Fund. While the performance of bitcoin futures contracts, in general, has historically been highly correlated to the performance of “spot” bitcoin, there can be no guarantee that this will continue. “Spot” bitcoin refers to bitcoin that can be purchased immediately.
5. The fifth paragraph of the risk entitled “Holding Period Risk” is replaced with the following:
The Index’s annualized historical volatility rate for the five-year period ended July 31, 2023, was 68.10%. The Index’s highest July to July volatility rate during the five-year period was 79.46% (July 31, 2019). The Index’s annualized total return performance for the five-year period ended July 31, 2023, was 30.41%. Historical Index volatility and performance do not predict future Index volatility and performance.
6. The following is added as a risk immediately following the risk entitled “Correlation Risk”:
•Risks Associated with the Use of Derivatives – Investing in derivatives to obtain inverse exposure may be considered aggressive and may expose the Fund to greater risks including counterparty risk and correlation risk. The Fund may lose money if its derivatives do not perform as expected and may even lose money if they do perform as expected. To the extent the Fund invests in swaps that use an ETF as the reference asset, the Fund may be subject to greater correlation risk since the performance of the ETF may not track the performance of the Index. Any costs associated with using derivatives will reduce the Fund’s return.
7. The risk entitled “Counterparty Risk” is replaced with the following:
•Counterparty Risk – The Fund may lose money if a counterparty does not meet its contractual obligations. With respect to swap agreements, if the Index has a dramatic intraday move that causes a material decline in the Fund’s net assets, the terms of a swap agreement between the Fund and its counterparty may permit the counterparty to immediately close out the transaction with the Fund. In that event, the Fund may be unable to enter into another swap agreement or invest in other derivatives to achieve its investment objective.
8. The first paragraph of the risk entitled “Bitcoin Risk” is replaced with the following:
•Bitcoin Risk – The Fund’s investments in swap agreements and bitcoin futures contracts expose the Fund to the risks associated with an investment in bitcoin because the price of these derivatives are substantially based on the price of bitcoin. Bitcoin is a relatively new innovation and is subject to unique and substantial risks. The market for bitcoin is subject to rapid price swings, changes and uncertainty.
Principal Investment Strategies – Statutory Section
9. The second paragraph in the section entitled “Short Bitcoin Strategy ProFund” is deleted in its entirety.
Understanding the Risks and Long-Term Performance of a Daily Objective Fund – Statutory Section
10. The sixth paragraph under the section entitled “Understanding the Risks and Long-Term Performance of a Daily Objective Fund” is replaced with the following:
To isolate the impact of inverse exposure, these graphs assume: a) no Fund expenses and b) borrowing/lending rates of zero percent. If these were reflected, the Fund’s performance would be lower than the performance returns shown. Each of the graphs also assumes a volatility rate of 71%, which is similar to the five-year historical volatility rate of the Bloomberg Galaxy Bitcoin Index. An index’s volatility rate is a statistical measure of the magnitude of fluctuations in the returns of an index.
11. The second to last sentence under the section entitled “Understanding the Risks and Long-Term Performance of a Daily Objective Fund” prior to the subsection entitled “What it means for you” is replaced with the following: