Share-split context: A reverse split was recorded on Jan 13, 2022 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 Short Real Estate (REK)

What this ETF is trying to do

The ProShares Short Real Estate ETF (REK) is an "inverse" ETF. This means it is designed to move in the opposite direction of the real estate market. If real estate prices go down, this ETF is designed to go up.

What the numbers show

It is important to understand that "price return" and "total return" are different things. Price return only tracks the change in the share price. Total return includes both the share price changes and any cash distributions (dividends) paid out.

Here is what the data shows for REK:

• Year-to-Date (YTD): The price return is approximately -1.46%, but the total return is approximately 0.45%.

• One Year: The price return is approximately 0.72%, while the total return is approximately 3.54%.

• Three Years: The price return is approximately -23.71%, and the total return is approximately -13.04%.

• Five Years: The five-year total return is approximately 10.36%.

Because this ETF has a history of reverse splits, we cannot provide an estimated price from one year ago. In a reverse split, multiple old shares are combined into fewer new shares. This causes the price per share to rise mechanically, but it does not increase the actual value of the investment.

Income and distribution explanation

REK pays out cash distributions to investors. The current distribution yield is approximately 2.70%. Over the last 12 months, there were 4 distributions, which usually happen every quarter. While these payments provide cash, a high yield does not guarantee that the investment's value will stay the same.

NAV erosion explanation

"NAV erosion" refers to a decline in the Net Asset Value (the actual value of the fund's assets). While a falling share price is a "price decline," it does not always mean the NAV is eroding.

For REK, the erosion-risk score is 94, which is labeled as "Stable / sideways." The erosion severity is rated as "good," and there is no severe erosion-risk flag present.

Pros

• The ETF provides a way to participate in the market's movement when real estate prices fall.

• The total return figures are higher than the price return figures, meaning distributions have added value to the overall performance.

Cons

• The three-year price and total returns have been negative.

• Because it is an inverse ETF, it behaves differently than standard funds that aim to grow as markets rise.

Beginner takeaway

When looking at REK, remember that price returns and total returns tell different stories. The total return includes the cash distributions you receive, while the price return only shows how the share price moved. Always look at both when trying to understand how an ETF has performed over time.