Share-split context: A reverse split was recorded on May 1, 2017 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: SPDN

What this ETF is trying to do

The SPDN ETF is an "inverse" fund. This means it is designed to move in the opposite direction of the S&P 500 index. While most funds try to go up when the market goes up, an inverse fund is built to gain value when the market goes down.

What the numbers show

It is important to understand the difference between "price return" and "total return." Price return only tracks how much the share price changes. Total return includes both the price change and any cash distributions paid out to investors.

Based on the data provided:

• Year-to-Date (YTD): The price return is approximately -11.66%, while the total return is approximately -9.28%.

• One Year: The price return is approximately -13.14%, while the total return is approximately -10.07%.

• Three Year: The price return is approximately -43.68%, while the total return is approximately -35.82%.

Because this ETF has a history of reverse splits, we cannot use an estimated price from one year ago. Instead, we look at these split-adjusted percentage returns to see how the value has changed over time. A reverse split happens when multiple old shares are combined into fewer new shares, which causes the per-share price to rise mechanically.

Income and distribution explanation

This ETF has a distribution yield of approximately 3.73%. This represents the cash distributions paid out relative to the current share price of $8.33. Over the last 12 months, there were four distributions. While these payments provide cash to investors, a high yield does not guarantee that the investment is growing in value.

NAV erosion explanation

"NAV erosion" refers to a decline in the Net Asset Value, or the actual underlying value of the fund. While a falling share price is a "price decline," it does not always mean the NAV has eroded.

For SPDN, the erosion-risk score is 75, which is labeled as "Mild price erosion." This is a measurement of risk rather than a confirmed fact of total value loss. There is no severe erosion-risk flag for this ETF.

Pros

• The fund provides a way to participate in market movements that are opposite to the S&P 500.

• It provides regular cash distributions (usually quarterly).

Cons

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

• The total return has been negative over multiple timeframes.

Beginner takeaway

When looking at ETFs like SPDN, remember that price returns and total returns are different. Also, keep in mind that receiving cash distributions is not the same as seeing your total investment grow. Always look at the total return to get a fuller picture of how the fund has performed.