Mutual Fund Summary Prospectus (497k)
02 4월 2014 - 1:55AM
Edgar (US Regulatory)
SUMMARY PROSPECTUS
OCTOBER 1, 2013
(as supplemented April 1,
2014)
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PROSHARES 30 YEAR TIPS/TSY SPREAD
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This summary prospectus is designed to provide investors with key fund information in a
clear and concise format. Before you invest, you may want to review the Funds full prospectus, which contains more information about the Fund and its risks. The Funds full prospectus, dated October 1, 2013, and statement of additional
information, dated October 1, 2013, and as each hereafter may be supplemented, are incorporated by reference into this summary prospectus. All of this information may be obtained at no cost either: online at ProShares.com/resources/litcenter; by
calling 866-PRO-5125 (866-776-5125); or by sending an email request to info@ProShares.com.
Receive investor materials electronically:
Shareholders may sign up for electronic delivery of investor materials. By doing so, you will receive the information faster and help us reduce the impact on the environment of providing these materials. To
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If you have any questions, please contact your brokerage firm.
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PROSHARES.COM
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30 YEAR TIPS/TSY SPREAD
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Investment Objective
ProShares 30 Year TIPS/TSY Spread (the Fund) seeks investment results, before fees and expenses, that track the performance of the Credit Suisse 30-Year Inflation Breakeven
Index (the Index).
Unlike many traditional bond funds, the Fund is not designed to provide a steady stream of income.
Fees and Expenses of the Fund
The table below
describes the fees and expenses that you may pay if you buy or hold shares of the Fund.
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Annual Fund Operating Expenses
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(expenses that you pay each year as a percentage of the value of your investment)
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Investment Advisory Fees
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0.55%
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Other Expenses
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1.99%
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Total Annual Fund Operating Expenses Before Fee Waivers and Expense Reimbursements
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2.54%
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Fee Waiver/Reimbursement*
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-1.79%
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Total Annual Fund Operating Expenses After Fee Waivers and Expense Reimbursements
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0.75%
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*
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ProShare Advisors LLC (ProShare Advisors) has contractually agreed to waive Investment Advisory and Management Services Fees and to reimburse Other Expenses to
the extent Total Annual Fund Operating Expenses Before Fee Waivers and Expense Reimbursements, as a percentage of average daily net assets, exceed 0.75% through September 30, 2014. After that date, the expense limitation may be terminated or
revised. Amounts waived or reimbursed in a particular contractual period may be recouped by ProShare Advisors within five years of the end of that contractual period to the extent that recoupment will not cause the Funds expenses to exceed any
expense limitation in place at that time.
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Example:
This example is intended to help you compare the cost of investing in the Fund with the cost of investing in other funds.
The example assumes that you invest $10,000 in the Fund for the time periods indicated and then redeem all of your shares at the end of each period. The example also assumes that your investment has a 5% return
each year and that the Funds operating expenses remain the same, except that the fee waiver/expense reimbursement is assumed only to pertain to the first year. Although your actual cost may be higher or lower, based on these assumptions your
approximate costs would be:
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1 Year
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3 Years
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5 Years
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10 Years
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$77
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$619
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$1,189
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$2,741
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The Fund pays transaction and financing costs associated with the purchase and sale of securities and derivatives. In addition,
investors may pay brokerage commissions on their purchases and sales of the Funds shares. These costs are not reflected in the table or the example above.
Portfolio Turnover
The Fund pays transaction costs, such as commissions, when it buys and sells
securities (or turns over its portfolio). A higher portfolio turnover may indicate higher transaction costs and may
result in higher taxes when the Funds shares are held in a taxable account. These costs, which are not reflected in Annual Fund Operating Expenses or in the example above, affect the
Funds performance. During the most recent fiscal year, the Funds annual portfolio turnover rate was 104% of the average value of its entire portfolio. This portfolio turnover rate is calculated without regard to cash instrument or
derivatives transactions. If such transactions were included, the Funds portfolio turnover rate would be significantly higher.
Principal Investment Strategies
The Fund, under
normal circumstances, seeks to remain fully exposed to the Index and will invest at least 80% of its total assets in securities of the Index. In addition, the Fund will invest in derivatives and other fixed income securities that ProShare Advisors
believes, in combination, should track the performance of the Index. The Index tracks the performance of long positions in the most recently issued 30-year Treasury Inflation-Protected Securities (TIPS) bond and duration-adjusted short
positions in U.S. Treasury bonds of the closest maturity. The difference in yield (or spread) between these bonds (Treasury yield minus TIPS yield) is commonly referred to as a breakeven rate of inflation (BEI).
The 30-Year BEI is considered to be a measure of the markets expectations for inflation over the next thirty years.
The Index (and
the Fund) is designed to appreciate as the BEI increases. An increase in the BEI occurs if: (1) the yield on Treasurys rises (i.e., the price of the Treasurys decreases) relative to the yield on TIPS; or (2) the yield on TIPS falls (i.e.,
the price of the TIPS increases) relative to the yield on Treasurys. Conversely, the Index (and the Fund) is designed to depreciate if the BEI decreases. A decrease in the BEI occurs if: (1) the yield on Treasurys falls (i.e., the price of the
Treasurys increases) relative to the yield on TIPS; or (2) the yield on TIPS rises (i.e., the price of the TIPS decreases) relative to the yield on Treasurys. The level of the Index (and the Fund) will fluctuate based on changes in the value of
the underlying bonds, which likely will not be the same on a percentage basis as changes in the BEI.
The Index is not designed to measure the realized rate of inflation, nor does it seek
to replicate the returns of any index or measure of actual consumer price levels.
The Index is published under the Bloomberg ticker symbol CSTYIN30.
The securities and financial instruments that the Fund will principally invest in are set forth below. Cash balances arising from the use of derivatives will
typically be held in money market instruments.
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U.S. Treasury Securities
The Fund
has exposure to securities issued by the U.S. Treasury, in particular the following:
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U.S. Treasury Inflation-Protected
Securities
The Fund generally takes long positions (or obtains long exposure via derivatives, as further described below) in U.S. Treasury Inflation-Protected Securities, or TIPS,
which are inflation-protected public obligations of the U.S. Treasury. TIPS are income-generating instruments whose interest and principal payments are adjusted for inflationa sustained increase in prices that erodes the purchasing power of
money. The inflation adjustment, which is typically applied monthly to the principal of the bond, follows a designated
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30 YEAR TIPS/TSY SPREAD
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PROSHARES.COM
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inflation index, such as the consumer price index. A fixed coupon rate is applied to the inflation-adjusted principal so that as inflation rises, the values of both the principal and the interest
payments increase. This can provide investors with a hedge against inflation, as it helps preserve the purchasing power of an investment. Because of this inflation adjustment feature, inflation-protected bonds typically have lower yields than
conventional fixed-rate bonds.
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U.S. Treasury Bonds
The Fund
generally takes short positions (or obtains short exposure via derivatives, as further described below) in U.S. Treasury bonds, which are public obligations of the U.S. Treasury that pay a fixed coupon and have a maturity of twenty or more years.
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Derivatives
The Fund invests in
derivatives, which are financial instruments whose value is derived from the value of an underlying asset or assets, such as stocks, bonds or funds (including exchange-traded funds (ETFs)), interest rates or indexes. The Fund invests in
derivatives as a substitute for investing directly in or making short sales of the fixed income securities underlying the Index. These derivatives principally include:
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Swap Agreements
Contracts entered
into primarily with major global financial institutions for a specified period ranging from a day to more than one year. In a standard swap transaction, two parties agree to exchange the return (or differentials in rates of return)
earned or realized on particular predetermined investments or instruments. The gross return to be exchanged or swapped between the parties is calculated with respect to a notional amount, e.g., the return on or change in
value of a particular dollar amount invested in a basket of securities representing a particular index.
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Futures Contracts
Standardized
contracts traded on, or subject to the rules of, an exchange that call for the future delivery of a specified quantity and type of asset at a specified time and place or, alternatively, may call for cash settlement.
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Money Market Instruments
The Fund
invests in short-term cash instruments that have a remaining maturity of 397 days or less and exhibit high quality credit profiles, including:
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U.S. Treasury Bills
U.S.
government securities that have initial maturities of one year or less, and are supported by the full faith and credit of the United States.
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Repurchase Agreements
Contracts in
which a seller of securities, usually U.S. government securities or other money market instruments, agrees to buy them back at a specified time and price. Repurchase agreements are primarily used by the Fund as a short-term investment vehicle for
cash positions.
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ProShare Advisors follows a passive approach to investing that is designed to track the performance of the
Index. The Fund attempts to track the performance of the Index by investing all, or substantially all, of its assets in investments that make up the Index or in financial instruments that provide similar exposure,
holding or exposed to each investment in approximately the same proportion as its weighting in the Index. At times, the Fund may invest in or gain exposure to only a representative sample of the
securities in the Index or to securities not contained in the Index or in financial instruments, with the intent of obtaining exposure with aggregate characteristics similar to those of the Index. ProShare Advisors does not invest the assets of the
Fund in securities or financial instruments based on ProShare Advisors view of the investment merit of a particular security or instrument, nor does it conduct conventional investment research or analysis or forecast market movement or trends,
in managing the assets of the Fund. The Fund seeks to remain fully invested at all times in securities and/or financial instruments that, in combination, provide exposure to the Index without regard to market conditions, trends or direction.
Please see Investment Objectives, Principal Investment Strategies and Related Risks in the back of the Funds Full Prospectus for
additional details.
Principal Risks
You could lose money by investing in the Fund.
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Risks Associated with the use of
Derivatives
The Fund obtains investment exposure through derivatives, which may be considered aggressive. Investing in derivatives may expose the Fund to greater risks than
investing directly in the reference asset(s) underlying those derivatives, such as counterparty risk, liquidity risk and increased correlation risk (each as discussed below). When the Fund uses derivatives, there may be imperfect correlation between
the value of the reference asset(s) and the derivative, which may prevent the Fund from achieving its investment objective. Moreover, with respect to the use of swap agreements, if the Index has a dramatic intraday move that causes a material
decline in the Funds 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 the desired exposure consistent with the Funds investment objective. This, in turn, may prevent the Fund from achieving its investment objective, even if the Index reverses all
or a portion of its intraday move by the end of the day. Any costs associated with using derivatives may also have the effect of lowering the Funds return.
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Breakeven Inflation Investing
Risk
The Index tracks the performance of long positions in the most recently issued Treasury Inflation-Protected Securities (TIPS) bond of a particular maturity and
duration-adjusted short positions in U.S. Treasury bonds of the closest maturity. The difference in yield (or spread) between these bonds (Treasury yield minus TIPS yield) is commonly referred to as a breakeven rate of inflation (BEI)
and is considered to be a measure of the markets expectations for inflation over the relevant period. The level of the Index (and the Fund) will fluctuate based on changes in the value of the underlying bonds, which will likely not be the same
on a percentage basis as changes in the BEI. The Index is not designed to measure or predict the realized rate of inflation,
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PROSHARES.COM
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30 YEAR TIPS/TSY SPREAD
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nor does it seek to replicate the returns of any price index or measure of actual consumer price levels. Changes in the BEI are based on the TIPS and U.S. Treasury markets, interest rate and
inflation expectations, and fiscal and monetary policy. There is no guarantee that these factors will combine to produce any particular directional changes in the Index over time, or that the Fund will retain any appreciation in value over extended
periods of time, or that the returns of the Index or the Fund will track or outpace the realized rate of inflation, or any price index or measure of actual consumer price levels. It is possible that the returns of the Index or the Fund will not
correlate to (or may be the opposite of) the change in the realized rate of inflation, or any price index, or measure of actual consumer price levels. Furthermore, while the BEI provides exposure to inflation expectations, it may also be influenced
by other factors, including premiums related to liquidity for certain bonds as well as premiums surrounding the uncertainty of future inflation. These other factors may impact the level of the Index or the value of the Fund in unexpected ways and
may cancel out or even reverse the impact of changes in inflation expectations. As a result, an investment in the Fund may not serve as an effective hedge against inflation.
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Fixed Income and Market Risk
The
TIPS and U.S. Treasury markets can be volatile, and the value of securities, swaps, futures, and other instruments correlated with these markets may fluctuate dramatically from day-to-day. Fixed income markets are subject to adverse issuer,
political, regulatory, market and economic developments, as well as developments that impact specific economic sectors, industries or segments of the market. Further, fixed income securities in the Index may underperform other fixed income or
inflation-linked investments. Volatility in the markets and/or market developments may cause the value of an investment in the Fund to decrease.
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Index Performance Risk
There is no
guarantee or assurance that the methodology used to create the Index will result in the Fund achieving high, or even positive, returns, or that the Fund will retain any appreciation in value over extended periods of time. The Index may underperform
more traditional indices. In turn, the Fund could lose value while other indices or measures of market performance increase in value. In addition, the Index was formed in November 2011. Accordingly, the Index has limited historical performance. In
addition, the Index adjusts its positions on a daily basis to maintain duration neutrality between its TIPS and Treasury positions. As such, its performance will not reflect the performance of an unadjusted equivalent investment in long TIPS and
short Treasury securities over a period of time greater than a single day. Because the Index adjusts its positions to maintain duration neutrality at or about the time of the Funds net asset value (NAV) calculation, when the
Funds shares are bought intraday, such shares are unlikely to be duration neutral.
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Correlation Risk
A number of
factors may affect the Funds ability to achieve a high degree of correlation with the Index, and there can be no guarantee that the Fund will achieve a high degree of correlation. Failure to achieve a high degree of correlation may prevent the
Fund from achieving its investment
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objective. The factors that may adversely affect the Funds correlation to the Index include fees, expenses, transaction costs, financing costs associated with the use of derivatives, income
items, valuation methodology, accounting standards, and disruptions or illiquidity in the markets for the securities or financial instruments in which the Fund invests. While the Fund attempts to track the performance of the index by investing all,
or substantially all, of its assets in the types of securities or gaining exposure to the securities that make up the Index in approximately the same proportions as their weightings in the Index, at times the weighting of investment exposure to such
securities may be different from that of the Index. In addition, the Fund may invest in securities not included in the Index or in financial instruments. The Fund may also be subject to large movements of assets into and out of the Fund, potentially
resulting in the Fund being over- or underexposed to the Index and may be impacted by Index reconstitutions and Index rebalancing events. Any of these factors could decrease correlation between the performance of the Fund and the Index and may
hinder the Funds ability to meet its investment objective.
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Counterparty Risk
The Fund will be
subject to credit risk (i.e., the risk that a counterparty is unwilling or unable to make timely payments to meet its contractual obligations) with respect to the amount it expects to receive from counterparties to financial instruments or
repurchase agreements entered into by the Fund. If a counterparty becomes bankrupt or fails to perform its obligations, the value of an investment in the Fund may decline.
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Debt Instrument Risk
The Fund will
invest in, or seek exposure to, debt instruments. Debt instruments may have varying levels of sensitivity to changes in interest rates, issuer credit risk and other factors. In addition, changes in the credit quality of the issuer of a debt
instrument can also affect the price of a debt instrument, as can an issuers default on its payment obligations. All U.S. government securities are subject to credit risk. It is possible that the U.S. government may not be able to meet its
financial obligations or that securities issued by the U.S. government may experience credit downgrades. Such a credit event may also adversely impact the financial markets.
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Early Close/Late Close/Trading Halt
Risk
An exchange or market may close early, close late or issue trading halts on specific securities, or the ability to buy or sell certain securities or financial instruments may
be restricted, which may result in the Fund being unable to buy or sell certain securities or financial instruments. In these circumstances, the Fund may be unable to rebalance its portfolio, may be unable to accurately price its investments and/or
may incur substantial trading losses.
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Liquidity Risk
In certain
circumstances, such as the disruption of the orderly markets for the securities or financial instruments in which the Fund invests, the Fund might not be able to acquire or dispose of certain holdings quickly or at prices that represent true market
value in the judgment of ProShare Advisors. Markets for the securities or financial instruments in
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30 YEAR TIPS/TSY SPREAD
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PROSHARES.COM
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which the Fund invests may be disrupted by a number of events, including but not limited to economic crises, natural disasters, new legislation, or regulatory changes inside or outside of the
U.S. For example, regulation limiting the ability of certain financial institutions to invest in certain securities would likely reduce the liquidity of those securities. These situations may prevent the Fund from limiting losses, realizing gains or
achieving a high correlation with the Index.
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Long/Short Risk
The Fund seeks
long exposure to certain securities and short exposure to certain other securities. There is no guarantee that the returns on the Funds long or short positions will produce high, or even positive, returns and the Fund could lose money if
either or both the Funds long and short positions produce negative returns. In addition, the Fund may gain enhanced long exposure to certain securities (i.e., obtain investment exposure that exceeds the amount directly invested in those
assets, a form of leverage) and, under such circumstances, will lose more money in market environments that are adverse to its long positions than funds that do not employ such leverage. As a result, such investments may give rise to losses that
exceed the amount invested in those assets.
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Market Price Variance Risk
The
Funds shares are listed for trading on the NYSE Arca and can be bought and sold in the secondary market at market prices. The market prices of shares will fluctuate in response to changes in the value of the Funds holdings and supply and
demand for shares. ProShare Advisors cannot predict whether shares will trade above, below or at a price equal to the value of the Funds holdings. Given the fact that shares can be created and redeemed in Creation Units, as defined below,
ProShare Advisors believes that large discounts or premiums to the value of the Funds holdings should not be sustained. The Funds investment results are measured based upon the daily NAV of the Fund. Investors purchasing and selling
shares in the secondary market may not experience investment results consistent with those experienced by investors creating and redeeming shares directly with the Fund.
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Non-Diversification Risk
The Fund
is classified as non-diversified under the Investment Company Act of 1940, and has the ability to invest a relatively high percentage of its assets in the securities of a small number of issuers susceptible to a single economic,
political or regulatory event. This may increase the Funds volatility and cause performance of a relatively smaller number of issuers to have a greater impact on the Funds performance. This risk may be particularly acute if the Index is
comprised of a small number of securities.
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Portfolio Turnover Risk
Active
market trading of the Funds shares may cause more frequent creation or redemption activities that could, in certain circumstances, increase the number of portfolio transactions. High levels of transactions increase brokerage and other
transaction costs and may result in increased taxable capital gains.
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Short Sale Exposure Risk
The Fund
may seek inverse or short exposure through financial instruments such as swap agreements and futures contracts, which may cause the Fund to be
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exposed to certain risks associated with selling securities short. These risks include, under certain market conditions, an increase in the volatility and decrease in the liquidity of securities
underlying the short position, which may lower the Funds return, result in a loss, have the effect of limiting the Funds ability to obtain inverse exposure through financial instruments such as swap agreements and futures contracts, or
require the Fund to seek inverse exposure through alternative investment strategies that may be less desirable or may be more costly to implement. To the extent that, at any particular point in time, the securities underlying the short position may
be thinly traded or have a limited market, including due to regulatory action, the Fund may be unable to meet its investment objective due to a lack of available securities or counterparties. During such periods, the Funds ability to issue
additional Creation Units may be adversely affected. Obtaining inverse exposure through these instruments may be considered an aggressive investment technique.
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Valuation Risk
In certain
circumstances, portfolio securities may be valued using techniques other than market quotations. The value established for a portfolio security may be different from what would be produced through the use of another methodology or if it had been
priced using market quotations. Portfolio securities that are valued using techniques other than market quotations, including fair valued securities, may be subject to greater fluctuation in their value from one day to the next than if
market quotations were used. In addition, there is no assurance that a Fund could sell a portfolio security for the value established for it at any time, and it is possible that a Fund would incur a loss because a portfolio security is sold at a
discount to its established value.
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Please see Investment Objectives, Principal Investment Strategies and Related Risks in
the back of the Funds Full Prospectus for additional details.
Investment Results
Performance history will be available for the Fund after it has been in operation for a full calendar year. After the Fund has a full calendar year of performance
information, performance information will be shown on an annual basis.
Management
The Fund is advised by ProShare Advisors. Michelle Liu, Portfolio Manager, has managed the Fund since January 2012.
Purchase and Sale of Fund Shares
The Fund will issue
and redeem shares only to Authorized Participants (typically broker-dealers) in exchange for the deposit or delivery of a basket of assets (securities and/or cash) in large blocks, known as Creation Units, each of which is comprised of 50,000
shares. Retail investors may only purchase and sell shares on a national securities exchange through a broker-dealer. Because the Funds shares trade at market prices rather than at NAV, shares may trade at a price greater than NAV (a premium)
or less than NAV (a discount).
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PROSHARES.COM
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30 YEAR TIPS/TSY SPREAD
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Tax Information
Income and capital gain distributions you receive from the Fund generally are subject to federal income taxes and may also be subject to state and local taxes. The Fund intends to distribute income, if any,
quarterly, and capital gains, if any, at least annually. Distributions for this Fund may be higher than those of most ETFs.
Investment Company Act file number
811-21114
ProShares Trust
7501 Wisconsin Avenue, Suite 1000E, Bethesda, MD 20814
866.PRO.5125
866.776.5125
ProShares.com
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© 2014 ProShare Advisors LLC. All rights reserved.
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RINF-APR14
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