• Small-and Mid-Cap Company Investment Risk — The Fund may invest in stocks of small-and mid-cap companies. The risk of equity investing may be particularly acute for securities of issuers with smaller market capitalizations. Small-and mid-cap company stocks may trade at greater spreads or lower trading volumes, and may be less liquid than the stocks of larger companies. Small-and mid-cap companies may have limited product lines or resources, may be dependent upon a particular market niche and may have greater fluctuations in price than the stocks of larger companies. Further, stocks of small-and mid-sized companies could be more difficult to liquidate during market downturns compared to larger, more widely traded companies. In addition, small-and mid-cap companies may lack the financial and personnel resources to handle economic or industry-wide setbacks and, as a result, such setbacks could have a greater effect on small-and mid-cap security prices.
When rolling futures contracts that are in contango, the Short Bitcoin Fund may buy the expiring bitcoin futures contract at a lower price and sell a longer-dated bitcoin futures contract at a higher price, resulting in a positive roll yield (i.e., a gain). When rolling futures contracts that are in backwardation, the Short Bitcoin Fund may buy the expiring bitcoin futures contract at a higher price and sell the longer-dated bitcoin futures contract at a lower price, resulting in a negative roll yield (i.e., a loss).
The Fund is an actively managed exchange traded fund. The Fund seeks to achieve its investment objective by investing substantially all of its assets in a combination of short positions in bitcoin futures contracts and money market instruments. The Fund is designed to benefit when the price of bitcoin futures contracts declines. The Fund generally seeks to have 30% of the value of its portfolio invested in short positions in bitcoin futures contracts and 70% of the value of its portfolio invested in money market instruments.
For example, you can enter a Bitcoin futures contract with Mortimer Duke saying that you will sell him 1 BTC on March 30, 2018, for the price of 5,000 USD per BTC. (In the actual CME futures contracts, the limit for one contract is 5 BTC, but we will stick with 1 BTC now for the purposes of easy explanation.) You enter into this contract on an exchange like CME.
You can find additional information about the Funds in the current Statement of Additional Information (“SAI”), dated October 1, 2017, as may be amended from time to time, which has been filed electronically with the Securities and Exchange Commission (“SEC”) and is incorporated by reference into, and is legally a part of, this Prospectus. A copy of the SAI is available, free of charge, online at ProShares.com. You may also receive a free copy of the SAI or make inquiries to ProShares by writing us at the address set forth above or calling us toll-free at the telephone number set forth above.
The Board has established an Audit Committee to assist the Board in performing oversight responsibilities. The Audit Committee is composed exclusively of Independent Trustees. Currently, the Audit Committee is composed of Messrs. Reynolds, Wachs and Fertig. Among other things, the Audit Committee makes recommendations to the full Board of Trustees with respect to the engagement of an independent registered public accounting firm and reviews with the independent registered public accounting firm the plan and results of the internal controls, audit engagement and matters having a material effect on the Trust’s financial operations. During the past fiscal year, the Audit Committee met five times, and the Board of Trustees met four times.
The Declaration of Trust of the Trust disclaims liability of the shareholders or the Officers of the Trust for acts or obligations of the Trust which are binding only on the assets and property of the Trust. The Declaration of Trust provides for indemnification of the Trust’s property for all loss and expense of any Funds shareholder held personally liable for the obligations of the Trust. The risk of a Trust shareholder incurring financial loss on account of shareholder liability is limited to circumstances where the Funds would not be able to meet the Trust’s obligations and this risk, thus, should be considered remote.
In general, dividends of net investment income received by corporate shareholders of a Fund may qualify for the 70% dividends-received deduction generally available to corporations to the extent of the amount of eligible dividends received by the Fund from domestic corporations for the taxable year. A dividend received by a Fund will not be treated as a dividend eligible for the dividends-received deduction (1) if it has been received with respect to any share of stock that the Fund has held for less than 46 days (91 days in the case of certain preferred stock) during the 91-day period beginning on the date which is 45 days before the date on which such share becomes ex-dividend with respect to such dividend (during the 181-day period beginning 90 days before such date in the case of certain preferred stock) or (2) to the extent that the Fund is under an obligation (pursuant to a short sale or otherwise) to make related payments with respect to positions in substantially similar or related property. Moreover, the dividends received deduction may otherwise be disallowed or reduced (1) if the corporate shareholder fails to satisfy the foregoing requirements with respect to its shares of the Fund or (2) by application of various provisions of the Code (for instance, the dividends-received deduction is reduced in the case of a dividend received on debt-financed portfolio stock (generally, stock acquired with borrowed funds)). The corporate alternative minimum tax may disallow the dividends received deduction in certain circumstances.
The first U.S. bitcoin futures are here. Bitcoin futures opened for trading on the Cboe Futures Exchange, LLC (CFE) on December 10, 2017. This is one of the biggest milestones for bitcoin since it emerged in the wake of the 2008-09 financial crisis. Bitcoin futures will bring much-needed transparency, greater liquidity and efficient price discovery to the ecosystem. Cboe will be soon joined by CME Group as it prepares to launch bitcoin futures contracts on December 18, 2017.
A Precautionary Note Regarding Unusual Circumstances — ProShares Trust can postpone payment of redemption proceeds for any period during which (1) [the Exchange] is closed other than customary weekend and holiday closings, (2) trading on [the Exchange] is restricted, (3) any emergency circumstances exist, as determined by the SEC, and (4) the SEC by order permits for the protection of shareholders of the Fund, as further described in the SAI.
The Funds may invest in both sponsored and unsponsored depositary receipts. Certain depositary receipts, typically those designated as “unsponsored,” require the holders thereof to bear most of the costs of such facilities, while issuers of “sponsored” facilities normally pay more of the costs thereof. The depository of an unsponsored facility frequently is under no obligation to distribute shareholder communications received from the issuer of the deposited securities or to pass through the voting rights to facility holders with respect to the deposited securities, whereas the depository of a sponsored facility typically distributes shareholder communications and passes through the voting rights.
• Short Sale Exposure Risk — The Fund seeks inverse or “short” exposure through short positions in bitcoin futures contracts and other financial instruments. This will cause the Fund to be exposed to certain risks associated with selling assets short. These risks include, under certain market conditions, an increase in the volatility and decrease in the liquidity of the asset underlying the short position, which may lower the Fund’s return, result in a loss, have the effect of limiting the Fund’s 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 more costly to implement. To the extent that, at any particular point in time, the assets 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 Fund’s ability to issue additional Creation Units may be adversely affected. Obtaining inverse exposure through these instruments may be considered an aggressive investment technique. Inverse exposure must be actively managed in order to keep the Fund fully invested. See “Compounding Risk” above for an explanation of how this impacts performance
• Bitcoin and investments linked to bitcoin, including bitcoin futures contracts, can be highly volatile and may experience large losses. The price of bitcoin has experienced periods of extreme volatility and low liquidity. Speculators and investors who seek to profit from trading and holding bitcoin currently account for a significant portion of bitcoin demand. Such speculation regarding the potential future appreciation in the value of bitcoin may artificially inflate the price of bitcoin. The price of bitcoin recently has been at or near all-time highs. There can be no guarantee this will continue and the market for bitcoin, and therefore bitcoin futures contracts, may change suddenly and without warning.
Market conditions should be considered favorable to a Fund when such conditions make it more likely that the value of an investment in that Fund will increase. Market conditions should be considered adverse to a Fund when such conditions make it more likely that the value of an investment in that Fund will decrease. For example, market conditions that cause the level of the S&P 500® to rise are considered “favorable” to the Ultra S&P500® and are considered “adverse” to the Short S&P500®.
These big coin strategies can also be used for trading bitcoin cash as well as other cryptocurrencies, in fact, you can use this as a trade guide for any type of trading instrument. The blockchain technology is a big step forward for how to access information and many companies are starting to develop applications to use it in their favor. Remember that when trading digital currency it may seem like it is not a real currency but it actually is real, this is not some Ponzi scheme. Before you buy bitcoins have a solid plan in place and don’t underestimate the cryptocurrency markets, you must do your technical analysis just as if you were going to day trade any other instruments. You can also read our best Gann Fan trading strategy.