FAQs

Distributions in ProShares High Income ETFs

  1. Do ProShares High Income ETFs—ISPY, IQQQ and ITWO—have distributions?
  2. What is the source of ProShares High Income ETF distributions?
  3. How is the amount of ProShares High Income ETF distributions determined?
  4. How are ProShares High Income ETF distributions taxed?
  5. Where can I find additional information about distributions?

  • What is the source of ProShares High Income ETF distributions?

    The Funds invest in financial instruments that, in combination, should track the performance of the index. The Funds invest in financial instruments, such as equity securities, swap agreements, futures contracts and U.S. Treasury securities, that generate taxable income in the form of interest, dividends and capital gains (or losses). However, some or all of the monthly distributions may be characterized as a return of capital for financial reporting and tax purposes.

  • How is the amount of ProShares High Income ETF distributions determined?

    ISPY intends to make distributions each month of an amount that generally reflects the dividend and call premium income earned by the Index (net of Fund expenses) as measured by the S&P 500 Daily Covered Call Index – Income Only, a sub-index that measures the cash received by the index from dividends and call option premiums. The monthly distributions are intended to provide shareholders with dividend and call premium income.

    IQQQ intends to make distributions each month of an amount that generally reflects the dividend and call premiums earned by the Index (net of Fund expenses), as measured by the Nasdaq-100 Daily Covered Call - Income Only Index, a sub-index that measures the cash received by the index from dividends and call option premiums. The monthly distributions are intended to provide shareholders with dividend and call premium income.

    ITWO intends to make distributions each month of an amount that generally reflects the dividend and call premiums earned by the index (net of Fund expenses), as measured by the Cboe Russell 2000 Daily Covered Call - Income Only Index, a sub-index that measures the cash received by the index from dividends and call option premiums. The monthly distributions are intended to provide shareholders with dividend and call premium income.

  • How are ProShares High Income ETF distributions taxed?

    Generally, ISPY, IQQQ and ITWO monthly distributions will be taxed as ordinary dividends, but not qualified dividends. However, a significant portion of the Funds’ distributions may be treated as return of capital for tax purposes. In general, distributions that are treated as return of capital are not taxable and will be reported as non-dividend distributions on Form 1099-DIV.

    If you have questions about the tax implications of your investment in a Fund, you should consult a tax professional.

  • Where can I find additional information about distributions?

    The distribution schedule, which includes ex-dates, record dates and payable dates, can be found here: Distribution Schedule. Distribution rates are posted after market close the evening prior to ex-date on each Fund’s product page. For Form 1099-DIV purposes, the character of each dividend can be viewed on the ICI Primary Report posted in the Tax Supplement section here: Tax Supplements.

Important Information

The Funds seek to replicate a daily covered call strategy by investing in equity securities and derivatives. The Funds do not sell (write) call options.

Registered Investment Companies are required by the IRS to distribute substantially all of their income and capital gains to shareholders at least annually. For specific tax advice, we recommend you speak with a qualified tax professional.

Investing involves risk, including the possible loss of principal. These ProShares ETFs are non-diversified and entail certain risks, including risks associated with the use of derivatives (swap agreements, futures contracts and similar instruments), imperfect benchmark correlation and market price variance, all of which can increase volatility and decrease performance. Please see summary and full prospectuses for a more complete description of risks.

Each Fund intends to make distributions each month of an amount that reflects the dividends and call premium income earned by a daily covered call strategy on its index (net of expenses). There is no guarantee any ProShares ETF will achieve its investment objective.­ The performance of the Funds may not correspond to the performance of their respective indexes, the Funds may not be successful in generating income for investors, and the Funds may not capture returns that traditional covered call strategies may sacrifice.

The S&P 500 Daily Covered Call Index replicates the performance of a covered call investment strategy that combines a long position in the S&P 500 Index with a short position in S&P 500 Index call options. In particular, the index is designed to replicate a daily covered call strategy that sells call options with one day to expiration each day.

The Nasdaq-100® Daily Covered Call Index replicates the performance of a covered call investment strategy that combines a long position in the Nasdaq-100 Index with a short position in Nasdaq-100 Index® call options. In particular, the index is designed to replicate a daily covered call strategy that sells call options with one day to expiration each day.

The Cboe Russell 2000® Daily Covered Call Index replicates the performance of a covered call investment strategy that combines a long position in the Russell 2000 Index® with a short position in Russell 2000 Index call options. In particular, the Index is designed to replicate a daily covered call strategy that sells call options with one day to expiration each day.

There can be no guarantee that the Funds will make such distributions and the amount of such distributions, if any, may vary significantly from month to month. Some or all of such distributions may be characterized as a return of capital.

Shares of any ETF are generally bought and sold at market price (not NAV) and are not individually redeemed from the Fund. Your brokerage commissions will reduce returns.

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.

The S&P 500 Daily Covered Call Index is a product of S&P Dow Jones Indices LLC and its affiliates and has been licensed for use by ProShares. "S&P®" is a registered trademark of Standard & Poor's Financial Services LLC ("S&P") and "Dow Jones®" is a registered trademark of Dow Jones Trademark Holdings LLC ("Dow Jones") and have been licensed for use by S&P Dow Jones Indices LLC and its affiliates. ProShares have not been passed on by S&P Dow Jones Indices LLC and its affiliates as to their legality or suitability. ProShares based on the S&P 500 Daily Covered Call Index are not sponsored, endorsed, sold or promoted by S&P Dow Jones Indices LLC, Dow Jones, S&P or their respective affiliates, and they make no representation regarding the advisability of investing in ProShares. THESE ENTITIES AND THEIR AFFILIATES MAKE NO WARRANTIES AND BEAR NO LIABILITY WITH RESPECT TO PROSHARES.

Nasdaq®, Nasdaq-100 Index®, Nasdaq-100®, NDX®, Nasdaq-100 Daily Covered Call™ Index, NDXDCC™, Nasdaq-100 Daily Covered Call Option™ Index, NDXDCCOV™, Nasdaq-100 Daily Covered Call Income™ Index, NDXDCCI™, are registered trademarks of Nasdaq, Inc. (which with its affiliates and third party licensors is referred to as the “Corporations”) and are licensed for use by ProShare Advisors LLC. The Product(s) have not been passed on by the Corporations as to their legality or suitability. The Product(s) are not issued, endorsed, sold, or promoted by the Corporations. The Corporations make no warranties and bear no liability with respect to the product(s).

Source: London Stock Exchange Group plc and its group undertakings (collectively, the “LSE Group”). ©LSE Group 2024. FTSE Russell is a trading name of certain of the LSE Group companies. The “Cboe Russell 2000 Daily Covered Call Index”, and “Russell®” are trademarks of the relevant LSE Group companies and are used by any other LSE Group company under license. All rights in the FTSE Russell indexes or data vest in the relevant LSE Group company which owns the index or the data. Neither LSE Group nor its licensors accept any liability for any errors or omissions in the indexes or data and no party may rely on any indexes or data contained in this communication. No further distribution of data from the LSE Group is permitted without the relevant LSE Group company’s express written consent. The LSE Group does not promote, sponsor or endorse the content of this communication.

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