Share-split context: A reverse split was recorded on Jan 13, 2022 with coefficient 0.2. A reverse split combines multiple old shares into fewer new shares and mechanically raises the quoted price per share. That mechanical increase does not restore lost investment value. The returns in this report are already split-adjusted, while reverse-split history remains a separate structural warning.

Understanding the ProShares UltraShort Dow30 ETF (DXD)

What this ETF is trying to do

The ProShares UltraShort Dow30 (DXD) is an ETF designed for a specific type of strategy. It is both an inverse and a leveraged ETF. This means it is built to move in the opposite direction of the Dow Jones Industrial Average, often with more intensity. Because it is leveraged, its price movements are intended to be larger than the index it follows.

What the numbers show

The data shows that DXD has experienced significant share-price declines over various timeframes.

• Year-to-Date (YTD): The price return is approximately -12.24%. When including distributions, the YTD total return is approximately -10.29%.

• One Year: The price return was approximately -17.63%, while the one-year total return was approximately -14.86%.

• Three Year: The price return shows a decline of approximately -58.26%. The three-year total return is approximately -52.72%.

It is important to note that the price return only measures the change in the share price. The total return includes the impact of distributions.

This ETF also has a history of reverse splits. A reverse split occurs when multiple old shares are combined into fewer new shares, which causes the quoted per-share price to rise mechanically. This mechanical increase does not restore lost investment value.

Income and distribution explanation

DXD provides cash distributions to investors. The trailing distributions are 0.632, resulting in a distribution yield of approximately 3.51%. These payments usually happen on a quarterly basis, with the last four payments occurring on Wednesdays.

When looking at high-yield ETFs, it is important to remember that the distribution yield is not the same as total return. A high yield does not guarantee that an investor has earned that percentage in overall value.

NAV erosion explanation

The supplied data is sufficient to evaluate price erosion, but it does not include enough historical NAV-per-share data to confirm or rule out NAV erosion.

Regarding price-based evidence, the ETF has an erosion score of 55, which is labeled as "Moderate price erosion." This indicates a moderate level of risk regarding the decline in the ETF's market price.

Pros

• Provides a way to participate in an inverse strategy (betting against the Dow Jones).

• Offers a distribution yield of approximately 3.51%.

Cons

• The ETF has experienced significant share-price declines over the last one, three, and five years.

• It is a leveraged and inverse product, which can lead to high volatility.

• The income rating grade is an "F."

Beginner takeaway

DXD is a specialized tool used to bet against the Dow Jones index using leverage. While it pays a distribution, the historical data shows that both the share price and the total return have declined significantly over the long term. Investors should distinguish between the cash received from distributions and the actual change in the value of their investment.