FEBRUARY 1, 2000
PROSPECTUS
PROFUNDS MUTUAL FUNDS
ULTRASMALL-CAP PROFUND
ULTRAMID-CAP PROFUND
ULTRAJAPAN PROFUND
[PROFUNDS 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 THE PROFUNDS OVERVIEW
11 PROFUNDS STRATEGY
15 SHARE PRICES, CLASSES & TAX INFORMATION
21 SHAREHOLDER SERVICES GUIDE
31 PROFUNDS MANAGEMENT
[PROFUNDS LOGO] PROFUND ADVISORS LLC
INVESTMENT ADVISOR
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THE PROFUNDS
OVERVIEW
OVERVIEW AND INVESTMENT OBJECTIVES
Each of the ProFunds described in this prospectus ("ProFunds") seeks a
daily return equal to double of the performance of a particular stock
market index.*
o ULTRASMALL-CAP PROFUND -- seeks daily investment results that correspond
to twice (200%) the performance of the Russell 2000(R) Index.
o ULTRAMID-CAP PROFUND -- seeks daily investment results that correspond to
twice (200%) the performance of the S&P MidCap 400 Index(R).
o ULTRAJAPAN PROFUND -- seeks daily investment results that correspond to
twice (200%) the performance of the Nikkei 225 Stock Average.
If a ProFund is successful in meeting its objective, it should gain
approximately twice as much as its benchmark index when the prices of the
securities in that index rise on a given day and should lose approximately
twice as much as the benchmark on a day when such prices decline.
* The securities indexes that the ProFunds use as their benchmark are described
below under "Benchmark Indexes."
The ProFunds Overview 1
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THIS CHART SUMMARIZES THE DAILY OBJECTIVE OF THE PROFUNDS:
PROFUND INDEX DAILY OBJECTIVE TYPES OF COMPANIES IN INDEX
Ultra Russell 2000 Double Diverse, small capitalization
Small-Cap
UltraMid-Cap S&P MidCap 400 Double Diverse, widely traded,
mid-sized capitalization
companies
UltraJapan Nikkei 225 Double Large capitalization, widely
Stock Average traded Japanese stocks
PRINCIPAL STRATEGIES
The ProFunds' investment advisor, ProFund Advisors LLC, uses quantitative
and statistical analysis it developed in seeking to achieve each ProFund's
investment objective. This analysis determines the type, quantity and mix
of investment positions that a ProFund should hold to approximate the
performance of its benchmark.
The ProFunds may invest in stocks that ProFund Advisors believe should
simulate the movement of the applicable underlying index. In addition, the
ProFunds may invest in the following instruments as a substitute for
investing directly in stocks, achieving leverage and for other purposes:
o Futures contracts on stock indexes and options on futures contracts; and
o Financial instruments such as equity caps, collars, floors, depository
receipts, and options on securities and stock indexes.
The 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 ProFund's
investments.
ULTRAJAPAN PROFUND invests in financial instruments including American
Depository Receipts ("ADRs") with values that reflect the performance of
certain stocks of Japan-based companies.
2 The ProFunds Overview
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PRINCIPAL INVESTMENT RISKS
Like all investments, the ProFunds entail risk. ProFund Advisors cannot
guarantee that any of the ProFunds will achieve its objective. As with any
mutual fund, the ProFunds could lose money, or their performance could
trail that of other investment alternatives.
In addition, the 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 ProFunds:
SMALL MID-
MARKET LEVERAGE FOREIGN CAPITALIZATION CAPITALIZATION
CAPITALIZATION RISK RISK RISK RISK RISK
UltraSmall-Cap X X X
UltraMid-Cap X X X
UltraJapan X X X
These and other risks are described below.
PRINCIPAL RISKS ASSOCIATED WITH PARTICULAR PROFUNDS
o SMALL COMPANY INVESTMENT RISK The UltraSmall-Cap ProFund could experience
greater risks than a fund which invests primarily in large capitalized, widely
traded companies, such as:
o Small company stocks tend to have greater fluctuations in price than the
stocks of large companies.
o There can be a shortage of reliable information on certain small
companies, which at times can pose a risk.
o Small companies tend to lack the financial and personnel resources to
handle industry wide setbacks and as a result such setbacks could have a
greater effect on the companies' share prices.
The ProFunds Overview 3
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o Small company stocks are typically less liquid then large company stocks
and liquidating positions in turbulent market conditions could become
difficult.
o MID-CAP COMPANY INVESTMENT RISK The UltraMid-Cap ProFund could experience
risks that a fund which invests in primarily large capitalized, widely traded
companies would not. Such risks could include:
o Mid-Cap company stocks tend to have greater fluctuations in price than
the stocks of large companies, but not as drastic as the stocks of small
companies.
o Stocks of mid-sized companies could be more difficult to liquidate during
market downturns compared to larger, more widely-traded companies.
o FOREIGN INVESTMENT RISK The UltraJapan ProFund entails the risk of foreign
investing, which may involve risks not typically associated with investing in
U.S. securities alone:
o Japan has accounting and disclosure standards that differ from U.S.
standards. Accordingly, this ProFund may not have access to adequate or
reliable company information.
o The UltraJapan ProFund will be subject to the market, economic and
political risks of the countries where it invests or where the companies
represented in the benchmark index are located. Because it may invest,
directly or indirectly, a large portion of its assets in Japanese stocks,
its performance may be susceptible to economic, political or regulatory
effects affecting Japanese companies and Japan, generally.
o Securities purchased by this ProFund 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.
4 The ProFunds Overview
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o VALUATION TIME RISK UltraJapan ProFund generally values its assets as of
the close of the New York Stock Exchange. Such valuation will reflect
market perceptions and trading activity on the U.S. financial market since
the calculation of the closing level of the Nikkei 225 Stock Average. The
Nikkei 225 Stock Average is determined in the early morning U.S. Eastern
time prior to the opening of the New York Stock Exchange. As a result, the
day-to-day correlation of UltraJapan's performance may vary from the
closing performance of the Nikkei 225 Stock Average. However, ProFunds
believes that over time UltraJapan's performance will correlate highly with
the movement of the Nikkei 225 Stock Average.
PRINCIPAL RISKS IN COMMON
Each ProFund faces certain risks in common:
o LEVERAGE RISK The 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 the ProFunds and makes them more volatile. The
leveraged investment techniques that the ProFunds employ should cause
investors in these ProFunds to lose more money in adverse environments.
o MARKET RISK The 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 should lose money when the index underlying their benchmark
declines. These indexes are discussed in the next section.
o LIQUIDITY RISK In certain circumstances, such as a disruption of the
orderly markets for the financial instruments in which the ProFunds invest,
the 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 the ProFunds from limiting losses or realizing
gains.
The ProFunds Overview 5
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o CORRELATION RISK While ProFund Advisors expects that each of the 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 ProFund from achieving its investment goal.
o NON-DIVERSIFICATION RISK The 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, if ProFund Advisors determines that doing so is
the most efficient means of tracking the relevant benchmark. This would
make the performance of a ProFund more susceptible to a single economic,
political or regulatory event than a more diversified mutual fund might be.
Nevertheless, the ProFunds intend to invest on a diversified basis.
o RISKS OF AGGRESSIVE INVESTMENT TECHNIQUES The 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 RUSSELL 2000(R) INDEX is an unmanaged index consisting of 2,000 small
company common stocks. The Index comprises 2,000 of the smallest U.S.
domiciled publicly traded common stocks that are included in the Russell
3000(R) Index. These common stocks represent approximately 8% of the total
market capitalization of the Russell 3000(R) Index which, in turn,
represents approximately 98% of the publicly traded U.S. equity market.
6 The ProFunds Overview
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o The S&P MIDCAP 400 INDEX(R) is a widely used measure of medium
capitalized U.S. company stock performance. It consists of the common
stocks of 400 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.
o The NIKKEI 225 STOCK AVERAGE is a price-weighted index of 225 large,
actively traded Japanese stocks traded on the Tokyo Stock Exchange. The
index is computed and distributed by the Nihon Keizai Shimbun (NKS).
ProFunds' Board of Trustees may change a ProFund's investment objective
without shareholder approval if, for example, it believes another benchmark
might better suit shareholder needs.
WHO MAY WANT TO CONSIDER A PROFUNDS INVESTMENT
The PROFUNDS may be appropriate for investors who:
o believe 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 the
ProFunds should understand that since each 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.
o are seeking to match an index's daily return with half the investment
required of conventional stock index mutual funds.
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An investor might invest $100,000 in a conventional Russell 2000(R) Index
Fund. Alternatively that same investor could invest half that
amount--$50,000--in the UltraSmall-Cap ProFund and target the same daily
return.
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The ProFunds Overview 7
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ALL OF THE PROFUNDS may be appropriate for investors who are 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, other than a $15 wire redemption
fee.
PROFUNDS' PERFORMANCE
Because the ProFunds are newly formed and have no investment track record,
they have no performance to compare against other mutual funds or broad
measures of securities market performance, such as indexes.
PROFUNDS' FEES AND EXPENSES
The tables below describe the estimated fees and expenses you may pay if
you buy and hold shares of the ProFunds during their first year of
operations. YOU PAY NO SALES CHARGE WHEN YOU BUY OR SELL SHARES, OR WHEN
YOU REINVEST DIVIDENDS.
SHAREHOLDER FEES - INVESTOR CLASS SHARES AND SERVICE CLASS SHARES
(paid directly from your investment)
Wire Redemption Fee* $15
* This charge may be waived at the discretion of the ProFunds.
ANNUAL OPERATING EXPENSES - INVESTOR CLASS SHARES
(percentage of average daily net assets)
ULTRASMALL-CAP ULTRAMID-CAP ULTRAJAPAN
PROFUND PROFUND PROFUND
Management fees 0.75% 0.75% 0.90%
Distribution (12b-1) fees none none none
Other expenses 0.58% 0.58% 0.58%
Total annual operating expenses 1.33% 1.33% 1.48%
8 The ProFunds Overview
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ANNUAL OPERATING EXPENSES - SERVICE CLASS SHARES
(percentage of average daily net assets)
ULTRASMALL-CAP ULTRAMID-CAP ULTRAJAPAN
PROFUND PROFUND PROFUND
Management fees 0.75% 0.75% 0.90%
Distribution (12b-1) fees none none none
Other expenses** 1.58% 1.58% 1.58%
Total annual operating expenses 2.33% 2.33% 2.48%
** Includes a shareholder services plan fee equal, on an annual basis, to a
maximum of 1.00% of average daily net assets of Service Class shares. See
"Share Prices, Classes and Tax Information - Classes of Shares," for more
information.
EXPENSE EXAMPLES
The following examples illustrate the expenses you would have incurred
on a $10,000 investment in each ProFund, and are intended to help you
compare the cost of investing in the ProFunds compared to other mutual
funds. The examples assume that you invest for the time periods shown
and redeem 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. Because these examples are hypothetical and
for comparison only, your actual costs will be different.
INVESTOR CLASS Expense Examples
1 year 3 years
UltraSmall-Cap ProFund $135 $421
UltraMid-Cap ProFund $135 $421
UltraJapan ProFund $151 $468
SERVICE CLASS EXPENSE EXAMPLES
1 year 3 years
UltraSmall-Cap ProFund $236 $727
UltraMid-Cap ProFund $236 $727
UltraJapan ProFund $251 $773
The ProFunds Overview 9
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PROFUNDS
STRATEGY
WHAT THE PROFUNDS DO
Each ProFund:
o Seeks to provide its shareholders with predictable investment returns
approximating its benchmark by investing in securities and other financial
instruments, such as futures and options on futures.
o Uses a mathematical and quantitative approach.
o Pursues its objective regardless of market conditions, trends or
direction.
o Seeks to provide correlation with its benchmark on a daily basis.
WHAT THE PROFUNDS DO NOT DO
ProFund Advisors does not:
o Conduct conventional stock research or analysis or forecast stock market
movement in managing the ProFunds' assets.
o Invest the ProFunds' assets in stocks or instruments based on ProFund
Advisors' view of the fundamental prospects of particular companies.
ProFunds Strategy 11
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o Adopt defensive positions by investing in cash or other instruments in
anticipation of an adverse climate for their benchmark indexes.
o Seek to invest to realize dividend income from their investments.
o Seek to provide correlation with the ProFunds' benchmarks over a period
of time other than daily, such as monthly or annually, since mathematical
compounding prevents the ProFunds from achieving such results.
IMPORTANT CONCEPTS
o LEVERAGE offers a means of magnifying small market movements, up or down,
into large changes in an investment's value.
o FUTURES, 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.
o OPTION 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
o AMERICAN DEPOSITORY RECEIPTS ("ADRs") represent the right to receive
securities of foreign issuers deposited in a bank or trust company. ADRs
are an alternative to purchasing the underlying securities in their
national markets and currencies. Investment in ADRs has certain advantages
over direct investment in the underlying foreign securities since: (i) ADRs
are U.S. dollar-denominated investments that are easily transferable and
for which market quotations are readily available, and (ii) issuers whose
securities are represented by ADRs are generally subject to auditing,
accounting and financial reporting standards similar to those applied to
domestic issuers.
12 ProFunds Strategy
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PORTFOLIO TURNOVER
ProFund Advisors expects a significant portion of the 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 the ProFunds
do 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.
ProFunds Strategy 13
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SHARE PRICES, CLASSES & TAX
INFORMATION
CALCULATING THE PROFUNDS' SHARE PRICES
Each 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.
Purchases and redemptions of shares are effected at the net asset value per
share next determined after receipt of an order in good form. 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 outstanding shares.
The ProFunds use the following methods for arriving at the current market
price of investments held by the ProFunds:
o securities 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.
o securities traded over-the-counter--NASDAQ-supplied information on the
prevailing bid and asked prices.
Share Prices, Classes & Tax Information 15
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o futures contracts and options on indexes and securities--the last sale
price prior to the close of regular trading on the NYSE.
o options on futures contracts--priced at fair value determined with
reference to established future exchanges.
o bonds and convertible bonds generally are valued using a third-party
pricing system.
o short-term debt securities are valued at amortized cost, which
approximates market value.
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 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.
16 Share Prices, Classes & Tax Information
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DIVIDENDS AND DISTRIBUTIONS
Each of the ProFunds intends to distribute to its shareholders every year
all of the year's net investment income and net capital gains. Each ProFund
will reinvest these distributions in additional shares unless a shareholder
has written to request a direct cash distribution.
TAX CONSEQUENCES
A ProFund does not ordinarily pay income tax on its net investment income
(which includes short-term capital gains) and net capital gains that it
distributes to shareholders, but individual shareholders pay tax on the
dividends and distributions they 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
gains 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:
o Whether 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 gains of the ProFund, not on how long an investor has
owned shares of the ProFund.
17 Share Prices, Classes & Tax Information
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o Dividends 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.
o As 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 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:
o receiving and processing shareholder orders,
o performing the accounting for the shareholder's account,
18 Share Prices, Classes & Tax Information
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o maintaining retirement plan accounts,
o answering questions and handling correspondence for individual accounts,
o acting as the sole shareholder of record for individual shareholders,
o issuing shareholder reports and transaction confirmations,
o executing daily investment "sweep" functions, and
o providing investment 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.
Share Prices, Classes & Tax Information 19
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SHAREHOLDER SERVICES
GUIDE
CONTACTING THE 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.
Shareholder Services Guide 21
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These minimums apply to all accounts, including retirement plans, and
apply to the total value of an investor's initial ProFund investment.
The ProFunds reserve the right to reject or refuse, at their
discretion, any order for the purchase of a ProFund's shares in whole
or in part.
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 the ProFunds in
advance if you wish to send third party checks. All purchases must be
made in U.S. dollars through a U.S. bank.
BY WIRE TRANSFER: First, complete an application and fax it to the
ProFunds at (800) 782-4797 (toll-free) or (614) 470-8718. Next, call
the 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 the 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.
After faxing a copy of the completed application, send the original to
the ProFunds via mail or overnight delivery. The addresses are shown
above under "Contacting the ProFunds by mail."
22 Shareholder Services Guide
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Instructions, written or telephonic, given to the ProFunds for wire
transfer requests do not constitute a purchase order until the wire
transfer has been received by the ProFunds. The ProFunds are 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.
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 the 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 the ProFunds in
advance if you wish to send third party checks. All purchases need to
be made in U.S. dollars through a U.S. bank.
BY WIRE TRANSFER: Call the 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
Shareholder Services Guide 23
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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 are 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.
PLEASE KEEP IN MIND WHEN PURCHASING SHARES:
o The minimum subsequent purchase amount is $100.
o ProFunds price 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.
o A 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 they process wires: between 8:00 a.m. and 3:30 p.m., Eastern
time for all 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 transacts business closes early, the above cut-off time will
be 25 minutes prior to the close of such exchange or market.
24 Shareholder Services Guide
<PAGE>
o If 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 their 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.
o Securities 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 a ProFund's shares.
EXCHANGES
Shareholders can exchange shares of either class of any ProFund for
shares of either class of another ProFund, including ProFunds that are
not described in this prospectus, 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 accept exchange orders either by phone, in writing, or
on-line via the Internet. 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.
Shareholders may use their personal computer to transact on-line
exchanges of shares of ProFunds at the ProFunds' website
(www.profunds.com). To access this service through the website, click
on the "Trade/Access Account" icon and you will be prompted to enter
your Social Security Number. Follow the instructions to establish your
Personal Identification Number (PIN) which will allow you to execute
exchanges between ProFunds and access ProFunds account information.
Shareholder Services Guide 25
<PAGE>
Internet exchange transactions are extremely convenient, but are not
risk free. To ensure that all Internet transactions are safe, secure
and as risk-free as possible, ProFunds has instituted certain
safeguards and procedures for determining the identity of web site
users. As a result, neither ProFunds nor their transfer agent will be
responsible for any loss, liability, cost or expense for following
Internet instructions they reasonably believe to be genuine. If you or
your intermediary make exchange requests by Internet, you will
generally bear the risk of loss.
ProFunds may terminate the ability to exchange ProFund shares on the
website at any time, in which case you may continue to exchange shares
as otherwise described in this prospectus, which is readily available
for viewing on the website.
PROFUNDS CAN ONLY ACCEPT EXCHANGE ORDERS BY PHONE BETWEEN 8:00 A.M.
AND 3:50 P.M. (3:55 P.M. FOR INTERNET EXCHANGE ORDERS) AND BETWEEN
4:30 P.M. AND 9:00 P.M. EASTERN TIME. ProFunds may not receive or
accept orders at any other time. If the primary exchange or market
(generally, the CME) on which a ProFund transacts business closes
early, the above cut-off time will be 25 minutes prior to the close of
such exchange or market.
PLEASE KEEP IN MIND WHEN EXCHANGING SHARES:
o An exchange is actually a redemption (sale) of shares of one ProFund
and purchase of shares of another ProFund.
o The minimum exchange for self-directed accounts is $1,000 or, if
less, for the account's entire current value.
o You may exchange, on a regular basis, shares of the Money Market
ProFund (described in another prospectus) for shares of other ProFunds
through an Automatic Exchange Plan. For more information on this
option, please call the ProFunds at 888-776-3637.
26 Shareholder Services Guide
<PAGE>
o Before executing an exchange between ProFunds described in this
prospectus for shares of another ProFund, a shareholder must first
review the prospectus related to the other ProFund. Such prospectus
may be obtained by contacting ProFunds by letter or telephone at the
address or phone number noted on the back cover of this prospectus or
by visiting the ProFunds' website (www.profunds.com).
REDEEMING PROFUND SHARES
YOU CAN REDEEM ALL OR PART OF YOUR SHARES AT THE PRICE NEXT DETERMINED
AFTER WE RECEIVE YOUR REQUEST. PROFUNDS CAN ONLY ACCEPT 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. ProFunds may not receive or accept orders
at any other time. If the primary exchange or market on which a
ProFund transacts business closes early, the above cut-off time will
be 25 minutes prior to the close of such exchange or market.
WRITTEN REDEMPTIONS
To redeem all or part of your shares in writing, your request needs to
include the following information:
o the name of the ProFund(s),
o the account number(s),
o the amount of money or number of shares being redeemed,
o the name(s) of the account owners,
o the signature(s) of all registered account owners, and
o your daytime telephone number.
Shareholder Services Guide 27
<PAGE>
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 the 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:
o Your account registration or address has changed within the last 30
calendar days.
o The check is being mailed to a different address than the one on
your account.
o The check or wire is being made payable to someone other than the
account owner.
o The redemption proceeds are being transferred to an account with a
different registration.
o You wish to redeem more than $100,000.
o You are adding or changing wire instructions on your account.
o Other unusual situations as determined by the ProFunds' transfer
agent.
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.
28 Shareholder Services Guide
<PAGE>
PLEASE KEEP IN MIND WHEN REDEEMING SHARES:
o Redemptions 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.
o 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 the transfer agent has collected the purchase payment.
o ProFunds 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.
o To 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 ProFunds to request a
retirement distribution form.
o Involuntary Redemptions: ProFunds reserve 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.
Shareholder Services Guide 29
<PAGE>
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 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 the ProFunds' investors.
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 70 1/2 years of age or older.
ABOUT TELEPHONE TRANSACTIONS
o It may be difficult to reach the 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.
o You 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.
30 Shareholder Services Guide
<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 ADVISOR
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 and provides investment advice and management services.
ProFund Advisors oversees the investment and reinvestment of the
assets in each ProFund. It receives fees equal to 0.75% of the average
daily net assets of each of the UltraSmall-Cap ProFund and the Ultra
Mid-Cap ProFund and 0.90% of the average daily net assets of the
UltraJapan ProFund. 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.).
ProFunds Management 31
<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 ProFund is managed by an investment team chaired by Dr. Seale.
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. Each ProFund pays a fee of 0.15% of its
average daily net assets for these services.
32 ProFunds Management
<PAGE>
OTHER INFORMATION
"Standard & Poor's(R)," "S&P(R)," and "S&P MidCap400 Index," are
trademarks of The McGraw-Hill Companies, Inc. and have been licensed
for use by the ProFunds. "Russell 2000(R) Index" is a trademark of the
Frank Russell Company. The ProFunds are not sponsored, endorsed, sold
or promoted by Standard & Poor's or the Frank Russell Company and
neither Standard & Poor's nor the Frank Russell Company 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).
ProFunds Management 33
<PAGE>
You can find more detailed information about each of the ProFunds in
their current Statement of Additional Information, dated February 1,
2000, 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 dated February 1, 2000. To
receive your free copy of a Statement of Additional Information, or if
you have questions about investing in the Funds, 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 electronic request at
"[email protected]" or by writing to the Public Reference Section of
the SEC, Washington D.C. 20549-0102. 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
1-202-942-8090.
PROFUNDS EXECUTIVE OFFICES
BETHESDA, MD
[PROFUNDS LOGO]
811-08239
