Frequently Asked Questions About Splits and Reverse Splits
Effective February 25, 2011
- What is a split? A reverse split?
- Which ProShares are subject to splits and what are the ratios?
- Which ProShares are subject to reverse splits and what are the ratios? What are the new CUSIPs?
- How many shares of each fund will be received as a result of the splits and reverse splits?
- Why has ProShares decided to split and reverse split the shares of these funds?
- Will ProShares splits and reverse splits incur any additional fees?
- Will ProShares splits and reverse splits create any taxable events?
- Who will participate in the splits and reverse splits?
- What will happen to shares of affected funds bought or sold on or after February 25?
- Will the ticker symbols change?
- Will limit or Good 'Til Canceled (GTC) orders be affected?
What is a split? A reverse split?
A split decreases the fund’s price per share and proportionately increases the number of shares outstanding. Splits occur in ratios; for example, after a 2:1 split, a shareholder would own double the number of shares previously held. The value of shareholders’ investments will not change after the split, however, because the post-split shares will be priced at half of the net asset value (NAV) of pre-split shares.
On the other hand, a reverse split increases the NAV and price per share and proportionately reduces the number of shares outstanding for a fund. As with a split, a reverse split does not change the value of investors' investments. For example, in a 1:4 reverse split, every four pre-split shares held by a shareholder will result in the receipt of one post-split share, which will be priced four times higher than the NAV of pre-split shares.
Which ProShares are subject to splits and what are the ratios?
Please note that funds subject to splits will not have new CUSIP numbers, unlike funds undergoing reverse splits.
Funds subject to splits effective on February 25:
| Ticker | Fund | Split Ratio |
|---|---|---|
| TQQQ | ProShares UltraPro QQQ | 2:1 |
| URTY | ProShares UltraPro Russell2000 | 2:1 |
| UMDD | ProShares UltraPro MidCap400 | 2:1 |
| UPRO | ProShares UltraPro S&P500 | 3:1 |
Which ProShares are subject to reverse splits and what are the ratios? What are the new CUSIPs?
Each fund undergoing a reverse split will be issued a new CUSIP number.
Funds subject to reverse splits effective on February 25:
| Ticker | Fund | Split Ratio | Old CUSIP | New CUSIP |
|---|---|---|---|---|
| EPV | ProShares UltraShort MSCI Europe | 1:4 | 74347X807 | 74348A301 |
| MZZ | ProShares UltraShort MidCap400 | 1:4 | 74347R859 | 74347X211 |
| REW | ProShares UltraShort Technology | 1:4 | 74347R578 | 74347X153 |
| SDD | ProShares UltraShort SmallCap600 | 1:4 | 74347R792 | 74348A400 |
| SDK | ProShares UltraShort Russell MidCap Growth | 1:4 | 74347R446 | 74347X187 |
| SIJ | ProShares UltraShort Industrials | 1:4 | 74347R594 | 74348A103 |
| SJH | ProShares UltraShort Russell2000 Value | 1:4 | 74347R412 | 74348A509 |
| SJL | ProShares UltraShort Russell MidCap Value | 1:4 | 74347R438 | 74347X161 |
| SKF | ProShares UltraShort Financials | 1:4 | 74347R628 | 74347X146 |
| SMK | ProShares UltraShort MSCI Mexico Investable Market | 1:4 | 74347X872 | 74347X179 |
| TWM | ProShares UltraShort Russell2000 | 1:4 | 74347R834 | 74348A202 |
| UCO | ProShares Ultra DJ-UBS Crude Oil* | 1:4 | 74347W502 | 74347W650 |
| ZSL | ProShares UltraShort Silver* | 1:4 | 74347W726 | 74347W643 |
| CMD | ProShares UltraShort DJ-UBS Commodity* | 1:5 | 74347W205 | 74347W676 |
| JPX | ProShares UltraShort MSCI Pacific ex-Japan | 1:5 | 74347X609 | 74347X229 |
| QID | ProShares UltraShort QQQ | 1:5 | 74347R875 | 74347X237 |
| SCO | ProShares UltraShort DJ-UBS Crude Oil* | 1:5 | 74347W809 | 74347W668 |
| SKK | ProShares UltraShort Russell2000 Growth | 1:5 | 74347R420 | 74347X195 |
| SSG | ProShares UltraShort Semiconductors | 1:5 | 74347R545 | 74347X245 |
| TLL | ProShares UltraShort Telecommunications | 1:5 | 74347R255 | 74347X252 |
How many shares of each fund will be received as a result of the splits and reverse splits?
The number of shares to be received will be different for each fund, depending upon the fund's split ratio (see tables for split ratios).
For a split: As an example, ProShares UltraPro QQQ (TQQQ) will undergo a 2-for-1 split. For each share of TQQQ, an investor will receive 2 shares, with the price of each share reduced by 50%.
Example of a hypothetical 2-for-1 split:
| Period | # of Shares Owned | Hypothetical NAV | Value of Shares |
|---|---|---|---|
| Pre-Split | 100 | $100.00 | $10,000.00 |
| Post-Split | 200 | $50.00 | $10,000.00 |
Post-split, shareholders will own more shares but the price per share will be proportionately lower. As a result, the value of an investment will not change.
For a reverse split: As an example, ProShares Ultra DJ-UBS Crude Oil (UCO) will undergo a 1-for-4 reverse split. This means, for every 4 shares of UCO, an investor will receive 1 share. As a result of these reverse splits, share prices will be adjusted proportionately higher.
Example of a hypothetical 1-for-4 reverse split:
| Period | # of Shares Owned | Hypothetical NAV | Value of Shares |
|---|---|---|---|
| Pre-Split | 100 | $10.00 | $1,000.00 |
| Post-Split | 25 | $40.00 | $1,000.00 |
Post reverse-split, shareholders will own fewer shares but the price per share will be proportionately higher. As a result, the value of an investment will not change. If the reverse split results in a fractional share, the fractional share will automatically be redeemed for cash.
Why has ProShares decided to split and reverse split the shares of these funds?
ProShares believes it is in our shareholders’ best interests to execute these splits and reverse splits in order to keep the share prices within efficient trading ranges.
Will ProShares splits and reverse splits incur any additional fees?
Some brokerage firms may assess a corporate action processing fee. Shareholders should check with their brokerage firms to determine whether their accounts will be charged.
Will ProShares splits and reverse splits create any taxable events?
It is possible that taxable events could be created for some shareholders in funds undergoing a reverse split. Shareholders in funds subject to a split will not be affected.
For shareholders who hold quantities of shares that are not an exact multiple of the reverse split ratio (for example, not a multiple of 4 for a 1:4 split), the reverse split will result in the creation of a fractional share. Fractional shares cannot trade on the exchanges, so post-reverse split fractional shares will be automatically redeemed for cash and be sent to each shareholder’s broker of record. This redemption may cause some shareholders to realize gains or losses, which could be a taxable event for those shareholders.
Who will participate in the splits and reverse splits?
Schedule for splits:
| Record Date | Payable Date | Effective Date |
|---|---|---|
| February 22 | February 24 | February 25 |
- Any shareholder as of the record date (see table above) as of the close of the markets will participate in the split. The additional shares should be posted to their accounts after payable date, in accordance with their brokerage firms' practices.
- Those who are not shareholders as of the record date, but purchase shares at the pre-split price prior to the effective dates, will also participate in the split. The additional shares should be posted to their accounts on the due-bill redemption date. Shareholders should consult with their brokerage firms on their due-bill policies.
- Shares will begin trading at post-split prices on the effective date, February 25, 2011.
Schedule for reverse splits:
| Record Date | Effective Date |
|---|---|
| February 24 | February 25 |
- Any shareholder as of the record date (see table above) as of the close of the markets will participate in the reverse split.
- Shares will begin trading at post-split prices on the effective date, February 25, 2011.
What will happen to shares of affected funds bought or sold on or after February 25?
All transactions occurring on or after the effective date will be at post-split prices and share quantities.
Will the ticker symbols change?
No. The ticker symbols of the funds undergoing splits and reverse splits will not change.
Will limit or Good 'Til Canceled (GTC) orders be affected?
Yes. Both events will cancel limit and GTC orders. Investors should replace these orders and adjust them to the post-split price. Please note that splits and reverse splits may also affect orders for options.
There is no guarantee any ProShares ETF will achieve its investment objective. Investing involves risk, including the possible loss of principal. ProShares are non-diversified and entail certain risks, including risk associated with the use of derivatives (futures contracts, swap agreements and similar instruments), imperfect benchmark correlation, leverage and market price variance, all of which can increase volatility and decrease performance. Short ProShares should lose money when their benchmarks or indexes rise. See the prospectus for a more complete description of risks.
Carefully consider the investment objectives, risks, charges and expenses of ProShares before investing. This and other information can be found in their summary and full prospectuses. Read them carefully before investing. Obtain them at proshares.com or from your financial professional or broker/dealer representative.
Commodity and Currency ProShares ETFs are not regulated under the Investment Company Act of 1940 and are not afforded its protections. Investing in ETFs involves a substantial risk of loss.
ProShares Trust II (issuer) has filed a registration statement (including a prospectus) with the SEC for the offering to which this communication relates. Before you invest, you should read the prospectus in that registration statement and other documents the issuer has filed with the SEC for more complete information about the issuer and this offering. You may get these documents for free by visiting EDGAR on the SEC website at sec.gov. Alternatively, the issuer will arrange to send you the prospectus if you request it by calling toll-free 866.776.5125, or visit proshares.com.
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