The Global Listed Private Equity ETF and the Short Term USD Emerging Markets Bond ETF each pay ProShare Advisors a fee at an annualized rate based on its average daily net assets of 0.50%. The Inflation Expectations ETF pays ProShare Advisors a fee at an annualized rate based on its average daily net assets of 0.55%. The CDS Short North American HY Credit ETF pays ProShare Advisors a fee at an annualized rate based on its average daily net assets of 0.65%. ProShare Advisors manages the investment and the reinvestment of the assets of each of the Funds in accordance with the investment objectives, policies, and limitations of the Fund, subject to the general supervision and control of the Trustees and the Officers of the Trust. ProShare Advisors bears all costs associated with providing these advisory services. Except for the Morningstar Alternatives Solution ETF, ProShare Advisors has contractually agreed to waive investment advisory and management services fees and to reimburse other expenses (exclusive of transaction costs,
The investment techniques and strategies discussed below may be used by a Fund if, in the opinion of the Advisor, the techniques or strategies may be advantageous to the Fund. A Fund may reduce or eliminate its use of any of these techniques or strategies without changing the Fund’s fundamental policies. There is no assurance that any of the techniques or strategies listed below, or any of the other methods of investment available to a Fund, will result in the achievement of the Fund’s objectives. Also, there can be no assurance that any Fund will grow to, or maintain, an economically viable size, and management may determine to liquidate a Fund at a time that may not be opportune for shareholders.
The most important feature of futures is that you never have to sell bitcoin ever again. Seriously. Why would you sell into fiat when you are concerned about a possible price drop? If you want to short bitcoin, then with futures you can simply "sell" or "short" the derivatives contracts and earn more bitcoin when the price drops -- so that your fiat value is the same or more if you use leverage. Of course you can also buy the contracts and multiply your bitcoin when the bitcoin price goes up! But think for a moment how important this tool is: earn more bitcoin when the bitcoin price drops, and you effectively do NOT have to sell to fiat anymore. And with the power of margin leverage, you don't have to risk too much Bitcoin to take meaningful directional positions.
Unlike many commodity futures, Bitcoin futures are cash settled rather than physically settled. Cash settlement is a relatively new development in futures trading, first introduced in 1981 for Eurodollar futures, that addresses the problem of how to settle futures contracts on things that are difficult/impossible to deliver physicially—things like interest rates, large stock indexes (e.g., S&P 500), and volatility indexes (Cboe’s VIX). Futures physical settlement involves actual shipment/change of ownership of the underlying product to the contract holder but in practice, it’s rarely used (~2% of the time). Instead, most organizations that are using futures to hedge prices of future production/usage will make separate arrangements with suppliers/customers for physical delivery and just use the futures to protect against contrary price changes. In practice, the final settlement price of the contract can be used to provide the desired price protection regardless of whether the futures contract specifies physically delivery or cash-settlement.
• Futures Position Limit Risk — Limits on the amount of futures any one entity can hold may negatively impact the Fund’s ability to meet its investment objective if such limits are reached and exceptions to such limits are not granted. Currently the position limits for bitcoin futures contracts are much lower than they are for most other futures contracts.
A Fund’s current obligations under most swap agreements (total return swaps, equity/index swaps, interest rate swaps) will be accrued daily (offset against any amounts owed to the Fund) and any accrued but unpaid net amounts owed to a swap counterparty will be covered by segregating or earmarking cash or other assets determined to be liquid, but typically no payments will be made until the settlement date. In connection with CDS in which a Fund is a “buyer”, the Fund will segregate or earmark cash or assets determined to be liquid by the Advisor, with a value at least equal to the Fund’s maximum potential exposure under the swap (e.g., any accrued but unpaid net amounts owed by the Fund to any clearinghouse counterparty). In connection with CDS in which a Fund is a “seller”, however, the Fund will segregate or earmark cash or assets determined to be liquid by the Advisor, with a value at least equal to the full notional amount of the swap (minus any variation margin or amounts owed to the Fund under an offsetting cleared transaction). This segregation or earmarking is intended to ensure that a Fund has assets available to satisfy its potential obligations with respect to the transaction. Each Fund reserves the right to modify its asset segregation policies in the future, including modifications to comply with any changes in the positions articulated by the SEC or its staff regarding asset segregation. Swap agreements that cannot be terminated in the ordinary course of business within seven days at approximately the amount a Fund has valued the asset may be considered to be illiquid for purposes of the Fund’s illiquid investment limitations.