N-CSR 1 tm223050d1_ncsr.htm N-CSR

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM N-CSR

 

CERTIFIED SHAREHOLDER REPORT OF REGISTERED

MANAGEMENT INVESTMENT COMPANIES

 

Investment Company Act file number 811-08239  

 

ProFunds

(Exact name of registrant as specified in charter)

 

                            7272 Wisconsin Avenue, 21st Floor Bethesda, MD                     20814
(Address of principal executive offices) (Zip code)

 

Citi Fund Services Ohio, Inc., 4400 Easton Commons, Suite 200, Columbus, OH 43219

(Name and address of agent for service)

 

Registrant’s telephone number, including area code: (240) 497-6400  

 

Date of fiscal year end: July 31  

 

Date of reporting period: July 31, 2022  

 

 

 

 

Item 1. Reports to Stockholders.

 

 

 

Annual Report

JULY 31, 2022

 

  Investor   Service
Access Flex Bear High Yield ProFund AFBIX   AFBSX
Access Flex High Yield ProFund FYAIX   FYASX
Banks UltraSector ProFund BKPIX   BKPSX
Basic Materials UltraSector ProFund BMPIX   BMPSX
Bear ProFund BRPIX   BRPSX
Biotechnology UltraSector ProFund BIPIX   BIPSX
Bitcoin Strategy ProFund BTCFX    
Bull ProFund BLPIX   BLPSX
Communication Services UltraSector ProFund WCPIX   WCPSX
Consumer Goods UltraSector ProFund CNPIX   CNPSX
Consumer Services UltraSector ProFund CYPIX   CYPSX
Europe 30 ProFund UEPIX   UEPSX
Falling U.S. Dollar ProFund FDPIX   FDPSX
Financials UltraSector ProFund FNPIX   FNPSX
Health Care UltraSector ProFund HCPIX   HCPSX
Industrials UltraSector ProFund IDPIX   IDPSX
Internet UltraSector ProFund INPIX   INPSX
Large-Cap Growth ProFund LGPIX   LGPSX
Large-Cap Value ProFund LVPIX   LVPSX
Mid-Cap Growth ProFund MGPIX   MGPSX
Mid-Cap ProFund MDPIX   MDPSX
Mid-Cap Value ProFund MLPIX   MLPSX
Nasdaq-100 ProFund OTPIX   OTPSX
Oil & Gas UltraSector ProFund ENPIX   ENPSX
Oil Equipment & Services UltraSector ProFund OEPIX   OEPSX
Pharmaceuticals UltraSector ProFund PHPIX   PHPSX
Precious Metals UltraSector ProFund PMPIX   PMPSX
Real Estate UltraSector ProFund REPIX   REPSX
Rising Rates Opportunity ProFund RRPIX   RRPSX
Rising Rates Opportunity 10 ProFund RTPIX   RTPSX
Rising U.S. Dollar ProFund RDPIX   RDPSX
Semiconductor UltraSector ProFund SMPIX   SMPSX
Short Bitcoin Strategy ProFund BITIX    
Short Nasdaq-100 ProFund SOPIX   SOPSX
Short Oil & Gas ProFund SNPIX   SNPSX
Short Precious Metals ProFund SPPIX   SPPSX
Short Real Estate ProFund SRPIX   SRPSX
Short Small-Cap ProFund SHPIX   SHPSX
Small-Cap Growth ProFund SGPIX   SGPSX
Small-Cap ProFund SLPIX   SLPSX
Small-Cap Value ProFund SVPIX   SVPSX
Technology UltraSector ProFund TEPIX   TEPSX
Telecommunications UltraSector ProFund TCPIX   TCPSX
UltraBear ProFund URPIX   URPSX
UltraBull ProFund ULPIX   ULPSX
UltraChina ProFund UGPIX   UGPSX
UltraDow 30 ProFund UDPIX   UDPSX
UltraEmerging Markets ProFund UUPIX   UUPSX
UltraInternational ProFund UNPIX   UNPSX
UltraJapan ProFund UJPIX   UJPSX
UltraLatin America ProFund UBPIX   UBPSX
UltraMid-Cap ProFund UMPIX   UMPSX
UltraNasdaq-100 ProFund UOPIX   UOPSX
UltraShort China ProFund UHPIX   UHPSX
UltraShort Dow 30 ProFund UWPIX   UWPSX
UltraShort Emerging Markets ProFund UVPIX   UVPSX
UltraShort International ProFund UXPIX   UXPSX
UltraShort Japan ProFund UKPIX   UKPSX
UltraShort Latin America ProFund UFPIX   UFPSX
UltraShort Mid-Cap ProFund UIPIX   UIPSX
UltraShort Nasdaq-100 ProFund USPIX   USPSX
UltraShort Small-Cap ProFund UCPIX   UCPSX
UltraSmall-Cap ProFund UAPIX   UAPSX
U.S. Government Plus ProFund GVPIX   GVPSX
Utilities UltraSector ProFund UTPIX   UTPSX

 

 

 

Table of Contents

 

1   Message from the Chairman
3   Management Discussion of Fund Performance
73   Expense Examples
     
    Schedules of Portfolio Investments
80   Access Flex Bear High Yield ProFund
81   Access Flex High Yield ProFund
82   Banks UltraSector ProFund
84   Basic Materials UltraSector ProFund
86   Bear ProFund
87   Biotechnology UltraSector ProFund
89   Bitcoin Strategy ProFund
90   Bull ProFund
92   Communication Services UltraSector ProFund
94   Consumer Goods UltraSector ProFund
97   Consumer Services UltraSector ProFund
100   Europe 30 ProFund
101   Falling U.S. Dollar ProFund
102   Financials UltraSector ProFund
106   Health Care UltraSector ProFund
109   Industrials UltraSector ProFund
113   Internet UltraSector ProFund
115   Large-Cap Growth ProFund
119   Large-Cap Value ProFund
125   Mid-Cap Growth ProFund
129   Mid-Cap ProFund
136   Mid-Cap Value ProFund
141   Nasdaq-100 ProFund
144   Oil & Gas UltraSector ProFund
146   Oil Equipment & Services UltraSector ProFund
148   Pharmaceuticals UltraSector ProFund
150   Precious Metals UltraSector ProFund
152   Real Estate UltraSector ProFund
155   Rising Rates Opportunity ProFund
156   Rising Rates Opportunity 10 ProFund
157   Rising U.S. Dollar ProFund
158   Semiconductor UltraSector ProFund
160   Short Bitcoin Strategy ProFund
161   Short Nasdaq-100 ProFund
162   Short Oil & Gas ProFund
163   Short Precious Metals ProFund
164   Short Real Estate ProFund
165   Short Small-Cap ProFund
166   Small-Cap Growth ProFund
172   Small-Cap ProFund
175   Small-Cap Value ProFund
182   Technology UltraSector ProFund
186   Telecommunications UltraSector ProFund
188   UltraBear ProFund
189   UltraBull ProFund
192   UltraChina ProFund
194   UltraDow 30 ProFund
196   UltraEmerging Markets ProFund
198   UltraInternational ProFund
199   UltraJapan ProFund
200   UltraLatin America ProFund
202   UltraMid-Cap ProFund
209   UltraNasdaq-100 ProFund
212   UltraShort China ProFund
213   UltraShort Dow 30 ProFund
214   UltraShort Emerging Markets ProFund
215   UltraShort International ProFund
216   UltraShort Japan ProFund
217   UltraShort Latin America ProFund
218   UltraShort Mid-Cap ProFund
219   UltraShort Nasdaq-100 ProFund
220   UltraShort Small-Cap ProFund
221   UltraSmall-Cap ProFund
224   U.S. Government Plus ProFund
225   Utilities UltraSector ProFund
227   Statements of Assets and Liabilities
245   Statements of Operations
263   Statements of Changes in Net Assets
293   Consolidated Statements of Cash Flows
295   Financial Highlights
331   Notes to Financial Statements
373   Report of Independent Registered Public Accounting Firm
375   Trustees and Executive Officers

 

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Message from the Chairman

 

Dear Shareholder:

 

During these times of geopolitical and economic uncertainty, I want to reaffirm ProFunds' commitment to providing you, our investors, with innovative products and services to help you meet your investment objectives. ProFunds remains focused on ensuring the effective management of our funds for investors, and below is our ProFunds Annual Report to shareholders for the 12 months ended July 31, 2022.

 

After a Strong Year, Volatility Returned to Equity Markets Amid Growing Pressures

 

Buoyed by the federal stimulus packages, near-zero interest rates, robust rollout of the COVID-19 vaccines, and strong corporate earnings, stocks generally rose through the second half of 2021. September saw a brief slump, but equity markets rallied again throughout late 2021, as a 6.9% hike in real GDP for the fourth quarter and other data demonstrated overall robust economic performance despite the emergence of the new Omicron variant. The markets ended 2021 with the S&P 500 rising 28.7% for the year and clocking in its third-best yearly performance of the century.

 

U.S. stocks reversed course in early 2022, as volatility returned amid mounting inflationary pressures, rising interest rates, tightening monetary policy, and Russia's invasion of Ukraine. By mid-year, the S&P 500 was down more than 20% from its January peak and had entered bear market territory for the first time since the World Health Organization's official declaration of a global pandemic in March 2020. With the notable exception of commodities like oil and gas, whose prices surged following sanctions against Russia, nearly all asset classes experienced selloffs through the end of the period. For example, tech-sector-heavy Nasdaq-100 sunk more than 20% during the second quarter alone.

 

Inflation has been concerning throughout 2022, with the consumer price index rising by 9.1% in June, a 40-year high, according to the U.S. Bureau of Labor Statistics. In July, the inflation rate dropped to 8.5%, due, in large part, to a decline in gas prices. Accordingly, investors have kept a close watch on the U.S. Federal Reserve Bank, which raised interest rates by 25 basis points in March, 50 basis points in May, 75 basis points in June, and 75 basis points in July. This brought the benchmark rate to a range of 2.25%-2.5% in the largest and fastest rate hikes since the 1980s. In his semiannual report to Congress in June, Fed Chairman Jerome Powell noted the Fed's strong commitment to bringing inflation back to the central bank's longer-run goal of 2%, leading some investors to worry about recession. In July, the Federal Open Market Committee reaffirmed its commitment to this goal.

 

Over the 12-month reporting period, the S&P 500® dropped 4.6%, the S&P MidCap 400® declined 5.7%, and the Russell 2000® Index lost 14.3%. The Nasdaq-100 Index® declined 12.8%, while the Dow® shed 4.1%. Among the Dow Jones Sector and Industry Indices, oil & gas (65.7%) and utilities (15.3%) rose. The biggest laggards were consumer services (-20%) and technology (-12.5%), with industrials, financials and telecom also declining by over 5%.

 

 1 

 

 

International Equities Decline

 

International developed market equities followed a similar pattern to the United States, rising in the second half of 2021 before dropping after Russia's invasion of Ukraine. Emerging markets, however, generally declined throughout the 12 months, driven by a selloff in China amid a regulatory crackdown. Most major international indexes posted negative returns over the reporting period: The MSCI EAFE Index®, which tracks developed markets outside North America, fell 14.3%. The ProFunds Europe 30 Index® dropped 7.5%, while S&P/BNY Mellon Emerging 50 ADR Index (USD) dropped 23.1%. Latin American stocks lost 5.2%, as measured by the S&P/BNY Mellon Latin America 35 ADR Index (USD).

 

Bond Markets Struggle as Treasury Yields Steepen

 

U.S. Treasury yields, which move opposite to bond prices, rose in the latter half of 2021 amid rising inflation concerns and tightening monetary policy. In 2022, the Fed's aggressive tightening led to one of the worst selloffs on record for the U.S. Treasury market. The U.S. 10-year and 2-year Treasury Yields rose from 1.5% to nearly 3%, and from 0.7% to 2.9%, respectively, in the first six months of 2022. Over the 12-month reporting period, the Ryan Labs Treasury 30-Year and 10-Year Indexes lost 24.4% and 12%, respectively. The U.S. dollar gained 11.1%, based on the Bloomberg Dollar Spot Index.

 

ProFunds Launches the Industry's First Short Bitcoin-Linked Mutual Fund and New Website

 

ProFunds investors were presented with significant opportunities for growth in the first half of the period. As interest rates rose in 2022 and the global economy reckoned with the invasion of Ukraine, investors had opportunities for gain by focusing on funds designed to outperform in environments marked by volatility and rising rates. Over the period, ProFunds also saw positive net flows into U.S. dollar, Treasury and money-market investments.

 

Following last year's launch of the Bitcoin Strategy ProFund (BTCFX) in July 2021, ProFunds launched the Short Bitcoin Strategy ProFund (BITIX) on June 21, 2022. As the industry's first short bitcoin-linked mutual fund, BITIX provides investors with an opportunity to potentially profit from a decline in the daily price of bitcoin or hedge their cryptocurrency exposure. In addition to launching BITIX, the company undertook a complete redesign of ProFunds.com, modernizing the website and making it more functional and inviting for investors.

 

Thousands of Investors Join with ProFunds to Oppose Burdensome FINRA Measures

 

In March 2022, the Financial Industry Regulatory Authority (FINRA) issued Notice 22-08 to solicit feedback on a number of measures that, if adopted, could restrict or impede the ability of investors to purchase a broad array of mutual funds and other popular types of investments – including leveraged, inverse, and cryptocurrency products offered by ProFunds. Nearly 20,000 investors joined with ProFunds, as well as other leading fund sponsors, advisers, brokers, and other institutions, to speak out against FINRA's ideas. Thousands of investors submitted letters that highlighted the way they use leveraged, inverse, and other funds to protect their portfolios and pursue other financial goals. In expressing their objections, many commentors warned that the measures FINRA is considering could limit investor choice and would be arbitrary, discriminatory, and harmful to investors.

 

ProFunds continues to actively monitor developments in this area and is committed to keeping you informed of these important issues as they arise. You can email us at finranotice@profunds.com to learn more.

 

We thank you for the trust and confidence that you have placed in us by choosing ProFunds. In these ever-evolving times, our wide array of funds offers an extensive lineup of strategies designed to meet your investment goals, help you manage risk, and potentially enhance returns. We appreciate the opportunity to continue serving your investing needs.

 

Sincerely,

 

 

 

Michael L. Sapir

Chairman of the Board of Trustees

 

 

 2 

 

 

Management Discussion of Fund Performance

 

 

 

 


4  :: Management Discussion of Fund Performance (unaudited)

 

Investment Strategies and Techniques:

 

Each ProFund (each, a "Fund" and, collectively, the "Funds"), except for the Classic ProFunds1, Falling U.S. Dollar ProFund, and Bitcoin Strategy ProFund seeks daily investment results, before fees and expenses, that correspond to the daily performance of a benchmark, such as the daily performance of an index or security, or a multiple, the inverse, or an inverse multiple of the daily performance of an underlying index or security (each such index or security, a "benchmark") for a single day, not for any other period.

 

Each of the Classic ProFunds and the Falling U.S. Dollar ProFund are designed to match, before fees and expenses, the performance of an underlying benchmark (each, a "Matching Fund" and, collectively, the "Matching Funds").

 

The Bitcoin Strategy ProFund seeks to provide capital appreciation by investing all or substantially all of its assets through managed exposure to bitcoin futures contracts.

 

All other ProFunds are "geared" funds (each, a "Geared Fund" and, collectively, the "Geared Funds"). Each Geared Fund seeks daily investment results, before fees and expenses, that correspond to a multiple (i.e., 1.25x, 1.5x or 2x), the inverse (i.e., -1x), or an inverse multiple (i.e., -1.25x or -2x) of the daily performance of an underlying benchmark. This means that Geared Funds seek daily investment results, before fees and expenses, for a single day only, not for any other period. A "single day" is measured from the time a Geared Fund calculates its net asset value ("NAV") to the time of the Geared Fund's next NAV calculation, not for longer periods. The return of a Geared Fund for periods longer than a single day will be the result of its return for each day compounded over the period. A Geared Fund's returns for periods long than a single day will very likely differ in amount, and possibly even direction, from the Geared Fund's stated leveraged (i.e. 1.25x, 1.5x, or 2x), inverse (-1x), or inverse leveraged (i.e. -1.25x or -2x) multiple times the return of the Geared Fund's benchmark for the same period. During periods of higher market volatility, the volatility of the benchmark may affect the Geared Fund's return as much as or more than the return of the benchmark.

 

ProFund Advisors LLC ("PFA"), the Funds' investment advisor, uses a passive approach in seeking to achieve the investment objective of each Fund. Using this approach, PFA determines the type, quantity and mix of investment positions that it believes, in combination, a Fund should hold to produce daily returns consistent with such Fund's investment objective.

 

In managing the assets of the Funds, PFA does not invest the assets of the Funds in securities or financial instruments based on its view of the investment merit of a particular security, instrument, or company nor does PFA conduct conventional research or analysis; forecast market movements, trends or market conditions; or take defensive positions.

 

The Funds (other than Europe 30 ProFund, Large-Cap Growth ProFund, Large-Cap Value ProFund, Mid-Cap Growth ProFund, Mid-Cap Value ProFund, Small-Cap Growth ProFund, and Small-Cap Value ProFund) make significant use of investment techniques that may be considered aggressive, including the use of swap agreements, futures contracts, forward contracts, and similar instruments (collectively, "derivatives"). Funds using derivatives are exposed to risks different from, or possibly greater than, the risks associated with investing directly in securities, including one or more of the following: counterparty risk (i.e., the risk that a counterparty is unable or unwilling to make timely payments) on the amount the Fund expects to receive from a derivatives counterparty, liquidity risk (i.e., the ability of a Fund to acquire or dispose of certain holdings quickly or at prices that represent true market value in the judgment of PFA) and increased correlation risk (i.e., the Fund's ability to achieve a high degree of correlation with its benchmark). If a counterparty becomes bankrupt, or fails to perform its obligations, the value of an investment in the Fund may decline. With respect to swaps and forward contracts, the Funds have sought to mitigate these risks by generally requiring derivatives counterparties to post collateral for the benefit of each Fund, marked to market daily, in an amount approximately equal to the amount the counterparty owes the Fund, subject to certain minimum thresholds. The Funds typically enter into derivatives with counterparties that are major, global financial institutions. Any costs associated with using derivatives may also have the effect of lowering the Fund's return.

 

Factors that Materially Affected the Performance of Each Fund during the Fiscal Year Ended July 31, 20222:

 

Primary factors affecting Fund performance, before fees and expenses, include the following: the total return of the securities and derivatives (if any) held by a Fund, including the performance of the reference assets to which any derivatives are linked, financing rates paid or earned by a Fund associated with cash and, in certain cases, derivative positions; stock dividends, premiums and bond yields paid or earned by a Fund (including those included in the total return of derivatives contracts); the types of derivative contracts used by a Fund and their correlation to the relevant benchmark or asset fees, expenses, and transaction costs; other miscellaneous factors; and in the case of the Geared Funds, the volatility of the Fund's benchmark (and its impact on compounding).

 

· Benchmark Performance: The performance of each Fund's benchmark and, in turn, the factors and market conditions affecting that benchmark are principal factors driving Fund performance.3
   
· Compounding of Daily Returns and Volatility: Each Geared Fund seeks daily investment results, before fees and expenses,

 

 

1 ProFunds included as Classic ProFunds are listed in Note 1 of the Notes to Financial Statements.
   
2 Past performance is not a guarantee of future results.
   
3 Unlike the Funds, indexes that may serve as benchmarks for the Funds do not actually hold a portfolio of securities and/or financial instruments. Indexes do not incur fees, expenses, and transaction costs. Fees, expenses, and transaction costs incurred by the Funds negatively impact the performance of the Funds relative to their benchmark. Performance for each Fund will generally differ from the performance of the Fund's benchmark index.

 

 

 


Management Discussion of Fund Performance (unaudited) :: 5

 

that correspond to the performance of a daily benchmark such as the multiple (i.e., 1.25x, 1.5x, or 2x), the inverse (i.e., -1x) or an inverse multiple (i.e., -1.25x or 2x) of its benchmark return for a single day only, not for any other period. Daily rebalancing and the compounding of each day's return over time means that the return of a Fund for a period longer than a single day will be the result of each day's returns compounded over the period, which will very likely differ in amount, and possibly even direction, from a Fund's one-day multiple times the return of the benchmark for the same period, before accounting for fees and expenses. Compounding affects all investments but has a more significant impact on a Geared Fund. In general, during periods of higher benchmark volatility, compounding will usually cause Fund performance for periods longer than a single day to differ in amount, and possibly even direction, from the multiple of the return of the benchmark. This effect becomes more pronounced as volatility increases. Conversely, in periods of lower benchmark volatility (particularly when combined with higher benchmark returns), Fund returns over longer periods can be higher than the multiple of the return of the benchmark. Actual results for a particular period, before fees and expenses, are also dependent on the following factors: a) period of time; b) financing rates associated with the use of derivatives; c) other Fund expenses; and d) dividends and interest paid with respect to the securities in the benchmark, e) the benchmark's volatility; and f) the benchmark's performance. Longer holding periods, higher benchmark volatility, inverse exposure and/or greater leverage each exacerbates the impact of compounding on a Fund's performance. During periods of higher benchmark volatility, the volatility of a benchmark may affect a Fund's return as much as or more than the return of its benchmark.

 

Daily volatility for the U.S. equity markets increased from a year ago. The volatility for the S&P 500® for the year ended July 31, 2022 was 20.4%, which was higher than the prior year’s volatility of 15.0%. The volatility of each Geared Fund benchmark is shown below:

 

Index  1 yr Vol. 
Dow Jones U.S. Select Oil Equipment & ServicesSM Index   44.83%
Dow Jones Precious MetalsSM Index   32.49%
S&P Latin America 35 ADR Index (USD)   26.37%
Dow Jones U.S. Oil & GasSM Index   32.56%
Dow Jones U.S. BanksSM Index   27.09%
Dow Jones U.S. SemiconductorsSM Index   40.56%
S&P SmallCap 600® Value Index   22.35%
S&P China Select ADR Index (USD)   56.50%
Russell 2000® Index   25.54%
Dow Jones U.S. BiotechnologySM Index   20.88%
S&P SmallCap 600® Growth Index   24.60%
S&P MidCap 400® Value Index   21.56%
Dow Jones U.S. TechnologySM Index   30.63%
Dow Jones Internet CompositeSM Index   36.95%
Dow Jones U.S. Basic MaterialsSM Index   22.94%
Dow Jones U.S. FinancialsSM Index   20.91%
S&P Emerging 50 ADR Index (USD)   30.18%
Dow Jones U.S. Real EstateSM Index   20.35%
S&P MidCap 400®   22.63%
Nasdaq-100® Index   28.15%
Dow Jones U.S. Select PharmaceuticalsSM Index   16.47%
Dow Jones U.S. IndustrialsSM Index   20.38%
Nikkei 225 Stock Average   20.16%
S&P MidCap 400® Growth Index   24.68%
Dow Jones U.S. UtilitiesSM Index   17.22%
Dow Jones U.S. Select TelecommunicationsSM Index   18.56%
ProFunds Europe 30® Index   20.66%
S&P Communication Services Select Sector® Index   25.96%
Dow Jones Industrial Average®   17.00%
S&P 500® Growth Index   26.55%
S&P 500® Value Index   16.47%
S&P 500®   20.44%
Dow Jones U.S. Health CareSM Index   17.35%
Dow Jones U.S. Consumer ServicesSM Index   25.70%
Dow Jones U.S. Consumer GoodsSM Index   22.10%
Ryan Labs Returns Treasury Yield Curve 30 Year Index   22.22%
MSCI EAFE Index®   17.05%
Ryan Labs Returns Treasury Yield Curve 10 Year Index   10.26%
U.S. Dollar Index   6.75%

 

 

 

 

6 :: Management Discussion of Fund Performance (unaudited)

 

Financing Rates Associated with Derivatives: The performance of Funds that use derivatives was impacted by related financing costs. Financial instruments such as futures contracts carry implied financing costs. Swap financing rates are negotiated between the Funds and their counterparties, and are typically set at the Fed Funds rate ("FEDL01") plus or minus a negotiated spread. This rate was changed from the one week/one month London Interbank Offered Rate ("LIBOR') in the third and fourth quarters of 2021. The Fed Funds rate appreciated from 0.07% to 2.32% during the fiscal year. Each Fund with long exposure to its benchmark was generally negatively affected by financing rates. Conversely, each Fund with short/inverse exposure generally benefited from financing rates. In certain market environments, LIBOR adjusted by the spread may result in a Fund with short/inverse exposure also being negatively affected by financing rates.
   
Stock Dividends and Bond Yields: The performance of Funds that provide long or leveraged long exposure was positively impacted by capturing the dividend, premium, or income yield of the underlying assets to which they have exposure. The performance of Funds that provide an inverse or leveraged inverse exposure was negatively impacted by virtue of effectively having to pay out the dividend, premium, or income yield (or a multiple thereof, as applicable) associated with the assets to which they have short exposure.
   
•   Fees, Expenses, and Transaction Costs: Fees and expenses are listed in the financial statements of each Fund and may generally be higher and thus have a more negative impact on performance than compared to many traditional index-based funds. For Geared Funds, daily repositioning of each Fund's portfolio so that its exposure to its benchmark is consistent with the Fund's daily investment objective, high levels of shareholder purchase and redemption activity, and use of leverage may lead to commensurate increases in portfolio transactions and transaction costs which negatively impact the daily NAV of each Fund. Transaction costs are not reflected in the Funds' expense ratio. Transaction costs are generally higher for Funds whose benchmarks are more volatile, have a larger daily multiple of its benchmark's return, that seek to return an inverse or inverse multiple of its benchmark's return, that invest in foreign securities, and for Funds that hold or have exposure to assets that are comparatively less liquid than other Funds.
     
Miscellaneous Factors: Each Fund holds a mix of securities and/or derivatives that is designed to provide returns that correspond to the performance of its investment objective. Certain Funds may obtain exposure to only a representative sample of the securities of their benchmark and may not have investment exposure to all securities of the benchmark or may have weightings that are different from that of its benchmark. Certain Funds may also obtain exposure to securities not contained in the relevant benchmark or in financial instruments, with the intent of obtaining exposure with aggregate characteristics similar to those of a multiple of the benchmark.

 

In addition, certain Funds invested in swap agreements based on exchange-traded funds ("ETFs") that are designed to track the performance of the Fund's benchmark. Because the closing price of an ETF may not perfectly track the performance of its benchmark, there are deviations between the return of a swap whose reference asset is an ETF and the return of a swap based directly on the Fund's benchmark. Thus, the performance of a Fund investing significantly in swap agreements based on an ETF correlated less with its benchmark than a Fund investing in swap agreements based directly on the Fund's benchmark.

 

 

 

 

Management Discussion of Fund Performance (unaudited) :: Access Flex Bear High Yield ProFund :: 7

 

The Access Flex Bear High Yield ProFund (the "Fund") seeks to provide investment results that correspond generally to the inverse (-1x) of the total return of the high yield market, consistent with maintaining reasonable liquidity. However, the Fund does not seek to match the daily returns of a specific benchmark. For the year ended July 31, 2022, the Fund (Investor Class shares) had a total return of 5.95%. For the same period, the Markit iBoxx $ Liquid High Yield Index, a widely used measure of high yield market performance had a total return of -6.84%1. The total return for the 5-year U.S. Treasury Note was -8.15%2.

 

The Fund is designed to maintain inverse exposure to the high yield market, regardless of market conditions. This means the Fund does not adopt defensive positions in anticipation of an adverse market climate. The Fund seeks to achieve its high yield exposure primarily through credit default swaps (CDS) and 5-year treasury exposure but may also invest in high yield debt instruments (commonly referred to as junk bonds), other debt, money market instruments, total return swap agreements and futures contracts.

 

During the year ended July 31, 2022, the Fund invested in credit default swap agreements and futures contracts as a substitute for shorting high yield bonds. These derivatives generally tracked the performance of their underlying benchmark and benefited from financing costs associated with their use. The Fund entered into credit default swap agreements that were centrally cleared. In a centrally cleared swap agreement, the clearing organization takes on the credit risk of all parties involved in the trade, and in effect, guarantees each party's obligations under the contract. As a result, each party involved in a centrally cleared contract only faces the clearing organization. There can be no assurance that the clearing organization, or its members, will satisfy its obligations to the Fund.

 

Value of a $10,000 Investment at Net Asset Value*

 

 

 

 

*The line graph represents the historical performance of a hypothetical investment of $10,000 in the Access Flex Bear High Yield ProFund from July 31, 2012 to July 31, 2022, assuming the reinvestment of distributions.

 

Average Annual Total Return as of 07/31/22

 

Fund  One Year   Five Year   Ten Year 
Investor   5.95%   -4.02%   -7.30%
Service   4.86%   -4.97%   -8.17%
Markit iBoxx $ Liquid High Yield Index   -6.84%   2.75%   4.21%

 

Expense Ratios**

 

Fund  Gross   Net 
Investor   9.92%   1.78%
Service   10.92%   2.78%

 

 

**Reflects the expense ratio as reported in the Prospectus dated November 30, 2021. Contractual fee waivers are in effect through November 30, 2022.

 

Allocation of Portfolio Holdings & Index Composition

 

Investment Type  % of Net Assets 
Credit Default Swap Agreements   (102)%
Futures Contracts   (82)%

 

"Market Exposure" includes the value of total investments (including the contract value of any derivatives) and excludes any instruments used for cash management.

 

Holdings

 

The Access Flex Bear High Yield ProFund primarily invests in non-equity securities, which may include: credit default swap agreements, futures contracts, repurchase agreements, U.S. Government and money market securities.

 

Industry Exposure

 

   % of Market
Exposure (CDS)
 
Consumer Cyclical   (28)%
Consumer Non-Cyclical   (16)%
Communications   (12)%
Financial   (11)%
Energy   (9)%
Industrials   (7)%
Basic Materials   (6)%
Utilities   (6)%
Technology   (5)%

 

Past performance does not guarantee future results. Return calculations assume the reinvestment of distributions and do not reflect taxes that a shareholder would pay on Fund distributions or on the redemption of Fund shares. The performance data quoted represents past performance and current returns may be lower or higher. The investment return and net asset value will fluctuate so that an investor's shares, when redeemed, may be worth more or less than the original cost. The performance above reflects any fee reductions during the applicable periods. If such fee reductions had not occurred, the quoted performance would be lower. To obtain performance current to the most recent month-end, please visit www.ProFunds.com.

 

 

1The graph and table reflect the theoretical reinvestment of dividends on securities in the Index. The impact of transaction costs and the deduction of fees and expenses associated with a mutual fund, such as investment management and accounting fees, are not reflected in the Index calculations. The Fund's performance reflects the reinvestment of dividends as well as the impact of transaction costs and the deduction of fees and expenses. It is not possible to invest directly in an index.
  
2The 5-year U.S. Treasury Note reflects both price return and yield components. It does not reflect the impact of transaction and financing costs, nor the deduction of fees and expenses associated with a mutual fund, such as investment management and accounting fees.

 

Investments in high yield bonds or in investments linked to the high yield market are subject to greater volatility and greater credit risks than investing in U.S. Treasuries. U.S. Treasury instruments are guaranteed by the U.S. government as to the timely payment of principal and interest, if held to maturity. Both the principal and yield of a mutual fund will fluctuate with changes in market conditions.

 

The above information is not covered by the Report of the Independent Registered Public Accounting Firm.

 

 

 

 

8 :: Access Flex High Yield ProFund :: Management Discussion of Fund Performance (unaudited)

 

The Access Flex High Yield ProFund (the "Fund") seeks to provide investment results that correspond generally to the total return of the high yield market, consistent with maintaining reasonable liquidity. However, the Fund does not seek to match the daily returns of a specific benchmark. For the year ended July 31, 2022, the Fund (Investor Class shares) had a total return of -8.85%. For the same period, the Markit iBoxx $ Liquid High Yield Index, a widely used measure of high yield market performance, had a total return of -6.84%1. The total return for the 5-year U.S. Treasury Note was -8.15%2.

 

The Fund is designed to maintain exposure to the high yield market, regardless of market conditions. This means the Fund does not adopt defensive positions in anticipation of an adverse market climate. The Fund seeks to achieve its high yield exposure primarily through credit default swaps (CDS) and 5-year treasury exposure but may also invest in high yield debt instruments (commonly referred to as junk bonds), other debt, money market instruments, total return swap agreements and futures contracts.

 

During the year ended July 31, 2022, the Fund invested in credit default swap agreements and futures contracts as a substitute for investing directly in high yield bonds. These derivatives generally tracked the performance of their underlying benchmark and were negatively impacted by financing costs associated with their use. The Fund entered into credit default swap agreements that were centrally cleared. In a centrally cleared swap agreement, the clearing organization takes on the credit risk of all parties involved in the trade, and in effect, guarantees each party's obligations under the contract. As a result, each party involved in a centrally cleared contract only faces the clearing organization. There can be no assurance that the clearing organization, or its members, will satisfy its obligations to the Fund.

 

Value of a $10,000 Investment at Net Asset Value*

 

 

 

 

 

*The line graph represents the historical performance of a hypothetical investment of $10,000 in the Access Flex High Yield ProFund from July 31, 2012 to July 31, 2022, assuming the reinvestment of distributions.

 

Average Annual Total Return as of 07/31/22

 

Fund  One Year   Five Year   Ten Year 
Investor   -8.85%   0.71%   3.32%
Service   -9.77%   -0.29%   2.30%
Markit iBoxx $ Liquid High Yield Index   -6.84%   2.75%   4.21%

 

Expense Ratios**

 

Fund  Gross   Net 
Investor   1.97%   1.78%
Service   2.97%   2.78%

 

 

**Reflects the expense ratio as reported in the Prospectus dated November 30, 2021. Contractual fee waivers are in effect through November 30, 2022.

 

Allocation of Portfolio Holdings & Index Composition

 

Investment Type  % of Net Assets 
Credit Default Swap Agreements   88%
Futures Contracts   9%
U.S. Treasury Obligation   58%

 

"Market Exposure" includes the value of total investments (including the contract value of any derivatives) and excludes any instruments used for cash management.

 

Holdings

 

The Access Flex High Yield ProFund primarily invests in non-equity securities, which may include: credit default swap agreements, futures contracts, repurchase agreements, U.S. Government and money market securities.

 

Industry Exposure

 

   % of Market
Exposure (CDS)
 
Consumer Cyclical   28%
Consumer Non-Cyclical   16%
Communications   12%
Financial   11%
Energy   9%
Industrials   7%
Basic Materials   6%
Utilities   6%
Technology   5%

 

Past performance does not guarantee future results. Return calculations assume the reinvestment of distributions and do not reflect taxes that a shareholder would pay on Fund distributions or on the redemption of Fund shares. The performance data quoted represents past performance and current returns may be lower or higher. The investment return and net asset value will fluctuate so that an investor's shares, when redeemed, may be worth more or less than the original cost. The performance above reflects any fee reductions during the applicable periods. If such fee reductions had not occurred, the quoted performance would be lower. To obtain performance current to the most recent month-end, please visit www.ProFunds.com.

 

 

1The graph and table reflect the theoretical reinvestment of dividends on securities in the Index. The impact of transaction costs and the deduction of fees and expenses associated with a mutual fund, such as investment management and accounting fees, are not reflected in the Index calculations. The Fund's performance reflects the reinvestment of dividends as well as the impact of transaction costs and the deduction of fees and expenses. It is not possible to invest directly in an index.
  
2The 5-year U.S. Treasury Note reflects both price return and yield components. It does not reflect the impact of transaction and financing costs, nor the deduction of fees and expenses associated with a mutual fund, such as investment management and accounting fees.

 

Investments in high yield bonds or in investments linked to the high yield market are subject to greater volatility and greater credit risks than investing in U.S. Treasuries. U.S. Treasury instruments are guaranteed by the U.S. government as to the timely payment of principal and interest, if held to maturity. Both the principal and yield of a mutual fund will fluctuate with changes in market conditions.

 

The above information is not covered by the Report of the Independent Registered Public Accounting Firm.

 

 

 

 

Management Discussion of Fund Performance (unaudited) :: Banks UltraSector ProFund :: 9

 

Banks UltraSector ProFund (the “Fund”) seeks daily investment results, before fees and expenses, that correspond to one and one-half times (1.5x) the return of the Dow Jones U.S. BanksSM Index (the “Index”) for a single day, not for any other period. A “single day” is measured from the time the Fund calculates its net asset value (“NAV”) to the time of the Fund’s next NAV calculation. The return of the Fund for periods longer than a single day will be the result of its return for each day compounded over the period. The Fund’s returns for periods longer than a single day will very likely differ in amount, and possibly even direction, from the Fund’s stated multiple (1.5x) times the return of the Fund’s Index for the same period. For periods longer than a single day, the Fund will lose money if the Index’s performance is flat, and it is possible that the Fund will lose money even if the level of the Index rises. For the year ended July 31, 2022, the Fund (Investor Class shares) had a total return of -20.05%. For the same period, the Index had a total return of -10.79%1 and a volatility of 27.09%. For the year, the Fund achieved an average daily statistical correlation of over 0.99 to one and one-half times the daily performance of the Index.2

 

The Fund takes positions in financial instruments that, in combination, should have similar daily return characteristics as one and one-half times the daily return of the Index. The Index measures the performance of the banking sector of the U.S. equity market. Component companies include, among others, regional and major U.S. domiciled banks engaged in a wide range of financial services, including retail banking, loans, and money transmissions.

 

During the year ended July 31, 2022, the Fund invested in swap agreements as a substitute for investing directly in stocks in order to gain leveraged exposure to the Index. These derivatives generally tracked the performance of their underlying benchmark and were negatively impacted by financing costs associated with their use. The Fund entered into swap agreements with counterparties that the Fund’s advisor determined to be major, global financial institutions. If a counterparty becomes insolvent or otherwise fails to perform on its obligations, the value of investments in the Fund may decline. The Fund has sought to mitigate this risk by generally requiring counterparties to post collateral for the benefit of the Fund, marked to market daily, in an amount approximately equal to the amount the counterparty owed to the Fund, subject to certain minimum thresholds.

 

Value of a $10,000 Investment at Net Asset Value*

 

 

 

 

*The line graph represents the historical performance of a hypothetical investment of $10,000 in the Banks UltraSector ProFund from July 31, 2012 to July 31, 2022, assuming the reinvestment of distributions.

 

Average Annual Total Return as of 7/31/22

 

Fund  One Year   Five Year   Ten Year 
Investor   -20.05%   0.62%   12.23%
Service   -20.85%   -0.40%   11.12%
Dow Jones U.S. BanksSM Index   -10.79%   5.05%   11.85%
S&P 500®   -4.64%   12.83%   13.80%

 

Expense Ratios**

 

Fund  Gross   Net     
Investor   1.53%   1.53%    
Service   2.53%   2.53%     

 

 

**Reflects the expense ratio as reported in the Prospectus dated November 30, 2021. Contractual fee waivers are in effect through November 30, 2022. See Financial Highlights for effective expense ratios.

 

Allocation of Portfolio Holdings & Index Composition

 

Market Exposure

 

Investment Type  % of Net Assets 
Equity Securities   81%
Swap Agreements   68%
Total Exposure   149%

 

“Market Exposure” includes the value of total investments (including the contract value of any derivatives) and excludes any instruments used for cash management.

 

Largest Equity Holdings

 

Company  % of Net Assets 
JPMorgan Chase & Co.   19.6%
Bank of America Corp.   13.9%
Wells Fargo & Co.   9.6%
Citigroup, Inc.   5.8%
The PNC Financial Services Group, Inc.   4.0%

 

Dow Jones U.S. BanksSM Index – Composition

 

   % of Index 
Diversified Banks   65%
Regional Banks   35%

 

Past performance does not guarantee future results. Return calculations assume the reinvestment of distributions and do not reflect taxes that a shareholder would pay on Fund distributions or on the redemption of Fund shares. The performance data quoted represents past performance and current returns may be lower or higher. The investment return and NAV will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than the original cost. The performance above reflects any fee reductions during the applicable periods. If such fee reductions had not occurred, the quoted performance would be lower. To obtain performance current to the most recent month-end, please visit www.ProFunds.com.

 

 

1The graph and table reflect the theoretical reinvestment of dividends on securities in the Indexes. The impact of transaction costs and the deduction of fees and expenses associated with a mutual fund, such as investment management and accounting fees, are not reflected in calculations of the indexes. The Fund’s performance reflects the reinvestment of dividends as well as the impact of transaction costs and the deduction of fees and expenses. It is not possible to invest directly in an index.

 

21.00 equals perfect correlation. This calculation is based on the daily total return of the Index and the performance of the daily total return of the NAV per share of the Fund.

 

3The S&P 500® is an unmanaged index that consists of the common stocks of 500 major U.S. corporations selected for their size and the frequency and ease with which their stocks trade.

 

The above information is not covered by the Report of the Independent Registered Public Accounting Firm.

 

 

 

 

10 :: Basic Materials UltraSector ProFund :: Management Discussion of Fund Performance (unaudited)

 

Basic Materials UltraSector ProFund (the “Fund”) seeks daily investment results, before fees and expenses, that correspond to one and one-half times (1.5x) the return of the Dow Jones U.S. Basic MaterialsSM Index (the “Index”) for a single day, not for any other period. A “single day” is measured from the time the Fund calculates its net asset value (“NAV”) to the time of the Fund’s next NAV calculation. The return of the Fund for periods longer than a single day will be the result of its return for each day compounded over the period. The Fund’s returns for periods longer than a single day will very likely differ in amount, and possibly even direction, from the Fund’s stated multiple (1.5x) times the return of the Fund’s Index for the same period. For periods longer than a single day, the Fund will lose money if the Index’s performance is flat, and it is possible that the Fund will lose money even if the level of the Index rises. For the year ended July 31, 2022, the Fund (Investor Class shares) had a total return of -9.03%. For the same period, the Index had a total return of -3.14%1 and a volatility of 22.94%. For the year, the Fund achieved an average daily statistical correlation of over 0.99 to one and one-half times the daily performance of the Index.2

 

The Fund takes positions in financial instruments that, in combination, should have similar daily return characteristics as one and one-half times the daily return of the Index. The Index measures the performance of the basic materials sector of the U.S. equity market. Component companies are involved in the production of aluminum, steel, non-ferrous metals, commodity chemicals, specialty chemicals, forest products, paper products, as well as the mining of precious metals and coal.

 

During the year ended July 31, 2022, the Fund invested in swap agreements as a substitute for investing directly in stocks in order to gain leveraged exposure to the Index. These derivatives generally tracked the performance of their underlying benchmark and were negatively impacted by financing costs associated with their use. The Fund entered into swap agreements with counterparties that the Fund’s advisor determined to be major, global financial institutions. If a counterparty becomes insolvent or otherwise fails to perform on its obligations, the value of investments in the Fund may decline. The Fund has sought to mitigate this risk by generally requiring counterparties to post collateral for the benefit of the Fund, marked to market daily, in an amount approximately equal to the amount the counterparty owed to the Fund, subject to certain minimum thresholds.

 

Value of a $10,000 Investment at Net Asset Value*

 

 

 

 

*The line graph represents the historical performance of a hypothetical investment of $10,000 in the Basic Materials UltraSector ProFund from July 31, 2012 to July 31, 2022, assuming the reinvestment of distributions.

 

Average Annual Total Return as of 7/31/22

 

Fund  One Year   Five Year   Ten Year 
Investor   -9.03%   7.77%   9.59%
Service   -9.91%   6.70%   8.51%
Dow Jones U.S. Basic MaterialsSM Index   -3.14%   8.88%   9.42%
S&P 500®   -4.64%   12.83%   13.80%

 

Expense Ratios**

 

Fund  Gross   Net     
Investor   1.82%   1.82%    
Service   2.82%   2.82%     

 

 

**Reflects the expense ratio as reported in the Prospectus dated November 30, 2021. Contractual fee waivers are in effect through November 30, 2022. See Financial Highlights for effective expense ratios.

 

Allocation of Portfolio Holdings & Index Composition

 

Market Exposure

 

Investment Type  % of Net Assets 
Equity Securities   78%
Swap Agreements   72%
Total Exposure   150%

 

“Market Exposure” includes the value of total investments (including the contract value of any derivatives) and excludes any instruments used for cash management or collateral for securities loaned.

 

Largest Equity Holdings

 

Company  % of Net Assets 
Linde PLC   14.7%
Air Products & Chemicals, Inc.   5.3%
Freeport-McMoRan, Inc.   4.4%
Corteva, Inc.   4.0%
Ecolab, Inc.   4.0%

 

Dow Jones U.S. Basic MaterialsSM Index – Composition

 

   % of Index 
Chemicals   77%
Metals & Mining   23%

 

Past performance does not guarantee future results. Return calculations assume the reinvestment of distributions and do not reflect taxes that a shareholder would pay on Fund distributions or on the redemption of Fund shares. The performance data quoted represents past performance and current returns may be lower or higher. The investment return and NAV will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than the original cost. The performance above reflects any fee reductions during the applicable periods. If such fee reductions had not occurred, the quoted performance would be lower. To obtain performance current to the most recent month-end, please visit www.ProFunds.com.

 

 

1The graph and table reflect the theoretical reinvestment of dividends on securities in the Indexes. The impact of transaction costs and the deduction of fees and expenses associated with a mutual fund, such as investment management and accounting fees, are not reflected in calculations of the indexes. The Fund’s performance reflects the reinvestment of dividends as well as the impact of transaction costs and the deduction of fees and expenses. It is not possible to invest directly in an index.

 

21.00 equals perfect correlation. This calculation is based on the daily total return of the Index and the performance of the daily total return of the NAV per share of the Fund.

 

3The S&P 500® is an unmanaged index that consists of the common stocks of 500 major U.S. corporations selected for their size and the frequency and ease with which their stocks trade.

 

The above information is not covered by the Report of the Independent Registered Public Accounting Firm.

 

 

 

 

Management Discussion of Fund Performance (unaudited) :: Bear ProFund :: 11

 

Bear ProFund (the “Fund”) seeks daily investment results, before fees and expenses, that correspond to the inverse (-1x) of the return of the S&P 500® (the “Index”) for a single day, not more than a not for any other period. A “single day” is measured from the time the Fund calculates its net asset value (“NAV”) to the time of the Fund’s next NAV calculation. The return of the Fund for periods longer than a single day will be the result of its return for each day compounded over the period. The Fund’s returns for periods longer than a single day will very likely differ in amount, and possibly even direction from the Fund’s stated multiple (-1x) times the return of the Fund’s Index for the same period. For periods longer than a single day, the Fund will lose money if the Index’s performance is flat, and it is possible that the Fund will lose money even if the level of the index falls. For the year ended July 31, 2022, the Fund (Investor Class shares) had a total return of 0.00%. For the same period, the Index had a total return of -4.64%1 and a volatility of 20.44%. For the year, the Fund achieved an average daily statistical correlation of over 0.99 to the inverse of the daily performance of the Index.2

 

The Fund takes positions in financial instruments that, in combination, should have similar daily return characteristics as the inverse of the daily return of the Index. The Index is a measure of large-cap U.S. stock market performance. It is a float-adjusted, market capitalization-weighted index of 500 U.S. operating companies and real estate investment trusts selected through a process that factors in criteria such as liquidity, price, market capitalization, and financial viability. Reconstitution occurs both on a quarterly and an ongoing basis.

 

During the year ended July 31, 2022, the Fund invested in swap agreements and futures contracts as a substitute for shorting stocks in order to gain inverse exposure to the Index. These derivatives generally tracked the performance of their underlying benchmark and benefitted from financing costs associated with their use. The Fund entered into swap agreements with counterparties that the Fund’s advisor determined to be major, global financial institutions. If a counterparty becomes insolvent or otherwise fails to perform on its obligations, the value of investments in the Fund may decline. The Fund has sought to mitigate this risk by generally requiring counterparties to post collateral for the benefit of the Fund, marked to market daily, in an amount approximately equal to the amount the counterparty owed to the Fund, subject to certain minimum thresholds.

 

Value of a $10,000 Investment at Net Asset Value*

 

 

 

 

*The line graph represents the historical performance of a hypothetical investment of $10,000 in the Bear ProFund from July 31, 2012 to July 31, 2022, assuming the reinvestment of distributions.

 

Average Annual Total Return as of 7/31/22

 

Fund  One Year   Five Year   Ten Year 
Investor   0.00%   -14.65%   -14.94%
Service   -0.96%   -15.50%   -15.79%
S&P 500®   -4.64%   12.83%   13.80%

 

Expense Ratios**

 

Fund  Gross   Net     
Investor   1.74%   1.74%    
Service   2.74%   2.74%     

 

 

**Reflects the expense ratio as reported in the Prospectus dated November 30, 2021. Contractual fee waivers are in effect through November 30, 2022. See Financial Highlights for effective expense ratios.

 

Allocation of Portfolio Holdings & Index Composition

 

Market Exposure

 

Investment Type  % of Net Assets 
Futures Contracts   (15)%
Swap Agreements   (85)%
Total Exposure   (100)%

 

“Market Exposure” includes the value of total investments (including the contract value of any derivatives) and excludes any instruments used for cash management.

 

Holdings

 

The Bear ProFund primarily invests in non-equity securities, which may include: swap agreements, futures contracts, options, forward contracts, repurchase agreements and U.S. Government securities.

 

S&P 500® – Composition

 

   % of Index 
Information Technology   28%
Health Care   14%
Consumer Discretionary   11%
Financials   11%
Communication Services   8%
Industrials   8%
Consumer Staples   7%
Energy   4%
Utilities   3%
Real Estate   3%
Materials   3%

 

Past performance does not guarantee future results. Return calculations assume the reinvestment of distributions and do not reflect taxes that a shareholder would pay on Fund distributions or on the redemption of Fund shares. The performance data quoted represents past performance and current returns may be lower or higher. The investment return and NAV will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than the original cost. The performance above reflects any fee reductions during the applicable periods. If such fee reductions had not occurred, the quoted performance would be lower. To obtain performance current to the most recent month-end, please visit www.ProFunds.com.

 

 

1The graph and table reflect the theoretical reinvestment of dividends on securities in the Index. The impact of transaction costs and the deduction of fees and expenses associated with a mutual fund, such as investment management and accounting fees, are not reflected in the index calculations. The Fund’s performance reflects the reinvestment of dividends as well as the impact of transaction costs and the deduction of fees and expenses. It is not possible to invest directly in an index.

 

21.00 equals perfect correlation. This calculation is based on the daily total return of the Index and the performance of the daily total return of the NAV per share of the Fund.

 

The above information is not covered by the Report of the Independent Registered Public Accounting Firm.

 

 

 

 

12 :: Biotechnology UltraSector ProFund :: Management Discussion of Fund Performance (unaudited)

 

Biotechnology UltraSector ProFund (the “Fund”) seeks daily investment results, before fees and expenses, that correspond to one and one-half times (1.5x) the return of the Dow Jones U.S. BiotechnologySM Index (the “Index”) for a single day, not for any other period. A “single day” is measured from the time the Fund calculates its net asset value (“NAV”) to the time of the Fund’s next NAV calculation. The return of the Fund for periods longer than a single day will be the result of its return for each day compounded over the period. The Fund’s return for periods longer than a single day will very likely differ in amount, and possibly even direction, from the Fund’s stated multiple (1.5x) times the return of the Fund’s Index for the same period. For periods longer than a single day, the Fund will lose money if the Index’s performance is flat, and it is possible that the Fund will lose money even if the level of the Index rises. For the year ended July 31, 2022, the Fund (Investor Class shares) had a total return of -20.96%. For the same period, the Index had a total return of -12.34%1 and a volatility of 20.88%. For the year, the Fund achieved an average daily statistical correlation of over 0.99 to one and one-half times the daily performance of the Index.2

 

The Fund takes positions in financial instruments that, in combination, should have similar daily return characteristics as one and one-half times the daily return of the Index. The Index measures the performance of the biotechnology sector of the U.S. equity market. Component companies engage in the research and development of biological substances for drug discovery and diagnostic development. These companies derive most of their revenue from the sale or licensing of drugs and diagnostic tools.

 

During the year ended July 31, 2022, the Fund invested in swap agreements as a substitute for investing directly in stocks in order to gain leveraged exposure to the Index. These derivatives generally tracked the performance of their underlying benchmark and were negatively impacted by financing costs associated with their use. The Fund entered into swap agreements with counterparties that the Fund’s advisor determined to be major, global financial institutions. If a counterparty becomes insolvent or otherwise fails to perform on its obligations, the value of investments in the Fund may decline. The Fund has sought to mitigate this risk by generally requiring counterparties to post collateral for the benefit of the Fund, marked to market daily, in an amount approximately equal to the amount the counterparty owed to the Fund, subject to certain minimum thresholds.

 

Value of a $10,000 Investment at Net Asset Value*

 

 

 

 

*The line graph represents the historical performance of a hypothetical investment of $10,000 in the Biotechnology UltraSector ProFund from July 31, 2012 to July 31, 2022, assuming the reinvestment of distributions.

 

Average Annual Total Return as of 7/31/22

 

Fund  One Year   Five Year   Ten Year 
Investor   -20.96%   6.61%   17.32%
Service   -21.75%   5.56%   16.16%
Dow Jones U.S. BiotechnologySM Index   -12.34%   7.50%   14.42%
S&P 500®   -4.64%   12.83%   13.80%

 

Expense Ratios**

 

Fund  Gross   Net     
Investor   1.55%   1.55%    
Service   2.55%   2.55%     

 

 

**Reflects the expense ratio as reported in the Prospectus dated November 30, 2022. Contractual fee waivers are in effect through November 30, 2022. See Financial Highlights for effective expense ratios.

 

Allocation of Portfolio Holdings & Index Composition

 

Market Exposure

 

Investment Type  % of Net Assets 
Equity Securities   76%
Swap Agreements   74%
Total Exposure   150%

 

“Market Exposure” includes the value of total investments (including the contract value of any derivatives) and excludes any instruments used for cash management or collateral for securities loaned.

 

Largest Equity Holdings

 

Company  % of Net Assets 
AbbVie, Inc.   14.4%
Danaher Corp.   10.7%
Amgen, Inc.   7.5%
Gilead Sciences, Inc.   4.2%
Vertex Pharmaceuticals, Inc.   4.1%

 

Dow Jones U.S. BiotechnologySM Index – Composition

 

   % of Index 
Biotechnology   67%
Life Sciences Tools & Services   33%

 

Past performance does not guarantee future results. Return calculations assume the reinvestment of distributions and do not reflect taxes that a shareholder would pay on Fund distributions or on the redemption of Fund shares. The performance data quoted represents past performance and current returns may be lower or higher. The investment return and NAV will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than the original cost. The performance above reflects any fee reductions during the applicable periods. If such fee reductions had not occurred, the quoted performance would be lower. To obtain performance current to the most recent month-end, please visit www.ProFunds.com.

 

 

1The graph and table reflect the theoretical reinvestment of dividends on securities in the Indexes. The impact of transaction costs and the deduction of fees and expenses associated with a mutual fund, such as investment management and accounting fees, are not reflected in calculations of the indexes. The Fund’s performance reflects the reinvestment of dividends as well as the impact of transaction costs and the deduction of fees and expenses. It is not possible to invest directly in an index.

 

21.00 equals perfect correlation. This calculation is based on the daily total return of the Index and the performance of the daily total return of the NAV per share of the Fund.

 

3The S&P 500® is an unmanaged index that consists of the common stocks of 500 major U.S. corporations selected for their size and the frequency and ease with which their stocks trade.

 

The above information is not covered by the Report of the Independent Registered Public Accounting Firm.

 

 

 

  

Management Discussion of Fund Performance (unaudited) :: Bitcoin Strategy ProFund :: 13

 

Bitcoin Strategy ProFund (the “Fund”) seeks to provide capital appreciation by investing all or substantially all of its assets through managed exposure to bitcoin futures contracts. The Fund does not invest directly in bitcoin. The Fund does not seek to match the daily returns of any specific benchmark. For the year ended July 31, 2022, the Fund (Investor Class shares) had a total return of -43.36%. For the same period, the Bloomberg Galaxy Bitcoin Index1,2 had a total return of -40.12%.3

 

The Fund will not invest directly in Bitcoin Futures Contracts. The Fund expects to gain exposure to these instruments by investing a portion of its assets in the ProFunds Bitcoin Strategy Portfolio, a wholly-owned subsidiary of the Fund organized under the laws of the Cayman Islands (the “Subsidiary”). The Subsidiary is advised by the Fund’s Advisor. Unlike the Fund, the Subsidiary is not an investment company registered under the Investment Company Act of 1940. The Fund’s investment in the Subsidiary is intended to provide the Fund with exposure to commodity markets in accordance with applicable rules and regulations. The Subsidiary has the same investment objective as the Fund.

 

During the year ended July 31, 2022, the Fund, through its investment in Subsidiary, invested in CME Bitcoin futures and CME Micro Bitcoin futures contracts.

 

Value of a $10,000 Investment at Net Asset Value*

 

 

 

 

*The line graph represents the historical performance of a hypothetical investment of $10,000 in the Bitcoin Strategy ProFund from July 28, 2021 to July 31, 2022, assuming the reinvestment of distributions.

 

Average Annual Total Return as of 7/31/22

 

Fund  One Year   Since Inception 
Investor   -43.36%   -43.77%
Bloomberg Galaxy Bitcoin Index   -40.12%   -40.33%
CF Bitcoin-Dollar US Settlement Price Index   -39.65%   -41.01%

 

Expense Ratios**

 

Fund  Gross   Net     
Investor   1.46%   1.15%    

 

 

**Reflects the expense ratio as reported in the Prospectus dated November 30, 2021. Contractual fee waivers are in effect through November 30, 2022. See Financial Highlights for effective expense ratios.

 

Allocation of Portfolio Holdings

 

Market Exposure

 

Investment Type  % of Net Assets 
Futures Contracts   100%
Total Exposure   100%

 

“Market Exposure” includes the value of total investments (including the contract value of any derivatives) and excludes any instruments used for cash management.

 

Holdings

 

The Bitcoin Strategy ProFund primarily invests in non-equity securities, which may include: futures contracts, Canadian Exchange Traded Funds, repurchase agreements and reverse repurchase agreements, and U.S. Government securities

 

Past performance does not guarantee future results. Return calculations assume the reinvestment of distributions and do not reflect taxes that a shareholder would pay on Fund distributions or on the redemption of Fund shares. The performance data quoted represents past performance and current returns may be lower or higher. The investment return and net asset value (“NAV”) will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than the original cost. The performance above reflects any fee reductions during the applicable periods. If such fee reductions had not occurred, the quoted performance would be lower. To obtain performance current to the most recent month-end, please visit www.ProFunds.com.

 

 

1In April 2022, the Advisor changed the primary benchmark for the Bitcoin Strategy ProFund from the CF Bitcoin-Dollar US Settlement Price Index to the Bloomberg Galaxy Bitcoin Index. The Advisor determined that, by changing primary benchmarks, comparable index performance could be obtained while also providing cost-savings to the shareholders of the Fund.

 

2The Bloomberg Galaxy Bitcoin Index (the “Index”) is designed to measure the performance of a single Bitcoin traded in US Dollar (USD) terms. The Index seeks to provide a proxy for the bitcoin market. Pricing sources are selected for liquidity and reliability, and approved for use following risk and suitability assessments. Crytpocurrencies must meet minimum thresholds for daily traded USD-value. The Index is intended to be responsive to the changing nature of the market in a manner that does not completely reshape the character of the Index from year to year.

 

3The impact of transaction costs and the deduction of fees and expenses associated with a mutual fund, such as investment management and accounting fees, are not reflected in calculation of the index. The Fund’s performance reflects the reinvestment of dividends as well as the impact of transaction costs and the deduction of fees and expenses. It is not possible to invest directly in an index.

 

4The CF Bitcoin-Dollar US Settlement Price Index is a once a day benchmark index price for Bitcoin that aggregates trade data from multiple Bitcoin-USD markets operated by major cryptocurrency exchanges that conform to the CD Constituent Exchange Criteria. It is a pre-eminent index price for Bitcoin risk settlement that is synchronized to the traditional US financial market close of 4pm EST. The Index is a Registered Benchmark under UK Benchmarks Regulation “BMR” and as such enjoys equivalence with the EU BMR Regime.

 

The above information is not covered by the Report of the Independent Registered Public Accounting Firm.

 

 

 

 

14 :: Bull ProFund :: Management Discussion of Fund Performance (unaudited)

 

Bull ProFund (the “Fund”) seeks investment results, before fees and expenses, that correspond to the return of the S&P 500® (the “Index”). For the year ended July 31, 2022, the Fund (Investor Class shares) had a total return of -6.39%. For the same period, the Index had a total return of -4.64%1 and a volatility of 20.44%. For the year, the Fund achieved an average daily statistical correlation of over 0.99 to the daily performance of the Index.2

 

The Fund takes positions in financial instruments that, in combination, should have similar return characteristics as the return of the Index. The Index is a measure of large-cap U.S. stock market performance. It is a float-adjusted, market capitalization-weighted index of 500 U.S. operating companies and real estate investment trusts selected through a process that factors in criteria such as liquidity, price, market capitalization, and financial viability. Reconstitution occurs both on a quarterly and an ongoing basis.

 

During the year ended July 31, 2022, the Fund invested in swap agreements and futures contracts as a substitute for investing directly in stocks in order to gain exposure to the Index. These derivatives generally tracked the performance of their underlying benchmark and were negatively impacted by financing costs associated with their use. The Fund entered into swap agreements with counterparties that the Fund’s advisor determined to be major, global financial institutions. If a counterparty becomes insolvent or otherwise fails to perform on its obligations, the value of investments in the Fund may decline. The Fund has sought to mitigate this risk by generally requiring counterparties to post collateral for the benefit of the Fund, marked to market daily, in an amount approximately equal to the amount the counterparty owed to the Fund, subject to certain minimum thresholds.

 

Value of a $10,000 Investment at Net Asset Value*

 

 

 

 

*The line graph represents the historical performance of a hypothetical investment of $10,000 in the Bull ProFund from July 31, 2012 to July 31, 2022, assuming the reinvestment of distributions.

 

Average Annual Total Return as of 7/31/22

 

Fund  One Year   Five Year   Ten Year 
Investor   -6.39%   10.74%   11.66%
Service   -7.32%   9.64%   10.55%
S&P 500®   -4.64%   12.83%   13.80%

 

Expense Ratios**

 

Fund  Gross   Net     
Investor   1.55%   1.55%    
Service   2.55%   2.55%     

 

 

**Reflects the expense ratio as reported in the Prospectus dated November 30, 2021. Contractual fee waivers are in effect through November 30, 2022. See Financial Highlights for effective expense ratios.

 

Allocation of Portfolio Holdings & Index Composition

 

Market Exposure

 

Investment Type  % of Net Assets 
Equity Securities   73%
Futures Contracts   4%
Swap Agreements   23%
Total Exposure   100%

 

“Market Exposure” includes the value of total investments (including the contract value of any derivatives) and excludes any instruments used for cash management.

 

Largest Equity Holdings

 

Company  % of Net Assets 
Apple, Inc.   5.2%
Microsoft Corp.   4.4%
Alphabet, Inc.   2.8%
Amazon.com, Inc.   2.5%
Tesla, Inc.   1.6%

 

S&P 500® – Composition

 

   % of Index 
Information Technology   28%
Health Care   14%
Consumer Discretionary   11%
Financials   11%
Communication Services   8%
Industrials   8%
Consumer Staples   7%
Energy   4%
Utilities   3%
Real Estate   3%
Materials   3%

 

Past performance does not guarantee future results. Return calculations assume the reinvestment of distributions and do not reflect taxes that a shareholder would pay on Fund distributions or on the redemption of Fund shares. The performance data quoted represents past performance and current returns may be lower or higher. The investment return and net asset value (“NAV”) will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than the original cost. The performance above reflects any fee reductions during the applicable periods. If such fee reductions had not occurred, the quoted performance would be lower. To obtain performance current to the most recent month-end, please visit www.ProFunds.com.

 

 

1The graph and table reflect the theoretical reinvestment of dividends on securities in the Index. The impact of transaction costs and the deduction of fees and expenses associated with a mutual fund, such as investment management and accounting fees, are not reflected in the index calculations. The Fund’s performance reflects the reinvestment of dividends as well as the impact of transaction costs and the deduction of fees and expenses. It is not possible to invest directly in an index.

 

21.00 equals perfect correlation. This calculation is based on the daily total return of the Index and the performance of the daily total return of the NAV per share of the Fund.

 

The above information is not covered by the Report of the Independent Registered Public Accounting Firm.

 

 

 

 

Management Discussion of Fund Performance (unaudited) :: Communication Services UltraSector ProFund :: 15

 

Communication Services UltraSector ProFund (the “Fund”) seeks daily investment results, before fees and expenses, that correspond to one and one-half times (1.5x) the return of the S&P Communication Services Select Sector® Index (the “Index”) for a single day, not for any other period. A “single day” is measured from the time the Fund calculates its net asset value (“NAV”) to the time of the Fund’s next NAV calculation. The return of the Fund for periods longer than a single day will be the result of its return for each day compounded over the period. The Fund’s return for periods longer than a single day will very likely differ in amount, and possibly even direction, from the Fund’s stated multiple (1.5x) times the return of the Fund’s Index for the same period. For periods longer than a single day, the Fund will lose money if the Index’s performance is flat, and it is possible that the Fund will lose money even if the level of the Index rises. For the year ended July 31, 2022, the Fund (Investor Class shares) had a total return of -45.54%. For the same period, the Index had a total return of -30.96%1 and a volatility of 25.96%. For the year, the Fund achieved an average daily statistical correlation of over 0.99 to one and one-half times the daily performance of the Index.2

 

The Fund takes positions in financial instruments that, in combination, should have similar daily return characteristics as one and one-half times the daily return of the Index. The Index measures the performance of the communication services industry group of the S&P 500®. The Index includes equity securities of companies from the following industries: diversified telecommunications services; wireless telecommunications services; media; entertainment; and interactive media & services.

 

During the year ended July 31, 2022, the Fund invested in swap agreements as a substitute for investing directly in stocks in order to gain leveraged exposure to the Index. These derivatives generally tracked the performance of their underlying benchmark and were negatively impacted by financing costs associated with their use. The Fund entered into swap agreements with counterparties that the Fund’s advisor determined to be major, global financial institutions. If a counterparty becomes insolvent or otherwise fails to perform on its obligations, the value of investments in the Fund may decline. The Fund has sought to mitigate this risk by generally requiring counterparties to post collateral for the benefit of the Fund, marked to market daily, in an amount approximately equal to the amount the counterparty owed to the Fund, subject to certain minimum thresholds.

 

Value of a $10,000 Investment at Net Asset Value*

 

 

 

 

*The line graph represents the historical performance of a hypothetical investment of $10,000 in the Communication Services UltraSector ProFund from July 31, 2012 to July 31, 2022, assuming the reinvestment of distributions.

 

Average Annual Total Return as of 7/31/22

 

Fund  One Year   Five Year   Ten Year 
Investor   -45.54%   6.02%   12.72%
Service   -46.09%   4.97%   11.59%
S&P Communication Services Select Sector® Index   -30.96%   6.17%   12.45%
S&P 500®   -4.64%   12.83%   13.80%

 

Expense Ratios**

 

Fund  Gross   Net     
Investor   1.91%   1.78%    
Service   2.91%   2.78%     

 

 

**Reflects the expense ratio as reported in the Prospectus dated November 30, 2021. Contractual fee waivers are in effect through November 30, 2022. See Financial Highlights for effective expense ratios.

 

Allocation of Portfolio Holdings & Index Composition

 

Market Exposure

 

Investment Type  % of Net Assets 
Equity Securities   77%
Swap Agreements   73%
Total Exposure   150%

 

“Market Exposure” includes the value of total investments (including the contract value of any derivatives) and excludes any instruments used for cash management.

 

Largest Equity Holdings

 

Company  % of Net Assets 
Alphabet, Inc.   18.6%
Meta Platforms, Inc.   13.2%
Netflix, Inc.   4.2%
T-Mobile U.S., Inc.   3.8%
The Walt Disney Co.   3.7%

 

S&P Communication Services Select Sector® Index – Composition

 

   % of Index 
Media & Entertainment   86%
Telecommunication Services   14%

 

Past performance does not guarantee future results. Return calculations assume the reinvestment of distributions and do not reflect taxes that a shareholder would pay on Fund distributions or on the redemption of Fund shares. The performance data quoted represents past performance and current returns may be lower or higher. The investment return and NAV will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than the original cost. The performance above reflects any fee reductions during the applicable periods. If such fee reductions had not occurred, the quoted performance would be lower. To obtain performance current to the most recent month-end, please visit www.ProFunds.com.

 

 

1The graph and table reflect the theoretical reinvestment of dividends on securities in the Indexes. The impact of transaction costs and the deduction of fees and expenses associated with a mutual fund, such as investment management and accounting fees, are not reflected in calculations of the indexes. The Fund’s performance reflects the reinvestment of dividends as well as the impact of transaction costs and the deduction of fees and expenses. It is not possible to invest directly in an index.

 

21.00 equals perfect correlation. This calculation is based on the daily total return of the Index and the performance of the daily total return of the NAV per share of the Fund.

 

3The S&P 500® is an unmanaged index that consists of the common stocks of 500 major U.S. corporations selected for their size and the frequency and ease with which their stocks trade.

 

The above information is not covered by the Report of the Independent Registered Public Accounting Firm.

 

 

 

 

16 :: Consumer Goods UltraSector ProFund :: Management Discussion of Fund Performance (unaudited)

 

Consumer Goods UltraSector ProFund (the “Fund”) seeks daily investment results, before fees and expenses, that correspond to one and one-half times (1.5x) the return of the Dow Jones U.S. Consumer GoodsSM Index (the “Index”) for a single day, not for any other period. A “single day” is measured from the time the Fund calculates its net asset value (“NAV”) to the time of the Fund’s next NAV calculation. The return of the Fund for periods longer than a single day will be the result of its return for each day compounded over the period. The Fund’s return for periods longer than a single day will very likely differ in amount, and possibly even direction, from the Fund’s stated multiple (1.5x) times the return of the Fund’s Index for the same period. For periods longer than a single day, the Fund will lose money if the Index’s performance is flat, and it is possible that the Fund will lose money even if the level of the Index rises. For the year ended July 31, 2022, the Fund (Investor Class shares) had a total return of -5.34%. For the same period, the Index had a total return of -0.84%1 and a volatility of 22.10%. For the year, the Fund achieved an average daily statistical correlation of over 0.99 to one and one-half times the daily performance of the Index.3

 

The Fund takes positions in financial instruments that, in combination, should have similar daily return characteristics as one and one-half times the daily return of the Index. The Index measures the performance of consumer goods sector of the U.S. equity market. Component companies include, among others, automobiles and auto parts and tires, brewers and distillers, farming and fishing, durable and non-durable household product manufacturers, cosmetic companies, food and tobacco products, clothing accessories, and footwear.

 

During the year ended July 31, 2022, the Fund invested in swap agreements as a substitute for investing directly in stocks in order to gain leveraged exposure to the Index. These derivatives generally tracked the performance of their underlying benchmark and were negatively impacted by financing costs associated with their use. The Fund entered into swap agreements with counterparties that the Fund’s advisor determined to be major, global financial institutions. If a counterparty becomes insolvent or otherwise fails to perform on its obligations, the value of investments in the Fund may decline. The Fund has sought to mitigate this risk by generally requiring counterparties to post collateral for the benefit of the Fund, marked to market daily, in an amount approximately equal to the amount the counterparty owed to the Fund, subject to certain minimum thresholds.

 

Value of a $10,000 Investment at Net Asset Value*

 

 

 

 

*The line graph represents the historical performance of a hypothetical investment of $10,000 in the Consumer Goods UltraSector ProFund from July 31, 2012 to July 31, 2022, assuming the reinvestment of distributions.

 

Average Annual Total Return as of 7/31/22

 

Fund  One Year   Five Year   Ten Year 
Investor   -5.34%   11.73%   14.64%
Service   -6.25%   10.63%   13.51%
Dow Jones U.S. Consumer GoodsSM Index   -0.84%   10.86%   12.23%
S&P 500®   -4.64%   12.83%   13.80%

 

Expense Ratios**

 

Fund  Gross   Net     
Investor   1.88%   1.78%    
Service   2.88%   2.78%     

 

 

**Reflects the expense ratio as reported in the Prospectus dated November 30, 2021. Contractual fee waivers are in effect through November 30, 2022. See Financial Highlights for effective expense ratios.

 

Allocation of Portfolio Holdings & Index Composition

 

Market Exposure

 

Investment Type  % of Net Assets 
Equity Securities   75%
Swap Agreements   75%
Total Exposure   150%

 

“Market Exposure” includes the value of total investments (including the contract value of any derivatives) and excludes any instruments used for cash management or collateral for securities loaned.

 

Largest Equity Holdings

 

Company  % of Net Assets 
Tesla, Inc.   16.5%
The Procter & Gamble Co.   7.3%
The Coca-Cola Co.   5.5%
PepsiCo, Inc.   5.3%
Philip Morris International, Inc.   3.3%

 

Dow Jones U.S. Consumer GoodsSM Index – Composition

 

   % of Index 
Food, Beverage & Tobacco   39%
Automobiles & Components   28%
Household & Personal Products   16%
Consumer Durables & Apparel   12%
Media & Entertainment   4%
Retailing   1%

 

Past performance does not guarantee future results. Return calculations assume the reinvestment of distributions and do not reflect taxes that a shareholder would pay on Fund distributions or on the redemption of Fund shares. The performance data quoted represents past performance and current returns may be lower or higher. The investment return and NAV will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than the original cost. The performance above reflects any fee reductions during the applicable periods. If such fee reductions had not occurred, the quoted performance would be lower. To obtain performance current to the most recent month-end, please visit www.ProFunds.com.

 

 

1The graph and table reflect the theoretical reinvestment of dividends on securities in the indexes. The impact of transaction costs and the deduction of fees and expenses associated with a mutual fund, such as investment management and accounting fees, are not reflected in calculations of the indexes. The Fund’s performance reflects the reinvestment of dividends as well as the impact of transaction costs and the deduction of fees and expenses. It is not possible to invest directly in an index.

 

21.00 equals perfect correlation. This calculation is based on the daily total return of the Index and the performance of the daily total return of the NAV per share of the Fund.

 

3The S&P 500® is an unmanaged index that consists of the common stocks of 500 major U.S. corporations selected for their size and the frequency and ease with which their stocks trade.

 

The above information is not covered by the Report of the Independent Registered Public Accounting Firm.

 

 

 

 

Management Discussion of Fund Performance (unaudited) :: Consumer Services UltraSector ProFund :: 17

 

Consumer Services UltraSector ProFund (the “Fund”) seeks daily investment results, before fees and expenses, that correspond to one and one-half times (1.5x) the return of the Dow Jones U.S. Consumer ServicesSM Index (the “Index”) for a single day, not for any other period. A “single day” is measured from the time the Fund calculates its net asset value (“NAV”) to the time of the Fund’s next NAV calculation. The return of the Fund for periods longer than a single day will be the result of its return for each day compounded over the period. The Fund’s return for periods longer than a single day will very likely differ in amount, and possibly even direction, from the Fund’s stated multiple (1.5x) times the return of the Fund’s Index for the same period. For periods longer than a single day, the Fund will lose money if the Index’s performance is flat, and it is possible that the Fund will lose money even if the level of the Index rises. For the year ended July 31, 2022, the Fund (Investor Class shares) had a total return of -31.68%. For the same period, the Index had a total return of -20.04%1 and a volatility of 25.70%. For the year, the Fund achieved an average daily statistical correlation of over 0.99 to one and one-half times the daily performance of the Index.3

 

The Fund takes positions in financial instruments that, in combination, should have similar daily return characteristics as one and one-half times the daily return of the Index. The Index measures the performance of consumer services sector of the U.S. equity market. Component companies include, among others, airlines, broadcasting and entertainment, apparel and broadline retailers, food and drug retailers, media agencies, publishing, gambling, hotels, restaurants and bars, and travel and tourism.

 

During the year ended July 31, 2022, the Fund invested in swap agreements as a substitute for investing directly in stocks in order to gain leveraged exposure to the Index. These derivatives generally tracked the performance of their underlying benchmark and were negatively impacted by financing costs associated with their use. The Fund entered into swap agreements with counterparties that the Fund’s advisor determined to be major, global financial institutions. If a counterparty becomes insolvent or otherwise fails to perform on its obligations, the value of investments in the Fund may decline. The Fund has sought to mitigate this risk by generally requiring counterparties to post collateral for the benefit of the Fund, marked to market daily, in an amount approximately equal to the amount the counterparty owed to the Fund, subject to certain minimum thresholds.

 

Value of a $10,000 Investment at Net Asset Value*

 

 

 

 

*The line graph represents the historical performance of a hypothetical investment of $10,000 in the Consumer Services UltraSector ProFund from July 31, 2012 to July 31, 2022, assuming the reinvestment of distributions.

 

Average Annual Total Return as of 7/31/22

 

Fund  One Year   Five Year   Ten Year 
Investor   -31.68%   10.02%   16.48%
Service   -32.37%   8.92%   15.32%
Dow Jones U.S. Consumer ServicesSM Index   -20.04%   9.63%   13.34%
S&P 500®   -4.64%   12.83%   13.80%

 

Expense Ratios**

 

Fund  Gross   Net     
Investor   1.56%   1.56%    
Service   2.56%   2.56%     

 

 

**Reflects the expense ratio as reported in the Prospectus dated November 30, 2021. Contractual fee waivers are in effect through November 30, 2022. See Financial Highlights for effective expense ratios.

 

Allocation of Portfolio Holdings & Index Composition

 

Market Exposure

 

Investment Type  % of Net Assets 
Equity Securities   78%
Swap Agreements   73%
Total Exposure   151%

 

“Market Exposure” includes the value of total investments (including the contract value of any derivatives) and excludes any instruments used for cash management or collateral for securities loaned.

 

Largest Equity Holdings

 

Company  % of Net Assets 
Amazon.com, Inc.   20.4%
The Home Depot, Inc.   5.4%
Costco Wholesale Corp.   4.1%
McDonald’s Corp.   3.4%
The Walt Disney Co.   3.3%

 

Dow Jones U.S. Consumer ServicesSM Index – Composition

 

   % of Index 
Retailing   48%
Consumer Services   18%
Media & Entertainment   17%
Food & Staples Retailing   12%
Transportation   3%
Commercial & Professional Services   1%
Health Care Equipment & Services   1%

 

Past performance does not guarantee future results. Return calculations assume the reinvestment of distributions and do not reflect taxes that a shareholder would pay on Fund distributions or on the redemption of Fund shares. The performance data quoted represents past performance and current returns may be lower or higher. The investment return and NAV will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than the original cost. The performance above reflects any fee reductions during the applicable periods. If such fee reductions had not occurred, the quoted performance would be lower. To obtain performance current to the most recent month-end, please visit www.ProFunds.com.

 

 

1The graph and table reflect the theoretical reinvestment of dividends on securities in the index. The impact of transaction costs and the deduction of fees and expenses associated with a mutual fund, such as investment management and accounting fees, are not reflected in the calculations of the indexes. The Fund’s performance reflects the reinvestment of dividends as well as the impact of transaction costs and the deduction of fees and expenses. It is not possible to invest directly in an index.

 

21.00 equals perfect correlation. This calculation is based on the daily total return of the Index and the performance of the daily total return of the NAV per share of the Fund.

 

3The S&P 500® is an unmanaged index that consists of the common stocks of 500 major U.S. corporations selected for their size and the frequency and ease with which their stocks trade.

 

The above information is not covered by the Report of the Independent Registered Public Accounting Firm.

 

 

 

 

18 :: Europe 30 ProFund :: Management Discussion of Fund Performance (unaudited)

 

Europe 30 ProFund (the “Fund”) seeks investment results, before fees and expenses, that correspond to the return of the ProFunds Europe 30® Index (the “Index”). For the year ended July 31, 2022, the Fund (Investor Class shares) had a total return of -6.25%. For the same period, the Index had a price return of -7.19%1 and a volatility of 20.66%. For the year, the Fund achieved an average daily statistical correlation of over 0.99 to the daily performance of the Index.2

 

The Fund takes positions in financial instruments that, in combination, should have similar return characteristics as the return of the Index. The Index, created by ProFund Advisors, is composed of companies whose principal offices are located in Europe and whose securities are traded on U.S. exchanges or on Nasdaq as depositary receipts or ordinary shares and meet certain liquidity requirements. The component companies included in the Index are the 30 most liquid companies based upon their U.S. dollar-traded volume. Their relative weights are determined using a modified market capitalization method. The Index is reconstituted annually. The Index is expressed in U.S. dollar terms and as such should generally reflect the relative movement of the U.S. dollar against the basket of foreign currencies represented by the constituent companies in the Index.

 

Value of a $10,000 Investment at Net Asset Value*

 

 

 

 

*The line graph represents the historical performance of a hypothetical investment of $10,000 in the Europe 30 ProFund from July 31, 2012 to July 31, 2022, assuming the reinvestment of distributions.

 

Average Annual Total Return as of 7/31/22

 

Fund  One Year   Five Year   Ten Year 
Investor   -6.25%   1.76%   4.46%
Service   -7.11%   0.72%   3.41%
ProFunds Europe 30® Index   -7.19%   0.26%   2.85%
STOXX Europe 50® Index   -9.01%   3.53%   5.26%

 

Expense Ratios**

 

Fund  Gross   Net     
Investor   2.15%   1.78%    
Service   3.15%   2.78%     

 

 

**Reflects the expense ratio as reported in the Prospectus dated November 30, 2021. Contractual fee waivers are in effect through November 30, 2022. See Financial Highlights for effective expense ratios.

 

Allocation of Portfolio Holdings & Index Composition

 

Market Exposure

 

Investment Type  % of Net Assets 
Equity Securities   100%
Total Exposure   100%

 

“Market Exposure” includes the value of total investments (including the contract value of any derivatives) and excludes any instruments used for cash management or collateral for securities loaned.

 

Largest Equity Holdings

 

Company  % of Net Assets 
NOVO Nordisk A/S   5.0%
Argenx SE   4.9%
TotalEnergies SE   4.9%
Equinor ASA   4.7%
BP PLC   4.7%

 

ProFunds Europe 30® Index – Composition

 

Industry Breakdown  % of Index 
Energy   21%
Health Care   21%
Consumer Staples   14%
Information Technology   12%
Financials   10%
Materials   8%
Industrials   5%
Utilities   3%
Consumer Discretionary   3%
Communication Services   3%

 

Country Composition  
United Kingdom   47%
Netherlands   9%
France   8%
Germany   7%
Other   29%

 

Past performance does not guarantee future results. Return calculations assume the reinvestment of distributions and do not reflect taxes that a shareholder would pay on Fund distributions or on the redemption of Fund shares. The performance data quoted represents past performance and current returns may be lower or higher. The investment return and net asset value (“NAV”) will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than the original cost. The performance above reflects any fee reductions during the applicable periods. If such fee reductions had not occurred, the quoted performance would be lower. To obtain performance current to the most recent month-end, please visit www.ProFunds.com.

 

 

1The graph and table DO NOT reflect the theoretical reinvestment of dividends on securities in the Index nor the impact of transaction costs and the deduction of fees and expenses associated with a mutual fund, such as investment management and accounting fees. The Fund’s performance reflects the reinvestment of dividends as well as the impact of transaction costs and the deduction of fees and expenses. It is not possible to invest directly in an index.

 

21.00 equals perfect correlation. This calculation is based on the daily total return of the Index and the performance of the daily total return of the NAV per share of the Fund.

 

3The STOXX Europe 50® Index is a capitalization-weighted index of 50 European blue-chip stocks. The graph and table reflect the theoretical reinvestment of dividends in the Index. The impact of the transaction costs and the deduction of fees and expenses associated with a mutual fund, such as investment management and accounting fees, are not reflected in the Index calculations. It is not possible to invest directly in an index.

 

The above information is not covered by the Report of the Independent Registered Public Accounting Firm.

 

 

 

 

Management Discussion of Fund Performance (unaudited) :: Falling U.S. Dollar ProFund :: 19

 

Falling U.S. Dollar ProFund (the “Fund”) seeks daily investment results, before fees and expenses, that correspond to the return of the basket of non-U.S. currencies included in the U.S. Dollar Index (the “Index”). The Index measures the performance of the U.S. dollar against a basket of six major world currencies (the “Benchmark”). For the year ended July 31, 2022, the Fund (Investor Class shares) had a total return of -14.85%. For the same period, the Index had a price return of 14.89%1 and a volatility of 6.75%. For the year, the Fund achieved an average daily statistical correlation of over 0.99 to the inverse of the daily performance of the Index.2

 

The Fund takes positions in financial instruments that, in combination, should have similar daily return characteristics as the daily return of the Benchmark. The currencies and their weightings as of July 31, 2022 are: Euro 57%; Japanese yen 14%; British pound 12%; Canadian dollar 9%; Swedish krona 4% and Swiss franc 4%. The Fund is designed to benefit from a decline in the value of the U.S. Dollar against the value of the currencies included in the Benchmark. Accordingly, as the value of the U.S. Dollar depreciates (i.e., “falls”) versus the Benchmark, the performance of the Fund generally should be expected to increase. As the value of the U.S. Dollar appreciates versus the Benchmark, the performance of the Fund generally should be expected to decline. The Fund does not normally provide investment returns that match the inverse of the Index.

 

During the year ended July 31, 2022, the Fund invested in forward currency contracts to gain exposure to the Benchmark. These derivatives generally tracked the performance of their underlying benchmark. The Fund entered into forward currency contracts with counterparties that the Fund’s advisor determined to be major, global financial institutions. If a counterparty becomes insolvent or otherwise fails to perform on its obligations, the value of investments in the Fund may decline. The Fund has sought to mitigate this risk by generally requiring counterparties to post collateral for the benefit of the Fund, marked to market daily, in an amount approximately equal to the amount the counterparty owed to the Fund, subject to certain minimum thresholds.

 

Value of a $10,000 Investment at Net Asset Value*

 

 

 

*The line graph represents the historical performance of a hypothetical investment of $10,000 in the Falling U.S. Dollar ProFund from July 31, 2012 to July 31, 2022, assuming the reinvestment of distributions.

 

Average Annual Total Return as of 7/31/22

 

Fund  One Year   Five Year   Ten Year 
Investor   -14.85%   -4.90%   -4.60%
Service   -15.80%   -5.84%   -5.54%
U.S. Dollar Index   14.89%   2.66%   2.51%
S&P 500®    -4.64%   12.83%   13.80%

 

Expense Ratios**

 

Fund  Gross   Net 
Investor   3.20%   1.78%
Service   4.20%   2.78%

 

 

**Reflects the expense ratio as reported in the Prospectus dated November 30, 2021. Contractual fee waivers are in effect through November 30, 2022. See Financial Highlights for effective expense ratios.

 

Allocation of Portfolio Holdings & Index Composition

 

Market Exposure

 

Investment Type  % of Net Assets 
Forward Currency Contracts   (100)%
Total Exposure   (100)%

 

“Market Exposure” includes the value of total investments (including the contract value of any derivatives) and excludes any instruments used for cash management.

 

Holdings

 

The Falling U.S. Dollar ProFund primarily invests in non-equity securities, which may include: swap agreements, futures contracts, options, forward contracts, repurchase agreements and U.S. Government securities.

 

U.S. Dollar Index – Composition

 

   % of Index 
Euro   57%
Japanese yen   14%
British pound   12%
Canadian dollar   9%
Swedish krona   4%
Swiss franc   4%

 

Past performance does not guarantee future results. Return calculations assume the reinvestment of distributions and do not reflect taxes that a shareholder would pay on Fund distributions or on the redemption of Fund shares. The performance data quoted represents past performance and current returns may be lower or higher. The investment return and net asset value (“NAV”) will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than the original cost. The performance above reflects any fee reductions during the applicable periods. If such fee reductions had not occurred, the quoted performance would be lower. To obtain performance current to the most recent month-end, please visit www.ProFunds.com.

 

 

1 The graph and table DO NOT reflect the theoretical reinvestment of dividends nor the impact of transaction costs and the deduction of fees and expenses associated with a mutual fund, such as investment management and accounting fees. The Fund’s performance reflects the reinvestment of dividends as well as the impact of transaction costs and the deduction of fees and expenses. It is not possible to invest directly in an index.
2 1.00 equals perfect correlation. This calculation is based on the daily total return of the Index and the performance of the daily total return of the NAV per share of the Fund.
3 The S&P 500® is an unmanaged index that consists of the common stocks of 500 major U.S. corporations selected for their size and the frequency and ease with which their stocks trade. The graph and table reflect the theoretical reinvestment of dividends on securities in the Index. The impact of the transaction costs and the deduction of fees and expenses associated with a mutual fund, such as investment management and accounting fees, are not reflected in the Index calculations. It is not possible to invest directly in an index.

 

The above information is not covered by the Report of the Independent Registered Public Accounting Firm.

 

 

 

 

20 :: Financials UltraSector ProFund :: Management Discussion of Fund Performance (unaudited)

 

Financials UltraSector ProFund (the “Fund”) seeks daily investment results, before fees and expenses, that correspond to one and one-half times (1.5x) the return of the Dow Jones U.S. FinancialsSM Index (the “Index”) for a single day, not for any other period. A “single day” is measured from the time the Fund calculates its net asset value (“NAV”) to the time of the Fund’s next NAV calculation. The return of the Fund for periods longer than a single day will be the result of its return for each day compounded over the period. The Fund’s return for periods longer than a single day will very likely differ in amount, and possibly even direction, from the Fund’s stated multiple (1.5x) times the return of the Fund’s Index for the same period. For periods longer than a single day, the Fund will lose money if the Index’s performance is flat, and it is possible that the Fund will lose money even if the level of the Index rises. For the year ended July 31, 2022, the Fund (Investor Class shares) had a total return of -12.30%. For the same period, the Index had a total return of -5.91%1 and a volatility of 20.91%. For the year, the Fund achieved an average daily statistical correlation of over 0.99 to one and one-half times the daily performance of the Index.2

 

The Fund takes positions in financial instruments that, in combination, should have similar daily return characteristics as one and one-half times the daily return of the Index. The Index measures the performance of the financial services sector of the U.S. equity market. Component companies include, among others, regional banks; major U.S. domiciled international banks; full line, life, and property and casualty insurance companies; companies that invest, directly or indirectly in real estate; diversified financial companies such as Fannie Mae, credit card issuers, check cashing companies, mortgage lenders and investment advisers; securities brokers and dealers including investment banks, merchant banks and online brokers; and publicly traded stock exchanges.

 

During the year ended July 31, 2022, the Fund invested in swap agreements as a substitute for investing directly in stocks in order to gain leveraged exposure to the Index. These derivatives generally tracked the performance of their underlying benchmark and were negatively impacted by financing costs associated with their use. The Fund entered into swap agreements with counterparties that the Fund’s advisor determined to be major, global financial institutions. If a counterparty becomes insolvent or otherwise fails to perform on its obligations, the value of investments in the Fund may decline. The Fund has sought to mitigate this risk by generally requiring counterparties to post collateral for the benefit of the Fund, marked to market daily, in an amount approximately equal to the amount the counterparty owed to the Fund, subject to certain minimum thresholds.

 

Value of a $10,000 Investment at Net Asset Value*

 

 

 

*The line graph represents the historical performance of a hypothetical investment of $10,000 in the Financials UltraSector ProFund from July 31, 2012 to July 31, 2022, assuming the reinvestment of distributions.

 

Average Annual Total Return as of 7/31/22

 

Fund  One Year   Five Year   Ten Year 
Investor   -12.30%   8.13%   15.18%
Service   -13.15%   7.04%   14.03%
Dow Jones U.S. FinancialsSM Index   -5.91%   9.01%   12.93%
S&P 500®    -4.64%   12.83%   13.80%

 

Expense Ratios**

 

Fund  Gross   Net 
Investor   1.72%   1.72%
Service   2.72%   2.72%

 

 

**Reflects the expense ratio as reported in the Prospectus dated November 30, 2021. Contractual fee waivers are in effect through November 30, 2022. See Financial Highlights for effective expense ratios.

 

Allocation of Portfolio Holdings & Index Composition

 

Market Exposure

 

Investment Type  % of Net Assets 
Equity Securities   72%
Swap Agreements   77%
Total Exposure   149%

 

“Market Exposure” includes the value of total investments (including the contract value of any derivatives) and excludes any instruments used for cash management or collateral for securities loaned.

 

Largest Equity Holdings

 

Company  % of Net Assets 
Berkshire Hathaway, Inc.   6.2%
Visa, Inc.   4.0%
JPMorgan Chase & Co.   3.9%
Mastercard, Inc.   3.5%
Bank of America Corp.   2.7%

 

Dow Jones U.S. FinancialsSM Index – Composition

 

   % of Index 
Diversified Financials   34%
Banks   22%
Real Estate   21%
Insurance   13%
Software & Services   10%

 

Past performance does not guarantee future results. Return calculations assume the reinvestment of distributions and do not reflect taxes that a shareholder would pay on Fund distributions or on the redemption of Fund shares. The performance data quoted represents past performance and current returns may be lower or higher. The investment return and NAV will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than the original cost. The performance above reflects any fee reductions during the applicable periods. If such fee reductions had not occurred, the quoted performance would be lower. To obtain performance current to the most recent month-end, please visit www.ProFunds.com.

 

 

1 The graph and table reflect the theoretical reinvestment of dividends on securities in the Indexes. The impact of transaction costs and the deduction of fees and expenses associated with a mutual fund, such as investment management and accounting fees, are not reflected in calculations of the indexes. The Fund’s performance reflects the reinvestment of dividends as well as the impact of transaction costs and the deduction of fees and expenses. It is not possible to invest directly in an index.
2 1.00 equals perfect correlation. This calculation is based on the daily total return of the Index and the performance of the daily total return of the NAV per share of the Fund.
3 The S&P 500® is an unmanaged index that consists of the common stocks of 500 major U.S. corporations selected for their size and the frequency and ease with which their stocks trade.

 

The above information is not covered by the Report of the Independent Registered Public Accounting Firm.

 

 

 

Management Discussion of Fund Performance (unaudited) :: Health Care UltraSector ProFund :: 21

 

Health Care UltraSector ProFund (the “Fund”) seeks daily investment results, before fees and expenses, that correspond to one and one-half times (1.5x) the return of the Dow Jones U.S. Health CareSM Index (the “Index”) for a single day, not for any other period. A “single day” is measured from the time the Fund calculates its net asset value (“NAV”) to the time of the Fund’s next NAV calculation. The return of the Fund for periods longer than a single day will be the result of its return for each day compounded over the period. The Fund’s return for periods longer than a single day will very likely differ in amount, and possibly even direction, from the Fund’s stated multiple (1.5x) times the return of the Fund’s Index for the same period. For periods longer than a single day, the Fund will lose money if the Index’s performance is flat, and it is possible that the Fund will lose money even if the level of the Index rises. For the year ended July 31, 2022, the Fund (Investor Class shares) had a total return of -5.85%. For the same period, the Index had a total return of -1.75%1 and a volatility of 17.35%. For the year, the Fund achieved an average daily statistical correlation of over 0.99 to one and one-half times the daily performance of the Index.2

 

The Fund takes positions in financial instruments that, in combination, should have similar daily return characteristics as one and one-half times the daily return of the Index. The Index measures the performance of the healthcare sector of the U.S. equity market. Component companies include, among others, health care providers, biotechnology companies, medical supplies, advanced medical devices, and pharmaceuticals.

 

During the year ended July 31, 2022, the Fund invested in swap agreements as a substitute for investing directly in stocks in order to gain leveraged exposure to the Index. These derivatives generally tracked the performance of their underlying benchmark and were negatively impacted by financing costs associated with their use. The Fund entered into swap agreements with counterparties that the Fund’s advisor determined to be major, global financial institutions. If a counterparty becomes insolvent or otherwise fails to perform on its obligations, the value of investments in the Fund may decline. The Fund has sought to mitigate this risk by generally requiring counterparties to post collateral for the benefit of the Fund, marked to market daily, in an amount approximately equal to the amount the counterparty owed to the Fund, subject to certain minimum thresholds.

 

Value of a $10,000 Investment at Net Asset Value*

 

 

 

*The line graph represents the historical performance of a hypothetical investment of $10,000 in the Health Care UltraSector ProFund from July 31, 2012 to July 31, 2022, assuming the reinvestment of distributions.

 

Average Annual Total Return as of 7/31/22

 

Fund  One Year   Five Year   Ten Year 
Investor   -5.85%   14.45%   19.32%
Service   -6.79%   13.34%   18.15%
Dow Jones U.S. Health CareSM Index   -1.75%   12.50%   15.22%
S&P 500®    -4.64%   12.83%   13.80%

 

Expense Ratios**

 

Fund  Gross   Net 
Investor   1.73%   1.73%
Service   2.73%   2.73%

 

 

**Reflects the expense ratio as reported in the Prospectus dated November 30, 2021. Contractual fee waivers are in effect through November 30, 2022. See Financial Highlights for effective expense ratios.

 

Allocation of Portfolio Holdings & Index Composition

 

Market Exposure

 

Investment Type  % of Net Assets 
Equity Securities   77%
Swap Agreements   74%
Total Exposure   151%

 

“Market Exposure” includes the value of total investments (including the contract value of any derivatives) and excludes any instruments used for cash management or collateral for securities loaned.

 

Largest Equity Holdings

 

Company  % of Net Assets 
UnitedHealth Group, Inc.   7.3%
Johnson & Johnson   6.6%
Pfizer, Inc.   4.0%
Eli Lilly & Co.   3.7%
AbbVie, Inc.   3.6%

 

Dow Jones U.S. Health CareSM Index – Composition

 

   % of Index 
Pharmaceuticals   29%
Health Care Providers & Services   22%
Health Care Equipment & Supplies   19%
Biotechnology   17%
Life Sciences Tools & Services   13%

 

Past performance does not guarantee future results. Return calculations assume the reinvestment of distributions and do not reflect taxes that a shareholder would pay on Fund distributions or on the redemption of Fund shares. The performance data quoted represents past performance and current returns may be lower or higher. The investment return and NAV will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than the original cost. The performance above reflects any fee reductions during the applicable periods. If such fee reductions had not occurred, the quoted performance would be lower. To obtain performance current to the most recent month-end, please visit www.ProFunds.com.

 

 

1 The graph and table reflect the theoretical reinvestment of dividends on securities in the Indexes. The impact of transaction costs and the deduction of fees and expenses associated with a mutual fund, such as investment management and accounting fees, are not reflected in calculations of the indexes. The Fund’s performance reflects the reinvestment of dividends as well as the impact of transaction costs and the deduction of fees and expenses. It is not possible to invest directly in an index.
  
2 1.00 equals perfect correlation. This calculation is based on the daily total return of the Index and the performance of the daily total return of the NAV per share of the Fund.
  
3 The S&P 500® is an unmanaged index that consists of the common stocks of 500 major U.S. corporations selected for their size and the frequency and ease with which their stocks trade.

 

The above information is not covered by the Report of the Independent Registered Public Accounting Firm.

 

 

 

22 :: Industrials UltraSector ProFund :: Management Discussion of Fund Performance (unaudited)

 

Industrials UltraSector ProFund (the “Fund”) seeks daily investment results, before fees and expenses, that correspond to one and one-half times (1.5x) the return of the Dow Jones U.S. IndustrialsSM Index (the “Index”) for a single day, not for any other period. A “single day” is measured from the time the Fund calculates its net asset value (“NAV”) to the time of the Fund’s next NAV calculation. The return of the Fund for periods longer than a single day will be the result of its return for each day compounded over the period. The Fund’s return for periods longer than a single day will very likely differ in amount, and possibly even direction, from the Fund’s stated multiple (1.5x) times the return of the Fund’s Index for the same period. For periods longer than a single day, the Fund will lose money if the Index’s performance is flat, and it is possible that the Fund will lose money even if the level of the Index rises. For the year ended July 31, 2022, the Fund (Investor Class shares) had a total return of -20.49%. For the same period, the Index had a total return of -11.87%1 and a volatility of 20.38%. For the year, the Fund achieved an average daily statistical correlation of over 0.99 to one and one-half times the daily performance of the Index.2

 

The Fund takes positions in financial instruments that, in combination, should have similar daily return characteristics as one and one-half times the daily return of the Index. The Index measures the performance of the industrial sector of the U.S. equity market. Component companies include, among others, building materials, heavy construction, factory equipment, heavy machinery, industrial services, pollution control, containers and packaging, industrial diversified, air freight, marine transportation, railroads, trucking, land-transportation equipment, shipbuilding, transportation services, advanced industrial equipment, electric components and equipment, and aerospace.

 

During the year ended July 31, 2022, the Fund invested in swap agreements as a substitute for investing directly in stocks in order to gain leveraged exposure to the Index. These derivatives generally tracked the performance of their underlying benchmark and were negatively impacted by financing costs associated with their use. The Fund entered into swap agreements with counterparties that the Fund’s advisor determined to be major, global financial institutions. If a counterparty becomes insolvent or otherwise fails to perform on its obligations, the value of investments in the Fund may decline. The Fund has sought to mitigate this risk by generally requiring counterparties to post collateral for the benefit of the Fund, marked to market daily, in an amount approximately equal to the amount the counterparty owed to the Fund, subject to certain minimum thresholds.

 

Value of a $10,000 Investment at Net Asset Value*

 

 

 

*The line graph represents the historical performance of a hypothetical investment of $10,000 in the Industrials UltraSector ProFund from July 31, 2012 to July 31, 2022, assuming the reinvestment of distributions.

 

Average Annual Total Return as of 7/31/22

 

Fund  One Year   Five Year   Ten Year 
Investor   -20.49%   9.58%   15.65%
Service   -21.29%   8.49%   14.51%
Dow Jones U.S. IndustrialsSM Index   -11.87%   9.79%   13.13%
S&P 500®    -4.64%   12.83%   13.80%

 

Expense Ratios**

 

Fund  Gross   Net 
Investor   1.81%   1.78%
Service   2.81%   2.78%

 

 

**Reflects the expense ratio as reported in the Prospectus dated November 30, 2021. Contractual fee waivers are in effect through November 30, 2022. See Financial Highlights for effective expense ratios.

 

Allocation of Portfolio Holdings & Index Composition

 

Market Exposure

 

Investment Type  % of Net Assets 
Equity Securities   68%
Swap Agreements   81%
Total Exposure   149%

 

“Market Exposure” includes the value of total investments (including the contract value of any derivatives) and excludes any instruments used for cash management or collateral for securities loaned.

 

Largest Equity Holdings

 

Company  % of Net Assets 
Accenture PLC   3.0%
Union Pacific Corp.   2.2%
United Parcel Service, Inc.   2.2%
Raytheon Technologies Corp.   2.2%
Honeywell International, Inc.   2.0%

 

Dow Jones U.S. IndustrialsSM Index – Composition

 

   % of Index 
Capital Goods   50%
Software & Services   17%
Transportation   13%
Commercial & Professional Services   8%
Materials   6%
Technology Hardware & Equipment   6%

 

Past performance does not guarantee future results. Return calculations assume the reinvestment of distributions and do not reflect taxes that a shareholder would pay on Fund distributions or on the redemption of Fund shares. The performance data quoted represents past performance and current returns may be lower or higher. The investment return and NAV will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than the original cost. The performance above reflects any fee reductions during the applicable periods. If such fee reductions had not occurred, the quoted performance would be lower. To obtain performance current to the most recent month-end, please visit www.ProFunds.com.

 

 

1 The graph and table reflect the theoretical reinvestment of dividends on securities in the Indexes. The impact of transaction costs and the deduction of fees and expenses associated with a mutual fund, such as investment management and accounting fees, are not reflected in calculations of the indexes. The Fund’s performance reflects the reinvestment of dividends as well as the impact of transaction costs and the deduction of fees and expenses. It is not possible to invest directly in an index.
2 1.00 equals perfect correlation. This calculation is based on the daily total return of the Index and the performance of the daily total return of the NAV per share of the Fund.
3 The S&P 500® is an unmanaged index that consists of the common stocks of 500 major U.S. corporations selected for their size and the frequency and ease with which their stocks trade.

 

The above information is not covered by the Report of the Independent Registered Public Accounting Firm.

 

 

 

Management Discussion of Fund Performance (unaudited) :: Internet UltraSector ProFund :: 23

 

Internet UltraSector ProFund (the “Fund”) seeks daily investment results, before fees and expenses, that correspond to one and one-half times (1.5x) the return of the Dow Jones Internet CompositeSM Index (the “Index”) for a single day, not for any other period. A “single day” is measured from the time the Fund calculates its net asset value (“NAV”) to the time of the Fund’s next NAV calculation, not for longer periods. The return of the Fund for periods longer than a single day will be the result of its return for each day compounded over the period. The Fund’s return for periods longer than a single day will very likely differ in amount, and possibly even direction, from the Fund’s stated multiple (1.5x) times the return of the Fund’s Index for the same period. For periods longer than a single day, the Fund will lose money if the Index’s performance is flat, and it is possible that the Fund will lose money even if the level of the Index rises. For the year ended July 31, 2022, the Fund (Investor Class shares) had a total return of -57.90%. For the same period, the Index had a total return of -41.02%1 and a volatility of 36.95%. For the year, the Fund achieved an average daily statistical correlation of over 0.99 to one and one-half times the daily performance of the Index.2

 

The Fund takes positions in financial instruments that, in combination, should have similar daily return characteristics as one and one-half times the daily return of the Index. The Index measures the performance of stocks in the U.S. equity markets that generate the majority of their revenues from the Internet. The Index is composed of two sub-groups: Internet Commerce, which includes companies that derive the majority of their revenues from providing goods and/or services through an open network, such as a web site, and Internet Services, which includes companies that derive the majority of their revenues from providing access to the Internet or providing services to people using the Internet.

 

During the year ended July 31, 2022, the Fund invested in swap agreements as a substitute for investing directly in stocks in order to gain leveraged exposure to the Index. These derivatives generally tracked the performance of their underlying benchmark and were negatively impacted by financing costs associated with their use. The Fund entered into swap agreements with counterparties that the Fund’s advisor determined to be major, global financial institutions. If a counterparty becomes insolvent or otherwise fails to perform on its obligations, the value of investments in the Fund may decline. The Fund has sought to mitigate this risk by generally requiring counterparties to post collateral for the benefit of the Fund, marked to market daily, in an amount approximately equal to the amount the counterparty owed to the Fund, subject to certain minimum thresholds.

 

Value of a $10,000 Investment at Net Asset Value*

 

 

 

*The line graph represents the historical performance of a hypothetical investment of $10,000 in the Internet UltraSector ProFund from July 31, 2012 to July 31, 2022, assuming the reinvestment of distributions.

 

Average Annual Total Return as of 7/31/22

 

Fund  One Year   Five Year   Ten Year 
Investor   -57.90%   6.41%   18.95%
Service   -58.32%   5.35%   17.76%
Dow Jones Internet CompositeSM Index   -41.02%   8.09%   15.61%
S&P 500®    -4.64%   12.83%   13.80%

 

Expense Ratios**

 

Fund  Gross   Net 
Investor   1.52%   1.52%
Service   2.52%   2.52%

 

 

**Reflects the expense ratio as reported in the Prospectus dated November 30, 2021. Contractual fee waivers are in effect through November 30, 2022. See Financial Highlights for effective expense ratios.

 

Allocation of Portfolio Holdings & Index Composition

 

Market Exposure

 

Investment Type  % of Net Assets 
Equity Securities   73%
Swap Agreements   77%
Total Exposure   150%

 

“Market Exposure” includes the value of total investments (including the contract value of any derivatives) and excludes any instruments used for cash management.

 

Largest Equity Holdings

 

Company  % of Net Assets 
Amazon.com, Inc.   7.6%
Alphabet, Inc.   7.5%
Meta Platforms, Inc.   4.1%
Cisco Systems, Inc.   3.8%
Salesforce, Inc.   3.7%

 

Dow Jones Internet CompositeSM Index – Composition

 

   % of Index 
Interactive Media & Services   25%
Software   20%
Internet & Direct Marketing Retail   15%
IT Services   15%
Communications Equipment   11%
Hotels, Restaurants & Leisure   4%
Entertainment   4%
Health Care Technology   4%
Real Estate Management & Development   2%

 

Past performance does not guarantee future results. Return calculations assume the reinvestment of distributions and do not reflect taxes that a shareholder would pay on Fund distributions or on the redemption of Fund shares. The performance data quoted represents past performance and current returns may be lower or higher. The investment return and NAV will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than the original cost. The performance above reflects any fee reductions during the applicable periods. If such fee reductions had not occurred, the quoted performance would be lower. To obtain performance current to the most recent month-end, please visit www.ProFunds.com.

 

 

1 The graph and table reflect the theoretical reinvestment of dividends on securities in the Indexes. The impact of transaction costs and the deduction of fees and expenses associated with a mutual fund, such as investment management and accounting fees, are not reflected in calculations of the indexes. The Fund’s performance reflects the reinvestment of dividends as well as the impact of transaction costs and the deduction of fees and expenses. It is not possible to invest directly in an index.
2 1.00 equals perfect correlation. This calculation is based on the daily total return of the Index and the performance of the daily total return of the NAV per share of the Fund.
3 The S&P 500® is an unmanaged index that consists of the common stocks of 500 major U.S. corporations selected for their size and the frequency and ease with which their stocks trade.

 

The above information is not covered by the Report of the Independent Registered Public Accounting Firm.

 

 

 

24 :: Large-Cap Growth ProFund :: Management Discussion of Fund Performance (unaudited)

 

Large-Cap Growth ProFund (the “Fund”) seeks investment results, before fees and expenses, that correspond to the performance of the S&P 500® Growth Index (the “Index”). For the year ended July 31, 2022, the Fund (Investor Class shares) had a total return of -10.69%. For the same period, the Index had a total return of -9.13%1 and a volatility of 26.55%. For the year, the Fund achieved an average daily statistical correlation of over 0.99 to the daily performance of the Index.2

 

The Fund takes positions in financial instruments that, in combination, should have similar return characteristics as the return of the Index. The Index is designed to provide a comprehensive measure of large-cap U.S. equity “growth” performance. It is an unmanaged, float-adjusted, market capitalization-weighted index comprising stocks representing approximately half the market capitalization of the S&P 500® that have been identified as being on the growth end of the growth-value spectrum.

 

Value of a $10,000 Investment at Net Asset Value*

 

 

 

*The line graph represents the historical performance of a hypothetical investment of $10,000 in the Large-Cap Growth ProFund from July 31, 2012 to July 31, 2022, assuming the reinvestment of distributions.

 

Average Annual Total Return as of 7/31/22

 

Fund  One Year   Five Year   Ten Year 
Investor   -10.69%   13.52%   13.35%
Service   -11.56%   12.39%   12.23%
S&P 500® Growth Index   -9.13%   15.64%   15.52%

 

Expense Ratios**

 

Fund  Gross   Net 
Investor   1.59%   1.59%
Service   2.59%   2.59%

 

 

**Reflects the expense ratio as reported in the Prospectus dated November 30, 2021. Contractual fee waivers are in effect through November 30, 2022. See Financial Highlights for effective expense ratios.

 

Allocation of Portfolio Holdings & Index Composition

 

Market Exposure

 

Investment Type  % of Net Assets 
Equity Securities   100%
Total Exposure   100%

 

“Market Exposure” includes the value of total investments (including the contract value of any derivatives) and excludes any instruments used for cash management.

 

Largest Equity Holdings

 

Company  % of Net Assets 
Apple, Inc.   14.5%
Microsoft Corp.   12.2%
Alphabet, Inc.   7.8%
Amazon.com, Inc.   6.8%
Tesla, Inc.   4.3%

 

S&P 500® Growth Index – Composition

 

   % of Index 
Information Technology   44%
Consumer Discretionary   17%
Health Care   12%
Communication Services   11%
Financials   7%
Industrials   3%
Real Estate   2%
Consumer Staples   2%
Materials   1%
Energy   1%

 

Past performance does not guarantee future results. Return calculations assume the reinvestment of distributions and do not reflect taxes that a shareholder would pay on Fund distributions or on the redemption of Fund shares. The performance data quoted represents past performance and current returns may be lower or higher. The investment return and net asset value (“NAV”) will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than the original cost. The performance above reflects any fee reductions during the applicable periods. If such fee reductions had not occurred, the quoted performance would be lower. To obtain performance current to the most recent month-end, please visit www.ProFunds.com.

 

 

1 The graph and table reflect the theoretical reinvestment of dividends on securities in the Index. The impact of transaction costs and the deduction of fees and expenses associated with a mutual fund, such as investment management and accounting fees, are not reflected in the index calculations. The Fund’s performance reflects the reinvestment of dividends as well as the impact of transaction costs and the deduction of fees and expenses. It is not possible to invest directly in an index.
2 1.00 equals perfect correlation. This calculation is based on the daily total return of the Index and the performance of the daily total return of the NAV per share of the Fund.

 

The above information is not covered by the Report of the Independent Registered Public Accounting Firm.

 

 

 

Management Discussion of Fund Performance (unaudited) :: Large-Cap Value ProFund :: 25

 

Large-Cap Value ProFund (the“Fund”) seeks investment results, before fees and expenses, that correspond to the performance of the S&P 500® Value Index (the “Index”). For the year ended July 31, 2022, the Fund (Investor Class shares) had a total return of -1.72%. For the same period, the Index had a total return of -0.03%1 and a volatility of 16.47%. For the year, the Fund achieved an average daily statistical correlation of over 0.99 to the daily performance of the Index.2

 

The Fund takes positions in financial instruments that, in combination, should have similar return characteristics as the return of the Index. The Index is designed to provide a comprehensive measure of large-cap U.S. equity “value” performance. It is an unmanaged, float-adjusted, market capitalization-weighted index comprising stocks representing approximately half the market capitalization of the S&P 500® that have been identified as being on the value end of the growth-value spectrum.

 

Value of a $10,000 Investment at Net Asset Value*

 

 

 

*The line graph represents the historical performance of a hypothetical investment of $10,000 in the Large-Cap Value ProFund from July 31, 2012 to July 31, 2022, assuming the reinvestment of distributions.

 

Average Annual Total Return as of 7/31/22

 

Fund  One Year   Five Year   Ten Year 
Investor   -1.72%   7.21%   9.52%
Service   -2.69%   6.14%   8.43%
S&P 500® Value Index   -0.03%   9.14%   11.51%

 

Expense Ratios**

 

Fund  Gross   Net 
Investor   1.71%   1.71%
Service   2.71%   2.71%

 

 

**Reflects the expense ratio as reported in the Prospectus dated November 30, 2021. Contractual fee waivers are in effect through November 30, 2022. See Financial Highlights for effective expense ratios.

 

Allocation of Portfolio Holdings & Index Composition

 

Market Exposure

 

Investment Type  % of Net Assets 
Equity Securities   100%
Total Exposure   100%

 

“Market Exposure” includes the value of total investments (including the contract value of any derivatives) and excludes any instruments used for cash management.

 

Largest Equity Holdings

 

Company  % of Net Assets 
Berkshire Hathaway, Inc.   3.1%
Johnson & Johnson   2.6%
Exxon Mobil Corp.   2.3%
The Procter & Gamble Co.   1.9%
Chevron Corp.   1.8%

 

S&P 500® Value Index – Composition

 

   % of Index 
Health Care   17%
Financials   15%
Industrials   12%
Information Technology   12%
Consumer Staples   11%
Energy   8%
Consumer Discretionary   6%
Communication Services   6%
Utilities   6%
Materials   4%
Real Estate   3%

 

Past performance does not guarantee future results. Return calculations assume the reinvestment of distributions and do not reflect taxes that a shareholder would pay on Fund distributions or on the redemption of Fund shares. The performance data quoted represents past performance and current returns may be lower or higher. The investment return and net asset value (“NAV”) will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than the original cost. The performance above reflects any fee reductions during the applicable periods. If such fee reductions had not occurred, the quoted performance would be lower. To obtain performance current to the most recent month-end, please visit www.ProFunds.com.

 

 

1 The graph and table reflect the theoretical reinvestment of dividends on securities in the Index. The impact of transaction costs and the deduction of fees and expenses associated with a mutual fund, such as investment management and accounting fees, are not reflected in the index calculations. The Fund’s performance reflects the reinvestment of dividends as well as the impact of transaction costs and the deduction of fees and expenses. It is not possible to invest directly in an index.
2 1.00 equals perfect correlation. This calculation is based on the daily total return of the Index and the performance of the daily total return of the NAV per share of the Fund.

 

The above information is not covered by the Report of the Independent Registered Public Accounting Firm.

 

 

 

26 :: Mid-Cap Growth ProFund :: Management Discussion of Fund Performance (unaudited)

 

Mid-Cap Growth ProFund (the “Fund”) seeks investment results, before fees and expenses, that correspond to the performance of the S&P MidCap 400® Growth Index (the “Index”). For the year ended July 31, 2022, the Fund (Investor Class shares) had a total return of -13.02%. For the same period, the Index had a total return of -11.26%1 and a volatility of 24.68%. For the year, the Fund achieved an average daily statistical correlation of over 0.99 to the daily performance of the Index.2

 

The Fund takes positions in financial instruments that, in combination, should have similar return characteristics as the return of the Index. The Index is designed to provide a comprehensive measure of mid-cap U.S. equity “growth” performance. It is an unmanaged, float-adjusted, market capitalization-weighted index comprising stocks representing approximately half the market capitalization of the S&P MidCap 400® that have been identified as being on the growth end of the growth-value spectrum.

 

Value of a $10,000 Investment at Net Asset Value*

 

 

 

*The line graph represents the historical performance of a hypothetical investment of $10,000 in the Mid-Cap Growth ProFund from July 31, 2012 to July 31, 2022, assuming the reinvestment of distributions.

 

Average Annual Total Return as of 7/31/22

 

Fund  One Year   Five Year   Ten Year 
Investor   -13.02%   6.87%   9.73%
Service   -13.90%   5.81%   8.64%
S&P MidCap 400® Growth Index   -11.26%   8.92%   11.80%

 

Expense Ratios**

 

Fund  Gross   Net 
Investor   1.69%   1.69%
Service   2.69%   2.69%

 

 

**Reflects the expense ratio as reported in the Prospectus dated November 30, 2021. Contractual fee waivers are in effect through November 30, 2022. See Financial Highlights for effective expense ratios.

 

Allocation of Portfolio Holdings & Index Composition

 

Market Exposure

 

Investment Type  % of Net Assets 
Equity Securities   101%
Total Exposure   101%

 

“Market Exposure” includes the value of total investments (including the contract value of any derivatives) and excludes any instruments used for cash management or collateral for securities loaned.

 

Company  % of Net Assets 
Targa Resources Corp.   1.5%
Carlisle Cos., Inc.   1.5%
Steel Dynamics, Inc.   1.4%
Service Corp. International   1.2%
Builders FirstSource, Inc.   1.2%

 

S&P MidCap 400® Growth Index – Composition

 

   % of Index 
Industrials   19%
Consumer Discretionary   15%
Information Technology   15%
Health Care   14%
Financials   11%
Real Estate   8%
Materials   8%
Energy   5%
Communication Services   2%
Consumer Staples   2%
Utilities   1%

 

Past performance does not guarantee future results. Return calculations assume the reinvestment of distributions and do not reflect taxes that a shareholder would pay on Fund distributions or on the redemption of Fund shares. The performance data quoted represents past performance and current returns may be lower or higher. The investment return and net asset value (“NAV”) will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than the original cost. The performance above reflects any fee reductions during the applicable periods. If such fee reductions had not occurred, the quoted performance would be lower. To obtain performance current to the most recent month-end, please visit www.ProFunds.com.

 

 

1 The graph and table reflect the theoretical reinvestment of dividends on securities in the Index. The impact of transaction costs and the deduction of fees and expenses associated with a mutual fund, such as investment management and accounting fees, are not reflected in the index calculations. The Fund’s performance reflects the reinvestment of dividends as well as the impact of transaction costs and the deduction of fees and expenses. It is not possible to invest directly in an index.
2 1.00 equals perfect correlation. This calculation is based on the daily total return of the Index and the performance of the daily total return of the NAV per share of the Fund.

 

The above information is not covered by the Report of the Independent Registered Public Accounting Firm.

 

 

 

Management Discussion of Fund Performance (unaudited) :: Mid-Cap ProFund :: 27

 

Mid-Cap ProFund (the “Fund”) seeks investment results, before fees and expenses, that correspond to the performance of the S&P MidCap 400® (the “Index”). For the year ended July 31, 2022, the Fund (Investor Class shares) had a total return of -7.57%. For the same period, the Index had a total return of -5.70%1 and a volatility of 22.63%. For the year, the Fund achieved an average daily statistical correlation of over 0.99 to the daily performance of the Index.2

 

The Fund takes positions in financial instruments that, in combination, should have similar return characteristics as the return of the Index. The Index is a measure of mid-size company U.S. stock market performance. It is a float-adjusted, market capitalization-weighted index of 400 U.S. operating companies and real estate investment trusts through a process that factors criteria such as liquidity, price, market capitalization, and financial viability. Reconstitution occurs both on a quarterly and ongoing basis.

 

During the year ended July 31, 2022, the Fund invested in swap agreements as a substitute for investing directly in stocks in order to gain exposure to the Index. These derivatives generally tracked the performance of their underlying benchmark and were negatively impacted by financing costs associated with their use. The Fund entered into swap agreements with counterparties that the Fund’s advisor determined to be major, global financial institutions. If a counterparty becomes insolvent or otherwise fails to perform on its obligations, the value of investments in the Fund may decline. The Fund has sought to mitigate this risk by generally requiring counterparties to post collateral for the benefit of the Fund, marked to market daily, in an amount approximately equal to the amount the counterparty owed to the Fund, subject to certain minimum thresholds.

 

Value of a $10,000 Investment at Net Asset Value*

 

 

 

*The line graph represents the historical performance of a hypothetical investment of $10,000 in the Mid-Cap ProFund from July 31, 2012 to July 31, 2022, assuming the reinvestment of distributions.

 

Average Annual Total Return as of 7/31/22

 

Fund  One Year   Five Year   Ten Year 
Investor   -7.57%   6.88%   9.94%
Service   -8.47%   5.81%   8.85%
S&P MidCap 400®    -5.70%   9.06%   12.05%

 

Expense Ratios**

 

Fund  Gross   Net 
Investor   1.83%   1.78%
Service   2.83%   2.78%

 

 

**Reflects the expense ratio as reported in the Prospectus dated November 30, 2022. Contractual fee waivers are in effect through November 30, 2022. See Financial Highlights for effective expense ratios.

 

Allocation of Portfolio Holdings & Index Composition

 

Market Exposure

 

Investment Type  % of Net Assets 
Equity Securities   65%
Swap Agreements   35%
Total Exposure   100%

 

“Market Exposure” includes the value of total investments (including the contract value of any derivatives) and excludes any instruments used for cash management or collateral for securities loaned.

 

Largest Equity Holdings

 

Company  % of Net Assets 
Targa Resources Corp.   0.5%
Carlisle Cos., Inc.   0.5%
Steel Dynamics, Inc.   0.4%
EQT Corp.   0.4%
Fair Isaac Corp.   0.4%

 

S&P MidCap 400® – Composition

 

   % of Index 
Industrials   18%
Financials   14%
Consumer Discretionary   14%
Information Technology   13%
Health Care   10%
Real Estate   9%
Materials   7%
Energy   5%
Utilities   4%
Consumer Staples   4%
Communication Services   2%

 

Past performance does not guarantee future results. Return calculations assume the reinvestment of distributions and do not reflect taxes that a shareholder would pay on Fund distributions or on the redemption of Fund shares. The performance data quoted represents past performance and current returns may be lower or higher. The investment return and net asset value (“NAV”) will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than the original cost. The performance above reflects any fee reductions during the applicable periods. If such fee reductions had not occurred, the quoted performance would be lower. To obtain performance current to the most recent month-end, please visit www.ProFunds.com.

 

 

1 The graph and table reflect the theoretical reinvestment of dividends on securities in the Index. The impact of transaction costs and the deduction of fees and expenses associated with a mutual fund, such as investment management and accounting fees, are not reflected in the index calculations. The Fund’s performance reflects the reinvestment of dividends as well as the impact of transaction costs and the deduction of fees and expenses. It is not possible to invest directly in an index.
2 1.00 equals perfect correlation. This calculation is based on the daily total return of the Index and the performance of the daily total return of the NAV per share of the Fund.

 

The above information is not covered by the Report of the Independent Registered Public Accounting Firm.

 

 

 

28 :: Mid-Cap Value ProFund :: Management Discussion of Fund Performance (unaudited)

 

Mid-Cap Value ProFund (the “Fund”) seeks investment results, before fees and expenses, that correspond to the performance of the S&P MidCap 400® Value Index (the “Index”). For the year ended July 31, 2022, the Fund (Investor Class shares) had a total return of -1.86%. For the same period, the Index had a total return of -0.05%1 and a volatility of 21.56%. For the year, the Fund achieved an average daily statistical correlation of over 0.99 to the daily performance of the Index.2

 

The Fund takes positions in financial instruments that, in combination, should have similar return characteristics as the return of the Index. The Index is designed to provide a comprehensive measure of mid-cap U.S. equity “value” performance. It is an unmanaged, float-adjusted, market capitalization-weighted index comprising stocks representing approximately half the market capitalization of the S&P MidCap 400® that have been identified as being on the value end of the growth-value spectrum.

 

Value of a $10,000 Investment at Net Asset Value*

 

 

 

*The line graph represents the historical performance of a hypothetical investment of $10,000 in the Mid-Cap Value ProFund from July 31, 2012 to July 31, 2022, assuming the reinvestment of distributions.

 

Average Annual Total Return as of 7/31/22

 

Fund  One Year   Five Year   Ten Year 
Investor   -1.86%   6.93%   9.99%
Service   -2.84%   5.87%   8.89%
S&P MidCap 400® Value Index   -0.05%   8.79%   11.98%

 

Expense Ratios**

 

Fund  Gross   Net 
Investor   1.86%   1.78%
Service   2.86%   2.78%

 

 

**Reflects the expense ratio as reported in the Prospectus dated November 30, 2021. Contractual fee waivers are in effect through November 30, 2022. See Financial Highlights for effective expense ratios.

 

Allocation of Portfolio Holdings & Index Composition

 

Market Exposure

 

Investment Type  % of Net Assets 
Equity Securities   100%
Total Exposure   100%

 

“Market Exposure” includes the value of total investments (including the contract value of any derivatives) and excludes any instruments used for cash management or collateral for securities loaned.

 

Largest Equity Holdings

 

Company  % of Net Assets 
EQT Corp.   1.2%
First Horizon Corp.   1.1%
Reliance Steel & Aluminum Co.   1.1%
Alleghany Corp.   1.0%
Medical Properties Trust, Inc.   0.9%

 

S&P MidCap 400® Value Index – Composition

 

   % of Index 
Industrials   18%
Financials   17%
Consumer Discretionary   12%
Real Estate   11%
Information Technology   10%
Health Care   7%
Materials   7%
Utilities   7%
Consumer Staples   6%
Energy   4%
Communication Services   1%

 

Past performance does not guarantee future results. Return calculations assume the reinvestment of distributions and do not reflect taxes that a shareholder would pay on Fund distributions or on the redemption of Fund shares. The performance data quoted represents past performance and current returns may be lower or higher. The investment return and net asset value (“NAV”) will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than the original cost. The performance above reflects any fee reductions during the applicable periods. If such fee reductions had not occurred, the quoted performance would be lower. To obtain performance current to the most recent month-end, please visit www.ProFunds.com.

 

 

1 The graph and table reflect the theoretical reinvestment of dividends on securities in the Index. The impact of transaction costs and the deduction of fees and expenses associated with a mutual fund, such as investment management and accounting fees, are not reflected in the index calculations. The Fund’s performance reflects the reinvestment of dividends as well as the impact of transaction costs and the deduction of fees and expenses. It is not possible to invest directly in an index.
2 1.00 equals perfect correlation. This calculation is based on the daily total return of the Index and the performance of the daily total return of the NAV per share of the Fund.

 

The above information is not covered by the Report of the Independent Registered Public Accounting Firm.

 

 

 

Management Discussion of Fund Performance (unaudited) :: Nasdaq-100 ProFund :: 29

 

Nasdaq-100 ProFund seeks investment results, before fees and expenses, that correspond to the performance of the Nasdaq-100® Index (the "Index"). For the year ended July 31, 2022, the Fund (Investor Class shares) had a total return of -15.20%. For the same period, the Index had a total return of -12.80%1 and a volatility of 28.15%. For the year, the Fund achieved an average daily statistical correlation of over 0.99 to the daily performance of the Index.2

 

The Fund takes positions in financial instruments that, in combination, should have similar return characteristics as the return of the Index. The Index, a modified market capitalization-weighted index, includes 100 of the largest non-financial domestic and international issues listed on Nasdaq.

 

During the year ended July 31, 2022, the Fund invested in swap agreements and futures contracts as a substitute for investing directly in stocks in order to gain exposure to the Index. These derivatives generally tracked the performance of their underlying benchmark and were negatively impacted by financing costs associated with their use. The Fund entered into swap agreements with counterparties that the Fund's advisor determined to be major, global financial institutions. If a counterparty becomes insolvent or otherwise fails to perform on its obligations, the value of investments in the Fund may decline. The Fund has sought to mitigate this risk by generally requiring counterparties to post collateral for the benefit of the Fund, marked to market daily, in an amount approximately equal to the amount the counterparty owed to the Fund, subject to certain minimum thresholds.

 

Value of a $10,000 Investment at Net Asset Value*

 

 

 

*The line graph represents the historical performance of a hypothetical investment of $10,000 in the Nasdaq-100 ProFund from July 31, 2012 to July 31, 2022, assuming the reinvestment of distributions.

 

Average Annual Total Return as of 7/31/22

 

Fund  One Year   Five Year   Ten Year 
Investor   -15.20%   15.51%   15.97%
Service   -16.03%   14.37%   14.81%
Nasdaq-100® Index   -12.80%   18.20%   18.54%

 

Expense Ratios**

 

Fund  Gross   Net     
Investor   1.48%   1.48%     
Service   2.48%   2.48%     

 

 

**Reflects the expense ratio as reported in the Prospectus dated November 30, 2021. Contractual fee waivers are in effect through November 30, 2022. See Financial Highlights for effective expense ratios.

 

Allocation of Portfolio Holdings & Index Composition

 

Market Exposure

 

Investment Type  % of Net Assets 
Equity Securities   60%
Futures Contracts   7%
Swap Agreements   33%
Total Exposure   100%

 

"Market Exposure" includes the value of total investments (including the contract value of any derivatives) and excludes any instruments used for cash management or collateral for securities loaned.

 

Largest Equity Holdings

 

Company  % of Net Assets 
Apple, Inc.   8.0%
Microsoft Corp.   6.3%
Alphabet, Inc.   4.3%
Amazon.com, Inc.   4.2%
Tesla, Inc.   2.8%

 

Nasdaq-100® Index – Composition

 

   % of Index 
Information Technology   52%
Consumer Discretionary   16%
Communication Services   16%
Consumer Staples   6%
Health Care   6%
Industrials   3%
Utilities   1%

 

Past performance does not guarantee future results. Return calculations assume the reinvestment of distributions and do not reflect taxes that a shareholder would pay on Fund distributions or on the redemption of Fund shares. The performance data quoted represents past performance and current returns may be lower or higher. The investment return and net asset value ("NAV") will fluctuate so that an investor's shares, when redeemed, may be worth more or less than the original cost. The performance above reflects any fee reductions during the applicable periods. If such fee reductions had not occurred, the quoted performance would be lower. To obtain performance current to the most recent month-end, please visit www.ProFunds.com.

 

 

1The graph and table reflect the theoretical reinvestment of dividends on securities in the Index. The impact of transaction costs and the deduction of fees and expenses associated with a mutual fund, such as investment management and accounting fees, are not reflected in the index calculations. The Fund's performance reflects the reinvestment of dividends as well as the impact of transaction costs and the deduction of fees and expenses. It is not possible to invest directly in an index.
  
21.00 equals perfect correlation. This calculation is based on the daily total return of the Index and the performance of the daily total return of the NAV per share of the Fund.

 

The above information is not covered by the Report of the Independent Registered Public Accounting Firm.

 

 

 

 

30 :: Oil & Gas UltraSector ProFund :: Management Discussion of Fund Performance (unaudited)

 

Oil & Gas UltraSector ProFund (the "Fund") seeks daily investment results, before fees and expenses, that correspond to one and one-half times (1.5x) the return of the Dow Jones U.S. Oil & GasSM Index (the "Index") for a single day, not for any other period. A "single day" is measured from the time the Fund calculates its net asset value ("NAV") to the time of the Fund's next NAV calculation. The return of the Fund for periods longer than a single day will be the result of its return for each day compounded over the period. The Fund's return for periods longer than a single day will very likely differ in amount, and possibly even direction, from the Fund's stated multiple (1.5x) times the return of the Fund's Index for the same period. For periods longer than a single day, the Fund will lose money if the Index's performance is flat, and it is possible that the Fund will lose money even if the level of the Index rises. For the year ended July 31, 2022, the Fund (Investor Class shares) had a total return of 100.88%. For the same period, the Index had a total return of 65.69%1 and a volatility of 32.56%. For the year, the Fund achieved an average daily statistical correlation of over 0.99 to one and one-half times the daily performance of the Index.2

 

The Fund takes positions in financial instruments that, in combination, should have similar daily return characteristics as one and one-half times the daily return of the Index. The Index measures the performance of the oil and gas sector of the U.S. equity market. Component companies include, among others, exploration and production, integrated oil and gas, oil equipment and services, pipelines, renewable energy equipment companies and alternative fuel producers.

 

During the year ended July 31, 2022, the Fund invested in swap agreements as a substitute for investing directly in stocks in order to gain leveraged exposure to the Index. These derivatives generally tracked the performance of their underlying benchmark and were negatively impacted by financing costs associated with their use. The Fund entered into swap agreements with counterparties that the Fund's advisor determined to be major, global financial institutions. If a counterparty becomes insolvent or otherwise fails to perform on its obligations, the value of investments in the Fund may decline. The Fund has sought to mitigate this risk by generally requiring counterparties to post collateral for the benefit of the Fund, marked to market daily, in an amount approximately equal to the amount the counterparty owed to the Fund, subject to certain minimum thresholds.

 

Value of a $10,000 Investment at Net Asset Value*

 

 

 

*The line graph represents the historical performance of a hypothetical investment of $10,000 in the Oil & Gas UltraSector ProFund from July 31, 2012 to July 31, 2022, assuming the reinvestment of distributions.

 

Average Annual Total Return as of 7/31/22

 

Fund  One Year   Five Year   Ten Year 
Investor   100.88%   4.25%   0.69%
Service   98.87%   3.22%   -0.31%
Dow Jones U.S. Oil & GasSM Index   65.69%   8.02%   4.24%
S&P 500®   -4.64%   12.83%   13.80%

 

Expense Ratios**

 

Fund  Gross   Net     
Investor   1.64%   1.64%     
Service   2.64%   2.64%     

  

 

**Reflects the expense ratio as reported in the Prospectus dated November 30, 2021. Contractual fee waivers are in effect through November 30, 2022. See Financial Highlights for effective expense ratios.

 

Allocation of Portfolio Holdings & Index Composition

 

Market Exposure

 

Investment Type  % of Net Assets 
Equity Securities   76%
Swap Agreements   74%
Total Exposure   150%

 

"Market Exposure" includes the value of total investments (including the contract value of any derivatives) and excludes any instruments used for cash management.

 

Largest Equity Holdings

 

Company  % of Net Assets 
Exxon Mobil Corp.   18.6%
Chevron Corp.   14.6%
ConocoPhillips   5.7%
EOG Resources, Inc.   3.0%
Occidental Petroleum Corp.   2.7%

 

Dow Jones U.S. Oil & GasSM Index – Composition

 

   % of Index 
Oil, Gas & Consumable Fuels   91%
Energy Equipment & Services   7%
Electrical Equipment   1%
Semiconductors & Semiconductor Equipment   1%

 

Past performance does not guarantee future results. Return calculations assume the reinvestment of distributions and do not reflect taxes that a shareholder would pay on Fund distributions or on the redemption of Fund shares. The performance data quoted represents past performance and current returns may be lower or higher. The investment return and NAV will fluctuate so that an investor's shares, when redeemed, may be worth more or less than the original cost. The performance above reflects any fee reductions during the applicable periods. If such fee reductions had not occurred, the quoted performance would be lower. To obtain performance current to the most recent month-end, please visit www.ProFunds.com.

 

 

1The graph and table reflect the theoretical reinvestment of dividends on securities in the Indexes. The impact of transaction costs and the deduction of fees and expenses associated with a mutual fund, such as investment management and accounting fees, are not reflected in calculations of the indexes. The Fund's performance reflects the reinvestment of dividends as well as the impact of transaction costs and the deduction of fees and expenses. It is not possible to invest directly in an index.
21.00 equals perfect correlation. This calculation is based on the daily total return of the Index and the performance of the daily total return of the NAV per share of the Fund.
3The S&P 500® is an unmanaged index that consists of the common stocks of 500 major U.S. corporations selected for their size and the frequency and ease with which their stocks trade.

 

The above information is not covered by the Report of the Independent Registered Public Accounting Firm.

 

 

 

 

Management Discussion of Fund Performance (unaudited) :: Oil Equipment & Services UltraSector ProFund :: 31

 

Oil Equipment & Services UltraSector ProFund (the “Fund”) seeks daily investment results, before fees and expenses, that correspond to one and one-half times (1.5x) the return of the Dow Jones U.S. Select Oil Equipment & ServicesSM Index (the “Index”) for a single day, not for any other period. A “single day” is measured from the time the Fund calculates its net asset value (“NAV”) to the time of the Fund’s next NAV calculation. The return of the Fund for periods longer than a single day will be the result of its return for each day compounded over the period. The Fund’s return for periods longer than a single day will very likely differ in amount, and possibly even direction, from the Fund’s stated multiple (1.5x) times the return of the Fund’s Index for the same period. For periods longer than a single day, the Fund will lose money if the Index’s performance is flat, and it is possible that the Fund will lose money even if the level of the Index rises. For the year ended July 31, 2022, the Fund (Investor Class shares) had a total return of 25.74%. For the same period, the Index had a total return of 24.22%1 and a volatility of 44.83%. For the year, the Fund achieved an average daily statistical correlation of over 0.99 to one and one-half times the daily performance of the Index.2

 

The Fund takes positions in financial instruments that, in combination, should have similar daily return characteristics as one and one-half times the daily return of the Index. The Index measures the performance of the oil and equipment services sector of the U.S. equity market. Component companies include, among others, suppliers of equipment and services to oil fields and offshore platforms, such as drilling, exploration, seismic-information services and platform construction.

 

During the year ended July 31, 2022, the Fund invested in swap agreements as a substitute for investing directly in stocks in order to gain leveraged exposure to the Index. These derivatives generally tracked the performance of their underlying benchmark and were negatively impacted by financing costs associated with their use. The Fund entered into swap agreements with counterparties that the Fund’s advisor determined to be major, global financial institutions. If a counterparty becomes insolvent or otherwise fails to perform on its obligations, the value of investments in the Fund may decline. The Fund has sought to mitigate this risk by generally requiring counterparties to post collateral for the benefit of the Fund, marked to market daily, in an amount approximately equal to the amount the counterparty owed to the Fund, subject to certain minimum thresholds.

 

Value of a $10,000 Investment at Net Asset Value*

 

 

 

*The line graph represents the historical performance of a hypothetical investment of $10,000 in the Oil Equipment & Services UltraSector ProFund from July 31, 2012 to July 31, 2022, assuming the reinvestment of distributions.

 

Average Annual Total Return as of 7/31/22

 

Fund  One Year   Five Year   Ten Year 
Investor   25.74%   -27.34%   -18.04%
Service   24.49%   -28.08%   -18.86%
Dow Jones U.S. Select Oil Equipment & ServicesSM Index   24.22%   -11.14%   -8.76%
S&P 500®   -4.64%   12.83%   13.80%

 

Expense Ratios**

 

Fund  Gross   Net     
Investor   1.63%   1.63%    
Service   2.63%   2.63%     

 

 

**Reflects the expense ratio as reported in the Prospectus dated November 30, 2021. Contractual fee waivers are in effect through November 30, 2022. See Financial Highlights for effective expense ratios.

 

Allocation of Portfolio Holdings & Index Composition

 

Market Exposure

 

Investment Type  % of Net Assets 
Equity Securities   84%
Swap Agreements   79%
Total Exposure   163%

 

“Market Exposure” includes the value of total investments (including the contract value of any derivatives) and excludes any instruments used for cash management. The “Market Exposure” for this fund as of July 31, 2022, was different from the stated investment objective due to timing of receipt of capital share activity.

 

Largest Equity Holdings

 

Company  % of Net Assets 
Schlumberger, Ltd.   18.3%
Halliburton Co.   16.7%
NOV, Inc.   4.3%
Helmerich & Payne, Inc.   4.2%
Patterson-UTI Energy, Inc.   4.1%

 

Dow Jones U.S. Select Oil Equipment & ServicesSM Index – Composition

 

   % of Index 
Oil & Gas Equipment & Services   81%
Oil & Gas Drilling   19%

 

Past performance does not guarantee future results. Return calculations assume the reinvestment of distributions and do not reflect taxes that a shareholder would pay on Fund distributions or on the redemption of Fund shares. The performance data quoted represents past performance and current returns may be lower or higher. The investment return and NAV will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than the original cost. The performance above reflects any fee reductions during the applicable periods. If such fee reductions had not occurred, the quoted performance would be lower. To obtain performance current to the most recent month-end, please visit www.ProFunds.com.

 

 

1The graph and table reflect the theoretical reinvestment of dividends on securities in the Indexes. The impact of transaction costs and the deduction of fees and expenses associated with a mutual fund, such as investment management and accounting fees, are not reflected in calculations of the indexes. The Fund’s performance reflects the reinvestment of dividends as well as the impact of transaction costs and the deduction of fees and expenses. It is not possible to invest directly in an index.
21.00 equals perfect correlation. This calculation is based on the daily total return of the Index and the performance of the daily total return of the NAV per share of the Fund.
3The S&P 500® is an unmanaged index that consists of the common stocks of 500 major U.S. corporations selected for their size and the frequency and ease with which their stocks trade.

 

The above information is not covered by the Report of the Independent Registered Public Accounting Firm.

 

 

 

 

32 :: Pharmaceuticals UltraSector ProFund :: Management Discussion of Fund Performance (unaudited)

 

Pharmaceuticals UltraSector ProFund (the “Fund”) seeks daily investment results, before fees and expenses, that correspond to one and one-half times (1.5x) the return of the Dow Jones U.S. Select PharmaceuticalsSM Index (the “Index”) for a single day, not for any other period. A “single day” is measured from the time the Fund calculates its net asset value (“NAV”) to the time of the Fund’s next NAV calculation. The return of the Fund for periods longer than a single day will be the result of its return for each day compounded over the period. The Fund’s return for periods longer than a single day will very likely differ in amount, and possibly even direction, from the Fund’s stated multiple (1.5x) times the return of the Fund’s Index for the same period. For periods longer than a single day, the Fund will lose money if the Index’s performance is flat, and it is possible that the Fund will lose money even if the level of the Index rises. For the year ended July 31, 2022, the Fund (Investor Class shares) had a total return of -1.71%. For the same period, the Index had a total return of 1.22%1 and a volatility of 16.47%. For the year, the Fund achieved an average daily statistical correlation of over 0.99 to one and one-half times the daily performance of the Index.2

 

The Fund takes positions in financial instruments that, in combination, should have similar daily return characteristics as one and one-half times the daily return of the Index. The Index measures the performance of the pharmaceuticals sector of the U.S. equity market. Component companies include, among others, the makers of prescription or over-the-counter drugs. The Index includes vaccine producers, but excludes vitamin producers.

 

During the year ended July 31, 2022, the Fund invested in swap agreements as a substitute for investing directly in stocks in order to gain leveraged exposure to the Index. These derivatives generally tracked the performance of their underlying benchmark and were negatively impacted by financing costs associated with their use. The Fund entered into swap agreements with counterparties that the Fund’s advisor determined to be major, global financial institutions. If a counterparty becomes insolvent or otherwise fails to perform on its obligations, the value of investments in the Fund may decline. The Fund has sought to mitigate this risk by generally requiring counterparties to post collateral for the benefit of the Fund, marked to market daily, in an amount approximately equal to the amount the counterparty owed to the Fund, subject to certain minimum thresholds.

 

Value of a $10,000 Investment at Net Asset Value*

 

 

 
*The line graph represents the historical performance of a hypothetical investment of $10,000 in the Pharmaceuticals UltraSector ProFund from July 31, 2012 to July 31, 2022, assuming the reinvestment of distributions.

 

Average Annual Total Return as of 7/31/22

 

Fund  One Year   Five Year   Ten Year 
Investor   -1.71%   5.03%   11.16%
Service   -2.69%   3.99%   10.05%
Dow Jones U.S. Select PharmaceuticalsSM Index   1.22%   5.94%   10.00%
S&P 500®   -4.64%   12.83%   13.80%

 

Expense Ratios**

 

Fund  Gross   Net     
Investor   2.27%   1.78%     
Service   3.27%   2.78%     

 

 

**Reflects the expense ratio as reported in the Prospectus dated November 30, 2021. Contractual fee waivers are in effect through November 30, 2022. See Financial Highlights for effective expense ratios.

 

Allocation of Portfolio Holdings & Index Composition

 

Market Exposure

 

Investment Type  % of Net Assets 
Equity Securities   85%
Swap Agreements   65%
Total Exposure   150%

 

“Market Exposure” includes the value of total investments (including the contract value of any derivatives) and excludes any instruments used for cash management or collateral for securities loaned.

 

Largest Equity Holdings

 

Company  % of Net Assets 
Johnson & Johnson   19.3%
Pfizer, Inc.   16.9%
Zoetis, Inc.   4.2%
Eli Lilly & Co.   4.1%
Royalty Pharma PLC   4.1%

 

Dow Jones U.S. Select PharmaceuticalsSM Index – Composition

 

   % of Index 
Pharmaceuticals   97%
Biotechnology   3%

 

Past performance does not guarantee future results. Return calculations assume the reinvestment of distributions and do not reflect taxes that a shareholder would pay on Fund distributions or on the redemption of Fund shares. The performance data quoted represents past performance and current returns may be lower or higher. The investment return and NAV will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than the original cost. The performance above reflects any fee reductions during the applicable periods. If such fee reductions had not occurred, the quoted performance would be lower. To obtain performance current to the most recent month-end, please visit www.ProFunds.com.

 

 

1The graph and table reflect the theoretical reinvestment of dividends on securities in the Indexes. The impact of transaction costs and the deduction of fees and expenses associated with a mutual fund, such as investment management and accounting fees, are not reflected in calculations of the indexes. The Fund’s performance reflects the reinvestment of dividends as well as the impact of transaction costs and the deduction of fees and expenses. It is not possible to invest directly in an index.
21.00 equals perfect correlation. This calculation is based on the daily total return of the Index and the performance of the daily total return of the NAV per share of the Fund.
3The S&P 500® is an unmanaged index that consists of the common stocks of 500 major U.S. corporations selected for their size and the frequency and ease with which their stocks trade.

 

The above information is not covered by the Report of the Independent Registered Public Accounting Firm.

 

 

 

 

Management Discussion of Fund Performance (unaudited) :: Precious Metals UltraSector ProFund :: 33

 

Precious Metals UltraSector ProFund (the “Fund”) seeks daily investment results, before fees and expenses, that correspond to one and one-half times (1.5x) the return of the Dow Jones Precious MetalsSM Index (the “Index”) for a single day, not for any other period. A “single day” is measured from the time the Fund calculates its net asset value (“NAV”) to the time of the Fund’s next NAV calculation. The return of the Fund for periods longer than a single day will be the result of its return for each day compounded over the period. The Fund’s return for periods longer than a single day will very likely differ in amount, and possibly even direction, from the Fund’s stated multiple (1.5x) times the return of the Fund’s Index for the same period. For periods longer than a single day, the Fund will lose money if the Index’s performance is flat, and it is possible that the Fund will lose money even if the level of the Index rises. For the year ended July 31, 2022, the Fund (Investor Class shares) had a total return of -38.48%. For the same period, the Index had a total return of -24.20%1 and a volatility of 32.49%. For the year, the Fund achieved an average daily statistical correlation of over 0.99 to one and one-half times the daily performance of the Index.2

 

The Fund takes positions in financial instruments that, in combination, should have similar daily return characteristics as one and one-half times the daily return of the Index. The Index measures the performance of the precious metals mining sector. Component companies include, among others, leading miners and producers of gold, silver and platinum-group metals whose securities are available to U.S. investors during U.S. trading hours.

 

During the year ended July 31, 2022, the Fund invested in swap agreements as a substitute for investing directly in stocks in order to gain leveraged exposure to the Index. These derivatives generally tracked the performance of their underlying benchmark and were negatively impacted by financing costs associated with their use. The Fund entered into swap agreements with counterparties that the Fund’s advisor determined to be major, global financial institutions. If a counterparty becomes insolvent or otherwise fails to perform on its obligations, the value of investments in the Fund may decline. The Fund has sought to mitigate this risk by generally requiring counterparties to post collateral for the benefit of the Fund, marked to market daily, in an amount approximately equal to the amount the counterparty owed to the Fund, subject to certain minimum thresholds.

 

Value of a $10,000 Investment at Net Asset Value*

 

 

 

 
*The line graph represents the historical performance of a hypothetical investment of $10,000 in the Precious Metals UltraSector ProFund from July 31, 2012 to July 31, 2022, assuming the reinvestment of distributions.

 

Average Annual Total Return as of 7/31/22

 

Fund  One Year   Five Year   Ten Year 
Investor   -38.48%   0.53%   -10.62%
Service   -39.08%   -0.47%   -11.50%
Dow Jones Precious MetalsSM Index   -24.20%   5.19%   -2.30%
S&P 500®   -4.64%   12.83%   13.80%

 

Expense Ratios**

 

Fund  Gross   Net     
Investor   1.59%   1.59%    
Service   2.59%   2.59%     

 

 

**Reflects the expense ratio as reported in the Prospectus dated November 30, 2021. Contractual fee waivers are in effect through November 30, 2022. See Financial Highlights for effective expense ratios.

 

Allocation of Portfolio Holdings & Index Composition

 

Market Exposure

 

Investment Type  % of Net Assets 
Equity Securities   71%
Swap Agreements   79%
Total Exposure   150%

 

“Market Exposure” includes the value of total investments (including the contract value of any derivatives) and excludes any instruments used for cash management or collateral for securities loaned.

 

Largest Equity Holdings

 

Company  % of Net Assets 
Newmont Corp.   13.0%
Barrick Gold Corp.   10.1%
Franco-Nevada Corp.   8.9%
Agnico Eagle Mines, Ltd.   7.1%
Wheaton Precious Metals Corp.   5.6%

 

Dow Jones Precious MetalsSM Index – Composition

 

   % of Index 
Gold   90%
Silver   6%
Precious Metals & Minerals   4%

 

Past performance does not guarantee future results. Return calculations assume the reinvestment of distributions and do not reflect taxes that a shareholder would pay on Fund distributions or on the redemption of Fund shares. The performance data quoted represents past performance and current returns may be lower or higher. The investment return and net NAV will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than the original cost. The performance above reflects any fee reductions during the applicable periods. If such fee reductions had not occurred, the quoted performance would be lower. To obtain performance current to the most recent month-end, please visit www.ProFunds.com.

 

 

1The graph and table reflect the theoretical reinvestment of dividends on securities in the indexes. The impact of transaction costs and the deduction of fees and expenses associated with a mutual fund, such as investment management and accounting fees, are not reflected in calculations of the indexes. The Fund’s performance reflects the reinvestment of dividends as well as the impact of transaction costs and the deduction of fees and expenses. It is not possible to invest directly in an Index.
  
21.00 equals perfect correlation. This calculation is based on the daily total return of the Index and the performance of the daily total return of the NAV per share of the Fund.
  
3The S&P 500® is an unmanaged index that consists of the common stocks of 500 major U.S. corporations selected for their size and the frequency and ease with which their stocks trade.

 

The above information is not covered by the Report of the Independent Registered Public Accounting Firm.

 

 

 

 

34 :: Real Estate UltraSector ProFund :: Management Discussion of Fund Performance (unaudited)

 

Real Estate UltraSector ProFund (the “Fund”) seeks daily investment results, before fees and expenses, that correspond to one and one-half times (1.5x) the return of the Dow Jones U.S. Real EstateSM Index (the “Index”) for a single day, not for any other period. A “single day” is measured from the time the Fund calculates its net asset value (“NAV”) to the time of the Fund’s next NAV calculation. The return of the Fund for periods longer than a single day will be the result of its return for each day compounded over the period. The Fund’s return for periods longer than a single day will very likely differ in amount, and possibly even direction, from the Fund’s stated multiple (1.5x) times the return of the Fund’s Index for the same period. For periods longer than a single day, the Fund will lose money if the Index’s performance is flat, and it is possible that the Fund will lose money even if the level of the Index rises. For the year ended July 31, 2022, the Fund (Investor Class shares) had a total return of -8.99%. For the same period, the Index had a total return of -3.90%1 and a volatility of 20.35%. For the year, the Fund achieved an average daily statistical correlation of over 0.99 to one and one-half times the daily performance of the Index.2

 

The Fund takes positions in financial instruments that, in combination, should have similar daily return characteristics as one and one-half times the daily return of the Index. The Index measures the performance of the real estate sector of the U.S. equity market. Component companies include real estate holding and development and real estate service companies; and real estate investment trusts (“REITs”) that invest in industrial, office and retail properties. REITs are passive investment vehicles that invest primarily in income-producing real estate or real estate related loans or interests.

 

During the year ended July 31, 2022, the Fund invested in swap agreements as a substitute for investing directly in stocks in order to gain leveraged exposure to the Index. These derivatives generally tracked the performance of their underlying benchmark and were negatively impacted by financing costs associated with their use. The Fund entered into swap agreements with counterparties that the Fund’s advisor determined to be major, global financial institutions. If a counterparty becomes insolvent or otherwise fails to perform on its obligations, the value of investments in the Fund may decline. The Fund has sought to mitigate this risk by generally requiring counterparties to post collateral for the benefit of the Fund, marked to market daily, in an amount approximately equal to the amount the counterparty owed to the Fund, subject to certain minimum thresholds.

 

Value of a $10,000 Investment at Net Asset Value*

 

 

 

*The line graph represents the historical performance of a hypothetical investment of $10,000 in the Real Estate UltraSector ProFund from July 31, 2012 to July 31, 2022, assuming the reinvestment of distributions.

 

Average Annual Total Return as of 7/31/22

 

Fund  One Year   Five Year   Ten Year 
Investor   -8.99%   6.66%   8.54%
Service   -9.89%   5.61%   7.46%
Dow Jones U.S. Real EstateSM Index   -3.90%   7.76%   8.41%
S&P 500®   -4.64%   12.83%   13.80%

 

Expense Ratios**

 

Fund  Gross   Net     
Investor   1.86%   1.78%     
Service   2.86%   2.78%     

 

 

**Reflects the expense ratio as reported in the Prospectus dated November 30, 2021. Contractual fee waivers are in effect through November 30, 2022. See Financial Highlights for effective expense ratios.

 

Allocation of Portfolio Holdings & Index Composition

 

Market Exposure

 

Investment Type  % of Net Assets 
Equity Securities   73%
Swap Agreements   78%
Total Exposure   151%

 

“Market Exposure” includes the value of total investments (including the contract value of any derivatives) and excludes any instruments used for cash management.

 

Largest Equity Holdings

 

Company  % of Net Assets 
American Tower Corp.   6.6%
Prologis, Inc.   5.1%
Crown Castle International Corp.   4.1%
Equinix, Inc.   3.4%
Public Storage   2.6%

 

Dow Jones U.S. Real EstateSM Index – Composition

 

   % of Index 
Equity Real Estate Investment Trusts (REITs)   91%
Real Estate Management & Development   4%
Mortgage Real Estate Investment Trusts (REITs)   3%
Professional Services   2%

 

Past performance does not guarantee future results. Return calculations assume the reinvestment of distributions and do not reflect taxes that a shareholder would pay on Fund distributions or on the redemption of Fund shares. The performance data quoted represents past performance and current returns may be lower or higher. The investment return and NAV will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than the original cost. The performance above reflects any fee reductions during the applicable periods. If such fee reductions had not occurred, the quoted performance would be lower. To obtain performance current to the most recent month-end, please visit www.ProFunds.com.

 

 

1The graph and table reflect the theoretical reinvestment of dividends on securities in the Indexes. The impact of transaction costs and the deduction of fees and expenses associated with a mutual fund, such as investment management and accounting fees, are not reflected in calculations of the indexes. The Fund’s performance reflects the reinvestment of dividends as well as the impact of transaction costs and the deduction of fees and expenses. It is not possible to invest directly in an index.
21.00 equals perfect correlation. This calculation is based on the daily total return of the Index and the performance of the daily total return of the NAV per share of the Fund.
3The S&P 500® is an unmanaged index that consists of the common stocks of 500 major U.S. corporations selected for their size and the frequency and ease with which their stocks trade.

 

The above information is not covered by the Report of the Independent Registered Public Accounting Firm.

 

 

 

 

Management Discussion of Fund Performance (unaudited) :: Rising Rates Opportunity ProFund :: 35

 

Rising Rates Opportunity ProFund (the “Fund”) seeks daily investment results, before fees and expenses, that correspond to one and one-quarter times the inverse (-1.25x) of the daily movement of the most recently issued 30-year U.S. Treasury Bond (the “Long Bond”) for a single day, not for any other period. A “single day” is measured from the time the Fund calculates its net asset value (“NAV”) to the time of the Fund’s next NAV calculation. The return of the Fund for periods longer than a single day will be the result of its return for each day compounded over the period. The Fund’s returns for periods longer than a single day very likely differ in amount, and possibly even direction, from the Fund’s stated multiple (-1.25x) times the return of the Long Bond for the same period. For periods longer than a single day, the Fund will lose money if the Long Bond’s performance is flat, and it is possible that the Fund will lose money even if the level of the Long Bond falls. For the year ended July 31, 2022, the Fund (Investor Class shares) had a total return of 24.67%. For the same period, the Long Bond, as measured by the Ryan Labs Returns Treasury Yield Curve 30 Year Index1, had a total return of -24.45%2 and a volatility of 22.22%. For the year, the Fund achieved an average daily statistical correlation of over 0.99 to one and one-quarter times the inverse of the daily price movement of the Long Bond.3

 

The Fund takes positions in financial instruments that, in combination, should have similar daily return characteristics as one and one-quarter times the inverse of the daily price movement of the Long Bond. The Long Bond is the longest term outstanding 30-year bond issued by the U.S. Treasury. As of July 31, 2022, the most recent Long Bond carried a maturity date of 5/15/52 and a 2.875% coupon.

 

During the year ended July 31, 2022, the Fund invested in swap agreements and future contracts as a substitute for shorting bonds in order to gain inverse leveraged exposure to the Long Bond. These derivatives generally tracked the performance of their underlying benchmark and benefited from financing costs associated with their use. The Fund entered into swap agreements with counterparties that the Fund’s advisor determined to be major, global financial institutions. If a counterparty becomes insolvent or otherwise fails to perform on its obligations, the value of investments in the Fund may decline. The Fund has sought to mitigate this risk by generally requiring counterparties to post collateral for the benefit of the Fund, marked to market daily, in an amount approximately equal to the amount the counterparty owed to the Fund, subject to certain minimum thresholds.

 

Value of a $10,000 Investment at Net Asset Value*

 

 

 
*The line graph represents the historical performance of a hypothetical investment of $10,000 in the Rising Rates Opportunity ProFund from July 31, 2012 to July 31, 2022, assuming the reinvestment of distributions.

 

Average Annual Total Return as of 7/31/22

 

Fund  One Year   Five Year   Ten Year 
Investor   24.67%   -5.07%   -5.23%
Service   23.47%   -6.01%   -6.19%
Ryan Labs Returns Treasury Yield Curve 30 Year Index   -24.45%   0.19%   0.69%

 

Expense Ratios**

 

Fund  Gross   Net     
Investor   1.69%   1.69%    
Service   2.69%   2.69%     

 

 

**Reflects the expense ratio as reported in the Prospectus dated November 30, 2021. Contractual fee waivers are in effect through November 30, 2022. See Financial Highlights for effective expense ratios.

 

Allocation of Portfolio Holdings

 

Market Exposure

 

Investment Type  % of Net Assets 
Swap Agreements   (124)%
Total Exposure   (124)%

 

“Market Exposure” includes the value of total investments (including the contract value of any derivatives) and excludes any instruments used for cash management.

 

Holdings

 

The Rising Rates Opportunity ProFund primarily invests in non-equity securities, which may include: swap agreements, futures contracts, options, forward contracts, repurchase agreements and U.S. Government securities.

 

Past performance does not guarantee future results. Return calculations assume the reinvestment of distributions and do not reflect taxes that a shareholder would pay on Fund distributions or on the redemption of Fund shares. The performance data quoted represents past performance and current returns may be lower or higher. The investment return and NAV will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than the original cost. The performance above reflects any fee reductions during the applicable periods. If such fee reductions had not occurred, the quoted performance would be lower. To obtain performance current to the most recent month-end, please visit www.ProFunds.com.

 

 

1The Ryan Labs Returns Treasury Yield Curve 30 Year Index is an index that consists of public obligations of the U.S. Treasury consisting of a single security, the latest issued on-the-run 30-year U.S. Treasury bond. This Index reflects both price return and yield. It does not reflect the impact of transaction costs nor the deduction of fees and expenses associated with a mutual fund, such as investment management and accounting fees. It is not possible to invest directly in an index.
2The Long Bond reflects a yield component. It does not reflect the impact of transaction and financing costs, nor the deduction of fees and expenses associated with a mutual fund, such as investment management and accounting fees. The Fund’s performance reflects a yield component, the impact of transaction and financing costs and the deduction of fees and expenses.
31.00 equals perfect correlation. This calculation is based on the daily total return of the Long Bond and the performance of the daily total return of the NAV per share of the Fund.

 

The above information is not covered by the Report of the Independent Registered Public Accounting Firm.

 

 

 

 

36 :: Rising Rates Opportunity 10 ProFund :: Management Discussion of Fund Performance (unaudited)

Rising Rates Opportunity 10 ProFund (the “Fund”) seeks daily investment results, before fees and expenses, that correspond to the inverse (-1x) of the daily movement of the most recently issued 10-year U.S. Treasury Note (the “Note”) for a single day, not for any other period. A “single day” is measured from the time the Fund calculates its net asset value (“NAV”) to the time of the Fund’s next NAV calculation. The return of the Fund for periods longer than a single day will be the result of its return for each day compounded over the period. The Fund’s returns for periods longer than a single day very likely differ in amount, and possibly even direction, from the Fund’s stated multiple (-1x) times the return of the Note for the same period. For periods longer than a single day, the Fund will lose money if the Note’s performance is flat, and it is possible that the Fund will lose money even if the level of the Note falls. For the year ended July 31, 2022, the Fund (Investor Class shares) had a total return of 9.17%. For the same period, the Note, as measured by the Ryan Labs Returns Treasury Yield Curve 10 Year Index1, had a total return of -12.03%2 and a volatility of 10.26%. For the year, the Fund achieved an average daily statistical correlation of over 0.99 to the inverse of the daily price movement of the Note.3

The Fund takes positions in derivatives that, in combination, should have similar daily return characteristics as the inverse of the daily price movement of the Note. As of July 31, 2022 the most recent Note carried a maturity date of 5/15/32 and a 2.875% coupon.

During the year ended July 31, 2021, the Fund invested in swap agreements and futures contracts as a substitute for shorting notes in order to gain inverse exposure to the Index. These derivatives generally tracked the performance of their underlying benchmark and benefitted from financing costs associated with their use. The Fund entered into swap agreements with counterparties that the Fund’s advisor determined to be major, global financial institutions. If a counterparty becomes insolvent or otherwise fails to perform on its obligations, the value of investments in the Fund may decline. The Fund has sought to mitigate this risk by generally requiring counterparties to post collateral for the benefit of the Fund, marked to market daily, in an amount approximately equal to the amount the counterparty owed to the Fund, subject to certain minimum thresholds. 

Value of a $10,000 Investment at Net Asset Value*

 

 

 

*The line graph represents the historical performance of a hypothetical investment of $10,000 in the Rising Rates Opportunity 10 ProFund from July 31, 2012 to July 31, 2022, assuming the reinvestment of distributions.

 

Average Annual Total Return as of 7/31/22

 

Fund  One Year   Five Year   Ten Year 
Investor   9.17%   -1.94%   -2.41%
Service   8.11%   -2.91%   -3.37%
Ryan Labs Returns Treasury Yield Curve 10 Year Index   -12.03%   0.78%   0.78%

 

Expense Ratios**

 

Fund  Gross   Net     
Investor   2.69%   1.78%    
Service   3.69%   2.78%     

 

 

**Reflects the expense ratio as reported in the Prospectus dated November 30, 2021. Contractual fee waivers are in effect through November 30, 2022. See Financial Highlights for effective expense ratios.

 

Allocation of Portfolio Holdings

 

Market Exposure

 

Investment Type  % of Net Assets 
Swap Agreements   (99)%
Total Exposure   (99)%

 

“Market Exposure” includes the value of total investments (including the contract value of any derivatives) and excludes any instruments used for cash management.

 

Holdings

 

The Rising Rates Opportunity 10 ProFund primarily invests in non-equity securities, which may include: swap agreements, futures contracts, options, forward contracts, repurchase agreements and U.S. Government securities.

 

Past performance does not guarantee future results. Return calculations assume the reinvestment of distributions and do not reflect taxes that a shareholder would pay on Fund distributions or on the redemption of Fund shares. The performance data quoted represents past performance and current returns may be lower or higher. The investment return and NAV will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than the original cost. The performance above reflects any fee reductions during the applicable periods. If such fee reductions had not occurred, the quoted performance would be lower. To obtain performance current to the most recent month-end, please visit www.ProFunds.com.

 

 

1The Ryan Labs Returns Treasury Yield Curve 10 Year Index is an index that consists of public obligations of the U.S. Treasury consisting of a single security, the latest issued on-the-run 10-year U.S. Treasury note. This index reflects both price return and yield. It does not reflect the impact of transaction costs nor the deduction of expenses associated with a mutual fund, such as investment management and accounting fees. It is not possible to invest directly in an index.
2The Note reflects a yield component. It does not reflect the impact of transaction and financing costs, nor the deduction of fees and expenses associated with a mutual fund, such as investment management and accounting fees. The Fund’s performance reflects a yield component, the impact of transaction and financing costs and the deduction of fees and expenses. Since the Rising Rates Opportunity 10 ProFund is an inverse fund, the yield of the Note is effectively paid out, rather than received.
31.00 equals perfect correlation. This calculation is based on the daily total return of the Note and the performance of the daily total return of the NAV per share of the Fund.

 

The above information is not covered by the Report of the Independent Registered Public Accounting Firm.

 

 

 

 

Management Discussion of Fund Performance (unaudited) :: Rising U.S. Dollar ProFund :: 37

 

Rising U.S. Dollar ProFund (the “Fund”) seeks daily investment results, before fees and expenses, that correspond to the inverse (-1x) of the return of the basket of currencies included in the U.S. Dollar Index (the “Index”) for a single day, not for any other period. The Index measures the performance of the U.S. dollar against a basket of six major world currencies (the “Benchmark”). A “single day” is measured from the time the Fund calculates its net asset value (“NAV”) to the time of the Fund’s next NAV calculation. The return of the Fund for periods longer than a single day will be the result of its return for each day compounded over the period. The Fund’s returns for periods longer than a single day will very likely differ in amount, and possibly even direction, from the Fund’s stated multiple (-1x) times the return of the Benchmark for the same period. For periods longer than a single day, the Fund will lose money if the Benchmark’s performance is flat, and it is possible that the Fund will lose money even if the level of the Benchmark falls. For the year ended July 31, 2022, the Fund (Investor Class shares) had a total return of 12.85%. For the same period, the Index had a price return of 14.89%1 and a volatility of 6.75%. For the year, the Fund achieved an average daily statistical correlation of over 0.99 to the daily performance of the Index.2

 

The Fund takes positions in financial instruments that, in combination, should have similar daily return characteristics as the inverse of the daily return of the Index. The six major currencies and their weightings are: Euro 57%; Japanese yen 14%; British pound 12%; Canadian dollar 9%; Swedish krona 4% and Swiss franc 4%. As the value of the U.S. dollar appreciates versus the Benchmark, the performance of the Fund increases. As the value of the U.S. dollar depreciates versus the Benchmark, the performance of the Fund declines. The Fund does not normally provide investment returns that match the Index.

 

During the year ended July 31, 2022, the Fund invested in forward currency contracts to gain inverse exposure to the Benchmark. These derivatives generally tracked the performance of their underlying benchmark. The Fund entered into forward currency contracts with counterparties that the Fund’s advisor determined to be major, global financial institutions. If a counterparty becomes insolvent or otherwise fails to perform on its obligations, the value of investments in the Fund may decline. The Fund has sought to mitigate this risk by generally requiring counterparties to post collateral for the benefit of the Fund, marked to market daily, in an amount approximately equal to the amount the counterparty owed to the Fund, subject to certain minimum thresholds.

 

Value of a $10,000 Investment at Net Asset Value*

 

 

 

*The line graph represents the historical performance of a hypothetical investment of $10,000 in the Rising U.S. Dollar ProFund from July 31, 2012 to July 31, 2022, assuming the reinvestment of distributions.

 

Average Annual Total Return as of 7/31/22

 

Fund  One Year   Five Year   Ten Year 
Investor   12.85%   2.62%   1.54%
Service   11.70%   1.62%   0.53%
U.S. Dollar Index   14.89%   2.66%   2.51%
S&P 500®   -4.64%   12.83%   13.80%

 

Expense Ratios**

 

Fund  Gross   Net     
Investor   2.13%   1.78%    
Service   3.13%   2.78%     

 

 

**Reflects the expense ratio as reported in the Prospectus dated November 30, 2021. Contractual fee waivers are in effect through November 30, 2022. See Financial Highlights for effective expense ratios.

 

Allocation of Portfolio Holdings & Index Composition

 

Market Exposure

 

Investment Type  % of Net Assets 
Forward Currency Contracts   100%
Total Exposure   100%

 

“Market Exposure” includes the value of total investments (including the contract value of any derivatives) and excludes any instruments used for cash management.

 

Holdings

 

The Rising U.S. Dollar ProFund primarily invests in non-equity securities, which may include: swap agreements, futures contracts, options, forward contracts, repurchase agreements and U.S. Government securities.

 

U.S. Dollar Index – Composition

 

   % of Index 
Euro   57%
Japanese yen   14%
British pound   12%
Canadian dollar   9%
Swedish krona   4%
Swiss franc   4%

 

Past performance does not guarantee future results. Return calculations assume the reinvestment of distributions and do not reflect taxes that a shareholder would pay on Fund distributions or on the redemption of Fund shares. The performance data quoted represents past performance and current returns may be lower or higher. The investment return and NAV will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than the original cost. The performance above reflects any fee reductions during the applicable periods. If such fee reductions had not occurred, the quoted performance would be lower. To obtain performance current to the most recent month-end, please visit www.ProFunds.com.

 

 
1The graph and table DO NOT reflect the theoretical reinvestment of dividends nor the impact of transaction costs and the deduction of fees and expenses associated with a mutual fund, such as investment management and accounting fees. The Fund’s performance reflects the reinvestment of dividends as well as the impact of transaction costs and the deduction of fees and expenses. It is not possible to invest directly in an index.
21.00 equals perfect correlation. This calculation is based on the daily total return of the Index and the performance of the daily total return of the NAV per share of the Fund.
3The S&P 500® is an unmanaged index that consists of the common stocks of 500 major U.S. corporations selected for their size and the frequency and ease with which their stocks trade. The graph and table reflect the theoretical reinvestment of dividends on securities in the Index. The impact of the transaction costs and the deduction of fees and expenses associated with a mutual fund, such as investment management and accounting fees, are not reflected in the Index calculations. It is not possible to invest directly in an index.

 

The above information is not covered by the Report of the Independent Registered Public Accounting Firm.

 

 

 

 

38 :: Semiconductor UltraSector ProFund :: Management Discussion of Fund Performance (unaudited)

 

Semiconductor UltraSector ProFund (the “Fund”) seeks daily investment results, before fees and expenses, that correspond to one and one-half times (1.5x) the return of the Dow Jones U.S. SemiconductorsSM Index (the “Index”) for a single day, not for any other period. A “single day” is measured from the time the Fund calculates its net asset value (“NAV”) to the time of the Fund’s next NAV calculation. The return of the Fund for periods longer than a single day will be the result of its return for each day compounded over the period. The Fund’s return for periods longer than a single day will very likely differ in amount, and possibly even direction, from the Fund’s stated multiple (1.5x) times the return of the Fund’s Index for the same period. For periods longer than a single day, the Fund will lose money if the Index’s performance is flat, and it is possible that the Fund will lose money even if the level of the Index rises. For the year ended July 31, 2022, the Fund (Investor Class shares) had a total return of -17.93%. For the same period, the Index had a total return of -7.40%1 and a volatility of 40.56%. For the year, the Fund achieved an average daily statistical correlation of over 0.99 to one and one-half times the daily performance of the Index.2

 

The Fund takes positions in financial instruments that, in combination, should have similar daily return characteristics as one and one-half times the daily return of the Index. The Index measures the performance of the semiconductor sector of the U.S. equity market. Component companies are engaged in the production of semiconductors and other integrated chips, as well as other related products such as semiconductor capital equipment and motherboards.

 

During the year ended July 31, 2022, the Fund invested in swap agreements as a substitute for investing directly in stocks in order to gain leveraged exposure to the Index. These derivatives generally tracked the performance of their underlying benchmark and were negatively impacted by financing costs associated with their use. The Fund entered into swap agreements with counterparties that the Fund’s advisor determined to be major, global financial institutions. If a counterparty becomes insolvent or otherwise fails to perform on its obligations, the value of investments in the Fund may decline. The Fund has sought to mitigate this risk by generally requiring counterparties to post collateral for the benefit of the Fund, marked to market daily, in an amount approximately equal to the amount the counterparty owed to the Fund, subject to certain minimum thresholds.

 

Value of a $10,000 Investment at Net Asset Value*

 

 

 

*The line graph represents the historical performance of a hypothetical investment of $10,000 in the Semiconductor UltraSector ProFund from July 31, 2012 to July 31, 2022, assuming the reinvestment of distributions.

 

Average Annual Total Return as of 7/31/22

 

Fund  One Year   Five Year   Ten Year 
Investor   -17.93%   26.27%   27.68%
Service   -18.76%   25.00%   26.40%
Dow Jones U.S. SemiconductorsSM Index   -7.40%   22.50%   22.04%
S&P 500®   -4.64%   12.83%   13.80%

 

Expense Ratios**

 

Fund  Gross   Net     
Investor   1.58%   1.58%    
Service   2.58%   2.58%     

 

 

**Reflects the expense ratio as reported in the Prospectus dated November 30, 2021. Contractual fee waivers are in effect through November 30, 2022. See Financial Highlights for effective expense ratios.

 

Allocation of Portfolio Holdings & Index Composition

 

Market Exposure

 

Investment Type  % of Net Assets 
Equity Securities   75%
Swap Agreements   74%
Total Exposure   149%

 

“Market Exposure” includes the value of total investments (including the contract value of any derivatives) and excludes any instruments used for cash management or collateral for securities loaned.

 

Largest Equity Holdings

 

Company  % of Net Assets 
NVIDIA Corp.   16.8%
Broadcom, Inc.   8.1%
Texas Instruments, Inc.   6.1%
Qualcomm, Inc.   6.0%
Advanced Micro Devices, Inc.   5.7%

 

Dow Jones U.S. SemiconductorsSM Index – Composition

 

   % of Index 
Semiconductors & Semiconductor Equipment   100%

 

Past performance does not guarantee future results. Return calculations assume the reinvestment of distributions and do not reflect taxes that a shareholder would pay on Fund distributions or on the redemption of Fund shares. The performance data quoted represents past performance and current returns may be lower or higher. The investment return and NAV will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than the original cost. The performance above reflects any fee reductions during the applicable periods. If such fee reductions had not occurred, the quoted performance would be lower. To obtain performance current to the most recent month-end, please visit www.ProFunds.com.

 

 
1The graph and table reflect the theoretical reinvestment of dividends on securities in the Indexes. The impact of transaction costs and the deduction of fees and expenses associated with a mutual fund, such as investment management and accounting fees, are not reflected in calculations of the indexes. The Fund’s performance reflects the reinvestment of dividends as well as the impact of transaction costs and the deduction of fees and expenses. It is not possible to invest directly in an index.
21.00 equals perfect correlation. This calculation is based on the daily total return of the Index and the performance of the daily total return of the NAV per share of the Fund.
3The S&P 500® is an unmanaged index that consists of the common stocks of 500 major U.S. corporations selected for their size and the frequency and ease with which their stocks trade.

 

The above information is not covered by the Report of the Independent Registered Public Accounting Firm.

 

 

 

 

Management Discussion of Fund Performance (unaudited) :: Short Bitcoin Strategy ProFund :: 39

 

Short Bitcoin Strategy ProFund (the "Fund") seeks daily investment results, before fees and expenses, that correspond to the inverse (-1x) of the daily performance of the S&P CME Bitcoin Futures Index1 the ("Index") for a single day, not for any other period. A "single day" is measured from the time the Fund calculates its net asset value ("NAV") to the time of the Fund's next NAV calculation. The return of the Fund for periods longer than a single day will be the result of its return for each day compounded over the period. The Fund's return for periods longer than a single day will very likely differ in amount, and possibly even direction, from the Fund's stated multiple (-1x) times the return of the Index for the same period. For periods longer than a single day, the Fund will lose money if the Index's performance is flat, and it is possible that the Fund will lose money even if the level of the Index falls. For the period from June 21, 2022 (commencement of operations) through July 31, 2022, the Fund (Investor Class shares) had a total return of -17.40%. For the same period, the Index had a total return of 14.73%.2

 

The Fund does not invest directly in bitcoin nor does it directly short bitcoin. Instead, the Fund seeks to benefit from decreases in the price of bitcoin futures contracts for a single day. The Fund expects to gain exposure to these instruments by investing a portion of its assets in the ProFunds Short Bitcoin Strategy Portfolio, a wholly-owned subsidiary of the Fund organized under the laws of the Cayman Islands (the "Subsidiary"). The Subsidiary is advised by the Fund's Advisor. Unlike the Fund, the Subsidiary is not an investment company registered under the Investment Company Act of 1940. The Fund's investment in the Subsidiary is intended to provide the Fund with exposure to commodity markets in accordance with applicable rules and regulations. The Subsidiary has the same investment objective as the Fund.

 

During the year ended July 31, 2022, the Fund, through its investment in Subsidiary, invested in CME Bitcoin futures and CME Micro Bitcoin futures contracts.

 

Value of a $10,000 Investment at Net Asset Value*

 

 

 

 

*The line graph represents the historical performance of a hypothetical investment of $10,000 in the Short Bitcoin Strategy ProFund from June 21, 2022 to July 31, 2022, assuming the reinvestment of distributions.

 

Average Annual Total Return as of 7/31/22

 

Fund  Since Inception 
Investor   -17.40%
S&P CME Bitcoin Futures Index   14.73%

 

Expense Ratios**

 

Fund  Gross   Net 
Investor   1.26%   1.26%

 

 

**Reflects the expense ratio as reported in the Prospectus dated June 19, 2022. See Financial Highlights for effective expense ratios.

 

Allocation of Portfolio Holdings

 

Market Exposure

 

Investment Type  % of Net Assets 
Futures Contracts   (99)%
Total Exposure   (99)%

 

"Market Exposure" includes the value of total investments (including the contract value of any derivatives) and excludes any instruments used for cash management.

 

Holdings

 

The Short Bitcoin Strategy ProFund primarily invests in non-equity securities, which may include: futures contracts, Canadian Exchange Traded Funds, repurchase agreements and reverse repurchase agreements, and U.S. Government securities.

 

Past performance does not guarantee future results. Return calculations assume the reinvestment of distributions and do not reflect taxes that a shareholder would pay on Fund distributions or on the redemption of Fund shares. The performance data quoted represents past performance and current returns may be lower or higher. The investment return and NAV will fluctuate so that an investor's shares, when redeemed, may be worth more or less than the original cost. The performance above reflects any fee reductions during the applicable periods. If such fee reductions had not occurred, the quoted performance would be lower. To obtain performance current to the most recent month-end, please visit www.ProFunds.com.

 

 

1The S&P CME Bitcoin Futures Index (the "Index") measures the performance of the front-month bitcoin futures contract trading on the Chicago Mercantile Exchange ("CME"). The Index is constructed from futures contracts and includes a provision for replacement of the Index futures contracts as the contracts approach maturity. This is often referred to as "rolling" a futures contract. The Index rolls monthly and distributes the weights 20% each day over a five-day roll period.

 

2The impact of transaction costs and the deduction of fees and expenses associated with a mutual fund, such as investment management and accounting fees, are not reflected in calculations of the index. The Fund's performance reflects the reinvestment of dividends as well as the impact of transaction costs and the deduction of fees and expenses. It is not possible to invest directly in an index.

 

The above inf