MAY 1, 1999
PROSPECTUS.
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]
LIKE SHARES OF ALL MUTUAL FUNDS, THESE SECURITIES HAVE NOT BEEN APPROVED OR
DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION NOR HAS THE SECURITIES AND
EXCHANGE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
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TABLE OF CONTENTS
1 BENCHMARK PROFUNDS
17 BENCHMARK PROFUNDS STRATEGY
21 MONEY MARKET PROFUND
27 MONEY MARKET PROFUND STRATEGY
31 SHARE PRICES, CLASSES & TAX INFORMATION
37 SHAREHOLDER SERVICES GUIDE
47 PROFUNDS' MANAGEMENT
51 FINANCIAL HIGHLIGHTS
PROFUND ADVISORS LLC
BANKERS TRUST COMPANY
INVESTMENT ADVISORS
[logo]
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BENCHMARK
PROFUNDS
OVERVIEW
The no-load Benchmark ProFunds each seek to achieve a daily
return equal to the performance of a particular stock market
BENCHMARK.*
oFor example, the Bull ProFund seeks to match the daily
performance of a stock market index--the S&P 500 Composite
Stock Price Index(R) ("S&P 500 Index")--like a conventional
index fund.
oUnlike conventional index funds, certain ProFunds seek to
double the daily return of a specified stock market index.
oOther ProFunds seek to produce a daily return of the inverse
(opposite) or double the inverse (opposite) of a particular
stock market index. The value of these ProFunds should go up
when the index underlying their benchmark goes down, and their
value should go down when the index goes up.
*A stock index reflects the price of a group of stocks of
specified companies. A benchmark can be any standard of
investment performance to which a mutual fund seeks to match
its return. For example, UltraBull ProFund has a benchmark of
TWICE THE DAILY RETURN OF THE S&P 500 INDEX.
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<TABLE>
<CAPTION>
THESE PROFUNDS SEEK TO MATCH OR DOUBLE AN INDEX'S DAILY PERFORMANCE:
PROFUND INDEX DAILY OBJECTIVE TYPES OF COMPANIES IN INDEX
<S> <C> <C> <C>
Bull S&P 500 Match Diverse, widely traded,
large capitalization
UltraBull S&P 500 Double Diverse, widely traded,
large capitalization
UltraOTC NASDAQ 100 Double Large capitalization, most
with technology and/or
growth orientation
UltraEurope ProFunds Europe Double Large capitalization, widely
traded European stocks
THESE PROFUNDS SEEK TO MATCH OR DOUBLE THE INVERSE (OPPOSITE) OF AN INDEX'S
DAILY PERFORMANCE:
PROFUND INDEX DAILY OBJECTIVE TYPES OF COMPANIES IN INDEX
Bear S&P 500 Inverse Diverse, widely traded,
large capitalization
UltraBear S&P 500 Double the inverse Diverse, widely traded,
large capitalization
UltraShort OTC NASDAQ 100 Double the inverse Large capitalization, most
with technology and/or
growth orientation
UltraShort ProFunds Europe Double the inverse Large capitalization, widely
Europe traded European stocks
The ProFunds also offer the Money Market ProFund, which is
discussed later in this prospectus.
</TABLE>
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BENCHMARK PROFUNDS OBJECTIVES
The investment objective of each of the Benchmark ProFunds is
set forth below:
oBULL PROFUND--seeks daily investment results that correspond
to the performance of the S&P 500 Index.
oULTRABULL PROFUND--seeks daily investment results that
correspond to twice (200%) the performance of the S&P 500
Index. If the UltraBull ProFund is successful in meeting its
objective, it should gain approximately twice as much as the
Bull ProFund when the prices of the securities in the S&P 500
Index rise on a given day and should lose approximately twice
as much when such prices decline on that day.
oULTRAOTC PROFUND--seeks daily investment results that
correspond to twice (200%) the performance of the NASDAQ 100
Index(TM). If the UltraOTC ProFund is successful in meeting
its objective, it should gain approximately twice as much as
the growth oriented NASDAQ 100 Index(TM) when the prices of
the securities in that index rise on a given day and should
lose approximately twice as much when such prices decline on
that day.
oULTRAEUROPE PROFUND--seeks daily investment results that
correspond to twice (200%) the performance of the ProFunds
Europe Index. If the UltraEurope ProFund is successful in
meeting its objective, it should gain approximately twice as
much as the ProFunds Europe Index when the prices of the
securities in that index rise on a given day and should lose
approximately twice as much when such prices decline on that
day.
oBEAR PROFUND--seeks daily investment results that correspond
to the inverse (opposite) 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
increase in the level of the S&P 500 Index.
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oULTRABEAR PROFUND--seeks daily investment results that
correspond to twice (200%) the inverse (opposite) of the
performance of the S&P 500 Index. The 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.
For example, if the S&P 500 Index were to decrease by 1% on
a particular day, investors in the Bear ProFund should
experience a gain in net asset value of approximately 1% for
that day. The UltraBear ProFund should realize an increase
of approximately 2% of its net asset value on the same day.
Conversely, if the S&P 500 Index were to increase by 1% by
the close of business on a particular trading day, investors
in the Bear ProFund and the UltraBear ProFund would
experience a loss in net asset value of approximately 1% and
2% respectively.
oULTRASHORT OTC PROFUND--seeks daily investment results
that correspond to twice (200%) the inverse (opposite) of the
performance of the NASDAQ 100 Index(TM). This ProFund operates
similar to the UltraBear ProFund, but UltraShort OTC ProFund
is benchmarked to the NASDAQ 100 Index(TM).
oULTRASHORT EUROPE PROFUND--seeks daily investment results
that correspond to twice (200%) the inverse (opposite) of the
performance of the ProFunds Europe Index. This ProFund should
reflect twice the inverse (opposite) of the performance of the
European companies included in the ProFunds Europe Index.
The securities indexes that these ProFunds use as their
benchmarks are described below under "Benchmark Indexes."
STRATEGY
ProFund Advisors uses quantitative and statistical analysis it
developed in seeking to achieve each Benchmark ProFund's
investment objective. This analysis determines the type,
quantity and mix of investment positions that a Benchmark
ProFund should hold to approximate the performance of its
benchmark.
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The BULL, ULTRABULL, ULTRAOTC and ULTRAEUROPE PROFUNDS
principally invest in:
oFutures contracts on stock indexes, and options on futures
contracts; and
oFinancial instruments such as equity caps, collars, floors,
and options on securities and stock indexes.
These ProFunds invest in the above instruments generally as
a substitute for investing directly in stocks. In addition,
these ProFunds may invest in a combination of stocks that in
ProFund Advisors' opinion should simulate the movement of the
appropriate benchmark index.
The ULTRA PROFUNDS generally invest in the above instruments
to produce economically "leveraged" investment results.
Leverage is a way to change small market movements into larger
changes in the value of a Benchmark ProFund's investments.
The BEAR, ULTRABEAR, ULTRASHORT OTC and ULTRASHORT EUROPE
PROFUNDS generally do not invest in traditional securities,
such as common stock of operating companies. Rather, these
ProFunds principally invest in futures contracts, options
contracts and other financial instruments, and engage in short
sales. Using these techniques, these ProFunds will generally
incur a loss if the price of the underlying security or index
increases between the date of the employment of the technique
and the date on which the ProFund terminates the position.
These ProFunds will generally realize a gain if the underlying
security or index declines in price between those dates.
The ULTRAEUROPE and ULTRASHORT EUROPE PROFUNDS invest in
financial instruments with values that reflect the performance
of stocks of European companies.
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BENCHMARK PROFUNDS' RISKS
Like all investments, the ProFunds entail risk. ProFund
Advisors cannot guarantee that any of the Benchmark ProFunds
will achieve its objective. As with any mutual fund, the
Benchmark ProFunds could lose money, or their performance
could trail that of other investment alternatives.
In addition, the Benchmark ProFunds present some risks not
traditionally associated with most mutual funds. It is
important that investors closely review and understand these
risks before making an investment in the ProFunds.
The following chart summarizes certain risks associated with
the Benchmark ProFunds:
MARKET LEVERAGE INVERSE CORRELATION FOREIGN
RISK RISK RISK RISK
Bull X
UltraBull X X
UltraOTC X X
UltraEurope X X X
Bear X X
UltraBear X X X
UltraShort OTC X X X
UltraShort Europe X X X X
These and other risks are described below.
CERTAIN RISKS ASSOCIATED WITH PARTICULAR PROFUNDS
oLEVERAGE RISK The Ultra ProFunds employ leveraged investment
techniques. Leverage is the ability to get a return on a
capital base that is larger than a ProFund's investment. Use
of leverage can magnify the effects of changes in the value of
these ProFunds and makes them more volatile. The leveraged
investment
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techniques that the Ultra ProFunds employ should cause
investors in these ProFunds to lose more money in adverse
environments.
oINVERSE CORRELATION RISK Shareholders in the negatively
correlated ProFunds should lose money when the index
underlying their benchmark rises -- A RESULT THAT IS THE
OPPOSITE FROM TRADITIONAL EQUITY MUTUAL FUNDS.
oFOREIGN INVESTMENT RISK UltraEurope ProFund and UltraShort
Europe ProFund entail the risk of foreign investing, which may
involve risks not typically associated with investing in U.S.
securities alone:
o Many foreign countries lack uniform accounting and
disclosure standards, or have standards that differ from
U.S. standards. Accordingly, these ProFunds may not have
access to adequate or reliable company information.
o UltraEurope ProFund and UltraShort Europe ProFund will be
subject to the market, economic and political risks of the
countries where they invest or where the companies
represented in the benchmark indexes are located.
o Securities purchased by these two ProFunds may be priced
in foreign currencies. Their value could change
significantly as the currencies strengthen or weaken
relative to the U.S. dollar. ProFund Advisors does not
engage in activities designed to hedge against foreign
currency fluctuations.
o On January 1, 1999, the eleven nations of the European
Monetary Union, including Germany and France, began the
process of introducing a uniform currency. The new currency,
the euro, is expected to reshape financial markets, banking
systems and monetary policy in Europe and throughout the
world. The continued transition to the euro may also have a
worldwide impact on the economic environment and behavior of
investors.
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RISKS IN COMMON
Each Benchmark ProFund faces certain risks in common:
oMARKET RISK The Benchmark ProFunds are subject to market
risks that will affect the value of their shares, including
general economic and market conditions, as well as
developments that impact specific industries or companies.
Shareholders in the positively correlated ProFunds should lose
money when the index underlying their benchmark declines.
Shareholders in the negatively correlated ProFunds should lose
money when the index underlying their benchmark rises. These
indexes are discussed in the next section.
oLIQUIDITY RISK In certain circumstances, such as a disruption
of the orderly markets for the financial instruments in which
ProFunds invest, ProFunds might not be able to dispose of
certain holdings quickly or at prices that represent true
market value in the judgment of ProFund Advisors. This may
prevent ProFunds from limiting losses or realizing gains.
oCORRELATION RISK While ProFund Advisors expects that each
of the Benchmark ProFunds will track its benchmark with an
average correlation of .90 or better over a year, there can be
no guarantee that the ProFunds will be able to achieve this
level of correlation. A failure to achieve a high degree of
correlation may prevent a Benchmark ProFund from achieving its
investment goal.
oNON-DIVERSIFICATION RISK The Benchmark ProFunds are
classified as "non-diversified" under the federal securities
laws. They have the ability to concentrate a relatively high
percentage of their investments in the securities of a small
number of companies. This would make the performance of a
Benchmark ProFund more susceptible to a single economic,
political or regulatory event than a more diversified mutual
fund might be. Nevertheless, the Benchmark ProFunds intend to
invest on a diversified basis.
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oRISKS OF AGGRESSIVE INVESTMENT TECHNIQUES The Benchmark
ProFunds use investment techniques that may be considered
aggressive. Risks associated with the use of options, futures
contracts, and options on futures contracts include
potentially dramatic price changes (losses) in the value of
the instruments and imperfect correlations between the price
of the contract and the underlying security or index.
BENCHMARK INDEXES
o THE S&P 500 INDEX is a widely used measure of large U.S.
company stock performance. It consists of the common stocks of
500 major corporations selected for their size and the
frequency and ease with which their stocks trade. Standard &
Poor's also attempts to assure that the Index reflects the
full range and diversity of the American economy. The
companies in the S&P 500 account for nearly three-quarters of
the value of all U.S. stocks.
o THE NASDAQ 100 INDEX Contains 100 of the largest and most
active non-financial domestic and international issues listed
on the NASDAQ Stock Market based on market capitalization.
Eligibility criteria for the NASDAQ 100 Index includes a
minimum average daily trading volume of 100,000 shares. If the
security is a foreign security, the company must have a world
wide market value of at least $10 billion, a U.S. market value
of at least $4 billion, and average trading volume of at least
200,000 shares per day.
oPROFUNDS EUROPE INDEX ("PEI") is a combined measure of
European stock performance created by ProFund Advisors from
the leading stock indexes of Europe's three largest economies
giving equal weight to each index each day. The PEI averages
the daily results of:
o THE FINANCIAL TIMES STOCK EXCHANGE 100 ("FTSE-100") Share
Index, a capitalization-weighted index of the 100 most
highly capitalized companies traded on the London Stock
Exchange.
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o THE DEUTSCHE AKTIENINDEX ("DAX"), is a total rate of
return index of 30 selected German blue-chip stocks traded
on the Frankfurt Stock Exchange.
o THE CAC-40, a capitalization-weighted index of 40
companies listed on the Paris Stock Exchange (the Bourse).
ProFunds' Board of Trustees may change benchmarks without
shareholder approval if, for example, it believes another
benchmark might better suit shareholder needs.
WHO MAY WANT TO CONSIDER A PROFUNDS INVESTMENT
The BULL PROFUND may be appropriate for investors who want to
receive investment results approximating the performance of
the S&P 500 Index.
The ULTRABULL, ULTRAOTC and ULTRAEUROPE PROFUNDS may be
appropriate for investors who:
obelieve that over the long term, the value of a particular
index will increase, and that by investing with the objective
of doubling the index's daily return they will achieve
superior results over time. Investors in these ProFunds should
understand that since each Ultra ProFund seeks to double the
daily performance of its benchmark index, it should have twice
the volatility of a conventional index fund and twice the
potential risk of loss.
oare seeking to match an index's daily return with half the
investment required of conventional stock index mutual funds.
An investor might invest $100,000 in a conventional S&P 500
Index Fund. Alternatively that same investor could invest
half that amount--$50,000-- in UltraBull ProFund and target
the same daily return.
The BEAR, ULTRABEAR, ULTRASHORT OTC and ULTRASHORT EUROPE
PROFUNDS may be appropriate for investors who:
oexpect the underlying index to go down and desire to earn a
profit as a result of the index declining.
owant to protect (or hedge) the value of a diversified
portfolio of stocks and/or stock mutual funds from a stock
market downturn that they anticipate.
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An investor with a diversified portfolio of stocks or stock
mutual funds valued at $100,000 might be concerned that the
general stock market could decrease or be volatile for the
next six months. The investor could try to protect the
portfolio against downturns in the stock market by investing
$50,000 in Bear, UltraBear, UltraShort OTC or UltraShort
Europe ProFund-or in a combination of these ProFunds. Of
course, the investor likely would also be giving up gains
that the portfolio would otherwise produce if the markets go
up rather than down in value. ProFunds cannot assure that
doing so would protect against market downturns.
ALL OF THE PROFUNDS may be appropriate for investors who:
oare executing a strategy that relies on frequent buying,
selling or exchanging among stock mutual funds, since the
ProFunds do not limit how often an investor may exchange among
the ProFunds and do not impose any transaction fee when
investors buy, sell or exchange a ProFund.
owant the impact of their investment to range from double the
index to double the inverse of the index based on their
current view, positive or negative, of the index.
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BENCHMARK PROFUNDS' PERFORMANCE
The bar chart and tables in this section can help you evaluate
the potential risks of investing in the Benchmark ProFunds.
The bar chart shows the 1998 return for the Investor Class
shares of each Benchmark ProFund available to the public for a
year or more as of December 31, 1998 (which excludes the newly
formed UltraShort OTC, UltraEurope and UltraShort Europe
ProFunds). The first table compares each such ProFund's return
for Investor Class shares in 1998 and since inception with its
relevant benchmark index. The second table compares each such
ProFund's return for Service Class shares in 1998 and since
inception with its relevant benchmark index. Of course, how a
Benchmark ProFund has performed in the past is not necessarily
an indication of how it will perform in the future.
[The table below represents a bar chart in the printed piece]
1998 RETURNS
26.57% Bull ProFund
42.95% UltraBull ProFund
185.34% UltraOTC ProFund
-19.46% Bear ProFund
-38.34% UltraBear ProFund
During the period covered in the chart above, the highest and
lowest return of the Investor Class shares of each of these
Benchmark ProFunds in any calendar quarters were as follows:
<TABLE>
<CAPTION>
HIGHEST QUARTERLY LOWEST QUARTERLY
FUND RETURN (%) RETURN (%)
- -------------------------------------------------------------------------------------
<S> <C> <C> <C>
Bull ProFund Q4 1998 (20.37%) Q3 1998 (-9.95%)
Bear ProFund Q3 1998 (11.11%) Q4 1998 (-17.06%)
UltraBull ProFund Q4 1998 (41.36%) Q3 1998 (-22.46%)
UltraBear ProFund Q3 1998 (17.87%) Q4 1998 (-32.26%)
UltraOTC ProFund Q4 1998 (72.73%) Q3 1998 (-5.15%)
</TABLE>
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AVERAGE ANNUAL INVESTOR CLASS SHARE RETURNS
as of December 31, 1998
ONE YEAR SINCE INCEPTION INCEPTION DATE
Bull ProFund 26.57% 23.07% 12/02/97
S&P 500 Index* 26.67% 24.18%
UltraBull ProFund 42.95% 42.34% 11/28/97
S&P 500 Index* 26.67% 26.92%
UltraOTC ProFund 185.34% 123.30% 12/02/97
NASDAQ 100 Index(TM)* 85.31% 70.12%
Bear ProFund -19.46% -19.41% 12/31/97
S&P 500 Index* 26.67% 26.67%
UltraBear ProFund -38.34% -35.43% 12/23/97
S&P 500 Index* 26.67% 28.27%
AVERAGE ANNUAL SERVICE CLASS SHARE RETURNS
as of December 31, 1998
ONE YEAR SINCE INCEPTION INCEPTION DATE
Bull ProFund 25.68% 22.26% 12/02/97
S&P 500 Index* 26.67% 24.18%
UltraBull ProFund 41.48% 40.99% 11/28/97
S&P 500 Index* 26.67% 26.92%
UltraOTC ProFund 183.98% 122.32% 12/02/97
NASDAQ 100 Index(TM)* 85.31% 70.12%
Bear ProFund -20.04% -19.99% 12/31/97
S&P 500 Index* 26.67% 26.67%
UltraBear ProFund -38.45% -35.60% 12/23/97
S&P 500 Index* 26.67% 28.27%
*Excludes dividends.
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ANNUAL BENCHMARK PROFUND OPERATING EXPENSES
The tables below describe the fees and expenses you may pay if
you buy and hold shares in any of the Benchmark ProFunds. THE
PROFUNDS ARE "NO-LOAD" MUTUAL FUNDS. YOU PAY NO SALES CHARGE
WHEN YOU BUY OR SELL SHARES, OR WHEN YOU REINVEST DIVIDENDS.
ANNUAL OPERATING EXPENSES--INVESTOR CLASS SHARES
(percentage of average daily net assets)
BULL ULTRABULL ULTRAOTC ULTRAEUROPE
PROFUND* PROFUND+ PROFUND+ PROFUND**
Management fees 0.75% 0.75% 0.75% 0.90%
Distribution none none none none
(12b-1) fees
Other expenses 0.98% 0.55% 0.50% 0.58%
Total annual 1.73% 1.30% 1.25% 1.48%
operating expenses
Fee waiver 0.34%* none none none
NET EXPENSES 1.39% 1.30% 1.25% 1.48%
ULTRASHORT
BEAR ULTRABEAR ULTRASHORT OTC EUROPE
PROFUND* PROFUND+ PROFUND+ PROFUND**
Management fees 0.75% 0.75% 0.75% 0.90%
Distribution none none none none
(12b-1) fees
Other expenses 1.15% 0.59% 0.68% 0.58%
Total annual 1.90% 1.34% 1.43% 1.48%
operating expenses
Fee waiver 0.51%* none none none
NET EXPENSES 1.39% 1.34% 1.43% 1.48%
* ProFund Advisors has contractually agreed to waive fees through December 31,
1999 with respect to the indicated ProFunds.
+ Expenses have been restated to reflect current operating expense ratios.
**Based on estimated expenses to be incurred in the first year of operations.
NOTE: The ProFunds charge $15 for each wire transfer of redemption proceeds;
this charge may be waived at the discretion of the ProFunds.
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ANNUAL OPERATING EXPENSES--SERVICE CLASS SHARES
(percentage of average daily net assets)
BULL ULTRABULL ULTRAOTC ULTRAEUROPE
PROFUND* PROFUND+ PROFUND+ PROFUND**
Management fees 0.75% 0.75% 0.75% 0.90%
Distribution none none none none
(12b-1) fees
Other expenses 2.02% 1.54% 1.59% 1.58%
Total annual 2.77% 2.29% 2.34% 2.48%
operating expenses
Fee waiver 0.34%* none none none
NET EXPENSES 2.43% 2.29% 2.34% 2.48%
ULTRASHORT
BEAR ULTRABEAR ULTRASHORT OTC EUROPE
PROFUND* PROFUND+ PROFUND+ PROFUND**
Management fees 0.75% 0.75% 0.75% 0.90%
Distribution none none none none
(12b-1) fees
Other expenses 2.15% 1.57% 1.72% 1.58%
Total annual 2.90% 2.32% 2.47% 2.48%
operating expenses
Fee waiver 0.51%* none none none
NET EXPENSES 2.39% 2.32% 2.47% 2.48%
* ProFund Advisors has contractually agreed to waive fees through December 31,
1999 with respect to the indicated ProFunds.
+ Expenses have been restated to reflect current operating expense ratios.
**Based on estimated expenses to be incurred in the first year of operations.
NOTE: The ProFunds charge $15 for each wire transfer of redemption proceeds;
this charge may be waived at the discretion of the ProFunds.
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EXPENSE EXAMPLES
The following examples illustrate the expenses you would have
incurred on a $10,000 investment in each Benchmark ProFund,
and are intended to help you compare the cost of investing in
the Benchmark ProFunds compared to other mutual funds. It
assumes that you invested for the time periods shown and
redeemed all of your shares at the end of each period, that
each ProFund earns an annual return of 5% over the periods
shown, that you reinvest all dividends and distributions, and
that gross operating expenses remain constant (1 year examples
for Bull and Bear ProFunds reflect current fee waivers).
Because this example is hypothetical and for comparison only,
your actual costs will be different.
INVESTOR CLASS EXPENSE EXAMPLES
1 YEAR 3 YEARS 5 YEARS 10 YEARS
UltraBull ProFund $132 $412 $713 $1,568
UltraOTC ProFund $125 $387 $686 $1,511
Bull ProFund $142 $545 $939 $2,041
Bear ProFund $142 $597 $1,026 $2,222
UltraBear ProFund $136 $425 $734 $1,013
UltraShort OTC ProFund $146 $452 $782 $1,713
UltraEurope ProFund1 $151 $468 N/A N/A
UltraShort Europe $151 $468 N/A N/A
ProFund1
SERVICE CLASS EXPENSE EXAMPLES
1 YEAR 3 YEARS 5 YEARS 10 YEARS
UltraBull ProFund $232 $715 $1,225 $2,626
UltraOTC ProFund $227 $700 $1,200 $2,575
Bull ProFund $246 $859 $1,464 $3,099
Bear ProFund $242 $898 $1,528 $3,223
UltraBear ProFund $235 $724 $1,240 $2,656
UltraShort OTC ProFund $250 $770 $1,316 $2,806
UltraEurope ProFund1 $251 $773 N/A N/A
UltraShort Europe $251 $773 N/A N/A
ProFund1
1 The Securities and Exchange Commission requires that these ProFunds estimate
expenses for one and three years only.
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BENCHMARK PROFUNDS
STRATEGY
WHAT THE BENCHMARK PROFUNDS DO
Each Benchmark ProFund:
oSeeks to provide its shareholders with predictable investment
returns approximating its benchmarks by investing in
securities and other financial instruments, such as futures
and options on futures.
oUses a mathematical and quantitative approach.
oPursues their objectives regardless of market conditions,
trends or direction.
oSeeks to provide correlation with their benchmarks on a daily
basis.
WHAT THE BENCHMARK PROFUNDS DO NOT DO
ProFund Advisors does not:
oConduct conventional stock research or analysis or forecast
stock market movement in managing the Benchmark ProFunds'
assets.
oInvest the Benchmark ProFunds' assets in stocks or
instruments based on ProFund Advisors' view of the fundamental
prospects of particular companies.
oAdopt defensive positions by investing in cash or other
instruments in anticipation of an adverse climate for their
benchmark indexes.
oSeek to invest to realize dividend income from their
investments.
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In addition, the Ultra ProFunds do not seek to provide
correlation with their benchmark over a period of time other
than daily, such as monthly or annually, since mathematical
compounding prevents these ProFunds from achieving such
results.
IMPORTANT CONCEPTS
oLEVERAGE offers a means of magnifying small market movements,
up or down, into large changes in an investment's value.
oFUTURES, or FUTURES CONTRACTS, are contracts to pay a fixed
price for an agreed-upon amount of commodities or securities,
or the cash value of the commodity or securities, on an
agreed-upon date.
oOPTION CONTRACTS grant one party a right, for a price, either
to buy or sell a security or futures contract at a fixed sum
during a specified period or on a specified day.
oSELLING SHORT, or borrowing stock to sell to a third party,
is a technique that may be employed by the ProFunds to seek
gains when their benchmark index declines if the ProFund
replaces the security to the lender at a price lower than the
price it borrowed it at plus interest incurred, the ProFund
makes a profit on the difference. If the current market price
is greater when the time comes to replace the stock, the
ProFund will incur a loss on the transaction.
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PORTFOLIO TURNOVER
ProFund Advisors expects a significant portion of the
Benchmark ProFunds' assets to come from professional money
managers and investors who use ProFunds as part of "market
timing" investment strategies. These strategies often call for
frequent trading of ProFund shares to take advantage of
anticipated changes in market conditions. Although ProFund
Advisors believes its accounting methodology should minimize
the effect on ProFunds of such trading, market timing trading
could increase the rate of ProFunds' portfolio turnover,
forcing realization of substantial capital gains and losses
and increasing transaction expenses. In addition, while
ProFunds does not expect it, large movements of assets into
and out of the ProFunds may negatively impact their abilities
to achieve their investment objectives or their level of
operating expenses.
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MONEY MARKET
PROFUND
OBJECTIVE
The Money Market ProFund invests its assets in the Cash
Management Portfolio (the "Portfolio"), a separate investment
company managed by Bankers Trust Company. This structure is
sometimes referred to as "master-feeder." The objective of the
Money Market ProFund and the Portfolio are identical: both
seek a high level of current income consistent with liquidity
and preservation of capital. The Portfolio seeks this
objective by investing in high quality short-term money market
instruments.
STRATEGY
Money Market ProFund invests for current income. In order to
maintain a stable share price, the Portfolio maintains a
dollar-weighted average maturity of 90 days or less.
Generally, securities in the Portfolio are valued in U.S.
dollars and have remaining maturities of 397 days (about 13
months) or less on their purchase date. The Portfolio may also
invest in securities that have features that reduce their
maturities to 397 days or less on their purchase date. The
Portfolio buys U.S. government debt obligations, money market
instruments and other debt obligations that at the time of
purchase:
ohave received the highest short-term rating from two
nationally recognized statistical rating organizations; or
ohave received the highest short-term rating from one rating
organization (if only one organization rates the security);
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oif unrated, are determined to be of similar quality by the
Portfolio's investment advisor; or
ohave no short-term rating, but are rated in the top three
highest long-term rating categories, or are determined to be
of similar quality by the Portfolio's investment advisor.
RISKS
All money market instruments, including U.S. government debt
obligations, are subject to interest rate risk, which is the
risk that an investment will change in value when interest
rates change. Generally, investments subject to interest rate
risk will decrease in value when interest rates rise and
increase when interest rates decline.
Money market instruments are subject to credit risk, which is
the risk that the issuer of the instrument will default, or
fail to meet its payment obligations. In addition, they may
change in value if an issuer's creditworthiness changes,
although such a circumstance would be extremely unlikely in
the case of U.S. government debt obligations.
The Money Market ProFund also will be subject to the effects
of business, economic and regulatory developments that affect
the Portfolio or the financial services industry generally.
An investment in the Money Market ProFund is not a deposit
of a bank, nor is it insured or guaranteed by the Federal
Deposit Insurance Corporation or any other government agency.
While the Money Market ProFund tries to maintain a stable net
asset value of $1.00 per share, there is no guarantee that the
Money Market ProFund will do so, and you could lose money by
investing in this ProFund.
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CONSIDERING A MONEY MARKET PROFUND INVESTMENT
Investors can take advantage of the Money Market ProFund in
two ways:
oduring periods when investors want to maintain a neutral
exposure to the stock market, the income earned from an
investment in the Money Market ProFund can keep their capital
at work.
othe Money Market ProFund can be invested in conjunction with
other ProFunds to adjust an investor's target exposure to an
index.
For instance, an investor who desires to target a daily
return of 1.5 times the daily performance of the S&P 500
Index could allocate 75% of his or her investment to the
UltraBull ProFund and 25% of the investment to the Money
Market ProFund.
MONEY MARKET PROFUND'S TOTAL RETURNS AND EXPENSES
The bar chart and tables in this section can help you evaluate
the potential risk of investing in Money Market ProFund. The
bar chart shows the 1998 return for the Investor Class shares
of the Money Market ProFund. The first table shows the Money
Market ProFund's return for Investor Class shares in 1998 and
since inception. The second table shows the return for Service
Class shares in 1998 and since inception. Of course, how the
Money Market ProFund has performed in the past is not
necessarily an indication of how it will perform in the
future.
[The table below represents a bar chart in the printed piece.]
1998 RETURNS
4.84% Money Market ProFund
During the period covered in the chart above, the highest
return in any calendar quarter for Money Market ProFund's
Investor Class shares was Q4 1998 (1.22%), and its lowest
quarterly return was Q3 1998 (1.14%).
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AVERAGE ANNUAL INVESTOR CLASS SHARE RETURNS
as of December 31, 1998
ONE YEAR SINCE INCEPTION INCEPTION DATE
Money Market ProFund 4.84% 4.87% 11/17/97
The 7-day yield, the income yield for the previous seven days
projected over a full year, was 4.41% for Money Market
ProFund's Investor Class shares as of December 31, 1998. To
learn the current 7-day yield, call ProFunds at (888)
776-3637.
AVERAGE ANNUAL SERVICE CLASS SHARE RETURNS
as of December 31, 1998
ONE YEAR SINCE INCEPTION INCEPTION DATE
Money Market ProFund 3.81% 3.41% 11/17/97
The 7-day yield, the income yield for the previous seven days
projected over a full year, was 3.41% for Money Market
ProFund's Service Class shares as of December 31, 1998. To
learn the current 7-day yield, call ProFunds at (888)
776-3637.
ANNUAL FUND OPERATING EXPENSES
The tables below describe the fees and expenses, including the
Money Market ProFund's prorated Portfolio expenses, you may
pay if you buy and hold shares of the Money Market ProFund.
The Money Market ProFund is a "no-load" mutual fund. You pay
no sales charge when you buy or sell shares or when you
reinvest dividends.
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MONEY MARKET ANNUAL OPERATING EXPENSES-INVESTOR CLASS SHARES
(percentage of average daily net assets)
Management fees 0.15%
Distribution (12b-1) fees None
Other expenses* 0.68%
TOTAL ANNUAL OPERATING EXPENSES* 0.83%
*Expenses have been restated to reflect current operating
expense ratios.
NOTE: The ProFunds charge $15 for each wire transfer of
redemption proceeds; this charge may be waived at the
discretion of the ProFunds.
MONEY MARKET ANNUAL OPERATING EXPENSES-SERVICE CLASS SHARES
(percentage of average daily net assets)
Management fees 0.15%
Distribution (12b-1) fees None
Other expenses* 1.68%
TOTAL ANNUAL OPERATING EXPENSES* 1.83%
*Expenses have been restated to reflect current operating
expense ratios.
NOTE: The ProFunds charge $15 for each wire transfer of
redemption proceeds; this charge may be waived at the
discretion of the ProFunds.
EXPENSE EXAMPLES
The examples below illustrate the expenses you would have
incurred on a $10,000 investment in each class of shares of
the Money Market ProFund, and are intended to help you compare
the cost of investing in the ProFund compared to other mutual
funds. It assumes that you invested for the time periods shown
and redeemed all of your shares at the end of each period, the
Money Market ProFund earns an annual return of 5% over the
periods shown, that you reinvest all dividends and
distributions, and that gross operating expenses remain
constant. Because this example is hypothetical and for
comparison only, your actual costs will be different.
1 YEAR 3 YEARS 5 YEARS 10 YEARS
Investor Shares $85 $265 $460 $1,025
Service Shares $186 $576 $990 $2,148
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MONEY MARKET PROFUND
STRATEGY
The Money Market ProFund invests all of its investable assets
in the Portfolio. The Portfolio may invest in high-quality,
short-term, dollar-denominated money market securities paying
a fixed, variable or floating interest rate. These include:
oDebt securities issued by U.S. and foreign banks, financial
institutions, and corporations, including certificates of
deposit, euro-time deposits, commercial paper (including
asset-backed commercial paper), notes, funding agreements and
U.S. government securities. Securities that do not satisfy the
maturity restrictions for a money market fund may be
specifically structured so that they are eligible investments
for money market funds. For example, some securities have
features which have the effect of shortening the security's
maturity.
oU.S. government securities that are issued or guaranteed by
the U.S. Treasury, or by agencies or instrumentalities of the
U.S. Government.
oRepurchase agreements, which are agreements to buy securities
at one price, with a simultaneous agreement to sell back the
securities at a future date at an agreed-upon price.
oAsset-backed securities, which are generally participations
in a pool of assets whose payment is derived from the payments
generated by the underlying assets. Payments on the
asset-backed security generally consist of interest and/or
principal.
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Because many of the Portfolio's principal investments are
issued or credit-enhanced by banks, the Portfolio may invest
more than 25% of its total assets in obligations of domestic
banks.
The Portfolio may invest in other types of instruments, as
described in the Statement of Additional Information.
SPECIFIC RISKS AND MEASURES TAKEN TO LIMIT THEM
CREDIT RISK
A money market instrument's credit quality depends on the
issuer's ability to pay interest on the security and repay the
debt: the lower the credit rating, the greater the risk that
the security's issuer will default, or fail to meet its
payment obligations. The credit risk of a security may also
depend on the credit quality of any bank or financial
institution that provides credit enhancement for it. The
Portfolio only buys high quality securities with minimal
credit risk. If a security no longer meets the Portfolio's
credit rating requirements, Bankers Trust Company will attempt
to sell that security within a reasonable time, unless selling
the security would not be in the Portfolio's best interest.
REPURCHASE AGREEMENT RISK
A repurchase agreement exposes the Portfolio to the risk that
the party that sells the securities defaults on its obligation
to repurchase them. In this circumstance, the Portfolio can
lose money because:
oit may not be able to sell the securities at the agreed-upon
time and price.
othe securities lose value before they can be sold.
Bankers Trust Company seeks to reduce the Portfolio's risk by
monitoring, under the supervision of the Portfolio's Board of
Trustees, the creditworthiness of the sellers with whom it
enters into repurchase agreements. The Portfolio also monitors
the value of the securities to ensure that they are at least
equal to the total amount of the repurchase obligations,
including interest.
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INTEREST RATE RISK
Money market instruments, like all debt securities, face the
risk that the securities will decline in value because of
changes in interest rates. Generally, investments subject to
interest rate risk will decrease in value when interest rates
rise and increase when interest rates decline. To minimize
such price fluctuations, the Portfolio adheres to the
following practices:
oBankers Trust Company limits the dollar-weighted average
maturity of the securities held by the Portfolio to 90 days or
less. Generally, rates of short-term investments fluctuate
less than longer-term bonds.
oBankers Trust Company primarily buys securities with
remaining maturities of 13 months or less. This reduces the
risk that the issuer's creditworthiness will change, or that
the issuer will default on the principal and interest payments
of the obligations.
MARKET RISK
Although individual securities may outperform their market,
the entire market may decline as a result of rising interest
rates, regulatory developments or deteriorating economic
conditions.
SECURITY SELECTION RISK
While the Portfolio invests in short-term securities, which by
nature are relatively stable investments, the risk remains
that the securities selected will not perform as expected.
This could cause the Portfolio's returns to lag behind those
of similar money market funds. Bankers Trust Company attempts
to limit this risk by diversifying the Portfolio's investments
so that a single setback need not undermine the pursuit of its
objective and by investing in money market instruments that
receive the highest short-term debt ratings as described
above.
CONCENTRATION RISK
Because the Portfolio may invest more than 25% of its total
assets in the financial services industry, it may be
vulnerable to setbacks in that industry. Banks and other
financial service
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companies are highly dependent on short-term interest rates
and can be adversely affected by downturns in the U.S. and
foreign economies or changes in banking regulations.
PREPAYMENT RISK
When a bond issuer, such as an issuer of asset-backed
securities, retains the right to pay off a high-yielding bond
before it comes due, the Portfolio may have no choice but to
reinvest the proceeds at lower interest rates. Thus,
prepayment may reduce the Portfolio's income. It may also
create a capital gains tax liability, because bond issuers
usually pay a premium for the right to pay off bonds early.
ORGANIZATIONAL STRUCTURE
The Money Market ProFund is a FEEDER FUND that invests all of
its assets in a master fund, the Portfolio. The ProFund and
the Portfolio have the same investment objective.
The Portfolio may accept investments from other feeder funds.
The feeders bear the Portfolio's expenses in proportion to
their assets. Each feeder can set its own transaction
minimums, fund-specific expenses and other conditions. The
Money Market ProFund's Trustees may withdraw its assets from
the Portfolio if they believe doing so is in the shareholders'
best interests. If the Trustees withdraw the Fund's assets,
they would then consider whether the Fund should hire its own
investment advisor and invest its assets directly in
appropriate instruments, invest in a different fund, or take
other action.
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SHARE PRICES, CLASSES & TAX
INFORMATION
CALCULATING THE PROFUNDS' SHARE PRICES
Except for the UltraEurope and UltraShort Europe ProFunds,
each Benchmark ProFund calculates daily share prices on the
basis of the net asset value of each class of shares at the
close of regular trading on the New York Stock Exchange
("NYSE") (normally, 4:00 p.m., Eastern time) every day the
NYSE and the Chicago Mercantile Exchange are open for
business.
The UltraEurope and UltraShort Europe ProFunds calculate their
daily share prices on the basis of net asset value of each
class as of one half hour after the latest opening of the
three exchanges tracked by the PEI: the London Stock Exchange,
the Frankfurt Stock Exchange or the Paris Bourse (normally,
4:30 a.m., Eastern time), on each day that all three of these
exchanges and the NYSE are open.
Purchases and redemptions of shares are effected at the net
asset value per share next determined after receipt and
acceptance of an order. If portfolio investments of a ProFund
are traded in markets on days when the ProFund's principal
trading market(s) is closed, the ProFund's net asset value may
vary on days when investors cannot purchase or redeem shares.
The ProFunds value shares of each class of shares by dividing
the market value of the assets attributable to each class,
less the liabilities attributable to the class, by the number
of the class's
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outstanding shares. The ProFunds use the following methods for
arriving at the current market price of investments held by
the Benchmark ProFunds:
osecurities listed and traded on exchanges--the last price the
stock traded at on a given day, or if there were no sales, the
mean between the closing bid and asked prices.
osecurities traded over-the-counter--NASDAQ-supplied
information on the prevailing bid and asked prices.
ofutures contracts and options on indexes and securities--the
last sale price prior to the close of regular trading on the
NYSE (for all Benchmark ProFunds except the UltraEurope
ProFund and UltraShort Europe ProFund).
ofutures prices used to calculate net asset values for the
UltraEurope ProFund and the UltraShort Europe ProFund will be
the last transaction prices for the respective futures
contracts that occur immediately prior to one half hour after
each underlying stock market opens.
ooptions on futures contracts--priced at fair value determined
with reference to established future exchanges.
obonds and convertible bonds generally are valued using a
third-party pricing system.
oshort-term debt securities are valued at amortized cost,
which approximates market value.
othe foreign exchange rates used to calculate the net asset
values for the UltraEurope ProFund and the UltraShort Europe
ProFund will be the mean of the bid price and the asked price
for the respective foreign currency occurring immediately
after one half hour after the last underlying stock market
opens.
When price quotes are not readily available, securities and
other assets are valued at fair value in good faith under
procedures established by, and under the general supervision
and responsibility of, the ProFunds' Board of Trustees. This
procedure incurs the unavoidable risk that the valuation may
be higher or lower than the securities might actually command
if the ProFunds sold them. In the event that a trading halt
closes the NYSE or a futures exchange early, portfolio
investments may be valued at fair
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value, or in a manner that is different from the discussion
above. See the Statement of Additional Information for more
details.
THE NEW YORK STOCK EXCHANGE and the CHICAGO MERCANTILE
EXCHANGE, a leading market for futures and options, are open
every week, Monday through Friday, except when the following
holidays are celebrated: New Year's Day, Martin Luther King,
Jr. Day (the third Monday in January), Presidents' Day (the
third Monday in February), Good Friday, Memorial Day (the last
Monday in May), July 4th, Labor Day (the first Monday in
September), Thanksgiving Day (the fourth Thursday in November)
and Christmas Day. Either or both of these Exchanges may close
early on the business day before each of these holidays.
Either or both of these Exchanges also may close early on the
day after Thanksgiving Day and the day before Christmas
holiday.
THE LONDON STOCK EXCHANGE, FRANKFURT STOCK EXCHANGE or PARIS
BOURSE closes for the following holidays in 1999: May Day (May
3), Ascension (May 13), Pentecost Monday (May 24), Spring Bank
Holiday (May 31), Corpus Christi Day (June 3), Independence
Day (July 5), Bastille Day (July 14), Summer Bank Holiday
(August 30), Labor Day (September 6), All Saints Day (November
1), Thanksgiving Day (November 25), Christmas Eve, Christmas
Day (observed December 27), Boxing Day (observed December 28)
and New Year's Eve. Holidays scheduled for 2000 include: New
Years Day (January 3), Good Friday (April 21) and Easter
Monday (April 24). Please note that holiday schedules are
subject to change without notice.
CALCULATING THE MONEY MARKET PROFUND'S SHARE PRICE
The Money Market ProFund calculates daily share prices on the
basis of the net asset value of each class of shares at the
close of regular trading on the NYSE (normally, 4:00 p.m.,
Eastern time) every day the NYSE is open for business except
for two additional bank holidays, Columbus Day and Veterans'
Day. Purchases and redemptions of shares are effected at the
net asset value per share
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next determined after receipt and acceptance of an order. If
the market for the primary investments in the Portfolio closes
early, the Portfolio may close early. The Money Market ProFund
will cease taking purchase orders at that time. The Money
Market ProFund's net asset value per share for each class of
shares will normally be $1.00, although neither ProFund
Advisors nor Bankers Trust Company can guarantee that this
will always be the case. The Portfolio uses the amortized cost
method to account for any premiums or discounts above or below
the face value of any securities it buys. This method does not
reflect daily fluctuations in market value.
DIVIDENDS AND DISTRIBUTIONS
Each of the Benchmark ProFunds intends to distribute to its
shareholders every year all of the year's net investment
income and net capital gains. Each Benchmark ProFund will
reinvest these distributions in additional shares unless a
shareholder has written to request a direct cash distribution.
The Money Market ProFund declares dividends from its net
income daily and pays the dividends on a monthly basis. The
Money Market ProFund will pay annually any long-term capital
gains as well as any short-term capital gains that it did not
distribute during the year, but it reserves the right to
include in the daily dividend any short-term capital gains on
securities that it sells.
The Money Market ProFund may revise these policies, postpone
the payment of dividends and interest or take other actions in
order to maintain a constant net asset value of $1.00 per
share.
TAX CONSEQUENCES
A ProFund does not ordinarily pay income tax on its net
investment income (which includes short-term capital gains)
and net capital gain that it distributes to shareholders, but
individual shareholders pay tax on the dividends and
distributions they
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receive. Shareholders will generally be taxed regardless of
how long they have held ProFund shares and regardless of
whether they receive cash or choose to have distributions and
dividends reinvested. Distributions and dividends generally
will be taxable as either ordinary income or long-term capital
gains. For example, if a ProFund designates a particular
distribution as a long-term capital gain distribution, it will
be taxable to shareholders at their long-term capital gain
rate. Dividends and distributions may also be subject to state
and local taxes.
Every year the ProFunds will send shareholders tax information
on the dividends and distributions for the previous year.
If shareholders sell or redeem their ProFund shares, they may
have a capital gain or loss, which will be long-term or
short-term, generally depending upon how long they have held
the shares. An exchange of ProFund shares may be treated as a
sale.
The tax consequences for tax deferred retirement accounts or
non-taxable shareholders will be different.
PLEASE KEEP IN MIND:
oWhether a distribution by a ProFund is taxable to
shareholders as ordinary income or at the lower capital gains
rate depends on whether it is long-term capital gain of the
ProFund, not on how long an investor has owned shares of the
ProFund.
oDividends and distributions declared by a ProFund in October,
November or December of one year and paid in January of the
next year may be taxable in the year the ProFund declared
them.
oAs with all mutual funds, a ProFund may be required to
withhold U.S. federal income tax at the rate of 31% of all
taxable distributions and redemption proceeds, payable to
shareholders who fail to provide the ProFund with correct
taxpayer identification numbers or to make required
certifications, or who have been notified by the IRS that they
are subject to backup withholding. Backup withholding is not
an additional tax; rather, it is a way in which the IRS
ensures it will collect taxes otherwise due. Any amounts
withheld may be credited against the
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shareholder's U.S. federal income tax liability. You also may
be subject to a $50 fee to reimburse the ProFunds for any
penalty that the IRS may impose.
PLEASE SEE THE STATEMENT OF ADDITIONAL INFORMATION FOR MORE
INFORMATION. BECAUSE EACH INVESTOR'S TAX CIRCUMSTANCES ARE
UNIQUE AND BECAUSE THE TAX LAWS ARE SUBJECT TO CHANGE, PROFUND
ADVISORS RECOMMENDS THAT SHAREHOLDERS CONSULT THEIR TAX
ADVISORS ABOUT FEDERAL, STATE, LOCAL AND FOREIGN TAX
CONSEQUENCES OF INVESTMENT IN THE PROFUNDS.
CLASSES OF SHARES
Investors in any of the ProFunds can purchase either Investor
Class shares directly, or Service Class shares through an
authorized firm, such as a registered investment advisor, a
bank or a trust company. Under a shareholder services plan for
Service Class shares, each ProFund may pay an authorized firm
up to 1.00% on an annualized basis of average daily net assets
attributable to its customers who are Service Class
shareholders. For this fee, the authorized firms may provide a
variety of services, such as:
oreceiving and processing shareholder orders,
operforming the accounting for the shareholder's account,
omaintaining retirement plan accounts,
oanswering questions, giving investment advice, and handling
correspondence for individual accounts,
oacting as the sole shareholder of record for individual
shareholders,
oissuing shareholder reports and transaction confirmations,
oexecuting daily investment "sweep" functions, and
oinvestment advisory services.
Holders of a ProFund's Service Class shares pay all fees and
expenses applicable to these shares. The authorized firms may
charge extra for services beyond those specified above, but
they must furnish clients who own Service Class shares with a
schedule explaining those fees.
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SHAREHOLDER SERVICES
GUIDE
CONTACTING PROFUNDS
BY TELEPHONE: (888) 776-3637 or (614) 470-8122--
for investors
(888) 776-5717--a phone line dedicated
for use by financial professionals ONLY
BY MAIL: ProFunds
P.O. Box 182800
Columbus, OH 43218-2800
BY OVERNIGHT MAIL: ProFunds
c/o BISYS Fund Services
3435 Stelzer Road
Columbus, OH 43219
MINIMUM INVESTMENTS
o$5,000 for discretionary accounts controlled by a financial
professional.
o$15,000 for self-directed accounts controlled directly by
investors.
These minimums apply to all accounts, including retirement
plans, and apply to the total value of an investor's initial
ProFunds investment. ProFunds reserves the right to reject or
refuse, at its discretion, any order for the purchase of a
ProFund's shares in whole or in part.
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OPENING YOUR PROFUNDS ACCOUNT
BY MAIL: Send a completed application, along with a check
payable to "ProFunds," to the aforementioned address. Cash,
credit cards and credit card checks are not accepted. Please
contact ProFunds in advance if you wish to send third party
checks. All purchases must be made in US dollars through a US
bank.
BY WIRE TRANSFER: First, complete an application and fax it to
ProFunds at (800) 782-4797 (toll-free) or (614) 470-8718.
Next, call ProFunds at (888) 776-3637 (toll-free) or (614)
470-8122 to a) confirm receipt of the faxed application, b)
request your new account number, c) inform ProFunds of the
amount to be wired and d) receive a confirmation number for
your purchase order. After receiving your confirmation number,
instruct your bank to transfer money by wire to:
UMB BANK, N.A.
KANSAS CITY, MO
ROUTING/ABA #:101000695
PROFUNDS DDA #9870857952
FOR FURTHER CREDIT TO: Your name, the name of the
ProFund(s), and your ProFunds account number
CONFIRMATION NUMBER: The confirmation number given to you by
the ProFunds representative
Instructions, written or telephonic, given to ProFunds for
wire transfer requests do not constitute a purchase order
until the wire transfer has been received by ProFunds.
ProFunds is not liable for any loss incurred due to a wire
transfer not having been received.
Please note that your bank may charge a fee to send or receive
wires.
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ESTABLISHING ACCOUNTS FOR TAX-SHELTERED RETIREMENT PLANS
The ProFunds sponsor Individual Retirement Accounts ("IRAs")
that enable individual investors to set up their own
retirement savings programs. ProFund Advisors charges an
annual fee of $15 per social security number for all types of
IRAs to pay for the extra maintenance and tax reporting that
these plans require. Investors in other types of retirement
plans also may invest in the ProFunds. For additional
information and an application, contact ProFunds directly by
phone or at the above address.
PURCHASING ADDITIONAL PROFUNDS SHARES
BY MAIL: Send a check payable to "ProFunds", noting the
ProFund and account number, to the aforementioned address.
Cash, credit cards, and credit card checks are not accepted.
Please contact ProFunds in advance if you wish to send third
party checks. All purchases need to be made in US dollars
through a US bank.
BY WIRE TRANSFER: Call ProFunds to inform us of the amount you
will be wiring and receive a confirmation number.
YOU CAN THEN INSTRUCT YOUR BANK TO TRANSFER YOUR FUNDS TO:
UMB BANK, N.A.
KANSAS CITY, MO
ROUTING/ABA #:101000695
PROFUNDS DDA #9870857952
FOR FURTHER CREDIT TO: Your name, the name of the
ProFund(s), and your ProFunds account number
CONFIRMATION NUMBER: The confirmation number given to you by
the ProFunds representative
Instructions, written or telephonic, given to ProFunds for
wire transfer requests do not constitute a purchase order
until the wire transfer has been received by ProFunds.
ProFunds is not liable for any loss incurred due to a wire
transfer not having been received.
Please note that your bank may charge a fee to send or receive
wires.
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PLEASE KEEP IN MIND WHEN PURCHASING SHARES:
oThe minimum subsequent purchase amount is $100.
oProFunds prices shares you purchase at the price per share
next computed after we receive and accept your purchase order
in good order. In order to be in good order, a purchase order
must include a properly completed application and wire, check
or other form of payment.
oA wire order is considered in good order only if (i) you have
called ProFunds under the procedures described above and (ii)
ProFunds receives and accepts your wire. ProFunds can only
accept wires during the times it processes wires: between 8:00
a.m. and 3:30 p.m. for all ProFunds except UltraEurope and
UltraShort Europe and between 8:00 a.m. and 6:00 p.m. for
UltraEurope and UltraShort Europe ProFunds. Wires received
after ProFunds' wire processing times will be processed the
next business day and will receive that day's share price. If
the primary exchange or market on which a ProFund (other than
the UltraEurope and UltraShort Europe ProFunds) transacts
business closes early, the above cut-off time will be 25
minutes prior to the close of such exchange or market.
oIf your purchase is cancelled, you will be responsible for
any losses that may result from any decline in the value of
the cancelled purchase. ProFunds (or its agents) have the
authority to redeem shares in your account(s) to cover any
losses due to fluctuations in share price. Any profit on a
cancelled transaction will accrue to the ProFunds.
oSecurities brokers and dealers have the responsibility of
transmitting your orders promptly. Brokers and dealers may
charge transaction fees on the purchase and/or sale of
ProFunds shares.
40
<PAGE>
EXCHANGES
Shareholders can exchange shares of either class of any
ProFund for shares of either class of another ProFund free of
charge. ProFunds can only honor exchanges between accounts
registered in the same name, and having the same address and
taxpayer identification number.
ProFunds accepts exchange orders either by phone or in
writing. You will need to specify the number of shares, or the
percentage or dollar value of the shares you wish to exchange,
and the ProFunds (and classes of shares) involved in the
transaction. PROFUNDS CAN ONLY ACCEPT EXCHANGE ORDERS BY PHONE
BETWEEN 8:00 A.M. AND 3:50 P.M. AND BETWEEN 4:30 P.M. AND 9:00
P.M. EASTERN TIME (8 A.M. AND 3:50 P.M. AND BETWEEN 4:30 P.M.
AND 8:00 P.M. FOR THE ULTRAEUROPE AND ULTRASHORT EUROPE
PROFUNDS). PROFUNDS MAY NOT RECEIVE OR ACCEPT ORDERS AT ANY
OTHER TIME. If the primary exchange or market (generally, the
CME) on which a ProFund (other than the UltraEurope or
UltraShort Europe ProFunds) transacts business closes early,
the above cut-off time will be 25 minutes prior to the close
of such exchange or market.
To receive the net asset value calculated on a given date,
telephone exchanges from any ProFund other than the Money
Market, UltraEurope and UltraShort Europe ProFund to either
the UltraEurope ProFund or the UltraShort Europe ProFund must
be made by 3:50 p.m., Eastern time, on such date. In such an
exchange, you will purchase UltraEurope and UltraShort Europe
ProFunds on the next business day. The proceeds will be
uninvested during the intervening period and will not earn
interest during that time. Please note that during certain
periods it may take several days for exchanges to be completed
due to holidays. Exchanges from the Money Market Fund into
either the UltraEurope or UltraShort Europe ProFund may be
made up until 8:00 p.m., Eastern time. All aspects of such an
exchange will occur the following business day for the
affected funds.
41
<PAGE>
Telephone exchanges from either the UltraEurope ProFund or
the UltraShort Europe ProFund to any other ProFund will
receive the net asset value calculated on the business day
following the day of the order on the redemption and purchase
sides of the exchange. Accordingly, shareholders will not be
uninvested for any period of time.
PLEASE KEEP IN MIND:
oAn exchange is actually a redemption and purchase of shares
and your redemptions are subject to taxes (in a non
tax-sheltered account).
oThe minimum exchange for self-directed accounts is $1,000 or,
if less, for the account's entire current value.
oYou may exchange, on a regular basis, shares of the Money
Market ProFund for shares of other ProFunds through an
Automatic Exchange Plan. For more information on this option,
please call ProFunds at 888-776-3637.
REDEEMING PROFUND SHARES
YOU CAN REDEEM ALL OR PART OF YOUR SHARES AT THE PRICE NEXT
DETERMINED AFTER WE RECEIVE YOUR REQUEST. PROFUNDS OTHER THAN
ULTRAEUROPE AND ULTRASHORT EUROPE ONLY ACCEPTS REDEMPTION
ORDERS BY PHONE BETWEEN 8:00 A.M. AND 3:50 P.M. AND BETWEEN
4:30 P.M. AND 9:00 P.M. EASTERN TIME. ULTRAEUROPE AND
ULTRASHORT EUROPE PROFUNDS ACCEPT TELEPHONE REDEMPTION ORDERS
ONLY BETWEEN 8:00 A.M. AND 3:50 P.M. AND 4:30 P.M. AND 8:00
P.M., EASTERN TIME. ProFunds may not receive or accept orders
at any other time. If the primary exchange or market on which
a ProFund (other than the UltraEurope and UltraShort Europe
ProFunds) transacts business closes early, the above cut-off
time will be 25 minutes prior to the close of such exchange or
market.
42
<PAGE>
WRITTEN REDEMPTIONS
To redeem all or part of your shares in writing, your request
needs to include the following information:
othe name of the ProFund(s),
othe account number(s),
othe amount of money or number of shares being redeemed,
othe name(s) of the account owners,
othe signature(s) of all registered account owners, and
oyour daytime telephone number.
WIRE REDEMPTIONS
If your account is authorized for wire redemption, your
proceeds will be wired directly into the bank account you have
designated. The ProFunds charge a $15 service fee for a wire
transfer of redemption proceeds, and your bank may charge an
additional fee to receive the wire. If you would like to
establish this option on an existing account, please call
ProFunds to request the appropriate form. Wire redemptions are
not available for retirement accounts.
SIGNATURE GUARANTEE
Certain redemption requests must include a signature
guarantee. Your request needs to be in writing and include a
signature guarantee if any of the following situations apply:
oYour account registration or address has changed within the
last 30 calendar days.
oThe check is being mailed to a different address than the one
on your account.
oThe check or wire is being made payable to someone other than
the account owner.
oThe redemption proceeds are being transferred to an account
with a different registration.
oYou wish to redeem more than $100,000.
oYou are adding or changing wire instructions on your account.
oOther unusual situations as determined by ProFund's transfer
agent.
43
<PAGE>
Signature guarantees may be provided by an eligible guarantor
institution such as a commercial bank, an NASD member firm
such as a stock broker, a savings association or a national
securities exchange.
PLEASE KEEP IN MIND:
oRedemptions from self-directed accounts must be for at least
$1,000 or, if less, for the account's entire current value.
The remaining balance needs to be above the applicable minimum
investment.
oThe ProFunds normally remit redemption proceeds within seven
days of completing your liquidation out of the relevant
ProFund. For redemption of shares purchased by check or
Automatic Investment, ProFunds may wait up to 15 days before
sending redemption proceeds to assure that its transfer agent
has collected the purchase payment.
oProFunds will remit payment of telephone redemptions only to
the address or bank of record on the account application. You
must submit, in writing, a request for payment to any other
address, along with a signature guarantee from a financial
service organization.
oTo redeem shares in a retirement account, your request needs
to be in writing, except for exchanges to other ProFunds,
which can be requested by phone or in writing. Call the
ProFunds to request a retirement distribution form.
oInvoluntary Redemptions: ProFunds reserves the right to
redeem involuntarily an investor's account, including a
retirement account, which falls below the applicable minimum
investment in total value in the ProFunds due to redemption.
In addition, both a request for a partial redemption by an
investor whose account balance is below the minimum investment
and a request for partial redemption by an investor that would
bring the account below the minimum investment will be treated
as a request by the investor for a complete redemption of the
account.
44
<PAGE>
oRedemption proceeds from the UltraEurope and UltraShort
Europe ProFunds are made within seven business days after the
business date of the redemption. The business date of these
redemptions is normally the business day following the day
your redemption request reaches ProFunds.
oMoney Market ProFund shares begin accruing dividends on the
day ProFund's transfer agent, BISYS Fund Services, receives a
purchase order and payment in the form of a Federal funds
wire. Purchases by check begin earning dividends the business
day following the business day the check is received. They
continue to earn dividends until the business day that BISYS
Fund Services has processed the redemption order.
SUSPENSION OF REDEMPTIONS
Your right of redemption may be suspended, or the date of
payment postponed: (i) for any period during which the NYSE or
the Federal Reserve Bank of New York, as appropriate, is
closed (other than customary weekend or holiday closings) or
trading on the NYSE, as appropriate, is restricted, as
determined by the Securities and Exchange Commission; (ii) for
any period during which an emergency exists, as determined by
the Securities and Exchange Commission, so that disposal of a
ProFund's investments or the determination of its net asset
value is not reasonably practicable; or (iii) for such other
periods as the Securities and Exchange Commission, by order,
may permit for protection of ProFunds' investors.
DRAFT CHECKS
You may elect to redeem shares of the Money Market ProFund by
draft check ($500 minimum) made payable to the order of any
person or institution. If you are interested in this option,
you must submit a completed signature card to ProFunds. You
will then be supplied with draft checks that are drawn on the
Money Market ProFund's account. There is a $25 fee for stop
payment requests on draft checks. This option is not available
to Individual Retirement Account shareholders.
45
<PAGE>
AUTOMATIC INVESTMENT AND REDEMPTION PLANS
Shareholders may buy and redeem shares automatically on a
monthly, bimonthly, quarterly or annual basis. The minimum
automatic purchase is $100 and the minimum automatic
redemption is $500. These minimums are waived for IRA
shareholders 701/2 years of age or older.
ABOUT TELEPHONE TRANSACTIONS
oIT MAY BE DIFFICULT TO REACH PROFUNDS BY TELEPHONE DURING
PERIODS OF HEAVY MARKET ACTIVITY OR OTHER TIMES. IF YOU ARE
UNABLE TO REACH US BY TELEPHONE, CONSIDER SENDING WRITTEN
INSTRUCTIONS.
oYou may initiate numerous transactions by telephone. Please
note, however, that the ProFunds and their agents will not be
responsible for losses resulting from unauthorized
transactions when procedures designed to verify the identity
of the caller are followed.
46
<PAGE>
PROFUNDS
MANAGEMENT
BOARD OF TRUSTEES AND OFFICERS
The ProFunds' Board of Trustees is responsible for the general
supervision of the ProFunds. The ProFunds' officers are
responsible for day-to-day operations of the ProFunds.
INVESTMENT ADVISORS
PROFUND ADVISORS LLC
PROFUND ADVISORS LLC, located at 7900 Wisconsin Avenue, Suite
300, Bethesda, Maryland 20814, serves as the investment
advisor to all of the ProFunds except for the Money Market
ProFund, providing investment advice and management services.
ProFund Advisors oversees the investment and reinvestment of
the assets in each Benchmark ProFund. It receives fees equal
to 0.75% of the average daily net assets of each Benchmark
ProFund, except the UltraEurope and UltraShort Europe
ProFunds, for which it receives a fee equal to 0.90% of the
average daily net assets. ProFund Advisors bears the costs of
advisory services.
MICHAEL L. SAPIR, Chairman and Chief Executive Officer of
ProFund Advisors LLC, served as senior vice president of Padco
Advisors, Inc., which advised Rydex(R) Funds. In addition, Mr.
Sapir practiced law for over 13 years, most recently as a
partner in a Washington-based law firm. As an attorney, Mr.
Sapir advised and represented mutual funds and other financial
institutions. He holds degrees from Georgetown University Law
Center (J.D.) and University of Miami (M.B.A. and B.A.).
47
<PAGE>
LOUIS M. MAYBERG, President of ProFund Advisors LLC,
co-founded National Capital Companies, L.L.C., an investment
bank in 1986, and manages its hedge fund. He holds a Bachelor
of Business Administration degree with a major in Finance from
George Washington University.
WILLIAM E. SEALE, PH.D., Director of Portfolio for ProFund
Advisors LLC, has more than 29 years of experience in the
commodity futures markets. His background includes a five-year
presidential appointment as a commissioner of the U.S.
Commodity Futures Trading Commission. He earned his degrees at
University of Kentucky. Dr. Seale also holds an appointment as
Professor of Finance at George Washington University.
Each Benchmark ProFund is managed by an investment team
chaired by Dr. Seale.
BANKERS TRUST COMPANY
The Money Market ProFund seeks to achieve its investment
objective by investing all of its assets in a portfolio
managed by Bankers Trust Company, with headquarters at 130
Liberty Street, New York, NY 10006. Bankers Trust makes the
Portfolio's investment decisions and assumes responsibility
for the securities the Portfolio owns. It receives a fee equal
to 0.05% of the average daily net assets of the Portfolio.
As of December 31, 1998, Bankers Trust was the eighth largest
bank holding company in the United States, with total assets
of approximately $156 billion. Bankers Trust Company is a
worldwide merchant bank dedicated to servicing the needs of
corporations, governments, financial institutions and private
clients through a global network of over 96 offices in more
than 43 countries.
Bankers Trust Company is a wholly owned subsidiary of Bankers
Trust Corporation. On November 30, 1998, Bankers Trust
Corporation entered into an Agreement and Plan of Merger with
Deutsche Bank AG under which Bankers Trust Corporation would
merge with and into a subsidiary of Deutsche Bank AG.
48
<PAGE>
Deutsche Bank AG is a major global banking institution that is
engaged in a wide range of financial services, including
investment management, mutual funds, retail and commercial
banking, investment banking and insurance. The transaction is
contingent upon various regulatory approvals, and continuation
of the Portfolio's advisory relationship with Bankers Trust
thereafter is subject to the approval of shareholders. If the
transaction is approved and completed, Deutsche Bank AG, as
Bankers Trust's new parent company, will control the
operations of Bankers Trust. Bankers Trust believes that,
under this new arrangement, the services provided to the
Portfolio will be maintained at their current level.
OTHER SERVICE PROVIDERS
BISYS Fund Services, located at 3435 Stelzer Road, Suite 1000,
Columbus, Ohio 43219, acts as the administrator to the
ProFunds, providing operations, compliance and administrative
services. Each ProFund pays BISYS a fee, on a sliding scale,
for its administrative services. For average daily net assets
up to $300 million, the fee is 0.15% of the assets, and it
declines to 0.05% for average daily net assets of $1 billion
or more.
ProFund Advisors also performs client support and
administrative services for the ProFunds. The Benchmark
ProFunds each paid a fee of 0.15% of average daily net assets
for these services last year. ProFund Advisors may receive a
fee of 0.35% of average daily net assets from the Money Market
ProFund for these services and for feeder fund management,
administration and reporting in its relationship to the
Portfolio.
YEAR 2000
Like other funds and business organizations around the world,
the ProFunds could be adversely affected if the computer
systems used by their investment advisors and other service
providers do not properly process and calculate date-related
information for
49
<PAGE>
the Year 2000 and beyond. In addition, Year 2000 issues may
adversely affect companies in which the ProFunds invest, which
could impact the prices of the ProFunds' shares.
The ProFunds have been assured that their service providers
have developed and are implementing clearly defined and
documented plans intended to minimize risks to services
critical to the ProFunds' operations associated with Year 2000
issues. The service providers are likewise seeking assurances
from their respective vendors and suppliers that these
entities are addressing any Year 2000 issues.
In the event that any systems upon which the ProFunds depend
are not Year 2000 ready by December 31, 1999, administrative
errors and account maintenance failures would likely occur.
While the ultimate costs or consequences of incomplete or
untimely resolution of Year 2000 issues by the ProFunds'
service providers cannot be accurately assessed at this time,
the ProFunds currently have no reason to believe that the Year
2000 plans of the investment advisors and other service
providers will not be completed by December 31, 1999. The
ProFunds will continue to closely monitor developments
relating to this issue.
OTHER INFORMATION
"Standard & Poor's(R)," "S&P(R)," "S&P 500(R)," "Standard &
Poor's 500(R)," and "500(R)" are trademarks of The McGraw-Hill
Companies, Inc. and have been licensed for use by ProFunds.
"NASDAQ 100 Index" is a trademark of the NASDAQ Stock Markets,
Inc. ("NASDAQ"). The ProFunds are not sponsored, endorsed,
sold or promoted by Standard & Poor's or NASDAQ and neither
Standard & Poor's nor NASDAQ makes any representation
regarding the advisability of investing in the Product.
(Please see the Statement of Additional Information which sets
forth certain additional disclaimers and limitations of
liabilities on behalf of S&P).
50
<PAGE>
FINANCIAL
HIGHLIGHTS
The following tables provide a picture of the performance
since inception of each share class of the ProFunds in
operation for a year or more as of December 31, 1998. The
information selected represents the rate of return that an
investor would have earned on an investment in the Fund,
assuming reinvestment of all dividends and distributions. This
information has been audited by Pricewaterhouse Coopers LLP,
independent accountants, whose report on the financial
statements of the ProFunds appears in the ProFunds' annual
report for the fiscal year ended December 31, 1998. The annual
report is available free of charge by phoning 888-776-3637.
51
<PAGE>
BULL PROFUND
FINANCIAL HIGHLIGHTS
For a share of beneficial interest outstanding
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
ADJUSTED FOR 5:1 REVERSE STOCK SPLIT
INVESTOR CLASS SERVICE CLASS
For the period For the period
For the year from December For the year from December 2,
Ended 2, 1997(a) Ended 1997(a)
December 31, to December 31, December 31, to December 31,
1998 1997 1998 1997
-------------------------------- ------------------------------
<S> <C> <C> <C> <C>
NET ASSET VALUE, $49.45 $50.00 $49.45 $50.00
BEGINNING OF PERIOD ------ ------ ------ ------
- -----------------------------------------------------------------------------------------------------------------
Net investment income 1.63(d) 0.10 1.08(d) --
- -----------------------------------------------------------------------------------------------------------------
Net realized and unrealized 11.49 (0.65) 11.64 (0.55)
gain/(loss) on investment ------ ------ ------ ------
transactions and futures contracts
- -----------------------------------------------------------------------------------------------------------------
Total income/(loss) from 13.12 (0.55) 12.72 (0.55)
investment operations
- -----------------------------------------------------------------------------------------------------------------
DISTRIBUTION TO SHAREHOLDERS FROM:
Net investment income (0.04) -- --(e) --
- -----------------------------------------------------------------------------------------------------------------
Net realized gains on (0.05) -- (0.05 --
investment transactions ------ ------ ------ ------
and futures contracts
- -----------------------------------------------------------------------------------------------------------------
Total distributions (0.09) -- (0.05) --
NET ASSET VALUE, END OF PERIOD $62.48 $49.45 $62.12 $49.45
====== ====== ====== ======
- -----------------------------------------------------------------------------------------------------------------
TOTAL RETURN 26.57% (1.10%)(b) 25.68% (1.10%)(b)
- -----------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period $7,543,922 $46,281 $589,547 $10
- -----------------------------------------------------------------------------------------------------------------
Ratio of expenses to 1.63% 1.33%(c) 2.67% 1.33%(c)
average net assets
- -----------------------------------------------------------------------------------------------------------------
Ratio of net investment 2.84% 2.97%(c) 1.89% 0.00%(c)
income to average
net assets
- -----------------------------------------------------------------------------------------------------------------
Ratio of expenses to average net 2.40% 423.48%(c) 3.30% 424.48%(c)
assets (before reimbursements)*
- -----------------------------------------------------------------------------------------------------------------
</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
52
<PAGE>
ULTRABULL PROFUND
FINANCIAL HIGHLIGHTS
For a share of beneficial interest outstanding
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
ADJUSTED FOR 5:1 REVERSE STOCK SPLIT
INVESTOR CLASS SERVICE CLASS
For the period For the period
For the year from November For the year from November 28,
ended 28, 1997(a) ended 1997(a)
December 31, to December 31, December 31, to December 31,
1998 1997 1998 1997
----------------------------------- -------------------------------------
<S> <C> <C> <C> <C>
NET ASSET VALUE, $51.45 $50.00 $51.45 $50.00
BEGINNING OF PERIOD ------ ------ ------ ------
- -----------------------------------------------------------------------------------------------------------------------------
Net investment income 1.55(d) 0.05 0.95(d) 0.05
- -----------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized 20.53 1.40 20.39 1.40
gain on investment transactions ------ ------ ------ ------
and futures contracts
- -----------------------------------------------------------------------------------------------------------------------------
Total income from 22.08 1.45 21.34 1.45
investment operations
- -----------------------------------------------------------------------------------------------------------------------------
DISTRIBUTION TO SHAREHOLDERS FROM:
Net investment income (0.06) -- --(e) --
- -----------------------------------------------------------------------------------------------------------------------------
Net realized gains on (0.03) -- (0.03) --
investment transactions ------ ------ ------ ------
and futures contracts
- -----------------------------------------------------------------------------------------------------------------------------
Total distributions (0.09) -- (0.03) --
- -----------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $73.44 $51.45 $72.76 $51.45
====== ====== ====== ======
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN 42.95% (2.90%)(b) 41.48% 2.90%(b)
- -----------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA:
Net assets at end of period $90,854,397 $6,043,740 $10,991,484 $2,394,297
- -----------------------------------------------------------------------------------------------------------------------------
Ratio of expenses to 1.50% 1.33%(c) 2.39% 1.33%(c)
average net assets
- -----------------------------------------------------------------------------------------------------------------------------
Ratio of net investment 2.43% 2.26%(c) 1.53% 1.69%(c)
income to average
net assets
- -----------------------------------------------------------------------------------------------------------------------------
Ratio of expenses to average net 1.70% 12.69%(c) 2.84% 13.69%(c)
assets (before reimbursements)*
- -----------------------------------------------------------------------------------------------------------------------------
</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
53
<PAGE>
ULTRAOTC PROFUND
FINANCIAL HIGHLIGHTS
For a share of beneficial interest outstanding
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
ADJUSTED FOR 5:1 REVERSE STOCK SPLIT
INVESTOR CLASS SERVICE CLASS
For the period For the period
For the year from November For the year from November 28,
ended 28, 1997(a) ended 1997(a)
December 31, to December 31, December 31, to December 31,
1998 1997 1998 1997
----------------------------------- -------------------------------------
<S> <C> <C> <C> <C>
NET ASSET VALUE, $41.80 $50.00 $41.80 $50.00
BEGINNING OF PERIOD ------ ------ ------ ------
- -----------------------------------------------------------------------------------------------------------------------------
Net investment income 0.81(d) 0.30 0.40(d) --
- -----------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized 76.66 (8.50) 76.50 (8.20)
gain/(loss) on investment ------ ------ ------ ------
transactions and futures contracts
- -----------------------------------------------------------------------------------------------------------------------------
Total income/(loss) from 77.47 (8.20) 76.90 (8.20)
investment operations
- -----------------------------------------------------------------------------------------------------------------------------
DISTRIBUTION TO SHAREHOLDERS FROM:
Net investment income --(e) -- --(e) --
- -----------------------------------------------------------------------------------------------------------------------------
Total distributions -- -- -- --
- -----------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $119.27 $41.80 $118.70 $41.80
======= ====== ======= ======
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN 185.34% (16.40%)(b) 183.98% (16.40%)(b)
- -----------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period $239.017,20 $256,184 $32,391,937 $663,984
- -----------------------------------------------------------------------------------------------------------------------------
Ratio of expenses to 1.47% 1.07%(c) 2.38% 1.75%(c)
average net assets
- -----------------------------------------------------------------------------------------------------------------------------
Ratio of net investment 1.05% 2.73%(c) 0.07% (0.06%)(c)
income to average
net assets
- -----------------------------------------------------------------------------------------------------------------------------
Ratio of expenses to average net 1.67% 21.74%(c) 2.61% 23.42%(c)
assets (before reimbursements)*
- -----------------------------------------------------------------------------------------------------------------------------
PORTFOLIO TURNOVER(f) 156% 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.
54
<PAGE>
BEAR PROFUND
FINANCIAL HIGHLIGHTS
For a share of beneficial interest outstanding
<TABLE>
<CAPTION>
ADJUSTED FOR 5:1 REVERSE STOCK SPLIT
INVESTOR CLASS SERVICE CLASS
For the period For the period
For the year from November For the year from November 28,
ended 28, 1997(a) ended 1997(a)
December 31, to December 31, December 31, to December 31,
1998 1997 1998 1997
----------------------------------- -------------------------------------
<S> <C> <C> <C> <C>
NET ASSET VALUE, $50.00 $50.00 $50.00 $50.00
BEGINNING OF PERIOD ------ ------ ------ ------
- ------------------------------------------------------------------------------------------------------------------
Net investment income 1.47(d) -- 0.87(d) --
- ------------------------------------------------------------------------------------------------------------------
Net realized and unrealized (11.22) -- (10.88) --
(loss) on investment transactions ------ ------ ------ ------
and futures contracts
- ------------------------------------------------------------------------------------------------------------------
Total (loss) from (9.75) -- (10.01) --
investment operations
- ------------------------------------------------------------------------------------------------------------------
DISTRIBUTION TO SHAREHOLDERS FROM:
Net investment income (0.37) -- (0.23) --
- ------------------------------------------------------------------------------------------------------------------
Net realized gains on --(e) -- --(e) --
investment transactions ------ ------ ------ ------
and futures contracts
Total distributions (0.37) -- (0.23) --
- ------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $39.88 $50.00 $39.76 $50.00
====== ====== ====== ======
- ------------------------------------------------------------------------------------------------------------------
TOTAL RETURN (19.46%) 0.00%(b) (20.04%) 0.00%(b)
- ------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period $4,166,787 $2,516,412 $379,670 $10
- ------------------------------------------------------------------------------------------------------------------
Ratio of expenses to 1.54% 0.00%(c) 2.49% 0.00%(c)
average net assets
- ------------------------------------------------------------------------------------------------------------------
Ratio of net investment 3.12% 0.00%(c) 1.90% 0.00%(c)
income to average
net assets
- ------------------------------------------------------------------------------------------------------------------
Ratio of expenses to average net 3.26% 325.97%(c) 4.09% 326.97%(c)
assets (before reimbursements)*
- ------------------------------------------------------------------------------------------------------------------
</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
55
<PAGE>
ULTRABEAR PROFUND
FINANCIAL HIGHLIGHTS
For a share of beneficial interest outstanding
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
ADJUSTED FOR 5:1 REVERSE STOCK SPLIT
INVESTOR CLASS SERVICE CLASS
For the period For the period
For the year from November For the year from November 28,
ended 28, 1997(a) ended 1997(a)
December 31, to December 31, December 31, to December 31,
1998 1997 1998 1997
----------------------------------- -------------------------------------
<S> <C> <C> <C> <C>
NET ASSET VALUE, $51.80 $50.00 $51.75 $50.00
BEGINNING OF PERIOD ------ ------ ------ ------
- -----------------------------------------------------------------------------------------------------------------------------
Net investment income 1.16(d) 6,082.50(e) 0.75(d) --
- -----------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized (21.04) (6,080.70)(e) 20.67 1.75
gain/(loss) on investment ------ ------ ------ ------
transactions and futures contracts
- -----------------------------------------------------------------------------------------------------------------------------
Total income/(loss) from (19.88) 1.80 (19.92) 1.75
investment operations
- -----------------------------------------------------------------------------------------------------------------------------
DISTRIBUTION TO SHAREHOLDERS FROM:
Net investment income (0.04) -- -- --
- -----------------------------------------------------------------------------------------------------------------------------
Total distributions (0.04) -- -- --
- -----------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $31.88 $51.80 $31.83 $51.75
====== ====== ====== ======
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN (38.34%) 3.60%(b) (38.45%) 3.50%(b)
- -----------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period $27,939,876 $21 $3,012,328 $10
- -----------------------------------------------------------------------------------------------------------------------------
Ratio of expenses to 1.57% 1.33%(c) 2.45% 1.33%(c)
average net assets
- -----------------------------------------------------------------------------------------------------------------------------
Ratio of net investment 2.73% 2.97%(c) 1.74% 0.00%(c)
income to average
net assets
- -----------------------------------------------------------------------------------------------------------------------------
Ratio of expenses to average net 1.78% 32.39%(c) 2.74% 33.39%(c)
assets (before reimbursements)*
- -----------------------------------------------------------------------------------------------------------------------------
</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.
56
<PAGE>
ULTRASHORT OTC PROFUND
FINANCIAL HIGHLIGHTS
For a share of beneficial interest outstanding
ADJUSTED FOR 5:1 REVERSE STOCK SPLIT
INVESTOR CLASS SERVICE CLASS
For the period For the period
from June 2, 1998(a) from June 2, 1998(a)
through December 31, through December 31,
1998 1998
-------------------- --------------------
NET ASSET VALUE, $50.00 $50.00
BEGINNING OF PERIOD ------ ------
- --------------------------------------------------------------------------------
Net investment income 0.26(d) 0.10(d)
- --------------------------------------------------------------------------------
Net realized and unrealized (34.02) (33.86)
(loss) on investment transactions ------ ------
and futures contracts
- --------------------------------------------------------------------------------
Total (loss) from (33.76) (33.76)
investment operations
- --------------------------------------------------------------------------------
DISTRIBUTION TO SHAREHOLDERS FROM:
Net investment income --(e) --
- --------------------------------------------------------------------------------
Total distributions -- --
- --------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $16.24 $16.24
====== ======
- --------------------------------------------------------------------------------
TOTAL RETURN (67.48%)(d) (67.50%)(b)
- --------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period $19,465,372 $855,392
- --------------------------------------------------------------------------------
Ratio of expenses to 1.83% 2.92%(c)
average net assets
- --------------------------------------------------------------------------------
Ratio of net investment 1.55% 0.54%(c)
income to average
net assets
- --------------------------------------------------------------------------------
Ratio of expenses to average net 1.98% 3.06%(c)
assets (before reimbursements)*
- --------------------------------------------------------------------------------
* 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
57
<PAGE>
MONEY MARKET PROFUND
FINANCIAL HIGHLIGHTS
For a share of beneficial interest outstanding
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
ADJUSTED FOR 5:1 REVERSE STOCK SPLIT
INVESTOR CLASS SERVICE CLASS
For the period For the period
For the year from November For the year from November 28,
ended 28, 1997(a) ended 1997(a)
December 31, to December 31, December 31, to December 31,
1998 1997 1998 1997
----------------------------------- -------------------------------------
<S> <C> <C> <C> <C>
NET ASSET VALUE, $1.00 $1.00 $1.00 $1.00
BEGINNING OF PERIOD ----- ----- ----- -----
- ------------------------------------------------------------------------------------------------------------------------------
Net investment income 0.05(d) 0.01 0.04(d) --
- ------------------------------------------------------------------------------------------------------------------------------
Total income from 0.05 0.01 0.04 --
investment operations
- ------------------------------------------------------------------------------------------------------------------------------
DISTRIBUTION TO SHAREHOLDERS FROM:
Net investment income (0.05) (0.01) (0.04) --
- ------------------------------------------------------------------------------------------------------------------------------
Total distributions (0.05) (0.01) (0.04) --
- ------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $1.00 $1.00 $1.00 $1.00
===== ===== ===== =====
- ------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN 4.84% 0.61%(b) 3.81% 0.21%(b)
- ------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA:
NET ASSETS, END OF PERIOD $62,026,228 $286,962 $15,406,187 $2,510
- ------------------------------------------------------------------------------------------------------------------------------
Ratio of expenses to 0.85%(d) 0.83%(c),(e) 1.87%(d) 1.83%(c),(e)
average net assets
- ------------------------------------------------------------------------------------------------------------------------------
Ratio of net investment 4.81% 4.92%(c) 3.43% 2.53%(c)
income to average
net assets
- ------------------------------------------------------------------------------------------------------------------------------
Ratio of expenses to average net 1.18%(d) 9.52%(c),(e) 2.18%(d) 10.52%(c),(e)
assets (before reimbursements)*
- ------------------------------------------------------------------------------------------------------------------------------
</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 Portfolio.
58
<PAGE>
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59
<PAGE>
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60
<PAGE>
Additional information about ProFunds' investments is
available in ProFunds' annual and semi-annual reports to
shareholders. In ProFunds' annual report you will find a
discussion of the market conditions and investment strategies
that significantly affected performance during the last fiscal
year.
You can find more detailed information about ProFunds in its
current Statement of Additional Information, dated May 1,
1999, which we have filed electronically with the Securities
and Exchange Commission (SEC) and which is incorporated by
reference into, and is legally a part of, this prospectus. To
receive your free copy of a Statement of Additional
Information, or the annual or semi-annual reports, or if you
have questions about investing in ProFunds, write to us at:
PROFUNDS
P.O. BOX 182800
COLUMBUS, OH 43218-2800
or call our toll-free numbers:
(888) PRO-FNDS (888) 776-3637 FOR INVESTORS
(888) PRO-5717 (888) 776-5717 FINANCIAL PROFESSIONALS ONLY
or visit our website WWW.PROFUNDS.COM
You can find other information about ProFunds on the SEC's
website (http://www.sec.gov), or you can get copies of this
information, after payment of a duplicating fee, by writing to
the Public Reference Section of the SEC, Washington D.C.
20549-6009. Information about the ProFunds, including their
Statement of Additional Information, can be reviewed and
copied at the SEC's Public Reference Room in Washington, D.C.
For information on the Public Reference Room, call the SEC at
(800) SEC-0330.
PROFUNDS EXECUTIVE OFFICES
BETHESDA, MD
[logo]
811-08239
PROBK
