For the December 2, 1997 (a)
six months ended year ended through
June 30, 1999 December 31, 1998 December 31, 1997
---------------- ----------------- --------------------
<S> <C> <C> <C>
Change in Net Assets:
Operations:
Net investment income
(loss).................... $ (430,523) $ 520,125 $ 1,652
Net realized gains (losses)
on investment transactions
and futures contracts..... 63,609,069 14,500,678 (867,046)
Net change in unrealized
appreciation/(depreciation)
of investments and futures
contracts................. (9,376,013) 68,743,665 (19,760)
--------------- --------------- -----------
Net increase (decrease) in
net assets resulting from
operations................ 53,802,533 83,764,468 (885,154)
Distributions to
Shareholders from:
Net investment income
Investor shares............ -- (37,904) --
Service shares............. -- (158) --
--------------- --------------- -----------
Net (decrease) in assets
resulting from
distributions............. -- (38,062) --
Capital Share Transactions:
Proceeds from shares
issued.................... 1,930,911,713 1,198,375,948 9,874,239
Dividends reinvested....... -- 26,453 --
Cost of shares redeemed.... (1,866,589,376) (1,011,639,835) (8,068,917)
--------------- --------------- -----------
Net increase in net assets
from capital share
transactions.............. 64,322,337 186,762,566 1,805,322
--------------- --------------- -----------
Total increase in net
assets.................... 118,124,870 270,488,972 920,168
Net Assets:
Beginning of period........ 271,409,140 920,168 --
--------------- --------------- -----------
End of period.............. $ 389,534,010 $ 271,409,140 $ 920,168
=============== =============== ===========
</TABLE>
- -----
(a) Commencement of operations
See accompanying notes to the financial statements.
13
<PAGE>
PROFUNDS
UltraOTC ProFund
(Unaudited)
Financial Highlights
<TABLE>
<CAPTION>
For a share of beneficial Adjusted for 5:1 reverse stock split on January 15, 1999 and 4:1 stock split on
interest outstanding July 16, 1999
Investor Class Service Class
------------------------------------------------- ------------------------------------------------
For the For the
For the period from For the period from
six months For the December 2, six months For the December 2,
ended year ended 1997 (a) ended year ended 1997 (a)
June 30, December 31, to December 31, June 30, December 31, to December 31,
1999 1998 1997 1999 1998 1997
------------ ------------ --------------- ----------- ------------ ---------------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period..... $ 29.82 $ 10.45 $ 12.50 $ 29.68 $ 10.45 $ 12.50
------------ ------------ -------- ----------- ----------- --------
Net investment income
(loss)................. (0.01)(d) 0.20(d) 0.08 (0.05)(d) 0.10(d) --
Net realized and
unrealized gain/(loss)
on investment
transactions and
futures contracts...... 11.88 19.17 (2.13) 11.65 19.13 (2.05)
------------ ------------ -------- ----------- ----------- --------
Total income/(loss) from
investment operations.. 11.87 19.37 (2.05) 11.60 19.23 (2.05)
------------ ------------ -------- ----------- ----------- --------
Distribution to
Shareholders from:
Net investment income... -- --(e) -- -- --(e) --
------------ ------------ -------- ----------- ----------- --------
Total distributions..... -- -- -- -- -- --
------------ ------------ -------- ----------- ----------- --------
Net Asset Value, End of
Period.................. $ 41.69 $ 29.82 $ 10.45 $ 41.28 $ 29.68 $ 10.45
============ ============ ======== =========== =========== ========
Total Return............. 39.89 %(b) 185.34% (16.40)%(b) 39.08 %(b) 183.98% (16.40)%(b)
Ratios/Supplemental Data:
Net assets, end of year.. $337,613,412 $239,017,203 $256,184 $51,920,598 $32,391,937 $663,984
Ratio of expenses to
average net assets...... 1.30 %(c) 1.47% 1.07 %(c) 2.30 %(c) 2.38% 1.75 %(c)
Ratio of net investment
income to average net
assets.................. (0.13)%(c) 1.05% 2.73 %(c) (1.11)%(c) 0.07% (0.06)%(c)
Ratio of expenses to
average net assets*..... 1.37 %(c) 1.67% 21.74 %(c) 2.32 %(c) 2.61% 23.42 %(c)
Portfolio Turnover(f).... 543 % 156% 543 % 156%
</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) Distribution per share was less than $0.005
(f) Portfolio turnover is calculated on the basis of the fund as a whole
without distinguishing between the classes of shares issued.
14
<PAGE>
PROFUNDS Schedule of Portfolio Investments
UltraEurope ProFund June 30, 1999
(Unaudited)
<TABLE>
<CAPTION>
Options Purchased (0.0%)
Contracts
or
Principal Market
Amount Value
---------- ------------
<S> <C> <C>
CAC Put Option expiring
July 1999 @ 2720...................................... 2,188 $ --
DAX Put Option expiring
July 1999 @ 3270...................................... 1,820 --
FTSE 100 Put Option expiring
July 1999 @ 4000...................................... 986 --
------------
TOTAL OPTIONS PURCHASED
(Cost $22,049)........................................ --
------------
U.S. Treasury Note (84.1%)
United States Treasury Note, 4.50%, 9/30/00............ $9,444,000 9,321,523
------------
TOTAL U.S. TREASURY NOTE
(Cost $9,321,791)..................................... 9,321,523
------------
TOTAL INVESTMENTS
(Cost $9,343,840)(a) (84.1%).......................... 9,321,523
Other assets in excess of liabilities (15.9%).......... 1,758,194
------------
TOTAL NET ASSETS (100.0%).............................. $ 11,079,717
============
</TABLE>
- -----
Percentages indicated are based on net assets of $11,079,717.
<TABLE>
<CAPTION>
Futures Sold
Number of Market
Contracts Value
--------- ------------
<S> <C> <C>
CAC 40 Index Future Contract expiring July 1999....... 161 $ (7,514,745)
FTSE 100 Index Future Contract expiring September
1999................................................. 72 (4,595,040)
FUSD 30 Index Future Contract expiring September
1999................................................. 53 (7,180,175)
------------
TOTAL FUTURES SOLD
(Proceeds $19,494,956)............................... $(19,289,960)
============
<CAPTION>
- -----
(a) Represents cost for federal income tax purposes and differs from market
value by net unrealized depreciation of securities as follows:
<S> <C>
Unrealized appreciation........................................ $ --
Unrealized depreciation........................................ (22,317)
--------
Net Unrealized depreciation.................................... $(22,317)
========
</TABLE>
See accompanying notes to the financial statements.
15
<PAGE>
PROFUNDS
UltraEurope ProFund
(Unaudited)
Statement of Assets and Liabilities
June 30,1999
Assets:
Investments, at value (cost $9,343,840).......................... $ 9,321,523
Cash............................................................. 2,019,977
Receivable from Investment Advisor............................... 25,218
Interest receivable.............................................. 106,826
Net receivable for variation margin on open futures contracts.... 71,377
-----------
Total Assets..................................................... 11,544,921
Liabilities:
Foreign currency at value ($344,288)............................. 342,832
Net payable for variation margin on futures contracts............ 91,772
Investment Advisory fees payable................................. 2,435
Management fees payable.......................................... 432
Administration fees payable...................................... 23,037
Shareholder servicing fees payable--Service Class................ 1,586
Other payables and accrued expenses.............................. 3,110
-----------
Total Liabilities................................................ 465,204
-----------
Net Assets........................................................ $11,079,717
===========
Net Assets consist of:
Capital.......................................................... $11,461,271
Accumulated undistributed net investment income.................. 4,518
Accumulated undistributed net realized losses on investments,
futures contracts, and foreign currency transactions............ (88,237)
Net unrealized appreciation of investments, futures contracts,
and foreign currency transactions............................... (297,835)
-----------
Total Net Assets.................................................. $11,079,717
===========
Investor Shares:
Net Assets....................................................... $ 4,452,617
Shares of Capital Stock Outstanding.............................. 152,640
Net Asset Value (offering and redemption price per share)........ $ 29.17
===========
Service Shares:
Net Assets....................................................... $ 6,627,100
Shares of Capital Stock Outstanding.............................. 227,914
Net Asset Value (offering and redemption price per share)........ $ 29.08
===========
Statement of Operations
For the period March 15, 1999(a) through June 30,1999
Investment Income:
Interest.......................................................... $ 12,909
Expenses:
Advisory fees..................................................... 2,866
Management servicing fees......................................... 478
Administration fees............................................... 22,826
Shareholder servicing fees--Service Class......................... 1,623
Transfer agent fees............................................... 674
Custody fees...................................................... 2,010
Registration & filing fees........................................ 2,777
Other fees........................................................ 550
---------
Total expenses before waivers/reimbursements...................... 33,804
Less expenses waived/reimbursed................................... (25,413)
---------
Net expenses...................................................... 8,391
---------
Net Investment Income.............................................. 4,518
---------
Realized and Unrealized Gains (Losses) on Investments:
Net realized losses on investment transactions and futures
contracts........................................................ (91,582)
Net realized gain on foreign currency transactions................ 3,345
Net change in unrealized depreciation of investments, futures
contracts, and foreign currency transactions..................... (297,835)
---------
Net realized and unrealized gains on investments, futures
contracts, and foreign currency transactions..................... (386,072)
---------
Increase In Net Assets Resulting from Operations................... $(381,554)
=========
- -----
(a) Commencement of operations
See accompanying notes to the financial statements.
16
<PAGE>
PROFUNDS
UltraEurope ProFund
(Unaudited)
Statement of Changes in Net Assets
<TABLE>
<CAPTION>
For the period
March 15, 1999 (a)
through
June 30, 1999
------------------
<S> <C>
Change in Net Assets:
Operations:
Net investment income...................................... $ 4,518
Net realized losses on investments and futures contracts... (91,582)
Net realized gain on foreign currency transactions......... 3,345
Net change in unrealized depreciation of investments,
futures contracts, and foreign currency transactions...... (297,835)
-----------
Net decrease in net assets resulting from operations....... (381,554)
Distributions to Shareholders from:
Net investment income
Investor shares............................................ --
Service shares............................................. --
Net realized gains on investment transactions and futures
contracts................................................. --
-----------
Net increase in assets resulting from distributions........ --
Capital Share Transactions:
Proceeds from shares issued................................ 12,096,074
Dividends reinvested....................................... --
Cost of shares redeemed.................................... (634,803)
-----------
Net increase in net assets resulting from capital share
transactions.............................................. 11,461,271
-----------
Total increase in net assets............................... 11,079,717
Net Assets:
Beginning of period........................................ --
-----------
End of period.............................................. $11,079,717
===========
</TABLE>
- -----
(a) Commencement of operations
See accompanying notes to the financial statements.
17
<PAGE>
PROFUNDS
UltraEurope ProFund
(Unaudited)
Financial Highlights
For a share of beneficial interest outstanding
<TABLE>
<CAPTION>
Investor Class Service Class
--------------------- ---------------------
For the period from For the period from
March 15, 1999 (a) March 15, 1999 (a)
through June 30, 1999 through June 30, 1999
--------------------- ---------------------
<S> <C> <C>
Net Asset Value, Beginning of
Period............................ $ 30.00 $ 30.00
---------- ----------
Net investment income............. 0.17 (d) 0.08 (d)
Net realized and unrealized gain
(loss) on investment transactions
and futures contracts............ (1.00) (1.00)
---------- ----------
Total income (loss) from
investment operations............ (0.83) (0.92)
Distribution to Shareholders from:
Net investment income............. -- --
Net realized gains on investment
transactions and futures
contracts........................ -- --
---------- ----------
Total distributions............... -- --
---------- ----------
Net Asset Value, End of Period..... $ 29.17 $ 29.08
========== ==========
Total Return....................... (2.77)%(b) (3.07)%(b)
Ratios/Supplemental Data:
Net assets, end of period.......... $4,452,617 $6,627,100
Ratio of expenses to average net
assets............................ 2.01 %(c) 3.21 %(c)
Ratio of net investment income to
average net assets................ 1.91 %(c) 0.93 %(c)
Ratio of expenses to average net
assets*........................... 13.28 %(c) 7.92 %(c)
Portfolio turnover(e) ............. 12 % 12 %
</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) Portfolio turnover is calculated on the basis of the fund as a whole
without distinguishing between the classes of shares issued.
18
<PAGE>
PROFUNDS Schedule of Portfolio Investments
Bear ProFund June 30, 1999
(Unaudited)
<TABLE>
<CAPTION>
Options Purchased (14.6%)
Contracts
or
Principal Market
Amount Value
---------- ----------
<S> <C> <C>
S&P 500 Put Option expiring
July 1999 @ 1775........................................ 4 $ 396,500
----------
TOTAL OPTIONS PURCHASED
(Cost $455,020)......................................... 396,500
----------
U.S. Treasury Note (84.9%)
United States Treasury Note,
4.50%, 9/30/00.......................................... $2,345,000 2,314,589
----------
TOTAL U.S. TREASURY NOTE
(Cost $2,314,655)....................................... 2,314,589
----------
TOTAL INVESTMENTS
(Cost $2,769,675)(a) (99.5%)............................ 2,711,089
Other assets in excess of liabilities (0.5%)............. 13,994
----------
TOTAL NET ASSETS (100.0%)................................ $2,725,083
==========
<CAPTION>
- -----
Percentages indicated are based on net assets of $2,725,083.
Futures Sold
Number of Market
Contracts Value
--------- -----------
<S> <C> <C>
S&P 500 Future Contract expiring September 1999......... 4 $ (206,775)
S&P 500 Future Contract expiring September 1999......... 3 (1,033,875)
-----------
TOTAL FUTURES SOLD
(Proceeds $1,209,646).................................. $(1,240,650)
===========
<CAPTION>
- -----
(a) Represents cost for income tax purposes differ from market value by net
unrealized depreciation of securities as follows:
<S> <C>
Unrealized appreciation........................................ $ --
Unrealized depreciation........................................ (58,586)
--------
Net unrealized depreciation.................................... $(58,586)
========
</TABLE>
See accompanying notes to the financial statements.
19
<PAGE>
PROFUNDS
Bear ProFund
(Unaudited)
<TABLE>
<CAPTION>
Statement of Assets and Liabilities
June 30, 1999
<S> <C>
Assets:
Investments, at value (cost $2,769,675).......................... $ 2,711,089
Capital shares receivable........................................ 1,913
Receivable from Investment Advisor............................... 124
Interest receivable.............................................. 26,525
Prepaid expenses................................................. 29,651
Deferred organization cost....................................... 68
-----------
Total Assets..................................................... 2,769,370
Liabilities:
Payable to custodian............................................. 5,179
Payable for capital shares redeemed.............................. 3,204
Net payable for variation margin on futures contracts............ 17,190
Advisory fees payable............................................ 11,371
Management servicing fees payable................................ 2,274
Administration fees payable...................................... 57
Shareholder servicing fees payable--Service Class................ 2,082
Other payables and accrued expenses.............................. 2,930
-----------
Total Liabilities................................................ 44,287
-----------
Net Assets........................................................ $ 2,725,083
===========
Net Assets consist of:
Capital.......................................................... $ 5,549,047
Accumulated undistributed net investment income.................. 99,815
Accumulated net realized losses on investments and futures
contracts....................................................... (2,834,189)
Net unrealized depreciation of investments and futures
contracts....................................................... (89,590)
-----------
Total Net Assets.................................................. $ 2,725,083
===========
Investor Shares:
Net Assets....................................................... $ 1,291,120
Shares of Capital Stock Outstanding*............................. 35,146
Net Asset Value (offering and redemption price per share)*....... $ 36.74
===========
Service Shares:
Net Assets....................................................... $ 1,433,963
Shares of Capital Stock Outstanding*............................. 39,504
Net Asset Value (offering and redemption price per share)*....... $ 36.30
===========
<CAPTION>
- -----
* Reflects 5 for 1 reverse stock split that occurred on January 15, 1999.
Statement of Operations
For the six months ended June 30, 1999
<S> <C>
Investment Income:
Interest........................................................ $ 154,657
Expenses:
Advisory fees................................................... 28,746
Management servicing fees....................................... 5,749
Administration fees............................................. 5,814
Shareholder servicing fees--Service Class....................... 3,078
Fund accounting fees............................................ 1,150
Transfer agent fees............................................. 3,304
Custody fees.................................................... 3,578
Registration & filing fees...................................... 15,997
Other fees...................................................... 10,081
-----------
Total expenses before waivers/reimbursements.................... 77,497
Less expenses waived/reimbursed................................. (21,365)
-----------
Net expenses.................................................... 56,132
-----------
Net Investment Income............................................ 98,525
-----------
Realized and Unrealized Gains (Losses) on Investments:
Net realized losses on investment transactions and futures
contracts...................................................... (2,064,475)
Net change in unrealized depreciation of investments and futures
contracts...................................................... (92,347)
-----------
Net realized and unrealized losses on investments and futures
contracts...................................................... (2,156,822)
-----------
Decrease in Net Assets Resulting from Operations................. $(2,058,297)
===========
</TABLE>
See accompanying notes to the financial statements.
20
<PAGE>
PROFUNDS
Bear ProFund
(Unaudited)
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
For the period from
For the For the December 31, 1997 (a)
six months ended year ended through
June 30, 1999 December 31, 1998 December 31, 1997
---------------- ----------------- ---------------------
<S> <C> <C> <C>
Change in Net Assets:
Operations:
Net investment income.. $ 98,525 $ 41,992 $ --
Net realized gains
(losses) on investment
transactions and
futures contracts..... (2,064,475) (769,283) 137
Net change in
unrealized
appreciation
(depreciation) of
investments and
futures contracts..... (92,347) 2,324 433
------------ ------------ ----------
Net increase (decrease)
in net assets
resulting from
operations............ (2,058,297) (724,967) 570
Distributions to
Shareholders from:
Net investment income
Investor shares........ -- (38,388) --
Service shares......... -- (2,314) --
Net realized gains on
investment
transactions and
futures contracts
Investor shares........ -- (481) --
Service shares......... -- (87) --
------------ ------------ ----------
Net decrease in assets
resulting from
distributions......... -- (41,270) --
Capital Share
Transactions:
Proceeds from shares
issued................ 88,489,581 53,489,566 2,515,852
Dividends reinvested... -- 39,914
Cost of shares
redeemed.............. (88,252,658) (50,733,208) --
------------ ------------ ----------
Net increase in net
assets resulting from
capital share
transactions.......... 236,923 2,796,272 2,515,852
------------ ------------ ----------
Total increase in net
assets................ (1,821,374) 2,030,035 2,516,422
Net Assets:
Beginning of period.... 4,546,457 2,516,422 --
------------ ------------ ----------
End of period.......... $ 2,725,083 $ 4,546,457 $2,516,422
============ ============ ==========
</TABLE>
- -----
(a) Commencement of operations.
See accompanying notes to the financial statements.
21
<PAGE>
PROFUNDS
Bear ProFund
(Unaudited)
Financial Highlights
For a share of beneficial interest outstanding Adjusted for 5:1 reverse stock
split on January 15, 1999
<TABLE>
<CAPTION>
Investor Class Service Class
---------------------------------------------- ---------------------------------------------
For the For the
For the period from For the period from
six months For the December 31, six months For the December 31,
ended year ended 1997 (a) ended year ended 1997 (a)
June 30, December 31, to December 31, June 30, December 31, to December 31,
1999 1998 1997 1999 1998 1997
---------- ------------ --------------- ---------- ------------ ---------------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period..... $ 39.88 $ 50.00 $ 50.00 $ 39.76 $ 50.00 $50.00
---------- ---------- ---------- ---------- -------- ------
Net investment income... 0.47(d) 1.47(d) -- 0.15(d) 0.87(d) --
Net realized and
unrealized loss on
investments and futures
contracts.............. (3.61) (11.22) -- (3.61) (10.88) --
---------- ---------- ---------- ---------- -------- ------
Total loss from
investment operations.. (3.14) (9.75) -- (3.46) (10.01) --
Distribution to
Shareholders from:
Net investment income... -- (0.37) -- -- (0.23) --
Net realized gains on
investment transactions
and futures contracts.. -- --(e) -- -- --(e) --
---------- ---------- ---------- ---------- -------- ------
Total distributions..... -- (0.37) -- -- (0.23) --
---------- ---------- ---------- ---------- -------- ------
Net Asset Value, End of
Period.................. $ 36.74 $ 39.88 $ 50.00 $ 36.30 $ 39.76 $50.00
========== ========== ========== ========== ======== ======
Total Return............. (7.92)%(b) (19.46)% 0.00%(b) (8.68)%(b) (20.04)% 0.00%(b)
Ratios/Supplemental Data:
Net assets at end of
period.................. $1,291,120 $4,166,787 $2,516,412 $1,433,963 $379,670 $ 10
Ratio of expenses to
average net assets...... 1.37 %(c) 1.54 % 0.00%(c) 2.62 %(c) 2.49 % 0.00%(c)
Ratio of net investment
income to average net
assets.................. 2.71 %(c) 3.12 % 0.00%(c) 1.04 %(c) 1.90 % 0.00%(c)
Ratio of expenses to
average net assets*..... 1.91 %(c) 3.26 % 325.97%(c) 3.38 %(c) 4.09 % 326.97%(c)
Portfolio turnover(f).... 469 % 469 %
</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.
(e) Distribution per share was less than $0.005
(f) Portfolio turnover is calculated on the basis of the fund as a whole
without distinguishing between the classes of shares issued.
22
<PAGE>
PROFUNDS Schedule of Portfolio Investments
UltraBear ProFund June 30, 1999
(Unaudited)
Options Purchased (21.9%)
<TABLE>
<CAPTION>
Contracts
or
Principal Market
Amount Value
----------- -----------
<S> <C> <C>
S&P 500 Call Option expiring
July 1999 @ 1700...................................... 400 $ 6,000
S&P 500 Put Option expiring
July 1999 @ 1775...................................... 100 9,912,500
-----------
TOTAL OPTIONS PURCHASED
(Cost $11,387,500).................................... 9,918,500
-----------
U.S. Treasury Note (79.3%)
United States Treasury Note, 4.50%, 9/30/00............ $36,348,000 35,876,627
-----------
TOTAL U.S. TREASURY NOTE
(Cost $35,877,641).................................... 35,876,627
-----------
TOTAL INVESTMENTS
(Cost $47,265,141)(a) (101.2%)........................ 45,795,127
Other liabilities in excess of assets (1.2%)........... (540,383)
-----------
TOTAL NET ASSETS (100.0%).............................. $45,254,744
===========
</TABLE>
- -----
Percentages indicated are based on net assets of $45,254,744.
Futures Sold
<TABLE>
<CAPTION>
Number of Market
Contracts Value
--------- ------------
<S> <C> <C>
S&P 500 Future Contract expiring September 1999........ 171 $(58,930,875)
------------
TOTAL FUTURE SOLD
(Proceeds $56,318,370)................................ $(58,930,875)
============
</TABLE>
- -----
(a) Represents cost for federal income tax purposes and differs from market
value by net unrealized depreciation of securities as follows:
<TABLE>
<S> <C>
Unrealized appreciation...................................... $ --
Unrealized depreciation...................................... (1,470,014)
-----------
Net unrealized depreciation.................................. $(1,470,014)
===========
</TABLE>
See accompanying notes to the financial statements.
23
<PAGE>
PROFUNDS
UltraBear ProFund
(Unaudited)
<TABLE>
<CAPTION>
Statement of Assets and Liabilities
June 30, 1999
<S> <C>
Assets:
Investments, at value (cost $47,265,141)........................ $ 45,795,127
Receivable from Investment Advisor.............................. 285
Interest receivable............................................. 411,149
Prepaid expenses................................................ 36,957
Deferred organization costs..................................... 5,542
------------
Total Assets.................................................... 46,249,060
Liabilities:
Payable to custodian............................................ 226,196
Net payable for variation margin on futures contracts........... 705,375
Advisory fees payable........................................... 35,999
Management servicing fees payable............................... 7,200
Administration fees payable..................................... 880
Shareholder servicing fees payable--Service Class............... 10,474
Other payables and accrued expenses............................. 8,192
------------
Total Liabilities............................................... 994,316
------------
Net Assets....................................................... $ 45,254,744
============
Net Assets consist of:
Capital......................................................... $ 69,733,751
Accumulated undistributed net investment income................. 501,726
Accumulated net realized losses on investments and futures
contracts...................................................... (20,898,214)
Net unrealized depreciation of investments and futures
contracts...................................................... (4,082,519)
------------
Total Net Assets................................................. $ 45,254,744
============
Investor Shares:
Net Assets...................................................... $ 40,861,705
Shares of Capital Stock Outstanding*............................ 1,613,374
Net Asset Value (offering and redemption price per share)*...... $ 25.33
============
Service Shares:
Net Assets...................................................... $ 4,393,039
Shares of Capital Stock Outstanding*............................ 174,548
Net Asset Value (offering and redemption price per share)*...... $ 25.17
============
</TABLE>
- -----
* Reflects 5 for 1 reverse stock split that occurred on January 15, 1999.
Statement of Operations
For the six months ended June 30, 1999
<TABLE>
<S> <C>
Investment Income:
Interest....................................................... $ 905,038
Expenses:
Advisory fees.................................................. 202,187
Management servicing fees...................................... 40,437
Administration fees............................................ 46,152
Shareholder servicing fees--Service Class...................... 34,629
Fund accounting fees........................................... 8,087
Transfer agent fees............................................ 43,033
Custody fees................................................... 4,838
Registration & filing fees..................................... 25,243
Other fees..................................................... 15,469
------------
Total expenses before waivers/reimbursements................... 420,075
Less expenses waived/reimbursed................................ (16,763)
------------
Net expenses................................................... 403,312
------------
Net Investment Income........................................... 501,726
------------
Realized and Unrealized Losses on Investments:
Net realized losses on investment transactions and futures
contracts..................................................... (13,738,835)
Net change in unrealized depreciation of investments and
futures contracts............................................. (2,433,533)
------------
Net realized and unrealized losses on investments.............. (16,172,368)
------------
Decrease in Net Assets Resulting from Operations................ $(15,670,642)
============
</TABLE>
See accompanying notes to the financial statements.
24
<PAGE>
PROFUNDS
UltraBear ProFund
(Unaudited)
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
For the period from
For the For the December 23, 1997 (a)
six months ended year ended through
June 30, 1999 December 31, 1998 December 31, 1997
---------------- ----------------- ---------------------
<S> <C> <C> <C>
Change in Net Assets:
Operations:
Net investment income.. $ 501,726 $ 432,129 $ 2,433
Net realized gains
(losses) on investment
transactions and
futures contracts..... (13,738,835) (7,159,379) 167,320
Net change in
unrealized
depreciation of
investments and
futures contracts..... (2,433,533) (1,648,986) --
------------- ------------- -----------
Net increase (decrease)
in net assets
resulting from
operations............ (15,670,642) (8,376,236) 169,753
Distributions to
Shareholders from:
Net investment income
Investor shares........ -- (21,742) --
Service shares......... -- -- --
------------- ------------- -----------
Net (decrease) in
assets resulting from
distributions......... -- (21,742) --
Capital Share
Transactions:
Proceeds from shares
issued................ 490,875,032 457,690,222 4,806,030
Dividends reinvested... 6 11,707
Cost of shares
redeemed.............. (460,901,856) (418,351,778) (4,975,752)
------------- ------------- -----------
Net increase (decrease)
in net assets
resulting from capital
share transactions.... 29,973,182 39,350,151 (169,722)
------------- ------------- -----------
Total increase in net
assets................ 14,302,540 30,952,173 31
Net Assets:
Beginning of period.... 30,952,204 31 --
------------- ------------- -----------
End of period.......... $ 45,254,744 $ 30,952,204 $ 31
============= ============= ===========
</TABLE>
- -----
(a) Commencement of operations
See accompanying notes to the financial statements.
25
<PAGE>
PROFUNDS
UltraBear ProFund
(Unaudited)
Financial Highlights
<TABLE>
<CAPTION>
For a share of beneficial interest outstanding Adjusted for 5:1 reverse stock split on January 15, 1999
Investor Class Service Class
------------------------------------------------ ------------------------------------------------
For the For the
period from period from
For the For the December 23, For the For the December 23,
six months year ended 1997 (a) six months year ended 1997 (a)
June 30, December 31, to December 31, June 30, December 31, to December 31,
1999 1998 1997 1999 1998 1997
----------- ------------ --------------- ---------- ------------ ---------------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period..... $ 31.88 $ 51.80 $ 50.00 $ 31.83 $ 51.75 $50.00
----------- ----------- --------- ---------- ---------- ------
Net investment income... 0.23(d) 1.16(d) 6,082.50(e) 0.12(d) 0.75(d) --
Net realized and
unrealized gain/(loss)
on investments and
futures contracts...... (6.78) (21.04) (6,080.70)(e) (6.78) (20.67) 1.75
----------- ----------- --------- ---------- ---------- ------
Total income/(loss) from
investment operations.. (6.55) (19.88) 1.80 (6.66) (19.92) 1.75
Distribution to
Shareholders from:
Net investment income... -- (0.04) -- -- -- --
----------- ----------- --------- ---------- ---------- ------
Total distributions..... -- (0.04) -- -- -- --
----------- ----------- --------- ---------- ---------- ------
Net Asset Value, End of
Period.................. $ 25.33 $ 31.88 $ 51.80 $ 25.17 $ 31.83 $51.75
=========== =========== ========= ========== ========== ======
Total Return............. (20.60)%(b) (38.34)% 3.60%(b) (20.97)% (38.45)%(b) 3.50%(b)
Ratios/Supplemental Data:
Net assets, end of year.. $40,861,705 $27,939,876 $ 21 $4,393,039 $3,012,328 $ 10
Ratio of expenses to
average net assets...... 1.37 %(c) 1.57 % 1.33%(c) 2.36 %(c) 2.45 % 1.33%(c)
Ratio of net investment
income to average net
assets.................. 1.99 %(c) 2.73 % 2.97%(c) 1.02 %(c) 1.74 % 0.00%(c)
Ratio of expenses to
average net assets*..... 1.45 %(c) 1.78 % 32.39%(c) 2.33 %(c) 2.74 % 33.39%(c)
Portfolio turnover(f).... 480 % 480 %
</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.
(f) Portfolio turnover is calculated on the basis of the fund as a whole
without distinguishing between the classes of shares issued.
26
<PAGE>
PROFUNDS Schedule of Portfolio Investments
UltraShort OTC ProFund June 30, 1999
(Unaudited)
<TABLE>
<CAPTION>
Options Purchased (18.5%)
Contracts
or
Principal Market
Amount Value
----------- -----------
<S> <C> <C>
Nasdaq Call Option expiring
July 1999 @ 3000...................................... 600 $ 12,000
Nasdaq Put Option expiring
July 1999 @ 2900...................................... 150 8,625,000
-----------
TOTAL OPTIONS PURCHASED
(Cost $12,024,000).................................... 8,637,000
-----------
U.S. Treasury Note (82.3%)
United States Treasury Note,
4.50%, 9/30/00........................................ $38,994,000 38,488,313
-----------
TOTAL U.S. TREASURY NOTE
(Cost $38,489,401).................................... 38,488,313
-----------
TOTAL INVESTMENTS
(Cost $50,513,401)(a) (100.8%)........................ 47,125,313
Other liabilities in excess of assets (0.8%)........... (382,679)
-----------
TOTAL NET ASSETS (100.0%).............................. $46,742,634
===========
</TABLE>
- -----
Percentages indicated are based on net assets of $46,742,634.
<TABLE>
<CAPTION>
Futures Sold
Number of Market
Contracts Value
--------- ------------
<S> <C> <C>
Nasdaq Futures Contract expiring September 1999........ 264 $(61,380,000)
------------
TOTAL FUTURES SOLD
(Proceeds $56,646,831)................................ $(61,380,000)
============
</TABLE>
- -----
(a) Represents cost for federal income tax purposes differ from market value by
net unrealized depreciation of securities as follows:
Unrealized appreciation...................................... $ --
Unrealized depreciation...................................... (3,388,088)
-----------
Net unrealized depreciation.................................. $(3,388,088)
===========
See accompanying notes to the financial statements.
27
<PAGE>
PROFUNDS
UltraShort OTC ProFund
(Unaudited)
<TABLE>
<CAPTION>
Statement of Assets and Liabilities
June 30, 1999
<S> <C>
Assets:
Investments, at value ($50,513,401)............................. $ 47,125,313
Receivable from Investment Advisor.............................. 386
Interest receivable............................................. 441,080
Prepaid expenses................................................ 54,063
------------
Total Assets.................................................... 47,620,842
Liabilities:
Payable to custodian............................................ 183,571
Net payable for variation margin on futures contracts........... 633,600
Advisory fees payable........................................... 35,901
Management servicing fees payable............................... 7,180
Administration fees payable..................................... 990
Shareholder servicing fees--Service Class....................... 3,173
Other payables and accrued expenses............................. 13,793
------------
Total Liabilities............................................... 878,208
------------
Net Assets....................................................... $ 46,742,634
============
Net Assets consist of:
Capital......................................................... $ 98,270,530
Accumulated undistributed net investment income................. 543,819
Accumulated net realized losses on investments and futures
contracts...................................................... (43,950,458)
Net unrealized depreciation of investments and futures
contracts...................................................... (8,121,257)
------------
Total Net Assets................................................. $ 46,742,634
============
Investor Shares:
Net Assets...................................................... $ 45,091,611
Shares of Capital Stock Outstanding*............................ 5,128,808
Net Asset Value (offering and redemption price per share)*...... $ 8.79
============
Service Shares:
Net Assets...................................................... $ 1,651,023
Shares of Capital Stock Outstanding*............................ 189,404
Net Asset Value (offering and redemption price per share)*...... $ 8.72
============
</TABLE>
- -----
* Reflects 5 for 1 reverse stock split that occurred on January 15, 1999.
<TABLE>
<CAPTION>
Statement of Operations
For the six months ended June 30, 1999
<S> <C>
Investment Income:
Interest....................................................... $ 944,963
Expenses:
Advisory fees.................................................. 208,648
Management servicing fees...................................... 41,730
Administration fees............................................ 50,455
Shareholder servicing fees--Service Class...................... 7,254
Fund accounting fees........................................... 6,337
Transfer agent fees............................................ 40,174
Custody fees................................................... 4,348
Registration & filing fees..................................... 40,282
Other fees..................................................... 13,310
------------
Total expenses before waivers/reimbursements................... 412,538
Less expenses waived/reimbursed................................ (11,394)
------------
Net expenses................................................... 401,144
------------
Net Investment Income........................................... 543,819
------------
Realized and Unrealized Losses on Investments:
Net realized losses on investment transactions and futures
contracts..................................................... (30,299,771)
Net change in unrealized depreciation of investments and
futures contracts............................................. (7,423,796)
------------
Net realized and unrealized losses on investments and futures
contracts..................................................... (37,723,567)
------------
Decrease in Net Assets Resulting from Operations................ $(37,179,748)
============
</TABLE>
See accompanying notes to the financial statements.
28
<PAGE>
PROFUNDS
UltraShort OTC ProFund
(Unaudited)
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
For the six June 2, 1998 (a)
months ended through
June 30, 1999 December 31, 1998
------------- -----------------
<S> <C> <C>
Change in Net Assets:
Operations:
Net investment income........................ $ 543,819 $ 72,078
Net realized losses on investment
transactions and futures contracts.......... (30,299,771) (13,650,687)
Net change in unrealized depreciation of
investments and futures contracts........... (7,423,796) (697,461)
------------- -------------
Net decrease in net assets resulting from
operations.................................. (37,179,748) (14,276,070)
Distributions to Shareholders from:
Net investment income
Investor shares.............................. -- (4,476)
Service shares............................... -- --
------------- -------------
Net decrease in net assets resulting from
distributions............................... -- (4,476)
Capital Share Transactions:
Proceeds from shares issued.................. 454,483,971 227,068,217
Dividends reinvested......................... -- 2,745
Cost of shares redeemed...................... (390,882,353) (192,469,652)
------------- -------------
Net increase in net assets resulting from
capital share transactions.................. 63,601,618 34,601,310
------------- -------------
Total increase in net assets................. 26,421,870 20,320,764
Net Assets:
Beginning of period.......................... 20,320,764 --
------------- -------------
End of period................................ $ 46,742,634 $ 20,320,764
============= =============
</TABLE>
- -----
(a) Commencement of operations.
See accompanying notes to the financial statements.
29
<PAGE>
PROFUNDS
UltraShort OTC ProFund
(Unaudited)
Financial Highlights
<TABLE>
<CAPTION>
For a share of beneficial
interest outstanding Adjusted for 5:1 reverse stock split on January 15, 1999
Investor Class Service Class
----------------------------------- -----------------------------------
For the For the
For the period from For the period from
six months June 2, 1998 (a) six months June 2, 1998 (a)
ended through ended through
June 30, 1999 December 31, 1998 June 30, 1999 December 31, 1998
------------- ----------------- ------------- -----------------
<S> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period..... $ 16.24 $ 50.00 $ 16.24 $ 50.00
----------- ----------- ---------- --------
Net investment income... 0.10(d) 0.26(d) 0.05(d) 0.10(d)
Net realized and
unrealized (loss) on
investment transactions
and futures contracts.. (7.55) (34.02) (7.57) (33.86)
----------- ----------- ---------- --------
Total (loss) from
investment operations.. (7.45) (33.76) (7.52) (33.76)
Distribution to
Shareholders from:
Net investment income... -- --(e) -- --
----------- ----------- ---------- --------
Total distributions..... -- -- -- --
----------- ----------- ---------- --------
Net Asset Value, End of
Period.................. $ 8.79 $ 16.24 $ 8.72 $ 16.24
=========== =========== ========== ========
Total Return............. (45.91)%(b) (67.48)%(b) (46.34)%(b) (67.50)%(b)
Ratios/Supplemental Data:
Net assets, end of year.. $45,091,611 $19,465,372 $1,651,023 $855,392
Ratio of expenses to
average net assets...... 1.42 %(c) 1.83 %(c) 2.43 %(c) 2.92 %(c)
Ratio of net investment
income to average net
assets.................. 1.99 %(c) 1.55 %(c) 0.74 %(c) 0.54 %(c)
Ratio of expenses to
average net assets*..... 1.46 %(c) 1.98 %(c) 2.45 %(c) 3.06 %(c)
Portfolio turnover(f).... 444 % 444 %
</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) Distribution per share was less than $0.005.
(f) Portfolio turnover is calculated on the basis of the fund as a whole
without distinguishing between the classes of shares issued.
30
<PAGE>
PROFUNDS Schedule of Portfolio Investments
UltraShort Europe ProFund June 30, 1999
(Unaudited)
U.S. Treasury Note (82.2%)
<TABLE>
<CAPTION>
Principal Market
Amount Value
--------- ------
<S> <C> <C>
United States Treasury Note,
4.50%, 9/30/00............................................... $6,000 $5,922
------
TOTAL U.S. TREASURY NOTE
(Cost $5,922)................................................ 5,922
------
TOTAL INVESTMENTS
(Cost $5,922)(a) (82.2%)..................................... 5,922
Other assets in excess of liabilities (17.8%)................. 1,283
------
TOTAL NET ASSETS (100.0%)..................................... $7,205
======
</TABLE>
- -----
Percentages indicated are based on net assets of $7,205.
(a) Cost and value for federal income tax and financial reporting purposes are
the same.
See accompanying notes to the financial statements.
31
<PAGE>
PROFUNDS
UltraShort Europe ProFund
(Unaudited)
Statement of Assets and Liabilities
June 30,1999
<TABLE>
<S> <C>
Assets:
Investments, at value (cost $5,922).................................. $ 5,922
Cash................................................................. 432
Receivable from Investment Advisor................................... 27,088
Interest receivable.................................................. 68
-------
Total Assets......................................................... 33,510
Liabilities:
Payable for capital shares redeemed.................................. 4
Investment Advisory fees payable..................................... 14
Management fees payable.............................................. 4
Administration fees payable.......................................... 23,037
Other payables and accrued expenses.................................. 3,246
-------
Total Liabilities.................................................... 26,305
-------
Net Assets............................................................ $ 7,205
=======
Net Assets consist of:
Capital.............................................................. $ 7,144
Accumulated undistributed net investment income...................... 68
Accumulated undistributed net realized losses on investments and
futures contracts................................................... (7)
-------
Total Net Assets..................................................... $ 7,205
=======
Investor Shares:
Net Assets........................................................... $ 7,106
Shares of Capital Stock Outstanding.................................. 236
Net Asset Value (offering and redemption price per share)............ $ 30.11
=======
Service Shares:
Net Assets........................................................... $ 100
Shares of Capital Stock Outstanding.................................. 3
Net Asset Value (offering and redemption price per share)............ $ 30.12
=======
</TABLE>
Statement of Operations
For the period March 15, 1999(a) through June 30, 1999
<TABLE>
<S> <C>
Investment Income:
Interest Income.................................................... $ 108
Expenses:
Advisory fees...................................................... 22
Management servicing fees.......................................... 4
Administration fees................................................ 22,826
Transfer agent fees................................................ 672
Custody fees....................................................... 2,010
Registration & filing fees......................................... 770
Other fees......................................................... 550
--------
Total expenses before waivers/reimbursements....................... 26,854
Less expenses waived/reimbursed.................................... (26,814)
--------
Net expenses....................................................... 40
--------
Net Investment Income............................................... 68
--------
Realized and Unrealized Losses on Investments:
Net realized losses on investment transactions and futures
contracts......................................................... (7)
--------
Net realized and unrealized losses on investments and futures
contracts......................................................... (7)
--------
Increase In Net Assets Resulting from Operations.................... $ 61
========
</TABLE>
- -----
(a) Commencement of operations
See accompanying notes to the financial statements.
32
<PAGE>
PROFUNDS
UltraShort Europe ProFund
(Unaudited)
Statement of Changes in Net Assets
<TABLE>
<CAPTION>
For the period
March 15, 1999 (a)
through June 30, 1999
---------------------
<S> <C>
Change in Net Assets:
Operations:
Net investment income................................... $ 68
Net realized losses on investments and futures
contracts.............................................. (7)
---------
Net increase in net assets resulting from operations.... 61
Distributions to Shareholders from:
Net investment income
Investor shares......................................... --
Service shares.......................................... --
Net realized gains on investment transactions and
futures contracts...................................... --
---------
Net increase in assets resulting from distributions..... --
Capital Share Transactions:
Proceeds from shares issued............................. 218,749
Dividends reinvested.................................... --
Cost of shares redeemed................................. (211,605)
---------
Net increase in net assets resulting from capital share
transactions........................................... 7,144
---------
Total increase in net assets............................ 7,205
Net Assets:
Beginning of period..................................... --
---------
End of period........................................... $ 7,205
=========
</TABLE>
- -----
(a) Commencement of operations
See accompanying notes to the financial statements.
33
<PAGE>
PROFUNDS
UltraShort Europe ProFund
(Unaudited)
Financial Highlights
For a share of beneficial interest outstanding
<TABLE>
<CAPTION>
Investor Class Service Class
------------------- -------------------
For the period from For the period from
March 15, 1999 (a) March 15, 1999 (a)
to June 30, 1999 to June 30, 1999
------------------- -------------------
<S> <C> <C>
Net Asset Value, Beginning of Period... $30.00 $30.00
------ ------
Net investment income................. 0.24(d) 0.14(d)
Net realized and unrealized
gain/(loss) on investment
transactions and futures contracts... (0.14) (0.02)
------ ------
Total income/(loss) from investment
operations........................... 0.10 0.12
Distribution to Shareholders from:
Net investment income................. -- --
Net realized gains on investment
transactions and futures contracts... -- --
------ ------
Total distributions................... -- --
------ ------
Net Asset Value, End of Period......... $30.10 $30.12
====== ======
Total Return........................... 0.37 %(b) 0.40 %(b)
Ratios/Supplemental Data:
Net assets, end of period.............. $7,105 $ 100
Ratio of expenses to average net
assets................................ 1.58 %(c) 0.60 %(c)
Ratio of net investment income to
average net assets.................... 2.71 %(c) 1.58 %(c)
Ratio of expenses to average net
assets*............................... 328.68 %(c) 344.42 %(c)
Portfolio turnover(e).................. 358 % 358 %
</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) Portfolio turnover is calculated on the basis of the fund as a whole
without distinguishing between the classes of shares issued.
34
<PAGE>
PROFUNDS
Money Market ProFund
(Unaudited)
Statement of Assets and Liabilities
June 30, 1999
<TABLE>
<S> <C>
Assets:
Investment in Cash Management Portfolio, at value (cost
$205,314,406)................................................... $205,314,406
Prepaid expenses................................................. 98,289
Deferred organization costs...................................... 9,817
Other Assets..................................................... 78,692
------------
Total Assets..................................................... 205,501,204
Liabilities:
Dividends payable................................................ 506,567
Administration fees payable...................................... 14,256
Shareholder servicing fees payable--Service Class................ 71,283
------------
Total Liabilities................................................ 592,106
------------
Net Assets........................................................ $204,909,098
============
Net Assets consist of:
Capital.......................................................... $204,901,866
Accumulated undistributed net investment income.................. 2,395
Accumulated undistributed net realized gains on investments...... 4,837
------------
Total Net Assets................................................. $204,909,098
============
Investor Shares:
Net Assets....................................................... $129,683,280
Shares of Capital Stock Outstanding.............................. 129,677,600
Net Asset Value (offering and redemption price per share)........ $ 1.00
============
Service Shares:
Net Assets....................................................... $ 75,225,818
Shares of Capital Stock Outstanding.............................. 75,224,266
Net Asset Value (offering and redemption price per share)........ $ 1.00
============
</TABLE>
Statement of Operations
For the six months ended June 30, 1999
<TABLE>
<S> <C>
Investment Income:
Net Investment Income Allocated from Cash Management Fund......... $4,119,074
----------
4,119,074
Expenses:
Advisory fees..................................................... 125,103
Management servicing fees......................................... 291,908
Administration fees............................................... 125,103
Shareholder servicing fees--Service Class......................... 223,919
Transfer agent fees............................................... 93,394
Registration & filing fees........................................ 99,792
Other fees........................................................ 43,638
----------
Total expenses before waivers/reimbursements...................... 1,002,857
Less expenses waived/reimbursed................................... (111,719)
----------
Net expenses...................................................... 891,138
----------
Net Investment Income.............................................. 3,227,936
----------
Realized Gains on Investment:
Net realized gains on investment transactions..................... 4,837
----------
Increase in Net Assets Resulting from Operations................... $3,232,773
==========
</TABLE>
See accompanying notes to the financial statements.
35
<PAGE>
PROFUNDS
Money Market ProFund
(Unaudited)
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
For the Six For the
Months Ended Year Ended
June 30, 1999 December 31, 1998
--------------- -----------------
<S> <C> <C>
Change in Net Assets:
Operations:
Net investment income...................... $ 3,227,936 $ 1,465,933
Net realized gains on investment........... 4,837 2,398
--------------- ---------------
Net increase in net assets resulting from
operations................................ 3,232,773 1,468,331
Distributions to Shareholders from:
Net investment income
Investor shares............................ (2,525,544) (214,526)
Service shares............................. (702,392) (1,251,407)
--------------- ---------------
Net decrease in assets resulting from
distributions............................. (3,227,936) (1,465,933)
Capital Share Transactions:
Proceeds from shares issued................ 2,374,108,203 1,182,465,274
Dividends reinvested....................... 2,805,962 1,242,690
Cost of shares redeemed.................... (2,249,442,318) (1,106,567,419)
--------------- ---------------
Net increase in net assets resulting from
capital share transactions................ 127,471,847 77,140,545
--------------- ---------------
Total increase in net assets............... 127,476,684 77,142,943
Net Assets:
Beginning of period........................ 77,432,415 289,472
--------------- ---------------
End of period.............................. $ 204,909,099 $ 77,432,415
=============== ===============
</TABLE>
See accompanying notes to the financial statements.
36
<PAGE>
PROFUNDS
Money Market ProFund
(Unaudited)
Financial Highlights
For a share of beneficial interest outstanding
<TABLE>
<CAPTION>
Investor Class
------------------------------------------------------
For the
period from
For the For the November 17,
six months year ended 1997 (a)
ended December 31, to December 31,
June 30, 1999 1998 1997
------------- ------------ ---------------
<S> <C> <C> <C>
Net Asset Value,
Beginning of Period..... $ 1.00 $ 1.00 $ 1.00
------------ ----------- --------
Net investment income... 0.05(d) 0.05(d) 0.01
------------ ----------- --------
Total income from
investment operations.. 0.05 0.05 0.01
Distributions to
Shareholder from:
Net investment income... (0.05) (0.05) (0.01)
------------ ----------- --------
Total distributions..... (0.05) (0.05) (0.01)
------------ ----------- --------
Net Asset Value, End of
Period.................. $ 1.00 $ 1.00 $ 1.00
============ =========== ========
Total Return............. 2.08%(b) 4.84% 0.61%(b)
Ratios/Supplemental Data:
Net assets, end of
period.................. $129,683,280(c) $62,026,228 $286,962
Ratio of expenses to
average net assets...... .82%(c),(d) 0.85%(d) 0.83%(c),(d)
Ratio of net investment
income to average net
assets.................. 4.26%(c) 4.81% 4.92%(c)
Ratio of expenses to
average net assets*..... .96%(c),(d) 1.18%(d) 9.52%(c),(d)
<CAPTION>
Service Class
---------------------------------------------------------
For the
period from
For the For the November 17,
six months year ended 1997 (a)
ended December 31, to December 31,
June 30, 1999 1998 1997
-------------------- ---------------- -------------------
<S> <C> <C> <C>
Net Asset Value,
Beginning of Period..... $ 1.00 $ 1.00 $ 1.00
-------------------- ---------------- -------------------
Net investment income... 0.04(d) 0.04(d) --
-------------------- ---------------- -------------------
Total income from
investment operations.. 0.04 0.04 --
Distributions to
Shareholder from:
Net investment income... (0.04) (0.04) --
-------------------- ---------------- -------------------
Total distributions..... (0.04) (0.04) --
-------------------- ---------------- -------------------
Net Asset Value, End of
Period.................. $ 1.00 $ 1.00 $ 1.00
==================== ================ ===================
Total Return............. 1.57%(b) 3.81% 0.21%(b)
Ratios/Supplemental Data:
Net assets, end of
period.................. $75,225,818 $15,406,187 $2,510
Ratio of expenses to
average net assets...... 1.92%(c),(d) 1.87%(d) 1.83%(c),(d)
Ratio of net investment
income to average net
assets.................. 3.17%(c) 3.43% 2.53%(c)
Ratio of expenses to
average net assets*..... 2.06%(c),(d) 2.18%(d) 10.52%(c),(d)
</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 Money Market ProFund expense ratio includes the expense allocation of
the Cash Management Portfolio Master Fund.
37
<PAGE>
PROFUNDS
Notes to Financial Statements
June 30, 1999
(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. ProFunds Advisors LLC (the "Advisor")
serves as the investment advisor for each of the ProFunds except the Money
Market ProFund. BISYS Fund Services Limited Partnership ("BISYS"), a wholly
owned subsidiary of The BISYS Group, Inc., acts as the Trust's
administrator. Currently, the Trust consists of nine separately managed
series: Bull ProFund, UltraBull ProFund, Bear ProFund, UltraBear ProFund,
UltraOTC ProFund, UltraShort OTC ProFund, UltraEurope, UltraShort Europe,
and Money Market ProFund (collectively the "ProFunds" and individually, a
"ProFund"). The ProFunds, excluding the Money Market ProFund, are referred
to as the "non-money market ProFunds". 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 Standard and Poor's (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 UltraEurope ProFund and the UltraShort Europe ProFund. The investment
objective of the UltraEurope ProFund is to provide investment returns that
correspond to 200% of the performance of the ProFunds Europe Index ("PEI").
The PEI was created by the Advisor and is equal to a blended average of the
performance of three European equity indices: the Financial Times Stock
Exchange 100 (FTSE-100), the Deutsche Aktienindex (DAX) and the CAC-40. The
UltraEurope ProFund should produce greater gains to investors when the PEI
rises and greater losses when the PEI declines over the corresponding gain
or loss of the PEI itself.
The UltraShort Europe ProFund is designed to allow investors to seek to
profit from anticipated decreases in the PEI or to hedge an existing
portfolio of securities or mutual fund shares. The UltraShort Europe
ProFund's investment objective is to provide investment results that will
inversely correlate to 200% of the performance of the PEI. The UltraShort
Europe ProFund seeks to achieve this inverse correlation on each business
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 Market ProFund
invests all of its
Continued
38
<PAGE>
PROFUNDS
Notes to Financial Statements (continued)
June 30, 1999
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
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 are valued using a third-party pricing system. Short-term debt
securities are valued at amortized cost, which approximates market value.
For the non-money market ProFunds other than the UltraEurope ProFund and the
UltraShort Europe ProFund, futures contracts and options on indexes and
exchanged-traded securities held are valued at the last traded sale price
prior to the close of the securities or commodities exchange on which they
are traded (generally 4:00 p.m. Eastern time). Options on securities traded
in the OTC market are valued at 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 as described herein or, when
price quotes are not readily available, the value of a futures contract
purchased will be the bid price, and the value of a futures contract sold
will be 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. For the UltraEurope
ProFund and the UltraShort Europe ProFund, futures contracts are valued at
the last transaction price for the respective contracts that occur
immediately prior to one half hour after each underlying stock market (the
London Stock Exchange, the Frankfurt Stock Exchange and the Paris
Bourse)(collectively, the "PEI exchanges") opens. For purposes of
determining the net asset value per share of the UltraEurope ProFund and the
UltraShort Europe ProFund, the foreign exchange rates used will be the mean
of the bid price and asked price for the respective foreign currency
occurring immediately after one half hour after the last underlying PEI
exchange opens (normally, 4:30 a.m. Eastern time), on each day that all
three PEI exchanges and the New York Stock Exchange are open. When market
quotations are not readily available, securities and other assets held by
the non-money market ProFunds 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 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.
Continued
39
<PAGE>
PROFUNDS
Notes to Financial Statements (continued)
June 30, 1999
c) Short Sales
When a ProFund engages in a short sale, the ProFund records a liability for
securities sold short, and records an asset equal to the proceeds received.
The amount of the liability is subsequently marked to market to reflect the
market value of the short sale. The ProFund maintains a segregated account
of securities as collateral for outstanding short sales, when required. The
ProFund is exposed to market risk based on the amount, if any, that the
market value of the securities sold short exceeds the proceeds received
d) Options
When a ProFund writes (sells) an option, an amount equal to the premium
received is entered in the ProFund'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 ProFund enters into a closing purchase transaction, the
ProFund realizes a gain (or loss if the cost of a closing purchase
transaction exceeds the premium received when the option was sold).
No ProFunds engaged in written options activity during the six months ended
June 30, 1999.
e) Futures Contracts
The ProFunds 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 ProFund may be required to deposit
and maintain as collateral such initial margin as required by the exchange
on which the transaction is effected. Pursuant to the contract, the ProFund
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 ProFund as unrealized
gains or losses. When the contract is closed or offset, the ProFund 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.
f) Risks of Futures Contracts and Options
Futures contracts and written options involve, to varying degrees, elements
of market risk and exposure to loss in excess of the amount recognized in
the Statements of Assets and Liabilities. The face or contract amounts
reflect the extent of the total exposure each ProFund has in the particular
classes of instruments. Risks may result from an imperfect correlation
between movements in the price of the instruments and the price of the
underlying securities.
g) Foreign Currency Transaction
The accounting records of the ProFunds are maintained in U.S. dollars.
Financial instruments and other assets and liabilities of the UltraEurope
ProFund and the UltraShort Europe ProFund denominated in a foreign currency
are translated into U.S. dollars at current exchange rates. Purchases and
sales of financial instruments, income receipts and expense payments are
translated into U.S. dollars at the exchange rate on the date of the
transaction. The ProFunds isolate that portion of the results of operations
resulting from changes in foreign exchange rates from those resulting from
changes in market values of financial instruments. Realized foreign exchange
gains or losses arise from transactions in financial instruments and foreign
currencies, currency exchange fluctuations between the trade and settlement
date of such transactions, and the difference between the amount of assets
and liabilities recorded and the U.S. dollar equivalent of the amounts
actually received or paid. Net unrealized foreign exchange gains and losses
arise from changes in the value of assets and liabilities, including
financial instruments, resulting from changes in currency exchange rates.
h) 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.
i) Expenses
Expenses directly attributable to a ProFund are charged to the ProFund,
while expenses which are attributable to more than one ProFund are allocated
among the respective Profunds based upon relative net assets or another
appropriate basis. In addition, investors in Investor Shares will pay the
expenses directly attributable to the Investor Shares as a class, and
investors in Service Shares will pay the expenses directly attributable to
the Service Shares as a class.
Continued
40
<PAGE>
PROFUNDS
Notes to Financial Statements (continued)
June 30, 1999
The investment income and expenses of a ProFund (other than class specific
expenses) and realized and unrealized gains and losses on investments of a
ProFund, are allocated to each class of shares based upon relative net
assets on the date income is earned or expenses are realized and unrealized
gains and losses are incurred.
j) Capital Accounts
The trust follows 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.
k) Distributions to Shareholders
The non-money market ProFunds will distribute net investment income and net
realized gains, if any, at least once a year. 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, if any, will
be distributed annually.
The amount of distributions from net investment income and net realized
gains are determined in accordance with federal income tax regulations which
may differ from generally accepted accounting principles. These "book/tax"
differences are either considered temporary or permanent in nature. To the
extent these differences are permanent in nature, such amounts are
reclassified within the composition of net assets based on their federal
tax-basis treatment; temporary differences do not require a
reclassification. Distributions which exceed net investment income and net
realized capital gains for financial reporting purposes but not for tax
purposes are reported as distributions in excess of net investment income or
net realized gains. To the extent they exceed net investment income and net
realized capital gains for tax purposes, they are reported as distribution
of capital. The non-money market ProFunds utilize equalization accounting
for tax purposes and designate earnings and profits, including net realized
gains distributed to shareholders on redemption of shares, as a part of the
dividends paid deduction for income tax purposes.
l) 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.
m) Organization Costs
Costs incurred by the Trust (excluding UltraEurope ProFund and UltraShort
Europe) in connection with its organization and registration under the 1940
Act and the Securities Act of 1933 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
Transactions in shares of beneficial interest were as follows for the
periods ended June 30, 1999 and December 31, 1998. UltraBull ProFund and
UltraOTC ProFund shares have been adjusted to reflect the 4 for 1 stock
split that occurred on July 16, 1999, and shares of each of the non-money
market ProFunds have been adjusted to reflect the 1 for 5 reverse stock
split that occurred on January 15, 1999.
Continued
41
<PAGE>
PROFUNDS
Notes to Financial Statements (continued)
June 30, 1999
<TABLE>
<CAPTION>
Bull ProFund
--------------------------------------------------------
For the six months ended Year ended
June 30, 1999 December 31, 1998
---------------------------- --------------------------
Shares Amount Shares Amount
----------- --------------- ----------- -------------
<S> <C> <C> <C> <C>
Investor Shares Sold.... 3,710,021 $ 209,228,634 1,819,504 $ 101,357,875
Investor Shares
Reinvested............. -- -- 174 10,906
Investor Shares
Redeemed............... (3,619,554) (202,339,921) (1,699,878) (94,711,215)
----------- --------------- ----------- -------------
Net Increase........... 90,467 $ 6,888,713 119,800 $ 6,657,566
=========== =============== =========== =============
Service Shares Sold..... 255,743 $ 10,743,474 217,707 $ 12,376,845
Service Shares
Reinvested............. -- 6 358
Service Shares
Redeemed............... (241,266) (9,731,154) (208,223) (11,741,216)
----------- --------------- ----------- -------------
Net Increase........... 14,477 $ 1,012,320 9,490 $ 635,987
=========== =============== =========== =============
<CAPTION>
UltraBull ProFund
--------------------------------------------------------
For the six months ended Year ended
June 30, 1999 December 31, 1998
---------------------------- --------------------------
Shares Amount Shares Amount
----------- --------------- ----------- -------------
<S> <C> <C> <C> <C>
Investor Shares Sold.... 24,108,847 $ 1,076,296,194 9,228,361 $ 570,135,640
Investor Shares
Reinvested............. -- -- 988 67,254
Investor Shares
Redeemed............... (17,633,430) (996,264,416) (8,109,673) (497,376,316)
----------- --------------- ----------- -------------
Net Increase........... 6,475,417 $ 80,031,778 1,119,676 $ 72,826,578
=========== =============== =========== =============
Service Shares Sold..... 2,381,367 $ 128,541,086 889,665 $ 55,056,597
Service Shares
Reinvested............. -- -- 23 1,214
Service Shares
Redeemed............... (1,991,147) (126,896,244) (785,151) (47,158,352)
----------- --------------- ----------- -------------
Net Increase........... 390,220 $ 1,644,842 104,537 $ 7,899,459
=========== =============== =========== =============
<CAPTION>
UltraOTC ProFund
--------------------------------------------------------
For the six months ended Year ended
June 30, 1999 December 31, 1998
---------------------------- --------------------------
Shares Amount Shares Amount
----------- --------------- ----------- -------------
<S> <C> <C> <C> <C>
Investor Shares Sold.... 23,754,166 $ 1,566,951,511 12,827,450 $ 961,145,454
Investor Shares
Reinvested............. -- -- 228 26,353
Investor Shares
Redeemed............... (17,660,805) (1,516,680,667) (10,829,785) (797,142,403)
----------- --------------- ----------- -------------
Net Increase........... 6,093,361 $ 50,270,844 1,997,893 $ 164,029,404
=========== =============== =========== =============
Service Shares Sold..... 4,471,590 $ 363,960,202 3,349,477 $ 237,230,494
Service Shares
Reinvested............. -- -- 2 100
Service Shares
Redeemed............... (3,486,561) (349,908,709) (3,092,485) (214,497,432)
----------- --------------- ----------- -------------
Net Increase........... 985,029 $ 14,051,493 256,994 $ 22,733,162
=========== =============== =========== =============
</TABLE>
<TABLE>
<CAPTION>
UltraEurope ProFund
-----------------------
March 15, 1999 through
June 30, 1999
-----------------------
Shares Amount
-----------------------
<S> <C> <C>
Investor Shares Sold................................ 165,636 $4,987,008
Investor Shares Reinvested.......................... -- --
Investor Shares Redeemed............................ (12,996) (390,020)
--------- ------------
Net Increase....................................... 152,640 $ 4,596,988
========= ============
Service Shares Sold................................. 236,107 $ 7,109,066
Service Shares Reinvested........................... --
Service Shares Redeemed............................. (8,193) (244,783)
--------- ------------
Net Increase....................................... 227,914 $ 6,864,283
========= ============
</TABLE>
Continued
42
<PAGE>
PROFUNDS
Notes to Financial Statements (continued)
June 30, 1999
<TABLE>
<CAPTION>
Bear ProFund
-----------------------------------------------------
For the six months ended Year ended
June 30, 1999 December 31, 1998
-------------------------- -------------------------
Shares Amount Shares Amount
----------- ------------- ---------- -------------
<S> <C> <C> <C> <C>
Investor Shares Sold.... 2,598,222 $ 82,793,242 1,002,423 $ 45,923,856
Investor Shares
Reinvested............. -- -- 946 37,746
Investor Shares
Redeemed............... (2,667,550) (83,715,669) (949,212) (43,589,058)
----------- ------------- ---------- -------------
Net Increase........... (69,328) $ (922,427) 54,157 $ 2,372,544
=========== ============= ========== =============
Service Shares Sold..... 224,102 $ 5,696,338 167,814 $ 7,565,710
Service Shares
Reinvested............. -- -- 54 2,168
Service Shares
Redeemed............... (194,147) (4,536,988) (158,319) (7,144,150)
----------- ------------- ---------- -------------
Net Increase........... 29,955 $ 1,159,350 9,549 $ 423,728
=========== ============= ========== =============
<CAPTION>
UltraBear ProFund
-----------------------------------------------------
For the six months ended Year ended
June 30, 1999 December 31, 1998
-------------------------- -------------------------
Shares Amount Shares Amount
----------- ------------- ---------- -------------
<S> <C> <C> <C> <C>
Investor Shares Sold.... 16,851,129 $ 398,162,374 9,428,709 $ 398,355,782
Investor Shares
Reinvested............. -- -- 370 11,707
Investor Shares
Redeemed............... (16,114,297) (372,314,634) (8,552,538) (364,196,957)
----------- ------------- ---------- -------------
Net Increase........... 736,832 $ 25,847,741 876,541 $ 34,170,532
=========== ============= ========== =============
Service Shares Sold..... 4,290,764 $ 91,712,665 1,330,039 $ 59,334,440
Service Shares
Reinvested............. -- -- -- --
Service Shares
Redeemed............... (4,210,855) (88,587,223) (1,235,400) (54,154,821)
----------- ------------- ---------- -------------
Net Increase........... 79,909 $ 3,125,442 94,639 $ 5,179,619
=========== ============= ========== =============
<CAPTION>
UltraShort OTC ProFund
-----------------------------------------------------
For the six months ended June 2, 1998 through
June 30, 1999 December 31, 1998
-------------------------- -------------------------
Shares Amount Shares Amount
----------- ------------- ---------- -------------
<S> <C> <C> <C> <C>
Investor Shares Sold.... 41,464,514 $ 428,606,063 6,280,979 $ 185,715,842
Investor Shares
Reinvested............. -- -- 165 2,745
Investor Shares
Redeemed............... (37,534,191) (366,628,932) (5,082,659) (153,765,286)
----------- ------------- ---------- -------------
Net Increase........... 3,930,323 $ 61,977,131 1,198,485 $ 31,953,301
=========== ============= ========== =============
Service Shares Sold..... 2,660,474 $ 25,877,908 1,398,985 $ 41,352,375
Service Shares
Reinvested............. -- -- -- --
Service Shares
Redeemed............... (2,523,727) (24,253,421) (1,346,328) (38,704,366)
----------- ------------- ---------- -------------
Net Increase........... 136,747 $ 1,624,487 52,657 $ 2,648,009
=========== ============= ========== =============
</TABLE>
<TABLE>
<CAPTION>
UltraShort Europe
ProFund
-----------------------
March 15, 1999 through
June 30, 1999
-----------------------
Shares Amount
-----------------------
<S> <C> <C>
Investor Shares Sold................................ 7,230 $ 217,364
Investor Shares Reinvested.......................... -- --
Investor Shares Redeemed............................ (6,994) (210,220)
--------- ------------
Net Increase....................................... 236 $ 7,144
========= ============
Service Shares Sold................................. 49 $ 1,385
Service Shares Reinvested........................... -- --
Service Shares Redeemed............................. (46) (1,385)
--------- ------------
Net Increase....................................... 3 $ --
========= ============
</TABLE>
Continued
43
<PAGE>
PROFUNDS
Notes to Financial Statements (continued)
June 30, 1999
<TABLE>
<CAPTION>
Money Market ProFund
------------------------------------------------------------
For the six months ended Year ended
June 30, 1999 December 31, 1998
------------------------------- ---------------------------
Shares Amount Shares Amount
-------------- --------------- ------------ -------------
<S> <C> <C> <C> <C>
Investor Shares Sold.... 1,828,593,052 $ 1,828,593,052 946,042,462 $ 946,042,462
Investor Shares
Reinvested............. 2,246,445 2,246,445 1,061,891 1,061,891
Investor Shares
Redeemed............... (1,763,186,148) (1,763,186,148) (885,367,066) (885,367,066)
-------------- --------------- ------------ -------------
Net Increase........... 67,653,349 $ 67,653,349 61,737,287 $ 61,737,287
============== =============== ============ =============
Service Shares Sold..... 545,515,150 $ 545,515,150 236,422,812 $ 236,422,812
Service Shares
Reinvested............. 559,518 559,518 180,799 180,799
Service Shares
Redeemed............... (486,256,171) (486,256,171) (221,200,353) (221,200,353)
-------------- --------------- ------------ -------------
Net Increase........... 59,818,497 $ 59,818,497 15,403,258 $ 15,403,258
============== =============== ============ =============
</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 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%.
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. Concord Financial
Group, Inc. an affiliate of BISYS, serves as the Trust's distributor and
principal underwriter and receives no compensation from the ProFunds for
such services. BISYS Fund Services, Inc. ("BFSI"), also 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-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 and are
compensated for such services.
Waivers and reimbursements are detailed as follows:
<TABLE>
<CAPTION>
Investment Shareholder Management Fund
Advisor Administration Servicing Servicing Accounting Expense
Waiver Waiver Waiver Waiver Waiver Reimbursement
---------- -------------- ----------- ---------- ---------- -------------
<S> <C> <C> <C> <C> <C> <C>
Bull ProFund............ $ 9,756 $ 1,621 $ -- $1,028 $ 324 $ --
UltraBull ProFund....... -- 19,798 -- -- 3,959 --
Bear ProFund............ 17,375 429 -- 3,475 86 8,233
UltraBear ProFund....... -- 11,660 -- -- 2,332 2,772
UltraOTC ProFund........ -- 87,525 -- -- 17,505 7,247
UltraShort OTC ProFund.. -- 10,042 -- -- -- 1,351
UltraEurope ProFund..... 431 -- -- 46 -- 24,936
UltraShort Europe
ProFund................ 9 -- -- 4 -- 26,805
Money Market ProFund.... -- -- -- -- -- --
</TABLE>
Continued
44
<PAGE>
PROFUNDS
Notes to Financial Statements (concluded)
June 30, 1999
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.
5.Securities Transactions
The cost of security purchases and the proceeds from the sale of securities
(excluding short-term securities) during the six months ended June 30, 1999
were as follows:
<TABLE>
<CAPTION>
Purchases Sales
-------------- --------------
<S> <C> <C>
Bull ProFund.................................. $ 32,482,296 $ 24,632,404
UltraBull ProFund............................. $ 228,738,966 $ 165,144,295
Bear ProFund.................................. $ 3,075,800 $ 4,697,655
Ultra Bear ProFund............................ $ 87,439,477 $ 78,149,092
UltraOTC ProFund.............................. $1,377,337,523 $1,102,385,755
UltraShort OTC ProFund........................ $ 87,665,766 $ 66,647,698
UltraEurope ProFund........................... $ 9,545,996 $ 224,367
UltraShort Europe ProFund..................... $ 20,887 $ 14,958
</TABLE>
6.Federal Income Tax Information
At December 31, 1998 the following funds had net capital loss carryforwards
to offset future net capital gains, if any, to the extent provided by the
Treasury regulations. To the extent that these carryovers are used to offset
future capital gains, it is probable that the gains so offset will not be
distributed to shareholders:
<TABLE>
<S> <C> <C>
Bear ProFund........................................ $ 629,925 Expires 2006
UltraBear ProFund................................... $3,665,791 Expires 2006
UltraShort OTC ProFund.............................. $7,192,872 Expires 2006
</TABLE>
During the year ended December 31, 1998, the following funds declared long-
term capital distributions as follows:
<TABLE>
<S> <C>
Bull ProFund......................................................... $ 3,969
UltraBull ProFund.................................................... $12,471
Bear ProFund......................................................... $ 283
</TABLE>
In addition, the following funds have deemed distributions from equalization
as follows:
<TABLE>
<S> <C>
Bull ProFund.................................................... $ 772,048
UltraBull ProFund............................................... $11,752,921
UltraBear ProFund............................................... $ 410,387
UltraShort OTC ProFund.......................................... $ 67,602
</TABLE>
Under current tax law, capital losses realized after October 31 may be
deferred and treated as occurring on the first business day of the following
fiscal year. The following funds had deferred losses, which will be treated
as arising on the first day of the fiscal year ending December 31, 1999:
<TABLE>
<CAPTION>
Fund Capital Loss Deferred
---- ---------------------
<S> <C>
Bear ProFund.......................................... $ 137,023
UltraBear ProFund..................................... $5,142,648
UltraShort OTC ProFund................................ $7,155,325
</TABLE>
45
<PAGE>
================================================================================
Cash Management Portfolio
Statement of Net Assets June 30, 1999 (unaudited)
- --------------------------------------------------------------------------------
Principal
Amount Description Value
------ ----------- -----
EURODOLLAR CERTIFICATES OF
DEPOSIT - 10.9%
Abbey National PLC:
$50,000,000 4.92%, 7/15/99 ................ $ 50,000,000
25,000,000 4.93%, 10/26/99 ............... 25,000,000
22,000,000 5.44%, 3/13/00 ................ 22,000,000
ABN Amro,
25,000,000 4.95%, 10/12/99 ............... 25,000,224
Bank of Austria,
12,000,000 4.88%, 7/22/99 ................ 12,000,042
Bank of Scotland:
20,000,000 4.93%, 8/03/99 ................ 19,999,086
30,000,000 4.95%, 8/25/99 ................ 30,000,000
Barclays Bank PLC,
35,000,000 4.875%, 8/16/99 ............... 35,000,221
Cariplo,
50,000,000 4.89%, 7/12/99 ................ 50,000,000
Commerzbank,
10,000,000 5.21%, 2/18/00 ................ 9,984,609
Credit Agricole,
20,000,000 4.95%, 10/12/99 ............... 20,000,558
Dresdner Bank,
25,000,000 4.96%, 9/30/99 ................ 25,000,940
Internationale Nederlanden
U.S. Funding Corp.:
30,000,000 5.219%, 7/30/99 ............... 30,000,000
20,000,000 4.94%, 8/16/99 ................ 19,999,649
25,000,000 4.965%, 8/23/99 ............... 25,000,359
35,000,000 4.975%, 9/17/99 ............... 35,000,689
35,000,000 4.975%, 9/22/99 ............... 34,999,444
20,000,000 4.975%, 11/10/99 .............. 20,001,073
20,000,000 5.155%, 2/22/00 ............... 19,955,245
Morgan Guaranty,
65,000,000 4.95%, 11/10/99 ............... 64,997,517
National Australia Bank,
20,000,000 4.96%, 11/12/99 ............... 20,000,000
Norddeutsche Landesbank,
25,000,000 5.01%, 9/08/99 ................ 25,000,473
Paribas SA,
35,000,000 4.90%, 8/11/99 ................ 34,995,324
Rabobank Nederland, N.V.,
$20,000,000 4.87%, 7/26/99 ................ 20,000,135
Westdeutsche Landesbank:
45,000,000 4.895%, 7/08/99 ............... 45,000,000
8,000,000 4.88%, 7/26/99 ................ 8,000,048
37,000,000 4.885%, 8/16/99 ............... 37,000,000
12,000,000 4.96%, 8/25/99 ................ 12,000,000
--------------
Total Eurodollar Certificates of Deposit
(Amortized Cost $775,935,636) .................. 775,935,636
--------------
YANKEE CERTIFICATES
OF DEPOSIT - 10.5%
Bank of Austria,
15,000,000 5.68%, 8/03/99 ................ 15,007,915
Banque Nationale de Paris:
6,000,000 4.87%, 7/02/99 ................ 5,999,997
75,000,000 4.88%, 7/02/99 ................ 74,999,990
Barclays Bank PLC,
75,000,000 4.875%,7/06/99 ................ 75,000,052
Bayerische Hypotheka
Vereinsbank:
25,000,000 4.91%, 7/08/99 ................ 25,000,000
12,000,000 5.15%, 4/20/00 ................ 11,999,313
Bayerische Landesbank,
91,900,000 4.88%, 7/26/99 ................ 91,895,584
Commerzbank:
25,000,000 5.15%, 9/17/99 ................ 25,008,053
5,000,000 5.01%, 1/10/00 ................ 4,988,355
20,000,000 4.99%, 2/02/00 ................ 19,976,825
20,000,000 5.16%, 2/25/00 ................ 19,994,955
25,000,000 5.20%, 3/15/00 ................ 24,998,170
20,000,000 5.185%, 3/30/00 ............... 19,992,800
Credit Agricole,
20,000,000 5.285%, 3/01/00 ............... 20,010,589
Credit Commercial de France,
25,000,000 4.85%, 7/12/99 ................ 25,000,000
Landesbank Hessen Thuringen,
3,000,000 5.215%, 2/29/00 ............... 2,999,120
Lloyds Bank PLC,
38,000,000 4.94%, 7/12/99 ................ 38,000,000
See Notes to Financial Statements.
46
<PAGE>
================================================================================
Cash Management Portfolio
Statement of Net Assets June 30, 1999 (unaudited)
- --------------------------------------------------------------------------------
Principal
Amount Description Value
------ ----------- -----
Norddeutsche Landesbank:
$ 8,000,000 5.66%, 7/27/99 .................... $ 8,003,180
10,000,000 5.35%, 5/24/00 .................... 9,994,821
Paribas SA:
22,000,000 4.91%, 7/08/99 .................... 22,000,000
25,000,000 4.95%, 8/24/99 .................... 25,000,000
Rabobank Nederland, N.V.:
20,000,000 5.02%, 1/12/00 .................... 19,952,177
14,000,000 5.14%, 3/20/00 .................... 13,975,107
Royal Bank of Canada:
13,000,000 5.035%, 2/08/00 ................... 12,963,073
15,000,000 5.235%, 3/09/00 ................... 14,999,338
5,000,000 5.70%, 7/03/00 .................... 4,997,586
Toronto Dominion Bank:
20,000,000 5.10%, 2/22/00 .................... 19,994,393
25,000,000 5.14%, 4/26/00 .................... 24,988,128
Union Bank of Switzerland,
15,000,000 5.155%, 2/25/00 ................... 14,996,216
Westdeutsche Landesbank,
60,000,000 4.87%, 7/06/99 .................... 60,000,000
-------------
Total Yankee Certificates of Deposit
(Amortized Cost $752,735,737) ................. 752,735,737
=============
CERTIFICATES
OF DEPOSIT - 0.9%
First Chicago,
18,000,000 4.87%, 7/08/99 .................... 17,999,836
First Union Corp.,
25,000,000 4.93%, 10/20/99 ................... 25,000,000
NationsBank,
7,000,000 4.99%, 1/11/00 .................... 6,982,804
Wachovia Bank,
10,000,000 4.90%, 1/10/00 .................... 9,993,056
-------------
Total Certificates of Deposit
(Amortized Cost $59,975,696) .................. 59,975,696
=============
EURODOLLAR TIME
DEPOSITS - 15.7%
ABN Amro:
25,000,000 5.10%, 7/14/99 .................... 25,000,000
50,000,000 4.98%, 11/12/99 ................... 50,000,000
Banque Bruxelles Lambert:
$35,000,000 5.00%, 10/06/99 ................... 35,000,000
25,000,000 4.98%, 11/10/99 ................... 25,000,000
Bayerische Landesbank:
25,000,000 4.96%, 10/12/99 ................... 25,000,000
40,000,000 4.95%, 10/29/99 ................... 40,000,000
Commerzbank,
50,000,000 4.92%, 7/08/99 .................... 50,000,000
Den Danske Bank,
40,000,000 4.955%, 8/27/99 ................... 40,000,000
National Australia,
200,000,000 5.75%, 7/01/99 .................... 200,000,000
National City Cleveland,
349,448,130 4.875%, 7/01/99 ................... 349,448,130
National Westminster,
75,000,000 5.15%, 9/23/99 .................... 75,000,000
Norddeutsche Landesbank,
25,000,000 4.938%, 9/30/99 ................... 25,000,000
Toronto Dominion Bank,
50,000,000 5.75%, 7/01/99 .................... 50,000,000
Westdeutsche Landesbank:
100,000,000 5.875%, 7/01/99 ................... 100,000,000
35,000,000 4.93%, 7/22/99 .................... 35,000,000
-------------
Total Eurodollar Time Deposits
(Amortized Cost $1,124,448,130) ............... 1,124,448,130
=============
FLOATING RATE
NOTES - 16.2%
American Express Centurion Bank:
Monthly Variable Rate,
30,000,000 4.994%, 2/14/00 ................... 30,010,665
20,000,000 4.948%, 3/15/00 ................... 20,000,000
25,000,000 4.903%, 4/03/00 ................... 25,000,267
Asset Securitization:
Quarterly Variable Rate,
40,000,000 5.06%, 3/06/00 .................... 40,000,000
30,000,000 5.095%, 3/10/00 ................... 29,997,948
See Notes to Financial Statements.
47
<PAGE>
================================================================================
Cash Management Portfolio
Statement of Net Assets June 30, 1999 (unaudited)
- --------------------------------------------------------------------------------
Principal
Amount Description Value
------ ----------- -----
Bank of America:
Monthly Variable Rate,
$15,000,000 4.985%, 8/18/99 ................... $ 14,999,632
10,000,000 5.05%, 4/18/00 .................... 10,006,319
Bank of Austria:
Monthly Variable Rate,
50,000,000 4.888%, 3/15/00 ................... 49,975,592
Quarterly Variable Rate,
25,000,000 4.855%, 7/27/99 ................... 24,998,951
Bank of Scotland:
Monthly Variable Rate,
25,000,000 4.898%, 3/15/00 ................... 24,989,559
25,000,000 4.811%, 5/10/00 ................... 24,985,190
Banque Nationale de Paris:
Monthly Variable Rate,
40,000,000 4.688%, 7/29/99 ................... 39,998,182
Bayerische Hypotheka Vereinsbank:
Monthly Variable Rate,
100,000,000 4.869%, 4/13/00 ................... 99,945,109
25,000,000 4.908%, 4/25/00 ................... 24,989,925
25,000,000 4.898%, 5/15/00 ................... 24,984,830
10,000,000 4.908%, 5/15/00 ................... 9,994,394
Bayerische Landesbank:
Monthly Variable Rate,
100,000,000 4.843%, 4/10/00 ................... 99,945,831
Chase Manhattan Bank:
Quarterly Variable Rate,
10,000,000 5.00%, 1/12/00 .................... 10,002,893
6,000,000 5.243%, 2/28/00 ................... 6,008,965
15,000,000 5.20%, 4/20/00 .................... 15,028,864
Corporate Receivables Corp.:
Quarterly Variable Rate,
30,000,000 5.003%, 2/16/00 ................... 30,000,000
Credit Agricole:
Monthly Variable Rate,
30,000,000 4.90%, 3/16/00 .................... 29,985,298
First Union Corp.:
Quarterly Variable Rate,
10,000,000 5.02%, 10/20/99 ................... 10,000,000
General Electric Capital Corp.:
Quarterly Variable Rate,
20,000,000 5.058%, 9/08/99 ................... 20,000,000
50,000,000 4.95%, 4/12/00 .................... 50,000,000
35,000,000 4.95%, 5/12/00 .................... 35,000,000
General Motors Acceptance Corp.:
Quarterly Variable Rate,
7,500,000 5.018%, 2/24/00 ................... 7,499,991
20,000,000 5.018%, 2/25/00 ................... 20,001,307
J.P. Morgan Securities Inc.:
Daily Variable Rate,
20,000,000 5.016%, 3/02/00 ................... 20,000,768
Quarterly Variable Rate,
14,000,000 4.999%, 2/23/00 ................... 13,999,496
7,820,000 4.95%, 4/06/00 .................... 7,819,994
35,000,000 5.13%, 6/23/00 .................... 35,000,000
Key Bank:
Monthly Variable Rate,
25,000,000 5.033%, 6/26/00 ................... 24,985,420
National Westminster:
Quarterly Variable Rate,
25,000,000 4.87%, 8/20/99 .................... 24,997,311
NationsBank:
Daily Variable Rate,
25,000,000 5.05%, 2/04/00 .................... 24,993,577
National Rural Utility Corp.:
Quarterly Variable Rate,
20,000,000 5.006%, 11/23/99 .................. 20,000,000
12,000,000 5.178%, 6/26/00 ................... 11,998,820
Norwest Corp.:
Quarterly Variable Rate,
30,000,000 5.016%, 10/28/99 .................. 29,999,017
PNC Bank:
Monthly Variable Rate,
25,000,000 5.098%, 1/31/00 ................... 24,994,213
Societe Generale:
Monthly Variable Rate,
35,000,000 4.913%, 5/15/00 ................... 34,981,747
25,000,000 4.913%, 5/15/00 ................... 24,990,428
Wells Fargo Bank:
Quarterly Variable Rate,
23,000,000 5.208%, 4/26/00 ................... 22,985,454
See Notes to Financial Statements.
48
<PAGE>
================================================================================
Cash Management Portfolio
Statement of Net Assets June 30, 1999 (unaudited)
- --------------------------------------------------------------------------------
Principal
Amount Description Value
------ ----------- -----
Westpac Capital Corp.:
Quarterly Variable Rate,
$10,000,000 4.816%, 4/17/00 ................. $ 9,995,243
---------------
Total Floating Rate Notes
(Amortized Cost $1,160,091,200) ............. 1,160,091,200
---------------
COMMERCIAL PAPER - 43.3%
Abbey National PLC,
15,000,000 4.82%, 7/08/99 .................. 14,985,942
AlliedSignal,
15,000,000 5.30%, 2/01/00 .................. 14,525,208
American General Finance,
15,000,000 4.83%, 7/26/99 .................. 14,949,687
American Home Products,
15,000,000 4.85%, 7/19/99 .................. 14,963,625
Asset Securitization:
38,000,000 4.94%, 7/12/99 .................. 37,942,641
20,000,000 5.05%, 8/16/99 .................. 19,870,944
18,000,000 5.25%, 8/31/99 .................. 17,839,875
Associates Corp.,
20,000,000 4.86%, 7/27/99 .................. 19,929,800
AT&T Corp.:
35,000,000 4.82%, 7/16/99 .................. 34,929,708
15,000,000 4.79%, 7/27/99 .................. 14,948,108
Bank of America:
15,000,000 4.82%, 8/16/99 .................. 14,907,617
10,000,000 4.84%, 11/17/99 ................. 9,813,122
BBL North America:
18,000,000 4.84%, 7/09/99 .................. 17,980,640
28,000,000 4.83%, 7/12/99 .................. 27,958,677
Bellsouth Telecommunications,
45,000,000 4.85%, 7/12/99 .................. 44,933,312
BP America,
100,000,000 5.80%, 7/01/99 .................. 100,000,000
British Telecom,
6,500,000 4.91%, 7/21/99 .................. 6,482,269
BTR Dunlop Finance,
22,476,000 5.04%, 7/15/99 .................. 22,431,947
Caterpillar Finance,
$27,000,000 5.30%, 7/14/99 .................. 26,948,325
Chase Manhattan Bank,
22,000,000 4.83%, 9/08/99 .................. 21,796,335
Coca Cola Co.,
15,000,000 5.27%, 1/20/00 .................. 14,554,246
Corporate Assets Funding
Co., Inc.:
60,000,000 4.82%, 7/15/99 .................. 59,887,533
30,000,000 4.82%, 7/21/99 .................. 29,919,667
70,000,000 5.05%, 8/16/99 .................. 69,537,444
30,000,000 4.90%, 8/23/99 .................. 29,783,583
Corporate Receivables Corp.:
80,000,000 4.82%, 7/15/99 .................. 79,847,944
27,000,000 5.05%, 8/12/99 .................. 26,840,925
30,000,000 5.05%, 8/13/99 .................. 29,819,042
52,000,000 4.88%, 8/16/99 .................. 51,658,578
25,000,000 5.24%, 8/17/99 .................. 24,828,972
Credit Suisse First Boston,
30,000,000 4.82%, 8/06/99 .................. 29,855,400
Cregem:
15,000,000 4.80%, 7/13/99 .................. 14,976,000
50,000,000 4.83%, 7/30/99 .................. 49,805,458
32,000,000 4.84%, 9/10/99 .................. 31,694,542
DaimlerChrysler:
14,000,000 4.90%, 8/02/99 .................. 13,939,022
Delaware Funding Corp.:
36,000,000 5.05%, 7/30/99 .................. 35,853,550
30,000,000 4.93%, 8/05/99 .................. 29,856,208
12,576,000 4.93%, 8/17/99 .................. 12,495,056
Diageo Capital PLC:
30,000,000 4.85%, 7/06/99 .................. 29,979,792
20,000,000 4.85%, 7/15/99 .................. 19,962,278
15,000,000 4.81%, 8/16/99 .................. 14,907,808
60,000,000 4.84%, 9/24/99 .................. 59,315,278
DuPont de Nemours &Co.:
25,000,000 4.84%, 7/08/99 .................. 24,976,472
30,000,000 4.87%, 7/19/99 .................. 29,926,950
Emerson Electric,
25,000,000 5.27%, 1/31/00 .................. 24,216,819
See Notes to Financial Statements.
49
<PAGE>
================================================================================
Cash Management Portfolio
Statement of Net Assets June 30, 1999 (unaudited)
- --------------------------------------------------------------------------------
Principal
Amount Description Value
------ ----------- -----
Ford Motor Credit:
$50,000,000 5.65%, 7/01/99 ................ $ 50,000,000
35,000,000 5.03%, 8/17/99 ................ 34,770,157
General Electric Capital Corp.:
25,000,000 4.82%, 7/15/99 ................ 24,953,139
15,000,000 4.89%, 7/22/99 ................ 14,957,212
25,000,000 4.83%, 7/28/99 ................ 24,909,437
18,000,000 4.78%, 8/02/99 ................ 17,923,520
25,000,000 4.83%, 9/30/99 ................ 24,694,771
23,000,000 5.20%, 2/02/00 ................ 22,282,400
22,000,000 4.95%, 2/07/00 ................ 21,331,475
General Electric Capital Corp.:
International Fund,
40,000,000 5.31%, 2/15/00 ................ 38,648,900
Generale Fund:
13,163,000 4.88%, 7/14/99 ................ 13,139,804
45,000,000 4.82%, 8/05/99 ................ 44,789,125
15,000,000 5.23%, 9/13/99 ................ 14,838,742
11,300,000 4.80%, 10/27/99 ............... 11,122,213
General Motors Acceptance Corp.:
40,000,000 4.88%, 7/08/99 ................ 39,962,044
23,000,000 4.97%, 7/16/99 ................ 22,952,372
40,000,000 4.87%, 7/29/99 ................ 39,848,489
12,000,000 4.87%, 8/04/99 ................ 11,944,807
35,000,000 4.94%, 8/16/99 ................ 34,779,072
15,000,000 5.22%, 1/31/00 ................ 14,534,550
Gillette Co.,
15,000,000 5.70%, 7/01/99 ................ 15,000,000
Glaxo Wellcome PLC:
25,300,000 4.80%, 7/29/99 ................ 25,205,547
25,000,000 4.82%, 8/10/99 ................ 24,866,111
Hydro-Quebec,
27,000,000 4.80%, 8/12/99 ................ 26,848,800
Internationale Nederlanden
U.S. Funding Corp.,
25,000,000 4.84%, 7/06/99 ................ 24,983,194
J.P. Morgan, Inc.:
45,000,000 4.82%, 7/06/99 ................ 44,969,875
42,000,000 5.03%, 8/16/99 ................ 41,730,057
22,000,000 4.90%, 9/15/99 ................ 21,772,422
Mellon Financial Co.,
30,000,000 5.03%, 8/16/99 ................ 29,807,183
MetLife Funding, Inc.,
52,772,000 4.86%, 7/06/99 ................ 52,736,344
Motorola, Inc.,
20,000,000 5.20%, 8/05/99 ................ 19,898,889
National Rural Utilities CFC:
22,000,000 4.84%, 7/16/99 ................ 21,955,633
20,000,000 5.04%, 9/17/99 ................ 19,781,600
Panasonic Finance, Inc.,
40,000,000 5.80%, 7/01/99 ................ 40,000,000
Pfizer, Inc.:
15,349,000 5.80%, 7/01/99 ................ 15,349,000
34,900,000 4.95%, 7/15/99 ................ 34,832,818
40,500,000 4.98%, 7/19/99 ................ 40,399,155
30,000,000 4.98%, 7/22/99 ................ 29,912,850
Province of Quebec:
16,220,000 4.77%, 7/13/99 ................ 16,194,210
15,305,000 4.80%, 7/15/99 ................ 15,276,432
Quincy Capital Corp.:
14,035,000 4.87%, 7/06/99 ................ 14,025,508
34,145,000 4.87%, 7/07/99 ................ 34,117,287
35,000,000 4.86%, 7/13/99 ................ 34,943,300
28,493,000 5.05%, 8/03/99 ................ 28,361,100
25,000,000 5.05%, 8/13/99 ................ 24,849,201
16,000,000 5.08%, 8/17/99 ................ 15,893,884
Receivables Capital Corp.:
27,000,000 4.91%, 7/06/99 ................ 26,981,588
10,000,000 5.34%, 7/06/99 ................ 9,992,584
15,000,000 4.82%, 7/09/99 ................ 14,983,933
45,654,000 4.87%, 7/14/99 ................ 45,573,712
Repsol International Finance B.U.:
34,870,000 4.87%, 7/07/99 ................ 34,841,830
25,000,000 4.87%, 7/15/99 ................ 24,952,654
Rio Tinto America, Inc.,
30,000,000 5.04%, 8/16/99 ................ 29,806,800
Riverwoods Funding Corp.,
25,000,000 4.84%, 7/09/99 ................ 24,973,111
See Notes to Financial Statements.
50
<PAGE>
================================================================================
Cash Management Portfolio
Statement of Net Assets June 30, 1999 (unaudited)
- --------------------------------------------------------------------------------
Principal
Amount Description Value
------ ----------- -----
Shell Oil Co.,
$17,000,000 4.97%, 7/15/99 ................... $ 16,967,144
Union Bank of Switzerland,
100,000,000 5.75%, 7/01/99 ................... 100,000,000
USAA Capital Corp.,
5,000,000 4.83%, 7/15/99 ................... 4,990,608
Wachovia Bank:
8,000,000 4.93%, 2/07/00 ................... 7,757,883
25,000,000 5.18%, 2/15/00 ................... 24,176,236
Windmill Funding Corp.:
53,000,000 4.88%, 7/12/99 ................... 52,920,583
27,000,000 4.93%, 7/13/99 ................... 26,955,630
6,125,000 4.91%, 7/26/99 ................... 6,104,115
25,000,000 4.93%, 8/02/99 ................... 24,890,444
13,000,000 4.94%, 8/02/99 ................... 12,942,916
13,450,000 4.94%, 8/06/99 ................... 13,383,557
15,000,000 4.94%, 8/09/99 ................... 14,919,725
--------------
Total Commercial Paper
(Amortized Cost $3,090,784,031) ................... 3,090,784,031
--------------
FUNDING AGREEMENTS - 2.2%
First Allmerica Financial
Life Insurance Co.:
Monthly Variable Rate,
$55,000,000 4.90%, 4/17/00(1) ................ $ 55,000,000
Transamerica Life:
Monthly Variable Rate,
35,000,000 4.951%,6/13/00(1) ................ 35,000,000
Travelers Insurance Co.:
Monthly Variable Rate,
40,000,000 4.984%,2/23/00(1) ................ 40,000,000
30,000,000 4.97%, 4/03/00(1) ................ 30,000,000
--------------
Total Funding Agreements
(Amortized Cost $160,000,000) ..................... 160,000,000
--------------
Total Investments
(Amortized Cost $7,123,970,430)............. 99.7% 7,123,970,430
Other Assets in Excess of
Liabilities ................................ 0.3% 22,449,437
----- --------------
Net Assets - 100.0% .......................... 100.0% $7,146,419,867
===== ==============
- -----------------
(1) Illiquid security.
See Notes to Financial Statements.
51
<PAGE>
================================================================================
Cash Management Portfolio
Statement of Operations For the six months ended June 30, 1999 (unaudited)
- --------------------------------------------------------------------------------
Investment Income
Interest ................................................ $ 166,249,559
-------------
Expenses
Advisory Fees ........................................... 5,013,875
Administration and Services Fees ........................ 1,671,292
Professional Fees ....................................... 13,334
Trustees Fees ........................................... 1,935
Miscellaneous Expenses .................................. 796
-------------
Total Expenses .......................................... 6,701,232
Less: Fees Waived by Bankers Trust ...................... (684,734)
-------------
Net Expenses ......................................... 6,016,498
-------------
Net Investment Income ..................................... 160,233,061
Net Realized Gain from Investment Transactions ............ 325,021
-------------
Net Increase in Net Assets from Operations ................ $ 160,558,082
=============
See Notes to Financial Statements.
52
<PAGE>
================================================================================
Cash Management Portfolio
Statements of Changes in Net Assets
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the For the
six months ended year ended
June 30, 1999(1) December 31, 1998
---------------- -----------------
<S> <C> <C>
Increase (Decrease) in Net Assets from:
Operations
Net Investment Income .............................................................. $ 160,233,061 $ 286,987,238
Net Realized Gain from Investment Transactions ..................................... 325,021 320,470
---------------- -----------------
Net Increase in Net Assets Resulting from Operations ................................. 160,558,082 287,307,708
---------------- -----------------
Capital Transactions
Proceeds from Capital Invested ..................................................... 20,588,149,400 85,829,057,272
Value of Capital Withdrawn ......................................................... (19,066,540,604) (84,691,836,966)
---------------- -----------------
Net Increase in Net Assets from Capital Share Transactions ........................... 1,521,608,796 1,137,220,306
---------------- -----------------
Total Increase in Net Assets ......................................................... 1,682,166,878 1,424,528,014
Net Assets
Beginning of Period .................................................................. 5,464,252,989 4,039,724,975
---------------- -----------------
End of Period ........................................................................ $ 7,146,419,867 $ 5,464,252,989
================ =================
</TABLE>
================================================================================
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 For the years ended December 31,
ended June 30, --------------------------------------------------------------------
1999(1) 1998 1997 1996 1995 1994
-------------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Supplemental Data and Ratios:
Net Assets, End of Period (000s omitted) $ 7,146,420 $ 5,464,253 $ 4,039,725 $ 3,261,910 $ 2,615,932 $ 2,735,025
Ratios to Average Net Assets:
Net Investment Income ................. 4.80% 5.37% 5.43% 5.27% 5.77% 4.24%
Expenses .............................. 0.18%(2) 0.18% 0.18% 0.18% 0.18% 0.18%
Decrease Reflected in Above Expense
Ratios Due to Expenses Reimbursed
and/or Fees Waived by Bankers Trust .. 0.02%(2) 0.02% 0.02% 0.02% 0.02% 0.02%
</TABLE>
- -----------------------
(1) Unaudited.
(2) Annualized.
See Notes to Financial Statements.
53
<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 began 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 Rule 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
accretion of 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
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
The Portfolio is considered a partnership under 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 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 .05% of the Portfolio's average daily net assets. For the six months
ended June 30, 1999, administrative and service fees amounted to $1,671,292, of
which $307,296 was payable at the end of the period.
The Portfolio has entered into an Advisory Agreement with Bankers Trust. Under
this 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. For the six months ended June 30, 1999, advisory fees amounted to
$5,013,875, of which $921,887 was payable at the end of the period.
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.
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, reflect 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 Portfolio is a participant with other affiliated entities in a revolving
credit facility in the amount of $100,000,000, which expires April 29, 2000. A
commitment fee of .10% 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 facility will bear interest at a
rate per annum equal to the Federal Funds Rate plus .50%. No amounts were drawn
down or outstanding under the credit facility as of and for the six months ended
June 30, 1999.
54
<PAGE>
================================================================================
Cash Management Portfolio
Notes to Financial Statements (unaudited)
- --------------------------------------------------------------------------------
Bankers Trust Company is a wholly owned subsidiary of Bankers Trust Corporation.
In November 1998 Bankers Trust Corporation ("BT Corp.") and Deutsche Bank AG
("Deutsche Bank") entered into an Agreement and Plan of Merger which was
consummated on June 4, 1999. As a result of the transaction, BT Corp. became a
wholly-owned subsidiary of Deutsche Bank.
Note 3--Net Assets
At June 30, 1999 net assets consisted of:
Paid-in Capital $7,146,419,867
==============
55
<PAGE>
ProFunds/SM/
Post Office Mailing Address For Investments:
P.O. Box 182800
Columbus, OH 43218-2800
Phone Numbers:
For Financial Professionals: (888) PRO-5717 (888) 776-5717
For All Others: (888) PRO-FNDS (888) 776-3637
or (614) 470-8122
FAX Number: (800) 782-4797
Website Address: www.profunds.com
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.
[LOGO OF PROFUNDS APPEARS HERE]
