ProFunds Group, the world's largest manager of leveraged and inverse funds,1 announced today that it expects to pay zero 2009 year-end capital gain distributions on all of its 77 leveraged and inverse ProShares equity and fixed-income exchange traded funds.
"We're pleased that ProShares provided knowledgeable investors opportunities to manage risk and pursue returns with leveraged and inverse strategies while also providing them with tax efficiency," said Michael L. Sapir, Chairman and CEO of ProShare Advisors LLC, ProShares' investment advisor.
"While we manage ProShares to minimize capital gain distributions, a myriad of factors may impact the level of capital gains that tax regulations require to be distributed," Mr. Sapir added. "These factors include, among other things, the path of the underlying index during the period and the size and the timing of asset flows. In contrast to last year when the funds were faced with a confluence of highly unusual circumstances with respect to such factors, this year presented circumstances that we view as more typical."
Estimates of capital gain distributions are subject to change. Capital gain and income distribution amounts will vary from year to year. This estimate is for informational purposes only. For specific tax advice, we recommend that investors seek advice from a qualified tax professional. ProShares plans to provide information about any fourth quarter income distributions separately.
About ProFunds Group
ProShares is part of ProFunds Group, the largest manager of leveraged and inverse funds, which also includes the 115 ProFunds mutual funds. ProShares introduced the first short and leveraged ETFs in the U.S. in 2006. It continues to be a leader in launching innovative new products—for two years in a row, ProShares has led the industry in attracting assets to newly launched ETFs and now is the fifth-largest manager of ETFs in the nation.2 Since 1997, ProFunds mutual funds have provided investors with access to sophisticated investment strategies. In addition, ProFunds Group subadvises the Canada-based Horizons BetaPro ETFs.
Most ProShares ETFs and many ProFunds employ leveraged investment techniques that magnify gains and losses and result in greater volatility in value. Each Short or Ultra ProShares ETF and leveraged or inverse ProFund seeks a return that is a multiple or inverse multiple (e.g., -200%) of the return of an index or other benchmark (target) for a single day. Due to the compounding of daily returns, ProShares' and leveraged and inverse ProFunds' returns over periods other than one day will likely differ in amount and possibly direction from the target return for the same period. Investors should monitor holdings consistent with their strategies, as frequently as daily. For more on correlation, leverage and other risks, please read the ProShares or ProFunds prospectus.
All investing involves risk, including the loss of principal. ProShares entail certain risks, including, in some or all cases, aggressive investment techniques (futures contracts, options, forward contracts, swap agreements and similar instruments), correlation or inverse correlation, leverage and market price variance risk, all of which can increase volatility and decrease performance. In addition, ProShares are non-diversified, and narrowly focused investments typically exhibit higher volatility. There is no guarantee that any ProShares ETF will achieve its investment objective.
Carefully consider the investment objectives, risks, charges and expenses of ProShares and ProFunds before investing. This and other information can be found in their prospectuses. Read the prospectus(es) carefully before investing. For a ProShares ETF prospectus, visit www.proshares.com and seek advice from your financial adviser or broker/dealer representative. Financial professionals can also call 866-PRO-5125. For a ProFunds mutual fund prospectus, call 888-PRO-FNDS (individual investors) or 888-PRO-5717 (financial professionals), or visit www.profunds.com. Read the prospectus(es) carefully before investing.
ProFunds Group includes ProFunds mutual funds and ProShares ETFs. ProFunds Distributors, Inc, is distributor for ProFunds mutual funds. ProShares ETFs registered under the Investment Company Act of 1940 are distributed by SEI Investments Distribution Co., which is not affiliated with ProFunds Group or its affiliates.
1 Lipper, based on a worldwide analysis of all of the known providers of publicly traded funds in these categories. The analysis covered ETFs, ETNs and mutual funds by the number of funds and assets (as of 6/30/2009).
3 Citigroup ETF Flow Report, based on an analysis of ETPs introduced in 2007 and 2008. Fifth largest based on assets for 10/30/2009, source: Bloomberg.
Tucker Hewes, 212-207-9451