Share-split context: A reverse split was recorded on May 20, 2015 with coefficient 0.25. 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 RUSSELL2000 (RWM)

What this ETF is trying to do

The PROSHARES SHORT RUSSELL2000 (RWM) is an "inverse" ETF. This means it is designed to move in the opposite direction of the Russell 2000 index. If that index goes down, this ETF is generally designed to go up.

What the numbers show

The current price of RWM is $14.42. Because this ETF has a history of reverse splits, we use split-adjusted returns to look at its performance. A reverse split is when multiple old shares are combined into fewer new shares, which makes the price per share rise mechanically.

Here is how the fund has performed:

• Year-to-Date (YTD) Price Return: Approximately -11.91%

• Year-to-Date (YTD) Total Return: Approximately -10.05%

• One-Year Price Return: Approximately -13.39%

• One-Year Total Return: Approximately -10.57%

• Three-Year Price Return: Approximately -41.76%

• Three-Year Total Return: Approximately -33.67%

It is important to know the difference between price return and total return. The price return only shows how much the share price changed. The total return includes both the price change and any distributions (cash payments) received.

Income and distribution explanation

RWM pays out cash distributions, which is often called a "distribution yield." The current distribution yield is approximately 3.31%. Over the last 12 months, there were 4 distributions. These payments usually happen on a quarterly basis.

While some investors look for high yields to get cash income, it is important to remember that a distribution yield is not the same as total return. A high yield does not guarantee that your original investment will stay the same value.

NAV erosion explanation

"NAV erosion" refers to a decline in the Net Asset Value of the fund. While a falling share price is not the same thing as NAV erosion, we use an "erosion-risk score" to measure potential risks.

RWM has an erosion score of 75, which is labeled as "Mild price erosion." This is a measurement of risk, not a guarantee that the fund's value has collapsed. There is no severe erosion-risk flag for this ETF at this time.

Pros

• The fund provides a way to participate in the inverse movement of the Russell 2000 index.

• It provides regular cash distributions (usually quarterly).

Cons

• The fund has shown significant negative price returns over the one-year and three-year periods.

• The total return has been negative across multiple timeframes.

Beginner takeaway

When looking at ETFs like RWM, it is important to distinguish between the share price and the total return. Because this fund has a history of reverse splits, looking at split-adjusted percentage returns is the best way to understand its past performance. Always remember that receiving cash distributions does not protect your original investment from a declining share price.