This
section contains additional details about the Funds investment
objective, principal investment strategies and related
risks.
Investment
Objective
The
Fund seeks investment results, before fees and expenses, that track the
performance of its index. The Funds investment objective is
non-fundamental, meaning that it may be changed by the Board
of Trustees (the Board) of ProShares Trust (the Trust),
without the approval of Fund shareholders. The Fund reserves
the right to substitute a different index for the Index
without shareholder approval.
Principal
Investment Strategies
In
seeking to achieve the Funds investment objective, ProShare Advisors
follows a passive approach to investing that is designed to
track the performance of the Index. The Fund attempts to
achieve its investment objective by investing all, or
substantially all, of its assets in the component securities of the
Index. The Fund employs various investment techniques that
ProShare Advisors believes should, in the aggregate, simulate
the movement of the Index.
ProShare
Advisors does not invest the assets of the Fund in securities or
financial instruments based on ProShare Advisors view of the
investment merit of a particular security, or company, other than
for cash management purposes, nor does it conduct
conventional investment research or analysis (other than in
determining counterparty creditworthiness), or forecast market
movement or trends, in managing the assets of the Fund. The
Fund generally seeks to remain fully invested at all times in
securities that, in combination, provide exposure to the Index
without regard to market conditions, trends, direction, or the
financial condition of a particular issuer.
Please
see Principal Investment Strategies in the Funds Summary Prospectus
for more detail about the financial instruments in which
the Fund invests.
Bitcoin
Bitcoin
is a digital asset which serves as the unit of account on an open-source,
decentralized, peer-to-peer computer network. Bitcoin may be used
to pay for goods and services, stored for future
use, or converted to a government-issued currency. As of the
date of this Prospectus, the adoption of bitcoin for these
purposes has been limited. The value of bitcoin is not
backed by any government, corporation, or other identified
body.
The
value of bitcoin is determined in part by the supply of (which is limited),
and demand for, bitcoin in the markets for exchange that have
been organized to facilitate the trading of bitcoin. By design,
the supply of bitcoin is limited to 21 million bitcoins. As of the
date of this Prospectus, there are approximately 20 million bitcoins
in circulation.
Bitcoin
is maintained on the decentralized, open source, peer-to-peer computer network
(the Bitcoin Network). No single entity owns or
operates the Bitcoin Network. The Bitcoin Net
work
is accessed through software and governs bitcoins creation and movement. The
source code for the Bitcoin Network, often referred to as
the Bitcoin Protocol, is open-source, and anyone can
contribute to its development.
The
Bitcoin Network
The
infrastructure of the Bitcoin Network is collectively maintained by participants in
the Bitcoin Network, which include miners, developers,
and users. Miners validate transactions and are currently
compensated for that service in bitcoin. Developers maintain
and contribute updates to the Bitcoin Networks source
code often referred to as the Bitcoin Protocol. Users access the
Bitcoin Network using open-source software. Anyone can be a
user, developer, or miner.
Bitcoin
is maintained on a digital transaction ledger commonly known as a
blockchain. A blockchain is a type of shared and
continually reconciled database, stored in a decentralized manner on the
computers of certain users of the digital asset and is
protected by cryptography. The Bitcoin Blockchain contains
a record and history for each bitcoin
transaction.
New
bitcoin is created by mining. Miners use specialized computer software
and hardware to solve a highly complex mathematical problem
presented by the Bitcoin Protocol. The first miner to
successfully solve the problem is permitted to add a block of
transactions to the Bitcoin Blockchain. The new block is then
confirmed through acceptance by a majority of users who
maintain versions of the blockchain on their individual
computers. Miners that successfully add a block to the Bitcoin
Blockchain are automatically rewarded with a fixed amount of
bitcoin for their effort plus any transaction fees paid by
transferors whose transactions are recorded in the block. This
reward system is the means by which new bitcoin enter
circulation and is the mechanism by which versions of the blockchain
held by users on a decentralized network are kept in
consensus.
The
Bitcoin Protocol
The
Bitcoin Protocol is an open source project with no official company or group in
control. Anyone can review the underlying code and suggest
changes. There are, however, a number of individual
developers that regularly contribute to a specific distribution of
bitcoin software known as the Bitcoin Core. Developers of the
Bitcoin Core loosely oversee the development of the source code.
There are many other compatible versions of the bitcoin
software, but Bitcoin Core is the most widely adopted and
currently provides the de facto standard for the Bitcoin
Protocol. The core developers are able to access, and can
alter, the Bitcoin Network source code and, as a result, they are
responsible for quasi-official releases of updates and other
changes to the Bitcoin Networks source
code.
However,
because bitcoin has no central authority, the release of updates to the
Bitcoin Networks source code by the core