EXHIBIT 23(d)(12)
AMENDED AND RESTATED
INVESTMENT ADVISORY AGREEMENT
AGREEMENT made this 28th day of October, 1997 and amended as of February
18, 1998 and amended and restated as of October 15, 1999, January 24, 2000, May
5, 2000, August 24, 2000, December 8, 2000, January 26, 2001, May 1, 2001,
September 1, 2001 and May 1, 2002 between ProFunds, a Delaware business trust
(the "Trust"), and ProFund Advisors LLC, a Maryland limited liability company
(the "Advisor").
WHEREAS, the Advisor is registered as an investment adviser under the
Investment Advisers Act of 1940, as amended, and is engaged principally in the
business of rendering investment management services; and
WHEREAS, the Trust is registered as an open-end management investment
company under the Investment Company Act of 1940, as amended (the "1940 Act");
and
WHEREAS, the Trust is authorized to issue shares of beneficial interest
("shares") in separate series with each such series representing interests in a
separate portfolio of securities and other assets; and
WHEREAS, the Trust currently offers eighty series of shares, and may offer
additional portfolios in the future; and
WHEREAS, the Trust desires to retain the services of the Advisor to provide
a continuous program of investment management for the following portfolios of
the Trust: Bull ProFund, UltraBull ProFund, Bear ProFund, UltraBear ProFund,
UltraOTC ProFund, UltraShort OTC ProFund, Europe 30 ProFund, ProFund VP Bull,
ProFund VP Bull Plus, ProFund VP UltraBull, ProFund VP UltraOTC, ProFund VP
Europe 30, ProFund VP UltraEurope, ProFund VP Bear, ProFund VP UltraBear,
ProFund VP UltraShort OTC, ProFund VP Money Market, UltraSmall-Cap ProFund,
UltraMid-Cap ProFund, UltraJapan ProFund, Airlines UltraSector ProFund, Banks
UltraSector ProFund, Basic Materials UltraSector ProFund, Biotechnology
UltraSector ProFund, Consumer Cyclical UltraSector ProFund, Consumer
Non-Cyclical UltraSector ProFund, Energy UltraSector ProFund, Leisure Goods &
Services UltraSector ProFund, Financial UltraSector ProFund, Healthcare
UltraSector ProFund, Industrial UltraSector ProFund, Internet UltraSector
ProFund, Oil Drilling Equipment & Services UltraSector ProFund, Pharmaceuticals
UltraSector ProFund, Precious Metals UltraSector ProFund, Real Estate
UltraSector ProFund, Semiconductor UltraSector ProFund, Technology UltraSector
ProFund, Telecommunications UltraSector ProFund, Utilities UltraSector ProFund,
Wireless Communications UltraSector ProFund, OTC ProFund, ProFund VP OTC,
ProFund VP UltraSmall-Cap, ProFund VP Small-Cap, ProFund VP Japan, ProFund VP
Airlines, ProFund XX Xxxxx, ProFund VP Basic Materials, ProFund VP
Biotechnology, ProFund VP Consumer Cyclical, ProFund VP Consumer Non-Cyclical,
ProFund VP Energy, ProFund VP Leisure Goods & Services, ProFund VP Financial,
ProFund VP
Healthcare, ProFund VP Industrial, ProFund VP Internet, ProFund VP Oil Drilling
Equipment & Services, ProFund VP Pharmaceuticals, ProFund VP Precious Metals,
ProFund VP Real Estate, ProFund VP Semiconductor, ProFund VP Technology, ProFund
VP Telecommunications, ProFund VP Utilities, ProFund VP Wireless Communications,
ProFund VP Small-Cap Value, ProFund VP Small-Cap Growth, ProFund VP Mid-Cap,
ProFund VP Mid-Cap Value, ProFund VP Mid-Cap Growth, ProFund VP UltraMid-Cap,
Small-Cap ProFund, Small-Cap Value ProFund, Small-Cap Growth ProFund, Mid-Cap
ProFund, Mid-Cap Value ProFund, Mid-Cap Growth ProFund, ProFund VP Asia 30,
ProFund VP U.S. Government Plus, ProFund VP UltraDow 30, ProFund VP Short OTC,
ProFund VP Short Small-Cap and the ProFund VP Rising Rates Opportunity, Asia 30
ProFund, UltraDow 30 ProFund, U.S. Government Plus ProFund, Short OTC ProFund,
Short Small-Cap ProFund, Rising Rates Opportunity ProFund and the Money Market
ProFund (each referred to hereinafter as a "Portfolio" and collectively as the
"Portfolios"); and
WHEREAS, the Advisor is willing, in accordance with the terms and
conditions hereof to provide such services to the Trust on behalf of such
Portfolios.
NOW, THEREFORE, in consideration of the mutual agreements set forth herein
and intending to be legally bound hereby, it is agreed between the parties as
follows:
1. APPOINTMENT OF ADVISOR
----------------------
The Trust hereby appoints Advisor to provide the advisory services set
forth herein to the Portfolios and Advisor agrees to accept such appointment and
agrees to render the services set forth herein for the compensation herein
provided. In carrying out its responsibilities under this Agreement, Advisor
shall at all times act in accordance with the investment objectives, policies
and restrictions applicable to the Portfolios as set forth in the then-current
Registration Statement of the Trust, applicable provisions of the 1940 Act and
the rules and regulations promulgated thereunder and other applicable federal
securities laws and regulations.
2. DUTIES OF ADVISOR
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Advisor shall provide a continuous program of investment management for
each Portfolio. Subject to the general supervision of the Trust's Board of
Trustees, Advisor shall have sole investment discretion with respect to the
Portfolios, including investment research, selection of the securities to be
purchased and sold and the portion of the assets of each Portfolio, if any, that
shall be held uninvested, and the selection of broker-dealers through which
securities transactions in the Portfolios will be executed. Advisor shall manage
the Portfolios in accordance with the objectives, policies and limitations set
forth in the Trust's current Prospectus and Statement of Additional Information.
Specifically, and without limiting the generality of the foregoing, Advisor
agrees that it will:
(a) promptly advise each Portfolio's designated custodian bank and
administrator or accounting agent of each purchase and sale, as the case
may be, made on behalf of the Portfolio, specifying the name and quantity
of the security purchased or sold, the unit and aggregate purchase or sale
price, commission paid, the market on which the transaction was effected,
the trade date, the settlement date, the identity of the effecting broker
or dealer and/or such other
information, and in such manner, as may from time to time be reasonably
requested by the Trust;
(b) maintain all applicable books and records with respect to the
securities transactions of the Portfolio. Specifically, but without
limitation, Advisor agrees to maintain with respect to each Portfolio those
records required to be maintained under Rule 31a-1(b)(1), (b)(5) and (b)(6)
under the 1940 Act with respect to transactions in each Portfolio
including, without limitation, records which reflect securities purchased
or sold in the Portfolio, showing for each such transaction, the market on
which the transaction was effected, the trade date, the settlement date,
and the identity of the executing broker or dealer. Advisor will preserve
such records in the manner and for the periods prescribed by Rule 31a-2
under the 1940 Act. Advisor acknowledges and agrees that all such records
it maintains for the Trust are the property of the Trust and Advisor will
surrender promptly to the Trust any such records upon the Trust's request;
(c) provide, in a timely manner, such information as may be reasonably
requested by the Trust or its designated agents in connection with, among
other things, the daily computation of each Portfolio's net asset value and
net income, preparation of proxy statements or amendments to the Trust's
registration statement and monitoring investments made in the Portfolio to
ensure compliance with the various limitations on investments applicable to
the Portfolio, to ensure that the Portfolio will continue to qualify for
the tax treatment accorded to regulated investment companies under
Subchapter M of the Internal Revenue Code of 1986, as amended (the "Code"),
and to ensure that the Portfolios that serve as the investment medium for
variable insurance contracts are managed in conformity with the
requirements of Section 817 of the Code and Treasury Regulatory subsection
1.817-5 thereunder (or any successor or amended provision);
(d) render regular reports to the Trust concerning the performance by
Advisor of its responsibilities under this Agreement. In particular,
Advisor agrees that it will, at the reasonable request of the Board of
Trustees, attend meetings of the Board or its validly constituted
committees and will, in addition, make its officers and employees available
to meet with the officers and employees of the Trust at least quarterly and
at other times upon reasonable notice, to review the investments and
investment programs of the Portfolio;
(e) maintain its policy and practice of conducting its fiduciary
functions independently. In making investment recommendations for the
Portfolios, the Advisor's personnel will not inquire or take into
consideration whether the issuers of securities proposed for purchase or
sale for the Trust's account are customers of the Advisor or of its
affiliates. In dealing with such customers, the Advisor and its affiliates
will not inquire or take into consideration whether securities of those
customers are held by the Trust; and
(f) review periodically and take responsibility for the material
accuracy and completeness of the information supplied by or at the request
of the
Advisor for inclusion in Trust's registration statement under the 1940 Act
and the Securities Act of 1933.
3. PORTFOLIO TRANSACTIONS
----------------------
Advisor shall be responsible for selecting members of securities exchanges,
brokers and dealers (herein after referred to as "brokers") for the execution of
purchase and sale transactions for the Portfolios. In executing portfolio
transactions and selecting brokers or dealers, if any, the Advisor will use its
best efforts to seek on behalf of a Portfolio the best overall terms available.
In assessing the best overall terms available for any transaction, the Advisor
shall consider all factors it deems relevant, including brokerage and research
services (as those terms are defined in Section 28(e) of the Securities Exchange
Act of 1934) provided to any Portfolio of the Trust and/or other accounts over
which the Advisor or an affiliate of the Advisor exercises investment
discretion. The Advisor may pay to a broker or dealer who provides such
brokerage and research services a commission for executing a portfolio
transaction which is in excess of the amount of commission another broker or
dealer would have charged for effecting that transaction if, but only if, the
Advisor determines in good faith that such commission was reasonable in relation
to the value of the brokerage and research services provided. The Advisor will
report to the Trustees from time to time regarding its portfolio execution and
brokerage practices.
4. EXPENSES AND COMPENSATION
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a) Allocation of Expenses
----------------------
The Advisor shall, at its expense, employ or associate with itself
such persons as it believes appropriate to assist in performing its
obligations under this Agreement and provide all advisory services,
equipment, facilities and personnel necessary to perform its obligations
under this Agreement.
The Trust shall be responsible for all its expenses and liabilities,
including, without limitation, compensation of its Trustees who are not
affiliated with the Portfolios' Administrator or the Advisor or any of
their affiliates; taxes and governmental fees; interest charges; fees and
expenses of the Trust's independent accountants and legal counsel; trade
association membership dues; fees and expenses of any custodian (including
for keeping books and accounts and calculating the net asset value of
shares of each Portfolio, transfer agent, registrar and dividend disbursing
agent of the Trust; expenses of issuing, selling, redeeming, registering
and qualifying for sale the Trust's shares of beneficial interest; expenses
of preparing and printing share certificates (if any), prospectuses,
shareholders' reports, notices, proxy statements and reports to regulatory
agencies; the cost of office supplies; travel expenses of all officers,
trustees and employees; insurance premiums; brokerage and other expenses of
executing portfolio transactions; expenses of shareholders' meetings;
organizational expenses; and extraordinary expenses.
b) Compensation
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Subject to Section 5, for its services under this Agreement, Advisor
shall be entitled to receive a fee calculated at the applicable annual rate
set forth on Schedule A hereto with respect to the average daily net asset
value of each Portfolio, which will be paid monthly. For the purpose of
accruing compensation, the net asset value of the Portfolios will be
determined in the manner provided in the then-current Prospectus of the
Trust.
c) Expense Limitations
-------------------
Advisor may waive all or a portion of its fees provided for hereunder
and such waiver will be treated as a reduction in the purchase price of its
services. Advisor shall be contractually bound hereunder by the terms of
any publicity announced waiver of its fee, or any limitation of the
Portfolio's expenses, as if such waiver were fully set forth herein.
5. MONEY MARKET PROFUND
--------------------
The Money Market ProFund currently invests all of its investable assets in
another mutual fund with a substantially similar investment objective (the
"Portfolio"). For so long as the Money Market ProFund invests all of its
investable assets in the Portfolio, or any successor mutual fund, the Advisor
shall not be entitled to any fee pursuant to Section 4(b) with respect to the
Money Market ProFund. Should the Trust's Board of Trustees determine that it is
in the best interests of the Money Market ProFund and its shareholders to
withdraw the Money Market ProFund's investment in the Portfolio (or successor),
the Advisor will directly manage, or supervise the direct management of, the
assets of the Money Market ProFund in accordance with the terms of this
Agreement. The Advisor may employ one or more investment sub-advisers from time
to time to perform some of the duties and services of the Advisor, including the
selection of brokers for the execution of portfolio transactions, for the Money
Market Portfolio, upon such terms and conditions as may be agreed upon between
the Advisor and such investment sub-adviser(s) and approved by the Trust's Board
of Trustees.
6. LIABILITY OF ADVISOR
--------------------
Neither the Advisor nor its officers, directors, employees, agents or
controlling person ("Associated Person") of the Advisor shall be liable for any
error of judgement or mistake of law or for any loss suffered by the Trust in
connection with the matters to which this Agreement relates including, without
limitation, losses that may be sustained in connection with the purchase,
holding, redemption or sale of any security or other investment by the Trust
except a loss resulting from willful misfeasance, bad faith or gross negligence
on the part of Advisor or such Associated Persons in the performance of their
duties or from reckless disregard by them of their duties under this Agreement.
7. LIABILITY OF THE TRUST AND PORTFOLIOS
-------------------------------------
It is expressly agreed that the obligations of the Trust hereunder shall
not be binding upon any of the Trustees, shareholders, nominees, officers,
agents or employees of the Trust personally, but shall bind only the trust
property of the Trust as provided in the Declaration of Trust. The execution and
delivery of this Agreement have been authorized by the Trustees, and it has been
signed by an officer of the Trust, acting as such, and neither such
authorization by such Trustees nor such execution and delivery by such officer
shall be deemed to have been made by any of them individually or to impose any
liability on any of them personally, but shall bind only the trust property of
the Trust as provided in its Declaration of Trust.
With respect to any obligation of the Trust on behalf of any Portfolio
arising hereunder, the Advisor shall look for payment or satisfaction of such
obligations solely to the assets and property of the Portfolio to which such
obligation relates as though the Trust had separately contracted with the
Advisor by separate written instrument with respect to each Portfolio.
8. DURATION AND TERMINATION OF THIS AGREEMENT
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(a) Duration. This Agreement shall become effective on the date
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hereof. Unless terminated as herein provided, this Agreement shall remain
in full force and effect for two years from the date hereof. Subsequent to
such initial period of effectiveness, this Agreement shall continue in full
force and effect for successive periods of one year thereafter with respect
to each Portfolio so long as such continuance with respect to such
Portfolio is approved at least annually (a) by either the Trustees of the
Trust or by vote of a majority of the outstanding voting securities (as
defined in the 0000 Xxx) of such Portfolio, and (b), in either event, by
the vote of a majority of the Trustees of the Trust who are not parties to
this Agreement or "interested persons" (as defined in the 0000 Xxx) of any
such party, cast in person at a meeting called for the purpose of voting on
such approval.
(b) Amendment. Any amendment to this Agreement shall become effective
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with respect to a Portfolio upon approval by the Advisor and the Trustees,
and to the extent required by applicable law, a majority of the outstanding
voting securities (as defined in the 0000 Xxx) of that Portfolio.
(c) Termination. This Agreement may be terminated with respect to any
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Portfolio at any time, without payment of any penalty, by vote of the
Trustees or by vote of a majority of the outstanding voting securities (as
defined in the 0000 Xxx) of that Portfolio, or by the Advisor, in each case
upon sixty (60) days' prior written notice to the other party. Any
termination of this Agreement will be without prejudice to the completion
of transactions already initiated by the Advisor on behalf of the Trust at
the time of such termination. The Advisor shall take all steps reasonably
necessary after such termination to complete any such transactions and is
hereby authorization to take such steps. In addition, this Agreement may be
terminated with respect to one or more Portfolios without affecting the
rights, duties or obligations of any of the other Portfolios.
(d) Automatic Termination. This Agreement shall automatically and
---------------------
immediately terminate in the event of its assignment (as defined in the
1940 Act).
(e) Approval, Amendment or Termination by Individual Portfolio. Any
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approval, amendment or termination of this Agreement by the holders of a
majority of the outstanding voting securities (as defined in the 0000 Xxx)
of any Portfolio shall be effective to continue, amend or terminate this
Agreement with respect to any such Portfolio notwithstanding (i) that such
action has not been approved by the holders of a majority of the
outstanding voting securities of any other Portfolio affected thereby, and
(ii) that such action has not been approved by the vote of a majority of
the outstanding voting securities of the Trust, unless such action shall be
required by any applicable law or otherwise.
(f) Use of Name. The parties acknowledge and agree that the names
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"ProFunds", "VP ProFunds" (collectively, the "ProFund Names") and any
derivatives thereof, as well as any logos that are now or shall hereafter
be associated with the ProFund Names are the valuable property of the
Advisor. In the event that this Agreement is terminated and the Advisor no
longer acts as Investment Advisor to the Trust, the Advisor reserves the
right to withdraw from the Trust and the Portfolios the uses of the ProFund
Names and logos or any name or logo misleadingly implying a continuing
relationship between the Trust of the Portfolios and the Advisor or any of
its affiliates.
9. SERVICES NOT EXCLUSIVE
----------------------
The services of the Advisor to the Trust hereunder are not to be deemed
exclusive, and the Advisor shall be free to render similar services to others so
long as its services hereunder are not impaired thereby.
10. MISCELLANEOUS
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(a) Notice. Any notice under this Agreement shall be in writing,
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addressed and delivered or mailed, postage prepaid, to the other party at
such address as such other party may designate in writing for the receipt
of such notices.
(b) Severability. If any provision of this Agreement shall be held or
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made invalid by a court decision, statue, rule or otherwise, the remainder
shall not be thereby affected.
(c) Applicable Law. This Agreement shall be construed in accordance
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with and governed by the laws of Maryland.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the date written below.
ProFund Advisors LLC, a Maryland
limited liability company
ATTEST: By:
---------------------------- -------------------------------------
Xxxxxxx X. Xxxxx
Chairman and Chief Executive Officer
Date: May 1, 2002
ProFunds, a Delaware business trust
ATTEST: By:
---------------------------- -------------------------------------
Xxxxxxx X. Xxxxx
Trustee and Chairman
Date: May 1, 2002
SCHEDULE A
TO THE AMENDED AND RESTATED
INVESTMENT ADVISORY AGREEMENT
BETWEEN PROFUNDS AND PROFUND ADVISORS LLC
AS OF MAY 1, 2002
NAME OF FUND COMPENSATION
------------ ------------
(at Annual rate expressed as a
percentage of average daily net assets
of each Fund)/(1)/
Bull ProFund 0.75%
UltraBull ProFund 0.75%
Bear ProFund 0.75%
UltraOTC ProFund 0.75%
UltraShort OTC ProFund 0.75%
Europe 30 ProFund 0.75%
ProFund VP Bull 0.75%
ProFund VP Bull Plus 0.75%
ProFund VP UltraBull 0.75%
ProFund VP UltraOTC 0.75%
ProFund VP Europe 30 0.75%
ProFund VP UltraEurope 0.90%
ProFund VP UltraSmall-Cap 0.75%
ProFund VP Bear 0.75%
ProFund VP UltraBear 0.75%
ProFund VP UltraShort OTC 0.75%
ProFund VP Money Market 0.75%
UltraBear ProFund 0.75%
UltraSmall-Cap ProFund 0.75%
UltraMid-Cap ProFund 0.75%
UltraJapan ProFund 0.90%
Basic Materials UltraSector ProFund 0.75%
Biotechnology UltraSector ProFund 0.75%
Consumer Cyclical UltraSector ProFund 0.75%
Consumer Non-Cyclical UltraSector ProFund 0.75%
Energy UltraSector ProFund 0.75%
Financial UltraSector ProFund 0.75%
Healthcare UltraSector ProFund 0.75%
Industrial UltraSector ProFund 0.75%
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/1/ All fees are computed daily and paid monthly.
NAME OF FUND COMPENSATION
------------ ------------
(at Annual rate expressed as a
percentage of average daily net assets
of each Fund)/(2)/
Internet UltraSector ProFund 0.75%
Pharmaceuticals UltraSector ProFund 0.75%
Precious Metals UltraSector ProFund 0.75%
Real Estate UltraSector ProFund 0.75%
Semiconductor UltraSector ProFund 0.75%
Technology UltraSector ProFund 0.75%
Telecommunications UltraSector ProFund 0.75%
Utilities UltraSector ProFund 0.75%
Wireless Communications UltraSector ProFund 0.75%
OTC ProFund 0.70%
Airlines UltraSector ProFund 0.75%
Banks UltraSector ProFund 0.75%
Leisure Goods & Services UltraSector ProFund 0.75%
Oil Drilling Equipment & Services UltraSector ProFund 0.75%
ProFund VP OTC 0.75%
ProFund VP Japan 0.90%
ProFund VP Small-Cap 0.75%
ProFund VP Airlines 0.75%
ProFund XX Xxxxx 0.75%
ProFund VP Basic Materials 0.75%
ProFund VP Biotechnology 0.75%
ProFund VP Consumer Cyclical 0.75%
ProFund VP Consumer Non-Cyclical 0.75%
ProFund VP Energy 0.75%
ProFund VP Leisure Goods & Services 0.75%
ProFund VP Financial 0.75%
ProFund VP Healthcare 0.75%
ProFund VP Industrial 0.75%
ProFund VP Internet 0.75%
ProFund VP Oil Drilling Equipment & Services 0.75%
ProFund VP Pharmaceuticals 0.75%
ProFund VP Precious Metals 0.75%
ProFund VP Real Estate 0.75%
ProFund VP Semiconductor 0.75%
ProFund VP Technology 0.75%
ProFund VP Telecommunications 0.75%
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/2/ All fees are computed daily and paid monthly.
NAME OF FUND COMPENSATION
------------ ------------
(at Annual rate expressed as a
percentage of average daily net assets
of each Fund)/(3)/
ProFund VP Utilities 0.75%
ProFund VP Wireless Communications 0.75%
ProFund VP Small-Cap Value 0.75%
ProFund VP Small-Cap Growth 0.75%
ProFund VP Mid-Cap 0.75%
ProFund VP Mid-Cap Value 0.75%
ProFund VP Mid-Cap Growth 0.75%
ProFund VP UltraMid-Cap 0.75%
Small-Cap ProFund 0.75%
Small-Cap Value ProFund 0.75%
Small-Cap Growth ProFund 0.75%
Mid-Cap ProFund 0.75%
Mid-Cap Value ProFund 0.75%
Mid-Cap Growth ProFund 0.75%
ProFund VP Asia 30 0.75%
ProFund VP U.S. Government Plus 0.50%
ProFund VP UltraDow 30 0.75%
ProFund VP Short OTC 0.75%
ProFund VP Short Small-Cap 0.75%
ProFund VP Rising Rates Opportunity 0.75%
Asia 30 ProFund 0.75%
UltraDow 30 ProFund 0.75%
U.S. Government Plus ProFund 0.50%
Short OTC ProFund 0.75%
Short Small-Cap ProFund 0.75%
Rising Rates Opportunity ProFund 0.75%
Money Market ProFund (upon commencement as IA) 0.35%
PROFUND ADVISORS LLC, PROFUNDS,
a Maryland limited liability company a Delaware business trust
By: By:
------------------------------------- ----------------------------
Xxxxxxx X. Xxxxx Xxxxxxx X. Xxxxx
Chairman and Chief Executive Officer Trustee and Chairman
Date: May 1, 2002 Date: May 1, 2002
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/3/ All fees are computed daily and paid monthly.
