Share-split context: A reverse split was recorded on May 25, 2021 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.

Understanding MZZ: ProShares UltraShort Midcap400

What this ETF is trying to do

MZZ, the ProShares UltraShort Midcap400, is an ETF designed to move in the opposite direction of the midcap market. It is both a leveraged and an inverse ETF. This means it uses financial tools to try to provide more than double the opposite performance of its target index. Because it is an "inverse" fund, if the midcap market goes down, this ETF is designed to go up. If the midcap market goes up, this ETF is designed to go down.

What the numbers show

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

• Year-to-Date (YTD): The price return is approximately -18.12%. When including distributions, the YTD total return is approximately -16.73%.

• One Year: The price return was approximately -21.65%, while the one-year total return was approximately -19.06%.

• Three Year: The price return was approximately -60.47%, and the three-year total return was approximately -54.59%.

It is important to note that this ETF has a history of reverse splits. In a reverse split, 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. Because MZZ has a split history, an estimated price from one year ago is not provided; instead, we use the supplied split-adjusted percentage returns.

Income and distribution explanation

MZZ provides cash distributions, which are payments made to shareholders. The trailing distributions over the last year were approximately $0.23 per share. The distribution yield is approximately 3.62%. This yield describes the cash payments relative to the current ETF price. The fund usually pays these distributions on a quarterly basis.

It is important to remember that a distribution yield is not the same as total return. While distributions provide cash, they do not guarantee that your original investment will stay the same 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 fund 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 market price of the shares.

Pros

• The ETF is designed to provide inverse exposure, which can be used by investors looking to profit from a declining midcap market.

• It provides regular quarterly distributions.

Cons

• The ETF has experienced significant share-price declines over the one-year and three-year periods.

• It is a leveraged and inverse product, which carries different risks than standard ETFs.

• The fund has a history of reverse splits.

Beginner takeaway

MZZ is a specialized tool used to bet against the midcap market using leverage. While it pays a distribution yield of approximately 3.62%, the share price has seen substantial declines over the last three years. Investors should understand that high distributions do not offset a declining share price, and the total return reflects the combined effect of both price changes and distributions.