Share-split context: A reverse split was recorded on Nov 7, 2024 with coefficient 0.5. 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.

ETF Education Report: ProShares UltraShort MSCI EAFE -2x Shares (EFU)

The ProShares UltraShort MSCI EAFE -2x Shares (EFU) is a leveraged and inverse ETF. It is designed to move in the opposite direction of its target index, aiming for -2x the daily return. This means if the index goes down, the ETF is designed to go up by twice that amount.

What the Numbers Show

The recent performance of EFU shows a significant decline in share price. Because this ETF has a history of reverse splits, we look at split-adjusted returns to see how it has performed:

• Year-to-Date (YTD): The price return is -18.25%, while the total return is -16.20%.

• One Year: The price return is -23.52%, and the total return is -20.59%.

• Three Year: The price return is -64.87%, and the total return is -60.12%.

The total return figures are slightly higher than the price returns because they include the cash distributions paid to investors.

Income and Distribution Explanation

EFU has a distribution yield of approximately 4.10%. Over the last 12 months, it has made 4 payments, usually on a quarterly basis.

It is important for beginners to remember that a distribution yield is not the same as a total return. While the ETF provides some cash income, the share price has declined significantly over the same period. A high yield alone can be misleading if the value of the shares is falling.

Price and 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 erosion, EFU has an erosion score of 55, which is labeled as "Moderate price erosion." Additionally, this ETF has a history of reverse splits. In a reverse split, multiple old shares are combined into fewer new shares, which mechanically raises the per-share price. This mechanical increase does not restore lost investment value. The most recent reverse split occurred on November 7, 2024, with a coefficient of 0.5.

Pros

• Inverse Strategy: It provides a way for investors to bet against the MSCI EAFE index.

• Leverage: The -2x multiplier can amplify gains if the target index falls.

• Regular Income: It has a history of making quarterly distributions.

Cons

• Significant Price Decline: The ETF has seen large losses over one-year and three-year periods.

• Reverse Split History: The fund has used reverse splits to manage its share price.

• High Risk: As a leveraged inverse fund, it is more volatile than a standard ETF.

Beginner Takeaway

EFU is a complex tool used to profit from a falling market. While it pays a distribution yield of about 4.10%, the total returns have been deeply negative over the last three years. Investors in income-focused funds generally care about "principal stability," which means they want their original investment to stay intact. In the case of EFU, the price has declined significantly despite the distributions.