ProShares is set to begin trading the “ProShares Ultra KBW Regional Banking ETF” (KRU) tomorrow April 22. The Fund seeks daily investment results, before fees and expenses, that correspond to twice (200%) the daily performance of the KBW Regional Banking Index . The Fund does not seek to achieve its stated investment objective over a period of time greater than one day.
Total Net Annual Fund Operating Expenses After Fee Waivers and Expense Reimbursements: .95%
Principal Investment Strategies
The Fund invests in equity securities and derivatives that ProShare Advisors believes, in combination, should have similar daily performance characteristics as twice (200%) the daily return of the Index. The Index is an equal-weighted index that measures the performance of publicly traded companies that do business as regional banks or thrifts. The Index components are selected to provide appropriate representation of the industry’s sub-sectors. Component companies include leading regional banks or thrifts listed on the NYSE or another U.S. national securities exchange, or NASDAQ® NMS. As of [ 2010], the Index included companies with capitalizations between $[ ] and $[ ]. The average capitalization of the companies comprising the Index was approximately $[ ]. The Index is published under the Bloomberg ticker symbol “KRX.” Assets of the Fund not invested in equity securities or derivatives will typically be held in money market instruments.
- Equity Securities — The Fund invests in common stock issued by public companies.
- Derivatives — The Fund invests in financial instruments whose value is derived from the value of an underlying asset, interest rate or index. The Fund invests in derivatives as a substitute for investing directly in stocks in order to gain leveraged exposure to the Index. Derivatives may include:
**Futures Contracts — Contracts that pay a fixed price for an agreed-upon amount of securities or the cash value of the securities, on an agreed-upon date.
**Swap Agreements — Contracts entered into primarily with institutional investors for a specified period ranging from a day to more than one year. In a standard “swap” transaction, two parties agree to exchange the returns (or differentials in rates of return) earned or realized on particular predetermined investments or instruments. The gross returns to be exchanged or “swapped” between the parties are 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.
- Money Market Instruments — The Fund invests in short-term cash instruments that have terms to maturity of less than 397 days and exhibit high quality credit profiles.
ProShare Advisors uses a mathematical approach to investing. Using this approach, ProShare Advisors determines the type, quantity and mix of investment positions that the Fund should hold to approximate the performance of its benchmark. The Fund may hold or gain exposure to only a representative sample of the securities in the underlying index, which is intended to have aggregate characteristics similar to those of the underlying index. ProShare Advisors does not invest the assets of the Fund in securities or derivatives based on ProShare Advisors’ view of the investment merit of a particular security, instrument, or company, nor does it conduct conventional stock research or analysis (other than in determining counterparty creditworthiness), or forecast stock 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 derivatives that provide exposure to its underlying index without regard to market conditions, trends or direction.
At the close of the markets each trading day, the Fund will seek to position its portfolio so that its exposure to its benchmark is consistent with the Fund’s investment objective. The impact of the Index’s movements during the day will affect whether the Fund’s portfolio needs to be re-positioned. For example, if the Index has risen on a given day, net assets of the Fund should rise, meaning that the Fund’s exposure will need to be increased. Conversely, if the Index has fallen on a given day, net assets of the Fund should fall, meaning the Fund’s exposure will need to be reduced.
The Fund will concentrate its investment in a particular industry or group of industries to approximately the same extent as the Index is so concentrated. As of the close of business on [ , 2010], the Index was concentrated in the bank industry group, which comprised approximately [ %] of the market capitalization of the Index.
For the full prospectus click: HERE