PROSHARES TRUST (Form: N-1A/A, Received: 05/22/2006 16:57:09)

Name of Portfolio Manager

Number of Registered
Investment Company
Accounts

(Total Assets)

Number of Other
Pooled Investment
Vehicles

(Total Assets)

Number of Other
Accounts

(Total Assets)

Agustin Fleites

93
($6,911,396,703)

1
($26,100,000)

Taeyong Lee

Olessia Burner

Steven Schoffstall

As filed with the Securities and Exchange Commission on May 22, 2006

Registration Nos. 333-89822; 811-21114

U.S. SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form N-1A


REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933		¨

Pre-Effective Amendment No. 6		x

Post-Effective Amendment No.		¨

And/Or

REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940		¨

Amendment No. 6		x

ProShares Trust (formerly xtraShares Trust)

(Exact name of Registrant as Specified in Trust Instrument)

7501 Wisconsin Avenue, Suite 1000

Bethesda, MD 20814

(Address of Principal Executive Office) (Zip Code)

Registrant’s Telephone Number, including Area Code: (240) 497-6400

Michael L. Sapir

Chairman

ProShare Advisors LLC

7501 Wisconsin Avenue, Suite 1000

Bethesda, MD 20814

(Name and Address of Agent for Service)

Copy to

Stuart M. Strauss, Esq.

C/o Clifford Chance US LLP

31 West 52nd Street

New York, NY 10019

Approximate date of Proposed Public Offering: As soon as practicable after the effective date of this Registration statement.

SUBJECT TO COMPLETION

PRELIMINARY PROSPECTUS

[ ], 2006

PROSHARES TRUST


The Bullish Funds		The Bearish Funds
Ultra500 Fund		Short 500 Fund
Ultra100 Fund		Short 100 Fund
Ultra30 Fund		Short 30 Fund
UltraMidCap400 Fund		Short MidCap400 Fund
		UltraShort 500 Fund
		UltraShort 100 Fund
		UltraShort 30 Fund
		UltraShort MidCap400 Fund

ProShares Trust (the “Trust”) is an exchange-traded fund organized as a Delaware business trust that consists of separate investment portfolios (each, a “Fund”). ProShare Advisors LLC (“ProShare Advisors”) serves as the investment advisor to each Fund.

The shares of each Fund (“Shares”) will be listed on the American Stock Exchange (“Exchange”). Shares trade on the Exchange at market prices that may differ from the indicative intraday value (“IIV”) of the Shares disseminated by the Exchange and may be above, below or equal to the Funds’ end of day net asset value (“NAV”). Each Fund has its own CUSIP number and exchange trading symbol. Each Fund issues and redeems Shares on a continuous basis at NAV in large, specified numbers of Shares called “Creation Units.” Creation Units of the Bullish Funds are issued and redeemed principally in-kind for securities included in the relevant underlying index and an amount of cash. Creation Units of the Bearish Funds are purchased and redeemed in cash.

Except when aggregated in Creation Units, Shares are not redeemable securities of the Funds. Retail investors, therefore, generally will not be able to purchase or redeem Shares directly from or with a Fund. Rather, most retail investors will purchase or sell Shares in the secondary market with the assistance of a broker. Thus, some of the information contained in this prospectus—such as information about purchasing and redeeming Shares from or with a Fund and all references to the Transaction Fee imposed on purchases and redemptions—is not relevant to retail investors.

Prospectus

, 2006

INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE U.S. SECURITIES AND EXCHANGE COMMISSION BUT HAS NOT YET BECOME EFFECTIVE. SHARES OF PROSHARES TRUST MAY NOT BE SOLD, NOR MAY OFFERS TO BUY BE ACCEPTED, PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES EFFECTIVE. THIS COMMUNICATION SHALL NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY, NOR SHALL THERE BE ANY SALE OF THESE SECURITIES IN A STATE IN WHICH SUCH OFFER, SOLICITATION, OR SALE WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAW OF THE STATE. IN ADDITION, THE OFFERING OF SHARES IS CONTINGENT UPON APPROVAL OF AN EXEMPTIVE APPLICATION CURRENTLY PENDING BEFORE THE SEC, WHICH APPROVAL MAY OR MAY NOT BE GRANTED.

NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

TABLE OF CONTENTS


Bullish Funds		4

Bearish Funds		21

Additional Information Regarding Strategies and Risks		54

Creation and Redemption of Creation Units		66

Purchasing Shares Directly From A Fund		66

Procedures Applicable to Purchase Bullish Funds		67

Procedures Applicable to Purchase Bearish Funds		68

Redeeming Shares Directly From A Fund		68

Redemption Procedures Applicable to Bullish Funds		68

Redemption Procedures Applicable to Bearish Funds		69

Transaction Fees on Creation and Redemption Transactions		69

Dividend Reinvestment Service		70

Distributions		70

Determination of NAV		70

Basic Tax Points		70

Management of ProShares Trust		72

Other Service Providers		74

[ProShares Trust Logo]

ProShare Advisors LLC — Investment Advisor

BULLISH FUNDS

The Bullish Funds seek to provide daily investment results, before fees and expenses, that double (200%) the daily performance of the applicable index.


Fund	Index	Benchmark ¹	Types of Companies in Index

Ultra500 Fund	S&P 500 ^® Index	Double (200%)	Diverse, widely traded, large capitalization

Ultra100 Fund	NASDAQ-100 Index ^®	Double (200%)	Large capitalization, non-financial companies listed on the NASDAQ Stock Market

Ultra30 Fund	Dow Jones Industrial Average	Double (200%)	Diverse, widely traded, large capitalization

UltraMidCap400 Fund	S&P MidCap400 Index	Double (200%)	Diverse, widely traded, mid- capitalization

An investment in a Fund is not a deposit of a bank, and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. The Funds are not guaranteed to achieve their investment objectives, and an investment in a Fund could lose money. No single Fund is a complete investment program.

A benchmark may be any standard of investment performance to which a fund seeks to match or correlate its performance. The Bullish and Bearish Funds utilize the performance of a multiple of an index, an inverse of an index or an inverse multiple of an index as their benchmark. For example, Ultra500 Fund has a daily benchmark of twice the daily return of the S&P 500 Index ^® .

Ultra500 Fund

INVESTMENT OBJECTIVE

Ultra500 Fund seeks daily investment results, before fees and expenses, that correspond to twice (200%) the daily performance of the S&P 500 ^® Index.

If Ultra500 Fund is successful in meeting its objective, its net asset value should gain approximately twice as much, on a percentage basis, as the S&P 500 Index when the Index rises on a given day. Conversely, its net asset value should lose approximately twice as much, on a percentage basis, as the Index when the Index declines on a given day.

PRINCIPAL INVESTMENT STRATEGY

The Ultra500 Fund’s principal investment strategies include:

•

Investing in equity securities and/or financial instruments (including derivatives) that ProShare Advisors believes, in combination, should have similar daily price return characteristics as twice (200%) the daily return of the S&P 500 Index.

•

Employing leveraged investment techniques and/or sampling techniques in seeking its investment objective.

•

Investing assets not invested in equity securities or financial instruments, in debt securities and/or money market instruments.

The Ultra500 Fund employs leveraged investment techniques to achieve its investment objective. Over time, the use of leverage, combined with the effect of compounding, will have a more significant impact on the Ultra500 Fund’s performance compared to the index underlying its benchmark than a fund that does not employ leverage. Therefore, the return of the index over a period of time greater than one day multiplied by a fund’s specified multiple or inverse multiple (e.g., 200% or -200%) will not generally equal a fund’s performance over that same period. The following example illustrates this point:

Let’s say, hypothetically, that a shareholder invests $10,000 in Fund A and $10,000 in Fund B.


Fund A: A fund whose objective is to seek daily investment results, before fees and expenses, that correspond to the daily performance of an index.		Fund B: A fund whose objective is to seek daily investment results, before fees and expenses, that correspond to twice (200%) the daily performance of an index.

On Day 1, each fund’s benchmark index increases in value 1% which would cause a 1% increase in Fund A and a 2% increase in Fund B.

On Day 2, each fund’s benchmark index decreases in value 1% which would cause a 1% decrease in Fund A and a 2% decrease in Fund B. At the end of Day 2, the value of the shareholder’s investment in Fund A would be approximately $9,999 (an increase of $100 on Day 1 and a decrease of $101 on Day 2). The value of the shareholder’s investment in Fund B would be approximately $9,996 at the end of Day 2 (an increase of $200 on Day 1 and a decrease of $204 on Day 2). In each case, the value of the shareholder’s investment declined overall. However, the effect of compounding was more pronounced for Fund B, which employs leverage. This example demonstrates how an investment in Fund A would have decreased in value by $1 over two days based on the index performance, while an investment in Fund B would have decreased in value by $4 over two days (four times the cumulative index loss over two days rather than two times the cumulative index loss).

Over time, the cumulative percentage increase or decrease in the net asset value of the Fund may diverge significantly from the cumulative percentage increase or decrease in the multiple of the return of the Underlying Index due to the compounding effect of losses and gains on the returns of the Fund.

PRINCIPAL RISK CONSIDERATIONS

The Ultra500 Fund is subject to the following principal risks:

•

Aggressive investment technique risk – The Ultra500 Fund uses investment techniques and financial instruments that may be considered aggressive, including the use of futures contracts, options on futures contracts, securities and indices, forward contracts, swap agreements and similar instruments. Such techniques may expose the Fund to potentially dramatic changes (losses) in the value of its portfolio holdings and imperfect correlation to the index underlying the Fund’s benchmark. These techniques also may expose the Fund to risks different from or possibly greater than the risks associated with investing directly in the securities contained in the index underlying the Fund’s benchmark.

•

Correlation risk – A number of factors may affect the Ultra500 Fund’s ability to achieve a high correlation with its benchmark and there can be no guarantee that the Fund will achieve a high degree of correlation.

•

Counterparty risk – The counterparty to a financial instrument may default on its obligations under the related agreement. In this circumstance, the Ultra500 Fund may lose money.

•

Credit Risk – An issuer of debt instruments may be unable to make interest payments and repay principal. Changes in an issuer’s financial strength or in an instrument’s credit rating may affect an instrument’s value and, thus, impact Ultra500 Fund’s performance. As described under “Counterparty Risk” above, the Fund will also be subject to credit risk with respect to the amount a Fund expects to receive from counterparties in financial instruments transactions. If a counterparty defaults on its payment obligations to a Fund, the value of your investment in a fund may decline.

•

Equity risk – The equity markets are volatile, and the value of securities, futures, options contracts and other instruments correlated with the equity markets may fluctuate dramatically from day-to-day.

•

Leverage risk – The Ultra500 Fund’s NAV and market price will likely be more volatile than the index underlying its benchmark and funds that do not employ leverage. Leverage should cause the Ultra500 Fund to lose more money in market environments adverse to its daily investment objective than an unleveraged investment.

•

Liquidity risk – In certain circumstances, the Ultra500 Fund may not be able to dispose of portfolio investments within a reasonable time at a fair price.

•

Market price variance risk – The Ultra500 Fund’s NAV will fluctuate with changes in the value of its portfolio holdings. Fund shares are listed on the Exchange and are purchased and sold at market prices. Although it is expected that the secondary market price for shares should approximate the Fund’s NAV, there may be times when the secondary market price varies significantly from NAV and may be below or above the most recently calculated NAV.

•

Market risk – The Ultra500 Fund is subject to market risks that will affect the value of its shares, including general economic and market conditions, as well as developments that impact specific economic sectors, industries or companies.

•

Non-diversification risk – The Ultra500 Fund is considered non-diversified and may invest a relatively high percentage of its assets in the securities of a small number of issuers. In such circumstances, the Fund’s performance may be susceptible to economic, political or regulatory events affecting a single issuer than a more diversified fund.

•

Repurchase Agreement Risk – Repurchase agreement risk is the risk that the counterparty to the repurchase agreement that sells the securities may default on its obligation to repurchase them. In this circumstance, Ultra500 Fund may lose money because: it may not be able to sell the securities at the agreed upon time and price, the securities may lose value before they can be sold, the selling institution may default or declare bankruptcy or the Fund may have difficulty exercising rights to the collateral.

•

Volatility Risk – Ultra500 Fund seeks to achieve a multiple of an index and therefore will experience greater volatility than the index underlying its benchmark and consequently has the potential for greater losses.

The Ultra500 Fund may be subject to risks in addition to those identified as principal risks. The sections titled “More on Risks” and “Special Risks of Exchange-Traded Funds” later in this Prospectus and the Statement of Additional Information (“SAI”) contains additional information about the Fund and related risks.

FUND PERFORMANCE

Performance history will be available for the Ultra500 Fund after it has been in operation for a full calendar year.

FEES AND EXPENSES

The following table describes the estimated fees and expenses you may pay when you buy, hold, or sell Creation Units of the Ultra500 Fund . Annual fund operating expenses are estimates. Investors purchasing shares in the secondary market will not pay the shareholder fees shown below, but may be subject to costs (including customary brokerage commissions) charged by their broker.

Shareholder Fees (paid directly by Authorized Participants)


Sales charges (loads)		None
Fixed transaction fee per order ^A		$[ ]
Variable transaction fee per creation unit ^B		up to [ ]%
Additional transaction charge if not settled through the Continuous Net Settlement System of the National Securities Clearing Corporation (NSCC) ^C		up to $[ ] plus up to [ ]%

^A	A fixed transaction fee of $[ ] will be charged when you create or redeem Creation Units of the Ultra500 Fund regardless of the number of shares created or redeemed on the date of the transaction.

^B	A variable transaction fee of up to [ ] % of the value of each Creation Unit will be charged to offset costs associated with the order.

An additional fee of up to [ ] times the fixed per order transaction fee plus up to [ ]% of the value of each Creation Unit may be charged if you do not create or redeem shares through the Continuous Net Settlement System of the NSCC, or in circumstances in which cash is substituted for certain securities. Such transactions are allowed at the sole discretion of the Fund.

Annual Fund Operating Expenses (as a percentage of average daily net assets)


Investment Advisory Fee	[	]%
Distribution and Service (12b-1) fees	[	]%
Other expenses ^A	[	]%
Total annual fund operating expenses	[	]%
Fee Waivers/Reimbursements ^B	[	]%
Total net annual fund operating expenses	[	]%

^A	Based on estimated amounts for the current fiscal year.

ProShare Advisors has contractually agreed to waive Investment Advisory and Management Services Fees and to reimburse other expenses to the extent Total Annual Operating Expenses, as a percentage of average daily net assets, exceed [ ]% through [ ]. After such date, the expense limitation may be terminated or revised. Amounts waived or reimbursed in a particular fiscal year may be recouped by ProShare Advisors within five years of the waiver or reimbursement to the extent that recoupment will not cause the Fund’s expenses to exceed any expense limitation in place at that time.

Example: The following examples are intended to help you compare the cost of investing in shares of the Ultra500 Fund with the cost of investing in other funds. Investors should note that the following examples are for illustration purposes only and are not meant to suggest actual or expected fees and expenses or returns, all of which may vary. The Fund issues and redeems shares in Creation Units principally on an in-kind basis for portfolio securities included in the relevant Index and cash. Shares are not redeemable in less than Creation Unit aggregations. The examples do not include the brokerage commissions that secondary market investors may incur to buy and sell shares.

The following example assumes that you invest $10,000 in the Ultra500 Fund for the time periods indicated and sell all of your shares at the end of those periods, but does not include transaction fees on purchases and redemptions of shares. The example also assumes that your investment has a 5% annual return each year and that the Fund’s annual operating expenses remain exactly as described in the fee table. Although your actual costs may be higher or lower, based on the assumptions, your costs would be:


1 year	$	[	]
3 years	$	[	]

The anticipated approximate value of one Creation Unit of the Ultra500 Fund , as of [ ], 2006, is $5,250,000. The following example assumes that you invest $10,000 in the Fund for the time periods indicated and sell all of your shares at the end of those periods. It also assumes that you pay the standard $[ ] transaction fee applicable to both the purchase and redemption of the Creation Unit, have a 5% annual return each year, and that the Fund’s operating expenses remain the same. Although your actual costs may be higher or lower, based on the assumptions, your costs would be:


1 year	$	[	]
3 years	$	[	]

Ultra100 Fund

INVESTMENT OBJECTIVE

Ultra100 Fund seeks daily investment results, before fees and expenses, that correspond to twice (200%) the daily performance of the NASDAQ-100 Index ^® .

If Ultra100 Fund is successful in meeting its objective, its net asset value should gain approximately twice as much, on a percentage basis, as the NASDAQ-100 Index when the Index rises on a given day. Conversely, its net asset value should lose approximately twice as much, on a percentage basis, as the Index when the Index declines on a given day.

PRINCIPAL INVESTMENT STRATEGY

The Ultra100 Fund’s principal investment strategies include:

•

Employing leveraged investment techniques and/or sampling techniques in seeking its investment objective.

•

Investing assets not invested in equity securities or financial instruments, in debt securities and/or money market instruments.

The Ultra100 Fund employs leveraged investment techniques to achieve its investment objective. Over time, the use of leverage, combined with the effect of compounding, will have a more significant impact on the Ultra100 Fund’s performance compared to the index underlying its benchmark than a fund that does not employ leverage. Therefore, the return of the index over a period of time greater than one day multiplied by a fund’s specified multiple or inverse multiple (e.g., 200% or -200%) will not generally equal a fund’s performance over that same period. The following example illustrates this point:

Let’s say, hypothetically, that a shareholder invests $10,000 in Fund A and $10,000 in Fund B.


Fund A: A fund whose objective is to seek daily investment results, before fees and expenses, that correspond to the daily performance of an index.		Fund B: A fund whose objective is to seek daily investment results, before fees and expenses, that correspond to twice (200%) the daily performance of an index.

On Day 1, each fund’s benchmark index increases in value 1% which would cause a 1% increase in Fund A and a 2% increase in Fund B.

PRINCIPAL RISK CONSIDERATIONS

The Ultra100 Fund is subject to the following principal risks:

•

Aggressive investment technique risk – The Ultra100 Fund uses investment techniques and financial instruments that may be considered aggressive, including the use of futures contracts, options on futures contracts, securities and indices, forward contracts, swap agreements and similar instruments. Such techniques may expose the Fund to potentially dramatic changes (losses) in the value of its portfolio holdings and imperfect correlation to the index underlying the Fund’s benchmark. These techniques also may expose the Fund to risks different from or possibly greater than the risks associated with investing directly in the securities contained in the index underlying the Fund’s benchmark.

•

Correlation risk – A number of factors may affect the Ultra100 Fund’s ability to achieve a high correlation with its benchmark and there can be no guarantee that the Fund will achieve a high degree of correlation.

•

Counterparty risk – The counterparty to a financial instrument may default on its obligations under the related agreement. In this circumstance, the Ultra100 Fund may lose money.

•

Credit Risk – An issuer of debt instruments may be unable to make interest payments and repay principal. Changes in an issuer’s financial strength or in an instrument’s credit rating may affect an instrument’s value and, thus, impact Ultra100 Fund’s performance. As described under “Counterparty Risk” above, the Fund will also be subject to credit risk with respect to the amount a Fund expects to receive from counterparties in financial instruments transactions. If a counterparty defaults on its payment obligations to a Fund, the value of your investment in a fund may decline.

•

Leverage risk – The Ultra100 Fund’s NAV and market price will likely be more volatile than the index underlying its benchmark and funds that do not employ leverage. Leverage should cause the Fund to lose more money in market environments adverse to its daily investment objective than an unleveraged investment.

•

Liquidity risk – In certain circumstances, such as the disruption of the orderly markets for the securities or financial instruments in which the Ultra100 Fund invests, the Fund might not be able to dispose of certain holdings quickly or at prices that represent true market value in the judgment of ProShare Advisors. Certain derivative securities such as over-the-counter contracts held by a ProShare may also be illiquid. This may prevent the ProShares from limiting losses, realizing gains, or from achieving a high (inverse) correlation with their underlying benchmark index or security. In addition, a ProShare may not be able to pay redemption proceeds within the time periods described in this Prospectus as a result of unusual market conditions, an unusually high volume of redemption requests or other reasons.

•

Market price variance risk – The Ultra100 Fund’s NAV will fluctuate with changes in the value of its portfolio holdings. Fund shares are listed on the Exchange and are purchased and sold at market prices

for shares. Although it is expected that the secondary market price for shares should approximate the Fund’s NAV, there may be times when the market price varies significantly from NAV.

•

Market risk – The Ultra100 Fund is subject to market risks that will affect the value of its shares, including general economic and market conditions, as well as developments that impact specific economic sectors, industries or companies.

•

Non-diversification risk – The Ultra100 Fund is considered non-diversified and may invest a relatively high percentage of its assets in the securities of a small number of issuers. In such circumstances, the Fund’s performance may be susceptible to economic, political or regulatory events affecting a single issuer than a more diversified fund.

•

Repurchase Agreement Risk – Repurchase agreement risk is the risk that the counterparty to the repurchase agreement that sells the securities may default on its obligation to repurchase them. In this circumstance, Ultra100 Fund may lose money because: it may not be able to sell the securities at the agreed upon time and price, the securities may lose value before they can be sold, the selling institution may default or declare bankruptcy or the Fund may have difficulty exercising rights to the collateral.

•

Technology Investment Risk – The Ultra100 Fund may maintain significant exposure to technology companies. Technology companies are subject to intense competition, both domestically and internationally, and may have limited product lines, markets, financial resources or personnel.

•

Volatility Risk – Ultra100 Fund seeks to achieve a multiple of an index and therefore will experience greater volatility than the index underlying its benchmark and consequently has the potential for greater losses.

The Ultra100 Fund may be subject to risks in addition to those identified as principal risks. The sections titled “More on Risks” and “Special Risks of Exchange-Traded Funds” later in this Prospectus and the SAI contains additional information about the Fund and related risks.

FUND PERFORMANCE

Performance history will be available for the Ultra100 Fund after it has been in operation for a full calendar year.

FEES AND EXPENSES

The following table describes the estimated fees and expenses you may pay when you buy, hold, or sell Creation Units of the Ultra100 Fund . Annual fund operating expenses are estimates. Investors purchasing shares in the secondary market will not pay the shareholder fees shown below, but may be subject to costs (including customary brokerage commissions) charged by their broker.

Shareholder Fees (paid directly by Authorized Participants)


Sales charges (loads)		None
Fixed transaction fee per order ^A		$[ ]
Variable transaction fee per creation unit ^B		up to [ ]%
Additional transaction charge if not settled through the Continuous Net Settlement System of the National Securities Clearing Corporation (NSCC) ^C		up to $[ ] plus up to [ ]%

^A	A fixed transaction fee of $[ ] will be charged when you create or redeem Creation Units of the Ultra100 Fund regardless of the number of shares created or redeemed on the date of the transaction.

^B	A variable transaction fee of up to [ ] % of the value of each Creation Unit will be charged to offset costs associated with the order.

Annual Fund Operating Expenses (as a percentage of average daily net assets)


Investment Advisory Fee		[ ]%
Distribution and Service (12b-1) fees		[ ]%
Other expenses ^A		[ ]%
Total annual fund operating expenses		[ ]%
Fee Waivers/Reimbursements ^B		[ ]%
Total net annual fund operating expenses		[ ]%

^A	Based on estimated amounts for the current fiscal year.

Example: The following examples are intended to help you compare the cost of investing in shares of the Ultra100 Fund with the cost of investing in other funds. Investors should note that the following examples are for illustration purposes only and are not meant to suggest actual or expected fees and expenses or returns, all of which may vary. The Fund issues and redeems shares in Creation Units principally on an in-kind basis for portfolio securities included in the relevant Index and cash. Shares are not redeemable in less than Creation Unit aggregations. The examples do not include the brokerage commissions that secondary market investors may incur to buy and sell shares.

The following example assumes that you invest $10,000 in the Ultra100 Fund for the time periods indicated and sell all of your shares at the end of those periods, but does not include transaction fees on purchases and redemptions of shares. The example also assumes that your investment has a 5% annual return each year and that the Fund’s annual operating expenses remain exactly as described in the fee table. Although your actual costs may be higher or lower, based on the assumptions, your costs would be:


1 year		$ [ ]
3 years		$ [ ]

The anticipated approximate value of one Creation Unit of the Ultra100 Fund , as of [ ], 2006, is $5,250,000. The following example assumes that you invest $10,000 in the Fund for the time periods indicated and sell all of your shares at the end of those periods. It also assumes that you pay the standard $[ ] transaction fee applicable to both the purchase and redemption of the Creation Unit, have a 5% annual return each year, and that the Fund’s operating expenses remain the same. Although your actual costs may be higher or lower, based on the assumptions, your costs would be:


1 year		$ [ ]
3 years		$ [ ]

Ultra30 Fund

INVESTMENT OBJECTIVE

Ultra30 Fund seeks daily investment results, before fees and expenses, that correspond to twice (200%) the daily performance of the Dow Jones Industrial Average ^SM (DJIA).

If Ultra30 Fund is successful in meeting its objective, its net asset value should gain approximately twice as much, on a percentage basis, as the DJIA when the DJIA rises on a given day. Conversely, its net asset value should lose approximately twice as much, on a percentage basis, as the DJIA when the DJIA declines on a given day.

PRINCIPAL INVESTMENT STRATEGY

The Ultra30 Fund’s principal investment strategies include:

•

Employing leveraged investment techniques and/or sampling techniques in seeking its investment objective.

•

Investing assets not invested in equity securities or financial instruments, in debt securities and/or money market instruments.

The Ultra30 Fund employs leveraged investment techniques to achieve its investment objective. Over time, the use of leverage, combined with the effect of compounding, will have a more significant impact on the Ultra30 Fund’s performance compared to the index underlying its benchmark than a fund that does not employ leverage. Therefore, the return of the index over a period of time greater than one day multiplied by a fund’s specified multiple or inverse multiple (e.g., 200% or -200%) will not generally equal a fund’s performance over that same period. The following example illustrates this point:

Let’s say, hypothetically, that a shareholder invests $10,000 in Fund A and $10,000 in Fund B.


Fund A: A fund whose objective is to seek daily investment results, before fees and expenses, that correspond to the daily performance of an index.		Fund B: A fund whose objective is to seek daily investment results, before fees and expenses, that correspond to twice (200%) the daily performance of an index.

On Day 1, each fund’s benchmark index increases in value 1% which would cause a 1% increase in Fund A and a 2% increase in Fund B.

PRINCIPAL RISK CONSIDERATIONS

The Ultra30 Fund is subject to the following principal risks:

•

Aggressive investment technique risk – The Ultra30 Fund uses investment techniques and financial instruments that may be considered aggressive, including the use of futures contracts, options on futures contracts, securities and indices, forward contracts, swap agreements and similar instruments. . Such techniques may expose the Fund to potentially dramatic changes (losses) in the value of its portfolio holdings and imperfect correlation to the index underlying the Fund’s benchmark. These techniques also may expose the Fund to risks different from or possibly greater than the risks associated with investing directly in the securities contained in the index underlying the Fund’s benchmark.

•

Concentration Risk – Ultra 30 Fund may concentrate its investments in issuers of one or more particular industries to the same extent that its Underlying Index is so concentrated. There is a risk that those issuers (or industry sector) will perform poorly and negatively impact a Fund.

•

Correlation risk – A number of factors may affect the Ultra30 Fund’s ability to achieve a high correlation with its benchmark and there can be no guarantee that the Fund will achieve a high degree of correlation.

•

Counterparty risk – The counterparty to a financial instrument may default on its obligations under the related agreement. In this circumstance, the Ultra30 Fund may lose money.

•

Credit Risk – An issuer of debt instruments may be unable to make interest payments and repay principal. Changes in an issuer’s financial strength or in an instrument’s credit rating may affect an instrument’s value and, thus, impact Ultra30 Fund’s performance. As described under “Counterparty Risk” above, the Fund will also be subject to credit risk with respect to the amount a Fund expects to receive from counterparties in financial instruments transactions. If a counterparty defaults on its payment obligations to a Fund, the value of your investment in a fund may decline.

•

Leverage risk – The Ultra30 Fund’s NAV and market price will likely be more volatile than the index underlying its benchmark and funds that do not employ leverage. Leverage should cause the Fund to lose more money in market environments adverse to its daily investment objective than an unleveraged investment.

•

Liquidity risk – In certain circumstances, the Ultra30 Fund may not be able to dispose of positions within a reasonable time at a fair price.

•

Market price variance risk – The Ultra30 Fund’s NAV will fluctuate with changes in the value of its portfolio holdings. Fund shares are listed on the Exchange and are purchased and sold at market prices for shares. Although it is expected that the secondary market price for shares should approximate the Fund’s NAV, there may be times when the market price varies significantly from NAV.

•

Market risk – The Ultra30 Fund is subject to market risks that will affect the value of its shares, including general economic and market conditions, as well as developments that impact specific economic sectors, industries or companies.

•

Repurchase Agreement Risk – Repurchase agreement risk is the risk that the counterparty to the repurchase agreement that sells the securities may default on its obligation to repurchase them. In this circumstance, Ultra30 Fund may lose money because: it may not be able to sell the securities at the agreed upon time and price, the securities may lose value before they can be sold, the selling institution may default or declare bankruptcy or the Fund may have difficulty exercising rights to the collateral.

•

Non-diversification risk – The Ultra30 Fund is considered non-diversified and may invest a relatively high percentage of its assets in the securities of a small number of issuers. In such circumstances, the Fund’s performance may be susceptible to economic, political or regulatory events affecting a single issuer than a more diversified fund.

•

Volatility Risk – Ultra30 Fund seeks to achieve a multiple of an index and therefore will experience greater volatility than the index underlying its benchmark and consequently has the potential for greater losses.

The Ultra30 Fund may be subject to risks in addition to those identified as principal risks. The sections titled “More on Risks” and “Special Risks of Exchange-Traded Funds” later in this Prospectus and the SAI contains additional information about the Fund and related risks.

FUND PERFORMANCE

Performance history will be available for the Ultra30 Fund after it has been in operation for a full calendar year.

FEES AND EXPENSES

The following table describes the estimated fees and expenses you may pay when you buy, hold, or sell Creation Units of the Ultra30 Fund . Annual fund operating expenses are estimates. Investors purchasing shares in the secondary market will not pay the shareholder fees shown below, but may be subject to costs (including customary brokerage commissions) charged by their broker.

Shareholder Fees (paid directly by Authorized Participants)


Sales charges (loads)		None
Fixed transaction fee per order ^A		$[ ]
Variable transaction fee per creation unit ^B		up to [ ]%
Additional transaction charge if not settled through the Continuous Net Settlement System of the National Securities Clearing Corporation (NSCC) ^C		up to $ [ ] plus up to [ ]%

^A	A fixed transaction fee of $[ ] will be charged when you create or redeem Creation Units of the Ultra30 Fund regardless of the number of shares created or redeemed on the date of the transaction.

^B	A variable transaction fee of up to [ ]% of the value of each Creation Unit will be charged to offset costs associated with the order.

Annual Fund Operating Expenses (as a percentage of average daily net assets)


Investment Advisory Fee		[ ]%
Distribution and Service (12b-1) fees		[ ]%
Other expenses ^A		[ ]%
Total annual fund operating expenses		[ ]%
Fee Waivers/Reimbursements ^B		[ ]%
Total net annual fund operating expenses		[ ]%

^A	Based on estimated amounts for the current fiscal year.

Example: The following examples are intended to help you compare the cost of investing in shares of the Ultra30 Fund with the cost of investing in other funds. Investors should note that the following examples are for illustration purposes only and are not meant to suggest actual or expected fees and expenses or returns, all of which may vary. The Fund issues and redeems shares in Creation Units principally on an in-kind basis for portfolio securities included in the relevant Index and cash. Shares are not redeemable in less than Creation Unit aggregations. The examples do not include the brokerage commissions that secondary market investors may incur to buy and sell shares.

The following example assumes that you invest $10,000 in the Fund for the time periods indicated and sell all of your shares at the end of those periods, but does not include transaction fees on purchases and redemptions of shares. The example also assumes that your investment has a 5% annual return each year and that the Fund’s annual operating expenses remain exactly as described in the fee table. Although your actual costs may be higher or lower, based on the assumptions, your costs would be:


1 year		$ [ ]
3 years		$ [ ]

The anticipated approximate value of one Creation Unit of the Ultra30 Fund , as of [ ], 2006, is $5,250,000. The following example assumes that you invest $10,000 in the Fund for the time periods indicated and sell all of your shares at the end of those periods. It also assumes that you pay the standard $[ ] transaction fee applicable to both the purchase and redemption of the Creation Unit, have a 5% annual return each year, and that the Fund’s operating expenses remain the same. Although your actual costs may be higher or lower, based on the assumptions, your costs would be:


1 year		$ [ ]
3 years		$ [ ]

UltraMidCap400 Fund

INVESTMENT OBJECTIVE

UltraMidCap400 Fund seeks daily investment results, before fees and expenses, that correspond to twice (200%) the daily performance of the S&P MidCap400 Index.

If UltraMidCap400 Fund is successful in meeting its objective, its net asset value should gain approximately twice as much, on a percentage basis, as the S&P MidCap400 Index when the Index rises on a given day. Conversely, its net asset value should lose approximately twice as much, on a percentage basis, as the Index when the Index declines on a given day.

PRINCIPAL INVESTMENT STRATEGY

The UltraMidCap400 Fund’s principal investment strategies include:

•

Committing at least 80% of its assets, under normal circumstances, to equity securities contained in the Index and/or financial instruments with similar economic characteristics.

•

Employing leveraged investment techniques and/or sampling techniques in seeking its investment objective.

•

Investing assets not invested in equity securities or financial instruments in debt securities and/or money market instruments.

The UltraMidCap400 Fund employs leveraged investment techniques to achieve its investment objective. Over time, the use of leverage, combined with the effect of compounding, will have a more significant impact on the Fund’s performance compared to the index underlying its benchmark than a fund that does not employ leverage. Therefore, the return of the index over a period of time greater than one day multiplied by a fund’s specified multiple or inverse multiple (e.g., 200% or -200%) will not generally equal a fund’s performance over that same period. The following example illustrates this point:

Let’s say, hypothetically, that a shareholder invests $10,000 in Fund A and $10,000 in Fund B.


Fund A: A fund whose objective is to seek daily investment results, before fees and expenses, that correspond to the daily performance of an index.		Fund B: A fund whose objective is to seek daily investment results, before fees and expenses, that correspond to twice (200%) the daily performance of an index.

On Day 1, each fund’s benchmark index increases in value 1% which would cause a 1% increase in Fund A and a 2% increase in Fund B.

decreased in value by $4 over two days (four times the cumulative index loss over two days rather than two times the cumulative index loss).

PRINCIPAL RISK CONSIDERATIONS

The UltraMidCap400 Fund is subject to the following principal risks:

•

Aggressive investment technique risk – The UltraMidCap400 Fund uses investment techniques and financial instruments that may be considered aggressive, including the use of futures contracts, options on futures contracts, securities and indices, forward contracts, swap agreements and similar instruments. Such techniques may expose the Fund to potentially dramatic changes (losses) in the value of its portfolio holdings and imperfect correlation to the index underlying the Fund’s benchmark. These techniques also may expose the Fund to risks different from or possibly greater than the risks associated with investing directly in the securities contained in the index underlying the Fund’s benchmark.

•

Correlation risk – A number of factors may affect the UltraMidCap400 Fund’s ability to achieve a high correlation with its benchmark and there can be no guarantee that the Fund will achieve a high degree of correlation.

•

Counterparty risk – The counterparty to a financial instrument may default on its obligations under the related agreement. In this circumstance, the UltraMidCap400 Fund may lose money.

•

Credit Risk – An issuer of debt instruments may be unable to make interest payments and repay principal. Changes in an issuer’s financial strength or in an instrument’s credit rating may affect an instrument’s value and, thus, impact UltraMidCap400 Fund’s performance. As described under “Counterparty Risk” above, the Fund will also be subject to credit risk with respect to the amount a Fund expects to receive from counterparties in financial instruments transactions. If a counterparty defaults on its payment obligations to a Fund, the value of your investment in a fund may decline.

•

Leverage risk – The UltraMidCap400 Fund’s NAV and market price will likely be more volatile than the index underlying its benchmark and funds that do not employ leverage. Leverage should cause the Fund to lose more money in market environments adverse to its daily investment objective than an unleveraged investment.

•

Liquidity risk – In certain circumstances, the UltraMidCap400 Fund may not be able to dispose of positions within a reasonable time at a fair price.

•

Market price variance risk – The UltraMidCap400 Fund’s NAV will fluctuate with changes in the value of its portfolio holdings. Fund shares are listed on the Exchange and are purchased and sold at market prices for shares. Although it is expected that the secondary market price for shares should approximate the Fund’s NAV, there may be times when the market price varies significantly from NAV.

•

Market risk – The UltraMidCap400 Fund is subject to market risks that will affect the value of its shares, including general economic and market conditions, as well as developments that impact specific economic sectors, industries or companies.

•

Mid-Cap Company Investment Risk – The UltraMidCap400 Fund may invest heavily in mid-cap company stocks. Mid-cap company stocks tend to have greater fluctuations in price than the stocks of large companies and could be more difficult to liquidate during market downturns.

•

Non-diversification risk – The UltraMidCap400 Fund is considered non-diversified and may invest a relatively high percentage of its assets in the securities of a small number of issuers. In such circumstances, the Fund’s performance may be susceptible to economic, political or regulatory events affecting a single issuer than a more diversified fund.

•

Repurchase Agreement Risk – Repurchase agreement risk is the risk that the counterparty to the repurchase agreement that sells the securities may default on its obligation to repurchase them. In this circumstance, UltraMidCap400 Fund may lose money because: it may not be able to sell the securities at the agreed upon time and price, the securities may lose value before they can be sold, the selling institution may default or declare bankruptcy or the Fund may have difficulty exercising rights to the collateral.

•

Volatility Risk – UltraMidCap400 Fund seeks to achieve a multiple of an index and therefore will experience greater volatility than the index underlying its benchmark and consequently has the potential for greater losses.

The UltraMidCap400 Fund may be subject to risks in addition to those identified as principal risks. The sections titled “More on Risks” and “Special Risks of Exchange-Traded Funds” later in this Prospectus and the SAI contains additional information about the Fund and related risks.

FUND PERFORMANCE

Performance history will be available for the UltraMidCap400 Fund after it has been in operation for a full calendar year.

FEES AND EXPENSES

The following table describes the estimated fees and expenses you may pay when you buy, hold, or sell Creation Units of the UltraMidCap400 Fund . Annual fund operating expenses are estimates. Investors purchasing shares in the secondary market will not pay the shareholder fees shown below, but may be subject to costs (including customary brokerage commissions) charged by their broker.

Shareholder Fees (paid directly by Authorized Participants)


Sales charges (loads)		None
Fixed transaction fee per order ^A		$[ ]
Variable transaction fee per creation unit ^B		up to [ ]%
Additional transaction charge if not settled through the Continuous Net Settlement System of the National Securities Clearing Corporation (NSCC) ^C		up to $ [ ] plus up to [ ]%

^A	A fixed transaction fee of $[ ] will be charged when you create or redeem Creation Units of the UltraMidCap400 Fund regardless of the number of shares created or redeemed on the date of the transaction.

^B	A variable transaction fee of up to [ ]% of the value of each Creation Unit will be charged to offset costs associated with the order.

^C	An additional fee of up to [ ] times the fixed per order transaction fee plus up to [ ]% of the value of each Creation Unit may be charged if you do not create or redeem shares through the Continuous Net Settlement System of the

NSCC, or in circumstances in which cash is substituted for certain securities. Such transactions are allowed at the sole discretion of the Fund.

Annual Fund Operating Expenses (as a percentage of average daily net assets)


Investment Advisory Fee		[ ]%
Distribution and Service (12b-1) fees		[ ]%
Other expenses ^A		[ ]%
Total annual fund operating expenses		[ ]%
Fee Waivers/Reimbursements ^B		[ ]%
Total net annual fund operating expenses		[ ]%

^A	Based on estimated amounts for the current fiscal year.

Example: The following examples are intended to help you compare the cost of investing in shares of the UltraMidCap400 Fund with the cost of investing in other funds. Investors should note that the following examples are for illustration purposes only and are not meant to suggest actual or expected fees and expenses or returns, all of which may vary. The Fund issues and redeems shares in Creation Units principally on an in-kind basis for portfolio securities included in the relevant Index and cash. Shares are not redeemable in less than Creation Unit aggregations. The examples do not include the brokerage commissions that secondary market investors may incur to buy and sell shares.

The following example assumes that you invest $10,000 in the UltraMidCap400 Fund for the time periods indicated and sell all of your shares at the end of those periods, but does not include transaction fees on purchases and redemptions of shares. The example also assumes that your investment has a 5% annual return each year and that the Fund’s annual operating expenses remain exactly as described in the fee table. Although your actual costs may be higher or lower, based on the assumptions, your costs would be:


1 year		$ [ ]
3 years		$ [ ]

The anticipated approximate value of one Creation Unit of the UltraMidCap400 Fund , as of [ ], 2006, is $5,250,000. The following example assumes that you invest $10,000 in the Fund for the time periods indicated and sell all of your shares at the end of those periods. It also assumes that you pay the standard $[ ] transaction fee applicable to both the purchase and redemption of the Creation Unit, have a 5% annual return each year, and that the Fund’s operating expenses remain the same. Although your actual costs may be higher or lower, based on the assumptions, your costs would be:


1 year		$ [ ]
3 years		$ [ ]

BEARISH FUNDS

The Bearish Funds seek to provide daily investment results, before fees and expenses, that either match (100%) or double (200%) the inverse (opposite) of the daily performance of the applicable index.


Fund	Index	Benchmark	Types of Companies in Index

Short 500 Fund	S&P 500 ^® Index	100% of the Inverse	Diverse, widely traded, large capitalization

Short 100 Fund	NASDAQ-100 Index ^®	100% of the Inverse	Large capitalization, non-financial companies listed on the The NASDAQ Stock Market

Short 30 Fund	Dow Jones Industrial Average	100% of the Inverse	Diverse, widely traded, large capitalization

Short MidCap400 Fund	S&P MidCap400 Index	100% of the Inverse	Diverse, widely traded, mid- capitalization

UltraShort 500 Fund	S&P 500 ^® Index	200% of the Inverse	Diverse, widely traded, large capitalization

UltraShort 100 Fund	NASDAQ-100 Index ^®	200% of the Inverse	Large capitalization, non-financial companies listed on the NASDAQ Stock Market

UltraShort 30 Fund	Dow Jones Industrial Average	200% of the Inverse	Diverse, widely traded, large capitalization

UltraShort MidCap400 Fund	S&P MidCap400 Index	200% of the Inverse	Diverse, widely traded, mid-capitalization

The Bearish Funds may be appropriate for investors who believe that the value of a particular index will decrease and desire to earn a profit as a result of the index declining or who want to protect (hedge) the value of a diversified portfolio of stocks and/or stock mutual funds from a market downturn that they anticipate.

An investment in a Bearish Fund is not a deposit of a bank and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. A Bearish Fund is not guaranteed to achieve its investment objective.

Short 500 Fund

INVESTMENT OBJECTIVE

Short 500 Fund seeks daily investment results, before fees and expenses, that correspond to the inverse (opposite) of the daily performance of the S&P 500 ^® Index.

If Short 500 Fund is successful in meeting its objective, its net asset value should gain approximately the same amount, on a percentage basis, as any decrease in the S&P 500 Index when the Index declines on any given day. Conversely, its net asset value should lose approximately the same amount, on a percentage basis, as any increase in the Index when the Index rises on a given day.

PRINCIPAL INVESTMENT STRATEGY

The Short 500 Fund’s principal investment strategies include:

•

Employing leveraged investment techniques in seeking its investment objective.

•

Investing assets not invested in financial instruments in debt securities and/or money market instruments.

PRINCIPAL RISK CONSIDERATIONS

The Short 500 Fund is subject to the following principal risks:

•

Aggressive investment technique risk – The Short 500 Fund uses investment techniques and financial instruments that may be considered aggressive, including the use of futures contracts, options on futures contracts, securities and indices, forward contracts, swap agreements and similar instruments. Such techniques may expose the Fund to potentially dramatic changes (losses) in the value of its portfolio holdings and imperfect correlation to the index underlying the Fund’s benchmark. These techniques also may expose the Fund to risks different from or possibly greater than the risks associated with investing directly in the securities contained in the index underlying the Fund’s benchmark.

•

Correlation risk – A number of factors may affect the Short 500 Fund’s ability to achieve a high correlation with its benchmark and there can be no guarantee that the Fund will achieve a high degree of correlation.

•

Counterparty risk – The counterparty to a financial instrument may default on its obligations under the related agreement. In this circumstance, the Short 500 Fund may lose money.

•

Credit Risk – An issuer of debt instruments may be unable to make interest payments and repay principal. Changes in an issuer’s financial strength or in an instrument’s credit rating may affect an instrument’s value and, thus, impact Short500 Fund’s performance. As described under “Counterparty Risk” above, the Fund will also be subject to credit risk with respect to the amount a Fund expects to receive from counterparties in financial instruments transactions. If a counterparty defaults on its payment obligations to a Fund, the value of your investment in a fund may decline.

•

Inverse Correlation Risk – Shareholders in Short 500 Fund should lose money when the index underlying the Fund’s benchmark rises – a result that is the opposite from traditional equity or bond funds .

•

Liquidity risk – In certain circumstances, the Short 500 Fund may not be able to dispose of positions within a reasonable time at a fair price.

•

Market price variance risk – The Short 500 Fund’s NAV will fluctuate with changes in the value of its portfolio holdings. Fund shares are listed on the Exchange and are purchased and sold at market prices for shares. Although it is expected that the secondary market price for shares should approximate the Fund’s NAV, there may be times when the market price varies significantly from NAV.

•

Market risk – The Short 500 Fund is subject to market risks that will affect the value of its shares, including general economic and market conditions, as well as developments that impact specific economic sectors, industries or companies.

•

Non-diversification risk – The Short 500 Fund is considered non-diversified and may invest a relatively high percentage of its assets in the securities of a small number of issuers. In such circumstances, the Fund’s performance may be susceptible to economic, political or regulatory events affecting a single issuer than a more diversified fund.

•

Repurchase Agreement Risk – Repurchase agreement risk is the risk that the counterparty to the repurchase agreement that sells the securities may default on its obligation to repurchase them. In this circumstance, Short 500 Fund may lose money because: it may not be able to sell the securities at the agreed upon time and price, the securities may lose value before they can be sold, the selling institution may default or declare bankruptcy or the Fund may have difficulty exercising rights to the collateral.

•

Short Sale Risk – The Short 500 Fund may sell securities short to seek gains when its benchmark index declines or to adjust investment exposure to its benchmark index. The Fund’s use of short sales involves additional transaction costs and other expenses. Under certain market conditions, short sales can increase the volatility, and decrease the liquidity, of a Fund and may lower a Fund’s return or result in a loss.

The Short 500 Fund may be subject to risks in addition to those identified as principal risks. The sections titled “More on Risks” and “Special Risks of Exchange-Traded Funds” later in this Prospectus and the SAI contains additional information about the Fund and related risks.

FUND PERFORMANCE

Performance history will be available for the Short 500 Fund after it has been in operation for a full calendar year.

FEES AND EXPENSES

The following table describes the estimated fees and expenses you may pay when you buy, hold, or sell Creation Units of the Short 500 Fund . Annual fund operating expenses are estimates. Investors purchasing shares in the secondary market will not pay the shareholder fees shown below, but may be subject to costs (including customary brokerage commissions) charged by their broker.

Shareholder Fees (paid directly by Authorized Participants)


Sales charges (loads)		None
Fixed transaction fee per order ^A		$[ ]
Variable transaction fee per creation unit ^B		up to [ ]%

^A	A fixed transaction fee of $[ ] will be charged when you create or redeem Creation Units of the Short 500 Fund regardless of the number of shares created or redeemed on the date of the transaction.

^B	A variable transaction fee of up to [ ]% of the value of each Creation Unit will be charged to offset costs associated with the order.

Annual Fund Operating Expenses (as a percentage of average daily net assets)


Investment Advisory Fee	[	]%
Distribution and Service (12b-1) fees	[	]%
Other expenses ^A	[	]%
Total annual fund operating expenses	[	]%
Fee Waivers/Reimbursements ^B	[	]%
Total net annual fund operating expenses	[	]%

^A	Based on estimated amounts for the current fiscal year.

Example: The following examples are intended to help you compare the cost of investing in shares of the Short 500 Fund with the cost of investing in other funds. Investors should note that the following examples are for illustration purposes only and are not meant to suggest actual or expected fees and expenses or returns, all of which may vary. The Fund issues and redeems shares in Creation Units for cash. Shares are not redeemable in less than Creation Unit aggregations. The examples do not include the brokerage commissions that secondary market investors may incur to buy and sell shares.

The following example assumes that you invest $10,000 in the Short 500 Fund for the time periods indicated and sell all of your shares at the end of those periods, but does not include transaction fees on purchases and redemptions of shares. The example also assumes that your investment has a 5% annual return each year and that the Fund’s annual operating expenses remain exactly as described in the fee table. Although your actual costs may be higher or lower, based on the assumptions, your costs would be:


1 year		$[ ]
3 years		$[ ]

The anticipated approximate value of one Creation Unit of the Short 500 Fund , as of [ ], 2006, is $5,250,000. The following example assumes that you invest $10,000 in the Fund for the time periods indicated and sell all of your shares at the end of those periods. It also assumes that you pay the standard $[ ] transaction fee applicable to both the purchase and redemption of the Creation Unit, have a 5% annual return each year, and that the Fund’s operating expenses remain the same. Although your actual costs may be higher or lower, based on the assumptions, your costs would be:


1 year		$[ ]
3 years		$[ ]

Short 100 Fund

INVESTMENT OBJECTIVE

Short 100 Fund seeks daily investment results that correspond to the inverse (opposite) of the daily performance of the NASDAQ-100 Index ^® .

If Short 100 Fund is successful in meeting its objective, its net asset value should gain approximately the same amount, on a percentage basis, as any decrease in the NASDAQ-100 Index when the Index declines on any given day. Conversely, its net asset value should lose approximately the same amount, on a percentage basis, as any increase in the Index when the Index rises on a given day.

PRINCIPAL INVESTMENT STRATEGY

The Short 100 Fund’s principal investment strategies include:

•

Taking positions in financial instruments (including derivatives) that ProShare Advisors believes, in combination, should have similar daily price return characteristics as the inverse of the NASDAQ-100 Index. Short 100 Fund will not sell short the equity securities of issuers contained in the NASDAQ-100 Index.

•

Employing leveraged investment techniques in seeking its investment objective.

•

Investing assets not invested in financial instruments in debt securities and/or money market instruments.

PRINCIPAL RISK CONSIDERATIONS

The Short 100 Fund is subject to the following principal risks:

•

Aggressive investment technique risk – The Short 100 Fund uses investment techniques and financial instruments that may be considered aggressive, including the use of futures contracts, options on futures contracts, securities and indices, forward contracts, swap agreements and similar instruments. Such techniques may expose the Fund to potentially dramatic changes (losses) in the value of its portfolio holdings and imperfect correlation to the index underlying the Fund’s benchmark. These techniques also may expose the Fund to risks different from or possibly greater than the risks associated with investing directly in the securities contained in the index underlying the Fund’s benchmark.

•

Correlation risk – A number of factors may affect the Short 100 Fund’s ability to achieve a high correlation with its benchmark and there can be no guarantee that the Fund will achieve a high degree of correlation.

•

Counterparty risk – The counterparty to a financial instrument may default on its obligations under the related agreement. In this circumstance, the Short 100 Fund may lose money.

•

Credit Risk – An issuer of debt instruments may be unable to make interest payments and repay principal. Changes in an issuer’s financial strength or in an instrument’s credit rating may affect an instrument’s value and, thus, impact Short 100 Fund’s performance. As described under “Counterparty Risk” above, the Fund will also be subject to credit risk with respect to the amount a Fund expects to receive from counterparties in financial instruments transactions. If a counterparty defaults on its payment obligations to a Fund, the value of your investment in a fund may decline.

•

Inverse Correlation Risk – Shareholders in Short 100 Fund should lose money when the index underlying the Fund’s benchmark rises – a result that is the opposite from traditional equity or bond funds.

•

Liquidity risk – In certain circumstances, the Short 100 Fund may not be able to dispose of positions within a reasonable time at a fair price.

•

Market price variance risk – The Short 100 Fund’s NAV will fluctuate with changes in the value of its portfolio holdings. Fund shares are listed on the Exchange and are purchased and sold at market prices for shares. Although it is expected that the secondary market price for shares should approximate the Fund’s NAV, there may be times when the market price varies significantly from NAV.

•

Market risk – The Short 100 Fund is subject to market risks that will affect the value of its shares, including general economic and market conditions, as well as developments that impact specific economic sectors, industries or companies.

•

Non-diversification risk – The Short 100 Fund is considered non-diversified and may invest a relatively high percentage of its assets in the securities of a small number of issuers. In such circumstances, the Fund’s performance may be susceptible to economic, political or regulatory events affecting a single issuer than a more diversified fund.

•

Repurchase Agreement Risk – Repurchase agreement risk is the risk that the counterparty to the repurchase agreement that sells the securities may default on its obligation to repurchase them. In this circumstance, Short 100 Fund may lose money because: it may not be able to sell the securities at the agreed upon time and price, the securities may lose value before they can be sold, the selling institution may default or declare bankruptcy or the Fund may have difficulty exercising rights to the collateral.

•

Short Sale Risk – The Short 100 Fund may sell securities short to seek gains when its benchmark index declines or to adjust investment exposure to its benchmark index. The Fund’s use of short sales involves additional transaction costs and other expenses. Under certain market conditions, short sales can increase the volatility, and decrease the liquidity, of a Fund and may lower a Fund’s return or result in a loss.

•

Technology Investment Risk – The Short 100 Fund currently maintains significant exposure to issuers conducting business in technology industry. Technology companies are subject to intense competition, both domestically and internationally, and may have limited product lines, markets, financial resources or personnel.

The Short 100 Fund may be subject to risks in addition to those identified as principal risks. The sections titled “More on Risks” and “Special Risks of Exchange-Traded Funds” later in this Prospectus and the SAI contains additional information about the Fund and related risks.

FUND PERFORMANCE

Performance history will be available for the Short 100 Fund after it has been in operation for a full calendar year.

FEES AND EXPENSES

The following table describes the estimated fees and expenses you may pay when you buy, hold, or sell Creation Units of the Short100 Fund . Annual fund operating expenses are estimates. Investors purchasing shares in the secondary market will not pay the shareholder fees shown below, but may be subject to costs (including customary brokerage commissions) charged by their broker.

Shareholder Fees (paid directly by Authorized Participants)


Sales charges (loads)		None
Fixed transaction fee per order ^A		$[ ]
Variable transaction fee per creation unit ^B		up to [ ]%

^A	A fixed transaction fee of $[ ] will be charged when you create or redeem Creation Units of the Short 100 Fund regardless of the number of shares created or redeemed on the date of the transaction.

^B	A variable transaction fee of up to [ ]% of the value of each Creation Unit will be charged to offset costs associated with the order.

Annual Fund Operating Expenses (as a percentage of average daily net assets)


Investment Advisory Fee	[	]%
Distribution and Service (12b-1) fees	[	]%
Other expenses ^A	[	]%
Total annual fund operating expenses	[	]%
Fee Waivers/Reimbursements ^B	[	]%
Total net annual fund operating expenses	[	]%

^A	Based on estimated amounts for the current fiscal year.

Example: The following examples are intended to help you compare the cost of investing in shares of the Short 100 Fund with the cost of investing in other funds. Investors should note that the following examples are for illustration purposes only and are not meant to suggest actual or expected fees and expenses or returns, all of which may vary. The Fund issues and redeems shares in Creation Units for cash. Shares are not redeemable in less than Creation Unit aggregations. The examples do not include the brokerage commissions that secondary market investors may incur to buy and sell shares.

The following example assumes that you invest $10,000 in the Short 100 Fund for the time periods indicated and sell all of your shares at the end of those periods, but does not include transaction fees on purchases and redemptions of shares. The example also assumes that your investment has a 5% annual return each year and that the Fund’s annual operating expenses remain exactly as described in the fee table. Although your actual costs may be higher or lower, based on the assumptions, your costs would be:


1 year		$ [ ]
3 years		$ [ ]

The anticipated approximate value of one Creation Unit of the Short 100 Fund , as of [ ], 2006, is $5,250,000. The following example assumes that you invest $10,000 in the Fund for the time periods indicated and sell all of your shares at the end of those periods. It also assumes that you pay the standard $[ ] transaction fee applicable to both the purchase and redemption of the Creation Unit, have a 5% annual return each year, and that the Short 100 Fund’s operating expenses remain the same. Although your actual costs may be higher or lower, based on the assumptions, your costs would be:


1 year		$ [ ]
3 years		$ [ ]

Short 30 Fund

INVESTMENT OBJECTIVE

Short 30 Fund seeks daily investment results that correspond to the inverse (opposite) of the daily performance of the Dow Jones Industrial Average (DJIA).

If Short 30 Fund is successful in meeting its objective, its net asset value should gain approximately the same amount, on a percentage basis, as any decrease in the DJIA when the DJIA declines on any given day. Conversely, its net asset value should lose approximately the same amount, on a percentage basis, as any increase in the DJIA when the DJIA rises on a given day.

PRINCIPAL INVESTMENT STRATEGY

The Short 30 Fund’s principal investment strategies include:

•

Taking positions in financial instruments (including derivatives) that ProShare Advisors believes, in combination, should have similar daily price return characteristics as the inverse of the DJIA.

•

Employing leveraged investment techniques in seeking its investment objective.

•

Investing assets not invested in financial instruments in debt securities and/or money market instruments.

PRINCIPAL RISK CONSIDERATIONS

The Short 30 Fund is subject to the following principal risks:

•

Aggressive investment technique risk – The Short 30 Fund uses investment techniques and financial instruments that may be considered aggressive, including the use of futures contracts, options on futures contracts, securities and indices, forward contracts, swap agreements and similar instruments. Such techniques may expose the Fund to potentially dramatic changes (losses) in the value of its portfolio holdings and imperfect correlation to the index underlying the Fund’s benchmark. These techniques also may expose the Fund to risks different from or possibly greater than the risks associated with investing directly in the securities contained in the index underlying the Fund’s benchmark.

•

Concentration Risk – Short 30 Fund may concentrate its investments in issuers of one or more particular industries to the same extent that its Underlying Index is so concentrated. There is a risk that those issuers (or industry sector) will perform poorly and negatively impact a Fund.

•

Correlation risk – A number of factors may affect the Short 30 Fund’s ability to achieve a high correlation with its benchmark and there can be no guarantee that the Fund will achieve a high degree of correlation.

•

Counterparty risk – The counterparty to a financial instrument may default on its obligations under the related agreement. In this circumstance, the Short 30 Fund may lose money.

•

receive from counterparties in financial instruments transactions. If a counterparty defaults on its payment obligations to a Fund, the value of your investment in a fund may decline.

•

Inverse Correlation Risk – Shareholders in Short 30 Fund should lose money when the index underlying the Fund’s benchmark rises – a result that is the opposite from traditional equity or bond funds .

•

Liquidity risk – In certain circumstances, the Short 30 Fund may not be able to dispose of positions within a reasonable time at a fair price.

•

Market price variance risk – The Short 30 Fund’s NAV will fluctuate with changes in the value of its portfolio holdings. Fund shares are listed on the Exchange and are purchased and sold at market prices for shares. Although it is expected that the secondary market price for shares should approximate the Fund’s NAV, there may be times when the market price varies significantly from NAV.

•

Market risk – The Short 30 Fund is subject to market risks that will affect the value of its shares, including general economic and market conditions, as well as developments that impact specific economic sectors, industries or companies.

•

Non-diversification risk – The Short 30 Fund is considered non-diversified and may invest a relatively high percentage of its assets in the securities of a small number of issuers. In such circumstances, the Fund’s performance may be susceptible to economic, political or regulatory events affecting a single issuer than a more diversified fund.

•

Repurchase Agreement Risk – Repurchase agreement risk is the risk that the counterparty to the repurchase agreement that sells the securities may default on its obligation to repurchase them. In this circumstance, Short 30 Fund may lose money because: it may not be able to sell the securities at the agreed upon time and price, the securities may lose value before they can be sold, the selling institution may default or declare bankruptcy or the Fund may have difficulty exercising rights to the collateral.

•

Short Sale Risk – The Short 30 Fund may sell securities short to seek gains when its benchmark index declines or to adjust investment exposure to its benchmark index. The Fund’s use of short sales involves additional transaction costs and other expenses. Under certain market conditions, short sales can increase the volatility, and decrease the liquidity, of a Fund and may lower a Fund’s return or result in a loss.

The Short 30 Fund may be subject to risks in addition to those identified as principal risks. The sections titled “More on Risks” and “Special Risks of Exchange-Traded Funds” later in this Prospectus and the SAI contains additional information about the Fund and related risks.

FUND PERFORMANCE

Performance history will be available for the Short 30 Fund after it has been in operation for a full calendar year.

FEES AND EXPENSES

The following table describes the estimated fees and expenses you may pay when you buy, hold, or sell Creation Units of the Short 30 Fund . Annual fund operating expenses are estimates. Investors purchasing shares in the secondary market will not pay the shareholder fees shown below, but may be subject to costs (including customary brokerage commissions) charged by their broker.

Shareholder Fees (paid directly by Authorized Participants)


Sales charges (loads)		None
Fixed transaction fee per order ^A		$[ ]
Variable transaction fee per creation unit ^B		up to [ ]%

^A	A fixed transaction fee of $[ ] will be charged when you create or redeem Creation Units of the Short 30 Fund regardless of the number of shares created or redeemed on the date of the transaction.

^B	A variable transaction fee of up to [ ]% of the value of each Creation Unit will be charged to offset costs associated with the order.

Annual Fund Operating Expenses (as a percentage of average daily net assets)


Investment Advisory Fee	[	]%
Distribution and Service (12b-1) fees	[	]%
Other expenses ^A	[	]%
Total annual fund operating expenses	[	]%
Fee Waivers/Reimbursements ^B	[	]%
Total net annual fund operating expenses	[	]%

^A	Based on estimated amounts for the current fiscal year.

Example: The following examples are intended to help you compare the cost of investing in shares of the Short 30 Fund with the cost of investing in other funds. Investors should note that the following examples are for illustration purposes only and are not meant to suggest actual or expected fees and expenses or returns, all of which may vary. The Fund issues and redeems shares in Creation Units for cash. Shares are not redeemable in less than Creation Unit aggregations. The examples do not include the brokerage commissions that secondary market investors may incur to buy and sell shares.

The following example assumes that you invest $10,000 in the Short 30 Fund for the time periods indicated and sell all of your shares at the end of those periods, but does not include transaction fees on purchases and redemptions of shares. The example also assumes that your investment has a 5% annual return each year and that the Fund’s annual operating expenses remain exactly as described in the fee table. Although your actual costs may be higher or lower, based on the assumptions, your costs would be:


1 year		$ [ ]
3 years		$ [ ]

The anticipated approximate value of one Creation Unit of the Short 30 Fund , as of [ ], 2006, is $5,250,000. The following example assumes that you invest $10,000 in the Fund for the time periods indicated and sell all of your shares at the end of those periods. It also assumes that you pay the standard $[ ] transaction fee applicable to both the purchase and redemption of the Creation Unit, have a 5% annual return each year, and that the Fund’s operating expenses remain the same. Although your actual costs may be higher or lower, based on the assumptions, your costs would be:


1 year		$ [ ]
3 years		$ [ ]

Short MidCap400 Fund

INVESTMENT OBJECTIVE

Short MidCap400 Fund seeks daily investment results, before fees and expenses, that correspond to the inverse (opposite) of the daily performance of the S&P MidCap 400 Index.

If Short MidCap400 Fund is successful in meeting its objective, its net asset value should gain approximately the same amount, on a percentage basis, as any decrease in the S&P MidCap 400 Index when the Index declines on any given day. Conversely, its net asset value should lose approximately the same amount, on a percentage basis, as any increase in the Index when the Index rises on a given day.

PRINCIPAL INVESTMENT STRATEGY

The Short MidCap400 Fund’s principal investment strategies include:

•

Committing at least 80% of its assets to financial instruments with economic characteristics that should be inverse to those of the Index.

•

Employing leveraged investment techniques in seeking its investment objective.

•

Investing assets not invested in financial instruments in debt securities and/or money market instruments.

PRINCIPAL RISK CONSIDERATIONS

The Short MidCap400 Fund is subject to the following principal risks:

•

Aggressive investment technique risk – The Short MidCap400 Fund uses investment techniques and financial instruments that may be considered aggressive, including the use of futures contracts, options on futures contracts, securities and indices, forward contracts, swap agreements and similar instruments. Such techniques may expose the Fund to potentially dramatic changes (losses) in the value of its portfolio holdings and imperfect correlation to the index underlying the Fund’s benchmark. These techniques also may expose the Fund to risks different from or possibly greater than the risks associated with investing directly in the securities contained in the index underlying the Fund’s benchmark.

•

Correlation risk – A number of factors may affect the Short MidCap400 Fund’s ability to achieve a high correlation with its benchmark and there can be no guarantee that the Fund will achieve a high degree of correlation.

•

Counterparty risk – The counterparty to a financial instrument may default on its obligations under the related agreement. In this circumstance, the Short MidCap400 Fund may lose money.

•

expects to receive from counterparties in financial instruments transactions. If a counterparty defaults on its payment obligations to a Fund, the value of your investment in a fund may decline.

•

Inverse Correlation Risk – Shareholders in Short MidCap400 Fund should lose money when the index underlying the Fund’s benchmark rises – a result that is the opposite from traditional equity or bond funds.

•

Liquidity risk – In certain circumstances, the Short MidCap400 Fund may not be able to dispose of positions within a reasonable time at a fair price.

•

Market price variance risk – The Short MidCap400 Fund’s NAV will fluctuate with changes in the value of its portfolio holdings. Fund shares are listed on the Exchange and are purchased and sold at market prices for shares. Although it is expected that the secondary market price for shares should approximate the Fund’s NAV, there may be times when the market price varies significantly from NAV.

•

Market risk – The Short MidCap400 Fund is subject to market risks that will affect the value of its shares, including general economic and market conditions, as well as developments that impact specific economic sectors, industries or companies.

•

Mid-Cap Company Investment Risk – The Short MidCap400 Fund maintains exposure to mid-cap company stocks. Mid-cap company stocks tend to have greater fluctuations in price than the stocks of large companies and could be more difficult to liquidate during market downturns.

•

Non-diversification risk – The Short MidCap400 Fund is considered non-diversified and may invest a relatively high percentage of its assets in the securities of a small number of issuers. In such circumstances, the Fund’s performance may be susceptible to economic, political or regulatory events affecting a single issuer than a more diversified fund.

•

Repurchase Agreement Risk – Repurchase agreement risk is the risk that the counterparty to the repurchase agreement that sells the securities may default on its obligation to repurchase them. In this circumstance, Short MidCap400 Fund may lose money because: it may not be able to sell the securities at the agreed upon time and price, the securities may lose value before they can be sold, the selling institution may default or declare bankruptcy or the Fund may have difficulty exercising rights to the collateral.

•

Short Sale Risk – The Short MidCap400 Fund may sell securities short to seek gains when its benchmark index declines or to adjust investment exposure to its benchmark index. The Fund’s use of short sales involves additional transaction costs and other expenses. Under certain market conditions, short sales can increase the volatility, and decrease the liquidity, of a Fund and may lower a Fund’s return or result in a loss.

The Short MidCap 400 Fund may be subject to risks in addition to those identified as principal risks. The sections titled “More on Risks” and “Special Risks of Exchange-Traded Funds” later in this Prospectus and the SAI contains additional information about the Fund and related risks.

FUND PERFORMANCE

Performance history will be available for the Short MidCap400 Fund after it has been in operation for a full calendar year.

FEES AND EXPENSES

The following table describes the estimated fees and expenses you may pay when you buy, hold, or sell Creation Units of the Short MidCap400 Fund . Annual fund operating expenses are estimates. Investors purchasing shares in the secondary market will not pay the shareholder fees shown below, but may be subject to costs (including customary brokerage commissions) charged by their broker.

Shareholder Fees (paid directly by Authorized Participants)


Sales charges (loads)		None
Fixed transaction fee per order ^A		$[ ]
Variable transaction fee per creation unit ^B		up to [ ]%

^A	A fixed transaction fee of $[ ] will be charged when you create or redeem Creation Units of the Short MidCap400 Fund regardless of the number of shares created or redeemed on the date of the transaction.

^B	A variable transaction fee of up to [ ]% of the value of each Creation Unit will be charged to offset costs associated with the order.

Annual Fund Operating Expenses (as a percentage of average daily net assets)


Investment Advisory Fee	[	]%
Distribution and Service (12b-1) fees	[	]%
Other expenses ^A	[	]%
Total annual fund operating expenses	[	]%
Fee Waivers/Reimbursements ^B	[	]%
Total net annual fund operating expenses	[	]%

^A	Based on estimated amounts for the current fiscal year.

Example: The following examples are intended to help you compare the cost of investing in shares of the Short MidCap 400 Fund with the cost of investing in other funds. Investors should note that the following examples are for illustration purposes only and are not meant to suggest actual or expected fees and expenses or returns, all of which may vary. The Fund issues and redeems shares in Creation Units for cash. Shares are not redeemable in less than Creation Unit aggregations. The examples do not include the brokerage commissions that secondary market investors may incur to buy and sell shares.

The following example assumes that you invest $10,000 in the Short MidCap 400 Fund for the time periods indicated and sell all of your shares at the end of those periods, but does not include transaction fees on purchases and redemptions of shares. The example also assumes that your investment has a 5% annual return each year and that the Fund’s annual operating expenses remain exactly as described in the fee table. Although your actual costs may be higher or lower, based on the assumptions, your costs would be:


1 year	$	[	]
3 years	$	[	]

The anticipated approximate value of one Creation Unit of the Short MidCap400 Fund , as of [ ], 2006, is $5,250,000. The following example assumes that you invest $10,000 in the Fund for the time periods indicated and sell all of your shares at the end of those periods. It also assumes that you pay the standard $[ ] transaction fee applicable to both the purchase and redemption of the Creation Unit, have a 5% annual return each year, and that the Fund’s operating expenses remain the same. Although your actual costs may be higher or lower, based on the assumptions, your costs would be:


1 year	$	[	]
3 years	$	[	]

UltraShort 500 Fund

INVESTMENT OBJECTIVE

UltraShort 500 Fund seeks daily investment results, before fees and expenses, that correspond to twice (200%) the inverse (opposite) of the daily performance of the S&P 500 ^{^®} Index.

If UltraShort 500 Fund is successful in meeting its objective, its net asset value should gain approximately twice as much, on a percentage basis, as any decrease in the S&P 500 Index (Index) when the Index declines on any given day. Conversely, its net asset value should lose approximately twice as much, on a percentage basis, as any increase in the Index when the Index rises on a given day.

PRINCIPAL INVESTMENT STRATEGY

The Fund’s principal investment strategies include:

•

Employing leveraged investment techniques in seeking its investment objective.

•

Investing assets not invested in financial instruments in debt instruments and/or money market instruments.

The UltraShort500 Fund employs leveraged investment techniques to achieve its investment objective. Over time, the use of leverage, combined with the effect of compounding, will have a more significant impact on the UltraShort500 Fund’s performance compared to the index underlying its benchmark than a fund that does not employ leverage. Therefore, the return of the index over a period of time greater than one day multiplied by a fund’s specified multiple or inverse multiple (e.g., 200% or -200%) will not generally equal a fund’s performance over that same period. The following example illustrates this point:

Let’s say, hypothetically, that a shareholder invests $10,000 in Fund A and $10,000 in Fund B.

Fund A: A fund whose objective is to seek

daily investment results, before fees and

expenses, that correspond to the inverse

(opposite) of the daily performance of an

index.

Fund B: A fund whose objective is to seek

daily investment results, before fees and

expenses, that correspond to twice (200%)

the inverse (opposite) of the daily

performance of an index.

On Day 1, each fund’s benchmark index decreases in value 1% which would cause a 1% increase in Fund A and a 2% increase in Fund B.

On Day 2, each fund’s benchmark index increases in value 1% which would cause a 1% decrease in Fund A and a 2% decrease in Fund B. At the end of Day 2, the value of the shareholder’s investment in Fund A would be approximately $9,999 (an increase of $100 on Day 1 and a decrease of $101 on Day 2). The value of the shareholder’s investment in Fund B would be approximately $9,996 at the end of Day 2 (an increase of $200 on Day 1 and a decrease of $204 on Day 2). In each case, the value of the shareholder’s investment declined overall. However, the effect of compounding was more pronounced for Fund B, which employs leverage. This example demonstrates how an investment in Fund A would have decreased in value by $1 over two days based on the index performance, while an investment in Fund B would have decreased in value by $4 over two days (four times the cumulative index loss over two days rather than two times the cumulative index loss).

PRINCIPAL RISK CONSIDERATIONS

The Fund is subject to the following principal risks:

•

Aggressive Investment Technique Risk – The Fund uses investment techniques that may be considered aggressive, including the use of futures contracts, options on futures contracts, securities and indices, forward contracts, swap agreements and similar instruments. Such techniques may expose UltraShort 500 Fund to potentially dramatic changes (losses) in the value of its portfolio holdings and imperfect correlation to the index underlying the Fund’s benchmark. These techniques also may expose the Fund to risks different from or possibly greater than the risks associated with investing directly in the securities contained in the index underlying the Fund’s benchmark.

•

Correlation Risk – A number of factors may affect UltraShort 500 Fund’s ability to achieve a high correlation with its benchmark and there can be no guarantee that the Fund will achieve a high degree of correlation.

•

Counterparty Risk – The counterparty to a financial instrument may default on its obligations under the related agreement. In this circumstance, UltraShort 500 Fund may lose money.

•

Credit Risk – An issuer of debt instruments may be unable to make interest payments and repay principal. Changes in an issuer’s financial strength or in an instrument’s credit rating may affect an instrument’s value and, thus, impact UltraShort 500 Fund’s performance. As described under “Counterparty Risk” above, the Fund will also be subject to credit risk with respect to the amount a Fund expects to receive from counterparties in financial instruments transactions. If a counterparty defaults on its payment obligations to a Fund, the value of your investment in a fund may decline.

•

Equity Risk – The equity markets are volatile, and the value of securities, futures, options contracts and other instruments correlated with the equity markets may fluctuate dramatically from day-to-day.

•

Inverse Correlation Risk – Shareholders in UltraShort 500 Fund should lose money when the index underlying the Fund’s benchmark rises – a result that is the opposite from traditional equity or bond funds.

•

Leverage Risk – The Fund ’s NAV and market price will likely be more volatile than the index underlying its benchmark and funds that do not employ leverage. Leverage should cause

UltraShort 500 Fund to lose more money in market environments adverse to its daily investment objective than an unleveraged investment.

•

Liquidity Risk – In certain circumstances, UltraShort 500 Fund may not be able to dispose of portfolio investments within a reasonable time at a fair price.

•

Market Price Variance Risk – UltraShort 500 Fund’s NAV will fluctuate with changes in the value of its portfolio holdings. Fund shares are listed on the Exchange and are purchased and sold at market prices for shares. Although it is expected that the secondary market price for shares should approximate the Fund’s NAV, there may be times when the market price varies significantly from NAV.

•

Market Risk – UltraShort 500 Fund is subject to market risks that will affect the value of its shares, including general economic and market conditions, as well as developments that impact specific economic sectors, industries or companies.

•

Non-diversification Risk – UltraShort 500 Fund is considered non-diversified and may invest a relatively high percentage of its assets in the securities of a small number of issuers. In such circumstances, the Fund’s performance may be susceptible to economic, political or regulatory events affecting a single issuer than a more diversified fund.

•

Repurchase Agreement Risk – Repurchase agreement risk is the risk that the counterparty to the repurchase agreement that sells the securities may default on its obligation to repurchase them. In this circumstance, UltraShort 500 Fund may lose money because it may not be able to sell the securities at the agreed upon time and price, the securities may lose value before they can be sold, the selling institution may default or declare bankruptcy or the Fund may have difficulty exercising rights to the collateral.

•

Short Sale Risk – UltraShort 500 Fund may sell securities short to seek gains when its benchmark index declines or to adjust investment exposure to its benchmark index. The Fund’s use of short sales involves additional transaction costs and other expenses. Under certain market conditions, short sales can increase the volatility, and decrease the liquidity, of a Fund and may lower a Fund’s return or result in a loss.

•

Volatility Risk – UltraShort 500 Fund seeks to achieve an inverse of a multiple of an index and therefore will experience greater volatility than the index underlying its benchmark and consequently has the potential for greater losses.

UltraShort 500 Fund may be subject to risks in addition to those identified as principal risks. The sections titled “More on Risks” and “Special Risks of Exchange-Traded Funds” later in this Prospectus and the SAI contains additional information about the Fund and related risks.

FUND PERFORMANCE

Performance history will be available for UltraShort 500 Fund after it has been in operation for a full calendar year.

FEES AND EXPENSES

The following table describes the estimated fees and expenses you may pay when you buy, hold, or sell Creation Units of UltraShort 500 Fund . Annual fund operating expenses are estimates.

Investors purchasing shares in the secondary market will not pay the shareholder fees shown below, but may be subject to costs (including customary brokerage commissions) charged by their broker.

Shareholder Fees (paid directly by Authorized Participants)


Sales charges (loads)		None
Fixed transaction fee per order ^A		$[ ]
Variable transaction fee per creation unit ^B		up to [ ]%

^A	A fixed transaction fee of $[ ] will be charged when you create or redeem Creation Units of the UltraShort 500 Fund regardless of the number of shares created or redeemed on the date of the transaction.

^B	A variable transaction fee of up to [ ]% of the value of each Creation Unit will be charged to offset costs associated with the order.

Annual Fund Operating Expenses (as a percentage of average daily net assets)


Investment Advisory Fee	[	]%
Distribution and Service (12b-1) fees	[	]%
Other expenses ^A	[	]%
Total annual fund operating expenses	[	]%
Fee Waivers/Reimbursements ^B	[	]%
Total net annual fund operating expenses	[	]%

^A	Based on estimated amounts for the current fiscal year.

Example: The following examples are intended to help you compare the cost of investing in shares of the UltraShort 500 Fund with the cost of investing in other funds. Investors should note that the following examples are for illustration purposes only and are not meant to suggest actual or expected fees and expenses or returns, all of which may vary. The Fund issues and redeems shares in Creation Units for cash. Shares are not redeemable in less than Creation Unit aggregations. The examples do not include the brokerage commissions that secondary market investors may incur to buy and sell shares.

The following example assumes that you invest $10,000 in the UltraShort 500 Fund for the time periods indicated and sell all of your shares at the end of those periods, but does not include transaction fees on purchases and redemptions of shares. The example also assumes that your investment has a 5% annual return each year and

that the Fund’s annual operating expenses remain exactly as described in the fee table. Although your actual costs may be higher or lower, based on the assumptions, your costs would be:


1 year	$	[	]
3 years	$	[	]

The anticipated approximate value of one Creation Unit of the UltraShort 500 Fund , as of [ ], 2006, is $5,250,000. The following example assumes that you invest $10,000 in the Fund for the time periods indicated and sell all of your shares at the end of those periods. It also assumes that you pay the standard $[ ] transaction fee applicable to both the purchase and redemption of the Creation Unit, have a 5% annual return each year, and that the Fund’s operating expenses remain the same. Although your actual costs may be higher or lower, based on the assumptions, your costs would be:


1 year	$	[	]
3 years	$	[	]

UltraShort 100 Fund

INVESTMENT OBJECTIVE

UltraShort 100 Fund seeks daily investment results, before fees and expenses, that correspond to twice (200%) the inverse (opposite) of the daily performance of the NASDAQ-100 Index ^{^®} .

If UltraShort 100 Fund is successful in meeting its objective, its net asset value should gain approximately twice as much, on a percentage basis, as any decrease in the NASDAQ-100 Index (Index) when the Index declines on any given day. Conversely, its net asset value should lose approximately twice as much, on a percentage basis, as any increase in the Index when the Index rises on a given day.

PRINCIPAL INVESTMENT STRATEGY

The Fund ’ s principal investment strategies include:

•

Taking positions in financial instruments (including derivatives) that ProShare Advisors believes, in combination, should have similar daily return characteristics as twice (200%) the inverse performance of the NASDAQ-100 Index. The Fund will not sell short the individual equity securities of issuers contained in the NASDAQ-100 Index.

•

Employing leveraged investment techniques in seeking its investment objective.

•

Investing assets not invested in financial instruments, in debt instruments and/or money market instruments.

The UltraShort 100 Fund employs leveraged investment techniques to achieve its investment objective. Over time, the use of leverage, combined with the effect of compounding, will have a more significant impact on the UltraShort 100 Fund’s performance compared to the index underlying its benchmark than a fund that does not employ leverage. Therefore, the return of the index over a period of time greater than one day multiplied by a fund’s specified multiple or inverse multiple (e.g., 200% or -200%) will not generally equal a fund’s performance over that same period. The following example illustrates this point:

Let’s say, hypothetically, that a shareholder invests $10,000 in Fund A and $10,000 in Fund B.

Fund A: A fund whose objective is to seek

daily investment results, before fees and

expenses, that correspond to the inverse

(opposite) of the daily performance of an

index.

Fund B: A fund whose objective is to seek

daily investment results, before fees and

expenses, that correspond to twice (200%)

the inverse (opposite) of the daily

performance of an index.

On Day 1, each fund’s benchmark index decreases in value 1% which would cause a 1% increase in Fund A and a 2% increase in Fund B.

PRINCIPAL RISK CONSIDERATIONS

The Fund is subject to the following principal risks:

•

Aggressive Investment Technique Risk – The Fund uses investment techniques that may be considered aggressive. Such techniques may expose UltraShort 100 Fund to potentially dramatic changes (losses) in the value of its portfolio holdings and imperfect correlation to the index underlying the Fund’s benchmark. These techniques also may expose the Fund to risks different from or possibly greater than the risks associated with investing directly in the securities contained in the index underlying the Fund’s benchmark.

•

Correlation Risk – A number of factors may affect UltraShort 100 Fund’s ability to achieve a high correlation with its benchmark and there can be no guarantee that the Fund will achieve a high degree of correlation.

•

Counterparty Risk – The counterparty to a financial instrument may default on its obligations under the related agreement. In this circumstance, UltraShort 100 Fund may lose money.

•

Credit Risk – An issuer of debt instruments may be unable to make interest payments and repay principal. Changes in an issuer’s financial strength or in an instrument’s credit rating may affect an instrument’s value and, thus, impact Fund performance. As described under “Counterparty Risk” above, the Fund will also be subject to credit risk with respect to the amount a Fund expects to receive from counterparties in financial instruments transactions. If a counterparty defaults on its payment obligations to a Fund, the value of your investment in a Fund may decline.

•

Inverse Correlation Risk – Shareholders in the UltraShort 100 Fund should lose money when the index underlying the Fund’s benchmark rises – a result that is the opposite from traditional equity or bond funds.

•

Leverage Risk – UltraShort 100 Fund’s NAV and market price will likely be more volatile than the index underlying its benchmark and funds that do not employ leverage. Leverage should cause the Fund to lose more money in market environments adverse to its daily investment objective than an unleveraged investment.

•

Liquidity Risk – In certain circumstances, UltraShort 100 Fund may not be able to dispose of portfolio investments within a reasonable time at a fair price.

•

Market Price Variance Risk – UltraShort 100 Fund’s NAV will fluctuate with changes in the value of its portfolio holdings. Fund shares are listed on the Exchange and are purchased and sold at market prices for shares. Although it is expected that the secondary market price for shares should approximate the Fund’s NAV, there may be times when the market price varies significantly from NAV.

•

Market Risk – UltraShort 100 Fund is subject to market risks that will affect the value of its shares, including general economic and market conditions, as well as developments that impact specific economic sectors, industries or companies.

•

Non-diversification Risk – UltraShort 100 Fund is considered non-diversified and may invest a relatively high percentage of its assets in the securities of a small number of issuers. In such circumstances, the Fund’s performance may be susceptible to economic, political or regulatory events affecting a single issuer than a more diversified fund.

•

Repurchase Agreement Risk – Repurchase agreement risk is the risk that the counterparty to the repurchase agreement that sells the securities may default on its obligation to repurchase them. In this circumstance, UltraShort 100 Fund may lose money because: it may not be able to sell the securities at the agreed upon time and price, the securities may lose value before they can be sold, the selling institution may default or declare bankruptcy or the Fund may have difficulty exercising rights to the collateral.

•

Short Sale Risk – The Fund may sell securities short to seek gains when its benchmark index declines or to adjust investment exposure to its benchmark index. The Fund’s use of short sales involves additional transaction costs and other expenses. Under certain market conditions, short sales can increase the volatility, and decrease the liquidity, of a Fund and may lower a Fund’s return or result in a loss.

•

Technology Investment Risk – The Fund currently maintains significant exposure to issuers conducting business in technology industry. Technology companies are subject to intense competition, both domestically and internationally, and may have limited product lines, markets, financial resources or personnel.

•

Volatility Risk – UltraShort 100 Fund seeks to achieve an inverse of a multiple of an index and therefore will experience greater volatility than the index underlying its benchmark and consequently has the potential for greater losses.

The Fund may be subject to risks in addition to those identified as principal risks. The sections titled “More on Risks” and “Special Risks of Exchange-Traded Funds” later in this Prospectus and the SAI contains additional information about UltraShort 100 Fund and related risks.

FUND PERFORMANCE

Performance history will be available for UltraShort 100 Fund after it has been in operation for a full calendar year.

FEES AND EXPENSES

The following table describes the estimated fees and expenses you may pay when you buy, hold, or sell Creation Units of UltraShort 100 Fund . Annual fund operating expenses are estimates. Investors purchasing shares in the secondary market will not pay the shareholder fees shown below, but may be subject to costs (including customary brokerage commissions) charged by their broker.

Shareholder Fees (paid directly by Authorized Participants)


Sales charges (loads)		None
Fixed transaction fee per order ^A		$[ ]
Variable transaction fee per creation unit ^B		up to [ ]%

^A	A fixed transaction fee of $[ ] will be charged when you create or redeem Creation Units of UltraShort 100 Fund regardless of the number of shares created or redeemed on the date of the transaction.

^B	A variable transaction fee of up to [ ]% of the value of each Creation Unit will be charged to offset costs associated with the order.

Annual Fund Operating Expenses (as a percentage of average daily net assets)


Investment Advisory Fee	[	]%
Distribution and Service (12b-1) fees	[	]%
Other expenses ^A	[	]%
Total annual fund operating expenses	[	]%
Fee Waivers/Reimbursements ^B	[	]%
Total net annual fund operating expenses	[	]%

^A	Based on estimated amounts for the current fiscal year.

Example: The following examples are intended to help you compare the cost of investing in shares of UltraShort 100 Fund with the cost of investing in other funds. Investors should note that the following examples are for illustration purposes only and are not meant to suggest actual or expected fees and expenses or returns, all of which may vary. The Fund issues and redeems shares in Creation Units for cash. Shares are not redeemable in less than Creation Unit aggregations. The examples do not include the brokerage commissions that secondary market investors may incur to buy and sell shares.

The following example assumes that you invest $10,000 in UltraShort 100 Fund for the time periods indicated and sell all of your shares at the end of those periods, but does not include transaction fees on purchases and redemptions of shares. The example also assumes that your investment has a 5% annual return each year and that the Fund’s annual operating expenses remain exactly as described in the fee table. Although your actual costs may be higher or lower, based on the assumptions, your costs would be:


1 year	$	[	]
3 years	$	[	]

The anticipated approximate value of one Creation Unit of UltraShort 100 Fund , as of [ ], 2006, is $5,250,000. The following example assumes that you invest $10,000 in the Fund for the time periods indicated and sell all of your shares at the end of those periods. It also assumes that you pay the standard $[ ] transaction fee applicable to both the purchase and redemption of the Creation Unit, have a 5% annual return each year, and that the Fund’s operating expenses remain the same. Although your actual costs may be higher or lower, based on the assumptions, your costs would be:


1 year	$	[	]
3 years	$	[	]

UltraShort 30 Fund

INVESTMENT OBJECTIVE

UltraShort 30 Fund (the “Fund”) seeks daily investment results, before fees and expenses that correspond to twice (200%) the inverse (opposite) of the daily performance of the Dow Jones Industrial Average (DJIA).

If UltraShort 30 Fund is successful in meeting its objective, its net asset value should gain approximately twice as much, on a percentage basis, as any decrease in the DJIA when the DJIA declines on any given day. Conversely, its net asset value should lose approximately twice as much, on a percentage basis, as any increase in the DJIA when the DJIA rises on a given day.

PRINCIPAL INVESTMENT STRATEGY

The Fund’s principal investment strategies include:

•

Employing leveraged investment techniques in seeking its investment objective.

•

Investing assets not invested in financial instruments, in debt instruments and/or money market instruments.

The UltraShort 30 Fund employs leveraged investment techniques to achieve its investment objective. Over time, the use of leverage, combined with the effect of compounding, will have a more significant impact on the UltraShort 30 Fund’s performance compared to the index underlying its benchmark than a fund that does not employ leverage. Therefore, the return of the index over a period of time greater than one day multiplied by a fund’s specified multiple or inverse multiple (e.g., 200% or -200%) will not generally equal a fund’s performance over that same period. The following example illustrates this point:

Let’s say, hypothetically, that a shareholder invests $10,000 in Fund A and $10,000 in Fund B.

Fund A: A fund whose objective is to seek

daily investment results, before fees and

expenses, that correspond to the inverse

(opposite) of the daily performance of an

index.

Fund B: A fund whose objective is to seek

daily investment results, before fees and

expenses, that correspond to twice (200%)

the inverse (opposite) of the daily

performance of an index.

On Day 1, each fund’s benchmark index decreases in value 1% which would cause a 1% increase in Fund A and a 2% increase in Fund B.

PRINCIPAL RISK CONSIDERATIONS

The Fund is subject to the following principal risks:

•

Aggressive Investment Technique Risk – UltraShort 30 Fund uses investment techniques that may be considered aggressive. Such techniques may expose the Fund to potentially dramatic changes (losses) in the value of its portfolio holdings and imperfect correlation to the index underlying the Fund’s benchmark. These techniques also may expose the Fund to risks different from or possibly greater than the risks associated with investing directly in the securities contained in the index underlying the Fund’s benchmark.

•

Concentration Risk – UltraShort 30 Fund may concentrate its investments in issuers of one or more particular industries to the same extent that its Underlying Index is so concentrated. There is a risk that those issuers (or industry sector) will perform poorly and negatively impact a Fund.

•

Correlation Risk – A number of factors may affect UltraShort 30 Fund’s ability to achieve a high correlation with its benchmark and there can be no guarantee that the Fund will achieve a high degree of correlation.

•

Counterparty Risk – The counterparty to a financial instrument may default on its obligations under the related agreement. In this circumstance, UltraShort 30 Fund may lose money.

•

Credit Risk – An issuer of debt instruments may be unable to make interest payments and repay principal. Changes in an issuer’s financial strength or in an instrument’s credit rating may affect an instrument’s value and, thus, impact Fund performance. As described under “Counterparty Risk” above, the Fund will also be subject to credit risk with respect to the amount a Fund expects to receive from counterparties in financial instruments transactions. If a counterparty defaults on its payment obligations to a Fund, the value of your investment in a Fund may decline.

•

Inverse Correlation Risk – Shareholders in UltraShort 30 Fund should lose money when the index underlying the Fund’s benchmark rises – a result that is the opposite from traditional equity or bond funds .

•

Leverage Risk – UltraShort 30 Fund’s NAV and market price will likely be more volatile than the index underlying its benchmark and funds that do not employ leverage. Leverage should cause the Fund to lose more money in market environments adverse to its daily investment objective than an unleveraged investment.

•

Liquidity Risk – In certain circumstances, UltraShort 30 Fund may not be able to dispose of portfolio investments within a reasonable time at a fair price.

•

Market Price Variance Risk – UltraShort 30 Fund’s NAV will fluctuate with changes in the value of its portfolio holdings. Fund shares are listed on the Exchange and are purchased and sold at market prices for shares. Although it is expected that the secondary market price for shares should approximate the Fund’s NAV, there may be times when the market price varies significantly from NAV.

•

Market Risk – UltraShort 30 Fund is subject to market risks that will affect the value of its shares, including general economic and market conditions, as well as developments that impact specific economic sectors, industries or companies.

•

Non-diversification Risk – UltraShort 30 Fund is considered non-diversified and may invest a relatively high percentage of its assets in the securities of a small number of issuers. In such circumstances, the Fund’s performance may be susceptible to economic, political or regulatory events affecting a single issuer than a more diversified fund.

•

Repurchase Agreement Risk – Repurchase agreement risk is the risk that the counterparty to the repurchase agreement that sells the securities may default on its obligation to repurchase them. In this circumstance, UltraShort 30 Fund may lose money because: it may not be able to sell the securities at the agreed upon time and price, the securities may lose value before they can be sold, the selling institution may default or declare bankruptcy or the Fund may have difficulty exercising rights to the collateral.

•

Volatility Risk – UltraShort 30 Fund seeks to achieve an inverse of a multiple of an index and therefore will experience greater volatility than the index underlying its benchmark and consequently has the potential for greater losses.

UltraShort 30 Fund may be subject to risks in addition to those identified as principal risks. The sections titled “More on Risks” and “Special Risks of Exchange-Traded Funds” later in this Prospectus and the SAI contains additional information about the Fund and related risks.

FUND PERFORMANCE

Performance history will be available for UltraShort 30 Fund after it has been in operation for a full calendar year.

FEES AND EXPENSES

The following table describes the estimated fees and expenses you may pay when you buy, hold, or sell Creation Units of UltraShort 30 Fund . Annual fund operating expenses are estimates. Investors purchasing shares in the secondary market will not pay the shareholder fees shown below, but may be subject to costs (including customary brokerage commissions) charged by their broker.

Shareholder Fees (paid directly by Authorized Participants)


Sales charges (loads)		None
Fixed transaction fee per order ^A		$[ ]
Variable transaction fee per creation unit ^B		up to [ ]%

^A	A fixed transaction fee of $[ ] will be charged when you create or redeem Creation Units of UltraShort 30 Fund regardless of the number of shares created or redeemed on the date of the transaction.

^B	A variable transaction fee of up to [ ]% of the value of each Creation Unit will be charged to offset costs associated with the order.

Annual Fund Operating Expenses (as a percentage of average daily net assets)


Investment Advisory Fee	[	]%
Distribution and Service (12b-1) fees	[	]%
Other expenses ^A	[	]%
Total annual fund operating expenses	[	]%
Fee Waivers/Reimbursements ^B	[	]%
Total net annual fund operating expenses	[	]%

^A	Based on estimated amounts for the current fiscal year.

Example: The following examples are intended to help you compare the cost of investing in shares of UltraShort 30 Fund with the cost of investing in other funds. Investors should note that the following examples are for illustration purposes only and are not meant to suggest actual or expected fees and expenses or returns, all of which may vary. The Fund issues and redeems shares in Creation Units for cash. Shares are not redeemable in less than Creation Unit aggregations. The examples do not include the brokerage commissions that secondary market investors may incur to buy and sell shares.

The following example assumes that you invest $10,000 in UltraShort 30 Fund for the time periods indicated and sell all of your shares at the end of those periods, but does not include transaction fees on purchases and redemptions of shares. The example also assumes that your investment has a 5% annual return each year and that the Fund ’s annual operating expenses remain exactly as described in the fee table. Although your actual costs may be higher or lower, based on the assumptions, your costs would be:


1 year	$	[	]
3 years	$	[	]

The anticipated approximate value of one Creation Unit of UltraShort 30 Fund , as of [ ], 2006, is $5,250,000. The following example assumes that you invest $10,000 in the Fund for

the time periods indicated and sell all of your shares at the end of those periods. It also assumes that you pay the standard $[ ] transaction fee applicable to both the purchase and redemption of the Creation Unit, have a 5% annual return each year, and that the Fund’s operating expenses remain the same. Although your actual costs may be higher or lower, based on the assumptions, your costs would be:


1 year	$	[	]
3 years	$	[	]

UltraShort MidCap400 Fund

INVESTMENT OBJECTIVE

UltraShort MidCap 400 Fund (the “Fund”) seeks daily investment results, before fees and expenses, that correspond to twice (200%) the inverse (opposite) of the daily performance of the S&P MidCap 400 Index.

If UltraShort MidCap400 Fund is successful in meeting its objective, its net asset value should gain approximately twice as much, on a percentage basis, as any decrease in the S&P MidCap 400 Index (Index) when the Index declines on any given day. Conversely, its net asset value should lose approximately twice as much, on a percentage basis, as any increase in the Index when the Index rises on a given day.

PRINCIPAL INVESTMENT STRATEGY

The Fund’s principal investment strategies include:

•

Committing at least 80% of its assets to investments that, in combination, have economic characteristics that are inverse to those of the Index.

•

Employing leveraged investment techniques in seeking its investment objective.

•

Investing assets not invested in financial instruments, in debt instruments and/or money market instruments.

The UltraShort MidCap400 Fund employs leveraged investment techniques to achieve its investment objective. Over time, the use of leverage, combined with the effect of compounding, will have a more significant impact on the UltraShort MidCap400 Fund’s performance compared to the index underlying its benchmark than a fund that does not employ leverage. Therefore, the return of the index over a period of time greater than one day multiplied by a fund’s specified multiple or inverse multiple (e.g., 200% or -200%) will not generally equal a fund’s performance over that same period. The following example illustrates this point:

Let’s say, hypothetically, that a shareholder invests $10,000 in Fund A and $10,000 in Fund B.

Fund A: A fund whose objective is to seek

daily investment results, before fees and

expenses, that correspond to the inverse

(opposite) of the daily performance of an

index.

Fund B: A fund whose objective is to seek

daily investment results, before fees and

expenses, that correspond to twice (200%)

the inverse (opposite) of the daily

performance of an index.

On Day 1, each fund’s benchmark index decreases in value 1% which would cause a 1% increase in Fund A and a 2% increase in Fund B.

decreased in value by $4 over two days (four times the cumulative index loss over two days rather than two times the cumulative index loss).

PRINCIPAL RISK CONSIDERATIONS

The Fund is subject to the following principal risks:

•

Aggressive Investment Technique Risk – UltraShort MidCap400 Fund uses investment techniques that may be considered aggressive. Such techniques may expose the Fund to potentially dramatic changes (losses) in the value of its portfolio holdings and imperfect correlation to the index underlying the Fund’s benchmark. These techniques also may expose the Fund to risks different from or possibly greater than the risks associated with investing directly in the securities contained in the index underlying the Fund’s benchmark.

•

Correlation Risk – A number of factors may affect UltraShort MidCap400 Fund’s ability to achieve a high correlation with its benchmark and there can be no guarantee that the Fund will achieve a high degree of correlation.

•

Counterparty Risk – The counterparty to a financial instrument may default on its obligations under the related agreement. In this circumstance, UltraShort MidCap400 Fund may lose money.

•

Credit Risk – An issuer of debt instruments may be unable to make interest payments and repay principal. Changes in an issuer’s financial strength or in an instrument’s credit rating may affect an instrument’s value and, thus, impact Fund performance. As described under “Counterparty Risk” above, the Fund will also be subject to credit risk with respect to the amount a Fund expects to receive from counterparties in financial instruments transactions. If a counterparty defaults on its payment obligations to a Fund, the value of your investment in a Fund may decline.

•

Inverse Correlation Risk – Shareholders in UltraShort MidCap400 Fund should lose money when the index underlying the Fund’s benchmark rises – a result that is the opposite from traditional equity or bond funds.

•

Leverage Risk – The UltraShort MidCap400 Fund’s NAV and market price will likely be more volatile than the index underlying its benchmark and funds that do not employ leverage. Leverage should cause the Fund to lose more money in market environments adverse to its daily investment objective than an unleveraged investment.

•

Liquidity Risk – In certain circumstances, UltraShort MidCap400 Fund may not be able to dispose of portfolio investments within a reasonable time at a fair price.

•

Market Price Variance Risk – UltraShort MidCap400 Fund’s NAV will fluctuate with changes in the value of its portfolio holdings. Fund shares are listed on the Exchange and are purchased and sold at market prices for shares. Although it is expected that the secondary market price for shares should approximate the Fund’s NAV, there may be times when the market price varies significantly from NAV.

•

Market Risk – UltraShort MidCap400 Fund is subject to market risks that will affect the value of its shares, including general economic and market conditions, as well as developments that impact specific economic sectors, industries or companies.

•

Mid-Cap Company Investment Risk – UltraShort MidCap400 Fund maintains exposure to mid-cap company stocks. Mid-cap company stocks tend to have greater fluctuations in price than the stocks of large companies and could be more difficult to liquidate during market downturns.

•

Non-diversification Risk – UltraShort MidCap400 Fund is considered non-diversified and may invest a relatively high percentage of its assets in the securities of a small number of issuers. In such circumstances, the Fund’s performance may be susceptible to economic, political or regulatory events affecting a single issuer than a more diversified fund.

•

Repurchase Agreement Risk – Repurchase agreement risk is the risk that the counterparty to the repurchase agreement that sells the securities may default on its obligation to repurchase them. In this circumstance, UltraShort MidCap400 Fund may lose money because: it may not be able to sell the securities at the agreed upon time and price, the securities may lose value before they can be sold, the selling institution may default or declare bankruptcy or the Fund may have difficulty exercising rights to the collateral.

•

Short Sale Risk – UltraShort MidCap400 Fund may sell securities short to seek gains when its benchmark index declines or to adjust investment exposure to its benchmark index. The Fund’s use of short sales involves additional transaction costs and other expenses. Under certain market conditions, short sales can increase the volatility, and decrease the liquidity, of a Fund and may lower a Fund’s return or result in a loss.

•

Volatility Risk – UltraShort MidCap400 Fund seeks to achieve an inverse of a multiple of an index and therefore will experience greater volatility than the index underlying its benchmark and consequently has the potential for greater losses.

UltraShort MidCap400 Fund may be subject to risks in addition to those identified as principal risks. The sections titled “More on Risks” and “Special Risks of Exchange-Traded Funds” later in this Prospectus and the SAI contains additional information about the Fund and related risks.

FUND PERFORMANCE

Performance history will be available for UltraShort MidCap400 Fund after it has been in operation for a full calendar year.

FEES AND EXPENSES

The following table describes the estimated fees and expenses you may pay when you buy, hold, or sell Creation Units of UltraShort MidCap400 Fund . Annual fund operating expenses are estimates. Investors purchasing shares in the secondary market will not pay the shareholder fees shown below, but may be subject to costs (including customary brokerage commissions) charged by their broker.

Shareholder Fees (paid directly by Authorized Participants)


Sales charges (loads)		None
Fixed transaction fee per order ^A		$[ ]
Variable transaction fee per creation unit ^B		up to [ ]%

^A	A fixed transaction fee of $[ ] will be charged when you create or redeem Creation Units of UltraShort MidCap400 Fund regardless of the number of shares created or redeemed on the date of the transaction.

^B	A variable transaction fee of up to [ ]% of the value of each Creation Unit will be charged to offset costs associated with the order.

Annual Fund Operating Expenses (as a percentage of average daily net assets)


Investment Advisory Fee	[	]%
Distribution and Service (12b-1) fees	[	]%
Other expenses ^A	[	]%
Total annual fund operating expenses	[	]%
Fee Waivers/Reimbursements ^B	[	]%
Total net annual fund operating expenses	[	]%

^A	Based on estimated amounts for the current fiscal year.

Example: The following examples are intended to help you compare the cost of investing in shares of UltraShort MidCap400 Fund with the cost of investing in other funds. Investors should note that the following examples are for illustration purposes only and are not meant to suggest actual or expected fees and expenses or returns, all of which may vary. The Fund issues and redeems shares in Creation Units for cash. Shares are not redeemable in less than Creation Unit aggregations. The examples do not include the brokerage commissions that secondary market investors may incur to buy and sell shares.

The following example assumes that you invest $10,000 in UltraShort MidCap400 Fund for the time periods indicated and sell all of your shares at the end of those periods, but does not include transaction fees on purchases and redemptions of shares. The example also assumes that your investment has a 5% annual return each year and that the Fund ’s annual operating expenses remain exactly as described in the fee table. Although your actual costs may be higher or lower, based on the assumptions, your costs would be:


1 year	$	[	]
3 years	$	[	]

The anticipated approximate value of one Creation Unit of UltraShort MidCap400 Fund , as of [ ], 2006, is $5,250,000. The following example assumes that you invest $10,000 in the Fund for the time periods indicated and sell all of your shares at the end of those periods. It also assumes that you pay the standard $[ ] transaction fee applicable to both the purchase and redemption of the Creation Unit, have a 5% annual return each year, and that the Fund ’s operating expenses remain the same. Although your actual costs may be higher or lower, based on the assumptions, your costs would be:


1 year	$	[	]
3 years	$	[	]

MORE ON OBJECTIVES, STRATEGIES AND RISKS

Investment Objectives:

Bullish Funds

•

Ultra500 Fund seeks daily investment results, before fees and expenses, that correspond to twice (200%) the daily performance of the S&P 500 ^® Index.

•

Ultra100 Fund seeks daily investment results, before fees and expenses, that correspond to twice (200%) the daily performance of the NASDAQ-100 Index ^® .

•

Ultra30 Fund seeks daily investment results, before fees and expenses, that correspond to twice (200%) the daily performance of the DJIA.

•

UltraMidCap400 Fund seeks daily investment results, before fees and expenses, that correspond to twice (200%) the daily performance of the S&P MidCap400 Index.

Bearish Funds

•

Short 500 Fund seeks daily investment results, before fees and expenses, that correspond to the inverse (opposite) of the daily performance of the S&P 500 ^® Index.

•

Short 100 Fund seeks daily investment results, before fees and expenses, that correspond to the inverse (opposite) of the daily performance of the NASDAQ-100 Index ^® .

•

Short 30 Fund seeks daily investment results, before fees and expenses, that correspond to the inverse (opposite) of the daily performance of the DJIA.

•

Short MidCap400 Fund seeks daily investment results, before fees and expenses, that correspond to the inverse (opposite) of the daily performance of the S&P MidCap 400 Index.

•

UltraShort 500 Fund seeks daily investment results, before fees and expenses, that correspond to twice (200%) the inverse (opposite) of the daily performance of the S&P 500 ^® Index.

•

UltraShort 100 Fund seeks daily investment results, before fees and expenses, that correspond to twice (200%) the inverse (opposite) of the daily performance of the NASDAQ-100 Index ^® .

•

UltraShort 30 Fund seeks daily investment results, before fees and expenses, that correspond to twice (200%) the inverse (opposite) of the daily performance of the DJIA.

•

UltraShort MidCap400 Fund seeks daily investment results, before fees and expenses, that correspond to twice (200%) the inverse (opposite) of the daily performance of the S&P MidCap 400 Index.

The investment objective of each Fund is non-fundamental and may be changed without shareholder approval.

More on Principal Investment Strategies

In seeking to achieve each Fund’s investment objective, ProShare Advisors uses a mathematical approach to investing. Using this approach, ProShare Advisors determines the type, quantity and mix of investment positions that a Fund should hold to approximate the performance of its benchmark.

Each Fund reserves the right to substitute a different index or security for the index underlying its benchmark (“Underlying Index”). ProShare Advisors does not invest the assets of the Funds in stocks or financial instruments based on ProShare Advisors’ view of the investment merit of a particular security, instrument, or company, nor does it conduct conventional stock research or analysis, or forecast stock market movement or trends, in managing the assets of the Funds. The Bullish Funds are designed to correspond to a multiple of the daily performance of an Underlying Index. The Bearish Funds are designed to correspond to the inverse of the daily performance or twice (200%) the inverse of the daily performance of an Underlying Index. Each Fund seeks to remain fully invested at all times in securities and/or financial instruments that provide exposure to its Underlying Index without regard to market conditions, trends or direction. The Funds also do not take temporary defensive positions. The Funds do not seek to achieve their stated investment objective over a period of time greater than one day because mathematical compounding prevents the Funds from achieving such results.

The Funds employ investment techniques that ProShare Advisors believes should simulate the movement of their respective benchmarks. For example, the Funds may employ the following investment techniques in pursuit of their investment objective:

•

Leveraged investment techniques offer a means of magnifying market movements into larger changes in an investment’s value. Swap agreements, borrowing, futures contracts, forward contracts, options on securities indexes, reverse repurchase agreements and short sales, all may be used to create leverage. Short sales or selling short entails selling a stock, usually borrowed, and buying it back at a later date. The Funds may employ leverage through these various techniques for investment purposes. Use of leveraged investment techniques may involve additional costs and risks to a Fund.

•

Sampling techniques . The Bullish Funds may hold a representative sample of the securities in the Underlying Index, which have aggregate characteristics similar to those of the Index. The sampling process typically involves selecting a representative sample of securities in an index principally to enhance liquidity and reduce transaction costs while seeking to maintain high correlation with, and similar aggregate characteristics (market capitalization and industry weightings) to, the Underlying Index. In addition, each Bullish Fund may obtain exposure to components not included in the Underlying Index, invest in securities that are not included in the Underlying Index or may overweight or underweight certain components contained in the Underlying Index.

Strategies Specific to the Bullish Funds

Each Bullish Fund invests in equity securities and/or financial instruments (including derivatives) that ProShare Advisors believes, in combination, should have similar daily price return characteristics as twice (200%) the daily return of its Underlying Index. These instruments include:

•

Equity securities are securities that include common stock, preferred stock, depositary receipts, convertible securities and rights and warrants. Stocks represent an ownership interest in a corporation.

•

Financial instruments (including derivatives) are investment contracts whose value is derived from the value of an underlying asset, interest rate or index. The Bullish Funds may invest in financial instruments as a substitute for investing directly in stocks or bonds in order to gain exposure to its Underlying Index. Financial Instruments may also be used to produce economically “leveraged” investment results. Financial instruments include:

•

Futures contracts and options on futures contracts — Futures or futures contracts are contracts to pay a fixed price for an agreed-upon amount of commodities or securities, or the cash value of the commodity or securities on an agreed-upon date.

•

Swap agreements — Swap agreements are two-party contracts entered into primarily by institutional investors for a specified period ranging from a day to more than one year. In a standard “swap” transaction, two parties agree to exchange the returns (or differentials in rates of return) earned or realized on particular predetermined investments or instruments. The gross returns to be exchanged or “swapped” between the parties are calculated with respect to a “notional amount,” e.g., the return on or increase in value of a particular dollar amount invested in a “basket” of securities representing a particular index. The Funds are subject to credit or performance risk on the amount each Fund expects to receive from swap agreement counterparties. A swap counterparty default on its payment obligation to a Fund may cause the value of the Fund to decrease.

•

Forward contracts — Forward contracts are two-party contracts entered into with dealers or financial institutions where a purchase or sale of a specific quantity of a commodity, security, foreign currency or other financial instrument at a set price, with delivery and settlement at a specified future date. Forwards may also be structured for cash settlement, rather than physical delivery.

•

Options on securities and stock indices and investments covering such positions — Option contracts grant one party a right, for a price, either to buy or sell a security or futures contract at a fixed price during a specified period or on a specified day. Call options give investors the right to buy a stock at an agreed-upon price on or before a certain date. A put option gives the investor the right to sell a stock at an agreed-upon price on or before a certain date.

Under normal circumstances, each Bullish Fund will invest at least 85% of its assets in the securities comprising the Underlying Index. In addition, each Bullish Fund may use other securities, financial instruments and techniques in pursuit of its investment objective. Assets of each Bullish Fund not invested in equity securities or financial instruments may be invested in debt securities and/or money market instruments, including repurchase agreements.

Strategies Specific to the Bearish Funds

The Bearish Funds invest in financial instruments (including derivatives) that ProShare Advisors believes, in combination, should have similar daily return characteristics as the inverse (opposite) or a multiple of the inverse of the Underlying Index. These instruments include:

•

Financial instruments (including derivatives) are investment contracts whose value is derived from the value of an underlying asset, interest rate or index and may be used to produce economically “leveraged” investment results. Financial instruments include:

•

Forward contracts — Forward contracts are two-party contracts entered into with dealers or financial institutions where a purchase or sale of a specific quantity of a commodity, security, foreign currency or other financial instrument at a set price, with delivery and settlement at a specified future date. Forward contracts may also be structured for cash settlement, rather than physical delivery.

•

Bearish Funds generally do not invest in equity securities such as common stock. In addition, each Bearish Fund may use other financial instruments and techniques in pursuit of its investment objective. Assets of the Bearish Funds not invested in financial instruments may be invested in debt instruments and/or money market instruments, including repurchase agreements.

Important Concepts and Definitions

This section describes additional securities, instruments and strategies that may be utilized by a Fund.

•

Debt Instruments include bonds and other instruments, such as certificates of deposit, euro time deposits, commercial paper (including asset-backed commercial paper), notes, funding agreements and U.S. Government securities that are used by U.S. and foreign banks, financial institutions, corporations, or other entities, to borrow money from investors. Holders of debt instruments have a higher priority claim to assets than do holders of equity securities. Typically, the debt issuer pays the investor a fixed, variable or floating rate of interest and must repay the borrowed amount at maturity. Some debt instruments, such as zero coupon bonds, are sold at a discount from their face values instead of paying interest.

•

Depositary Receipts (DRs) include American Depositary Receipts (ADRs), Global Depositary Receipts (GDRs), and New York Shares (NYSs).

•

ADRs represent the right to receive securities of foreign issuers deposited in a bank or trust company. ADRs are an alternative to purchasing the underlying securities in their national markets and currencies. Investment in ADRs has certain advantages over direct investment in the underlying foreign securities since: (i) ADRs are U.S. dollar-denominated investments that are easily transferable and for which market quotations are readily available, and (ii) issuers whose securities are represented by ADRs are generally subject to auditing, accounting and financial reporting standards similar to those applied to domestic issuers.

•

GDRs are receipts for shares in a foreign-based corporation traded in capital markets around the world. While ADRs permit foreign corporations to offer shares to American citizens, GDRs allow companies in Europe, Asia, the United States and Latin America to offer shares in many markets around the world.

•

A NYS is a share of New York registry, representing equity ownership in a non-U.S. company, allowing for a part of the capital of the company to be outstanding in the U.S. and part in the home market. It is issued by a U.S. transfer agent and registrar on behalf of the company and created against the cancellation of the local share by the local registrar. One New York Share is always equal to one ordinary share. New York Share programs are typically managed by the same banks that manage ADRs, as the mechanics of the instrument are very similar. New York Shares are used primarily by Dutch companies.

•

Money Market Instruments are short-term debt instruments that have terms-to-maturity of less than 397 days and exhibit high quality credit profiles. Money market instruments include U.S. Government securities and repurchase agreements.

•

Repurchase Agreements are contracts in which the seller of securities, usually U.S. Government Securities or other Money Market Instruments, agrees to buy them back at a specified time and price. Repurchase Agreements are primarily used by the ProShares as a short-term investment vehicle for cash positions.

•

Reverse Repurchase Agreements involve the sale of a security by a fund to another party (generally a bank or dealer) in return for cash and an agreement by the fund to buy the security back at a specified price and time. Reverse repurchase agreements may be considered a form of borrowing for some purposes and may create leverage.

•

Selling Short entails selling a stock or debt instrument, usually borrowed, and buying it back at a later date. Entering into short positions through financial instruments such as futures, options and swap agreements in intended to have similar investment results as selling short.

•

Structured Notes are debt obligations which may include components such as swaps, forwards, options, caps or floors which change its return pattern. Structured notes may be used to expose a portfolio, or alternatively may be used to expose a portfolio to asset classes or markets in which one does not desire to invest directly.

•

U.S. Government Securities are issued by the U.S. Government or one of its agencies or instrumentalities. Some, but not all, U.S. Government securities are backed by the full faith and credit of the federal government. Other U.S. Government securities are backed by the issuer’s right to borrow from the U.S. Treasury and some are backed only by the credit of the issuing organization.

More on Risks: Like all investments, investing in the Funds entails risks. Many factors affect the value of an investment in a Fund. A Fund’s NAV will change daily based on variations in market conditions, interest rates and other economic, political or financial developments. A Fund’s response to these developments will depend upon the types of securities in which the Fund invests, the Fund’s level of investment in particular issuers and other factors, including the financial condition, industry, economic sector and location of such issuers.

The factors most likely to have a significant impact on a Fund’s portfolio are called “principal risks.” The principal risks for each Fund are described in each Fund description. A Fund may be subject to risks in addition to those identified as principal risks and risks other than those described below. The SAI contains additional information about the Funds, their investment strategies and related risks.

The following risk factors are “principal risks” to the Funds noted in italics and can have a significant impact on a Fund’s performance:

•

Aggressive investment technique risk (All Funds) — The Funds use investment techniques that may be considered aggressive, including the use of futures contracts, options on futures contracts, securities and indices, forward contracts, swap agreements and similar instruments. The Funds’ investment in financial instruments may involve a small investment relative to the amount of investment exposure assumed and may result in losses exceeding the amounts invested. Such instruments, particularly when used to create leverage, may expose the Funds to potentially dramatic changes (losses or gains) in the value of the instruments and imperfect correlation between the value of the instruments and the security or index. The use of aggressive investment techniques also exposes the Funds to risks different from, or possibly greater than, the risks associated with investing directly in securities contained in an index underlying a ProShares benchmark, including: 1) the risk that an instrument is mispriced; 2) credit or performance risk on the amount the Fund expects to receive from a counterparty; 3) the risk that securities prices, interest rates and currency markets will move adversely and the Fund will incur significant losses; 4) the risk that there may be imperfect correlation between the price of financial instruments and movements in the prices of the underlying securities; 5) the risk that the cost of holding a financial instrument might exceed its total return; and 6) the possible absence of a liquid secondary

market for any particular instrument and/or possible exchange imposed price fluctuation limits, which may make it difficult or impossible to adjust a Fund’s position in a particular financial instrument when desired.

•

Correlation risk (All Funds) — A number of factors may affect a Fund’s ability to achieve a high degree of correlation with its benchmark, and there can be no guarantee that a Fund will achieve a high degree of correlation. A failure to achieve a high degree of correlation may prevent a Fund from achieving its investment objective. The following factors, including fees, expenses, transaction costs, costs associated with the use of leveraged investment techniques , may adversely affect the a Fund’s correlation with its benchmark and a Fund’s ability to meet its daily investment objective: 1) use of sampling techniques; 2) investment in securities or financial instruments not included in its Underlying Index; 3) large movements of assets; 4) the receipt of transaction information after the relevant exchange or market closes, potentially resulting in over- or under-exposure to the benchmark; 5) the early close or trading halt on an exchange or market; 6) a restriction on security transactions, which may result in the inability to buy or sell certain securities or financial instruments; or 7) a Fund may not have investment exposure to all securities in its underlying benchmark index, or its weighting of investment exposure to such stocks or industries may be different from that of the Underlying Index. In such circumstances, a Fund may be unable to rebalance its portfolio, accurately price its investments and may incur substantial trading losses.

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Counterparty risk (All Funds) – Each Fund will be subject to credit risk with respect to the amount it expects to receive from counterparties to financial instruments entered into by a Fund or held by special purpose or structured vehicles. If a counterparty becomes bankrupt or otherwise fails to perform its obligations due to financial difficulties, the value of your investment in a Fund may decline. A Fund may experience significant delays in obtaining any recovery in a bankruptcy or other reorganization proceeding. A Fund may obtain only limited recovery or may obtain no recovery in such circumstances. The Funds typically enter into transactions with counterparties whose credit rating is investment grade, as determined by a nationally recognized statistical rating organization, or, if unrated, judged by ProShare Advisors to be of comparable quality.

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Credit Risk (All Funds) – An issuer of debt instruments may be unable to make interest payments and repay principal. Changes in an issuer’s financial strength or in an instrument’s credit rating may affect an instrument’s value and, thus, impact Fund performance. As described under “Counterparty Risk” above, the Funds will also be subject to credit risk with respect to the amount a Fund expects to receive from counterparties in financial instruments transactions. If a counterparty defaults on its payment obligations to a Fund, the value of your investment in a Fund may decline.

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Equity risk (All Funds) — The equity markets are volatile, and the value of securities, futures, options contracts and other instruments correlated with the equity markets may fluctuate dramatically from day-to-day. This volatility may cause the value of an investment in a Fund to decrease. The Bearish Funds respond differently to these risks than funds that are positively correlated to the equity markets, such as the Bullish Funds.

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Inverse Correlation Risk (Bearish Funds) — Shareholders in Bearish Funds should lose money when the Underlying Index rises – a result that is the opposite from traditional equity or bond funds .

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Leverage Risk (Bullish Funds and UltraShort Bearish Funds) - Leverage offers a means of magnifying market movements into larger changes in an investment’s value and provides greater investment exposure than an unleveraged investment. Swap agreements, borrowing, futures contracts, forward contracts, options on securities indexes, reverse repurchase agreements and short sales, all may be used to create leverage. While only the Bullish Funds and certain Bearish Funds employ leverage, each Fund employs leveraged investment techniques to achieve its investment objective. Over time, the use of leverage, combined with the effect of compounding, will have a more significant impact on a Fund’s performance compared to the index underlying its benchmark than a fund that does not employ leverage. Therefore, the return of the index over a period of time greater than one day multiplied by a Fund’s specified multiple or inverse multiple (e.g., 200% or -200%) will not generally equal a Fund’s performance over that same period. Consequently, the Funds that employ leverage will normally lose more money in adverse market environments than funds that do not employ leverage. (A falling market is considered an adverse market environment for the Bullish Funds and a rising market is considered an adverse market environment for the Bearish Funds.) The example previously provided under each Fund’s “Principal Investment Strategy” illustrates this point.

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Liquidity risk (All Funds) — In certain circumstances, such as the disruption of the orderly markets for the securities or financial instruments in which a Fund invests, a Fund might not be able to dispose of certain holdings quickly or at prices that represent true market value in the judgment of ProShare Advisors. This may prevent a Fund from limiting losses, realizing gains or from achieving a high correlation or inverse correlation with its Underlying Benchmark.

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Market price variance risk (All Funds) — Individual Shares of a Fund will be listed for trading on the Exchange and can be bought and sold in the secondary market at market prices. The market prices of Shares will fluctuate in response to changes in NAV and supply and demand for Shares. ProShare Advisors cannot predict whether Shares will trade above, below or at their NAV. Differences between secondary market prices and NAV for Shares may be due largely to supply and demand forces in the secondary market, which forces may not be the same as those influencing prices for securities or instruments held by a Fund at a particular time. Given the fact that Shares can be created and redeemed in Creation Units, ProShare Advisors believes that large discounts or premiums to the NAV of Shares should not be sustained. There may, however, be times when the market price and the NAV vary significantly. Thus, you may pay more than NAV when buying Shares on the secondary market, and you may receive less than NAV when you sell those Shares. The market price of Shares, like the price of any exchange-traded security, includes a “bid-ask spread” charged by the exchange specialist, market makers or other participants that trade the particular security. In times of

severe market disruption, the bid-ask spread often increases significantly. This means that Shares may trade at a discount to NAV, and the discount is likely to be greatest when the price of Shares is falling fastest, which may be the time that you most want to sell your Shares. A Fund’s investment results are measured based upon the daily NAV of the Fund. Investors purchasing and selling shares in the secondary market may not experience investment results consistent with those experienced by those creating and redeeming directly with a Fund.

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Market risk (All Funds) — The Funds are subject to market risks that will affect the value of their shares, including, adverse issuer, political, regulatory, market or economic developments, as well as developments that impact specific economic sectors, industries or segments of the market. Investors in a Bullish Fund should normally lose value on days when its Underlying Index declines. Investors in a Bearish Fund should normally lose value on days when its Underlying Index increases. Each of the Funds seeks to remain fully invested regardless of market conditions.

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Non-diversification risk (All Funds) – The Funds are classified as “non-diversified” under the federal securities laws. Each Fund has the ability to invest a relatively high percentage of its investments in the securities of a small number of issuers if ProShare Advisors determines that doing so is the most efficient means of meeting its objective. This would make the performance of the Funds susceptible to a single economic, political or regulatory event than a diversified fund might be.

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Repurchase Agreement Risk (All Funds) – Repurchase agreement risk is the risk that the counterparty to the repurchase agreement that sells the securities may default on its obligation to repurchase them. In this circumstance, a ProShare may lose money because: it may not be able to sell the securities at the agreed upon time and price, the securities may lose value before they can be sold, the selling institution may default or declare bankruptcy or the ProShare may have difficulty exercising rights to the collateral. In addition, repurchase agreements involve the risk that the market value of the securities retained by a Fund may decline below the price of the securities the Fund has sold but is obligated to repurchase at a higher price under the agreement.

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Short Sale Risk (Bearish Funds) – Selling short is a technique that may be employed by the Bearish Funds to achieve investment exposure consistent with its investment objective. Short selling is accomplished by borrowing a security and then selling it. If a Fund buys back the security at a price lower than the price at which it sold the security plus accrued interest, the Fund will earn a positive return (profit) on the difference. If the current market price is greater when the time comes to buy back the security plus accrued interest, the Fund will incur a negative return (loss) on the transaction. The Funds’ use of short sales may involve additional transaction costs and other expenses. As a result, the cost of maintaining a short position may exceed the return on the position, which may cause a Fund to lose money. Under certain market conditions, short sales can increase the volatility, and decrease the liquidity of certain securities or positions and may lower a Fund’s return or result in a loss.

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Volatility Risk (Bullish Funds and UltraShort Bearish Funds) — The Funds subject to volatility risk seek to achieve daily returns equal to multiple of an index. Therefore, they experience greater volatility than the indexes underlying their benchmarks and thus have the potential for greater losses.

In addition to the principal risks described above, the following risks may apply:

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Concentration Risk – Each Fund will concentrate its investments in issuers of one or more particular industries to the same extent that its Underlying Index is so concentrated and to the extent permitted by applicable regulatory guidance. There is a risk that those issuers (or industry sector) will perform poorly and negatively impact a Fund. Concentration risk results from maintaining exposure to issuers conducting business in a specific industry. The risk of concentrating investments in a limited number of issuers in a particular industry is that a Fund will be more susceptible to the risks associated with that industry than a fund that does not concentrate its investments.

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Debt Instrument Risk . Each Fund may invest in, or seek exposure to, debt instruments. Debt instruments may have varying levels of sensitivity to changes in interest rates, credit risk and other factors. Typically, the value of outstanding debt instruments fall when interest rates rise. Debt instruments with longer maturities may fluctuate more in response to interest rate changes than instruments with shorter maturities. Many types of debt instruments are subject to prepayment risk, which is the risk that the issuer of the security can repay principal prior to the maturity date. Debt instruments allowing prepayment may offer less potential for gains during a period of declining interest rates. In addition, changes in the credit quality of the issuer of a debt instrument can also affect the price of a debt instrument, as can an issuer’s default on its payment obligations. Such factors may cause the value of an investment in a Fund to decrease. Also, the securities of certain U.S. government agencies, authorities or instrumentalities

in which a Fund may invest are neither issued by nor guaranteed as to principal and interest by the U.S. Government, and may be exposed to credit risk.

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Foreign Investment Risk . Foreign stocks and financial instruments correlated to such stocks may be more volatile than their U.S. counterparts for a variety of reasons, including the effects of economic or political developments, public health and safety issues, demographic changes, market inefficiencies, or a higher risk that essential investment information is incomplete, unavailable or inaccurate. Additionally, certain countries may lack uniform accounting and disclosure standards, or have standards that differ from U.S. standards. Securities or financial instruments purchased by a Fund may be impacted by fluctuations in foreign currencies. The value of such securities or instruments could change significantly as the currencies strengthen or weaken relative to the U.S. dollar. ProShare Advisors does not engage in activities designed to hedge against foreign currency fluctuations.

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Interest Rate Risk . Interest rate risk is the risk that debt securities or certain financial instruments may fluctuate in value due to changes in interest rates and other factors. Commonly, investments subject to interest rate risk will decrease in value when interest rates rise and increase in value when interest rates decline. The value of securities with longer maturities may fluctuate more in response to interest rate changes than securities with shorter maturities.

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Portfolio Turnover Risk . The portfolio turnover rate for each Fund is expected to be greater than 100%. Active trading of Fund shares may cause more frequent creation or redemption activities and could increase the rate of portfolio turnover. A high level of portfolio turnover may negatively impact performance by increasing transaction expenses and generating taxable short-term capital gains. In addition, large movements of assets into and out of the Funds may negatively impact a Fund’s ability to achieve its investment objective or maintain a consistent level of operating expenses. In certain circumstances, a Fund’s expense ratio may vary from current estimates disclosed in this Prospectus.

Special Risks of Exchange-Traded Funds

Not Individually Redeemable. Shares may be redeemed by a Fund at NAV only in large blocks known as Creation Units. You may incur brokerage costs purchasing enough Shares to constitute a Creation Unit.

Trading Issues. Trading in Shares on the Exchange may be halted due to market conditions or for reasons that, in the view of the Exchange, make trading in Shares inadvisable. In addition, trading in Shares on the Exchange may be halted due to extraordinary market volatility or other reasons. There can be no assurance that Shares will continue to meet the listing requirements of the Exchange, as they may be amended from time to time.

Precautionary Notes

A Precautionary Note to Retail Investors. The Depository Trust Company (“DTC”), a limited trust company and securities depositary that serves as a national clearinghouse for the settlement of trades for its participating banks and broker-dealers, or its nominee will be the registered owner of all outstanding Shares of each Fund of ProShares Trust. Your ownership of Shares will be shown on the records of DTC and the DTC Participant broker through whom you hold the Shares. PROSHARES TRUST WILL NOT HAVE ANY RECORD OF YOUR OWNERSHIP. Your account information will be maintained by your broker, who will provide you with account statements, confirmations of your purchases and sales of Shares, and tax information. Your broker also will be responsible for ensuring that you receive shareholder reports and other communications from the Fund whose Shares you own. You will receive other services (e.g., dividend reinvestment and average cost information) only if your broker offers these services.

A Precautionary Note to Purchasers of Creation Units. You should be aware of certain legal risks unique to investors purchasing Creation Units directly from the issuing Fund. Because new Shares may be issued on an ongoing basis, a “distribution” of Shares could be occurring at any time. As a dealer, certain activities on your part could, depending on the circumstances, result in your being deemed a participant in the distribution, in a manner that

could render you a statutory underwriter and subject you to the prospectus delivery and liability provisions of the Securities Act of 1933, as amended (“Securities Act”). For example, you could be deemed a statutory underwriter if you purchase Creation Units from an issuing Fund, break them down into the constituent Shares, and sell those Shares directly to customers, or if you choose to couple the creation of a supply of new Shares with an active selling effort involving solicitation of secondary market demand for Shares. Whether a person is an underwriter depends upon all of the facts and circumstances pertaining to that person’s activities, and the examples mentioned here should not be considered a complete description of all the activities that could cause you to be deemed an underwriter. Dealers who are not “underwriters,” but are participating in a distribution (as opposed to engaging in ordinary secondary market transactions), and thus dealing with Shares as part of an “unsold allotment” within the meaning of Section 4(3)(C) of the Securities Act, will be unable to take advantage of the prospectus delivery exemption provided by Section 4(3) of the Securities Act.

A Precautionary Note to Investment Companies. For purposes of the Investment Company Act of 1940, each Fund is a registered investment company, and the acquisition of Shares by other investment companies is subject to the restrictions of Section 12(d)(1) thereof.

A Precautionary Note Regarding Unusual Circumstances. ProShares Trust can postpone payment of redemption proceeds for any period during which (1) the New York Stock Exchange (the “NYSE”) is closed other than customary weekend and holiday closings, (2) trading on the NYSE is restricted, as determined by the U.S. Securities and Exchange Commission (the “SEC”), (3) any emergency circumstances exist, as determined by the SEC, or (4) the SEC by order permits for the protection of shareholders of a Fund.

UNDERLYING INDEXES

[The Funds have entered into licensing agreements for the use of the indices underlying their benchmarks.] A description of the indices currently underlying the Funds’ benchmarks follows:

Ultra500 Fund, Short500 Fund and UltraShort 500 Fund: The S&P 500 Index is a measure of large-cap U.S. stock market performance. It is a float-adjusted market capitalization weighted index of 500 U.S. operating companies and REITs selected by the S&P U.S. Index Committee through a non-mechanical process that factors criteria such as liquidity, price, market capitalization and financial viability. Reconstitution occurs both on a quarterly and ongoing basis. As of March 31, 2006, the S&P 500 Index included companies with capitalizations between $815.2 million and $371.6 billion. The average capitalization of the companies comprising the Index was approximately $24.2 billion.

Ultra100 Fund, Short100 Fund and UltraShort 100 Fund: The NASDAQ-100 Index includes 100 of the largest non-financial domestic and international issues listed on the NASDAQ Stock Market. To be eligible for inclusion companies cannot be in bankruptcy proceedings and must meet certain additional criteria including minimum trading volume and “seasoning” requirements. The Index is calculated under a modified capitalization-weighted methodology. Reconstitution and rebalancing occurs on an annual, quarterly, and ongoing basis. As of March 31, 2006, the NASDAQ-100 Index included companies with capitalizations between $3.7 billion and $281.2 billion. The average capitalization of the companies comprising the Index was approximately $21.2 billion.

Ultra30 Fund, Short30 Fund and UltraShort 30 Fund: The Dow Jones Industrial Average (DJIA) is a price-weighted index maintained by editors of The Wall Street Journal. The Index includes 30 large-cap, “blue-chip” U.S.

stocks, excluding utility and transportation companies. Components are selected through a discretionary process with no pre-determined criteria except that components should be established U.S. companies that are leaders in their industries, have an excellent reputation, demonstrate sustained growth, are of interest to a large number of investors and accurately represent the sectors covered by the average. The DJIA is not limited to traditionally defined industrial stocks, instead, the index serves as a measure of the entire U.S. market, covering such diverse industries as financial services, technology, retail, entertainment and consumer goods. Composition changes are rare, and generally occur only after corporate acquisitions or other dramatic shifts in a component’s core business. When such an event necessitates that one component be replaced, the entire index is reviewed. As of March 31, 2006, the DJIA included companies with capitalizations between $12.0 billion and $371.6 billion. The average capitalization of the companies comprising the Index was approximately $125.7 billion.

UltraMidCap400 Fund, ShortMidCap400 Fund and UltraShort MidCap400 Fund: The S&P MidCap 400 Index is a measure of mid-size company U.S. stock market performance. It is a float-adjusted market capitalization weighted index of 400 U.S. operating companies and REITs. Securities are selected for inclusion in the index by the S&P U.S. Index Committee through a non-mechanical process that factors criteria such as liquidity, price, market capitalization and financial viability. Reconstitution occurs both on a quarterly and ongoing basis. As of March 31, 2006, the S&P MidCap 400 Index included companies with capitalizations between $438.3 million and $16.1 billion. The average capitalization of the companies comprising the Index was approximately $3.1 billion.

“Standard & Poor’s,” “S&P,” “S&P 500,” “Standard & Poor’s 500,” “500”, and “S&P MidCap 400,” “Standard & Poor’s MidCap 400,” are trademarks of The McGraw-Hill Companies, Inc. and have been licensed for use by ProShares. “NASDAQ-100 Index” is a trademark of the NASDAQ Stock Markets, Inc. (“NASDAQ”). ProShares are not sponsored, endorsed, sold or promoted by Standard & Poor’s, NASDAQ and neither Standard & Poor’s or NASDAQ makes any representation regarding the advisability of investing in ProShares.

“Dow Jones,” “Dow Jones Industrial Average,” and “DJIA,” are service marks of Dow Jones & Company, Inc.

Dow Jones does not:

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Sponsor, endorse, sell or promote Ultra30 Fund, Short30 Fund or UltraShort 30 Fund.

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Recommend that any person invest in the ProShares or any other securities.

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Have any responsibility or liability for or make any decisions about timing, amount or pricing of the ProShares.

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Have any responsibility or liability for the administration, management of marketing of the ProShares.

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Consider the needs of the ProShares or the owners of the ProShares in determining, composing or calculating the Dow Jones Industrial Average or have any obligation to do so.

Dow Jones will not have any liability in connection with the ProShares. Specifically, Dow Jones does not make any warranty, express or implied, and Dow Jones disclaims any warranty about:

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The results to be obtained by the ProShares, the owner of the ProShares or any other person in connection with the use of the DJIA and the data included in the DJIA;

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The accuracy or completeness of the DJIA and its data; or

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The merchantability and the fitness for a particular purpose or use of the DJIA and its data.

Dow Jones will have no liability for any errors, omission or interruptions in the DJIA or its data.

Under no circumstances will Dow Jones be liable for any lost profits or indirect, punitive, special or consequential damages or losses, even if Dow Jones knows that they might occur.

[The licensing agreement between ProShares and Dow Jones is solely for their benefit and not for the benefit of the investors in the ProShares or any other third parties.]

(Please see the SAI, which sets forth certain additional disclaimers and limitations of liabilities).

CREATION AND REDEMPTION OF CREATION UNITS

Each Fund issues and redeems Shares only in bundles of a specified number of Shares. These bundles are known as “Creation Units.” To purchase or redeem a Creation Unit, you must be an Authorized Participant or you must do so through a broker that is an Authorized Participant. An Authorized Participant is a participant in the Depository Trust Company (“DTC”), a limited trust company and securities depository that serves as a national clearinghouse for the settlement of trades for its participating banks and broker-dealers, that has executed a Participant Agreement with the Funds’ distributor (“Distributor”). Because Creation Units likely will cost millions of dollars, it is expected that only institutional investors will purchase and redeem Shares directly with an issuing Fund.

Retail investors may acquire Shares on the secondary market (i.e., not from the issuing Fund) through a broker. Shares of each Fund are listed on the Exchange and are publicly traded. For information about acquiring Shares through a secondary market purchase, please contact your broker. If you want to sell Shares of a Fund on the secondary market, you must do so through your broker.

When you buy or sell Shares on the secondary market, your broker may charge you a commission or other transaction charges and you may pay some or all of the spread between the bid and the offered price for each purchase or sale transaction. Unless imposed by your broker, there is no minimum dollar amount you must invest and no minimum number of Shares you must buy in the secondary market. In addition, because secondary market transactions occur at market prices, you may pay more than NAV when you buy Shares, and receive less than NAV when you sell those Shares.

The Funds impose no restrictions on the frequency of purchases and redemptions directly with the Funds. In establishing this policy, the Board of Trustees noted that the Funds are expected to be attractive to arbitrageurs (where trading activity is critical to ensuring that shares trade at or close to net asset value per share) as well as active institutional and retail investors interested in buying and selling equity market basket index securities on a short-term basis. In addition, the Board considered that, unlike traditional mutual funds, each Fund issues and redeems its shares at net asset value per share in Creation Units plus applicable transaction fees and each Fund’s shares may be purchased and sold on the Exchange at prevailing market prices. Given this structure, the Board determined that the risks of frequent trading were less than in the case of a traditional mutual fund. Nevertheless, to the extent that purchases and redemptions directly with the Funds are effected in cash rather than through a contribution or redemption of portfolio securities, frequent purchases and redemptions could increase the rate of portfolio turnover. A high ratio of portfolio turnover may negatively impact a Fund’s performance by increasing transaction costs. In addition, large movements of cash into or out of the Funds may negatively impact a Fund’s ability to achieve its investment objective or maintain a consistent level of operating expenses.

PURCHASING SHARES DIRECTLY FROM A FUND

You can purchase Shares directly from a Fund only if you meet the following criteria and comply with purchase transaction procedures specified by the Trust.

Eligible Investors. To purchase Shares directly from a Fund, you must be an Authorized Participant or you must purchase through a broker that is an Authorized Participant. Investors should contact the Distributor for the names of Authorized Participants.

Creation Units. You must purchase Shares in large blocks, known as “Creation Units.” The number of Shares that comprise a Creation Unit are as follows:


Fund Purchase		Number of Shares in a Creation Unit
Ultra500 Fund		75,000
Ultra100 Fund		75,000
Ultra30 Fund		75,000
UltraMidCap400 Fund		75,000
Short500 Fund		75,000
Short100 Fund		75,000
Short30 Fund		75,000
ShortMidCap400 Fund		75,000
UltraShort 500 Fund		75,000
UltraShort 100 Fund		75,000
UltraShort 30 Fund		75,000
UltraShort MidCap400 Fund		75,000

For any particular Fund, the number of Shares in a Creation Unit will not change, except in the event of a share split, reverse split or similar revaluation. The Funds will not issue fractional Creation Units.

PROCEDURES APPLICABLE TO PURCHASE OF BULLISH FUNDS

In-kind Deposits. To purchase Shares directly from a Bullish Fund, you must deposit with the Fund a basket of securities and cash. Each business day, prior to the opening of trading on the Exchange, an agent of the Fund (“Index Receipt Agent”) will make available through the NSCC a list of the names and number of shares of each security to be included in that day’s creation basket (“Deposit Securities”). The identity and number of shares of the Deposit Securities required for a Creation Unit changes as rebalancing adjustments and corporate action events are reflected from time to time by ProShare Advisors with a view to the investment objective of the Bullish Fund. The composition of the Deposit Securities may also change in response to adjustments to the weighting or composition of the securities constituting the relevant securities index. The Fund reserves the right to permit or require the substitution of an amount of cash – i.e., a “cash in lieu” amount – to be added to the Balancing Amount (defined below) to replace any Deposit Security that may not be available in sufficient quantity for delivery or that may not be eligible for transfer through the Clearing Process (discussed below), or that may not be eligible for trading by an Authorized Participant or the investor for which it is acting.

Balancing Amount. In addition to the in-kind deposit of securities, Authorized Participants will either pay to, or receive from a Bullish Fund an amount of cash referred to as the “Balancing Amount.” The Balancing Amount is the amount equal to the differential, if any, between the market value of the Deposit Securities and the NAV of a Creation Unit. The Fund will publish, on a daily basis, information about the previous day’s Balancing Amount. The Balancing Amount may, at times, represent a significant portion of the aggregate purchase price (or in the case of redemptions, the redemption proceeds). This is because the mark-to-market value of the Financial Instruments held by the Funds will be included in the Balancing Amount (not in the Deposit Basket or Redemption Basket). The Balancing Amount may fluctuate significantly due to the leveraged nature of the Bullish Funds. You also must pay a Transaction Fee, described below, in cash. For custom orders, “cash in lieu” may be added to the Balancing Amount to replace any Deposit Security that may not be available in sufficient quantity for delivery or that may not be eligible for transfer through the Clearing Process (discussed below), or that may not be eligible for trading by an Authorized Participant or the investor for which it is acting. The Balancing Amount must be paid to the Trust on the third Business Day following the Transmittal Date.

Placement of Purchase Orders. All purchase orders for Shares must be placed by or through an Authorized Participant. Purchase orders will be processed either through a manual clearing process run at the DTC (“Manual Clearing Process”) or through an enhanced clearing process (“Enhanced Clearing Process”) that is available only to those DTC participants that also are participants in the Continuous Net Settlement System of the National Securities Clearing Corporation (“NSCC”). Authorized Participants that do not use the Enhanced Clearing Process will be charged a higher Transaction Fee (discussed below). A purchase order must be received by the Distributor by 4:00 p.m. New York time, if transmitted by mail or by 3:00 p.m. New York time if transmitted by telephone, facsimile or other electronic means permitted under the Participant Agreement, in order to receive that day’s closing NAV per Share. A custom order may be placed for one or more whole Creation Units of Shares of a Fund and must be received by the Distributor in proper form no later than 3:00 p.m. New York time in order to receive that day’s NAV per Share. All other procedures set forth in the Participant Agreement must be followed in order for you to receive the NAV determined on that day.

Shares may be issued in advance of receipt of Deposit Securities subject to various conditions including a requirement to maintain on deposit with the Trust cash in an amount up to 115% of the market value of the missing Deposit Securities. Any such transaction effected with the Trust must be effected using the Manual Clearing Process consistent with the terms of the Authorized Participant Agreement. See the “Summary of Transaction Fees and Charges” below for more information.

PROCEDURES APPLICABLE TO PURCHASE OF BEARISH FUNDS

The Bearish Funds only accept cash to purchase Creation Units. The purchaser must transfer cash in an amount equal to the value of Creation Unit(s) purchased and the applicable Transaction Fee. All purchase orders will be processed through the Manual Clearing Process described above. The Trust will deliver shares of the Bearish Funds upon payment of cash to the Trust on the third Business Day following the Transmittal Date consistent with the terms of the Authorized Participant Agreement.

REDEEMING SHARES DIRECTLY FROM A FUND

The redemption process is essentially the reverse of the purchase process described above. To redeem Shares, you must be an Authorized Participant or you must redeem through a broker that is an Authorized Participant, and you must tender Shares in Creation Units.

REDEMPTION PROCEDURES APPLICABLE TO BULLISH FUNDS

Redemption Proceeds. Redemption proceeds will be paid in-kind with a basket of securities. In most cases, the basket of securities you receive will be the same as that required of investors purchasing Creation Units on the same day. There will be times, however, when the creation and redemption baskets differ. The composition of the redemption basket will be available through the NSCC. Each Fund reserves the right to honor a redemption request with a non-conforming redemption basket.

Balancing Amount. If the NAV of a Creation Unit is higher than the value of the redemption securities, you will receive from the issuing Fund a Balancing Amount in cash. If the NAV of a Creation Unit is lower than the value of the redemption securities, you will be required to pay to the issuing Fund a Balancing Amount in cash. If you are receiving a Balancing Amount, the amount due will be reduced by the amount of the applicable Transaction Fee.

Placement of Redemption Orders. As with purchases, redemptions may be processed either through the Manual Clearing Process or the Enhanced Clearing Process. A redemption order must be received by the Distributor prior to 4:00 p.m. New York time if transmitted by mail or by 3:00 p.m. New York time if transmitted by telephone, facsimile or other electronic means permitted under the Participant Agreement in order to receive that day’s closing NAV per Share. All other procedures set forth in the Participant Agreement must be followed in order for you to receive the NAV determined on that day.

An investor may request a redemption in cash which the Bullish Fund may, in its sole discretion, permit. Investors that elect to receive cash in lieu of one or more securities in the redemption basket are subject to an additional charge. Redemptions of Creation Units for cash (when available) and/or outside of the continuous Net Settlement System of the National Securities Clearing Corp. (“NSCC”) also require the payment of an additional charge. See the “Summary of Transaction Fees and Charges” below for more information.

REDEMPTION PROCEDURES APPLICABLE TO BEARISH FUNDS

Redemption Proceeds. Redemption proceeds will be paid in cash.

Placement of Redemption Orders. As with purchases, redemptions may be processed either through the Manual Clearing Process or the Enhanced Clearing Process. A redemption order must be received by the Distributor prior to 4:00 p.m. New York time if transmitted by mail or by 3:00 p.m. New York time if transmitted by telephone, facsimile or other electronic means permitted under the Participant Agreement in order to receive that day’s Closing NAV per Share. All other procedures set forth in the Participation Agreement must be followed in order for you to receive the NAV determined on that day.

TRANSACTION FEES ON CREATION AND REDEMPTION TRANSACTIONS

Each Fund will impose Transaction Fees to offset transfer and other transaction costs associated with the issuance and redemption of Creation Units. There is a fixed and a variable component to the total Transaction Fee on transactions in Creation Units. A fixed Transaction Fee is applicable to each creation and redemption transaction, regardless of the number of Creation Units transacted. A variable Transaction Fee based upon the value of each Creation Unit is applicable to each creation and redemption transaction. Purchasers and redeemers of Creation Units of Bullish Funds effected through the Manual Clearing Process are required to pay an additional charge to compensate for brokerage and other expenses. In addition, purchasers of Creation Units are responsible for payment of the costs of transferring the Deposit Securities to the Trust. Redeemers of Creation Units are responsible for the costs of transferring securities from the Trust to their accounts or on their order. Investors who use the services of a broker or other such intermediary may pay fees for such services. The following table summarizes the components of the Transaction Fees.


Fund	Fixed Transaction Fee for In-kind and Cash Purchases and Redemptions		Variable Transaction Fee for In-kind and Cash Purchases and Redemptions*		Maximum Additional Charge for Cash Purchases and Redemptions**		Number of Shares Per Creation Unit
Ultra500 Fund	[	]	[	]	[	]	75,000
Ultra100 Fund	[	]	[	]	[	]	75,000
Ultra30 Fund	[	]	[	]	[	]	75,000
UltraMidCap400 Fund	[	]	[	]	[	]	75,000
Short 500 Fund	[	]	[	]	—		75,000
Short 100 Fund	[	]	[	]	—		75,000
Short 30 Fund	[	]	[	]	—		75,000
Short MidCap400 Fund	[	]	[	]	—		75,000
UltraShort 500 Fund	[	]	[	]	—		75,000
UltraShort 100 Fund	[	]	[	]	—		75,000
UltraShort 30 Fund	[	]	[	]	—		75,000
UltraShort MidCap400 Fund	[	]	[	]	—		75,000

*	As a percentage of the amount invested.

**	The maximum additional charge is equal to [ ] times the fixed transaction charge, plus the following amounts, expressed as a percentage of the amount invested.

DISTRIBUTIONS

As a shareholder, you are entitled to your share of the Fund’s income from interest and dividends, and gains from the sale of investments. You may receive such earnings as either an income dividend or a capital gains distribution. Income dividends primarily come from the dividends that the Fund earns from its holdings and the interest it receives from its money market and bond investments. Capital gains may be realized when the fund sells securities. Capital gains maybe either short-term or long-term, depending on whether the fund held the securities for one year or less, or more than one year.

Each Fund intends to declare and distribute to its shareholders [annually] virtually all of its net income (interest and dividends, less expenses), if any, as well as any net capital gains, if any, realized from the sale of its holdings. Dividends may be declared and paid more frequently to comply with the distribution requirements of the Internal Revenue Code or for other reasons.

DIVIDEND REINVESTMENT SERVICE

Brokers may make available to their customers who own Shares the DTC book-entry dividend reinvestment service. If this service is available and used, dividend distributions of both income and capital gains will automatically be reinvested in additional whole Shares of the same Fund. Without this service, investors would have to take their distributions in cash. To determine whether the dividend reinvestment service is available and whether there is a commission or other charge for using this service, please consult your broker.

DETERMINATION OF NAV

NAV per Share of each Fund is computed by dividing the value of the net assets of such Fund (i.e., the value of its total assets less total liabilities) by its total number of Shares outstanding. Expenses and fees are accrued daily and taken into account for purposes of determining NAV. The NAV of each Fund is calculated by the Fund Accounting Agent and determined each business day at the close of regular trading of the NYSE (ordinarily 4:00 p.m. New York time).

Securities and other assets are generally valued at their market value using information provided by a pricing service or market quotations. Certain short-term securities are valued on the basis of amortized cost. When a market price is not readily available, securities and other assets are valued at fair value in good faith under procedures established by, and under the general supervision and responsibility of the Funds’ Board of Trustees. The use of a fair valuation method may be appropriate if, for example: (i) market quotations do not accurately reflect fair value of an

investment; (ii) an investment’s value has been materially affected by events occurring after the close of the exchange or market on which the investment is principally traded (for example, a foreign exchange or market); (iii) a trading halt closes an exchange or market early; or (iv) other events result in an exchange or market delaying its normal close. This procedure incurs the unavoidable risk that the valuation may be higher or lower than the securities might actually command if the Funds sold them. See the SAI for more details.

The NYSE is open every week, Monday through Friday, except when the following holidays are celebrated in 2004: New Year’s Day, Martin Luther King, Jr. Day (the third Monday in January), Presidents’ Day (the third Monday in February), Good Friday, Memorial Day (the last Monday in May), July 4th, Labor Day (the first Monday in September), Thanksgiving Day (the fourth Thursday in November) and Christmas Day. The NYSE may close early on the business day before each of these holidays and on the day after Thanksgiving Day. Exchange holiday schedules are subject to change without notice. If the exchange or market on which a Fund’s investments are primarily traded closes early, the net asset value may be calculated prior to its normal calculation time. Creation/redemption transaction order time cutoffs would also be accelerated.

BASIC TAX POINTS

Taxable investors should be aware of the following basic tax points:

•

Distributions are taxable to you for federal income tax purposes whether or not you reinvest these amounts in additional Shares.

•

Distributions declared in December—if paid to you by the end of January—are taxable for federal income tax purposes as if received in December.

•

Any dividends and short-term capital gain distributions that you receive are taxable to you as ordinary income for federal income tax purposes. Under recently enacted legislation, ordinary income dividends you receive may be taxed at the same rates as long term capital gains. However, income received in the form of ordinary income dividends will not be considered long-term capital gains for other Federal income tax purposes, including the calculation of net capital losses. Short-term capital gain distributions will continue to be taken at ordinary income rates.

•

Any distributions of net long-term capital gains are taxable to you as long-term capital gains for federal income tax purposes, no matter how long you have owned your Shares.

•

Capital gains distributions may vary considerably from year to year as a result of the funds’ normal investment activities and cash flows.

•

A sale of Shares is a taxable event. This means that you may have a capital gain to report as income, or a capital loss to report as a deduction, when you complete your federal income tax return.

•

Dividend and capital gains distributions that you receive, as well as your gains or losses from any sale or exchange of Shares, may be subject to state and local income taxes.

•

If you are not a citizen or a permanent resident of the United States, or if you are a foreign entity, any dividends and short term capital gains that you receive will generally be subject to a 30% U.S. withholding tax, unless a lower treaty rate applies.

•

Dividends and interest received by the Fund may give rise to withholding and other taxes imposed by foreign countries. Tax conventions between certain countries and the United States may reduce or eliminate such taxes.

•

By law, the Fund must withhold a percentage of your distributions and proceeds if you have not provided a taxpayer identification number or social security number. The backup withholding rate is currently 28%. Under current law, the backup withholding rate will increase to 31% for the taxable year 2011 and thereafter.

In addition, taxable investors who purchase or redeem Creation Units should be aware of the following additional basic tax points:

•

A person who exchanges equity securities for Creation Units generally will recognize a gain or loss equal to the difference between the market value of the Creation Units at the time and the exchanger’s aggregate basis in the securities surrendered and the Balancing Amount paid.

•

A person who exchanges Creation Units for equity securities generally will recognize a gain or loss equal to the difference between the exchanger’s basis in the Creation Units and the aggregate market value of the securities received and any cash received. However, the Internal Revenue Service may assert that a loss realized upon an exchange of securities for Creation Units cannot be deducted currently under the rules governing “wash sales” or on the basis that there has been no significant change in economic position.

Note: This prospectus provides general tax information only. If you are investing through a tax-deferred retirement account, such as an IRA, special tax rules apply. Please consult your tax advisor for detailed information about a fund’s tax consequences for you.

MANAGEMENT OF PROSHARES TRUST

Board of Trustees and Officers. The Board of Trustees of ProShares Trust is responsible for the general supervision of all of the Funds. The officers of ProShares Trust are responsible for the day-to-day operations of the Funds.

Investment Advisor. ProShare Advisors LLC, located at 7501 Wisconsin Avenue, Suite 1000, Bethesda, Maryland 20814, serves as the investment advisor to all of the Funds and provides investment advice and management services to the Funds. ProShare Advisors oversees the investment and reinvestment of the assets in each Fund. For its services, ProShare Advisors is entitled to receive fees equal to [ ]% of the average daily net assets of each Fund. A discussion regarding the basis for the Board of Trustees approving the investment advisory agreement of the Trust will be available in the Trust’s annual report to shareholders.

ProShare Advisors is owned by Michael L. Sapir, Louis M. Mayberg and William E. Seale.

Michael L. Sapir, Chairman and Chief Executive Officer of ProShare Advisors LLC since inception and ProFund Advisors LLC since April 1997, formerly served as senior vice president of Padco Advisors, Inc., which advised Rydex ^® Funds. In addition, Mr. Sapir practiced law, primarily representing financial institutions for over 13 years, most recently as a partner in a Washington, D.C. based law firm. He holds degrees from Georgetown University Law Center (J.D.) and University of Miami (M.B.A. and B.A.)

Louis M. Mayberg, President of ProShare Advisors LLC since inception and ProFund Advisors LLC since April 1997, co-founded National Capital Companies, L.L.C., an investment bank specializing in financial service companies mergers and acquisitions and equity underwritings in 1986, and managed its financial services hedge fund. He holds a Bachelor of Business Administration degree with a major in Finance from George Washington University.

William E. Seale, Ph.D., Chief Investment Officer since 2003 and formerly Director of Portfolio for ProFund Advisors LLC since 1997, has more than 30 years of experience in the financial markets. His background includes a five-year presidential appointment as a commissioner of the U.S. Commodity Futures Trading Commission and Chairman of the Finance Department at George Washington University. He earned his degrees at University of Kentucky.

Portfolio Management. Each Fund is managed by an investment team overseen by Agustin J. Fleites.

Agustin J. Fleites , Chief Investment Officer and Head of Exchange Traded Funds for ProShare Advisors LLC since inception and ProFund Advisors LLC since August, 2005. Mr. Fleites is principally responsible for development and oversight of Portfolio strategy for each Advisor. Mr. Fleites formerly served as Senior Principal of State Street Global Advisors (“SSgA”), President of SSgA Funds Management, Inc. and Managing Director of the Advisor Strategies unit from 2002-2005. He served as Chairman of the Board and President of SSgA’s streetTRACKS family of exchange traded funds, Chief Executive Officer and a Director of the SSgA Funds, and a Director of the Select Sector SPDR Trust from 1999-2005. He holds a Bachelor’s degree in Finance and Multinational management from the Wharton School of the University of Pennsylvania and a Master of Business Administration degree in Finance from Babson College. He is also a Chartered Financial Analyst.

The following table summarizes the service and experience of the members of the investment team with the most significant joint responsibility for the day-to-day management of the Funds:


Name and Title	Length of Service to Team	Business Experience During Last 5 Years

Taeyong Lee, Senior Portfolio Manager	Since Inception	ProFund Advisors – Senior Portfolio Manager since November 2004; ETF Development Leader since 2002; Portfolio Group Team Member since March 1999.

Olessia Burner, Portfolio Manager	Since Inception	ProFund Advisors – Portfolio Manager since November 2004; Portfolio Analyst, November 1997-November 2004; Portfolio Group Team Member since November 1997.

Steve Schoffstall, ETF Portfolio Operations Specialist	Since Inception	ProFund Advisors – Portfolio Group Team Member and ETF Portfolio Operations Specialist since February 2005; Accountemps – Temporary, January 2005; Federal Express – Packaging Technician, December 2004; Not employed – September 2004 through November 2004; Pennsylvania State University – Graduate Student, August 2003 to August 2004; Student, August 2000 to August 2003.

The SAI provides additional information about the Portfolio Managers’ compensation, accounts managed by the Portfolio Managers and their ownership of ProShares.

PORTFOLIO HOLDINGS INFORMATION

A description of the Trust’s policies and procedures with respect to the disclosure of the Funds’ portfolio holdings is available in the Funds’ SAI.

OTHER SERVICE PROVIDERS

SEI Investments Distribution Co., located at 1 Freedom Valley Drive, Oaks, PA 19456, serves as the Funds’ distributor. JP Morgan Chase Bank, N.A., located at 4 MetroTech Center, Brooklyn, NY 11245, serves as the Funds’ administrator, custodian and index receipt agent.

ProShare Advisors also performs certain administrative services for the Funds under a Management Services Agreement. ProShare Advisors is entitled to receive annual fees equal to [ ]% of the average daily net assets of each Fund for such services.

FOR MORE INFORMATION

If you’d like more information about ProShares Trust or any of its Funds, the following documents are available free upon request:

ANNUAL/SEMIANNUAL REPORTS TO SHAREHOLDERS

Additional information about the issuing funds’ investments is available in the funds’ annual and semiannual reports to shareholders. In the Fund’s Annual Report, you will find a discussion of the market conditions and investment strategies that significantly affected the Fund’s performance during its last fiscal year.

STATEMENT OF ADDITIONAL INFORMATION

The SAI for the issuing fund provides additional information about ProShares Trust, the Funds and their Shares. The current annual and semiannual reports and the SAI are incorporated by reference into (and are thus legally a part of) this prospectus.

To receive a free copy of the latest annual or semiannual report or the SAI, or to request additional information about ProShares Trust, the Funds and Shares or to make shareholder inquiries, please contact us at:

MAIL:

TELEPHONE:

WORLD WIDE WEB:

PROSHARES TRUST

7501 Wisconsin Avenue

Suite 1000

Bethesda, Maryland 20814

[toll-free telephone number]

www.proshares.com

INFORMATION PROVIDED BY THE SECURITIES AND EXCHANGE COMMISSION (SEC)

You can review and copy information about the issuing funds (including the SAI) at the SEC’s Public Reference Room in Washington, DC. To find out more about this public service, call the SEC at 1-202-942-8090. Reports and other Information about the funds are also available on the SEC’s website (www.sec.gov), or you can receive copies of this information, for a fee, by electronic request at the following E-mail address: publicinfo@sec.gov, or by writing the Public Reference Section, Securities and Exchange Commission, Washington, DC 20549-0102.

ProShares Investment Company Act file

Number: 811-21114

SUBJECT TO COMPLETION. PRELIMINARY STATEMENT OF ADDITIONAL INFORMATION DATED [ ], 2006. The information in this statement of additional information is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This statement of additional information is not an offer to sell these securities and is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.

PROSHARES TRUST

STATEMENT OF ADDITIONAL INFORMATION

7501 WISCONSIN AVENUE, SUITE 1000

BETHESDA, MARYLAND 20814

PHONE: (240) 497-6400

This Statement of Additional Information describes ProShares Trust, a Delaware business trust (“Trust”) comprised of the following portfolios (each a “Fund”): Ultra500 Fund, Ultra100 Fund, Ultra30 Fund, UltraMidCap400 Fund, Short 500 Fund, Short 100 Fund, Short 30 Fund, Short MidCap400 Fund, UltraShort 500 Fund, UltraShort 100 Fund, UltraShort 30 Fund and UltraShort MidCap400 Fund.

This Statement of Additional Information (“SAI”) is not a prospectus. It should be read in conjunction with the Prospectus of ProShares Trust, dated [ ], 2006 which incorporates this Statement of Additional Information by reference. Capitalized terms used herein that are not defined have the same meaning as in the Prospectus, unless otherwise noted. A copy of the Prospectus is available, without charge, upon request to the address above, by telephone at the numbers above, or on the Trust’s website at www.proshares.com. An annual report for the Funds will be available once the Funds have completed their first annual period.

The date of this Statement of Additional Information is dated [ ], 2006.


		PAGE

PROSHARES TRUST		3

INVESTMENT POLICIES, TECHNIQUES AND RELATED RISKS		4

SPECIAL CONSIDERATIONS		16

INVESTMENT RESTRICTIONS		16

PORTFOLIO TRANSACTIONS AND BROKERAGE		17

MANAGEMENT OF THE PROSHARES TRUST		19

COSTS AND EXPENSES		29

ADDITIONAL INFORMATION CONCERNING SHARES		29

CAPITALIZATION

PURCHASE AND REDEMPTION OF SHARES		33

TAXATION		39

PERFORMANCE INFORMATION

OTHER INFORMATION		44

FINANCIAL STATEMENTS		46

PROSHARES TRUST

The Trust is a Delaware business trust and registered investment company comprised of the following Funds:

Bullish Funds

Ultra500 Fund

Ultra100 Fund

Ultra30 Fund

UltraMidCap400 Fund

Bearish Funds

Short 500 Fund

Short 100 Fund

Short 30 Fund

Short MidCap400 Fund

UltraShort500 Fund

UltraShort100 Fund

UltraShort30 Fund

UltraShort MidCap400 Fund

Other Funds may be added in the future. Each of the Funds is registered as a non-diversified managed investment company.

The shares of each Fund (“Shares”) will be listed on a national securities exchange (“Exchange”). The Shares will trade on the Exchange at market prices that may differ to some degree from the Shares’ net asset values. Each Fund issues and redeems Shares on a continuous basis at net asset value in large, specified numbers of Shares called “Creation Units.” Creation Units of the Bullish Funds are issued and redeemed principally in-kind for securities included in the relevant underlying index. Creation Units of the Bearish Funds are purchased and redeemed in cash. Except when aggregated in Creation Units, Shares are not redeemable securities of the Funds. Retail investors, therefore, generally will not be able to purchase the Shares directly. Rather, most retail investors will purchase Shares in the secondary market with the assistance of a broker.

Reference is made to the Prospectus for a discussion of the investment objectives and policies of the Funds. The discussion below supplements and should be read in conjunction with the Prospectus. Portfolio management is provided to the Funds by ProShare Advisors LLC (“ProShare Advisors”), a Maryland limited liability company with offices at 7501 Wisconsin Avenue, Suite 1000, Bethesda, Maryland.

The investment restrictions of the Funds specifically identified as fundamental policies may not be changed without the affirmative vote of at least a majority of the outstanding voting securities of that Fund, as defined in the Investment Company Act of 1940, as amended (“Investment Company Act”). The investment objectives and all other investment policies of the Funds not specified as fundamental (including the benchmarks of the Funds) may be changed by the Trustees of the Funds without the approval of shareholders.

The investment strategies of the Funds discussed below, and as discussed in the Prospectus, may be used by a Fund if, in the opinion of ProShare Advisors, these strategies will be advantageous to the Fund. A Fund is free to reduce or eliminate its activity in any of these areas without changing the Fund's fundamental policies. There is no assurance that any of these strategies or any other strategies and methods of investment available to a Fund will result in the achievement of the Fund's objectives. Also, there can be no assurance that any Fund will grow to, or maintain, an economically viable size, in which case management may determine to liquidate the Fund at a time that may not be opportune for shareholders.

The use of the term “favorable market conditions” throughout this SAI is intended to convey rising markets for the Bullish Funds and falling markets for the Bearish Funds. The use of the term “adverse market conditions” is intended to convey falling markets for the Bullish Funds and rising markets for the Bearish Funds.

INVESTMENT POLICIES, TECHNIQUES AND RELATED RISKS

A Fund may consider changing its benchmark or the index underlying its benchmark if, for example, the current index becomes unavailable; the Board of Trustees believes that the current index no longer serves the investment needs of a majority of shareholders or another index better serves their needs; or the financial or economic environment makes it difficult for its investment results to correspond sufficiently to its current benchmark or underlying index. If believed appropriate, a Fund may specify a benchmark index for itself that is “leveraged” or proprietary. Of course, there can be no assurance that a Fund will achieve its objective.

Fundamental securities analysis is not used by ProShare Advisors in seeking to correlate with the Funds’ respective benchmarks. Rather, ProShare Advisors primarily uses a mathematical approach to determine the investments a Fund makes and techniques it employs. While ProShare Advisors attempts to minimize any “tracking error,” certain factors will tend to cause a Fund’s investment results to vary from a perfect correlation to its benchmark. See “Special Considerations.”

Certain Funds have non-fundamental investment policies obligating such Fund to commit, under normal market conditions, at least 80% of its assets to investments that, in combination, have economic characteristics similar to the type of investments suggested by its name. For purposes of such an investment policy, “assets” includes the Fund’s net assets, as well as any amounts borrowed for investment purposes. In addition, for purposes of such an investment policy, “assets” includes not only the amount of a ProShares’ net assets attributable to investments directly providing investment exposure to the type of investments suggested by its name (e.g., the value of stocks, or the value of derivative instruments such as futures, options or options on futures), but also the amount of the Fund’s net assets that are segregated on the Fund’s books and records, as required by applicable regulatory guidance, or otherwise used to cover such investment exposure. The Trust’s Board of Trustees has adopted a policy to provide investors with at least 60 days’ notice prior to changes in such an investment policy.

Additional information concerning the characteristics of the investments of the Funds is set forth below.

Exchange Listing and Trading. The Shares of each Fund are expected to be approved for listing and trading on the Exchange. Shares (redeemable only when aggregated in Creation Units) trade on the Exchange at prices that may differ to some degree from their net asset value. There can be no assurance that the requirements of the Exchange necessary to maintain the listing of Shares of any Fund will continue to be met. The Exchange may, but is not required to, remove a Fund from listing if (i) following the initial 12 month period beginning upon the commencement of trading of a Fund, there are fewer than 50 beneficial owners or a Fund for 30 or more consecutive trading days; (ii) the value of the index to which such Fund is based is no longer calculated or available; or (iii) such other event shall occur or condition exists that, in the opinion of the Exchange, makes further dealings on the Exchange inadvisable. In addition, the Exchange may remove the Shares from listing and trading upon termination of the Trust.

As in the case of other stocks traded on an Exchange, the brokers’ commission on transactions will be based on negotiated commission rates at customary levels for retail customers.

In order to provide current Share pricing information, the Exchange disseminates an updated “Indicative Intra-Day Value” (“IIV”) for each Fund. The Trust is not involved in or responsible for any aspect of the calculation or dissemination of the IIVs, and makes no warranty as to the accuracy of the IIVs. IIVs are expected to be disseminated on a per Fund basis every 15 seconds during regular trading hours of the Exchange.

The Exchange will calculate and disseminate the IIV throughout the trading day for each Bullish Fund by (i) calculating the current value of all Equity Securities held by a Fund, (ii) calculating the estimated amount of the value of cash and Money Market Instruments held in the Fund’s Portfolio (“Estimated Cash”), (iii) calculating the marked-to-market gains or losses from the Fund’s total return swap exposure based on the Underlying Index percentage change, the swap costs determined by the daily imbedded weighted interest rate and the notional value of the swap contracts, if any, (iv) calculating the marked-to-market gains or losses of the futures contracts and other Financial Instruments held by the Fund, if any, (v) adding the current value of Equity Securities, the Estimated Cash, the marked-to-market gains/losses from swaps and the futures contracts and other Financial Instruments, to arrive at a value and (vii) dividing that value by the total shares outstanding to obtain current IIV.

The exchange will calculate and disseminate the IIV throughout the trading day for each Bearish Fund by (i) calculating the Estimated Cash, (ii) calculating the marked-to-market gains/losses of swaps, futures and other Financial Instruments held by the Fund in a manner described above, (iii) adding the Estimated Cash and the marked-to-market gains or losses of the Financial Instruments to arrive at a value, and (iv) dividing that value by the total shares outstanding to obtain current IIV.

Equity Securities. The market price of securities owned by a Fund may go up or down, sometimes rapidly or unpredictably. Securities may decline in value due to factors affecting securities markets generally or particular industries represented in the securities markets. The value of a security may decline due to general market conditions which are not specifically related to a particular company, such as real or perceived adverse economic conditions, changes in the general outlook for corporate earnings, changes in interest or currency rates, or adverse investor sentiment generally. They may also decline due to factors which affect a particular industry or industries, such as labor shortages or increased production costs and competitive conditions within an industry. The value of a security may also decline for a number of reasons which directly relate to the issuer, such as management performance, financial leverage and reduced demand for the issuer’s goods or services. Equity securities generally have greater price volatility than fixed income securities, and the Funds are particularly sensitive to these market risks.

Foreign Securities. Certain of the Funds may invest in securities of foreign issuers (“foreign securities”). These securities involve certain risks. These include the risk that an investment in a foreign issuer could be adversely effected as a result of a decline in value of the local currency versus the dollar. There is also the possibility of expropriation, nationalization or confiscatory taxation, taxation of income earned in foreign nations or other taxes imposed with respect to investments in foreign nations, foreign exchange controls (which may include suspension of the ability to transfer currency from a given country), default in foreign government securities, political or social instability or diplomatic developments which could affect investments in securities of issuers in foreign nations. Some countries may withhold portions of interest and dividends at the source. In addition, in many countries there is less publicly available information about issuers than is available in reports about companies in the United States. Foreign companies are not generally subject to uniform accounting, auditing and financial reporting standards, and auditing practices and requirements may not be comparable to those applicable to United States companies. Further, the Funds may encounter difficulties or be unable to pursue legal remedies and obtain judgments in foreign courts.

Futures Contracts and Related Options. The Funds may purchase or sell stock index futures contracts and options thereon as a substitute for a comparable market position in the underlying securities or to satisfy regulatory requirements. A futures contract generally obligates the seller to deliver (and the purchaser to take delivery of) the specified commodity on the expiration date of the contract. A stock index futures contract obligates the seller to deliver (and the purchaser to take) an amount of cash equal to a specific dollar amount (the contract multiplier) multiplied by the difference between the final settlement price of a specific stock index futures contract and the price at which the agreement is made. No physical delivery of the underlying stocks in the index is made.

The Funds generally choose to engage in closing or offsetting transactions before final settlement wherein a second identical futures contract is sold to offset a long position (or bought to offset a short position). In such cases the obligation is to deliver (or take delivery of) cash equal to a specific dollar amount (the contract multiplier)

multiplied by the difference between price of the offsetting transaction and the price at which the original contract was entered into. If the original position entered into is a long position (futures contract purchased) there will be a gain (loss) if the offsetting sell transaction is done at a higher (lower) price, inclusive of commissions. If the original position entered into is a short position (futures contract sold) there will be a gain (loss) if the offsetting buy transaction is done at a lower (higher) price, inclusive of commissions.

Whether a Fund realizes a gain or loss from futures activities depends generally upon movements in the underlying commodity. The extent of the Fund's loss from an unhedged short position in futures contracts is potentially unlimited. The Funds may engage in related closing transactions with respect to options on futures contracts. The Funds intend to engage in transactions in futures contracts that are traded on a U.S. exchange or board of trade or that have been approved for sale in the United States by the Commodity Futures Trading Commission (“CFTC”).

When a Fund purchases or sells a stock index futures contract, or sells an option thereon, the Fund “covers” its position. To cover its position, a Fund may enter into an offsetting position or segregate with its custodian bank or on the books and records of the Fund (and mark-to-market on a daily basis) cash or liquid instruments that, when added to any amounts deposited with a futures commission merchant as margin, are equal to the market value of the futures contract or otherwise “cover” its position.

The CFTC has eliminated limitations on futures trading by certain regulated entities, including registered investment companies, and consequently registered investment companies may engage in unlimited futures transactions and options thereon provided that the investment adviser to the company claims an exclusion from regulation as a commodity pool operator. In connection with its management of the Trust, the Advisor has claimed such an exclusion from registration as a commodity pool operator under the Commodity Exchange Act (the “CEA”). Therefore, it is not subject to the registration and regulatory requirements of the CEA. Therefore, there are no limitations on the extent to which each Fund may engage in non-hedging transactions involving futures and options thereon, except as set forth in the Funds’ Prospectus and SAI.

Upon entering into a futures contract, each Fund will be required to deposit with the broker an amount of cash or cash equivalents in the range of approximately 5% to 7% of the contract amount (this amount is subject to change by the exchange on which the contract is traded). This amount, known as “initial margin,” is in the nature of a performance bond or good faith deposit on the contract and is returned to each Fund upon termination of the futures contract, assuming all contractual obligations have been satisfied. Subsequent payments, known as “variation margin,” to and from the broker will be made daily as the price of the index underlying the futures contract fluctuates, making the long and short positions in the futures contract more or less valuable, a process know as “marking-to-market.” At any time prior to expiration of a futures contract, each Fund may elect to close the position by taking an opposite position, which will operate to terminate each Fund’s existing position in the contract.

A Fund may cover its long position in a futures contract by taking a short position in the instruments underlying the futures contract, or by taking positions in instruments the prices of which are expected to move relatively consistently with the futures contract. A Fund may cover its short position in a futures contract by taking a long position in the instruments underlying the futures contract, or by taking positions in instruments the prices of which are expected to move relatively consistently inverse to the futures contract. A Fund may “cover” its short position in a futures contract by purchasing a call option on the same futures contract with a strike price (i.e., an exercise price) as low or lower than the price of the futures contract, or, if the strike price of the call is greater than the price of the futures contract, the Fund will earmark, segregate cash or liquid instruments equal in value to the difference between the strike price of the call and the price of the future. A Fund may cover its short position in a futures contract by taking a long position in the instruments underlying the futures contract, or by taking positions in instruments, the prices of which are expected to move relatively consistently with a long position in the futures contract. A Fund may cover long or short positions in futures by earmarking or segregating with its custodian bank or on the books and records of the Funds (and mark-to-market on a daily basis) cash or liquid instruments that, when added to any amounts deposited with a futures commission merchant as margin, are equal to the market value of the futures contract or otherwise “cover” its position.

A Fund may cover its sale of a call option on a futures contract by taking a long position in the underlying futures contract at a price less than or equal to the strike price of the call option, or, if the long position in the underlying futures contract is established at a price greater than the strike price of the written (sold) call, the Fund will earmark or maintain in a segregated account liquid instruments equal in value to the difference between the strike price of the call and the price of the future. A Fund may also cover its sale of a call option by taking positions in instruments, the prices of which are expected to move relatively consistently with the call option. A Fund may cover its sale of a put option on a futures contract by taking a short position in the underlying futures contract at a price greater than or equal to the strike price of the put option, or, if the short position in the underlying futures contract is established at a price less than the strike price of the written put, the Fund will segregate cash or liquid instruments equal in value to the difference between the strike price of the put and the price of the future. A Fund may also cover its sale of a put option by taking positions in instruments the prices of which are expected to move relatively consistently with the put option.

Although the Funds intend to sell futures contracts only if there is an active market for such contracts, no assurance can be given that a liquid market will exist for any particular contract at any particular time. Many futures exchanges and boards of trade limit the amount of fluctuation permitted in futures contract prices during a single trading day. Once the daily limit has been reached in a particular contract, no trades may be made that day at a price beyond that limit or trading may be suspended for specified periods during the day. Futures contract prices could move to the limit for several consecutive trading days with little or no trading, thereby preventing prompt liquidation of futures positions and potentially subjecting a Fund to substantial losses. If trading is not possible, or if a Fund determines not to close a futures position in anticipation of adverse price movements, the Fund will be required to make daily cash payments of variation margin. The risk that the Fund will be unable to close out a futures position will be minimized by entering into such transactions on a national securities exchange with an active and liquid secondary market.

Forward Contracts. A principal investment strategy of the Funds is to enter into Financial Instruments, which may include forward contracts, and for the Bearish Funds, that may be the primary or sole investment strategy. The Funds may enter into equity, equity index or interest rate forward contracts for purposes of attempting to gain exposure to an index or group of securities without actually purchasing these securities, or to hedge a position. Forward contracts are two-party contracts pursuant to which one party agrees to pay the counterparty a fixed price for an agreed upon amount of commodities, securities, or the cash value of the commodities, securities or the securities index, at an agreed upon date. When required by law, a Fund will segregate liquid assets in an amount equal to the value of the Fund’s total assets committed to the consummation of such forward contracts. Obligations

under forward contracts so covered will not be considered senior securities for purposes of a Fund’s investment restriction concerning senior securities. Because they are two-party contracts and because they may have terms greater than seven days, forward contracts may be considered to be illiquid for the Fund’s illiquid investment limitations. A Fund will not enter into any forward contract unless the Adviser believes that the other party to the transaction is creditworthy. A Fund bears the risk of loss of the amount expected to be received under a forward contract in the event of the default or bankruptcy of a counterparty. If such a default occurs, a Fund will have contractual remedies pursuant to the forward contract, but such remedies may be subject to bankruptcy and insolvency laws which could affect the Fund’s rights as a creditor.

Index Options. The Funds may purchase and write options on stock indexes to create investment exposure consistent with their investment objectives, hedge or limit the exposure of their positions, or create synthetic money market positions. See “Taxation” herein.

A stock index fluctuates with changes in the market values of the stocks included in the index. Options on stock indexes give the holder the right to receive an amount of cash upon exercise of the option. Receipt of this cash amount will depend upon the closing level of the stock index upon which the option is based being greater than (in the case of a call) or less than (in the case of a put) the exercise price of the option. The amount of cash received, if any, will be the difference between the closing price of the index and the exercise price of the option, multiplied by a specified dollar multiple. The writer (seller) of the option is obligated, in return for the premiums received from the purchaser of the option, to make delivery of this amount to the purchaser. All settlements of index options transactions are in cash.

Index options are subject to substantial risks, including the risk of imperfect correlation between the option price and the value of the underlying securities composing the stock index selected and the risk that there might not be a liquid secondary market for the option. Because the value of an index option depends upon movements in the level of the index rather than the price of a particular stock, whether a Fund will realize a gain or loss from the purchase or writing (sale) of options on an index depends upon movements in the level of stock prices in the stock market generally or, in the case of certain indexes, in an industry or market segment, rather than upon movements in the price of a particular stock. This requires different skills and techniques than are required for predicting changes in the price of individual stocks. A Fund will not enter into an option position that exposes the Fund to an obligation to another party, unless the Fund either (i) owns an offsetting position in securities or other options and/or (ii) earmarks or segregates with the Fund’s custodian bank cash or liquid instruments that, when added to the premiums deposited with respect to the option, are equal to the market value of the underlying stock index not otherwise covered.

The Funds may engage in transactions in stock index options listed on national securities exchanges or traded in the OTC market as an investment vehicle for the purpose of realizing the Fund’s investment objective. Options on indexes are settled in cash, not by delivery of securities. The exercising holder of an index option receives, instead of a security, cash equal to the difference between the closing price of the securities index and the exercise price of the option.

Some stock index options are based on a broad market index such as the S&P 500 Index, the NYSE Composite Index, or the AMEX Major Market Index, or on a narrower index such as the Philadelphia Stock Exchange Over-the-Counter Index. Options currently are traded on the Chicago Board Options Exchange (the “CBOE”), the AMEX, and other exchanges (“Exchanges”). Purchased OTC options and the cover for written OTC options will be subject to the respective Fund’s 15% limitation on investment in illiquid securities. See “Illiquid Securities.”

Each of the Exchanges has established limitations governing the maximum number of call or put options on the same index which may be bought or written (sold) by a single investor, whether acting alone or in concert with others (regardless of whether such options are written on the same or different Exchanges or are held or written on one or more accounts or through one or more brokers). Under these limitations, option positions of all investment companies advised by the same investment adviser are combined for purposes of these limits. Pursuant to these limitations, an Exchange may order the liquidation of positions and may impose other sanctions or

restrictions. These position limits may restrict the number of listed options which a Fund may buy or sell; however, the Advisor intends to comply with all limitations.

Options on Securities. The Funds may buy and write (sell) options on securities for the purpose of realizing their respective investment objective. By buying a call option, a Fund has the right, in return for a premium paid during the term of the option, to buy the securities underlying the option at the exercise price. By writing a call option on securities, a Fund becomes obligated during the term of the option to sell the securities underlying the option at the exercise price if the option is exercised. By buying a put option, a Fund has the right, in return for a premium paid during the term of the option, to sell the securities underlying the option at the exercise price. By writing a put option, a Fund becomes obligated during the term of the option to purchase the securities underlying the option at the exercise price if the option is exercised. During the term of the option, the writer may be assigned an exercise notice by the broker-dealer through whom the option was sold. The exercise notice would require the writer to deliver, in the case of a call, or take delivery of, in the case of a put, the underlying security against payment of the exercise price. This obligation terminates upon expiration of the option, or at such earlier time that the writer effects a closing purchase transaction by purchasing an option covering the same underlying security and having the same exercise price and expiration date as the one previously sold. Once an option has been exercised, the writer may not execute a closing purchase transaction. To secure the obligation to deliver the underlying security in the case of a call option, the writer of a call option is required to deposit in escrow the underlying security or other assets in accordance with the rules of the Options Clearing Corporation (the “OCC”), an institution created to interpose itself between buyers and sellers of options. The OCC assumes the other side of every purchase and sale transaction on an exchange and, by doing so, gives its guarantee to the transaction. When writing call options on securities, a Fund may cover its position by owning the underlying security on which the option is written. Alternatively, the Fund may cover its position by owning a call option on the underlying security, on a share-for-share basis, which is deliverable under the option contract at a price no higher than the exercise price of the call option written by the Fund or, if higher, by owning such call option and depositing and segregating cash or liquid instruments equal in value to the difference between the two exercise prices. In addition, a Fund may cover its position by segregating cash or liquid instruments equal in value to the exercise price of the call option written by the Fund. When a Fund writes a put option, the Fund will segregate with its custodian bank cash or liquid instruments having a value equal to the exercise value of the option. The principal reason for a Fund to write call options on stocks held by the Fund is to attempt to realize, through the receipt of premiums, a greater return than would be realized on the underlying securities alone.

If a Fund that writes an option wishes to terminate the Fund’s obligation, the Fund may effect a “closing purchase transaction.” The Fund accomplishes this by buying an option of the same series as the option previously written by the Fund. The effect of the purchase is that the writer’s position will be canceled by the OCC. However, a writer may not effect a closing purchase transaction after the writer has been notified of the exercise of an option. Likewise, a Fund which is the holder of an option may liquidate its position by effecting a “closing sale transaction.” The Fund accomplishes this by selling an option of the same series as the option previously purchased by the Fund. There is no guarantee that either a closing purchase or a closing sale transaction can be affected. If any call or put option is not exercised or sold, the option will become worthless on its expiration date. A Fund will realize a gain (or a loss) on a closing purchase transaction with respect to a call or a put option previously written by the Fund if the premium, plus commission costs, paid by the Fund to purchase the call or put option to close the transaction is less (or greater) than the premium, less commission costs, received by the Fund on the sale of the call or the put option. The Fund also will realize a gain if a call or put option which the Fund has written lapses unexercised, because the Fund would retain the premium.

Although certain securities exchanges attempt to provide continuously liquid markets in which holders and writers of options can close out their positions at any time prior to the expiration of the option, no assurance can be given that a market will exist at all times for all outstanding options purchased or sold by a Fund. If an options market were to become unavailable, the Fund would be unable to realize its profits or limit its losses until the Fund could exercise options it holds, and the Fund would remain obligated until options it wrote were exercised or expired. Reasons for the absence of liquid secondary market on an exchange include the following: (i) there may be insufficient trading interest in certain options; (ii) restrictions may be imposed by an exchange on opening or

closing transactions or both; (iii) trading halts, suspensions or other restrictions may be imposed with respect to particular classes or series of options; (iv) unusual or unforeseen circumstances may interrupt normal operations on an exchange; (v) the facilities of an exchange or the OCC may not at all times be adequate to handle current trading volume; or (vi) one or more exchanges could, for economic or other reasons, decide or be compelled at some future date to discontinue the trading of options (or a particular class or series of options) would cease to exist, although outstanding options on that exchange that had been issued by the OCC as a result of trades on that exchange would continue to be exercisable in accordance with their terms.

Swap Agreements. A principal investment strategy of the Funds is to enter into Financial Instruments, which may include swap agreements, and, for the Bearish Funds, that may be the primary or sole investment strategy (along with selling securities short). The Funds may enter into equity, equity index or interest rate swap agreements for purposes of attempting to gain exposure to an index or group of securities without actually purchasing those securities, or to hedge a position. Swap agreements are two-party contracts entered into primarily by institutional investors for periods ranging from a day to more than one year. In a standard “swap” transaction, two parties agree to exchange the returns (or differentials in rates of return) earned or realized on particular predetermined investments or instruments. The gross returns to be exchanged or “swapped” between the parties are calculated with respect to a “notional amount,” i.e., the return on or increase in value of a particular dollar amount invested in a “basket” of securities representing a particular index or group of securities. Forms of swap agreements include interest rate caps, under which, in return for a premium, one party agrees to make payments to the other to the extent that interest rates exceed a specified rate, or “cap”; interest rate floors, under which, in return for a premium, one party agrees to make payments to the other to the extent that interest rates fall below a specified level, or “floor”; and interest rate collars, under which a party sells a cap and purchases a floor or vice versa in an attempt to protect itself against interest rate movements exceeding given minimum or maximum levels.

Most swap agreements entered into by the Funds calculate the obligations of the parties to the agreement on a “net basis.” Consequently, a Fund’s current obligations (or rights) under a swap agreement will generally be equal only to the net amount to be paid or received under the agreement based on the relative values of the positions held by each party to the agreement (the “net amount”).

A Fund’s current obligations under a swap agreement will be accrued daily (offset against any amounts owing to the Fund) and any accrued but unpaid net amounts owed to a swap counterparty will be covered by segregating or earmarking assets determined to be liquid. Obligations under swap agreements so covered will not be construed to be “senior securities” for purposes of a Fund's investment restriction concerning senior securities. Because they are two-party contracts and because they may have terms of greater than seven days, swap agreements may be considered to be illiquid for purposes of the Funds' illiquid investment limitations. A Fund will not enter into any swap agreement unless the Advisor believes that the other party to the transaction is creditworthy. A Fund bears the risk of loss of the amount expected to be received under a swap agreement in the event of the default or bankruptcy of a swap agreement counterparty. If such a default occurs, a Fund will have contractual remedies pursuant to the swap agreements, but such remedies may be subject to bankruptcy and insolvency laws which could affect the Fund’s right as a creditor.

Each Fund may enter into swap agreements to invest in a market without owning or taking physical custody of securities in circumstances in which direct investment is restricted for legal reasons or is otherwise impracticable. The counterparty to any swap agreement will typically be a bank, investment banking firm or broker/dealer. On a long swap, the counterparty will generally agree to pay the Fund the amount, if any, by which the notional amount of the swap agreement would have increased in value had it been invested in the particular stocks, plus the dividends that would have been received on those stocks. The Fund will agree to pay to the counterparty a floating rate of interest on the notional amount of the swap agreement plus the amount, if any, by which the notional amount would have decreased in value had it been invested in such stocks. Therefore, the return to the Fund on any swap agreement should be the gain or loss on the notional amount plus dividends on the stocks less the interest paid by the Fund on the notional amount. As a trading technique, the Advisor may substitute physical securities with a swap agreement having risk characteristics substantially similar to the underlying securities.

Swap agreements typically are settled on a net basis, which means that the two payment streams are netted out, with the Fund receiving or paying, as the case may be, only the net amount of the two payments. Payments may be made at the conclusion of a swap agreement or periodically during its term. Swap agreements do not involve the delivery of securities or other underlying assets. Accordingly, the risk of loss with respect to swap agreements is limited to the net amount of payments that a Fund is contractually obligated to make. If the other party to a swap agreement defaults, a Fund’s risk of loss consists of the net amount of payments that such Fund is contractually entitled to receive, if any. The net amount of the excess, if any, of a Fund’s obligations over its entitlements with respect to each equity swap will be accrued on a daily basis and an amount of cash or liquid assets, having an aggregate NAV at least equal to such accrued excess will be earmarked or segregated by a Fund's custodian. Inasmuch as these transactions are entered into for hedging purposes or are offset by earmarked or segregated cash or liquid assets, as permitted by applicable law, the Funds and their Advisor believe that transactions do not constitute senior securities within the meaning of the Investment Company Act of 1940, as amended (“Investment Company Act”), and, accordingly, will not treat them as being subject to a Fund’s borrowing restrictions.

The swap market has grown substantially in recent years with a large number of banks and investment banking firms acting both as principals and as agents utilizing standardized swap documentation. As a result, the swap market has become relatively liquid in comparison with the markets for other similar instruments which are traded in the over-the-counter market. The Advisor, under the supervision of the Board of Trustees, is responsible for determining and monitoring the liquidity of the Funds’ transactions in swap agreements.

The use of equity swaps is a highly specialized activity which involves investment techniques and risks different from those associated with ordinary portfolio securities transactions.

Short Sales. The Funds (other than the Ultra100 Fund, Short 100 Fund and UltraShort 100 Fund) may engage in short sales transactions. To complete such a transaction, a Fund must borrow the security to make delivery to the buyer. The Fund is then obligated to replace the security borrowed by borrowing the same security from another lender, purchasing it at the market price at the time of replacement or paying the lender an amount equal to the cost of purchasing the security. The price at such time may be more or less than the price at which the security was sold by the Fund. Until the security is replaced, the Fund is required to repay the lender any dividends or interest which accrue during the period of the loan. To borrow the security, the Fund also may be required to pay a premium, which would increase the cost of the security sold. The net proceeds of the short sale will be retained by the broker, to the extent necessary to meet the margin requirements, until the short position is closed out. A Fund also will incur transaction costs in effecting short sales.

A Fund will incur a loss as a result of a short sale if the price of the security increases between the date of the short sale and the date on which the Fund replaces the borrowed security. A Fund will realize a gain if the price of the security declines in price between those dates. The amount of any gain will be decreased, and the amount of any loss increased, by the amount of the premium, dividends or interest a Fund may be required to pay, if any, in connection with a short sale.

The Funds may make short sales “against the box,” i.e., when a security identical to or convertible or exchangeable into one owned by a Fund is borrowed and sold short. Whenever a Fund engages in short sales, it earmarks or segregates liquid securities in an amount that, when combined with the amount of collateral deposited with the broker in connection with the short sale, equals the current market value of the security sold short. The earmarked or segregated assets are marked to market daily.

Depository Receipts. Each Bullish Fund may invest in ADRs. For many foreign securities, U.S. Dollar denominated ADRs, which are traded in the United States on exchanges or over-the-counter, are issued by domestic banks. ADRs represent the right to receive securities of foreign issuers deposited in a domestic bank or a correspondent bank. ADRs do not eliminate all the risk inherent in investing in the securities of foreign issuers. However, by investing in ADRs rather than directly in foreign issuers’ stock, the Funds can avoid currency risks during the settlement period for either purchase or sales.

In general, there is a large, liquid market in the United States for many ADRs. The information available for ADRs is subject to the accounting, auditing and financial reporting standards of the domestic market or exchange on which they are traded, which standards are more uniform and more exacting than those to which many foreign issuers may be subject. Certain ADRs, typically those denominated as unsponsored, require the holders thereof to bear most of the costs of such facilities, while issuers of sponsored facilities normally pay more of the costs thereof. The depository of an unsponsored facility frequently is under no obligation to distribute shareholder communications received from the issuer of the deposited securities or to pass through the voting rights to facility holders with respect to the deposited securities, whereas the depository of a sponsored facility typically distributes shareholder communications and passes through the voting rights.

The Funds may invest in both sponsored and unsponsored ADRs. Unsponsored ADRs programs are organized independently and without the cooperation of the issuer of the underlying securities. As result, available information concerning the issuers may not be as current for sponsored ADRs, and the prices of unsponsored depository receipts may be more volatile than if such instruments were sponsored by the issuer.

A Fund may also invest in Global Depository Receipts (“GDRs”). GDRs are receipts for shares in a foreign-based corporation traded in capital markets around the world. While ADRs permit foreign corporations to offer shares to American citizens, GDRs allow companies in Europe, Asia, the United States and Latin American to offer shares in many markets around the world.

U.S. Government Securities. Each Fund also may invest in U.S. government securities in pursuit of their investment objectives, as “cover” for the investment techniques these Funds employ, or for liquidity purposes.

U.S. government securities include U.S. Treasury securities, which are backed by the full faith and credit of the U.S. Treasury and which differ only in their interest rates, maturities, and times of issuance. U.S. Treasury bills have initial maturities of one year or less; U.S. Treasury notes have initial maturities of one to ten years; and U.S. Treasury bonds generally have initial maturities of greater than ten years. Certain U.S. government securities are issued or guaranteed by agencies or instrumentalities of the U.S. government including, but not limited to, obligations of U.S. government agencies or instrumentalities, such as the Federal National Mortgage Association, the Government National Mortgage Association, the Small Business Administration, the Federal Farm Credit Administration, the Federal Home Loan Banks, Banks for Cooperatives (including the Central Bank for Cooperatives), the Federal Land Banks, the Federal Intermediate Credit Banks, the Tennessee Valley Authority, the Export-Import Bank of the United States, the Commodity Credit Corporation, the Federal Financing Bank, the Student Loan Marketing Association, and the National Credit Union Administration. Some obligations issued or guaranteed by U.S. government agencies and instrumentalities, including, for example, Government National Mortgage Association pass-through certificates, are supported by the full faith and credit of the U.S. Treasury. Other obligations issued by or guaranteed by Federal agencies, such as those securities issued by the Federal National Mortgage Association, are supported by the discretionary authority of the U.S. government to purchase certain obligations of the federal agency, while other obligations issued by or guaranteed by federal agencies, such as those of the Federal Home Loan Banks, are supported by the right of the issuer to borrow from the U.S. Treasury. While the U.S. government provides financial support to such U.S. government-sponsored Federal agencies, no assurance can be given that the U.S. government will always do so, since the U.S. government is not so obligated by law. U.S. Treasury notes and bonds typically pay coupon interest semi-annually and repay the principal at maturity.

Yields on U.S. government securities are dependent on a variety of factors, including the general conditions of the money and bond markets, the size of a particular offering, and the maturity of the obligation. Debt securities with longer maturities tend to produce higher yields and are generally subject to potentially greater capital appreciation and depreciation than obligations with shorter maturities and lower yields. The market value of U.S. government securities generally varies inversely with changes in market interest rates. An increase in interest rates, therefore, would generally reduce the market value of a Fund's portfolio investments in U.S. government securities, while a decline in interest rates would generally increase the market value of a Fund's portfolio investments in these securities.

Repurchase Agreements. Each of the Funds may enter into repurchase agreements with financial institutions in pursuit of their investment objectives, as “cover” for the investment techniques the Funds employ, or for liquidity purposes. Under a repurchase agreement, a Fund purchases a debt security and simultaneously agrees to sell the security back to the seller at a mutually agreed-upon future price and date, normally one day or a few days later. The resale price is greater than the purchase price, reflecting an agreed-upon market interest rate during the purchaser's holding period. While the maturities of the underlying securities in repurchase transactions may be more than one year, the term of each repurchase agreement will always be less than one year. The Funds follow certain procedures designed to minimize the risks inherent in such agreements. These procedures include effecting repurchase transactions only with large, well-capitalized and well-established financial institutions whose condition will be continually monitored by ProShare Advisors. In addition, the value of the collateral underlying the repurchase agreement will always be at least equal to the repurchase price, including any accrued interest earned on the repurchase agreement. In the event of a default or bankruptcy by a selling financial institution, a Fund will seek to liquidate such collateral which could involve certain costs or delays and, to the extent that proceeds from any sale upon a default of the obligation to repurchase were less than the repurchase price, the Fund could suffer a loss. A Fund also may experience difficulties and incur certain costs in exercising its rights to the collateral and may lose the interest the Fund expected to receive under the repurchase agreement. Repurchase agreements usually are for short periods, such as one week or less, but may be longer. It is the current policy of the Funds not to invest in repurchase agreements that do not mature within seven days if any such investment, together with any other illiquid assets held by the Fund, amounts to more than 15% of the Fund's total net assets. The investments of each of the Funds in repurchase agreements at times may be substantial when, in the view of ProShare Advisors, liquidity, investment, regulatory, or other considerations so warrant.

Cash Reserves. To seek its investment objective, as a cash reserve, for liquidity purposes, or as “cover” for positions it has taken, each Fund may invest all or part of the Fund’s assets in cash or cash equivalents, which include, but are not limited to, short-term money market instruments, U.S. government securities, certificates of deposit, bankers acceptances, or repurchase agreements secured by U.S. government securities.

Reverse Repurchase Agreements. The Funds may use reverse repurchase agreements as part of that Fund’s investment strategy. Reverse repurchase agreements involve sales by a Fund of portfolio assets concurrently with an agreement by the Fund to repurchase the same assets at a later date at a fixed price. Generally, the effect of such a transaction is that the Fund can recover all or most of the cash invested in the portfolio securities involved during the term of the reverse repurchase agreement, while the Fund will be able to keep the interest income associated with those portfolio securities. Such transactions are advantageous only if the interest cost to the Fund of the reverse repurchase transaction is less than the cost of obtaining the cash otherwise. Opportunities to achieve this advantage may not always be available, and the Fund intends to use the reverse repurchase technique only when it will be to the Fund’s advantage to do so. The Fund will earmark or segregate cash or liquid instruments equal in value to the Fund’s obligations in respect of reverse repurchase agreements.

Borrowing. The Funds may borrow money for cash management purposes or investment purposes. Borrowing for investment is known as leveraging. Leveraging investments, by purchasing securities with borrowed money, is a speculative technique which increases investment risk, but also increases investment opportunity. Since substantially all of a Fund’s assets will fluctuate in value, whereas the interest obligations on borrowings may be fixed, the net asset value per share of the Fund will fluctuate more when the Fund is leveraging it investments than would otherwise be the case. Moreover, interest costs on borrowings may fluctuate with changing market rates of interest and may partially offset or exceed the returns on the borrowed funds. Under adverse conditions, a Fund might have to sell portfolio securities to meet interest or principal payments at a time when investment considerations would not favor such sales.

As required by the Investment Company Act, a Fund must maintain continuous asset coverage (total assets, including assets acquired with borrowed funds, less liabilities exclusive of borrowings) of 300% of all amounts borrowed. If at any time the value of a Fund's assets should fail to meet this 300% coverage test, the Fund, within three days (not including weekends and holidays), will reduce the amount of the Fund's borrowings to the extent necessary to meet this 300% coverage. Maintenance of this percentage limitation may result in the sale of portfolio securities at a time when investment considerations would not favor such sale. In addition to the foregoing, the Funds are authorized to borrow money as a temporary measure for extraordinary or emergency purposes in amounts not in excess of 5% of the value of each Fund's total assets. This borrowing is not subject to the foregoing 300% asset coverage requirement. The Funds are authorized to pledge portfolio securities as ProShare Advisors deems appropriate in connection with any borrowings.

Each Fund may also enter into reverse repurchase agreements, which may be viewed as a form of borrowing, with financial institutions. However, to the extent a Fund “covers” its repurchase obligations as described above in “Reverse Repurchase Agreements,” such agreement will not be considered to be a “senior security” and, therefore, will not be subject to the 300% asset coverage requirement otherwise applicable to borrowings by that Fund.

Lending of Portfolio Securities. Subject to the investment restrictions set forth below, a Fund may lend its portfolio securities to brokers, dealers, and financial institutions, provided that cash equal to at least 100% of the market value of the securities loaned is deposited by the borrower with the Fund and is maintained each business day in a segregated account pursuant to applicable regulations. While such securities are on loan, the borrower will pay the lending Fund any income accruing thereon, and the Fund may invest the cash collateral in portfolio securities, thereby earning additional income. A Fund will not lend more than 33 1/3% of the value of the Fund’s total assets. Loans would be subject to termination by the lending Fund on four business days' notice, or by the borrower on one day’s notice. Borrowed securities must be returned when the loan is terminated. Any gain or loss in the market price of the borrowed securities which occurs during the term of the loan inures to the lending Fund and that Fund’s shareholders. There may be risks of delay in receiving additional collateral or risks of delay in recovery of the securities or even loss of rights in the securities lent should the borrower of the securities fail financially. A Fund may pay reasonable finders, borrowers, administrative, and custodial fees in connection with a loan.

When-Issued and Delayed-Delivery Securities. Each Fund, from time to time, in the ordinary course of business, may purchase securities on a when-issued or delayed-delivery basis (i.e., delivery and payment can take place between a month and 120 days after the date of the transaction). These securities are subject to market fluctuations and no interest accrues to the purchaser during this period. At the time a Fund makes the commitment to purchase securities on a when-issued or delayed-delivery basis, the Fund will record the transaction and thereafter reflect the value of the securities, each day, in determining the Fund’s net asset value. Each Fund will not purchase securities on a when-issued or delayed-delivery basis if, as a result, more than 15% of the Fund’s net assets would be so invested. At the time of delivery of the securities, the value of the securities may be more or less than the purchase price.

The Trust will earmark or segregate cash or liquid instruments equal to or greater in value than the Fund’s purchase commitments for such when-issued or delayed-delivery securities, or the Trust does not believe that a Fund’s net asset value or income will be adversely affected by the Fund’s purchase of securities on a when-issued or delayed delivery basis.

Investments in Other Investment Companies. The Funds may invest in the securities of other investment companies to the extent that such an investment would be consistent with the requirements of the Investment Company Act. If a Fund invests in, and, thus, is a shareholder of, another investment company, the Fund’s shareholders will indirectly bear the Fund’s proportionate share of the fees and expenses paid by such other investment company, including advisory fees, in addition to both the management fees payable directly by the Fund to the Fund's own investment adviser and the other expenses that the Fund bears directly in connection with the Fund’s own operations.

Illiquid Securities. Each Fund may purchase illiquid securities, including securities that are not readily marketable and securities that are not registered (“restricted securities”) under the Securities Act of 1933, as amended (“Securities Act”), but which can be sold to qualified institutional buyers under Rule 144A under the Securities Act. A Fund will not invest more than 15% of the Fund’s net assets in illiquid securities. The term “illiquid securities” for this purpose means securities that cannot be disposed of within seven days in the ordinary course of business at approximately the amount at which the Fund has valued the securities. Under the current guidelines of the staff of the Securities and Exchange Commission (“Commission”), illiquid securities also are considered to include, among other securities, purchased over-the-counter options, certain cover for OTC options, repurchase agreements with maturities in excess of seven days, and certain securities whose disposition is restricted under the Federal securities laws. The Fund may not be able to sell illiquid securities when ProShare Advisors considers it desirable to do so or may have to sell such securities at a price that is lower than the price that could be obtained if the securities were more liquid. In addition, the sale of illiquid securities also may require more time and may result in higher dealer discounts and other selling expenses than does the sale of securities that are not illiquid. Illiquid securities also may be more difficult to value due to the unavailability of reliable market quotations for such securities, and investments in illiquid securities may have an adverse impact on net asset value.

Institutional markets for restricted securities have developed as a result of the promulgation of Rule 144A under the Securities Act, which provides a safe harbor from Securities Act registration requirements for qualifying sales to institutional investors. When Rule 144A securities present an attractive investment opportunity and otherwise meet selection criteria, a Fund may make such investments. Whether or not such securities are illiquid depends on the market that exists for the particular security. The Commission staff has taken the position that the liquidity of Rule 144A restricted securities is a question of fact for a board of trustees to determine, such determination to be based on a consideration of the readily-available trading markets and the review of any contractual restrictions. The staff also has acknowledged that, while a board of trustees retains ultimate responsibility, trustees may delegate this function to an investment adviser. The Board of Trustees of Funds has delegated this responsibility for determining the liquidity of Rule 144A restricted securities which may be invested in by a Fund to ProShare Advisors. It is not possible to predict with assurance exactly how the market for Rule 144A restricted securities or any other security will develop. A security which when purchased enjoyed a fair degree of marketability may subsequently become illiquid and, accordingly, a security which was deemed to be liquid at the time of acquisition may subsequently become illiquid. In such event, appropriate remedies will be considered to minimize the effect on the Fund’s liquidity.

Portfolio Turnover. Portfolio turnover may vary from year to year, as well as within a year. The portfolio turnover rate for each Fund is expected to be greater than 100%. A higher portfolio turnover rate would likely involve correspondingly greater brokerage commissions and transaction and other expenses which would be borne by the Funds. The overall reasonableness of brokerage commissions is evaluated by ProShare Advisors based upon its knowledge of available information as to the general level of commissions paid by other institutional investors for comparable services. In addition, a Fund’s portfolio turnover level may adversely affect the ability of the Fund to achieve its investment objective. Because each Fund’s portfolio turnover rate, to a great extent, will depend on the creation and redemption activity of investors, it is difficult to estimate what the Fund’s actual portfolio turnover rate will be in the future. “Portfolio Turnover Rate” is defined under the rules of the Commission as the value of the securities purchased or securities sold, excluding all securities whose maturities at time of acquisition were one year or less, divided by the average monthly value of such securities owned during the year. Based on this definition, instruments with remaining maturities of less than one year are excluded from the calculation of portfolio turnover rate. Instruments excluded from the calculation of portfolio turnover

generally would include the futures contracts and option contracts in which the Funds invest since such contracts generally have a remaining maturity of less than one year. Pursuant to the formula prescribed by the Commission, the portfolio turnover rate for each Fund is calculated without regard to instruments, including options and futures contracts, having a maturity of less than one year.

SPECIAL CONSIDERATIONS

To the extent discussed above and in the prospectus, the Funds present certain risks, some of which are further described below.

Tracking Error. While the Funds do not expect that their daily returns will deviate adversely from their respective daily investment objectives, several factors may affect their ability to achieve this correlation. Among these factors are: (1) a Fund’s expenses, including brokerage (which may be increased by high portfolio turnover) and the cost of the investment techniques employed by that Fund; (2) less than all of the securities in the benchmark index being held by a Fund and securities not included in the benchmark index being held by a Fund; (3) an imperfect correlation between the performance of instruments held by a Fund, such as futures contracts, and the performance of the underlying securities in the cash market; (4) bid-ask spreads (the effect of which may be increased by portfolio turnover); (5) holding instruments traded in a market that has become illiquid or disrupted; (6) a Fund’s share prices being rounded to the nearest cent; (7) changes to the benchmark index that are not disseminated in advance; (8) the need to conform a Fund's portfolio holdings to comply with investment restrictions or policies or regulatory or tax law requirements; and (9) early and unanticipated closings of the markets on which the holdings of a Fund trade, resulting in the inability of the Fund to execute intended portfolio transactions. While close tracking of any Fund to its benchmark may be achieved on any single trading day, over time the cumulative percentage increase or decrease in the net asset value of the Shares of a Fund may diverge significantly from the cumulative percentage decrease or increase in the benchmark due to a compounding effect.

Leverage. Each Fund intends to regularly use leveraged investment techniques in pursuing their investment objectives. Utilization of leverage involves special risks and should be considered to be speculative. Leverage exists when a Fund achieves the right to a return on a capital base that exceeds the amount the Fund has invested. Leverage creates the potential for greater gains to shareholders of these Funds during favorable market conditions and the risk of magnified losses during adverse market conditions. Leverage should cause higher volatility of the net asset values of these Funds' Shares. Leverage may involve the creation of a liability that does not entail any interest costs or the creation of a liability that requires the Fund to pay interest which would decrease the Fund's total return to shareholders. If these Funds achieve their investment objectives, during adverse market conditions, shareholders should experience a loss greater than they would have incurred had these Funds not been leveraged.

Non-Diversified Status. Each Fund is a “non-diversified” series. A Fund is considered “non-diversified” because a relatively high percentage of the Fund’s assets may be invested in the securities of a limited number of issuers, primarily within the same economic sector. That Fund’s portfolio securities, therefore, may be more susceptible to any single economic, political, or regulatory occurrence than the portfolio securities of a more diversified investment company. A Fund’s classification as a “non-diversified” investment company means that the proportion of the Fund’s assets that may be invested in the securities of a single issuer is not limited by the Investment Company Act. Each Fund, however, intends to seek to qualify as a “regulated investment company” for purposes of the Internal Revenue Code of 1986, as amended (“Code”), which imposes diversification requirements on these Funds that are less restrictive than the requirements applicable to the “diversified” investment companies under the Investment Company Act.

INVESTMENT RESTRICTIONS

Each Fund has adopted certain investment restrictions as fundamental policies which cannot be changed without the approval of the holders of a “majority” of the outstanding Shares of the Fund, as that term is defined in the Investment Company Act. The term “majority” is defined in the Investment Company Act as the lesser of: (i) 67% or more of the Shares of the series present at a meeting of shareholders, if the holders of more than 50% of the

outstanding Shares of the Fund are present or represented by proxy; or (ii) more than 50% of the outstanding Shares of the series. (All policies of a Fund not specifically identified in this Statement of Additional Information or the Prospectus as fundamental may be changed without a vote of the shareholders of the Fund.) For purposes of the following limitations, all percentage limitations apply immediately after a purchase or initial investment.

A Fund may not:

Make investments for the purpose of exercising control or management.

Purchase or sell real estate, except that, to the extent permitted by applicable law, the Fund may invest in securities directly or indirectly secured by real estate or interests therein or issued by companies that invest in real estate or interests therein.

Make loans to other persons, except that the acquisition of bonds, debentures or other corporate debt securities and investment in government obligations, commercial paper, pass-through instruments, certificates of deposit, bankers’ acceptances and repurchase agreements and purchase and sale contracts and any similar instruments shall not be deemed to be the making of a loan, and except further that the Fund may lend its portfolio securities, provided that the lending of portfolio securities may be made only in accordance with applicable law and the guidelines set forth in the Prospectus and this Statement of Additional Information, as they may be amended from time to time.

Issue senior securities to the extent such issuance would violate applicable law.

Borrow money, except that the Fund (i) may borrow from banks (as defined in the Investment Company Act) in amounts up to 33 1/3% of its total assets (including the amount borrowed), (ii) may, to the extent permitted by applicable law, borrow up to an additional 5% of its total assets for temporary purposes, (iii) may obtain such short-term credit as may be necessary for the clearance of purchases and sales of portfolio securities, (iv) may purchase securities on margin to the extent permitted by applicable law and (v) may enter into reverse repurchase agreements. The Fund may not pledge its assets other than to secure such borrowings or, to the extent permitted by the Fund's investment policies as set forth in the Prospectus and this Statement of Additional Information, as they may be amended from time to time, in connection with hedging transactions, short sales, when-issued and forward commitment transactions and similar investment strategies.

Underwrite securities of other issuers, except insofar as the Fund technically may be deemed an underwriter under the Securities Act, in selling portfolio securities.

Purchase or sell commodities or contracts on commodities, except to the extent the Fund may do so in accordance with applicable law and the Fund's Prospectus and Statement of Additional Information, as they may be amended from time to time.

No Fund will concentrate (i.e., hold more than 25% of its assets in the stocks of a single industry or group of industries) its investments in issuers of one or more particular industries, except that a Fund will concentrate to approximately the same extent that its underlying Index concentrates in the stocks of such particular industry or industries. For purposes of this limitation, securities of the U.S. government (including its agencies and instrumentalities) and securities of state or municipal governments and their political subdivisions (and repurchase agreements collateralized by government securities) are not considered to be issued by members of any industry.

PORTFOLIO TRANSACTIONS AND BROKERAGE

Subject to the general supervision by the Trustees, ProShare Advisors is responsible for decisions to buy and sell securities for each of the Funds, the selection of brokers and dealers to effect the transactions, and the

negotiation of brokerage commissions, if any. ProShare Advisors expects that the Funds may execute brokerage or other agency transactions through registered broker-dealers, who receive compensation for their services, in conformity with the Investment Company Act, the Securities Exchange Act of 1934, as amended (“Securities Exchange Act”), and the rules and regulations thereunder. Compensation may also be paid in connection with riskless principal transactions (in Nasdaq or over-the-counter securities and securities listed on an exchange) and agency Nasdaq or over-the-counter transactions executed with an electronic communications network or an alternative trading system.

ProShare Advisors may serve as an investment manager to and may place portfolio transactions on behalf of a number of clients, including other investment companies. It is the practice of ProShare Advisors to cause purchase and sale transactions to be allocated among the Funds and others whose assets ProShare Advisors manages in such manner as ProShare Advisors deems equitable. The main factors considered by ProShare Advisors in making such allocations among the Funds and other client accounts of ProShare Advisors are the respective investment objectives, the relative size of portfolio holdings of the same or comparable securities, the availability of cash for investment, the size of investment commitments generally held, and the opinions of the person(s) responsible, if any, for managing the portfolios of the Funds and the other client accounts.

The policy of each Fund regarding purchases and sales of securities for a Fund's portfolio is that primary consideration will be given to obtaining the most favorable prices and efficient executions of transactions. Consistent with this policy, when securities transactions are effected on a stock exchange, each Fund's policy is to pay commissions which are considered fair and reasonable without necessarily determining that the lowest possible commissions are paid in all circumstances. Each Fund believes that a requirement always to seek the lowest possible commission cost could impede effective portfolio management and preclude the Fund and ProShare Advisors from obtaining a high quality of brokerage (and potentially research) services. In seeking to determine the reasonableness of brokerage commissions paid in any transaction, ProShare Advisors relies upon its experience and knowledge regarding commissions generally charged by various brokers and on its judgment in evaluating the brokerage and research services received from the broker effecting the transaction. Such determinations are necessarily subjective and imprecise, as in most cases an exact dollar value for those services is not ascertainable.

Purchases and sales of U.S. government securities are normally transacted through issuers, underwriters or major dealers in U.S. government securities acting as principals. Such transactions are made on a net basis and do not involve payment of brokerage commissions. The cost of securities purchased from an underwriter usually includes a commission paid by the issuer to the underwriters; transactions with dealers normally reflect the spread between bid and asked prices.

In seeking to implement a Fund’s policies, ProShare Advisors effects transactions with those brokers and dealers who ProShare Advisors believes provide the most favorable prices and are capable of providing efficient executions. If ProShare Advisors believes such prices and executions are obtainable from more than one broker or dealer, ProShare Advisors may give consideration to placing portfolio transactions with those brokers and dealers who also furnish research and other services to the Fund or ProShare Advisors. Such services may include, but are not limited to, any one or more of the following: information as to the availability of securities for purchase or sale; statistical or factual information or opinions pertaining to investment; wire services; and appraisals or evaluations of portfolio securities. If the broker-dealer providing these additional services is acting as a principal for its own account, no commissions would be payable. If the broker-dealer is not a principal, a higher commission may be justified, at the determination of ProShare Advisors, for the additional services.

The information and services received by ProShare Advisors from brokers and dealers may be of benefit to ProShare Advisors in the management of accounts of some of ProShare Advisors’ other clients and may not in all cases benefit a Fund directly. While the receipt of such information and services is useful in varying degrees and would generally reduce the amount of research or services otherwise performed by ProShare

Advisors and thereby reduce ProShare Advisors’ expenses, this information and these services are of indeterminable value and the management fee paid to ProShare Advisors is not reduced by any amount that may be attributable to the value of such information and services.

ProShare Advisors does not consider sales of Trust Shares as a factor in the selection of broker-dealers to execute portfolio transactions.

MANAGEMENT OF PROSHARES TRUST

Trustees and Officers

The Trust’s officers, under the supervision of the Board of Trustees, manage the day-to-day operations of the Trust. The Trustees set broad policies for the Trust and choose its officers. One Trustee and all of the officers of the Trust are directors, officers or employees of ProFund Advisors or JP Morgan Investor Services. The other Trustees are not “Interested Persons” as defined under Section 2(a)(19) of the Investment Company Act, as amended (“Non-Interested Trustees”). Trustees and officers of the Trust are also directors and officers of some or all of the funds in the Fund Complex. The Fund Complex includes all funds advised by ProShare Advisors and any funds that have an investment adviser that is an affiliated person of ProShare Advisors.

The Non-Interested Trustees of the Trust, their term of office and length of time served, their principal business occupations during the past five years, the number of portfolios in the Fund Complex overseen by each Non-Interested Trustee and other directorships, if any, held by the Trustee, are shown below.

N ON -I NTERESTED T RUSTEES


Name, Address, and Age	Position(s) Held with the Trust	Term of Office and Length of Time Served	Principal Occupation(s) During Past 5 Years	Number of Portfolios in Fund Complex Overseen by Trustee	Other Directorships Held by Trustee
Independent Trustees
Russell S. Reynolds, III c/o ProShares Trust 7501 Wisconsin Avenue, Suite 1000 Bethesda, MD 20814 Birth Date: 7/57	Trustee	Indefinite; October 1997 to present	Directorship Search Group, Inc. (Executive Recruitment): President (May 2004 to present); Managing Director (March 1993 to April 2004)	ProShares (12); ProFunds (137) Access One Trust (8)	Directorship Search Group, Inc.

Michael C. Wachs c/o ProShares Trust 7501 Wisconsin Avenue, Suite 1000 Bethesda, MD 20814 Birth Date: 10/61	Trustee	Indefinite; October 1997 to present	AMC Delancey Group, Inc. (Real Estate Development): Vice President (January 2001 to Present); Delancey Investment Group, Inc. (Real Estate Development): Vice President (May 1996 to December 2000)	ProShares (12); ProFunds (137) Access One Trust (8)	AMC Delancey Group, Inc.

The Interested Trustee and executive officers of the Trust, their term of office and length of time served, their principal business occupations during the past five years, the number of portfolios in the Fund Complex overseen by each Interested Trustee and the other directorships, if any, held by the Trustee, are shown below.

I NTERESTED T RUSTEES

Interested Trustee

Michael L. Sapir ^*

7501 Wisconsin Avenue,

Suite 1000

Bethesda, MD 20814

Birth Date: 5/58

Trustee

Indefinite; April 1997 to present

Chairman and Chief Executive Officer of the Advisor (May 1997 to present)

ProShares (12);

ProFunds (137)

Access One Trust (8)

None

*	Mr. Sapir is an “interested person,” as defined by the 1940 Act, because of his employment with, and ownership interest in, the Advisor.

*	Each Trustee serves an indefinite term, until his or her successor is elected.

Executive Officers


Name, Address, and Age	Position(s) Held with Trust	Term of Office and Length of Time Served	Principal Occupation(s) During Past 5 Years
Michael L. Sapir 7501 Wisconsin Avenue, Suite 1000 Bethesda, MD 20814 Birth Date: 5/58	Chairman	Indefinite; November 2005 to present	Chairman and Chief Executive Officer of ProShare Advisors (November 2005 to present) and ProFund Advisors (May 1997 to present).

Louis M. Mayberg 7501 Wisconsin Avenue, Suite 1000 Bethesda, MD 20814 Birth Date: 8/62	President and Treasurer	Indefinite; November 2005 to present	President of ProShare Advisors (November 2005 to present) and ProFund Advisor (May 1997 to present).

Victor M. Frye 7501 Wisconsin Avenue, Suite 1000 Bethesda, MD 20814 Birth Date: 10/58	Chief Compliance Officer	Indefinite; November 2005 to present	Counsel and Chief Compliance Officer of ProFund Advisors (October 2002 to present); Calvert Group, Ltd.: Counsel, Compliance Officer and Assistant Secretary (January 1999 to October 2002).

Gregory Pickard 73 Tremont Boston, MA 02108 Birth Date: 3/65	Assistant Secretary	Indefinite; November 2005 to present	Vice President and Associate General Counsel for J.P. Morgan Investor Services since July 2001.

Michael Minella 73 Tremont Boston, MA 02108 Birth Date: 1/71	Assistant Treasurer	Indefinite; November 2005 to present	Vice President within the Fund Administration Department for J.P. Morgan Investor Services Co. since 2004. Mr. Minella was a Manager within the Audit Department at the public accounting firm, Russell, Brier & Co. LLP from 2002 to 2004, and a Senior Manager in the Financial Services Audit Department at the public accounting firm, Deloitte & Touche LLP from 1998 to 2002.

Brian Downs 73 Tremont Boston, MA 02108 Birth Date: 5/68	Assistant Treasurer	Indefinite; November 2005 to present	Mr. Downs is an Assistant Vice President within the Fund Administration Department for J.P. Morgan Investor Services Co. Mr. Downs has been a member of the Fund Administration Department since 1998.

Listed below for each Trustee is a dollar range of securities beneficially owned in the Trust, together with the aggregate dollar range of equity securities in all registered investment companies overseen by each Trustee that are in the same family of investment companies as the Trust, as of December 31, 2005.


Name of Trustee	Dollar Range of Equity Securities in the Trust	Aggregate Dollar Range of Equity Securities in All Registered Investment Companies Overseen by Trustee in Family of Investment Companies
Independent Trustees
Russell S. Reynolds, III	None	None
Michael C. Wachs	None	None
Interested Trustee
Michael L. Sapir	None	$10,001-$50,000

Committees

The Board of Trustees of the Trust has an Audit Committee. The Audit Committee is composed entirely of Non-Interested Trustees. Currently, the Audit Committee is composed of Messrs. Wachs and Reynolds. The Audit Committee makes recommendations to the full Board of Trustees with respect to the engagement of independent accountants and reviews with the independent accountants the plan and results of the internal controls, audit engagement and matters having a material effect on the Trust’s financial operations.

Compensation of Trustees and Officers

The Trust pays each Non-Interested Trustee a $6,000 annual retainer and $1,000 for attendance at each quarterly in-person meeting of the Board of Trustees and $500 for attendance at each special meeting of the Board of Trustees, including telephonic meetings. Trustees who are also officers or affiliated persons receive no remuneration from the Trust for their services as Trustees. The Trust’s officers receive no compensation directly from the trust for performing the duties of their offices.

The Trust does not accrue pension or retirement benefits as part of the Fund’s expenses, and Trustees of the Trust are not entitled to benefits upon retirement from the Board of Trustees.

The following table shows aggregate compensation estimated to be paid to the Trust’s Trustees by the Fund annually and paid by the Fund Complex for the fiscal year ending December 31, 2005.


Name of Person, Position	Estimated Aggregate Compensation From Trust ^*		Pension or Retirement Benefits Accrued as Part of Trust Expenses ^**		Estimated Annual Benefits Upon Retirement		Total Compensation From Trust and Fund Complex Paid to Trustees
Independent Trustees
Russell S. Reynolds, III, Trustee	$	10,000	$	0	$	0	$	54,000
Michael C. Wachs, Trustee	$	10,000	$	0	$	0	$	54,000
Interested Trustee
Michael L. Sapir, Trustee and Chairman	$	0	$	0	$	0	$	0

*	Assumes that four (4) meetings of the Board of Trustees of the Funds were held during previous calendar year.

INVESTMENT ADVISOR

Portfolio Management

Listed below for each portfolio manager is a dollar range of securities beneficially owned in the Funds managed by the portfolio manager, together with the aggregate dollar range of equity securities in all registered investment companies in the Fund Complex as of December 31, 2005.


Name of Portfolio Manager	Dollar Range of Equity Securities in the Funds		Aggregate Dollar Range of Equity Securities in All Registered Investment Companies in Fund Complex
Agustin Fleites	$	0	$	0
Taeyong Lee	$	0	$	0
Olessia Burner	$	0	$	0
Steven Schoffstall	$	0	$	0

Portfolio Managers’ Compensation

ProShare Advisors believes that its compensation program is competitively positioned to attract and retain high-caliber investment professionals. The compensation package for portfolio managers consists of a base salary, an annual incentive bonus opportunity and a competitive benefits package. A portfolio manager’s salary compensation is designed to be competitive with the marketplace and reflect a portfolio manager’s relative experience and contribution to the firm. Base salary compensation is reviewed and adjusted annually to reflect increases in the cost of living and market rates.

The annual incentive bonus opportunity provides cash bonuses based upon the overall firms’ performance and individual contributions. Principal consideration is given to appropriate risk management, teamwork and investment support activities in determining the annual bonus amount.

Portfolio managers are eligible to participate in the firm’s standard employee benefits programs, which include a competitive 401(k) retirement savings program with employer match, life insurance coverage, and health and welfare programs.

Other Accounts Managed by Portfolio Managers

Portfolio managers are generally responsible for multiple investment company accounts and, in one case, an unregistered investment company account. Certain inherent conflicts of interest arise from the fact that portfolio managers have responsibility for multiple accounts, including conflicts relating to the allocation of investment opportunities. Listed below for each portfolio manager are the number and type of accounts managed or overseen by each portfolio manager as of December 31, 2005.

Investment Advisory Agreement

Under an investment advisory agreement between ProShare Advisors and the Trust, on behalf of each Fund, dated December 14, 2005 (“Agreement” or “Advisory Agreement”), each Fund pays ProShare Advisors a fee at an annualized rate, based on its average daily net assets, of [ ]%. ProShare Advisors manages the investment and the reinvestment of the assets of each of the Funds, in accordance with the investment objectives, policies, and limitations of the Fund, subject to the general supervision and control of the Trustees and the officers of the Funds. ProShare Advisors bears all costs associated with providing these advisory services. ProShare Advisors has contractually agreed to waive investment advisory and management services fees and to reimburse other expenses to the extent total annual operating expenses, as a percentage of average daily net assets, exceed [ ]% through [ ]. After such date, the expense limitation may be terminated or revised. Amounts waived or reimbursed in a particular fiscal year may be recouped by ProShare Advisors within five years of waiver or reimbursement to the extent that recoupment will not cause a Fund’s expenses to exceed any expense limitation in place at that time. ProShare Advisors, from its own resources, including profits from advisory fees received from the Funds, also may make payments to broker-dealers and other financial institutions for their expenses in connection with the distribution of the Funds’ Shares. The address of ProShare Advisors is 7501 Wisconsin Avenue, Suite 1000, Bethesda, Maryland 20814.

The Board unanimously approved the Advisory Agreement with respect to each Fund at a meeting held on December 14, 2005. The Board considered all factors it believed relevant, none of which was considered dispositive by itself, including (i) the nature, extent, and quality of the services to be provided to each Fund

and its shareholders by the Advisor; (ii) the costs of the services provided and the profits to be realized by the Advisor from the relationship with the Funds; (iii) the extent to which economies of scale would be realized as the Funds grow; and (iv) whether fee levels reflect these economies of scale, if any, for the benefit of Fund shareholders. As the Funds’ are not yet operational, the Board did not consider performance in their review of the Advisory Agreement.

These factors and the conclusions that formed the basis of the Board’s determination that the terms of the Advisory Agreement were fair, reasonable and consistent with the Advisor’s fiduciary duty under applicable law are discussed in more detail below. In reaching its determination to approve the Advisory Agreement, the Board considered that the Funds were unique in the ETF marketplace. In determining whether to approve the Advisory Agreement on behalf of the Funds, the Board reviewed substantial detailed information that it believed to be reasonably necessary to reach its conclusion, including the terms of the Advisory Agreement itself, the Advisor’s Form ADV, the background and experience of the people primarily responsible for providing investment advisory services to the Funds, detailed comparative industry fee data, information regarding brokerage allocation and best execution and developments in the financial services industry. The Board carefully evaluated this information, and was advised by legal counsel with respect to its deliberations. The Trustees who were not “interested persons” of the Funds were also advised by independent legal counsel.

Nature, Quality and Extent of Services

The Board reviewed the nature, quality and extent of the investment advisory services of the Advisor in light of the high quality services the Trust expects to be provided by the Advisor in its management of the Funds and the success of each Fund in achieving its stated investment objective. The Board focused on the overall high quality of the personnel and operations at the Advisor and the systems and processes required to effectively manage the Funds, which systems and processes may not be present at other investment advisory organizations. The Board noted the nature of, and the special advisory skills needed to manage, each Fund. Specifically, the Board considered the fact that to maintain exposure consistent with each Fund’s daily investment objective, the Funds need to be re-balanced each day and that such activity is not typical of traditional ETFs or index funds. The Board also considered the Advisor’s development of investment strategies, including those involving the use of complex financial instruments, and processes that maximize the Funds’ ability to meet their stated investment objectives. The Board considered the size and experience of the Advisor’s portfolio staff and the Advisor’s ability to recruit, train and retain personnel with relevant experience. The Board considered the structure of the portfolio staff compensation program and the Board considered whether it provided appropriate incentives. The Board also considered information regarding how Fund brokerage would be allocated. Finally, the Board reviewed the proposed compliance activities of the Advisor. Based upon its review, the Board concluded that the nature, quality and extent of the investment advisory services to be provided by the Advisor were appropriate, consistent with the terms of the Advisory Agreement, that the expected high quality of services will benefit Fund shareholders, particularly in light of the unique nature of the Funds and the services required to support them.

Cost of services

The Board considered the fairness and reasonableness of the investment advisory fee payable to the Advisor in light of the investment advisory services to be provided, the expected costs of these services and the comparability of the fees paid to fees paid by other investment companies, including investment companies offering services similar in nature and extent to the Trust. The Board considered the fact that obtaining useful industry fee comparisons for the Funds is complicated by the fact that there are no similar funds in the marketplace. Notwithstanding, the Board found such comparisons useful in that each comparison contained information for certain categories of ETFs and mutual funds that, when taken together, provided a comprehensive presentation for the trustees’ consideration. The Board noted that fees paid by traditional ETFs were not necessarily appropriate benchmarks for comparison, because traditional ETFs do not involve leverage or portfolio management in the usual sense. The Board also considered the significant drivers of cost (leverage, intellectual capital (trading, tax, regulatory) and daily rebalancing) and also examined the costs to investors to achieve the objectives of the Funds on their own accord, noting that it would be more expensive or impossible to do so. The Board also considered the Advisor’s proposed performance of non-advisory services, including those performed under a Management Services

Agreement. The Board discussed with management the indirect or “fall-out” benefits the Advisor may derive from its relationship to the Funds, noting in particular that while the Advisor may receive research provided by broker-dealers, it will only obtain generic or other research not ascribed significant value and therefore not requiring the commitment of trading. The Board also considered the financial condition of the Advisor, which they found to be sound. The Board, including the independent Trustees, concluded that the investment advisory fees and other compensation payable by each Fund to the Advisor were reasonable in relation to the fees paid by other investment companies, including funds offering services similar in nature and extent to those of the Funds and were consistent with the Advisor’s fiduciary duty with respect to the receipt of such fees.

Potential Economies of Scale

The Board discussed with representatives of the Advisor the potential economies of scale as well as the effect of the contractual expense limitations undertaken by the Advisor. The Board discussed the fact that economies of scale are best achieved when a fund grows to be very large and remains that way and that the Funds’ expected asset volatility may offset such economies. The Board also considered the extended period associated with the start-up of the Funds and the associated costs borne by the Advisor. The Board determined that it would assess asset levels of each of the Funds upon commencement of operations to monitor whether breakpoints would become appropriate at some point in the future.

Conclusion

Based upon its evaluation, including their consideration of each of the factors noted above for each Fund, the Board and the independent Trustees acting separately, unanimously concluded that the Advisory Agreement is fair and reasonable to each Fund and its shareholders and that it should be approved.

Codes of Ethics. The Trust, ProShare Advisors, and SEI Investments Distribution Co. (“Distributor”) each have adopted a code of ethics, as required by applicable law, which is designed to prevent affiliated persons of the Trust, ProShare Advisors, and the Distributor from engaging in deceptive, manipulative, or fraudulent activities in connection with securities held or to be acquired by the Funds (which may also be held by persons subject to a code). There can be no assurance that the codes will be effective in preventing such activities. The Codes permit personnel subject to them to invest in securities, including securities that may be held or purchased by a Fund. The Codes are on file with the SEC and are available to the public.

DISCLOSURE OF PORTFOLIO HOLDINGS POLICY

The Trust has adopted a policy regarding the disclosure of information about each Fund’s portfolio holdings. The Board of Trustees of the Trust must approve all material amendments to this policy. A complete schedule of each Fund’s portfolio holdings as of the end of each fiscal quarter will be filed with the SEC (and publicly available) within 60 days of the end of each fiscal quarter. In addition, each Fund’s portfolio holdings will be publicly disseminated each day the Funds are open for business via the Funds’ website.

The portfolio composition file (“PCF”) and the IIV file, which contain equivalent portfolio holdings information, will be made available as frequently as daily to the Funds’ service providers to facilitate the provision of services to the Funds and to certain other entities (“Entities”) in connection with the dissemination of information necessary for transactions in large blocks of shares (called “Creation Units”), as contemplated by exemptive orders issued by the SEC and other legal and business requirements pursuant to which the Funds create and redeem shares. Entities are generally limited to National Securities Clearing Corporation (“NSCC”) members and subscribers to various fee-based services, including large institutional investors (“Authorized Participants”) that have been authorized by the Distributor to purchase and redeem Creation Units and other institutional market participants that provide information services. Each business day, Fund portfolio holdings information will be provided to the Distributor or other agent for dissemination through the facilities of the NSCC and/or through other fee-based services to NSCC members and/or subscribers to the fee-based services, including Authorized Participants, and to entities that publish and/or analyze such information in connection with the process of purchasing or redeeming Creation Units or trading shares of Funds in the secondary market.

Daily access to the PCF and IIV file is permitted (i) to certain personnel of those service providers that are involved in portfolio management and providing administrative, operational, or other support to portfolio management, including Authorized Participants, and (ii) to other personnel of the Advisor and the Funds’ distributor, administrator, custodian and fund accountant who are involved in functions which may require such information to conduct business in the ordinary course.

Portfolio holdings information may not be provided prior to its public availability (“Non-Standard Disclosure”) in other circumstances except where appropriate confidentiality arrangements limiting the use of such information are in effect. Non-Standard Disclosure may be authorized by the Trust’s Chief Compliance Officer or, in his absence, any other authorized officer of the Trust if he determines that such disclosure is in the best interests of the Fund’s shareholders, no conflict exists between the interests of the Fund’s shareholders and those of the Advisor or Distributor, and such disclosure serves a legitimate business purpose. The length of lag, if any, between the date of the information and the date on which the information is disclosed shall be determined by the officer authorizing the disclosure.

The Board of Trustees has adopted a Portfolio Holdings Disclosure Policy and will review the Policy annually.

OTHER SERVICE PROVIDERS

Administrator, Transfer Agent, and Fund Accounting Agent. J.P. Morgan Investor Services Co., 73 Tremont Street, Boston, MA 02108, acts as Administrator to the Funds. The Administrator provides the Funds with all required general administrative services, including, without limitation, office space, equipment, and personnel; clerical and general back office services; bookkeeping, internal accounting, and secretarial services; the determination of net asset values; and the preparation and filing of all reports, registration statements, proxy statements, and all other materials required to be filed or furnished by the Funds under federal and state securities laws. The Administrator also maintains the shareholder account records for the Funds, distributes dividends and distributions payable by the Funds, and produces statements with respect to account activity for the Funds and their shareholders. The Administrator pays all fees and expenses that are directly related to the services provided by the Administrator to the Funds; each Fund reimburses the Administrator for all fees and expenses incurred by the Administrator which are not directly related to the services the Administrator provides to the Funds under the service agreement. For these services, each Fund shall pay the Administrator a fee of [ ]%.

ProShare Advisors, pursuant to a separate Management Services Agreement, performs certain administrative services on behalf of the Funds. For these services, the Trust will pay to ProShare Advisors a fee at the annual rate of [ ]% of average daily net assets for all of the Funds.

Custodian. JPMorgan Chase Bank, N.A. acts as custodian to the Funds. JPMorgan Chase Bank is located at 4 MetroTech Center, Brooklyn, New York 11245.

Independent Accountants. [ ] serves as independent auditors to the Funds. [ ] provides audit services, tax return preparation and assistance, and consultation in connection with certain SEC filings. [Address]

Legal Counsel. Clifford Chance US LLP, 31 West 52 ^nd Street, New York, NY 10019, serves as counsel to the Funds.

DISTRIBUTOR

SEI Investments Distribution Co. serves as the distributor and principal underwriter in all fifty states and the District of Columbia. Its address is One Freedom Valley Drive, Oaks, Pa. 19456. The Distributor has no role in determining the investment policies of the Trust or any of the Funds, or which securities are to be purchased or sold by the Trust or any of the Funds.

Distribution and Service Plan. Shares will be continuously offered for sale by the Trust through the Distributor only in Creation Units, as described below under "Purchase and Issuance of Shares in Creation Units." Shares in less than Creation Units are not distributed by the Distributor. The Distributor also acts as agent for the Trust. The Distributor will deliver a prospectus to persons purchasing Shares in Creation Units and will maintain records of both orders placed with it and confirmations of acceptance furnished by it. The Distributor is a broker-dealer registered under the Securities Exchange Act and a member of the National Association of Securities Dealers, Inc. The Distributor has no role in determining the investment policies of the Funds or which securities are to be purchased or sold by the Funds.

The Board of Trustees has approved a Distribution and Service Plan under which each Fund may pay financial intermediaries such as broker-dealers and investment advisors (“Authorized Firms”) up to [ ]%, on an annualized basis, of average daily net assets of the Fund as reimbursement or compensation for distribution-related activities with respect to the Shares of Fund and shareholder services. Under the Distribution and Service Plan, the Trust or the Distributor may enter into agreements (“Distribution and Service Agreements”) with Authorized Firms that purchase Shares on behalf of their clients. The Distribution and Service Agreements will provide for compensation to the Authorized Firms in an amount up to [ ]% (on an annual basis) of the average daily net assets of the Shares of the applicable Fund attributable to, or held in the name of the Authorized Firm for, its clients. The Funds may pay different service fee amounts to Authorized Firms, which may provide different levels of services to their clients or customers.

The Trustees of the Trust, including a majority of the Trustees who are not interested persons of the Trust and who have no direct or indirect financial interest in the operation of the Distribution and Service Plan or the related Distribution and Service Agreements, voted to adopt the Distribution and Service Plan and Distribution and Service Agreements at a meeting called for the purpose of voting on such Distribution and Service Plan and Distribution and Service Agreements on November 14, 2005,. The Distribution and Service Plan and Distribution and Service Agreements will remain in effect for a period of one year and will continue in effect thereafter only if such continuance is specifically approved annually by a vote of the Trustees in the manner described above. All material amendments of the Distribution and Service Plan must also be approved by the Trustees in the manner described above. The Distribution and Service Plan may be terminated at any time by a majority of the Trustees as described above or by vote of a majority of the outstanding Service Shares of the affected Fund. The Distribution and Service Agreements may be terminated at any time, without payment of any penalty, by vote of a majority of the Trustees as described above or by a vote of a majority of the outstanding Shares of the affected Fund on not more than 60 days' written notice to any other party to the Distribution and Service Agreements. The Distribution and Service Agreements shall terminate automatically if assigned. The Trustees have determined that, in their judgment, there is a reasonable likelihood that the Distribution and Service Plan will benefit the Funds and holders of Shares of the Funds. In the Trustees’ quarterly review of the Distribution and Service Plan and Distribution and Service Agreements, they will consider their continued appropriateness and the level of compensation and/or reimbursement provided therein.

The Distribution and Service Plan is intended to permit the financing of a broad array of distribution-related activities and services, as well as shareholder services, for the benefit of investors. These activities

and services are intended to make the Shares an attractive investment alternative, which may lead to increased assets, increased investment opportunities and diversification, and reduced per share operating expenses.

COSTS AND EXPENSES

Each Fund bears all expenses of its operations other than those assumed by ProShare Advisors or the Administrator. Fund expenses include: the management fee; administrative and transfer agency and shareholder servicing fees; custodian and accounting fees and expenses, legal and auditing fees; securities valuation expenses; fidelity bonds and other insurance premiums; expenses of preparing and printing prospectuses, product descriptions, confirmations, proxy statements, and shareholder reports and notices; registration fees and expenses; proxy and annual meeting expenses, if any; licensing fees, listing fees, all Federal, state, and local taxes (including, without limitation, stamp, excise, income, and franchise taxes); organizational costs; and non-interested Trustees' fees and expenses.

ADDITIONAL INFORMATION CONCERNING SHARES

Organization and Description of Shares of Beneficial Interest. ProShares Trust (“Trust”) is a Delaware business trust and registered investment company. The Trust was organized on May 29, 2002, and has authorized capital of unlimited Shares of beneficial interest of no par value which may be issued in more than one class or series. Currently, the Trust consists of multiple separately managed series. The Board may designate additional series of common stock and classify Shares of a particular series into one or more classes of that series.

All Shares of the Trust are freely transferable. The Trust Shares do not have preemptive rights or cumulative voting rights, and none of the Shares have any preference to conversion, exchange, dividends, retirements, liquidation, redemption, or any other feature. Trust Shares have equal voting rights, except that, in a matter affecting a particular series or class of Shares, only Shares of that series or class may be entitled to vote on the matter. Trust shareholders are entitled to require the Trust to redeem Creation Units of their Shares. The Declaration of Trust confers upon the Board of Trustees the power, by resolution, to alter the number of Shares constituting a Creation Unit or to specify that Shares of the Trust may be individually redeemable. The Trust reserves the right to adjust the stock prices of Shares of the Trust to maintain convenient trading ranges for investors. Any such adjustments would be accomplished through stock splits or reverse stock splits which would have no effect on the net assets of the applicable Fund.

Under Delaware law, the Trust is not required to hold an annual shareholders meeting if the Investment Company Act does not require such a meeting. Generally, there will not be annual meetings of Trust shareholders. Trust shareholders may remove Trustees from office by votes cast at a meeting of Trust shareholders or by written consent. If requested by shareholders of at least 10% of the outstanding Shares of the Trust, the Trust will call a meeting of Funds’ shareholders for the purpose of voting upon the question of removal of a Trustee of the Trust and will assist in communications with other Trust shareholders.

The Declaration of Trust of the Trust disclaims liability of the shareholders or the officers of the Trust for acts or obligations of the Trust which are binding only on the assets and property of the Trust. The Declaration of Trust provides for indemnification of the Trust’s property for all loss and expense of any Funds shareholder held personally liable for the obligations of the Trust. The risk of a Trust shareholder incurring financial loss on account of shareholder liability is limited to circumstances in which loss of account of shareholder liability is limited to circumstances in which the Funds itself would not be able to meet the Trust’s obligations and this risk, thus, should be considered remote.

If a Fund does not grow to a size to permit it to be economically viable, the Fund may cease operations. In such an event, investors may be required to liquidate or transfer their investments at an inopportune time.

Book Entry Only System. The Depository Trust Company (“DTC”) acts as securities depositary for the Shares. The Shares of each Fund are represented by global securities registered in the name of DTC or its nominee and deposited with, or on behalf of, DTC. Except as provided below, certificates will not be issued for Shares.

DTC has advised the Trust as follows: it is a limited-purpose trust company organized under the laws of the State of New York, a member of the Federal Reserve System, a “clearing corporation” within the meaning of the New York Uniform Commercial Code, and a “clearing agency” registered pursuant to the provisions of Section 17A of the Exchange Act. DTC was created to hold securities of its participants (“DTC Participants”) and to facilitate the clearance and settlement of securities transactions among the DTC Participants in such securities through electronic book-entry changes in accounts of the DTC Participants, thereby eliminating the need for physical movement of securities certificates. DTC Participants include securities brokers and dealers, banks, trust companies, clearing corporations and certain other organizations, some of whom (and/or their representatives) own DTC. More specifically, DTC is owned by a number of its DTC Participants and by the New York Stock Exchange, Inc., the American Stock Exchange LLC and the National Association of Securities Dealers, Inc. Access to the DTC system is also available to others such as banks, brokers, dealers and trust companies that clear through or maintain a custodial relationship with a DTC Participant, either directly or indirectly (“Indirect Participants”). DTC agrees with and represents to its Participants that it will administer its book-entry system in accordance with its rules and by-laws and requirements of law. Beneficial ownership of Shares is limited to DTC Participants, Indirect Participants and persons holding interests through DTC Participants and Indirect Participants. Ownership of beneficial interests in Shares (owners of such beneficial interests are referred to herein as “Beneficial owners”) is shown on, and the transfer of ownership is effected only through, records maintained by DTC (with respect to DTC Participants) and on the records of DTC Participants (with respect to Indirect Participants and Beneficial owners that are not DTC Participants). Beneficial owners will receive from or through the DTC Participant a written confirmation relating to their purchase of Shares. The laws of some jurisdictions may require that certain purchasers of securities take physical delivery of such securities in definitive form. Such laws may impair the ability of certain investors to acquire beneficial interests in Shares.

Beneficial owners of Shares are not entitled to have Shares registered in their names, will not receive or be entitled to receive physical delivery of certificates in definitive form and are not considered the registered holder thereof. Accordingly, each Beneficial Owner must rely on the procedures of DTC, the DTC Participant and any Indirect Participant through which such Beneficial Owner holds its interests, to exercise any rights of a holder of Shares. The Trust understands that under existing industry practice, in the event the Trust requests any action of holders of Shares, or a Beneficial Owner desires to take any action that DTC, as the record owner of all outstanding Shares, is entitled to take, DTC would authorize the DTC Participants to take such action and that the DTC Participants would authorize the Indirect Participants and Beneficial owners acting through such DTC Participants to take such action and would otherwise act upon the instructions of Beneficial owners owning through them. As described above, the Trust recognizes DTC or its nominee as the owner of all Shares for all purposes. Conveyance of all notices, statements and other communications to Beneficial owners is effected as follows. Pursuant to the Depositary Agreement between the Trust and DTC, DTC is required to make available to the Trust upon request and for a fee to be charged to the Trust a listing of Shares holdings of each DTC Participant. The Trust shall inquire of each such DTC Participant as to the number of Beneficial owners holding Shares, directly or indirectly, through such DTC Participant. The Trust shall provide each such DTC Participant with copies of such notice, statement or other communication, in such form, number and at such place as such DTC Participant may reasonably request, in order that such notice, statement or communication may be transmitted by such DTC Participant, directly or indirectly, to such Beneficial owners. In addition, the Trust shall pay to each such DTC Participant a fair and reasonable amount as reimbursement for the expenses attendant to such transmittal, all subject to applicable statutory and regulatory requirements.

Distributions of Shares shall be made to DTC or its nominee, Cede & Co., as the registered holder of all Shares. DTC or its nominee, upon receipt of any such distributions, shall credit immediately DTC Participants’ accounts with payments in amounts proportionate to their respective beneficial interests in Shares as shown on the records of DTC or its nominee. Payments by DTC Participants to Indirect Participants and Beneficial owners of Shares held through such DTC Participants will be governed by

standing instructions and customary practices, as is now the case with securities held for the accounts of customers in bearer form or registered in a "street name," and will be the responsibility of such DTC Participants. The Trust has no responsibility or liability for any aspects of the records relating to or notices to Beneficial owners, or payments made on account of beneficial ownership interests in such Shares, or for maintaining, supervising or reviewing any records relating to such beneficial ownership interests or for any other aspect of the relationship between DTC and the DTC Participants or the relationship between such DTC Participants and the Indirect Participants and Beneficial owners owning through such DTC Participants.

DTC may determine to discontinue providing its service with respect to Shares at any time by giving reasonable notice to the Trust and discharging its responsibilities with respect thereto under applicable law. Under such circumstances, the Trust shall take action either to find a replacement for DTC to perform its functions at a comparable cost or, if such a replacement is unavailable, to issue and deliver printed certificates representing ownership of Shares, unless the Trust makes other arrangements with respect thereto satisfactory to the Exchange. In addition, certain brokers may make a dividend reinvestment service available to their clients. Brokers offering such services may require investors to adhere to specific procedures and timetables in order to participate. Investors interested in such a service should contact their broker for availability and other necessary details.

PROXY VOTING POLICY AND PROCEDURES

Background

The Board of Trustees has adopted policies and procedures with respect to voting proxies relating to portfolio securities of the Funds, pursuant to which the Board has delegated responsibility for voting such proxies to the Advisor subject to the Board’s continuing oversight.

Policies and Procedures

The Advisor’s proxy voting policies and procedures (the “Guidelines”) are designed to maximize shareholder value and protect shareowner interests when voting proxies. The Advisor’s Proxy Oversight Committee (the “Proxy Committee”) exercises and documents the Advisor’s responsibility with regard to voting of client proxies. The Proxy Committee is composed of representatives of the Advisor’s Compliance, Legal and Portfolio Management Departments, and chaired by the Advisor’s Chief Compliance Officer. The Proxy Committee reviews and monitors the effectiveness of the Guidelines.

To assist the Advisor in its responsibility for voting proxies and the overall proxy voting process, the Advisor has retained Institutional Shareholder Services (“ISS”) as an expert in the proxy voting and corporate governance area. ISS is an independent company that specializes in providing a variety of proxy-related services to institutional investment managers, plan sponsors, custodians, consultants, and other institutional investors. The services provided by ISS include in-depth research, global issuer analysis, and voting recommendations as well as vote execution, reporting and record keeping. ISS issues quarterly reports for the Advisor to review to assure proxies are being voted properly. The Advisor and ISS also perform spot checks intra-quarter to match the voting activity with available shareholder meeting information. ISS’s management meets on a regular basis to discuss its approach to new developments and amendments to existing policies. Information on such developments or amendments in turn is provided to the Proxy Committee. The Proxy Committee reviews and, as necessary, may amend periodically the Guidelines to address new or revised proxy voting policies or procedures.

The Guidelines are maintained and implemented by ISS and are an extensive list of common proxy voting issues with recommended voting actions based on the overall goal of achieving maximum shareholder value and protection of shareholder interests. Generally, proxies are voted in accordance with the voting recommendations contained in the Guidelines. If necessary, the Advisor will be consulted by ISS on non-routine issues. Proxy issues identified in the Guidelines include but are not limited to:

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Election of Directors - considering factors such as director qualifications, term of office, age limits.

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Proxy Contests - considering factors such as voting for nominees in contested elections and reimbursement of expenses.

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Election of Auditors - considering factors such as independence and reputation of the auditing firm.

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Proxy Contest Defenses - considering factors such as board structure and cumulative voting.

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Tender Offer Defenses - considering factors such as poison pills (stock purchase rights plans) and fair price provisions.

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Miscellaneous Governance Issues - considering factors such as confidential voting and equal access.

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Capital Structure - considering factors such as common stock authorization and stock distributions.

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Executive and Director Compensation - considering factors such as performance goals and employee stock purchase plans.

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State of Incorporation - considering factors such as state takeover statutes and voting on reincorporation proposals.

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Mergers and Corporate Restructuring - considering factors such as spin-offs and asset sales.

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Mutual Fund Proxy Voting - considering factors such as election of directors and proxy contests.

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Consumer and Public Safety Issues - considering factors such as social and environmental issues as well as labor issues.

A full description of each guideline and voting policy is maintained by the Advisor, and a complete copy of the Guidelines is available upon request.

Conflicts of Interest

From time to time, proxy issues may pose a material conflict of interest between Fund shareholders and the Advisor, the underwriter or any affiliates thereof. Due to the limited nature of the Advisor’s activities ( e.g. , no underwriting business, no publicly traded affiliates, no investment banking activities, and no research recommendations), conflicts of interest are likely to be infrequent. Nevertheless, it shall be the duty of the Proxy Committee to monitor for potential conflicts of interest. In the event a conflict of interest arises, the Advisor will direct ISS to use its independent judgment to vote affected proxies in accordance with approved guidelines. The Proxy Committee will disclose to the Board the voting issues that created the conflict of interest and the manner in which ISS voted such proxies.

Record of Proxy Voting

The Advisor, with the assistance of ISS, shall maintain for a period of at least five years a record of each proxy statement received and materials that were considered when the proxy was voted during the calendar year. Information on how the Funds voted proxies relating to portfolio securities for the 12-month (or shorter) period ended June 30 will be available (1) without charge, upon request, by calling the Advisor at [ ], (2) on the ProShares web site, and (3) on the Securities and Exchange Commission’s website at http://www.sec.gov.

PURCHASE AND REDEMPTION OF SHARES

The Trust issues and redeems Shares of each Fund only in aggregations of Creation Units. The following table sets forth the number of Shares of a Fund that constitute a Creation Unit for each Fund and the value of such Creation Unit as of the date of this Statement of Additional Information:


Fund	Shares Per Creation Unit	Value Per Creation Unit ($U.S.)
Ultra500 Fund	75,000	$	5,250,000
Ultra100 Fund	75,000	$	5,250,000
Ultra30 Fund	75,000	$	5,250,000
UltraMidCap400 Fund	75,000	$	5,250,000
Short 500 Fund	75,000	$	5,250,000
Short 100 Fund	75,000	$	5,250,000
Short 30 Fund	75,000	$	5,250,000
Short MidCap400 Fund	75,000	$	5,250,000
Short 500 Fund	75,000	$	5,250,000
Short 100 Fund	75,000	$	5,250,000
Short 30 Fund	75,000	$	5,250,000
Short MidCap400 Fund	75,000	$	5,250,000

See “Purchase and Issuance of Shares in Creation Units” and “Redemption of Shares in Creation Units” below. The Board of Trustees of the Trust reserves the right to declare a split or a consolidation in the number of Shares outstanding of any Fund of the Trust, and may make a corresponding change in the number of Shares constituting a Creation Unit, in the event that the per Shares price in the secondary market rises (or declines) to an amount that falls outside the range deemed desirable by the Board.

Purchase and Issuance of Creation Units. The Trust issues and sells Shares only in Creation Units on a continuous basis through the Distributor, without a sales load, at their net asset value next determined after receipt, on any Business Day (as defined herein), of an order in proper form.

A “Business Day” with respect to each Fund is any day on which the New York Stock Exchange is open for business.

Creation Units of Shares may be purchased only by or through a DTC Participant that has entered into an Authorized Participant Agreement with the Distributor (“Authorized Participant”). Such Authorized Participant will agree pursuant to the terms of such Authorized Participant Agreement on behalf of itself or any investor on whose behalf it will act, as the case may be, to certain conditions, including that such Authorized Participant will make available an amount of cash sufficient to pay the Balancing Amount and the transaction fee described below. The Authorized Participant may require the investor to enter into an agreement with such Authorized Participant with respect to certain matters, including payment of the Balancing Amount. Investors who are not Authorized Participants must make appropriate arrangements with an Authorized Participant. Investors should be aware that their particular broker may not be a DTC Participant or may not have executed an Authorized Participant Agreement, and that therefore orders to purchase Creation Units of Shares may have to be placed by the investor's broker through an Authorized Participant. As a result, purchase orders placed through an Authorized Participant may result in additional charges to such investor. The Trust does not expect to enter into an Authorized Participant Agreement with more than a small number of DTC Participants.

Portfolio Deposit (Bullish Funds only). The consideration for purchase of a Creation Unit of Shares of a Bullish Fund generally consists of the in-kind deposit of a designated portfolio of equity securities (“Deposit Securities”) constituting a representation of the Underlying Index for the Bullish Fund, the Balancing Amount, and the appropriate transaction fee (collectively, the “Portfolio Deposit”). The Balancing Amount will be the amount equal to the differential, if any, between the total aggregate market value of the Deposit Securities and the NAV of the Creation Units being purchased and will be paid to, or received from, the Trust after the NAV has been calculated.

The Index Receipt Agent makes available through the National Securities Clearing Corporation (“NSCC”) on each Business Day, either immediately prior to the opening of business on the Exchange or the night before, the list of the names and the required number of shares of each Deposit Security to be included in the current Portfolio Deposit (based on information at the end of the previous Business Day) for each Bullish Fund. Such Portfolio Deposit is applicable, subject to any adjustments as described below, in order to effect purchases of Creation Units of Shares of a given Bullish Fund until such time as the next-announced Portfolio Deposit composition is made available.

The identity and number of shares of the Deposit Securities required for a Portfolio Deposit for each Fund changes as rebalancing adjustments and corporate action events are reflected from time to time by ProShare Advisors with a view to the investment objective of the Bullish Fund. The composition of the Deposit Securities may also change in response to adjustments to the weighting or composition of the securities constituting the relevant securities index. In addition, the Trust reserves the right to permit or require the substitution of an amount of cash (i.e., a “cash in lieu” amount) to be added to the Balancing Amount to replace any Deposit Security which may not be available in sufficient quantity for delivery or for other similar reasons. The adjustments described above will reflect changes, known to ProShare Advisors on the date of announcement to be in effect by the time of delivery of the Portfolio Deposit, in the composition of the subject index being tracked by the relevant Bullish Fund, or resulting from stock splits and other corporate actions.

In addition to the list of names and numbers of securities constituting the current Deposit Securities of a Portfolio Deposit, on each Business Day, the Balancing Amount effective through and including the previous Business Day, per outstanding Share of each Bullish Fund, will be made available.

Shares may be issued in advance of receipt by the Trust of all or a portion of the applicable Deposit Securities as described below. In these circumstances, the initial deposit will have a greater value than the NAV of the Shares on the date the order is placed in proper form since, in addition to the available Deposit Securities, cash must be deposited in an amount equal to the sum of (i) the Balancing Amount, plus (ii) 115% of the market value of the undelivered Deposit Securities (the “Additional Cash Deposit”). An additional amount of cash shall be required to be deposited with the Trust, pending delivery of the missing Deposit Securities to the extent necessary to maintain the Additional Cash Deposit with the Trust in an amount at least equal to 115% of the daily marked to market value of the missing Deposit Securities. The Participation Agreement will permit the Trust to buy the missing Deposit Securities any time. Authorized Participants will be liable to the Trust for the costs incurred by the Trust in connection with any such purchases. These costs will be deemed to include the amount by which the actual purchase price of the Deposit Securities exceeds the market value of such Deposit Securities on the day the purchase order was deemed received by the Distributor plus the brokerage and related transaction costs associated with such purchases. The Trust will return any unused portion of the Additional Cash Deposit once all of the missing Deposit Securities have been properly received by the Custodian Bank or purchased by the Trust and deposited into the Trust. In addition, a transaction fee, as listed below, will be charged in all cases. The delivery of Shares so purchased will occur no later than the third Business Day following the day on which the purchase order is deemed received by the Distributor.

All questions as to the number of shares of each security in the Deposit Securities and the validity, form, eligibility and acceptance for deposit of any securities to be delivered shall be determined by the Trust, and the Trust's determination shall be final and binding.

Cash Purchase Amount (Bearish Funds only). Creation Units of the Bearish Funds will be sold only for cash (“Cash Purchase Amount”). Creation Units are sold at their net asset value, plus a transaction fee, as described below.

Purchases through the Clearing Process (Bullish Funds only). An Authorized Participant may place an order to purchase (or redeem) Creation Units (i) through the Continuous Net Settlement clearing processes of NSCC as such processes have been enhanced to effect purchases (and redemptions) of Creation Units, such processes being referred to herein as the "Clearing Process," or (ii) outside the Clearing Process. To purchase or redeem through the Clearing Process, an Authorized Participant must be a member of NSCC that is eligible to use the Continuous Net Settlement system. For purchase orders placed through the Clearing Process, the Authorized Participant Agreement authorizes the Distributor to transmit through the Transfer Agent to NSCC, on behalf of an Authorized Participant, such trade instructions as are necessary to effect the Authorized Participant's purchase order. Pursuant to such trade instructions to NSCC, the Authorized Participant agrees to deliver the requisite Deposit Securities and the Balancing Amount to the Trust, together with the Transaction Fee and such additional information as may be required by the Distributor. A purchase order must be received by the Distributor at 4:00 p.m. New York time if transmitted by mail or by 3:00 p.m. New York time if transmitted by telephone, facsimile or other electronic means permitted under the Participant Agreement in order to receive that day’s Closing NAV per Share.

Purchases Outside the Clearing Process. An Authorized Participant that wishes to place an order to purchase Creation Units outside the Clearing Process must state that it is not using the Clearing Process and that the purchase instead will be effected through a transfer of securities and cash directly through DTC. All purchases of the Bearish Funds will be settled outside the Clearing Process. Purchases (and redemptions) of Creation Units of the Bullish Funds settled outside the Clearing Process will be subject to a higher Transaction Fee than those settled through the Clearing Process. Purchase orders effected outside the Clearing Process are likely to require transmittal by the Authorized Participant earlier on the Transmittal Date than orders effected using the Clearing Process. Those persons placing orders outside the Clearing Process should ascertain the deadlines applicable to DTC and the Federal Reserve Bank wire system by contacting the operations department of the broker or depository institution effectuating such transfer of Deposit Securities and Balancing Amount (for the Bullish Funds), or of the Cash Purchase Amount (for the Bearish Funds) together with the applicable Transaction Fee.

Rejection of Purchase Orders. The Trust reserves the absolute right to reject a purchase order transmitted to it by the Distributor in respect of any Fund if (a) the purchaser or group of purchasers, upon obtaining the shares ordered, would own 80% or more of the currently outstanding Shares of any Fund; (b) for the Bullish Funds only, the Deposit Securities delivered are not as specified by ProShare Advisors and ProShare Advisors has not consented to acceptance of an in-kind deposit that varies from the designated Deposit Securities; (c) acceptance of the purchase transaction order would have certain adverse tax consequences to the Fund; (d) the acceptance of the purchase transaction order would, in the opinion of counsel, be unlawful; (e) the acceptance of the purchase transaction order would otherwise, in the discretion of the Trust or ProShare Advisors, have an adverse effect on the Trust or the rights of beneficial owners; (f) the value of a Cash Purchase Amount, or the value of the Balancing Amount to accompany an in-kind deposit exceed a purchase authorization limit extended to an Authorized Participant by the custodian and the Authorized Participant has not deposited an amount in excess of such purchase authorization with the custodian prior to 3:00 p.m. on the Transmittal Date; or (g) in the event that circumstances outside the control of the Trust, the Distributor and ProShare Advisors make it impractical to process purchase orders. The Trust shall notify a prospective purchaser of its rejection of the order of such person. The Trust and the Distributor are under no duty, however, to give notification of any defects or irregularities in the delivery of purchase transaction orders nor shall either of them incur any liability for the failure to give any such notification.

Redemption of Creation Units. Shares may be redeemed only in Creation Units at their net asset value next determined after receipt of a redemption request in proper form by the Distributor on any Business Day. The Trust will not redeem Shares in amounts less than Creation Units. Beneficial owners also may sell Shares in the secondary market, but must accumulate enough Shares to constitute a Creation Unit in order to have such Shares redeemed by the Trust. There can be no assurance, however, that there will be

sufficient liquidity in the public trading market at any time to permit assembly of a Creation Unit of Shares. Investors should expect to incur brokerage and other costs in connection with assembling a sufficient number of Shares to constitute a redeemable Creation Unit.

Fund Securities (Bullish Funds only). With respect to each Bullish Fund, ProShare Advisors makes available through the NSCC immediately prior to the opening of business on the Exchange on each day that the Exchange is open for business the Portfolio Securities that will be applicable (subject to possible amendment or correction) to redemption requests received in proper form (as defined below) on that day (“Fund Securities”). These securities may, at times, not be identical to Deposit Securities which are applicable to a purchase of Creation Units.

The redemption proceeds for a Creation Unit generally consist of Fund Securities, as announced by ProShare Advisors through the NSCC on any Business Day, plus the Balancing Amount. The redemption transaction fee described below is deducted from such redemption proceeds.

Cash Redemption Amount (Bearish Funds only). The redemption proceeds for a Creation Unit of a Bearish Fund will consist solely of cash in an amount equal to the net asset value of the Shares being redeemed, as next determined after a receipt of a request in proper form, less the redemption transaction fee described below (“Cash Redemption Amount”).

Placement of Redemption Orders Using Clearing Process. Orders to redeem Creation Units of Funds through the Clearing Process must be delivered through an Authorized Participant that is a member of NSCC that is eligible to use the Continuous Net Settlement System. A redemption order must be received by the Distributor prior to 4:00 p.m. New York time if transmitted by mail or by 3:00 p.m. New York time if transmitted by telephone, facsimile or other electronic means permitted under the Participant Agreement in order to receive that day’s closing NAV per share. All other procedures set forth in the Participant Agreement must be followed in order for you to receive the NAV determined on that day. The requisite Fund Securities and the Balancing Amount (for the Bullish Funds) or the Cash Redemption Amount (for the Bearish Funds) will be transferred by the third (3 ^rd ) NSCC Business Day following the date on which such request for redemption is deemed received.

Placement of Redemption Orders Outside Clearing Process. Orders to redeem Creation Units of Funds outside the Clearing Process must be delivered through a DTC Participant that has executed the Participant Agreement. A DTC Participant who wishes to place an order for redemption of Creation Units of a Fund to be effected outside the Clearing Process need not be a Participating Party, but such orders must state that the DTC Participant is not using the Clearing Process and that redemption of Creation Units will instead be effected through transfer of Shares directly through DTC. A redemption order must be received by the Distributor prior to 4:00 p.m. New York time if transmitted by mail or by 3:00 p.m. New York time if transmitted by telephone, facsimile or other electronic means permitted under the Participant Agreement in order to receive that day’s closing NAV per share. All other procedures set forth in the Participant Agreement must be followed in order for you to receive the NAV determined on that day. The order must be accompanied or preceded by the requisite number of Shares of Funds specified in such order, which delivery must be made through DTC to the Custodian by the third Business Day following such Transmittal Date (“DTC Cut-Off Time”); and (iii) all other procedures set forth in the Participant Agreement must be properly followed.

After the Transfer Agent has deemed an order for redemption outside the Clearing Process received, the Transfer Agent will initiate procedures to transfer the requisite Fund Securities (for the Bullish Funds only) which are expected to be delivered within three Business Days and the Cash Redemption Amount (for all Funds) by the third Business Day following the Transmittal Date on which such redemption order is deemed received by the Transfer Agent.

In certain instances, Authorized Participants may create and redeem Creation Unit aggregations of the same Fund on the same trade date. In this instance, the Trust reserves the right to settle these transactions on a net basis.

Redemptions in Cash. For Bullish Funds, if it is not possible to effect deliveries of the Fund Securities, the Fund may in its discretion exercise its option to redeem such Shares in cash, and the redeeming shareholder will be required to receive its redemption proceeds in cash. In addition, an investor may request a redemption in cash which the Bullish Fund may, in its sole discretion, permit. In either case, the investor will receive a cash payment equal to the net asset value of its Shares based on the net asset value of Shares of the relevant Fund next determined after the redemption request is received in proper form (minus a redemption transaction fee and additional charge for requested cash redemptions specified above, to offset the Fund’s brokerage and other transaction costs associated with the disposition of Fund Securities). The Fund may also, in its sole discretion, upon request of a shareholder, provide such redeemer a portfolio of securities which differs from the exact composition of the Fund Securities but does not differ in net asset value.

For Bearish Funds, all redemptions will be in cash.

The right of redemption may be suspended or the date of payment postponed with respect to any Fund (1) for any period during which the New York Stock Exchange is closed (other than customary weekend and holiday closings); (2) for any period during which trading on the New York Stock Exchange is suspended or restricted; (3) for any period during which an emergency exists as a result of which disposal of the shares of the Fund's portfolio securities or determination of its net asset value is not reasonably practicable; or (4) in such other circumstance as is permitted by the SEC.

Transaction Fees. Transaction fees are imposed as set forth in the table below. Transaction fees payable to the Trust are imposed to compensate the Trust for the transfer and other transaction costs of a Fund associated with the issuance and redemption of Creation Units of Shares. There is a fixed and a variable component to the total Transaction Fee. A fixed Transaction Fee is applicable to each creation or redemption transaction, regardless of the number of Creation Units purchased or redeemed. In addition, a variable Transaction Fee equal to a percentage of the value of each Creation Unit purchased or redeemed is applicable to each creation or redemption transaction.

Purchasers of Creation Units of Bullish Funds for cash are required to pay an additional charge to compensate the relevant Fund for brokerage and market impact expenses relating to investing in portfolios securities. Where the Trust permits an in-kind purchaser to substitute cash in lieu of depositing a portion of the Deposit Securities, the purchaser will be assessed an additional charge for cash purchases.

Purchasers of Shares in Creation Units are responsible for the costs of transferring the securities constituting the Deposit Securities to the account of the Trust. The purchase transaction fees for in-kind purchases and cash purchases (when available) are listed in the table below. Investors will also bear the costs of transferring securities from the Fund to their account or on their order. Investors who use the services of a broker or other such intermediary may be charged a fee for such services. This table is subject to revision from time to time.


Fund	Fixed Transaction Fee for In-kind and Cash Purchases and Redemptions		Variable Transaction Fee for In-kind and Cash Purchases and Redemptions*		Maximum Additional Charge for Cash Purchases and Redemptions**		Number of Shares Per Creation Unit
Ultra500 Fund	[	]	[	]	[	]	75,000
Ultra100 Fund	[	]	[	]	[	]	75,000
Ultra30 Fund	[	]	[	]	[	]	75,000
UltraMidCap400 Fund	[	]	[	]	[	]	75,000
Short500 Fund	[	]	[	]	[	]	75,000
Short100 Fund	[	]	[	]	[	]	75,000
Short30 Fund	[	]	[	]	[	]	75,000
ShortMidCap400 Fund	[	]	[	]	[	]	75,000
UltraShort 500 Fund	[	]	[	]	[	]	75,000
UltraShort 100 Fund	[	]	[	]	[	]	75,000
UltraShort 30 Fund	[	]	[	]	[	]	75,000
UltraShort MidCap400 Fund	[	]	[	]	[	]	75,000

*	As a percentage of the amount invested.

**	The additional charge is equal to three times the fixed transaction charge, plus the following amounts, expressed as a percentage of the amount invested.

See “Distribution and Service Plan” herein for additional information concerning the distribution arrangements for Shares.

DETERMINING NET ASSET VALUE

Net asset value per share for each Fund is computed by dividing the value of the net assets of such Fund (i.e., the value of its total assets less total liabilities) by the total number of Shares outstanding, rounded to the nearest cent. Expenses and fees, including the management, administration and distribution fees, are accrued daily and taken into account for purposes of determining net asset value. The net asset value of each Fund is determined as of the close of the regular trading session on the New York Stock Exchange, Inc. (“NYSE”) (ordinarily 4:00 p.m., Eastern time) on each day that the NYSE is open. The Trust may establish additional times for the computation of net asset value of one or more Funds in the future in connection with the possible future trading of Shares of such Funds on one or more foreign exchanges.

CONTINUOUS OFFERING

The method by which Creation Units of Shares are created and traded may raise certain issues under applicable securities laws. Because new Creation Units of Shares are issued and sold by the Trust on an ongoing basis, at any point a “distribution,” as such term is used in the Securities Act, may occur. Broker-dealers and other persons are cautioned that some activities on their part may, depending on the circumstances, result in their being deemed participants in a distribution in a manner which could render them statutory underwriters and subject them to the prospectus delivery and liability provisions of the Securities Act. For example, a broker-dealer firm or its client may be deemed a statutory underwriter if it takes Creation Units after placing an order with the Distributor, breaks them down into constituent Shares, and sells some or all of the Shares comprising such Creation Units directly to its customers; or if it chooses to couple the creation of a supply of new Shares with an active selling effort involving solicitation of secondary market demand for Shares. A determination of whether a person is an underwriter for the purposes of the Securities Act depends upon all the facts and circumstances pertaining to that person's activities. Thus, the examples mentioned above should not be considered a complete description of all the activities that could lead to a categorization as an underwriter. Broker- dealer firms should also note that dealers who are effecting transactions in Shares, whether or not participating in the distribution of Shares, are generally required to deliver a prospectus. This is because the prospectus delivery exemption in Section 4(3) of the Securities Act is not available in respect of such transactions as a result of Section 24(d) of the Investment Company Act . The Trust has, however, applied to the Securities and Exchange Commission for an exemption from this prospectus delivery obligation in ordinary secondary market transactions involving Shares under certain circumstances, on the condition that purchasers of Shares are provided with a product description of the Shares. If the SEC grants the Trust this relief, broker-dealer firms should note that dealers who are not “underwriters” but are participating in a distribution (as contrasted to ordinary secondary market transaction), and thus dealing with Shares that are part of an “unsold allotment” within the meaning of section 4(3)(C) of the Securities Act, would be unable to take advantage of the prospectus delivery exemption provided by section 4(3) of the Securities Act. Firms that incur a prospectus-delivery obligation with respect to Shares are reminded that under Securities Act Rule 153 a prospectus delivery obligation under Section 5(b)(2) of the Securities Act owed to a national securities exchange member in connection with a sale on the national securities exchange is satisfied by the fact that the Fund’s prospectus is available at the national securities exchange on which the Shares of such Fund trade upon request. The prospectus delivery mechanism provided in Rule 153 is only available with respect to transactions on a national securities exchange and not with respect to “upstairs” transactions.

TAXATION

Overview. Set forth below is a discussion of certain U.S. federal income tax issues concerning the Funds and the purchase, ownership, and disposition of a Fund’s Shares. This discussion does not purport to be complete or to deal with all aspects of federal income taxation that may be relevant to shareholders in light of their particular circumstances, nor to certain types of shareholders subject to special treatment under the federal income tax laws (for example, banks and life insurance companies). This discussion is based upon present provisions of the Code, the regulations promulgated thereunder, and judicial and administrative ruling authorities, all of which are subject to change, which change may be retroactive. Prospective investors should consult their own tax advisors with regard to the federal tax consequences of the purchase, ownership, or disposition of a Fund’s Shares, as well as the tax consequences arising under the laws of any state, foreign country, or other taxing jurisdiction.

Dividends out of net ordinary income and distribution of net short-term capital gains are taxable to the recipient U.S. shareholders as ordinary income, whether received in cash or reinvested in a Fund’s Shares. Under recently enacted legislation, ordinary income dividends you receive may be taxed at the same rate as long-term capital gains. However, income received in the form of ordinary income dividends will not be considered long-term capital gains for other federal income tax purposes, including the calculation of net capital losses. Short-term capital gain distributions will continue to be taxed at ordinary income rates. Dividends from net ordinary income may be eligible for the corporate dividends-received deduction.

The excess of net long-term capital gains over the net short-term capital losses realized and distributed by a Fund to its U.S. shareholders as capital gains distributions is taxable to the shareholders as gain from the sale of a capital asset held for more than one year, regardless of the length of time a shareholder has held the Fund Shares. If a shareholder holds a Fund’s Shares for six months or less and during that period receives a distribution taxable to the shareholder as long-term capital gain, any loss realized on the sale of the Fund’s Shares will be long-term loss to the extent of such distribution.

The amount of an income dividend or capital gains distribution declared by a Fund during October, November or December of a year to shareholder of record as of a specified date in such a month that is paid during January of the following year will be deemed to be received by shareholders on December 31 of the prior year.

Any dividend or distribution paid by a Fund has the effect of reducing the Fund's net asset value per share. Investors should be careful to consider the tax effect of buying Shares shortly before a distribution by a Fund. The price of Shares purchased at that time will include the amount of the forthcoming distribution, but the distribution will be taxable to the shareholder.

A dividend or capital gains distribution with respect to Shares of a Fund held by a tax-deferred or qualified plan, such as an IRA, retirement plan or corporate pension or profit sharing plan, will not be taxable to the plan. Distributions from such plans will be taxable to individual participants under applicable tax rules without regard to the character of the income earned by the qualified plan.

Shareholders will be advised annually as to the federal tax status of dividends and capital gains distribution made by the Funds for the preceding year. Distributions by Funds generally will be subject to state and local taxes.

Each of the Funds intends to qualify and elect to be treated each year as a regulated investment company (a “RIC”) under Subchapter M of the Code. A RIC generally is not subject to federal income tax on income and gains distributed in a timely manner to its shareholders. Accordingly, each Fund generally must, among other things, (a) derive in each taxable year at least 90% of its gross income from dividends, interest, payments with respect to certain securities loans, and gains from the sale or other disposition of stock, securities or foreign currencies, or other income derived with respect to its business of investing in

such stock, securities or currencies; and (b) diversify its holdings so that, at the end of each fiscal quarter, (i) at least 50% of the market value of the Fund’s assets is represented by cash, U.S. government securities, the securities of other regulated investment companies and other securities, with such other securities limited, in respect of any one issuer, to an amount not greater than 5% of the value of the Fund’s total assets and 10% of the outstanding voting securities of such issuer, and (ii) not more than 25% of the value of its total assets is invested in the securities of any one issuer (other than U.S. government securities and the securities of other regulated investment companies).

As a RIC, a Fund generally will not be subject to U.S. federal income tax on income and gains that it distributes to shareholders, if at least 90% of the Fund’s investment company taxable income (which includes, among other items, dividends, interest and the excess of any net short-term capital gains over net long-term capital losses) for the taxable year is distributed. Each Fund intends to distribute substantially all of such income.

Amounts not distributed on a timely basis in accordance with a calendar year distribution requirement are subject to a nondeductible 4% excise tax at the Fund level. To avoid the tax, each Fund must distribute during each calendar year an amount equal to the sum of (1) at least 98% of its ordinary income (not taking into account any capital gains or losses) for the calendar year, (2) at least 98% of its capital gains in excess of its capital losses (adjusted for certain ordinary losses) for a one-year period generally ending on October 31 of the calendar year, and (3) all ordinary income and capital gains for previous years that were not distributed during such years. To avoid application of the excise tax, the Funds intend to make distributions in accordance with the calendar year distribution requirement. A distribution will be treated as paid on December 31 of a calendar year if it is declared by the Fund in October, November or December of that year with a record date in such a month and paid by the Fund during January of the following year. Such distributions will be taxable to shareholders in the calendar year in which the distributions are declared, rather than the calendar year in which the distributions are received.

Market Discount. If a Fund purchases a debt security at a price lower than the stated redemption price of such debt security, the excess of the stated redemption price over the purchase price is “market discount”. If the amount of market discount is more than a de minimis amount, a portion of such market discount must be included as ordinary income (not capital gain) by the Fund in each taxable year in which the Fund owns an interest in such debt security and receives a principal payment on it. In particular, the Fund will be required to allocate that principal payment first to the portion of the market discount on the debt security that has accrued but has not previously been includable in income. In general, the amount of market discount that must be included for each period is equal to the lesser of (i) the amount of market discount accruing during such period (plus any accrued market discount for prior periods not previously taken into account) or (ii) the amount of the principal payment with respect to such period. Generally, market discount accrues on a daily basis for each day the debt security is held by a Fund at a constant rate over the time remaining to the debt security’s maturity or, at the election of the Fund, at a constant yield to maturity which takes into account the semi-annual compounding of interest. Gain realized on the disposition of a market discount obligation must be recognized as ordinary interest income (not capital gain) to the extent of the “accrued market discount.”

Original Issue Discount. Certain debt securities acquired by the Funds may be treated as debt securities that were originally issued at a discount. Original issue discount can generally be defined as the difference between the price at which a security was issued and its stated redemption price at maturity. Although no cash income is actually received by a Fund, original issue discount that accrues on a debt security in a given year generally is treated for federal income tax purposes as interest and, therefore, such income would be subject to the distribution requirements applicable to regulated investment companies.

Some debt securities may be purchased by the Funds at a discount that exceeds the original issue discount on such debt securities, if any. This additional discount represents market discount for federal income tax purposes (see above).

Futures and Foreign Currency Forward Contracts. Any regulated futures contracts and certain options (namely, nonequity options and dealer equity options) in which a Fund may invest may be “section 1256

contracts.” (The Funds do not intend to invest or trade in options.) Gains (or losses) on these contracts generally are considered to be 60% long-term and 40% short-term capital gains or losses; however foreign currency gains or losses arising from certain section 1256 contracts are ordinary in character. Also, section 1256 contracts held by a Fund at the end of each taxable year (and on certain other dates prescribed in the Code) are “marked to market” with the result that unrealized gains or losses are treated as though they were realized.

Transactions in futures and forward contracts undertaken by the Funds may result in “straddles” for federal income tax purposes. The straddle rules may affect the character of gains (or losses) realized by a Fund, and losses realized by the Fund on positions that are part of a straddle may be deferred under the straddle rules, rather than being taken into account in calculating the taxable income for the taxable year in which the losses are realized. In addition, certain carrying charges (including interest expense) associated with positions in a straddle may be required to be capitalized rather than deducted currently. Certain elections that a Fund may make with respect to its straddle positions may also affect the amount, character and timing of the recognition of gains or losses from the affected positions.

Because only a few regulations implementing the straddle rules have been promulgated, the consequences of such transactions to the Funds are not entirely clear. The straddle rules may increase the amount of short-term capital gain realized by a Fund, which is taxed as ordinary income when distributed to shareholders. Because application of the straddle rules may affect the character of gains or losses, defer losses and/or accelerate the recognition of gains or losses from the affected straddle positions, the amount which must be distributed to shareholders as ordinary income or long-term capital gain may be increased or decreased substantially as compared to a fund that did not engage in such transactions.

Constructive Sales. Recently enacted rules may affect the timing and character of gain if a Fund engages in transactions that reduce or eliminate its risk of loss with respect to appreciated financial positions. If the Fund enters into certain transactions in property while holding substantially identical property, the Fund would be treated as if it had sold and immediately repurchased the property and would be taxed on any gain (but not loss) from the constructive sale. The character of gain from a constructive sale would depend upon the Fund’s holding period in the property. Loss from a constructive sale would be recognized when the property was subsequently disposed of, and its character would depend on the Fund's holding period and the application of various loss deferral provisions of the Code.

Passive Foreign Investment Companies. The Funds may invest in shares of foreign corporations that may be classified under the Code as passive foreign investment companies (“PFICs”). In general, a foreign corporation is classified as a PFIC if at least one-half of its assets constitute investment-type assets, or 75% or more of its gross income is investment-type income. If a Fund receives a so-called “excess distribution” with respect to PFIC stock, the Fund itself may be subject to a tax on a portion of the excess distribution, whether or not the corresponding income is distributed by the Fund to shareholders. In general, under the PFIC rules, an excess distribution is treated as having been realized ratably over the period during which the Fund held the PFIC shares. Each Fund will itself be subject to tax on the portion, if any, of an excess distribution that is so allocated to prior Fund taxable years and an interest factor will be added to the tax, as if the tax had been payable in such prior taxable years. Certain distributions from a PFIC as well as gain from the sale of PFIC shares are treated as excess distributions. Excess distributions are characterized as ordinary income even though, absent application of the PFIC rules, certain excess distributions might have been classified as capital gains.

The Funds may be eligible to elect alternative tax treatment with respect to PFIC shares. Under an election that currently is available in some circumstances, a Fund generally would be required to include in its gross income its share of the earnings of a PFIC on a current basis, regardless of whether distributions were received from the PFIC in a given year. If this election were made, the special rules, discussed above, relating to the taxation of excess distributions, would not apply. In addition, another election would involve marking to market the Fund’s PFIC shares at the end of each taxable year, with the result that unrealized gains would be treated as though they were realized and reported as ordinary income. Any mark-to-market losses and any loss from an actual disposition of Fund Shares would be deductible as ordinary losses to the extent of any net mark-to-market gains included in income in prior years.

Distributions. Distributions of investment company taxable income are taxable to a U.S. shareholder as ordinary income, whether paid in cash or shares. Dividends paid by a Fund to a corporate shareholder, to the extent such dividends are attributable to dividends received from U.S. corporations by the Fund, may qualify for the dividends received deduction. However, the revised alternative minimum tax applicable to corporations may deduct the value of the dividends received deduction. Distributions of net capital gains (the excess of net long-term capital gains over net short-term capital losses), if any, designated by the Fund as capital gain dividends, whether paid in cash or in Shares, are taxable as gain from the sale or exchange of an asset held for more than one year, regardless of how long the shareholder has held the Fund’s Shares. Capital gains dividends are not eligible for the dividends received deduction.

Shareholders will be notified annually as to the U.S. federal tax status of distributions, and shareholders receiving distributions in the form of newly issued Shares will receive a report as to the net asset value of the Shares received.

If the net asset value of Shares is reduced below a shareholder’s cost as a result of a distribution by a Fund, such distribution generally will be taxable even though it represents a return of invested capital. Investors should be careful to consider the tax implications of buying Shares of a Fund just prior to a distribution. The price of Shares purchased at this time will include the amount of the forthcoming distribution, but the distribution will generally be taxable.

Funds will not pay interest on uncashed distribution checks.

Disposition of Shares. Upon a redemption, sale or exchange of Shares of a Fund, a shareholder will realize a taxable gain or loss depending upon his or her basis in the Shares. A gain or loss will be treated as capital gain or loss if the Shares are capital assets in the shareholder’s hands and generally will be long-term, mid-term or short-term, depending upon the shareholder’s holding period for the Shares. Any loss realized on a redemption, sale or exchange will be disallowed to the extent the Shares disposed of are replaced (including through reinvestment of dividends) within a period of 61 days, beginning 30 days before and ending 30 days after the Shares are disposed of. In such a case the basis of the Shares acquired will be adjusted to reflect the disallowed loss. Any loss realized by a shareholder on the disposition of a Fund’s Shares held by the shareholder for six months or less will be treated for tax purposes as a long-term capital loss to the extent of any distributions of capital gain dividends received or treated as having been received by the shareholder with respect to such Shares.

Backup Withholding. Each Fund may be required to withhold federal income tax (“backup withholding”) from dividends paid, capital gains distributions, and redemption proceeds to shareholders. The backup withholding rate is the fourth lowest tax rate applicable to an unmarried individual, which is currently 28%. Federal tax will be withheld if (1) the shareholder fails to furnish the Fund with the shareholder’s correct taxpayer identification number or social security number, (2) the IRS notifies the shareholder or the Fund that the shareholder has failed to report properly certain interest and dividend income to the IRS and to respond to notices to that effect, or (3) when required to do so, the shareholder fails to certify that he or she is not subject to backup withholding. Any amounts withheld may be credited against the shareholder’s federal income tax liability.

Other Taxation. Distributions may be subject to additional state, local and foreign taxes, depending on each shareholder’s particular situation. Non-U.S. shareholders and certain types of U.S. shareholders subject to special treatment under the U.S. federal income tax laws (e.g. banks and life insurance companies) may be subject to U.S. tax rules that differ significantly from those summarized above.

Equalization Accounting. Each Fund distributes its net investment income and capital gains to shareholders as dividends annually to the extent required to qualify as a regulated investment company under the Code and generally to avoid federal income or excise tax. Under current law, each Fund may on its tax return treat as a distribution of investment company taxable income and net capital gain the portion of redemption proceeds paid to redeeming shareholders that represents the redeeming shareholders’ portion of the Fund’s undistributed investment company taxable income and net capital gain. This practice, which involves the use of equalization accounting, will have the effect of reducing the amount of income and

gains that the Fund is required to distribute as dividends to shareholders in order for the Fund to avoid federal income tax and excise tax. This practice may also reduce the amount of distributions required to be made to non-redeeming shareholders and the amount of any undistributed income will be reflected in the value of the Fund’s Shares; the total return on a shareholder’s investment will not be reduced as a result of the Fund’s distribution policy. Investors who purchase Shares shortly before the record date of a distribution will pay the full price for the Shares and then receive some portion of the price back as a taxable distribution.

OTHER INFORMATION

The Funds are not sponsored, endorsed, sold or promoted by Standard & Poor’s, a division of The McGraw-Hill Companies, Inc. (“S&P”) or NASDAQ Stock Markets, Inc. (“NASDAQ”). S&P and NASDAQ make no representation or warranty, express or implied, to the owners of Shares of the Funds or any member of the public regarding the advisability of investing in securities generally or in the Funds particularly or the ability of the S&P 500 Index or NASDAQ 100 Index to track general stock market performance. S&P’s and NASDAQ’s only relationship to the Funds (“Licensee”) is the licensing of certain trademarks and trade names of S&P and NASDAQ. S&P and NASDAQ have no obligation to take the needs of the Licensee or owners of the Shares of the Funds into consideration in determining, composing or calculating the S&P 500 Index and NASDAQ 100 Index, respectively. S&P and NASDAQ are not responsible for and have not participated in the determination or calculation of the equation by which the Shares of Funds are to be converted into cash. S&P and NASDAQ have no obligation or liability in connection with the administration, marketing or trading of Funds.

S&P AND NASDAQ DO NOT GUARANTEE THE ACCURACY AND/OR THE COMPLETENESS OF THE S&P 500 INDEX OR THE NASDAQ-100 INDEX, RESPECTIVELY, OR ANY DATA INCLUDED THEREIN AND S&P AND NASDAQ SHALL HAVE NO LIABILITY FOR ANY ERRORS, OMISSIONS, OR INTERRUPTIONS THEREIN. S&P AND NASDAQ MAKE NO WARRANTY, EXPRESS OR IMPLIED, AS TO RESULTS TO BE OBTAINED BY LICENSEE, OWNERS OF THE PRODUCT, OR ANY OTHER PERSON OR ENTITY FROM THE USE OF THE S&P 500 INDEX( OR NASDAQ-100 INDEX( OR ANY DATA INCLUDED THEREIN. S&P AND NASDAQ MAKE NO EXPRESS OR IMPLIED WARRANTIES, AND EXPRESSLY DISCLAIM ALL WARRANTIES OF MERCHANTIBILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE WITH RESPECT TO THE S&P 500 INDEX( OR THE NASDAQ-100 INDEX OR ANY DATA INCLUDED THEREIN. WITHOUT LIMITING ANY OF THE FOREGOING, IN NO EVENT SHALL S&P OR NASDAQ HAVE ANY LIABILITY FOR ANY SPECIAL, PUNITIVE, INDIRECT, OR CONSEQUENTIAL DAMAGES (INCLUDING LOST PROFITS), EVEN IF NOTIFIED OF THE POSSIBILITY OF SUCH DAMAGES.

“Dow Jones” is a service mark of Dow Jones & Company, Inc.

Dow Jones does not:

•

Sponsor, endorse, sell or promote the Funds.

•

Recommend that any person invest in the Funds or any other securities.

•

Have any responsibility or liability for or make any decisions about timing, amount or pricing of the Funds.

•

Have any responsibility or liability for the administration, management or marketing of the Funds.

•

Consider the needs of the Funds or the owners of the Funds in determining, composing or calculating the Dow Jones indices or have any obligation to do so.

Dow Jones will not have any liability in connection with the Funds. Specifically,

•

Dow Jones does not make any warranty, express or implied, and Dow Jones disclaims any warranty about:

•

The results to be obtained by the Funds, the owner of the Funds or any other person in connection with the use of the Dow Jones sector indices and the data included in the Dow Jones indices;

•

The accuracy or completeness of the Dow Jones indices and its data;

•

The merchantability and the fitness for a particular purpose or use of the Dow Jones indices and its data:

•

Dow Jones will have no liability for any errors, omission or interruptions in the Dow Jones indices or its data;

•

Under no circumstances will Dow Jones be liable for any lost profits or indirect, punitive, special or consequential damages or losses, even if Dow Jones knows that they might occur.

FINANCIAL STATEMENTS

Report of Independent Accountants

To the Shareholders and Board of Trustees of ProShares Trust

In our opinion, the accompanying statement of assets and liabilities presents fairly, in all material respects, the financial position of ProShares Trust (“Trust”) at [ ], 2006, in conformity with generally accepted accounting principles. This financial statement is the responsibility of the Trust's management; our responsibility is to express an opinion on this financial statement based on our audit. We conducted our audit of this financial statement in accordance with generally accepted auditing standards, which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statement is free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation.

PROSHARES TRUST

STATEMENT OF ASSETS AND LIABILITIES

XXXX 2006

ASSETS


Cash	$	XXX,XXX
Total assets	$	XXX,XXX
Net assets	$	XXX,XXX
Analysis of Net Assets:
Paid-in Capital	$	XXX,XXX
Net asset value, offering and redemption price per share, $XXX,XXX/X,XXX.X shares outstanding (unlimited amount authorized, no par value)	$	XX.XX

See accompanying notes to financial statements.

PROSHARES TRUST

STATEMENT OF OPERATIONS

FOR THE PERIOD FROM XXX 2006 TO XXX 2006

EXPENSES


Organizational Expenses	$	xx,xxx
Less:
Reimbursement of Organizational Expenses by Adviser	$	(xx,xxx	)
Net Expenses	$	0

See accompanying notes to financial statements.

PROSHARES TRUST

NOTES TO FINANCIAL STATEMENTS

1.	Organization

ProShares Trust, a Delaware statutory trust, (the “Trust”) was formed on May 29, 2002. The Trust has had no operations to date other than matters relating to its organization and registration as a non-diversified, open-end management investment company under the Investment Company Act of 1940, as amended, and the sale and issuance to ProShare Advisors LLC (the “Advisor”), of X,XXX.X Shares of beneficial interest at an aggregate purchase price of $XXX,XXX in xxxxxxxx ProShares (the “Fund”). The Fund is one of twelve portfolios currently comprising the Trust. As of the date of this statement, no other Fund has commenced operations. The investment objective of the Fund is to seek daily investment results, before fees and expenses, that correspond to the inverse (opposite) of the daily performance of the XXX Index.

2.	Summary of Significant Account Policies

Use of Estimates:

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of this financial statement. Actual results could differ from those estimates.

Federal Income Tax:

The Fund intends to qualify as a “regulated investment company” under Subchapter M of the Code. If so qualified, the Fund will not be subject to federal income tax to the extent it distributes substantially all of its net investment income and capital gains to shareholders.

3.	Agreements

Investment Advisory and Management Services Agreements:

The Advisor serves as the Trust’s investment adviser pursuant to an Investment Advisory Agreement and provides investment management services to the Trust pursuant to a Management Services Agreement. The Advisor is responsible for developing, implementing and supervising the Fund’s investment program. The Advisor manages the investment and the reinvestment of the assets of the Fund, in accordance with the investment objectives, policies, and limitations of the Fund, subject to the general supervision and control of the Trustees and officers of the Trust. For these and other services, the Fund pays the Adviser advisory and management services fees at an annualized rate based upon the Fund’s average daily net assets of [ ]% and [ ]%, respectively. All fees are computed daily and paid monthly.

Expense Limitation Agreement:

In the interest of limiting the expenses of the Fund, the Advisor has entered into an Expense Limitation Agreement with the Trust pursuant to which the Adviser has agreed to defer its fees and to assume other expenses if necessary so that the total annual operating expenses (excluding certain extraordinary expenses) of the Fund are limited to [ ]% of average daily net assets in the Trust’s first fiscal year.

The Fund may at a later date reimburse the Advisor the advisory and management services fees deferred or other expenses assumed and paid for by the Advisor pursuant to the Expense Limitation Agreement within the prior five fiscal years, provided the Fund has reached a sufficient size to permit such reimbursement to

be made without causing the total annual expense ratio of the Fund to exceed the expense limit mentioned above for the respective period.

Distribution and Service (12b-1) Plan:

SEI Investments serves as the Funds’ distributor. The Fund has adopted a Distribution and Service (12b-1) Plan pursuant to which the Fund may bear a 12b-1 fee not to exceed [ ]% per annum of the Fund’s average daily net assets. No 12b-1 fees are currently paid by any Fund, and there are currently no plans to impose these fees.

Custodian and Transfer Agent:

JP Morgan Chase serves as the Funds’ custodian and transfer agent.

4.	Organization and Offering Costs

The Adviser has agreed to reimburse the Fund’s organizational costs for the period included in this seed capital audit.

5.	Related Parties

At December 1, 2005, four officers of the Trust were also employees of the Advisor.

PART C. OTHER INFORMATION

ProShares Trust

Item 23.

Exhibits

(a)

(1) (i)

Certificate of Trust of the Registrant (1).

(ii)

Certificate of Amendment to the Certificate of Trust of the Registrant (changing the name from ProFunds ETF Trust to xtraShares Trust) (2).

(iii)

Certificate of Amendment to the Certificate of Trust of the Registrant (changing the name from xtraShares Trust to ProShares Trust (3)

(2) (i)

Form of Declaration of Trust of the Registrant (1).

(ii)

Form of Amended and Restated Declaration of Trust of the Registrant (3)

(b)

By-laws of Registrant (3)

(c)

Not applicable.

(d)

Investment Advisory Agreement between the Registrant and ProShare Advisors LLC – To be filed by amendment.

(e)

Form of Distribution Agreement between Registrant and SEI Investments Distribution Co. (3)

(f)

Not applicable.

(g)

Form of Custody Agreement and Form of Cash Trade Execution Rider between Registrant and JP Morgan Chase Bank, N.A (3)

(h)

(1)

Form of Fund Services Agreement (Administration and Compliance Services, Regulatory Services, Accounting Services) between Registrant and JP Morgan Investor Services Co. (3)

(2)

Form of Agency Services Agreement between Registrant and JP Morgan Chase Bank, N.A. (3)

(3)

Management Services Agreement between Registrant and ProShare Advisors LLC - To be filed by amendment.

(4)

Form of Authorized Participant Agreement between Registrant and SEI Investment Distribution Co. (3)

(i)

Opinion and Consent of Counsel (3)

(j)

Consent of Independent Auditors – To be filed by amendment.

(k)

Not applicable.

(l)

Not applicable.

(m)

Form of Distribution Plan (3)

(n)

Not applicable.

(o)

Not applicable.

(p)

(1)

Code of Ethics of the Registrant (3)

(2)

Code of Ethics of the Advisor (3)

(3)

Code of Conduct of the Distributor (3)

(q)

Powers of Attorney (3)

(1)	Filed with Initial Registration Statement on June 5, 2002.

(2)	Previously filed on July 17, 2003 as part of Pre-Effective Amendment No. 2 and incorporated by reference herein.

(3)	Filed herewith.

Item 24.

Persons Controlled By or Under Common Control With Registrant

Provide a list or diagram of all persons directly or indirectly controlled by or under common control with the Registrant. For any person controlled by another person, disclose the percentage of voting securities owned by the immediately controlling person or other basis of that person’s control. For each company, also provide the state or other sovereign power under the laws of which the company is organized.

None.

Item 25.

Indemnification

State the general effect of any contract, arrangements or statute under which any director, officer, underwriter or affiliated person of the registrant is insured or indemnified against any liability incurred in their official capacity, other than insurance provided by any director, officer, affiliated person, or underwriter for their own protection.

Reference is made to Article Eight of the Registrant’s Declaration of Trust which is incorporated by reference herein:

The Registrant (also, the “Trust”) is organized as a Delaware business trust and is operated pursuant to an Amended and Restated Declaration of Trust, dated October 10, 2005 (the “Declaration of Trust”), that permits the Registrant to indemnify every person who is, or has been, a Trustee, officer, employee or agent of the Trust, including persons who serve at the request of the Trust as directors, trustees, officers, employees or agents of another organization in which the Trust has an interest as a shareholder, creditor or otherwise (hereinafter referred to as a “Covered Person”), shall be indemnified by the Trust to the fullest extent permitted by law against liability and against all expenses reasonably incurred or paid by him in connection with any claim, action, suit or proceeding in which he becomes involved as a party or otherwise by virtue of his being or having been such a Trustee, director, officer, employee or agent and against amounts paid or incurred by him in settlement thereof. This indemnification is subject to the following conditions:

No indemnification shall be provided hereunder to a Covered Person:

(a)

For an liability to the Trust or its Shareholders arising out of a final adjudication by the court of other body before which the proceeding was brought that the Covered Person engaged in willful misfeasance, bad faith, gross negligence or reckless disregard of the duties involved in the conduct of his office;

(b)

With respect to any matter as to which the Covered Person shall have been finally adjudicated not to have acted in good faith in the reasonable belief that his or her action was in the best interests of the Trust; or

(c)

In the event of a settlement of other disposition not involving a final adjudication (as provided in paragraph (a) or (b) of this Section 8.5.2) and resulting in a payment by a Covered Person, unless there has been either a determination that such Covered Person did not engage in willful misfeasance, b ad faith, gross negligence or reckless disregard

of the duties involved in the conduct of this office by the court or other body approving the settlement or other disposition, or a reasonable determination, based on a review of readily available facts (as opposed to a full trial-type inquiry), that he or she did not engage in such conduct, such determination being made by : (i) a vote of a majority of the Disinterested Trustees (as such term is defined in Section 8.5.5) acting on the matter); or (ii) a writer opinion of independent legal counsel.

The rights of indemnification under the Declaration of Trust may be insured against by policies maintained by the Trust, and shall be severable, shall not affect any other rights to which any Covered Person may now or hereafter be entitled, shall continue as to a person who has ceased to be a Covered Person, and shall inure to the benefit of the heirs, executors and administrators of such a person. Nothing contained in the Declaration of Trust shall affect any rights to indemnification to which Trust personnel other than Covered Persons may be entitled by contract or otherwise under law.

Expenses of preparation and presentation of a defense to any claim, action, suit or proceeding subject to a claim for indemnification under Section 8.5 of the Declaration of Trust shall be advanced by the Trust prior to final disposition thereof upon receipt of an undertaking by or on behalf of the recipient to repay such amount if it is ultimately determined that he or she is not entitled to indemnification under Section 8.5 of the Declaration of Trust, provided that either: Covered Person, unless there has been either a determination that such Covered Person did not engage in willful misfeasance, bad faith, gross negligence or reckless disregard of the duties involved in the conduct of this office by the court or other body approving the settlement or other disposition, or a reasonable determination, based on a review of readily available facts (as opposed to a full trial-type inquiry), that he or she did not engage in such conduct, such determination being made by : (i) a vote of a majority of the Disinterested Trustees (as such term is defined in Section 8.5.5) acting on the matter (provided that a majority of Disinterested Trustees then in office act on the matter); or (ii) a writer opinion of independent legal counsel.

(a)

Such undertaking is secured by a surety bond or some other appropriate security or the Trust shall be insured against losses arising out of any such advances; or

(b)

A majority of the Disinterested Trustees acting on the matter (provided that a majority of the Disinterested Trustees then in office act on the matter) or independent legal counsel in a written opinion shall determine, based upon a review of the readily available facts (as opposed to the facts available upon a full trial), that there is reason to believe that the recipient ultimately will be found entitled to indemnification.

As used in Section 8.5 of the Declaration of Trust, the following words shall have the meanings set forth below:

(c)

A “Disinterested Trust” is one (i) who is not an Interested Person of the Trust (including anyone, as such Disinterested Trustees, who has been exempted from being an Interested Person by any rule, regulation or order of the Commission), and (ii) against whom none of such actions, suits or other proceedings or another action, suit or other proceeding on the same or similar grounds is then or has been pending;

(d)

“Claim,” “action,” “suite” or “proceeding” shall apply to all claims, actions, suits, proceedings (civil, criminal, administrative or other, including appeals), actual or threatened; and

(e)

“Liability” and “expenses” shall include without limitation, attorneys’ fees, costs, judgments, amounts paid in settlement, fines, penalties and other liabilities.

Item 26.

Business and Other Connections of Investment Advisers

Describe any other business, profession, vocation or employment of a substantial nature in which the investment adviser and each director, officer or partner of the investment adviser, or has been, engaged within the last two fiscal years for his or her own account or in the capacity of director, officer, employee, partner or trustee (disclose the name and principal business address of any company for which a person listed above serves in the capacity of director, officer, employee, partner or trustee, and the nature of the relationship.)

Reference is made to the caption “Management” in the Prospectuses constituting Part A which is incorporated by reference to this Registration Statement and “Management of the ProShares Trust” in the Statement of Additional Information constituting Part B which is incorporated by reference to this Registration Statement.

The information as to the directors and officers of ProShare Advisors LLC is set forth in ProShare Advisors LLC’s Form ADV filed with the Securities and Exchange Commission on May 7, 2002 (Reference No. 5524427696B2B2) and amended through the date hereof, is incorporated herein by reference.

Item 27.

Principal Underwriters

(a)

State the name of each investment company (other than the registrant) for which each principal underwriter currently distributing securities of the registrant also acts as a principal underwriter, depositor or investment adviser.

Registrant’s distributor, SEI Investments Distribution Co. (the “Distributor”), acts as distributor for:

SEI Daily Income Trust

SEI Liquid Asset Trust

SEI Tax Exempt Trust

SEI Index Funds

SEI Institutional Managed Trust

SEI Institutional International Trust

The Advisors’ Inner Circle Fund

The Advisors’ Inner Circle Fund II

Bishop Street Funds

SEI Asset Allocation Trust

SEI Institutional Investments Trust

HighMark Funds

Oak Associates Funds

CNI Charter Funds

iShares Inc.

iShares Trust

JohnsonFamily Funds, Inc.

Causeway Capital Management Trust

The Japan Fund, Inc.

Barclays Global Investors Funds

The Arbitrage Funds

The Turner Funds

The Distributor provides numerous financial services to investment managers, pension plan sponsors, and bank trust departments. These services include portfolio evaluation, performance measurement and consulting services (“Funds Evaluation”) and automated execution, clearing and settlement of securities transactions (“MarketLink”).

(b)

Provide the information required by the following table with respect to each director, officer or partner of each principal underwriter named in answer to Item 20.


Name	Position and Office with Underwriter	Positions and Offices with Registrant
William M. Doran	Director	None
Edward D. Loughlin	Director	None
Stephen Meyer	Director	None
Wayne M. Withrow	Director	None
Kevin Barr	President & Chief Executive Officer	None
Maxine Chou	Chief Financial Officer & Treasurer	None
Mark Greco	Chief Operations Officer	None
John Munch	General Counsel & Secretary	None


Karen LaTourette	Chief Compliance Office, Anti-Money Laundering Officer & Assistant Secretary	None
Mark J. Held	Senior Vice President	None
Lori L. White	Vice President & Assistant Secretary	None
Robert Silvestri	Vice President	None
John Coary	Vice President & Assistant Secretary	None
Michael Farrell	Vice President	None
Al DelPizzo	Vice President	None
Mark McManus	Vice President	None

Item 28.

Location of Accounts and Records

State the names and address of each person maintaining principal possession of each account, book or other document required to be maintained by Section 31(a) of the 1940 Act [15 u.s.c. 80a-30(a)] and the rules under that section.

The books, accounts and other documents required by Section 31(a) under the Investment Company Act of 1940, as amended, and the rules promulgated thereunder are maintained in the physical possession of:

JPMorgan Chase Bank, N.A.

Attn: General Counsel

4 MetroTech Center

Brooklyn, NY 11245

J.P. Morgan Investor Services Co.

73 Tremont Street

Boston, MA 02108

Attention: Legal Department

ProShares Advisors LLC

c/o ProFunds Advisors LLC

Attn: General Counsel

7501 Wisconsin Avenue, Suite 1000

Bethesda, MD 20814

SEI Investments Distribution Co.

Attn: General Counsel

One Freedom Valley Drive

Oaks, Pennsylvania 19456-1100

Item 29.

Management Services

Provide a summary of the substantive provisions of any management-related service contract not discussed in Part A or Part B, disclosing the parties to the contract and the total amount paid and by whom, for the fund’s last three fiscal years.

Not applicable.

Item 30.

Undertakings

Not applicable.

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, as amended (the “1933 Act”), and the Investment Company Act of 1940, as amended, the Registrant has duly caused this Amendment to its Registration Statement to be signed on its behalf by the undersigned, duly authorized, in the City of Bethesda and the State of Maryland on May 22, 2006.


ProShares Trust

By:		/s/ Louis M. Mayberg
		Louis M. Mayberg

Pursuant to the requirements of the Securities Act of 1933, this Amendment to the Registration Statement has been signed below by the following persons in the capacities indicated.


Signature	Title	Date

/s/ Michael L. Sapir Michael L. Sapir	Trustee, Chairman	May 22, 2006

* Russell S. Reynolds, III	Trustee	May 22, 2006

* Michael Wachs	Trustee	May 22, 2006

/s/ Louis M. Mayberg Louis M. Mayberg	President and Treasurer	May 22, 2006



* By:		/s/ Steven Brancato
		Steven Brancato As Attorney-in-fact

Date: May 22, 2006

Exhibit (a)(1)(iii)

Delaware

The first State

I, HARRIET SMITH WINDSOR, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO HEREBY CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF AMENDMENT OF “XTRASHARES TRUST”, CHANGING ITS NAME FROM “XTRASHARES TRUST” TO “PROSHARES TRUST”, FILED IN THIS OFFICE ON THE FIRST DAY OF NOVEMBER, A.D. 2005, AT 5:02 O’CLOCK P.M.


	[SEAL]	/s/ Harriet Smith Windsor
		Harriet Smith Windsor, Secretary of State
3530200 8100		*AUTHENTICATION: 4271835*
050893122		*DATE: 11-03-05*


		State of Delaware
		Secretary of State
		Division of Corporations
		Delivered 05:02 PM 11/01/2005
		FILED 05:02 PM 11/01/2005
		SRV 050893122 - 3530200 FILE

CERTIFICATE OF AMENDMENT

CERTIFICATE OF TRUST

(Pursuant to Section 3810 of the Delaware Statutory Trust Act)


FIRST:		The name of the statutory trust (hereinafter referred to as the “Trust”) is xtraShares Trust.

SECOND:		The name of the Trust is hereby changed to: ProShares Trust

THIRD:		This Certificate of Amendment to Certificate of Trust shall be effective October 10, 2005 for accounting purposes only.



By:		/s/ Michael L. Sapir
		Michael L. Sapir
		Trustee

By:		/s/ Louis M. Mayberg
		Louis M. Mayberg
		Trustee

Exhibit (a)(2)(ii)

AMENDED AND RESTATED

DECLARATION OF TRUST OF PROSHARES TRUST

This DECLARATION OF TRUST is made as of this day, October 10, 2005, by the Trustees hereunder.

WHEREAS, the Trustees desire to establish a trust for the purpose of carrying on the business of an open-end management investment company; and

WHEREAS, in furtherance of such purpose, the Trustees and any successor Trustee selected in accordance with Article 5 hereof are acquiring and may hereafter acquire assets which they will hold and manage as trustees of a Delaware business trust in accordance with the provisions hereinafter set forth; and

WHEREAS, this Trust is authorized to issue its shares of beneficial interest in one or more separate series, all in accordance with the provisions set forth in this Declaration of Trust.

NOW, THEREFORE, the Trustees hereby declare that they will hold in trust all cash, securities, and other assets which they may from time to time acquire in any manner as Trustees hereunder, and that they will manage and dispose of the same upon the following terms and conditions for the benefit of the holders of shares of beneficial interest in this Trust as hereinafter set forth.

ARTICLE 1

NAME AND DEFINITIONS

Section 1.1. Name . This Trust shall be known as the “ ProShares Trust ”, and the Trustees shall conduct the business of the Trust under that name or any other name or names as they may from time to time determine.

Section 1.2. Definitions . Whenever used herein, unless otherwise required by the context or specifically provided below:

(a) The “ Trust ” shall mean the Delaware business trust established by this Declaration of Trust, as amended from time to time;

(b) “ Trustee ” or “ Trustees ” shall mean each signatory to this Declaration of Trust so long as such signatory shall continue in office in accordance with the terms hereof, and all other individuals who at the time in question have been duly elected or appointed and qualified in accordance with Article 5 hereof and are then in office;

(c) “ Shares ” shall mean the shares of beneficial interest in the Trust described in Article 4 hereof and shall include fractional and whole Shares;

(d) “ Shareholder ” shall mean a record owner of Shares;

(e) The “ 1940 Act ” refers to the Investment Company Act of 1940 (and any successor statute) and the rules and regulations thereunder, all as amended from time to time;

(f) The terms “ Person ,” “ Interested Person ,” and “ Principal Underwriter ” shall have the meanings given them in the 1940 Act;

(g) The term “ Commission ” shall mean the United States Securities and Exchange Commission (or any successor agency thereto);

(h) “ Declaration of Trust ” or “ Declaration ” shall mean this Declaration of Trust as amended or restated from time to time;

(i) “ By-Laws ” shall mean the By-Laws of the Trust as amended from time to time;

(j) “ Series ” shall mean any of the separate series of Shares established and designated under or in accordance with the provisions of Article 4 hereof and to which the Trustees have allocated assets and liabilities of the Trust in accordance with Article 4;

(k) The “ DBTA ” refers to the Delaware Business Trust Act, Chapter 38 of Title 12 of the Delaware Code (and any successor statute), as amended from time to time;

(l) The “ Code ” refers to the Internal Revenue Code of 1986 (and any successor statute) and the rules and regulations thereunder, all as amended from time to time; and

(m) “ Class ” shall mean any of the separate classes of Shares established and designated under or in accordance with the provisions of Article 4 hereof and to which the Trustees have allocated assets and liabilities of the Trust in accordance with Article 4.

ARTICLE 2

NATURE AND PURPOSE OF TRUST SECTION

Section 2.1. Nature of Trust . The Trust is a business trust of the type referred to in the DBTA. The Trustees shall file a certificate of trust in accordance with Section 3810 of the DBTA. The Trust is not intended to be, shall not be deemed to be, and shall not be treated as, a general or a limited partnership, joint venture, corporation or joint stock company, nor shall the Trustees or Shareholders or any of them for any purpose be deemed to be, or be treated in any way whatsoever as though they were, liable or responsible hereunder as partners or joint venturers.

Section 2.2. Purpose of Trust . The purpose of the Trust is to engage in, operate and carry on the business of an open-end management investment company and to do any and all acts or things as are necessary, convenient, appropriate, incidental or customary in connection therewith.

Section 2.3. Interpretation of Declaration of Trust .

Section 2.3.1. Governing Instrument . This Declaration of Trust shall be the governing instrument of the Trust and shall be governed by and construed according to the laws of the State of Delaware.

Section 2.3.2. No Waiver of Compliance with Applicable Law . No provision of this Declaration shall be effective to require a waiver of compliance with any provision of the Securities Act of 1933, as amended, or the 1940 Act, or of any valid rule, regulation or order of the Commission thereunder.

Section 2.3.3. Power of the Trustees Generally . Except as otherwise set forth herein, the Trustees may exercise all powers of trustees under the DBTA on behalf of the Trust.

- 2 -

ARTICLE 3

REGISTERED AGENT; PRINCIPAL PLACE OF BUSINESS

Section 3.1. Registered Agent . The name of the registered agent of the Trust is The Corporation Trust Company, and the registered agent’s business address in Delaware is Corporation Trust Center, 1209 Orange Street, Wilmington, Delaware 19801.

Section 3.2. Principal Place of Business . The principal place of business of the Trust is 7501 Wisconsin Avenue, Suite 1000, Bethesda, Maryland 20814.

ARTICLE 4

BENEFICIAL INTEREST

Section 4.1. Shares of Beneficial Interest . The beneficial interests in the Trust shall be divided into Shares, all without par value, and the Trustees shall have the authority from time to time to divide the class of Shares into two (2) or more separate and distinct series of Shares (“ Series ”) or classes of Shares (“ Classes ”) as provided in Section 4.9 of this Article 4.

Section 4.2. Number of Authorized Shares . The Trustees are authorized to issue an unlimited number of Shares. The Trustees may issue Shares for such consideration and on such terms as they may determine (or for no consideration if pursuant to a Share dividend or split), all without action or approval of the Shareholders.

Section 4.3. Ownership and Certification of Shares . The Secretary of the Trust, or the Trust’s transfer or similar agent, shall record the ownership and transfer of Shares of each Series and Class separately on the record books of the Trust. The record books of the Trust, as kept by the Secretary of the Trust or any transfer or similar agent, shall contain the name and address of and the number of Shares held by each Shareholder, and such record books shall be conclusive as to who are the holders of Shares and as to the number of Shares held from time to time by such Shareholders. No certificates certifying the ownership of Shares shall be issued except as the Trustees may otherwise determine from time to time. The Trustees may make such rules as they consider appropriate for the issuance of share certificates, transfer of Shares, and similar matters for the Trust or any Series or Class.

Section 4.4. Status of Shares .

Section 4.4.1. Fully Paid and Non-assessable . All Shares when issued on the terms determined by the Trustees shall be fully paid and non-assessable.

Section 4.4.2. Personal Property . Shares shall be deemed to be personal property giving only the rights provided in this Declaration of Trust.

Section 4.4.3. Party to Declaration of Trust . Every Person by virtue of having become registered as a Shareholder shall be held to have expressly assented and agreed to the terms of this Declaration of Trust and to have become a party thereto.

Section 4.4.4. Death of Shareholder . The death of a Shareholder during the continuance of the Trust shall not operate to terminate the Trust nor entitle the representative of any deceased Shareholder to an accounting or to take any action in court or elsewhere against the Trust or the Trustees. The representative shall be entitled to the same rights as the decedent under this Trust.

- 3 -

Section 4.4.5. Title to Trust; Right to Accounting . Ownership of Shares shall not entitle the Shareholder to any title in or to the whole or any part of the Trust property or right to call for a partition or division of the same or for an accounting.

Section 4.5. Determination of Shareholders . The Trustees may from time to time close the transfer books or establish record dates and times for the purposes of determining the Shareholders entitled to be treated as such, to the extent provided or referred to in Section 7.3.

Section 4.6. Shares Held by Trust . The Trustees may hold as treasury shares, reissue for such consideration and on such terms as they may determine, or cancel, at their discretion from time to time, any Shares of any Series or Class reacquired by the Trust.

Section 4.7. Shares Held by Persons Related to Trust . Any Trustee, officer or other agent of the Trust, and any organization in which any such person is interested may acquire, own, hold and dispose of Shares of the Trust to the same extent as if such person were not a Trustee, officer or other agent of the Trust; and the Trust may issue and sell or cause to be issued and sold and may purchase Shares from any such person or any such organization subject only to the general limitations, restrictions or other provisions applicable to the sale or purchase of such Shares generally.

Section 4.8. Preemptive and Appraisal Rights . Shareholders shall not, as Shareholders, have any right to acquire, purchase or subscribe for any Shares or other securities of the Trust which it may hereafter issue or sell, other than such right, if any, as the Trustees in their discretion may determine. Shareholders shall have no appraisal rights with respect to their Shares and, except as otherwise determined by resolution of the Trustees in their sole discretion, shall have no exchange or conversion rights with respect to their Shares. No action may be brought by a Shareholder on behalf of the Trust unless Shareholders owning no less than a majority of the then outstanding Shares, or Series or Class thereof, join in the bringing of such action. A Shareholder of Shares in a particular Series or Class of the Trust shall not be entitled to participate in a derivative or class action lawsuit on behalf of any other Series or Class, as appropriate, or on behalf of the Shareholders in any such other Series or Class of the Trust.

Section 4.9. Series and Classes of Shares .

Section 4.9.1. Classification of Shares . The Trustees may classify or reclassify any unissued Shares or any Shares previously issued and reacquired of any Series or Class into one or more Series or Class that may be established and designated from time to time.

Section 4.9.2. Establishment and Designation . The Trustees shall have exclusive power without the requirement of Shareholder approval to establish and designate separate and distinct Series and Classes of Shares and to fix such preferences, voting powers, rights and privileges of such Series or Class as the Trustees may from time to time determine, to divide or combine the Shares or any Series or Class into a greater or lesser number without thereby materially changing the proportionate beneficial interest of the Shares of such Series or Class in the assets held with respect to that Series, to classify or reclassify any issued Shares or any Series or Class thereof into one or more Series or Classes, and to take such other action with respect to the Shares as the Trustees may deem desirable. The establishment and designation of any Series or Class (in addition to those established and designated in this Section below) shall be effective upon the execution by a majority of the Trustees of an instrument setting forth such establishment and designation and the relative rights and preferences of the Shares of such Series or Class, or as otherwise provided in such instrument. Each such instrument shall have the status of an amendment to this Declaration of Trust. Without limiting the authority of the Trustees to establish and designate any further Series or Class, the Trustees hereby establish and designate the following eight (8) initial Series:

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Ultra S&P 500 ProShares

Ultra QQQ ProShares

Ultra Dow 30 ProShares

Ultra MidCap400 ProShares

Short S&P 500 ProShares

Short QQQ ProShares

Short Dow 30 ProShares

Short MidCap 400 ProShares

Ultra Short QQQ ProShares

Ultra Short S&P 500 ProShares

Ultra Short MidCap 400 ProShares

Ultra Short Dow 30 ProShares

Section 4.9.3. Separate and Distinct Nature . Each Series and Class, including without limitation Series and Classes specifically established and designated in Section 4.9.2, shall be separate and distinct from any other Series and Class and shall maintain separate and distinct records on the books of the Trust, and the assets belonging to any such Series or Class shall be held and accounted for separately from the assets of the Trust or any other Series or Class.

Section 4.9.4. Conversion Rights . Subject to compliance with the requirements of the 1940 Act, the Trustees shall have the authority to provide that holders of Shares of any Series or Class shall have the right to convert said Shares into Shares of one or more other Series or Class in accordance with such requirements and procedures as may be established by the Trustees.

Section 4.9.5. Rights and Preferences . The Trustees shall have exclusive power without the requirement of Shareholder approval to fix and determine the relative rights and preferences as between the Shares of the separate Series and Classes. The initial Series and Classes and any further Series and Classes that may from time to time be established and designated by the Trustees shall (unless the Trustees otherwise determine with respect to some further Series at the time of establishing and designating the same) have relative rights and preferences as set forth in this Section 4.9.5.

Section 4.9.5.1. Assets and Liabilities “Belonging” to a Series or Class . All consideration received by the Trust for the issue or sale of Shares of particular Series or Class, together with all assets in which such consideration is invested or reinvested, all income, earnings, profits, and proceeds thereof, including any proceeds derived from the sale, exchange or liquidation of such assets, and any funds or payments derived from any reinvestment of such proceeds in whatever form the same may be, shall be held and accounted for separately from the other assets of the Trust and of every other Series or Class and may be referred to herein as “assets belonging to” that Series or Class. The assets belonging to a particular Series or Class shall belong to that Series or Class for all purposes, and to no other Series or Class, subject only to the rights of creditors of that Series or Class. Such consideration, assets, income, earnings, profits, and proceeds thereof, including any proceeds derived from the sale, exchange or liquidation of such assets, and any funds or payments which are not readily identifiable as belonging to any particular Series or Class (collectively “ General Items ”), the Trustees shall allocate to and among any one or more of the Series and/or Classes in such manner and on such basis as they, in their sole discretion, deem fair and equitable. Any General Items so allocated to a particular Series or Class shall belong to that Series/Class. Each such allocation by the Trustees shall be conclusive and binding upon all Shareholders for all purposes. The assets belonging to each particular Series and Class shall be charged with the liabilities in respect of that Series/Class and all expenses, costs, charges and reserves attributable to that Series/Class, and any general liabilities, expenses, costs, charges or reserves of the Trust which are not readily identifiable as belonging to any particular Series or Class shall be allocated and charged by the Trustees to and among any one or more of the Series and Classes established and

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designated from time to time in such manner and on such basis as the Trustees in their sole discretion deem fair and equitable. Each allocation of liabilities, expenses, costs, charges and reserves by the Trustees shall be conclusive and binding upon all Shareholders for all purposes.

Section 4.9.5.2. Treatment of Particular Items . The Trustees shall have full discretion, to the extent consistent with the 1940 Act and consistent with generally accepted accounting principles, to determine which items shall be treated as income and which items as capital; and each such determination and allocation shall be conclusive and binding upon the Shareholders.

Section 4.9.5.3. Limitation on Interseries and Interclass Liabilities . Subject to the right of the Trustees in their discretion to allocate general liabilities, expenses, costs, charges or reserves as provided in Section 4.9.5.1, the debts, liabilities, obligations and expenses incurred, contracted for or otherwise existing with respect to a particular Series or Class shall be enforceable against the assets of such Series/Class only, and not against the assets of any other Series or Class. Notice of this limitation on liabilities between and among Series shall be set forth in the certificate of trust of the Trust (whether originally or by amendment) as filed or to be filed in the Office of the Secretary of State of the State of Delaware pursuant to the DBTA, and upon the giving of such notice in the certificate of trust, the statutory provisions of Section 3804 of the DBTA relating to limitations on liabilities between and among series (and the statutory effect under Section 3804 of setting forth such notice in the certificate of trust) shall become applicable to the Trust and each Series

Section 4.9.5.4. Dividends . Dividends and capital gains distributions on Shares of a particular Series may be paid with such frequency, in such form, and in such amount as the Trustees may determine by resolution adopted from time to time, or pursuant to a standing resolution or resolutions adopted only once or with such frequency as the Trustees may determine. All dividends and distributions on Shares of a particular Series or Class shall be distributed pro rata to the holders of Shares of that Series/Class in proportion to the number of Shares of that Series/Class held by such holders at the date and time of record established for the payment of such dividends or distributions. Such dividends and distributions may be paid in cash, property or additional Shares of that Series/Class, or a combination thereof, as determined by the Trustees or pursuant to any program that the Trustees may have in effect at the time for the election by each Shareholder of the form in which dividends or distributions are to be paid to that Shareholder. Any such dividend or distribution paid in Shares shall be paid at the net asset value thereof as determined in accordance with Section 4.9.5.8.

Section 4.9.5.5. Redemption by Shareholder . Each Shareholder of a particular Series or Class shall have the right on any business day to require the Trust to redeem all or any part of his Shares of that Series or Class, upon and subject to the terms and conditions provided in this Section 4.9.5.5, in accordance with and pursuant to procedures or methods prescribed or approved by the Trustees and, in the case of any Series or Class now or hereafter authorized, if so determined by the Trustees, shall be redeemable only in aggregations of such number of Shares and at such times as may be determined by, or determined pursuant to procedures or methods prescribed by or approved by, the Trustees from time to time with respect to such Series or Class. The number of Shares comprising an aggregation for purposes of redemption or repurchase so determined from time to time with respect to any Series or Class shall be referred to herein as a “ Creation Unit ” and collectively, as “ Creation Units ”. The Trustees shall have the unrestricted power to determine from time to time the number of Shares constituting a Creation Unit by resolutions adopted at any regular or special meeting of the Trustees. Each holder of a Creation Unit aggregation of a Series or Class, upon request to the Trust accompanied by surrender of the appropriate stock certificate or certificates in proper form for transfer if certificates have been issued to such holder, or in accordance with such other procedures as may from time to time be in effect if certificates have not been issued, shall be entitled to require the Trust to redeem all or any number of such holder’s Shares standing in the name of such holder on the books of the Trust, but in the

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case of Shares of any Series or Class as to which the Trustees have determined that such Shares shall be redeemable in Creation Unit aggregations, only in such Creation Unit aggregations of shares of such Series or Class as the Trustees may determine from time to time in accordance with this Section 4.9.5.5. The Trust shall, upon application of any Shareholder or pursuant to authorization from any Shareholder, redeem or repurchase from such Shareholder outstanding Shares for an amount per share determined by the Trustees in accordance with any applicable laws and regulations; provided that (i) such amount per share shall not exceed the cash equivalent of the proportionate interest of each Share or of any Class or Series of Shares in the assets of the Trust at the time of the redemption or repurchase and (ii) if so authorized by the Trustees, the Trust may, at any time and from time to time, charge fees for effecting such redemption or repurchase, at such rates as the Trustees may establish, as and to the extent permitted under the 1940 Act and the rules and regulations promulgated thereunder, and may, at any time and from time to time, pursuant to such Act and such rules and regulations, suspend such right of redemption. The procedures for effecting and suspending redemption shall be as set forth in the Prospectus from time to time. Payment may be in cash, securities or a combination thereof, as determined by or pursuant to the direction of the Trustees from time to time, less any applicable sales charges and/or fees.

Section 4.9.5.6. Redemption by Trust . The Trustees may cause the Trust to redeem the Shares of any Series or Class held by a Shareholder at the redemption price that would be applicable if such Shares were then being redeemed by the Shareholder pursuant to Section 4.9.5.5 upon such conditions as may from time to time be determined by the Trustees. Upon redemption of Shares pursuant to this Section 4.9.5.6, the Trust shall promptly cause payment of the full redemption price to be made to such Shareholder for Shares so redeemed.

Section 4.9.5.7. Prevention of Personal Holding Company Status . The Trust may reject any purchase order, refuse to transfer any Shares, and compel the redemption of Shares if, in its opinion, any such rejection, refusal, or redemption would prevent the Trust from becoming a personal holding company as defined by the Code.

Section 4.9.5.8. Net Asset Value . The net asset value per Share of any Series or Class shall be determined in accordance with the methods and procedures established by the Trustees from time to time and, to the extent required by applicable law, as disclosed in the then current prospectus or statement of additional information for the Series/Class.

Section 4.9.5.9. Maintenance of Stable Net Asset Value . The Trustees may determine to maintain the net asset value per Share of any Series at a designated constant dollar amount and in connection therewith may adopt procedures not inconsistent with the 1940 Act for the continuing declarations of income attributable to that Series, or any Class thereof, as dividends payable in additional Shares of that Series/Class at the designated constant dollar amount and for the handling of any losses attributable to that Series/Class. Such procedures may provide that in the event of any loss each Shareholder shall be deemed to have contributed to the capital of the Trust attributable to that Series/Class his or her pro rata portion of the total number of Shares required to be canceled in order to permit the net asset value per Share of that Series/Class to be maintained, after reflecting such loss, at the designated constant dollar amount. Each Shareholder of the Trust shall be deemed to have agreed, by his investment in any Series with respect to which the Trustees shall have adopted any such procedure, to make the contribution referred to in the preceding sentence in the event of any such loss. The Trustees may delegate any of their powers and duties under this Section 4.9.5.9 with respect to appraisal of assets and liabilities in the determination of net asset value or with respect to a suspension of the determination of net asset value to an officer or officers or agent or agents of the Trust designated from time to time by the Trustees.

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Section 4.9.5.10. Transfer of Shares . Except to the extent that transferability is limited by applicable law or such procedures as may be developed from time to time by the Trustees or the appropriate officers of the Trust, Shares shall be transferable on the records of the Trust only by the record holder thereof or by his agent thereunto duly authorized in writing, upon delivery to the Trustees or the Trust’s transfer agent of a duly executed instrument of transfer, together with a Share certificate, if one is outstanding, and such evidence of the genuineness of each such execution and authorization and of such other matters as may be required by the Trustees. Upon such delivery the transfer shall be recorded on the register of the Trust.

Section 4.9.5.11. Equality of Shares . All Shares of each particular Series or Class shall represent an equal proportionate interest in the assets belonging or attributable to that Series/Class (subject to the liabilities belonging to that Series/Class), and each Share of any particular Series or Class shall be equal in this respect to each other Share of that Series or Class, as applicable.

Section 4.9.5.12. Fractional Shares . Any fractional Share of any Series or Class, if any such fractional Share is outstanding, shall carry proportionately all the rights and obligations of a whole Share of that Series/Class, including rights and obligations with respect to voting, receipt of dividends and distributions, redemption of Shares, and liquidation of the Trust or any Series or Class.

ARTICLE 5

TRUSTEES

Section 5.1. Management of the Trust . The business and affairs of the Trust shall be managed by the Trustees, and they shall have all powers necessary and desirable to carry out that responsibility, including those specifically set forth in Sections 5.10 and 5.11 herein.

Section 5.2. Qualification . Each Trustee shall be a natural person. A Trustee need not be a Shareholder, a citizen of the United States, or a resident of the State of Delaware.

Section 5.3. Number . By the vote or consent of a majority of the Trustees then in office, the Trustees may fix the number of Trustees at a number not less than two (2) nor more than twenty-five (25). No decrease in the number of Trustees shall have the effect of removing any Trustee from office prior to the expiration of his or her term, but the number of Trustees may be decreased in conjunction with the removal of a Trustee pursuant to Section 5.7.

Section 5.4. Term and Election . Each Trustee shall hold office until the next meeting of Shareholders called for the purpose of considering the election or re-election of such Trustee or of a successor to such Trustee, and until his or her successor is elected and qualified, and any Trustee who is appointed by the Trustees in the interim to fill a vacancy as provided hereunder shall have the same remaining term as that of his or her predecessor, if any, or such term as the Trustees may determine.

Section 5.5. Composition of the Board of Trustees . No election or appointment of any Trustee shall take effect if such election or appointment would cause the number of Trustees who are Interested Persons to exceed the number permitted by Section 10 of the 1940 Act.

Section 5.6. Resignation and Retirement . Any Trustee may resign or retire as a Trustee (without need for prior or subsequent accounting) by an instrument in writing signed by such Trustee and delivered or mailed to the Chairman, if any, the President, or the Secretary of the Trust. Such resignation or retirement shall be effective upon such delivery, or at a later date according to the terms of the instrument.

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Section 5.7. Removal . Any Trustee may be removed with or without cause at anytime: (1) by written instrument signed by two-thirds (2/3) of the number of Trustees in office prior to such removal, specifying the date upon which such removal shall become effective, or (2) by the affirmative vote of Shareholders holding not less than two-thirds (2/3) of Shares outstanding, cast in person or by proxy at any meeting called for that purpose

Section 5.8. Vacancies . Any vacancy or anticipated vacancy resulting for any reason, including without limitation the death, resignation, retirement, removal, or incapacity of any of the Trustees, or resulting from an increase in the number of Trustees may (but need not unless required by the 1940 Act) be filled by a majority of the Trustees then in office, subject to the provisions of Section 16 of the 1940 Act, through the appointment in writing of such other person as such remaining Trustees in their discretion shall determine. The appointment shall be effective upon the acceptance of the person named there into serve as a trustee, except that any such appointment in anticipation of a vacancy occurring by reason of the resignation, retirement, or increase in number of Trustees to be effective at a later date shall become effective only at or after the effective date of such resignation, retirement, or increase in number of Trustees.

Section 5.9. Ownership of Assets of the Trust . The assets of the Trust shall be held separate and apart from any assets now or hereafter held in any capacity other than as Trustee hereunder by the Trustees or any successor Trustees. Legal title to all the Trust property shall be vested in the Trust as a separate legal entity under the DBTA, except that the Trustees shall have the power to cause legal title to any Trust property to be held by or in the name of one or more of the Trustees or in the name of any other Person on behalf of the Trust on such terms as the Trustees may determine. In the event that title to any part of the Trust property is vested in one or more Trustees, the right, title and interest of the Trustees in the Trust property shall vest automatically in each person who may hereafter become a Trustee upon his or her due election and qualification. Upon the resignation, removal or death of a Trustee, he or she shall automatically cease to have any right, title or interest in any of the Trust property, and the right, title and interest of such Trustee in the Trust property shall vest automatically in the remaining Trustees. To the extent permitted by law, such vesting and cessation of title shall be effective whether or not conveyancing documents have been executed and delivered. No Shareholder shall be deemed to have a severable ownership in any individual asset of the Trust or any right of partition or possession thereof.

Section 5.10. Powers . Subject to the provisions of this Declaration of Trust, the business of the Trust shall be managed by the Trustees, and they shall have all powers necessary or convenient to carry out that responsibility and the purpose of the Trust including, but not limited to, those enumerated in this Section 5.10.

Section 5.10.1. Bylaws . The Trustees may adopt By-Laws not inconsistent with this Declaration of Trust providing for the conduct of the business and affairs of the Trust and may amend and repeal them to the extent that such By-Laws do not reserve that right to the Shareholders.

Section 5.10.2. Officers, Agents, and Employees . The Trustees may, as they consider appropriate, elect and remove officers and appoint and terminate agents and consultants and hire and terminate employees, any one or more of the foregoing of whom may be a Trustee, and may provide for the compensation of all of the foregoing.

Section 5.10.3. Committees . The Trustees may appoint from their own number, and terminate, any one or more committees consisting of two or more Trustees, including without implied limitation an executive committee, which may, when the Trustees are not in session (but subject to the 1940 Act), exercise some or all of the power and authority of the Trustees as the Trustees may determine.

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Section 5.10.4. Advisers, Administrators, Depositories, and Custodians . The Trustees may, in accordance with Article 6, employ one or more advisers, administrators, depositories, custodians, and other persons and may authorize any depository or custodian to employ sub custodians or agents and to deposit all or any part of such assets in a system or systems for the central handling of securities and debt instruments, retain transfer, dividend, accounting or Shareholder servicing agents or any of the foregoing, provide for the distribution of Shares by the Trust through one or more distributors, principal underwriters or otherwise, and set record dates or times for the determination of Shareholders.

Section 5.10.5. Compensation . The Trustees may compensate or provide for the compensation of the Trustees, officers, advisers, administrators, custodians, other agents, consultants and employees of the Trust or the Trustees on such terms as they deem appropriate.

Section 5.10.6. Delegation of Authority . In general, the Trustees may delegate to any officer of the Trust, to any committee of the Trustees and to any employee, adviser, administrator, distributor, depository, custodian, transfer and dividend disbursing agent, or any other agent or consultant of the Trust such authority, powers, functions and duties as they consider desirable or appropriate for the conduct of the business and affairs of the Trust, including without implied limitation, the power and authority to act in the name of the Trust and of the Trustees, to sign documents and to act as attorney-in-fact for the Trustees.

Section 5.10.7. Suspension of Sales . The Trustees shall have the authority to suspend or terminate the sales of Shares of any Series or Class at any time or for such periods as the Trustees may from time to time decide.

Section 5.11. Certain Additional Powers . Without limiting the foregoing and to the extent not inconsistent with the 1940 Act, other applicable law, and the fundamental policies and limitations of the applicable Series or Class, the Trustees shall have power and authority for and on behalf of the Trust and each separate Series and Class as enumerated in this Section 5.11.

Section 5.11.1. Investments . The Trustees shall have the power to invest and reinvest cash and other property, and to hold cash or other property uninvested without in any event being bound or limited by any present or future law or custom in regard to investments by trustees.

Section 5.11.2. Disposition of Assets . The Trustees shall have the power to sell, exchange, lend, pledge, mortgage, hypothecate, write options on and lease any or all of the assets of the Trust.

Section 5.11.3. Ownership . The Trustees shall have the power to vote, give assent, or exercise any rights of ownership with respect to securities or other property; and to execute and deliver proxies or powers of attorney to such person or persons as the Trustees shall deem proper, granting to such person or persons such power and discretion with relation to securities or other property as the Trustees shall deem proper.

Section 5.11.4. Subscription . The Trustees shall have the power to exercise powers and rights of subscription or otherwise which in any manner arise out of ownership of securities.

Section 5.11.5. Payment of Expenses . The Trustees shall have the power to pay or cause to be paid all expenses, fees, charges, taxes and liabilities incurred or arising in connection with the Trust or any Series or Class, or in connection with the management thereof, including, but not limited to, the Trustees’ compensation and such expenses and charges for the Trust’s officers, employees, investment advisers, administrator, distributor, principal underwriter, auditor, counsel, depository, custodian, transfer agent, dividend disbursing agent ,accounting agent, shareholder servicing agent, and such other agents,

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consultants, and independent contractors and such other expenses and charges as the Trustees may deem necessary or proper to incur.

Section 5.11.6. Form of Holding . The Trustees shall have the power to hold any securities or other property in a form not indicating any trust, whether in bearer, unregistered or other negotiable form, or in the name of the Trustees or of the Trust or of any Series or Class or in the name of a custodian, subcustodian or other depository or a nominee or nominees or otherwise.

Section 5.11.7. Reorganization, Consolidation, or Merger . The Trustees shall have the power to consent to or participate in any plan for the reorganization, consolidation or merger of any corporation or issuer, any security of which is or was held in the Trust, and to consent to any contract, lease, mortgage, purchase or sale of property by such corporation or issuer, and to pay calls or subscriptions with respect to any security held in the Trust.

Section 5.11.8. Compromise . The Trustees shall have the power to arbitrate or otherwise adjust claims in favor of or against the Trust or any Series or Class on any matter in controversy, including but not limited to claims for taxes.

Section 5.11.9. Partnerships . The Trustees shall have the power to enter into joint ventures, general or limited partnerships and any other combinations or associations.

Section 5.11.10. Borrowing . The Trustees shall have the power to borrow funds and to mortgage and pledge the assets of the Trust or any Series or any part thereof to secure obligations arising in connection with such borrowing, consistent with the provisions of the 1940 Act.

Section 5.11.11. Guarantees . The Trustees shall have the power to endorse or guarantee the payment of any notes or other obligations of any person; to make contracts of guaranty or suretyship, or otherwise assume liability for payment thereof; and to mortgage and pledge the Trust property (or Series property) or any part thereof to secure any of or all such obligations.

Section 5.11.12. Insurance . The Trustees shall have the power to purchase and pay for entirely out of Trust property such insurance as they may deem necessary or appropriate for the conduct of the business, including, without limitation, insurance policies insuring the assets of the Trust and payment of distributions and principal on its portfolio investments, and insurance policies insuring the Shareholders, Trustees, officers, employees, agents, consultants, investment advisers, managers, administrators, distributors, principal underwriters, or independent contractors, or any thereof (or any person connected therewith), of the Trust individually against all claims and liabilities of every nature arising by reason of holding, being or having held any such office or position, or by reason of any action alleged to have been taken or omitted by any such person in any such capacity, including any action taken or omitted that may be determined to constitute negligence, whether or not the Trust would have the power to indemnify such person against such liability.

Section 5.11.13. Pensions . The Trustees shall have the power to pay pensions for faithful service, as deemed appropriate by the Trustees, and to adopt, establish and carry out pension, profit-sharing, share bonus, share purchase, savings, thrift and other retirement, incentive and benefit plans, including the purchasing of life insurance and annuity contracts as a means of providing such retirement and other benefits, for any or all of the Trustees, officers, employees and agents of the Trust.

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Section 5.12. Vote of Trustees .

Section 5.12.1. Quorum . One third of the Trustees then in office being present in person or by proxy shall constitute a quorum.

Section 5.12.2. Required Vote . Except as otherwise provided by the 1940 Act or other applicable law, this Declaration of Trust, or the By-Laws, any action to be taken by the Trustees on behalf of the Trust or any Series or Class may betaken by a majority of the Trustees present at a meeting of Trustees at which a quorum is present, including any meeting held by means of a conference telephone or other communications equipment by means of which all persons participating in the meeting can hear each other at the same time.

Section 5.12.3. Consent in Lieu of a Meeting . Except as otherwise provided by the 1940 Act or other applicable law, the Trustees may, by written consent of a majority of the Trustees then in office, take any action which may have been taken at a meeting of the Trustees.

ARTICLE 6

SERVICE PROVIDERS

Section 6.1. Investment Adviser . The Trust may enter into written contracts with one or more persons to act as investment adviser or investment subadviser to each of the Series, and as such, to perform such functions as the Trustees may deem reasonable and proper, including, without limitation, investment advisory, management, research, valuation of assets, clerical and administrative functions, under such terms and conditions, and for such compensation, as the Trustees may in their discretion deem advisable.

Section 6.2. Underwriter and Transfer Agent . The Trust may enter into written contracts with one or more persons to act as underwriter or distributor whereby the Trust may either agree to sell Shares to the other party or parties to the contract or appoint such other party or parties its sales agent or agents for such Shares and with such other provisions as the Trustees may deem reasonable and proper, and the Trustees may in their discretion from time to time enter into transfer agency and/or shareholder service contract(s), in each case with such terms and conditions, and providing for such compensation, as the Trustees may in their discretion deem advisable.

Section 6.3. Custodians . The Trust may enter into written contracts with one or more persons to act as custodian to perform such functions as the Trustees may deem reasonable and proper, under such terms and conditions, and for such compensation, as the Trustees may in their discretion deem advisable. Each such custodian shall be a bank or trust company having an aggregate capital, surplus, and undivided profits of at least one million dollars ($1,000,000).

Section 6.4. Administrator . The Trust may enter into written contracts with one or more persons to act as an administrator to perform such functions as the Trustees may deem reasonable and proper, under such terms and conditions, and for such compensation, as the Trustees may in their discretion deem advisable.

Section 6.5. Parties to Contracts . Any contract of the character described in Sections 6.1, 6.2, 6.3, and 6.4 or in Article 8 hereof may be entered into with any corporation, firm, partnership, trust or association, including, without limitation, the investment adviser, any investment subadviser, or any affiliated person of the investment adviser or investment subadviser, although one or more of the Trustees or officers of the Trust may be an officer, director, trustee, shareholder, or member of such other party to the contract, or may otherwise be interested in such contract, and no such contract shall be invalidated or rendered

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voidable by reason of the existence of any such relationship, nor shall any person holding such relationship be liable merely by reason of such relationship for any loss or expense to the Trust under or by reason of said contract or be accountable for any profit realized directly or indirectly therefrom; provided, however, that the contract when entered into was not inconsistent with the provisions of this Article 6, Article 8, or the Bylaws. The same person (including a firm, corporation, partnership, trust or association) may provide more than one of the services identified in this Article 6.

ARTICLE 7

SHAREHOLDERS’ VOTING POWERS AND MEETINGS

Section 7.1. Voting Powers . The Shareholders shall have power to vote only with respect to matters expressly enumerated in Section 7.1.1, 7.1.3 or with respect to such additional matters relating to the Trust as may be required by the 1940 Act, this Declaration of Trust, the By-Laws, any registration of the Trust with the Commission or any state, or as the Trustees may otherwise deem necessary or desirable.

Section 7.1.1. Matters Upon Which Shareholders May Vote . The Shareholders shall have power to vote on the following matters:

(a)

For the election or removal of Trustees as provided in Sections 5.4 and 5.7;

(b)

With respect to a contract with a third party provider of services as to which Shareholder approval is required by the 1940 Act;

(c)

With respect to a termination or reorganization of the Trust to the extent and as provided in Sections 9.1 and 9.2;

(d)

With respect to an amendment of this Declaration of Trust to the extent and as may be provided by this Declaration of Trust or applicable law; and

(e)

With respect to any court action, proceeding or claim brought or maintained derivatively or as a class action on behalf of the Trust, any Series or Class thereof or the Shareholders of the Trust; provided, however, that a shareholder of a particular Series or Class shall not be entitled to vote upon a derivative or class action on behalf of any other Series or Class or shareholder of any other Series/Class.

Section 7.1.2. Derivative Actions . A Shareholder may bring derivative action on behalf of the Trust only if the Shareholder or Shareholders first make a pre-suit demand upon the Trustees to bring the subject action unless an effort to cause the Trustees to bring such action is excused. A demand on the Trustees shall only be excused if a majority of the Board of Trustees, or a majority of any committee established to consider such action, has a personal financial interest in the action at issue. A Trustee shall not be deemed to have a personal financial interest in an action or otherwise be disqualified from ruling a Shareholder demand by virtue of the fact that such Trustee receives remuneration from his service on the Board of Trustees of the Trust or on the boards of one or more investment companies with the same or an affiliated investment advisor or underwriter.

Section 7.1.3. Separate Voting by Series . On any matter submitted to a vote of the Shareholders, all Shares shall be voted separately by individual Series, except (i) when required by the 1940 Act, Shares shall be voted in the aggregate or by Class, and not by individual Series; and (ii) when

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the Trustees have determined that the matter affects the interests of more than one Series, then the Shareholders of all such Series shall be entitled to vote thereon.

Section 7.1.4. Number of Votes . On any matter submitted to a vote of the Shareholders, each Shareholder shall be entitled to one vote for each dollar of net asset value standing in such Shareholder’s name on the books of each Series or Class in which such Shareholder owns Shares which are entitled to vote on the matter.

Section 7.1.5. Cumulative Voting . There shall be no cumulative voting in the election of Trustees.

Section 7.1.6. Voting of Shares; Proxies . Votes may be cast in person or by proxy. A proxy with respect to Shares held in the name of two or more persons shall be valid if executed by any one of them unless at or prior to exercise of the proxy the Trust receives a specific written notice to the contrary from any one of them. A proxy purporting to be executed by or on behalf of a Shareholder shall be deemed valid unless challenged at or prior to its exercise, and the burden of proving the invalidity of a proxy shall rest on the challenger.

Section 7.1.7. Actions Prior to the Issuance of Shares . Until Shares are issued, the Trustees may exercise all rights of Shareholders and may take any action required by law, this Declaration of Trust or the Bylaws to be taken by Shareholders.

Section 7.2. Meetings of Shareholders .

Section 7.2.1. Annual or Regular Meetings . No annual or regular meetings of Shareholders are required to be held.

Section 7.2.2. Special Meetings . Special meetings of Shareholders may be called by the President of the Trust or the Trustees from time to time for the purpose of taking action upon any matter requiring the vote or authority of the Shareholders as herein provided or upon any other matter upon which Shareholder approval is deemed by the Trustees to be necessary or desirable.

Section 7.2.3. Notice of Meetings . Written notice of any meeting of Shareholders shall be given or caused to be given by the Trustees by mailing or transmitting such notice at least ten (10) days before such meeting, postage prepaid, stating the time, place and purpose of the meeting, to each Shareholder at the Shareholder’s address as it appears on the records of the Trust.

Section 7.3. Record Dates . For the purpose of determining the Shareholders who are entitled to vote or act at any meeting, or who are entitled to participate in any dividend or distribution, or for the purpose of any other action, the Trustees may from time to time close the transfer books for such period, not exceeding thirty (30) days (except at or in connection with the termination of the Trust), as the Trustees may determine; or without closing the transfer books the Trustees may fix a date and time not more than one hundred twenty (120) days prior to the date of any meeting of Shareholders or other action as the date and time of record for the determination of Shareholders entitled to vote at such meeting or to be treated as Shareholders of record for purposes of such other action. Any Shareholder who was a Shareholder at the date and time so fixed shall be entitled to vote at such meeting or to be treated as a Shareholder of record for purposes of such other action, even though such Shareholder has since that date and time disposed of its Shares, and no Shareholder becoming such after that date and time shall be so entitled to vote at such meeting or to be treated as a Shareholder of record for purposes of such other action.

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Section 7.4. Quorum and Required Vote . Except as otherwise required by the 1940 Act or other applicable law, this Declaration of Trust, or the By-Laws, one-tenth (1/10) of the Shares entitled to vote in person or by proxy shall be a quorum as to any particular matter; provided, however, that any lesser number shall be sufficient for matters upon which the Shareholders vote at any meeting called in accordance with Section 7.5. Any matter upon which the Shareholders vote shall be approved by a majority of the votes cast on such matter at a meeting of the Shareholders at which a quorum is present, except that Trustees shall be elected by a plurality of the votes cast at such a meeting.

Section 7.5. Adjournments . If a meeting at which a quorum was present is adjourned, a meeting may be held within a reasonable time after the date set for the original meeting without the necessity of further notice for the purpose of taking action upon any matter that would have been acted upon at the original meeting but for its adjournment.

Section 7.6. Actions by Written Consent . Except as otherwise required by the 1940 Act or other applicable law, this Declaration of Trust, or the By-Laws, any action taken by Shareholders may be taken without a meeting if Shareholders entitled to cast at least a majority of all of the votes entitled to be cast on the matter (or such larger proportion thereof as shall be required by the 1940 Act or by any express provision of this Declaration of Trust or the By-Laws) consent to the action in writing and such written consents are filed with the records of the meetings of Shareholders. Such consent shall be treated for all purposes as a vote taken at a meeting of Shareholders.

Section 7.7. Inspection of Records . The records of the Trust shall be open to inspection by Shareholders to the same extent as is required for stockholders of a Delaware business corporation under the Delaware General Corporation Law.

Section 7.8. Additional Provisions . The By-Laws may include further provisions for Shareholders’ votes and meetings and related matters not inconsistent with the provisions hereof.

ARTICLE 8

LIMITATION OF LIABILITY AND INDEMNIFICATION

Section 8.1. General Provisions .

Section 8.1.1. General Limitation of Liability . No personal liability for any debt or obligation of the Trust shall attach to any Trustee of the Trust. Without limiting the foregoing, a Trustee shall not be responsible for or liable in any event for any neglect or wrongdoing of any officer, agent, employee, investment adviser, subadviser, principal underwriter or custodian of the Trust, nor shall any Trustee be responsible or liable for the act or omission of any other Trustee. Every note, bond, contract, instrument, certificate, Share or undertaking and every other act or thing whatsoever executed or done by or on behalf of the Trust or the Trustees or any Trustee in connection with the Trust shall be conclusively deemed to have been executed or done only in or with respect to their or his or her capacity as Trustees or Trustee and neither such Trustees or Trustee nor the Shareholders shall be personally liable thereon.

Section 8.1.2. Notice of Limited Liability . Every note, bond, contract, instrument, certificate or undertaking made or issued by the Trustees or by any officers or officer shall recite that the same was executed or made by or on behalf of the Trust by them as Trustees or Trustee or as officers or officer and not individually and that the obligations of such instrument are not binding upon any of them or the Shareholders individually but are binding only upon the assets and property of the Trust or belonging or attributable to a Series or Class thereof, and may contain such further recitals as they or he may deem

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appropriate, but the omission thereof shall not operate to bind any Trustees or Trustee or officers or officer or Shareholders or Shareholder individually.

Section 8.1.3. Liability Limited to Assets of the Trust . All persons extending credit to, contracting with or having any claim against the Trust shall look only to the assets of the Trust or belonging to a Series or Class thereof, as appropriate, for payment under such credit, contract or claim, and neither the Shareholders nor the Trustees nor any of the Trust’s officers, employees or agents, whether past, present or future, shall be personally liable therefor.

Section 8.2. Liability of Trustees . The exercise by the Trustees of their powers and discretion hereunder shall be binding upon the Trust, the Shareholders, and any other person dealing with the Trust. The liability of the Trustees, however, shall be limited by this Section 8.2.

Section 8.2.1. Liability for Own Actions . A Trustee shall be liable to the Trust or the Shareholders only for his own willful misfeasance, bad faith, gross negligence, or reckless disregard of the duties involved in the conduct of the office of Trustee, and for nothing else, and shall not be liable for errors of judgment or mistakes of fact or law.

Section 8.2.2. Liability for Actions of Others . The Trustees shall not be responsible or liable in any event for any neglect or wrongdoing of any officer, agent, employee, consultant, adviser, administrative distributor, principal underwriter, custodian, transfer agent, dividend disbursing agent, Shareholder servicing agent, or accounting agent of the Trust, nor shall any Trustee be responsible for any act or omission of any other Trustee.

Section 8.2.3. Advice of Experts and Reports of Others . The Trustees may take advice of counsel or other experts with respect to the meaning and operation of this Declaration of Trust and their duties as Trustees hereunder, and shall be under no liability for any act or omission in accordance with such advice or for failing to follow such advice. In discharging their duties, the Trustees, when acting in good faith, shall be entitled to rely upon the books of account of the Trust and upon written reports made to the Trustees by any officer appointed by them, any independent public accountant and (with respect to the subject matter of the contract involved) any officer, partner or responsible employee of any other party to any contract entered into hereunder.

Section 8.2.4. Bond . The Trustees shall not be required to give any bond as such, nor any surety if a bond is required.

Section 8.2.5. Declaration of Trust Governs Issues of Liability . The provisions of this Declaration of Trust, to the extent that they restrict the duties and liabilities of the Trustees otherwise existing at law or in equity, are agreed by the Shareholders and all other Persons bound by this Declaration of Trust to replace such other duties and liabilities of the Trustees.

Section 8.3. Liability of Third Persons Dealing with Trustees . No person dealing with the Trustees shall be bound to make any inquiry concerning the validity of any transaction made or to be made by the Trustees or to see to the application of any payments made or property transferred to the Trust or upon its order.

Section 8.4. Liability of Shareholders . Without limiting the provisions of this Section 8.4 or the DBTA, the Shareholders shall be entitled to the same limitation of personal liability extended to stockholders of private corporations organized for profit under the General Corporation Law of the State of Delaware.

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Section 8.4.1. Limitation of Liability . No personal liability for any debt or obligation of the Trust shall attach to any Shareholder or former Shareholder of the Trust, and neither the Trustees, nor any officer, employee or agent of the Trust shall have any power to bind any Shareholder personally or to call upon any Shareholder for the payment of any sum of money or assessment whatsoever other than such as the Shareholder may at any time personally agree to pay by way of subscription for any Shares or otherwise.

Section 8.4.2. Indemnification of Shareholders . In case any Shareholder or former Shareholder of the Trust shall be held to be personally liable solely by reason of being or having been a Shareholder and not because of such Shareholder’s acts or omissions or for some other reason, the Shareholder or former Shareholder (or, in the case of a natural person, his or her heirs, executors, administrators or other legal representatives or, in the case of a corporation or other entity, its corporate or other general successor) shall be entitled out of the assets of the Trust to be held harmless from and indemnified against all loss and expense arising from such liability; provided, however, there shall be no liability or obligation of the Trust arising hereunder to reimburse any Shareholder for taxes paid by reason of such Shareholder’s ownership of any Shares or for losses suffered by reason of any changes in value of any Trust assets. The Trust shall, upon request by the Shareholder or former Shareholder, assume the defense of any claim made against the Shareholder for any act or obligation of the Trust and satisfy any judgment thereon.

Section 8.5. Indemnification .

Section 8.5.1. Indemnification of Covered Persons . Subject to the exceptions and limitations contained in Section 8.5.2, every person who is, or has been, a Trustee, officer, employee or agent of the Trust, including persons who serve at the request of the Trust as directors, trustees, officers, employees or agents of another organization in which the Trust has an interest as a shareholder, creditor or otherwise (hereinafter referred to as a “Covered Person”), shall be indemnified by the Trust to the fullest extent permitted by law against liability and against all expenses reasonably incurred or paid by him in connection with any claim, action, suit or proceeding in which he becomes involved as a party or otherwise by virtue of his being or having been such a Trustee, director, officer, employee or agent and against amounts paid or incurred by him in settlement thereof.

Section 8.5.2. Exceptions . No indemnification shall be provided hereunder to a Covered Person:

(a) For any liability to the Trust or its Shareholders arising out of a final adjudication by the court or other body before which the proceeding was brought that the Covered Person engaged in willful misfeasance, bad faith, gross negligence or reckless disregard of the duties involved in the conduct of his office;

(b) With respect to any matter as to which the Covered Person shall have been finally adjudicated not to have acted in good faith in the reasonable belief that his or her action was in the best interests of the Trust; or

(c) In the event of a settlement or other disposition not involving a final adjudication (as provided in paragraph (a) or (b) of this Section 8.5.2) and resulting in a payment by a Covered Person, unless there has been either a determination that such Covered Person did not engage in willful misfeasance, bad faith, gross negligence or reckless disregard of the duties involved in the conduct of his office by the court or other body approving the settlement or other disposition, or a reasonable determination, based on a review of readily available facts (as opposed to a full trial-type inquiry), that he or she did not engage in such conduct, such determination being made by: (i) a vote of a majority of the

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Disinterested Trustees (as such term is defined in Section 8.5.5) acting on the matter (provided that a majority of Disinterested Trustees then in office act on the matter); or (ii) a written opinion of independent legal counsel.

Section 8.5.3. Rights of Indemnification . The rights of indemnification herein provided may be insured against by policies maintained by the Trust, and shall be severable, shall not affect any other rights to which any Covered Person may now or hereafter be entitled, shall continue as to a person who has ceased to be a Covered Person, and shall inure to the benefit of the heirs, executors and administrators of such a person. Nothing contained herein shall affect any rights to indemnification to which Trust personnel other than Covered Persons may be entitled by contract or otherwise under law.

Section 8.5.4. Expenses of Indemnification . Expenses of preparation and presentation of a defense to any claim, action, suit or proceeding subject to a claim for indemnification under this Section 8.5 shall be advanced by the Trust prior to final disposition thereof upon receipt of an undertaking by or on behalf of the recipient to repay such amount if it is ultimately determined that he or she is not entitled to indemnification under this Section 8.5, provided that either:

(a) Such undertaking is secured by a surety bond or some other appropriate security or the Trust shall be insured against losses arising out of any such advances; or

(b) A majority of the Disinterested Trustees acting on the matter (provided that a majority of the Disinterested Trustees then in office act on the matter) or independent legal counsel in a written opinion shall determine, based upon a review of the readily available facts (as opposed to the facts available upon a full trial), that there is reason to believe that the recipient ultimately will be found entitled to indemnification.

Section 8.5.5. Certain Defined Terms Relating to Indemnification . As used in this Section 8.5, the following words shall have the meanings set forth below:

(a) A “ Disinterested Trustee ” is one (i) who is not an Interested Person of the Trust (including anyone, as such Disinterested Trustee, who has been exempted from being an Interested Person by any rule, regulation or order of the Commission), and (ii) against whom none of such actions, suits or other proceedings or another action, suit or other proceeding on the same or similar grounds is then or has been pending;

(b) “ Claim ,” “ action ,” “ suit ” or “ proceeding ” shall apply to all claims, actions, suits, proceedings (civil, criminal, administrative or other, including appeals), actual or threatened; and

(c) “ Liability ” and “ expenses ” shall include without limitation, attorneys’ fees, costs, judgments, amounts paid in settlement, fines, penalties and other liabilities.

ARTICLE 9

TERMINATION OR REORGANIZATION

Section 9.1. Termination of Trust or Series . Unless terminated as provided herein, the Trust and each Series or Class designated and established pursuant to this Declaration of Trust shall continue without limitation of time.

Section 9.1.1. Termination . The Trust or any Series or Class (and the establishment and designation thereof) may be terminated either by a majority vote of the Trustees then in office upon a

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determination that the continuation of the Trust or Series is not in the best interests of the Trust, such Series or Class, or the affected Shareholders as a result of factors or events adversely affecting the ability of the Trust, Series or Class to conduct its business and operations in an economically viable manner; or by the affirmative vote of a majority of the holders of the Trust or the Series entitled to vote.

Section 9.1.2. Distribution of Assets . Upon termination of the Trust or any Series or Class, after paying or otherwise providing for all charges, taxes, expenses and liabilities, whether due or accrued or anticipated, as may be determined by the Trustees, the Trust shall, in accordance with such procedures as the Trustees consider appropriate, reduce the remaining assets of the Trust to distributable form in cash or other securities, or any combination thereof, and distribute the proceeds to the affected Shareholders in the manner set forth by resolution of the Trustees.

Section 9.1.3. Certificate of Cancellation . Upon termination of the Trust, the Trustees shall file a certificate of cancellation in accordance with Section 3810 of the DBTA.

Section 9.2. Reorganization . The Trustees may sell, convey, merge and transfer the assets of the Trust, or the assets belonging to any one or more Series or Classes, to another trust, partnership, association or corporation organized under the laws of any state of the United States, or to the Trust to be held as assets belonging to another Series or Class of the Trust, in exchange for cash, shares or other securities (including, in the case of a transfer to another Series or Class of the Trust, Shares of such other Series or Classes) with such transfer either (i) being made subject to, or with the assumption by the transferee of, the liabilities belonging to each Series or Class the assets of which are so transferred, or (ii) not being made subject to, or not with the assumption of, such liabilities. Following such transfer, the Trustees shall distribute such cash, Shares or other securities (giving due effect to the assets and liabilities belonging to and any other differences among the various Series or Classes the assets belonging to which have so been transferred) among the Shareholders of the Series or Classes the assets belonging to which have been so transferred. If all of the assets of the Trust have been so transferred, the Trust shall be terminated.

Section 9.3. Merger or Consolidation .

Section 9.3.1. Authority to Merge or Consolidate . Pursuant to an agreement of merger or consolidation, the Trust, or any one or more Series or Classes, may merge or consolidate with or into one or more business trusts or other business entities formed or organized or existing under the laws of the State of Delaware or any other state or the United States or any foreign country or other foreign jurisdiction.

Section 9.3.2. No Shareholder Approval Required . Any merger or consolidation described in Section 9.3.1 or any reorganization described in Section 9.2, shall not require the vote of the Shareholders affected thereby, unless such vote is required by the 1940 Act or other applicable laws, or unless such merger or consolidation would result in an amendment of this Declaration of Trust which would otherwise require the approval of such Shareholders.

Section 9.3.3. Subsequent Amendments . In accordance with Section 3815(f) of DBTA, an agreement of merger or consolidation may effect any amendment to this Declaration of Trust or the By-Laws or effect the adoption of a new declaration of trust or By-Laws of the Trust if the Trust is the surviving or resulting business trust.

Section 9.3.4. Certificate of Merger or Consolidation . Upon completion of the merger or consolidation, the Trustees shall file a certificate of merger or consolidation in accordance with Section 3810 of the DBTA.

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ARTICLE 10

MISCELLANEOUS PROVISIONS

Section 10.1. Signatures . To the extent permitted by applicable law, any instrument signed pursuant to a validly executed power of attorney shall be deemed to have been signed by the Trustee or officer executing the power of attorney. To the extent permitted by law, any Trustee or officer may, in his or her discretion, accept a facsimile signature as evidence of a valid signature on any document.

Section 10.2. Certified Copies . The original or a copy of this Declaration of Trust and of each amendment hereto shall be kept in the office of the Trust where it may be inspected by any Shareholder. Anyone dealing with the Trust may rely on a certificate by an officer or Trustee of the Trust as to whether or not any such amendments have been made and as to any matters in connection with the Trust hereunder, and with the same effect as if it were the original, may rely on a copy certified by an officer or Trustee of the Trust to be a copy of this Declaration of Trust or of any such amendments.

Section 10.3. Certain Internal References . In this Declaration of Trust or in any such amendment, references to this Declaration of Trust, and all expressions like “herein,” “hereof” and “hereunder,” shall be deemed to refer to this Declaration of Trust as a whole and as amended or affected by any such amendment.

Section 10.4. Headings . Headings are placed herein for convenience of reference only, and in case of any conflict, the text of this instrument, rather than the headings, shall control. This instrument may be executed in any number of counterparts, each of which shall be deemed an original.

Section 10.5. Resolution of Ambiguities . The Trustees may construe any of the provisions of this Declaration insofar as the same may appear to be ambiguous or inconsistent with any other provisions hereof, and any such construction hereof by the Trustees in good faith shall be conclusive as to the meaning to be given to such provisions. In construing this Declaration, the presumption shall be in favor of a grant of power to the Trustees.

Section 10.6. Amendments .

Section 10.6.1. Generally . Except as otherwise specifically provided herein or as required by the 1940 Act or other applicable law, this Declaration of Trust may be amended at any time by an instrument in writing signed by a majority of the Trustees then in office.

Section 10.6.2. Certificate of Amendment . In the event of any amendment to this Declaration of Trust which affects the Trust’s certificate of trust, the Trustees shall file a certificate of amendment in accordance with Section 3810 of the DBTA.

Section 10.6.3. Prohibited Retrospective Amendments . No amendment of this Declaration of Trust or repeal of any of its provisions shall limit or eliminate the limitation of liability provided to Trustees and officers hereunder with respect to any act or omission occurring prior to such amendment or repeal.

Section 10.7. Governing Law . This Declaration of Trust is executed and delivered with reference to DBTA and the laws of the State of Delaware by all of the Trustees whose signatures appear below, and the rights of all parties and the validity and construction of every provision hereof shall be subject to and construed according to DBTA and the laws of the State of Delaware (unless and to the extent otherwise provided for and/or preempted by the 1940 Act or other applicable federal securities laws); provided,

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however, that there shall not be applicable to the Trust, the Trustees, or this Declaration of Trust (a) the provisions of Section 3540 of Title 12 of the Delaware Code or (b) any provisions of the laws (statutory or common) of the State of Delaware (other than the DBTA) pertaining to trusts which are inconsistent with the rights, duties, powers, limitations or liabilities of the Trustees set forth or referenced in this Declaration of Trust. All references to sections of the DBTA or the 1940 Act, or any rules or regulations thereunder, refer to such sections, rules, or regulations in effect as of the date of this Declaration of Trust, or any successor sections, rules, or regulations thereto.

Section 10.8. Severability . The provisions of this Declaration of Trust are severable, and if the Trustees shall determine, with the advice of counsel, that any of such provision is in conflict with the 1940 Act, the DBTA, or with other applicable laws and regulations, the conflicting provision shall be deemed never to have constituted a part of this Declaration of Trust; provided, however, that such determination shall not affect any of the remaining provisions of this Declaration of Trust or render invalid or improper any action taken or omitted prior to such determination. If any provision of this Declaration of Trust shall be held invalid or unenforceable in any jurisdiction, such invalidity or unenforceability shall attach only to such provision in such jurisdiction and shall not in any manner affect such provision in any other jurisdiction or any other provision of this Declaration of Trust in any jurisdiction.

IN WITNESS WHEREOF, the undersigned, being the Trustees of the Trust, have executed this Declaration of Trust as of the date first written above.

/s/ Michael L. Sapir

Michael L. Sapir

/s/ Louis M. Mayberg

Louis M. Mayberg

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Exhibit (b)

xtraShares Trust

(A Delaware Business Trust)

BYLAWS

September 20, 2005

Table Contents


ARTICLE I		3
NAME OF TRUST, PRINCIPAL OFFICE AND SEAL

ARTICLE II		3
MEETINGS OF TRUSTEES

ARTICLE III		3
COMMITTEES

ARTICLE IV		4
OFFICERS

ARTICLE V		6
MEETINGS OF SHAREHOLDERS

ARTICLE VI		7
SHARES IN THE TRUST

ARTICLE VII		7
CUSTODY OF SECURITIES

ARTICLE VIII		8
FISCAL YEAR AND ACCOUNT

ARTICLE IX		8
AMENDMENTS

ARTICLE X		8
MISCELLANEOUS

BYLAWS

XTRASHARES TRUST

(A Delaware Business Trust)

These Bylaws of xtraShares Trust (the “Trust”), a Delaware business trust, are subject to the Declaration of Trust of the Trust dated May 25, 2002, as from time to time amended, supplemented or restated (the “Declaration of Trust”). Capitalized terms used herein have the same meaning as in the Declaration of Trust.

ARTICLE I

NAME OF TRUST, PRINCIPAL OFFICE AND SEAL

SECTION 1. PRINCIPAL OFFICE. The principal office of the Trust shall be located in Bethesda, Maryland, or such other location as the Trustees may from time to time determine. The Trust may establish and maintain other offices and places of business as the Trustees may from time to time determine.

SECTION 2. DELAWARE OFFICE. The Trustees shall establish a registered office in the State of Delaware and shall appoint as the Trust’s registered agent for service of process in the State of Delaware an individual resident of the State of Delaware or a Delaware corporation or a corporation authorized to transact business in the State of Delaware and in any case the business office of such registered agent for service of process shall be identical with the registered Delaware office of the Trust.

SECTION 3. SEAL. The Trustees may adopt a seal which shall be in such form and have such inscription as the Trustees may from time to time determine. Any Trustee or officer of the Trust shall have authority to affix the seal to any document, provided that the failure to affix the seal shall not affect the validity or effectiveness of any document.

ARTICLE II

MEETINGS OF TRUSTEES

SECTION 1. MEETINGS. Meetings of the Trustees may be held at such places and such times as the Trustees may from time to time determine. Such meetings may be called orally or in writing by the Chairman of the Trustees or by any other Trustee. Each Trustee shall be given at least twenty four hours’ notice of any meeting unless such Trustee has waived the notice requirement by written instrument executed before, at or after such meeting or if such Trustee attends the meeting.

SECTION 2. ACTION WITHOUT A MEETING. Actions may be taken by the Trustees without a meeting or by a telephone meeting, as provided in Article 5, Section 5.12.3, of the Declaration of Trust.

SECTION 3. COMPENSATION OF TRUSTEES. As provided by Article 5, Section 5.10.5 of the Declaration of Trust, each Trustee may receive such compensation from the Trust for his or her services and reimbursement for his or her expenses as may be fixed from time to time by the Trustees.

ARTICLE III

COMMITTEES

SECTION 1. ORGANIZATION. As provided in Article 5, Section 5.10.3 of the Declaration of Trust, the Trustees may designate one or more committees of the Trustees. The Chairmen of such committees shall be elected by the Trustees. The number composing such committees and the powers conferred upon the same shall be determined by the vote of a majority of the Trustees. All members of such committees shall hold office at the pleasure of the

Trustees. The Trustees may abolish any such committee at any time in their sole discretion. Any committee to which the Trustees delegate any of their powers shall maintain records of its meetings and shall report its actions to the Trustees. The Trustees shall have the power to rescind any action of any committee, but no such rescission shall have retroactive effect. The Trustees shall have the power at any time to fill vacancies in the committees. The Trustees may delegate to these committees any of its powers, subject to the limitations of applicable law.

SECTION 2. EXECUTIVE COMMITTEE. As provided by Article 5, Section 5.10.3 of the Declaration of Trust, the Trustees may elect from their own number an Executive Committee which shall have any or all the powers of the Trustees when the Trustees are not in session. The Chairman of the Trustees shall be a member of the Executive Committee.

SECTION 3. NOMINATING COMMITTEE. Pursuant to the powers granted in Article 5, Section 5.10.3 of the Declaration of Trust, the Trustees may elect from their own number a Nominating Committee composed entirely of Trustees who are not Interest Persons which shall have the power to select and nominate Trustees who are not Interested Persons, and shall have such other powers and perform such other duties as may be assigned to it from time to time by the Trustees.

SECTION 4. AUDIT COMMITTEE. Pursuant to the powers granted in Article 5, Section 5.10.3 of the Declaration of Trust, the Trustees may elect from their own number an Audit Committee composed entirely of Trustees who are not Interested Persons which shall have the power to review and evaluate the audit function, including recommending independent certified public accountants, and shall have such other powers and perform such other duties as may be assigned to it from time to time by the Trustees.

SECTION 5. OTHER COMMITTEES. The Trustees may appoint other committees in accordance with Article 5, Section 5.10.3 of the Declaration of Trust. Each such committee shall have such powers and perform such duties as may be assigned to it from time to time by the Trustees, but shall not exercise any power which may lawfully be exercised only by the Trustees or a committee thereof.

SECTION 6. PROCEEDINGS AND QUORUM. In the absence of an appropriate resolution of the Trustees, each committee may adopt such rules and regulations governing its proceedings, quorum and manner of acting as it shall deem proper and desirable. In the event any member of any committee is absent from any meeting, the members present at the meeting, whether or not they constitute a quorum, may appoint a Trustee to act in the place of such absent member.

SECTION 7. COMPENSATION OF COMMITTEE MEMBERS. Each committee member may receive such compensation from the Trust for his or her services and reimbursement for his or her expenses as may be fixed from time to time by the Trustees.

ARTICLE IV

OFFICERS

SECTION 1. GENERAL. The officers of the Trust shall be a President, a Treasurer, a Secretary, and may include one or more Vice Presidents, Assistant Treasurers or Assistant Secretaries, and such other officers as the Trustees may from time to time elect. It shall not be necessary for any Trustee or other officer to be a Shareholder of the Trust.

SECTION 2. ELECTION, TENURE AND QUALIFICATIONS OF OFFICERS. The officers of the Trust, except those appointed as provided in Section 9 of this Article, shall be elected by the Trustees. Each officer elected by the Trustees shall hold office until his or her successor shall have been elected and qualified or until his or her earlier resignation. Any person may hold one or more offices of the Trust. A person who holds more than one office in the Trust may not act in more than one capacity to execute, acknowledge or verify an instrument required by law to be executed, acknowledged or verified by more than one officer. No officer need be a Trustee.

SECTION 3. VACANCIES AND NEWLY CREATED OFFICES. Whenever a vacancy shall occur in any office, regardless of the reason for such vacancy, or if any new office shall be created, such vacancies or newly created offices may be filled by the Trustees or, in the case of any office created pursuant to Section 9 of this Article, by any officer upon whom such power shall have been conferred by the Trustees.

SECTION 4. REMOVAL AND RESIGNATION. Any officer may be removed from office at any time, with or without cause, by action of a majority of the Trustees. In addition, any officer or agent appointed in accordance with the provisions of Section 9 of this Article may be removed, with or without cause, by any officer upon whom such power of removal shall have been conferred by the Trustees. Any officer may resign from office at any time by delivering a written resignation to the Trustees, the President, the Secretary, or any Assistant Secretary. Unless otherwise specified therein, such resignation shall take effect upon delivery.

SECTION 5. PRESIDENT. Subject to the direction of the Trustees, the President shall be the Principal Executive Officer of the Trust and shall have general charge of the business affairs, policies and property of the Trust and general supervision over its officers, employees and agents. In the absence of the Chairman of the Trustees or if no Chairman of the Trustees has been elected, the President shall preside at all Shareholders’ meetings and at all meetings of the Trustees and shall in general exercise the powers and perform the duties of the Chairman of the Trustees. Except as the Trustees may otherwise order, the President shall have the power to grant, issue, execute or sign such powers of attorney, proxies, agreements or other documents as may be deemed advisable or necessary in the furtherance of the interests of the Trust or any Series or Class thereof. The President also shall have the power to employ attorneys, accountants and other advisers and agents for the Trust. The President shall exercise such other powers and perform such other duties as the Trustees may from time to time assign to the President.

SECTION 6. VICE PRESIDENT. The Trustees may from time to time elect one or more Vice Presidents who shall have such powers and perform such duties as may from time to time be assigned to them by the Trustees or the President. At the request or in the absence or disability of the President, the Vice President (or, if there are two or more Vice Presidents, then the first appointed of the Vice Presidents present and able to act) may perform all the duties of the President and, when so doing, shall have all the powers of and be subject to all the restrictions upon the President.

SECTION 7. TREASURER AND ASSISTANT TREASURERS. The Treasurer shall be the principal financial and accounting officer of the Trust and shall have general charge of the finances and books of the Trust. The Treasurer shall deliver all funds and securities of the Trust to such company as the Trustees shall retain as custodian in accordance with the Declaration of Trust, these Bylaws, and applicable law. The Treasurer shall make annual reports regarding the business and financial condition of the Trust as soon as possible after the close of the Trust’s fiscal year. The Treasurer also shall furnish such other reports concerning the business and financial condition of the Trust as the Trustees may from time to time require. The Treasurer shall perform all acts incidental to the office of Treasurer, subject to the supervision of the Trustees, and shall perform such additional duties as the Trustees may from time to time designate.

Any Assistant Treasurer may perform such duties of the Treasurer as the Trustees or the Treasurer may assign, and, in the absence of the Treasurer, may perform all the duties of the Treasurer.

SECTION 8. SECRETARY AND ASSISTANT SECRETARIES. The Secretary shall record all votes and proceedings of the meetings of Trustees and Shareholders in books to be kept for that purpose. The Secretary shall be responsible for giving and serving of all notices of the Trust. The Secretary shall have custody of any seal of the Trust. The Secretary shall be responsible for the records of the Trust, including the Share register and such other books and papers as the Trustees may direct and such books, reports, certificates and other documents required by law. All of such records and documents shall at all reasonable times be kept open by the Secretary for inspection by any Trustee for any proper Trust purpose. The Secretary shall perform all acts incidental to the office of Secretary, subject to the supervision of the Trustees, and shall perform such additional duties as the Trustees may from time to time designate.

Any Assistant Secretary may perform such duties of the Secretary as the Trustees or the Secretary may assign, and, in the absence of the Secretary, may perform all the duties of the Secretary.

SECTION 9. SUBORDINATE OFFICERS. The Trustees may appoint from time to time such other officers and agents as they may deem advisable, each of whom shall have such title, hold office for such period, have such authority and perform such duties as the Trustees may determine. The Trustees may delegate from time to time to one or more officers or committees of Trustees the power to appoint any such subordinate officers or agents and to prescribe their respective rights, terms of office, authorities and duties. Any officer or agent appointed in accordance with the provisions of this Section 9 may be removed, either with or without cause, by any officer upon whom such power of removal shall have been conferred by the Trustees.

SECTION 10. COMPENSATION OF OFFICERS. Each officer may receive such compensation from the Trust for services and reimbursement for expenses as may be fixed from time to time by the Trustees.

SECTION 11. SURETY BOND. The Trustees may require any officer or agent of the Trust to execute a bond (including, without limitation, any bond required by the Investment Company Act of 1940 and the rules and regulations of the Securities and Exchange Commission) to the Trust in such sum and with such surety or sureties as the Trustees may determine, conditioned upon the faithful performance of his or her duties to the Trust, including responsibility for the accounting of any of the Trust’s property, funds or securities that may come into his or her hands.

ARTICLE V

MEETINGS OF SHAREHOLDERS

SECTION 1. ANNUAL AND REGULAR MEETINGS. As provided in Article 7, Section 7.2.1 of the Declaration of Trust, there shall be no annual or regular Shareholders’ meetings except as required by law or as hereinafter provided.

SECTION 2. SPECIAL MEETINGS. Special meetings of Shareholders of the Trust or of any Series or Class shall be called in accordance with Article 7, Section 7.2.2 of the Declaration of Trust.

Special meetings of the Shareholders of the Trust or of any Series or Class shall be called by the Secretary upon the written request of Shareholders owning at least ten percent (10%) of the Outstanding Shares entitled to vote at such meeting, provided that (1) such request shall state the purposes of such meeting and the matters proposed to be acted on, and (2) the Shareholders requesting such meeting shall have paid to the Trust the reasonably estimated cost of preparing and mailing the notice thereof, which the Secretary shall determine and specify to such Shareholders.

If the Secretary fails for more than thirty days to call a special meeting, The Trustees or the Shareholders requesting such a meeting may, in the name of the Secretary, call the meeting by giving the required notice. If the meeting is a meeting of Shareholders of any Series or Class, but not a meeting of all Shareholders of the Trust, then only a special meeting of Shareholders of such Series or Class need be called and, in such case, only Shareholders of such Series or Class shall be entitled to notice of and to vote at such meeting.

SECTION 3. NOTICE OF MEETINGS. Notice shall be provided in accordance with Article 7, Section 7.2.3 of the Declaration of Trust. The written notice of any meeting may be delivered or mailed, postage prepaid, to each Shareholder entitled to vote at such meeting. If mailed, notice shall be deemed to be given when deposited in the United States mail directed to the Shareholder at his or her address as it appears on the records of the Trust. Notice of any Shareholders’ meeting need not be given to any Shareholder if a written waiver of notice, executed before, at or after such a meeting, is filed with the record of such a meeting, or to any Shareholder who is present at such meeting in person or by proxy unless the Shareholder is present solely for the purpose of objecting to the call of the meeting. Notice of adjournment of a Shareholders’ meeting to another time or place need not be given, if such time and place are announced at the meeting which the adjournment is taken and the adjourned meeting is held within a reasonable time after the date set for the original meeting. At the adjourned meeting the Trust may transact any business which might have been transacted at the original meeting. If after the adjournment a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to Shareholders of record entitled to vote at such meeting. Any irregularities in the notice of any meeting or the nonreceipt of any such notice by any of the Shareholders shall not invalidate any action otherwise properly taken at any such meeting.

SECTION 4. FIXING RECORD DATES. For the purpose of determining the Shareholders who are entitled to notice of or to vote or act at any meeting, including any adjournment thereof, or who are entitled to participate in any dividends, or for any other proper purpose, the Trustees may from time to time, without closing the transfer books, fix a record date in the manner provided in Article 7, Section 7.3 of the Declaration of Trust. If the Trustees do not prior to any meeting of Shareholders so fix a record date or close the transfer books, then the date of mailing notice of the meeting or the date upon which the dividend resolution is adopted, as the case may be, shall be the record date.

SECTION 5. VALIDITY OF PROXIES. Subject to the provision of Article 7, Section 7.1.5 of the Declaration of Trust, Shareholders entitled to vote may vote either in person or by proxy, provided that either (1) a written instrument authorizing such proxy to act has been signed and dated by the Shareholder or by his or her duly authorized attorney, or (2) the Trustees adopt by resolution an electronic, telephonic, computerized or other alternative to execution of a written instrument authorizing the proxy to act, but if a proposal by anyone other than the officers or Trustees is submitted to a vote of the Shareholders of the Trust or of any Series, or if there is a proxy contest or proxy solicitation or proposal in opposition to any proposal by the officers or Trustees, Shares may be voted only in person or by written proxy. Unless the proxy provides otherwise, it shall not be valid if executed more than eleven months before the date of the meeting. All proxies shall be delivered to the Secretary or other person responsible for recording the proceedings before being voted. Unless otherwise specifically limited by their terms, proxies shall entitle the Shareholder to vote at any adjournment of a Shareholders’ meeting. At every meeting of the Shareholders, unless the voting is conducted by inspectors, all questions concerning the qualifications of voters, the validity of proxies, and the acceptance or rejection of votes, shall be decided by the chairman of the meeting. Subject to the provisions of the Declaration of Trust or these Bylaws, all matters concerning the giving, voting or validity of proxies shall be governed by the General Corporation Law of the State of Delaware relating to proxies, and judicial interpretations thereunder, as if the Trust were a Delaware corporation and Shareholders were shareholders of a Delaware corporation.

SECTION 6. PLACE OF MEETING. All special meetings of Shareholders shall be held at the principal place of business of the Trust or at such other place as the Trustees may from time to time designate.

SECTION 7. ACTION WITHOUT A MEETING. Any action to be taken by the Shareholders may be taken without a meeting in accordance with Article 7, Section 7.6 of the Declaration of Trust.

ARTICLE VI

SHARES IN THE TRUST

SECTION 1. CERTIFICATES. No certificates certifying the ownership of Shares shall be issued. In lieu of issuing certificates of Shares, the Trustees or the transfer agent or Shareholder servicing agent may either issue receipts or may keep accounts upon the books of the Trust for record holders of such Shares. In either case, the record holders shall be deemed, for all purposes, to be holders of certificates for such Shares as if they accepted such certificates and shall be held to have expressly consented to the terms thereof.

SECTION 2. NON-TRANSFERABILITY OF SHARES. Shares in the Trust shall not be transferable unless the prospective transferor obtains the prior unanimous consent of the Shareholders to the transfer. The Trust shall be entitled to treat the holder of record of any Share or Shares as the absolute owner for all purposes, and shall not be bound to recognize any legal, equitable or other claim or interest in such Share of Shares on the part of any other person except as otherwise expressly provided by law.

ARTICLE VII

CUSTODY OF SECURITIES

SECTION 1. EMPLOYMENT OF A CUSTODIAN. The Trust may enter into written contracts for the placement and maintenance of all funds, securities and similar investments of the Trust in accordance with Article 6, Section 6.3 of the Declaration of Trust.

SECTION 2. TERMINATION OF CUSTODIAN AGREEMENT. Upon termination of the Custodian Agreement or inability of the Custodian to continue to serve, the Trustees shall promptly appoint a successor Custodian. If so directed by resolution of the Trustees or by vote of a majority of Outstanding Shares of the Trust, the Custodian shall deliver and pay over all property of the Trust or any Series held by it as specified in such vote.

SECTION 3. OTHER ARRANGEMENTS. The Trust may make such other arrangements for the custody of its assets (including deposit arrangements) as may be required by any applicable law, rule or regulation.

ARTICLE VIII

FISCAL YEAR AND ACCOUNTANT

SECTION 1. FISCAL YEAR. The fiscal year of the Trust shall be as determined by the Trustees.

SECTION 2. ACCOUNTANT. The Trust shall employ independent certified public accountants as its accountant (“Accountant”) to examine the accounts of the Trust and to sign and certify financial statements filed by the Trust. The Accountant’s certificates and reports shall be addressed both to the Trustees and to the Shareholders.

ARTICLE IX

AMENDMENTS

SECTION 1. GENERAL. All Bylaws of the Trust shall be subject to amendment, alteration or repeal, and new Bylaws may be made by the affirmative vote of a majority of either: (1) the Outstanding Shares of the Trust entitled to vote at any meeting; or (2) the Trustees. In no event will Bylaws be adopted that are in conflict with the Declaration of Trust, the Delaware Business Trust Act, the Investment Company Act of 1940, or applicable securities laws.

ARTICLE X

MISCELLANEOUS

SECTION 1. INSPECTION OF BOOKS. The Trustees shall from time to time determine whether and to what extent, and at what times and places, and under what conditions the accounts and books of the Trust or any Series shall be open to the inspection of Shareholders. No Shareholder shall have any right to inspect any account or book or document of the Trust except as conferred by law or otherwise by the Trustees.

SECTION 2. SEVERABILITY. The provisions of these Bylaws are severable. If the Trustees determine, with the advice of counsel, that any provision hereof conflicts with the Investment Company Act of 1940, the regulated investment company or other provisions of the Internal Revenue Code or with other applicable laws and regulations the conflicting provision shall be deemed never to have constituted a part of these Bylaws; provided, however, that such determination shall not affect any of the remaining provisions of these Bylaws or render invalid or improper any action taken or omitted prior to such determination. If any provision hereof shall be held invalid or unenforceable in any jurisdiction, such invalidity or unenforceability shall attach only to such provision only in such jurisdiction and shall not affect any other provision of these Bylaws.

SECTION 3. HEADINGS. Headings are placed in these Bylaws for convenience of reference only and in case of any conflict, the text of these Bylaws rather than the headings shall control.

Exhibit (e)

FORM OF DISTRIBUTION AGREEMENT

THIS AGREEMENT is made as of this __ day of _______, 2005 between ProShares Trust (“the Trust”), a Delaware business trust and SEI Investments Distribution Co. (the “Distributor”), a Pennsylvania corporation.

WHEREAS, the Trust is registered as an investment company with the Securities and Exchange Commission (the “SEC”) under the Investment Company Act of 1940, as amended (the “1940 Act”), and its shares are registered with the SEC under the Securities Act of 1933, as amended (the “1933 Act”); and

WHEREAS, the Distributor is registered as a broker-dealer with the SEC under the Securities Exchange Act of 1934 (the “1934 Act”), as amended and is a member of the NASD and will continue as such during the entire term of the agreement;

NOW, THEREFORE, in consideration of the mutual covenants hereinafter contained, the Trust and Distributor hereby agree as follows:

ARTICLE 1. Sale of Shares . The Trust grants to the Distributor the exclusive right to sell as agent units (the “Shares”) of the portfolios (the “Portfolios”) of the Trust at the net asset value per Share, plus any applicable sales charges in accordance with the current prospectus and statement of additional information, as agent and on behalf of the Trust, during the term of this Agreement and subject to the registration requirements of the 1933 Act, the rules and regulations of the SEC and the laws governing the sale of securities in the various states (“Blue Sky Laws”). In its capacity as distributor of the Shares, all activities of Distributor and its partners, agents, and employees shall, at its own expense, comply with all applicable laws, rules and regulations, including, without limitation, the 1940 Act, all rules and regulations promulgated by the Securities and Exchange Commission thereunder and all rules and regulations adopted by any securities association registered under the 1934 Act as modified by the exemptive relief obtained by the Trust, ProFund Advisors LLC and the Distributor. The Distributor will not maintain a secondary market in the Shares.

ARTICLE 2. Solicitation of Sales . In consideration of these rights granted to the Distributor, the Distributor agrees to use its best efforts in connection with the distribution of Shares of the Trust on a continuous basis; provided, however, that the Distributor shall not be prevented from entering into like arrangements with other issuers. In particular, the Distributor shall enter into Authorized Participant Agreements with persons who are participants in the system for book-entry of the Depository Trust Company (“DTC”), as authorized by the Advisor (“Authorized Participants”), consistent with applicable law and the registration statement and prospectus and statement of additional information of the Trust, to create and redeem Shares, consistent with the protocol described in Sections 1(a)(7) and 2(g) of the Services Agreement, of even date herewith, among ProFund Advisors LLC (the “Advisor”), the Distributor and SEI Investments Management Corporation (the “Services Agreement”). In addition, if the Trust adopts any distribution and/or shareholder servicing plan(s) pursuant to Rule 12b-1 under the 1940 Act (the “Plan(s)”), the Distributor shall enter into selling and/or investor servicing agreements (the “Sales and Investor Services Agreements”) with various broker-dealers and any other financial institution exempt under federal or state securities laws from registration as a broker or dealer

authorized by the Advisor, consistent with applicable law and the registration statement and prospectus, to sell Shares and provide services to shareholders, consistent with the protocol described in Sections 1(a)(8) and 2(f) of the Services Agreement. The Distributor, together with its affiliated companies, shall provide such additional specific services as are listed in Appendix A hereto, including without limitation generating and transmitting confirmations of purchase order acceptances to the purchasers of Shares. If and whenever the determination of net asset value is suspended and until such suspension is terminated, no further orders for Shares will be processed by SEI except such unconditional orders as may have been placed with SEI before it had knowledge of the suspension. In addition, SEI shall accede to any suspension by the Trust of sales of Shares (and SEI’s authority to process orders for Shares), upon due notice to SEI if, in the judgment of the Trust, it is in the best interests of the Trust to do so. Suspension shall continue until such time as may be determined by the Trust. No Shares shall be offered by either you or the Fund under any of the provisions of this agreement and no orders for the purchase or sale of such Shares hereunder shall be accepted by the Fund if and so long as the effectiveness of the registration statement then in effect or any necessary amendments thereto shall be suspended under any of the provisions of the 1933 Act or if and so long as a current prospectus as required by Section 10 of said Act is not on file with the Securities and Exchange Commission; provided, however, that nothing contained in this Paragraph shall in any way restrict or have any application to or bearing upon the Fund’s obligation to redeem or repurchase any Shares from any shareholder in accordance with the provisions of the Fund’s prospectus or charter documents. In the event of a suspension of the sale of Shares or the suspension of the determination of net asset value, SEI shall have no liability for processing orders before receiving due notice from the Trust regarding any such suspension.

SEI shall, in connection with the foregoing processes, maintain appropriate telephone facsimile and/or access to direct computer communication links with the Transfer Agent.

ARTICLE 3. Authorized Representations . The Distributor is not authorized by the Trust to give any information or to make any representations other than those contained in the current registration statements and prospectuses of the Trust filed with the SEC or contained in shareholder reports or other material that may be prepared by or on behalf of the Trust for the Distributor’s use. The Distributor may prepare and distribute sales literature and other material as it may deem appropriate, provided that such literature and materials have been prepared in accordance with applicable rules and regulations.

ARTICLE 4. Registration of Shares . The Trust agrees that it will take all action necessary to register Shares under the federal securities laws (and state securities laws, in the Trust’s discretion) so that there will be available for sale the number of Shares the Distributor may reasonably be expected to sell and to pay all fees associated with said registration. The Trust shall make available to the Distributor such number of copies of its currently effective prospectus and statement of additional information as the Distributor may reasonably request to fulfill its obligations hereunder. The Trust shall furnish to the Distributor copies of all information, financial statements and other papers which the Distributor may reasonably request for use in connection with the distribution of Shares of the Trust. The costs associated with the drafting, typesetting, printing and mailing the prospectus or other information, financial statements or other papers shall be borne by the Trust or the Advisor. The Trust shall not pay any of the costs of advertising or promotion for the sale of the Shares, except as such payments may be made pursuant to a distribution and/or shareholder servicing plan adopted by the Trust.

ARTICLE 5 . Delivery of Prospectus . The Distributor shall deliver copies of the prospectus of the Trust (or where appropriate, the product description, as approved by the Distributor, in lieu of the prospectus) to purchasers of Shares from the Trust (and, upon request, copies of the statement of additional information), except where such delivery is not required by applicable law. In addition, the Distributor shall ensure that all requests to the Distributor for prospectuses and statements of additional information are fulfilled (by providing information regarding such fulfillment requests to the relevant party designated by the Advisor); and (ii) provide the American Stock Exchange (“AMEX”) (and any other national stock exchange on which the Shares may be listed) with copies of prospectuses to be provided to purchasers in the secondary market (by providing information regarding delivery of prospectuses to the relevant exchange to the relevant party designated by the Advisor). In connection with the foregoing, the Distributor shall generally make it known in the brokerage community that prospectuses and statements of additional information are available, including by (i) advising AMEX on behalf of its member firms of the same and (ii) making such disclosure in all marketing and advertising materials prepared and/or filed by the Distributor with the NASD .

ARTICLE 6. Administration of the Plan(s) . The Distributor agrees to administer on behalf of the Trust any Plan(s) adopted by the Trust under Rule 12b-1. The Distributor shall, at its own expense, set up and maintain a system of recording payments of fees and reimbursement of expenses disseminated pursuant to this Agreement and other agreements related to any such Plan(s) and, pursuant to the 1940 Act, report such payment activity to the Trust at least quarterly.

(a) The Distributor shall receive from the Trust all distribution and shareholder servicing fees, as applicable, at the rate and to the extent payable under the terms and conditions set forth in any Plan(s) adopted by the Trust, applicable to the appropriate class of shares of each Portfolio, as such Plan(s) may be amended from time to time, and subject to any further limitations on such fees as the Board of Trustees of the Trust may impose;

(b) The Distributor shall pay, from the fees accrued by the Trust pursuant to any such Plan(s), all fees and make reimbursement of all expenses, pursuant to and in accordance with such Plan(s) and any and all Sales and Investor Services Agreements referred to in Article 2 herein. In no event shall Distributor be entitled to retain for its own account any amount accrued pursuant to any such Plan(s).

ARTICLE 7. Expenses. The Distributor shall bear the following costs and expenses relating to the distribution of Shares of the Portfolios: (1) the costs of processing an maintaining records of creations of Shares; (2) the costs of maintaining the records required of a broker-dealer under the 1934 Act; (3) the expenses of maintaining its registration or qualification as a dealer or broker under federal or state laws; and (4) all other expenses incurred in connection with the distribution services contemplated herein, except as specifically provided in this Agreement or the Services Agreement.

ARTICLE 8. Privacy . In accordance with the Securities and Exchange Commission’s Regulation S-P (“Regulation S-P”), nonpublic personal financial information relating to consumers

or customers of the Trust provided by, or at the direction of the Trust to the Distributor, or collected or retained by the Distributor in the course of performing its duties shall be considered confidential information. Distributor agrees that it shall not use such confidential information for any purpose other than to carry out its obligations under this Agreement, and further agrees that it shall not give, sell, or in any way transfer or disclose such confidential information to any person or entity, other than (i) affiliates of the Distributor who have entered into contractual arrangements with the Trust, and then only to the extent necessary to carry out the obligations under such contractual arrangements, (ii) at the discretion of the Trust, (iii) as required by law, or (iv) subject to (i) above, as permitted by law. Distributor represents that it has in place and shall maintain physical, electronic, and procedural safeguards reasonably designed to protect the security, confidentiality, and integrity of, and to prevent unauthorized access to or use of records and information related to customers of the Trust. Distributor warrants that prior to disclosing such confidential information to any person or entity as permitted in the previous sentence, Distributor shall obtain a representation from such person or entity that the person or entity has in place similar procedural safeguards designed to meet the objectives set forth in this paragraph. The Trust represents to the Distributor that it has adopted a Statement of its privacy policies and practices as required by Regulation S-P and agrees to provide Distributor with a copy of that statement annually

ARTICLE 9. Indemnification of Distributor . The Trust agrees to indemnify and hold harmless the Distributor and each of its directors and officers and each person, if any, who controls the Distributor within the meaning of Section 15 of the 1933 Act (each, a “Distributor Indemnified Party”) against any loss, liability, claim, damages or expense (including the reasonable cost of investigating or defending any alleged loss, liability, claim, damages, or expense and reasonable counsel fees and disbursements incurred in connection therewith), arising by reason of (i) any person acquiring any Shares, based upon the ground that the registration statement, prospectus, shareholder reports or other information filed or made public by the Trust (as from time to time amended) included an untrue statement of a material fact or omitted to state a material fact required to be stated or necessary in order to make the statements made not misleading, (ii) an Authorized Participant’s failure to initially or subsequently fulfill the Trust’s creditworthiness standards or (iii) the failure to apply or inaccurate application of the Trust’s creditworthiness standards. However, the Trust does not agree to indemnify any Distributor Indemnified Party or hold it harmless to the extent that the statement or omission under paragraph (i) was made in reliance upon, and in conformity with, information furnished to the Trust by or on behalf of such Distributor Indemnified Party.

In no case (i) is the indemnity of the Trust to be deemed to protect any Distributor Indemnified Party against any liability to the Trust or its Shareholders to which such Distributor Indemnified Party otherwise would be subject by reason of willful misfeasance, bad faith or gross negligence in the performance of its duties or by reason of its reckless disregard of its obligations and duties under this Agreement, or (ii) is the Trust to be liable to any Distributor Indemnified Party under the indemnity agreement contained in this paragraph with respect to any claim made against such Distributor Indemnified Party unless the Distributor or the Distributor Indemnified Party shall have notified the Trust in writing of the claim within a reasonable time after the summons or other first written notification giving information of the nature of the claim shall have been served upon the Distributor or such other person (or after the Distributor or the Distributor Indemnified Party shall have received notice of service on any designated agent). However, failure to notify the Trust

of any claim shall not relieve the Trust from any liability which it may have to the Distributor Indemnified Party against whom such action is brought otherwise than on account of its indemnity agreement contained in this paragraph.

The Trust will also not indemnify any indemnitee with respect to any untrue statement or omission made in the registration statement or prospectus that is subsequently corrected in such document (or an amendment thereof or supplement thereof) if a copy of the prospectus (or such amendment or supplement) was not sent or given to the person asserting any such loss, liability, claim damage or expense at or before the written purchase confirmation to such person in any case where such delivery is required by the 1933 Act and the Trust had notified the Distributor of the amendment or supplement prior to the sending of the confirmation.

The Trust shall be entitled to participate at its own expense in the defense or, if it so elects, to assume the defense of any suit brought to enforce any claims subject to this indemnity provision. If the Trust elects to assume the defense of any such claim, the defense shall be conducted by counsel chosen by the Trust and satisfactory to the indemnified defendants in the suit whose approval shall not be unreasonably withheld. In the event that the Trust elects to assume the defense of any suit and retain counsel, the indemnified defendants shall bear the fees and expenses of any additional counsel retained by them. If the Trust does not elect to assume the defense of a suit, it will reimburse the indemnified defendants for the reasonable fees and expenses of any counsel retained by the indemnified defendants.

The Trust agrees to notify the Distributor promptly of the commencement of any litigation or proceedings against it or any of its officers or Trustees in connection with the issuance or sale of any of its Shares.

ARTICLE 10. Indemnification of Trust . The Distributor covenants and agrees that it will indemnify and hold harmless the Trust and each of its Trustees and officers and each person, if any, who controls the Trust within the meaning of Section 15 of the 1933 Act (each, a “Trust Indemnified Party”), against any loss, liability, damages, claim or expense (including the reasonable cost of investigating or defending any alleged loss, liability, damages, claim or expense and reasonable counsel fees incurred in connection therewith) based upon the 1933 Act or any other statute or common law and arising by reason of any person acquiring any Shares, and alleging a wrongful act of the Distributor or any of its employees or alleging that the registration statement, prospectus, Shareholder reports or other information filed or made public by the Trust (as from time to time amended) included an untrue statement of a material fact or omitted to state a material fact required to be stated or necessary in order to make the statements not misleading, insofar as the statement or omission was made in reliance upon and in conformity with information furnished to the Trust by or on behalf of the Distributor.

In no case (i) is the indemnity of the Distributor in favor of the Trust or any Trust Indemnified Party to be deemed to protect the Trust or any Trust Indemnified Party against any liability to which the Trust or such Trust Indemnified Party would otherwise be subject by reason of willful misfeasance, bad faith or gross negligence in the performance of its duties or by reason of its reckless disregard of its obligations and duties under this Agreement, or (ii) is the Distributor to be liable under its indemnity agreement contained in this paragraph with respect to any claim made

against the Trust or any Trust Indemnified Party unless the Trust or Trust Indemnified Party, as the case may be, shall have notified the Distributor in writing of the claim within a reasonable time after the summons or other first written notification giving information of the nature of the claim shall have been served upon the Trust or upon any Trust Indemnified Party (or after the Trust or such Trust Indemnified Party shall have received notice of service on any designated agent). However, failure to notify the Distributor of any claim shall not relieve the Distributor from any liability which it may have to the Trust or any Trust Indemnified Party against whom the action is brought otherwise than on account of its indemnity agreement contained in this paragraph.

The Distributor shall be entitled to participate, at its own expense, in the defense or, if it so elects, to assume the defense of any suit brought to enforce the claim, but if the Distributor elects to assume the defense, the defense shall be conducted by counsel chosen by the Distributor and satisfactory to the indemnified defendants whose approval shall not be unreasonably withheld. In the event that the Distributor elects to assume the defense of any suit and retain counsel, the defendants in the suit shall bear the fees and expenses of any additional counsel retained by them. If the Distributor does not elect to assume the defense of any suit, it will reimburse the indemnified defendants in the suit for the reasonable fees and expenses of any counsel retained by them.

The Distributor agrees to notify the Trust promptly of the commencement of any litigation or proceedings against it or any of its officers in connection with the issue and sale of any of the Trusts’ Shares.

ARTICLE 11. Consequential Damages . In no event and under no circumstances shall either party to this Agreement be liable to anyone, including, without limitation, the other party, for consequential damages for any act or failure to act under any provision of this Agreement.

ARTICLE 12. Effective Date . This Agreement shall be binding upon the Trust upon approval by the full board of trustees and by a majority of the Qualified Trustees (as defined below) and shall commence upon the date of initial public offering of Shares of the Trust, and, unless terminated as provided, shall continue in force for two year(s) from the initial public offering (“Effective Date”) and thereafter from year to year, provided that such annual continuance is approved by (i) either the vote of a majority of the Trustees of the Trust, or the vote of a majority of the outstanding voting securities of the Trust, and (ii) the vote of a majority of those Trustees of the Trust who are not parties to this Agreement or the Trust’s distribution plan or interested persons of any such party (“Qualified Trustees”), cast in person at a meeting called for the purpose of voting on the approval. This Agreement shall automatically terminate in the event of its assignment. As used in this paragraph the terms “vote of a majority of the outstanding voting securities,” “assignment” and “interested person” shall have the respective meanings specified in the 1940 Act. In addition, this Agreement may at any time be terminated without penalty by a vote of a majority of Qualified Trustees or by vote of a majority of the outstanding voting securities of the Trust upon not less than sixty days prior written notice to the other party. This Agreement may be terminated by the Distributor without penalty only upon termination of the Services Agreement in accordance with its terms.

ARTICLE 13. Notices . Any notice required or permitted to be given by either party to the other shall be deemed sufficient if sent by registered or certified mail, postage prepaid, addressed by

the party giving notice to the other party at the last address furnished by the other party to the party giving notice: if to the Trust, at 7501 Wisconsin Avenue, Suite 1000, Bethesda, Maryland 20814, Attn: General Counsel; and if to the Distributor, One Freedom Valley Drive, Oaks, Pennsylvania 19456, Attn: General Counsel.

ARTICLE 14. Limitation of Liability . A copy of the Certificate of Trust of the Trust is on file with the Secretary of State of the State of Delaware, and notice is hereby given that this Agreement is executed on behalf of the Trustees of the Trust as Trustees and not individually and that the obligations of this instrument are not binding upon any of the Trustees, officers or shareholders of the Trust individually but binding only upon the assets and property of the Trust.

Each Portfolio shall be regarded for all purposes hereunder as a separate party apart from each Portfolio. Under the context otherwise requires, with respect to every transaction covered by this Agreement, every reference herein to the Trust shall be deemed to relate solely to the particular Portfolio to which such transaction relates. Under no circumstances shall the rights, obligations or remedies with respect to a particular Portfolio constitute a right, obligation, or remedy applicable to any other Portfolio. The use of this single document to memorialize the separate agreement of each Portfolio is understood to be for clerical convenience only and shall not constitute any basis for joining the Portfolios for any reason.

The Distributor shall not be liable to the Trust for any damages arising out of (i) activities or statements of sales or wholesaler personnel who are employed and supervised by the Trust’s investment adviser or its affiliates (collectively, the “Adviser”), (ii) any act or omission of the Trust’s transfer agent, (iii) any act or omission hereunder unless such act or omission is the result of Distributor’s bad faith, gross negligence or willful misconduct in the performance of its duties hereunder, (iv) any misstatement or omission in the Trust’s registration statement, prospectus, shareholder report or other information filed or made public by the Trust (as from time to time amended), provided that such misstatement or omission was not made in reliance upon, and in conformity with, information furnished to the Trust by Distributor, (v) the operation of a customer contact center or similar call center by the Adviser or one of its agents, or (vi) mistakes or errors in data provided to Distributor by, or interruptions or delays or communications with, any other service providers to the Trust.

ARTICLE 15. Representations of SEI .

(a) The Distributor represents and warrants that this Agreement has been duly authorized by Distributor and, when executed and delivered by Distributor, will constitute a legal, valid and binding obligation of Distributor, enforceable against Distributor in accordance with its terms, subject to bankruptcy, insolvency, reorganization, moratorium and other laws of general application affecting the rights and remedies of creditors and secured parties.

(b) The Distributor further represents and warrants that it is a member of the NASD and agrees to abide by all of the rules and regulations of the NASD, including, without limitation, its Conduct Rules. The Distributor agrees to comply with all applicable federal and state laws, rules and regulations. The Distributor agrees to notify Advisor immediately in the event of its expulsion or suspension by the NASD. Expulsion of the Distributor by the NASD will automatically

terminate this Agreement immediately without notice. Suspension of the Distributor by the NASD will terminate this Agreement effective immediately upon written notice of termination to the Distributor from Advisor.

(c) The Distributor further represents that its anti-money laundering program (“AML Program”), at a minimum, (i) designates a compliance officer to administer and oversee the AML Program, (ii) provides ongoing employee training, (iii) includes an independent audit function to test the effectiveness of the AML Program, (iv) establishes internal policies, procedures, and controls that are tailored to its particular business, (v) includes a customer identification program consistent with the rules under section 326 of the USA Patriot Act, (vi) provides for the filing of all necessary anti-money laundering reports including, but not limited to, currency transaction reports and suspicious activity reports, (vii) provides for screening all new and existing customers against reports and suspicious activity reports, (vii) provides for screening all new and existing customers against the Office of Foreign Asset Control list and any other government list that is or becomes required under the USA Patriot Act, and (viii) allows for appropriate regulators to examine its anti-money laundering books and records. Notwithstanding the foregoing, the Trust acknowledges that the Authorized Participants (that is, a person authorized to purchase and redeem aggregations of a specified number of Shares of any Fund in accordance with the exemptive order noted below) are not “customers” for the purposes of 31 CFR 103.

(d) The Distributor represents and warrants that (i) it has in place compliance policies and procedures reasonably designed to ensure compliance with the Federal Securities Laws as that term is defined in Rule 38a-1 under the 1940 Act; (ii) it will upon request provide reports and certifications in a mutually agreed upon form to the Trust’s Chief Compliance Officer regarding the foregoing, and (iii) it will maintain appropriate records in accordance with Rule 38a-1.

(e) To the extent applicable, the Distributor agrees that it will comply with any requirements set forth in (i) the Exchange Act Rule 19b-4 relief provided to the American Stock Exchange LLC (Release No. 34-52197; File No. SR-Amex-2004-62) or similar relief which may be provided to any other listing exchange and with respect to which the Distributor receives adequate advance notice; (ii) the Third Amended and Restated Application for an Order under Section 6(c) of the 1940 Act for an exemption from Sections 2(a)(32), 5(a)(1), 22(d) and 24(d) of the 1940 Act and Rule 22c-1 under the 1940 Act and under Sections 6(c) and 17(b) of the 1940 Act for an exemption from Sections 17(a)(1) and 17(a)(2) of the 1940 Act, File No. 812-12354 (“Exemptive Order”); (iii) the registration statement of the Funds; and (iv) the Request for Exemptive, Interpretive or No-Action Relief from Section 11(d)(1) of the Exchange Act and Rules 10a-1, 10b-10, 10b-17, 11d1-2, 14e-5, 15c1-5, 15c1-6, Rules 101 and 102 of Regulation M and Rule 200(g) of Regulation SHO.

(f) To the extent the Distributor has access to the Trust’s portfolio holdings prior to their public dissemination, the Distributor represents and warrants that it will comply with the Trust’s portfolio holdings disclosure policy.

(g) The Distributor represents and warrants that it is not an “affiliated person” (as defined under the Investment Company Act of 1940, as amended) with the AMEX, any other listing exchange or any underlying index provider for any Portfolio.

(h) The Distributor represents and warrants that it will not make any secondary sales to brokers or dealers at a concession.

ARTICLE 16. Return of Records. The Distributor shall promptly upon the demand of the Advisor and/or the Trust, turn over to the Advisor and/or the Trust files, records and documents created and maintained by the Distributor pursuant to this Agreement which are no longer needed by the Distributor in the performance of its services or for its legal protection. If not so turned over to Advisor and/or the Trust, such documents and records will be retained by the Distributor for six years from the year of creation. At the end of such six year period, such records and documents will be turned over to the Advisor and/or the Trust unless the Trust authorizes in writing the destruction of such records and documents.

ARTICLE 17. Entire Agreement; Amendments . This Agreement constitutes the entire agreement between the parties hereto and supersedes any prior agreement, draft or agreement or proposal with respect to the subject matter hereof. This Agreement or any part hereof may be changed or waived only by an instrument in writing signed by the party against which enforcement of such change or waiver is sought.

ARTICLE 18. Governing Law . This Agreement shall be construed in accordance with the laws of the State of Delaware and the applicable provisions of the 1940 Act. To the extent that the applicable laws of the State of Delaware, or any of the provisions herein, conflict with the applicable provisions of the 1940 Act, the latter shall control.

ARTICLE 19. Multiple Originals . This Agreement may be executed in two or more counterparts, each of which when so executed shall be deemed to be an original, but such counterparts shall together constitute but one and the same instrument.

ARTICLE 20. Severability . If any part, term or provision of this Agreement is held to be illegal, in conflict with any law or otherwise invalid, the remaining portion or portions shall be considered severable and not be affected, and the rights and obligations of the parties shall be construed and enforced as if the Agreement did not contain the particular part, term or provision held to be illegal or invalid.

ARTICLE 21. Confidentiality . During the term of this Agreement, the Distributor and the Trust may have access to confidential information relating to such matters as either party’s business, trade secrets, systems, procedures, manuals, products, contracts, personnel, and clients. As used in this Agreement, “Confidential Information” means information belonging to one of the parties which is of value to such party and the disclosure of which could result in a competitive or other disadvantage to such party. Confidential Information includes, without limitation, financial information, proposal and presentations, reports, forecasts; inventions, improvements and other intellectual property; trade secrets; know-how; designs, processes or formulae; software; market or sales information or plans; customer lists; and business plans, prospects and opportunities (such as possible acquisitions or dispositions of businesses or facilities). Confidential Information includes information developed by either party in the course of engaging in the activities provided for in this Agreement, unless: (i) the information is or

becomes publicly known through lawful means; (ii) at the time of receipt the information was already actually known to the other party; or (iii) the information is disclosed to the other party without a confidential restriction by a third party who rightfully possesses the information and did not obtain it, either directly or indirectly, from one of the parties, as the case may be, or any of their respective principals, employees, affiliated persons, or affiliated entities. The parties understand and agree that all Confidential Information shall be kept confidential by the other both during and after the term of this Agreement. The parties further agree that they will not, without the prior written approval by the other party, disclose such Confidential Information, or use such Confidential Information in any way, either during the term of this Agreement or at any time thereafter, except as required in the course of this Agreement and as approved by the other party or as required by law. Under no circumstances shall Distributor serve in any capacity with respect to investment companies structured as exchange traded funds whose investment objective or strategy is to produce a return that is a multiple (or an inverse multiple) of the return of a particular underlying index managed, advised or sponsored by Padco Advisors, Inc., Padco Advisors II, Inc. or their affiliates.

IN WITNESS WHEREOF, the Trust and Distributor have each duly executed this Agreement, as of the day and year above written.


PROSHARES TRUST

By:
Name:
Title:

SEI INVESTMENTS DISTRIBUTION CO.

By:
Name:
Title:

APPENDIX A

ADDITIONAL SERVICES

(1)	forward any complaints concerning the Trust received by the Distributor to the Trust, assist in resolving such complaints, and maintain a log of such complaints as required by applicable law;

(2)

provide an order processing system pursuant to which the Authorized Participants may contact the Distributor (or its affiliates) and place requests to create and redeem Shares as set forth in Exhibit C attached to the Services Agreement, including without limitation (a) generating and transmitting confirmations of purchase order acceptances to purchasers of Shares, (b) providing acknowledgement to Authorized Participants that orders have been accepted, (c) rejecting any orders which were not submitted in proper form or in a timely fashion, (d) confirming that Authorized Participants will not place trades that would raise their total holdings to 80% or more of any fund, (e) maintain along with the Trust and its Index Receipt Agent the right to require and rely upon information necessary to determine beneficial share ownership for purposes of the 80% determination or, in lieu of this, accept a certification from an AMEX member firm or a member of such other exchange that the cost basis of the securities so deposited is essentially identical to their market value at the time of deposit, and (f) maintaining a dedicated toll-free line for authorized participants to place share creation and redemption orders;

(3)	assist in the preparation of quarterly materials with regard to sales and other distribution related data reasonably requested by the Board of Trustees of the Trust (the “Board”);

(4)	prepare materials for the Board supporting the annual renewal of the Distribution Agreement;

(5)	make available one or members of its staff to attend Board meetings of the Trust in order to provide information with regard to the ongoing distribution process and for such other purposes as may be requested by the Board;

(6)	in connection with the foregoing activities, maintain an office facility for the Trust;

(7)	in connection with the foregoing activities, furnish the Trust with clerical services, stationery and office supplies; and

(8)	keep and maintain all books and records relating to its services in accordance with Rule 31a-1 under the 1940 Act.

(9)	Assure that Authorized Participants are a registered broker/dealer, a clearing agency registered with the SEC or a participant in the DTC and that all Authorized Participants placing orders have signed participant agreements.

(10)	Distributor will receive purchase and redemption orders by mail up to 4:00 p.m. Mail will be opened and time stamped and order processed if received by 4:00 p.m. Purchase

and redemption orders received by telephone, facsimile and other electronic means of communication must be received by 3:00 p.m. Adviser. Any orders received after this time (except for orders by mail) will be rejected and must be resubmitted the following business day, unless the investment adviser to the Trust determines to accept purchase orders between 3:00 p.m. and 4:00 p.m., in which case such option will be disclosed and available to all prospective purchasers on an equal basis and purchasers will receive the NAV of the Portfolio that day as of 4:00 p.m.

(11)

A creation order may be rejected by the Distributor or the Trust in the following circumstances and the Distributor shall monitor for the event described in sub-sections (i), (vi) (to the extent notified by the Index Receipt Agent or Custodian in time for the Distributor to reject the order) and (vii): (i) an Authorized Participant owns more than 80% or more of outstanding Shares of a Portfolio; (ii) a deposit basket does not contain securities specified; (iii) acceptance of a basket would have adverse tax consequences, (iv) acceptance of a basket would be unlawful; (v) acceptance of a basket would have an adverse effect on the Trust, the Portfolios or shareholders; (vi) the value of the all cash payment or the balancing amount exceeds the purchase authorization afforded the authorized participant by the custodian and the authorized participant has not deposited an amount in excess of such authorization with the custodian prior to 3:00 p.m. and (vii) it is impossible to process Share purchases.

(12)

The Distributor will provide confirmations to Authorized Participants disclosing the number of such Creation Units created or redeemed without providing a statement of the identity, number, price of shares of individual Deposit Securities included in the Deposit Basket tendered to the Trust for purposes of creation of Creation Units, or the identity, number and price of shares of individual equity securities held by a Fund to be delivered by the Trust to the redeeming holder. Such confirmations shall state that all information required by Rule 10b-10 will be provided upon request, and any such request for information required by Rule 10b-10 will be filled in a timely manner, in accordance with Rule 10b-10(c).

Exhibit (g)

LOGO

FORM OF

DOMESTIC CUSTODY AGREEMENT

BETWEEN

PROSHARES TRUST

AND

JPMORGAN CHASE BANK, N.A.

___________________, 2006

DOMESTIC CUSTODY AGREEMENT

This Agreement, dated ____________________, 2006, is between JPMORGAN CHASE BANK, N.A. (“ Bank ”), with a place of business at 4 MetroTech Center, Brooklyn New York 11245; and PROSHARES TRUST (“ Customer ”) a Delaware business trust and a company registered under the Investment Company Act of 1940, as amended, with a place of business at 7501 Wisconsin Avenue, Suite 1000, Bethesda, Maryland 20814, severally and for and on behalf of certain of its respective portfolios listed on Exhibit 1 hereto (each a “Fund”).

1. INTENTION OF THE PARTIES; DEFINITIONS

1.1

Intention of the Parties .

(a) This Agreement sets out the terms governing custodial, settlement and certain other associated services offered by Bank to Customer. Bank will be responsible for the performance of only those Securities custody duties that are set forth in this Agreement or expressly contained in Instructions that are consistent with the provisions of this Agreement. Customer acknowledges that Bank is not providing any legal, tax or investment advice in connection with the services hereunder.

(b) It is the intention of the parties that the services offered by Bank under this Agreement with respect to the custody of Securities and related settlement services will be limited to Securities that are issued in the United States (“ U.S. ”) by an issuer that is organized under the laws of the U.S. or any state thereof, or that are both traded in the U.S. and that are eligible for deposit in a U.S. Securities Depository.

1.2

Definitions .

(a) As used herein, the following terms have the meaning hereinafter stated.

“ Account ” has the meaning set forth in Section 2.1 of this Agreement.

“ Affiliate ” means an entity controlling, controlled by, or under common control with, Bank.

“ Applicable Law ” means any statute, whether national, state or local, applicable in the United States or any other country, the rules of the treaty establishing the European Community, any other law, rule, regulation or interpretation of any governmental entity, any applicable common law, and any decree, injunction, judgment, order, ruling, or writ of any governmental entity.

“ Authorized Person ” means any person who has been designated by written notice from Customer (or by any agent designated by Customer, including, without limitation, an investment manager) to act on behalf of Customer hereunder. Such persons will continue to

be Authorized Persons until such time as Bank receives Instructions from Customer (or its agent) that any such person is no longer an Authorized Person.

“ Bank Indemnitees ” means Bank, and its nominees, directors, officers, employees and agents.

“Cash Account” has the meaning set forth in Section 2.1(a)(ii) of this Agreement.

“Corporate Action” means any subscription right, bonus issue, stock repurchase plan, redemption, exchange, tender offer, or similar matter with respect to a Financial Asset in the Securities Account that require discretionary action by the holder, but does not include proxy solicitations.

“ Entitlement Holder ” means the person named on the records of a Securities Intermediary as the person having a Securities Entitlement against the Securities Intermediary.

“ Financial Asset ” means a Security and refers, as the context requires, either to the asset itself or to the means by which a person’s claim to it is evidenced, including a Security, a security certificate, or a Securities Entitlement. “ Financial Asset ” does not include cash.

“ Instructions ” means instructions which: (i) contain all necessary information required by Bank to enable Bank to carry out the Instructions; (ii) are received by Bank in writing or via Bank’s electronic instruction system, SWIFT, telephone, tested telex, facsimile or such other methods as are for the time being agreed by Customer (or an Authorized Person) and Bank; and (iii) Bank reasonably believes have been given by an Authorized Person or are transmitted with proper testing or authentication pursuant to terms and conditions which Bank may specify.

“Liabilities” means any liabilities, losses, claims, costs, damages, penalties, fines, obligations, or expenses of any kind whatsoever (including, without limitation, reasonable attorneys’, accountants’, consultants’ or experts’ fees and disbursements).

“ Securities ” means stocks, bonds, rights, warrants and other negotiable and non-negotiable instruments, whether issued in certificated or uncertificated form, that are commonly traded or dealt in on securities exchanges or financial markets. “Securities” also means other obligations of an issuer, or shares, participations and interests in an issuer recognized in the country in which it is issued or dealt in as a medium for investment and any other property as may be acceptable to Bank for the Securities Account.

“ Securities Account ” means each Securities custody account on Bank’s records to which Financial Assets are or may be credited pursuant hereto.

“ Securities Depository ” has the meaning set forth in Section 5.1 of this Agreement.

“ Securities Entitlement ” means the rights and property interest of an Entitlement Holder with respect to a Financial Asset as set forth in Part 5 of Article 8 of the Uniform Commercial Code of the State of New York, as the same may be amended from time to time.

“ Securities Intermediary ” means Bank, a Securities Depository, and any other financial institution which in the ordinary course of business maintains Securities custody accounts for others and acts in that capacity.

(b) All terms in the singular will have the same meaning in the plural unless the context otherwise provides and visa versa.

2. WHAT BANK IS REQUIRED TO DO

2.1

Set Up Accounts .

(a) Bank will establish and maintain the following accounts (“ Accounts ”):

(i)

a Securities Account in the name of Customer on behalf of each Fund for Financial Assets, which may be received by or on behalf of Bank for the account of Customer, including as an Entitlement Holder; and

(ii)

an account in the name of Customer (“ Cash Account ”) for any and all cash received by or on behalf of Bank for the account of Customer.

(b) At the request of Customer, additional Accounts may be opened in the future, which will be subject to the terms of this Agreement:

(i)

in accordance with the provisions of an agreement among Customer and a broker-dealer (registered under the Securities Exchange Act of 1934 (“Exchange Act”) and a member of the National Association of Securities Dealer, Inc. (“NASD”), or any futures commission merchant registered under the Commodity Exchange Act, relating to compliance with the rules of the Options Clearing Corporation and of any registered national securities exchange (or the Commodity Futures Trading Commission or any registered contract market), or of any similar organization, regarding escrow or other arrangements in connection with transactions by us;

(ii)

for the purpose of segregating cash or Financial Assets on the books and records of Bank at the Instruction of Customer, to the extent necessary; and

(iii)

for any other corporate purposes as per the Instruction of an Authorized Person.

2.2

Cash Account .

Except as otherwise provided in Instructions acceptable to Bank, all cash held in the Cash Account by Bank will be deposited during the period it is credited to the Accounts in one or more deposit accounts at Bank in which cash shall not be subject to withdrawal by check or draft. Funds credited to the Cash Account will be transferred by Bank by means of Instruction (“ payment order ”) to a Bank administrator assigned to Customer. Payment orders and Instructions seeking to cancel payment orders or to amend payment orders which are issued by telephone, telecopier or in writing shall be subject to a mutually agreed security procedure and Bank may execute or pay payment orders issued in Customer’s name when verified by an Authorized Person in accordance with such procedure.

2.3

Segregation of Assets; Nominee Name .

(a) Bank will identify in its records that Financial Assets credited to Customer’s Securities Account belong to Customer on behalf of the relevant Fund (except as otherwise may be agreed by Bank and Customer).

(b) Bank is authorized, in its discretion:

(i)

to hold in bearer form, such Financial Assets as are customarily held in bearer form or are delivered to Bank in bearer form;

(ii)

to hold Financial Assets in or deposit Financial Assets with any Securities Depository, settlement system or dematerialized book entry or similar systems; and

(iii)

to register in the name of Customer, Bank, a Securities Depository, or their respective nominees, such Financial Assets as are customarily held in registered form.

(c) Bank is authorized, when directed to do so by Customer, to hold Financial Assets at third parties and to register Financial Assets in broker “street name” or in the name of other third parties (or their nominees). Notwithstanding Section 7.1, Bank shall have no liability for any loss of Financial Assets or other damages resulting from holding or registering Financial Assets as so directed by Customer.

Customer authorizes Bank to hold Financial Assets in omnibus accounts and will accept delivery of Financial Assets of the same class and denomination as those with Bank.

2.4

Settlement of Trades .

When Bank receives an Instruction directing settlement of a transaction in Financial Assets that includes all information required by Bank, Bank will use reasonable care to effect such settlement as instructed and as described in Section 4 of the Service Level Document. Settlement

of transactions in Financial Assets will be conducted in a manner consistent with prevailing standards of the market in which the transaction occurs. Without limiting the generality of the foregoing, the risk of loss will be Customer’s whenever Bank delivers Financial Assets or payment in accordance with applicable market practice in advance of receipt or settlement of the expected consideration. In the case of the failure of Customer’s counterparty (or other appropriate party) to deliver the expected consideration as agreed, Bank will contact the counterparty to seek settlement and if settlement is not received, notify Customer, but Bank will not be obligated to institute legal proceedings, file a proof of claim in any insolvency proceeding, or take any similar action.

2.5

Contractual Settlement Date Accounting .

(a) Should Customer request to have Bank’s Contractual Settlement Date Accounting Service, Bank will effect book entries on a “contractual settlement date accounting” basis as described below with respect to the settlement of trades in those markets where Bank generally offers contractual settlement date accounting and will notify Customer of those markets from time to time.

(i)

Sales : On the settlement date for a sale, Bank will credit the Cash Account with the proceeds of the sale and transfer the relevant Financial Assets to an account at Bank pending settlement of the trade where not already delivered.

(ii)

Purchases : On the settlement date for the purchase (or earlier, if market practice requires delivery of the purchase price before the settlement date), Bank will debit the Cash Account for the settlement amount and credit a separate account at Bank. Bank then will post the Securities Account as awaiting receipt of the expected Financial Assets. Customer will not be entitled to the Financial Assets that are awaiting receipt until Bank actually receives them.

Bank reserves the right to restrict in good faith the availability of contractual settlement date accounting for credit or operational reasons. Bank, whenever reasonably possible, will notify Customer prior to imposing such restrictions.

(b) Bank may (in its discretion) upon prior oral or written notification to Customer reverse any debit or credit made pursuant to Section 2.5(a) prior to a transaction’s actual settlement, and Customer will be responsible for any costs or liabilities resulting from such reversal. Customer acknowledges that the procedures described in this sub-section are of an administrative nature, and Bank does not undertake to make loans and/or Financial Assets available to Customer.

2.6

Actual Settlement Date Accounting .

With respect to any sale or purchase transaction that is not posted to the Account on the contractual settlement date as referred to in Section 2.5, Bank will post the transaction on the date

on which the cash or Financial Assets received as consideration for the transaction is actually received by Bank.

2.7

Income Collection (Autocredit ^® ) .

(a) Bank will credit the Cash Account with income and redemption proceeds on Financial Assets in accordance with the schedule of times for each Security type notified by Bank from time to time on or after the anticipated payment date, net of any taxes that are withheld by Bank or any third party. Where no time is specified for a particular market, income and redemption proceeds from Financial Assets will be credited only after actual receipt and reconciliation. Bank may reverse such credits upon oral or written notification to Customer that Bank believes that the corresponding payment will not be received by Bank within a reasonable period or such credit was incorrect.

(b) Bank will make good faith efforts in its discretion to contact appropriate parties to collect unpaid interest, dividends or redemption proceeds. Bank will notify Customer if Bank is unable to collect such unpaid amounts. Bank will not be obliged to file any formal notice of default, institute legal proceedings, file a proof of claim in any insolvency proceeding, or take any similar action.

2.8

Certain Ministerial Acts .

(a) Until Bank receives Instructions to the contrary, Bank will:

(i)

present all Financial Assets for which Bank has received notice of a call for redemption or that have otherwise matured, and all income and interest coupons and other income items that call for payment upon presentation;

(ii)

execute in the name of Customer such certificates as may be required to obtain payment in respect of Financial Assets; and

(iii)

exchange interim or temporary documents of title held in the Securities Account for definitive documents of title.

(b) Bank may provide information concerning the Accounts to Securities Depositories, counterparties, issuers of Financial Assets, governmental entities, securities exchanges, self-regulatory entities, and similar entities to the extent required by Applicable Law or as may be required in the ordinary course by market practice or otherwise in order to provide the services contemplated by this Agreement.

2.9

Corporate Actions .

(a) Bank will promptly notify Customer of any Corporate Action of which information is either (i) received by it to the extent that Bank’s central corporate actions department has actual

knowledge of the Corporate Action in time to notify its customers in a timely manner; or (ii) published via a formal notice in publications and reporting services routinely used by Bank for this purpose in time for Bank to notify its customers in a timely manner. Bank also will use its reasonable efforts to notify Customer of any class action litigation for which information is actually received by Bank’s central corporate actions department but shall not be liable for any Liabilities arising out of Bank’s failure to identify Customer’s interest in any class action litigation. Bank does not commit, however, to provide information concerning Corporate Actions or class action litigation relating to Financial Assets being held at Customer’s request in a name not subject to the control of Bank.

(b) If an Authorized Person fails to provide Bank with timely Instructions with respect to any Corporate Action or class action, neither Bank nor its nominees will take any action in relation to that Corporate Action or class action, except as otherwise agreed in writing by Bank and Customer or as may be set forth by Bank as a default action in the notification it provides under Section 2.9(a) with respect to that Corporate Action or class action.

(c) Bank may sell or otherwise dispose of fractional interests in Financial Assets arising out of a Corporate Action or class action and, to the extent necessary to protect Customer’s interest in that Corporate Action or class action, credit the Cash Account with the proceeds of the sale or disposition. If some, but not all, of an outstanding class of Financial Asset is called for redemption, Bank may allot the amount redeemed among the respective beneficial holders of such class of Financial Asset in any manner Bank deems to be fair and equitable.

(d) Notices of Corporate Actions and class actions dispatched to Customer may have been obtained from sources which Bank does not control and may have been translated or summarized. Although Bank believes such sources to be reliable, Bank has no duty to verify the information contained in such notices nor the faithfulness of any translation or summary and therefore does not guarantee its accuracy, completeness or timeliness, and shall not be liable to Customer for any loss that may result from relying on such notice.

2.10

Proxies .

(a) Subject to and upon the terms of this sub-section, Bank will provide Customer with information which it receives on matters to be voted upon at meetings of holders of Financial Assets (“ Notifications ”), and Bank will act in accordance with Customer’s Instructions in relation to such Notifications. If information is received by Bank at its proxy voting department too late to permit timely voting by Customer, Bank’s only obligation will be to provide to Customer, so far as reasonably practicable, a Notification (or summary information concerning a Notification) on an “information only” basis.

(b) Bank will act upon Instructions to vote on matters referred to in a Notification, provided Instructions are received by Bank at its proxy voting department by the deadline referred to in the relevant Notification. If Instructions to vote are not received from Customer in a timely

manner, Bank will not be obligated to vote on the matter. It is Customer’s obligation to monitor the agreed means of providing Notifications to determine if new Notifications have been received.

(c) Customer acknowledges that the provision of proxy voting services may be precluded or restricted under a variety of circumstances. These circumstances include, but are not limited to:

(i)

the Financial Assets being on loan or out for registration,

(ii)

the pendency of conversion or another Corporate Action;

(iii)

Financial Assets being held at Customer’s request in a name not subject to the control of Bank;

(iv)

Financial Assets being held in a margin or collateral account at Bank or another bank or broker, or otherwise in a manner which affects voting; and

(v)

local market regulations or practices, or restrictions by the issuer.

(d) Notwithstanding the fact that Bank may act in a fiduciary capacity with respect to Customer under other agreements, in performing proxy voting services Bank will be acting solely as the agent of Customer, and will not exercise any discretion with regard to such proxy voting services or vote any proxy except when directed by an Authorized Person.

2.11

Statements and Information Available On-Line .

(a) Bank will send, or make available on-line, to Customer, at times mutually agreed upon, a formal statement of account in Bank’s standard format for each Account maintained by Customer with Bank, identifying the Financial Assets and cash held in each Account (each such statement a “ Statement of Account ”). Additionally, Bank will send (or make available on-line) to Customer an advice or notification of any transfers of cash or Financial Assets with respect to each Account. Bank will not be liable with respect to any matter set forth in those portions of any Statement of Account or any such advice or notification (or reasonably implied therefrom) to which Customer has not given Bank a written exception or objection within sixty (60) days of receipt of the Statement of Account, provided such matter is not the result of Bank’s willful misconduct or bad faith. References in this Agreement to Statements of Account include Statements of Account in electronic form.

(b) Prices and other information obtained from third parties which may be contained in any Statement of Account or other statement sent to Customer have been obtained from sources Bank believes to be reliable. Bank does not, however, make any representation as to the accuracy of such information or that the prices specified necessarily reflect the proceeds that would be received on a disposal of the relevant Financial Assets.

(c) Customer acknowledges that, except for Statements of Account or as otherwise expressly agreed by Bank, records and reports available to it on-line may not be accurate due to mis-postings, delays in updating Account records, and other causes. Bank will not be liable for any loss or damage arising out of the inaccuracy of any such records or reports accessed on-line.

2.12

Access to Bank’s Records .

(a) Bank will allow Authorized Persons of Customer’s independent public accountants such reasonable access to the records of Bank relating to Financial Assets as is required in connection with their examination of books and records pertaining to Customer’s affairs. Bank shall preserve such records for the applicable periods as prescribed by the second paragraph of Rule 31a-3 under the Investment Company Act of 1940, as amended (the “1940 Act”), where a bank is acting as custodian for an investment company.

(b) Upon the request of Customer, Bank shall provide the latest copy of the audit report of its independent accounts of the Bank’s systems of internal accounting controls pursuant to requirements of the Statement of Auditing Standards No. 70 (the “SAS 70 Report”) as issued by the American Institute of Certified Public Accountants, as it may be amended from time to time.

2.13

Tax Relief Services .

Bank will provide tax relief services as provided in Section 8.2 hereof.

3. INSTRUCTIONS

3.1

Acting on Instructions; Unclear Instructions .

(a) Customer authorizes Bank to accept and act upon any Instructions received by it without inquiry. Customer will indemnify Bank Indemnitees against, and hold each of them harmless from, any Liabilities that may be imposed on, incurred by, or asserted against Bank Indemnitees as a result of any action or omission taken in accordance with any Instructions or other directions upon which Bank is authorized to rely under the terms of this Agreement.

(b) Unless otherwise expressly provided, all Instructions will continue in full force and effect until canceled or superseded.

(c) Bank may (in its sole discretion and without affecting any part of this Section 3.1) seek clarification or confirmation of an Instruction from an Authorized Person and may decline to act upon an Instruction if it does not receive clarification or confirmation satisfactory to it. Bank will not be liable for any loss arising from any delay while it seeks such clarification or confirmation.

(d) In executing or paying a payment order Bank may rely upon the identifying number (e.g. Fedwire routing number or account) of any party as instructed in the payment order. Customer

assumes full responsibility for any inconsistency between the name and identifying number of any party contained in payment orders issued to Bank in Customer’s name.

3.2

Confirmation of Oral Instructions/Security Devices .

Any Instructions delivered to Bank by telephone will promptly thereafter be confirmed in writing, including through an electronic mail message, by an Authorized Person. Each confirmation is to be clearly marked “Confirmation”. Bank will not be liable for having followed such Instructions notwithstanding the failure of an Authorized Person to send such confirmation in writing or the failure of such confirmation to conform to the telephone Instructions received. Bank shall notify Customer as soon as reasonably practicable if Bank does not receive a written confirmation or if such written confirmation fails to conform to the telephone Instructions received. Either party may record any of their telephonic communications. Customer will comply with any security procedures reasonably required by Bank from time to time with respect to verification of Instructions. Customer will be responsible for safeguarding any test keys, identification codes or other security devices that Bank will make available to Customer or any Authorized Person.

3.3

Instructions; Contrary to Law/Market Practice .

Bank need not act upon Instructions which it reasonably believes to be contrary to law, regulation or market practice and Bank will be under no duty to investigate whether any Instructions comply with Applicable Law or market practice. Bank will notify Customer as soon as reasonably practicable if it does not act upon an Instruction in reliance upon this Section.

3.4

Cut-off Times .

Bank has established cut-off times for receipt of some categories of Instruction, which will be made available to Customer. If Bank receives an Instruction after its established cut-off time, Bank will attempt to act upon the Instruction on the day requested if Bank deems it practicable to do so or otherwise as soon as practicable on the next business day.

4. FEES, EXPENSES AND OTHER AMOUNTS OWING TO BANK

4.1

Fees and Expenses .

Customer will pay to Bank for its services hereunder the fees set forth in Schedule A hereto or such other amounts as may be agreed upon in writing from time to time, together with Bank’s expenses as set forth in Schedule A. Customer shall pay such fees and expenses upon receipt of Bank’s invoice therefor. Without prejudice to Bank’s other rights, Bank reserves the right to charge interest on overdue amounts after thirty (30) days from the due date until actual payment at such rate as Bank may reasonably determine.

4.2

Overdrafts .

Customer will have sufficient immediately available funds each day in the Cash Account (without regard to any Cash Account investments) to pay for the settlement of all Financial Assets delivered against payment to Customer and credited to the Securities Account. If a debit to the Cash Account results (or will result) in a debit balance, then Bank may, in its discretion, (i) advance an amount equal to the overdraft (an “Advance”), (ii) refuse to settle in whole or in part the transaction causing such debit balance, or (iii) if any such transaction is posted to the Securities Account, reverse any such posting. If Bank elects to make an Advance, Bank shall notify Customer by the next business day of such Advance and the Advance will be deemed a loan to Customer, payable on demand, bearing interest at the rate agreed by Customer and Bank for the Accounts from time to time, or, in the absence of such an agreement, at the rate charged by Bank from time to time, for advances incurred by customers similar to Customer, from the date of such advance to the date of payment (both after as well as before judgment) and otherwise on the terms on which Bank makes similar advances available from time to time. No prior action or course of dealing on Bank’s part with respect to the settlement of transactions on Customer’s behalf will be asserted by Customer against Bank for Bank’s refusal to make Advances to the Cash Account or to settle any transaction for which Customer does not have sufficient available funds in the Cash Account.

4.3

Bank’s Right Over Securities; Set-off .

(a) Customer grants Bank a security interest in and a lien on the Financial Assets held in the Securities Account established for a Fund as security for any and all amounts which are now or become owing to Bank with respect to such Fund under any provision of this Agreement, whether or not matured or contingent (“ Indebtedness ”). Indebtedness of the Customer to Bank under the Agreement shall include unpaid fees and expenses (under Section 4.1), unpaid Advances on Securities settlements (under Section 4.2), indemnity obligations (under Section 7.1(c)) and tax obligations (under Section 8.1(d)). Bank shall not have a security interest in and lien on the Financial Assets in any special custody account established under separate agreement with the Fund and a third party and under which Bank has expressly waived such security interest and lien.

(b) Without prejudice to Bank’s rights under Applicable Law, Bank may set off against any Indebtedness any amount standing to the credit of any of the Fund’s accounts (whether deposit or otherwise) with any Bank branch or office or with any Affiliate of Bank of which the Fund is the beneficial owner. For this purpose, Bank shall be entitled to accelerate the maturity of any fixed term deposits. Bank will notify Customer in advance of any such charge unless Bank reasonably believes that it might prejudice its interests to do so and, in such event, Bank will notify Customer promptly afterwards.

5. SECURITIES DEPOSITORIES AND OTHER AGENTS

5.1

Use of Securities Depositories .

(a) Bank may deposit Financial Assets with, and hold Financial Assets in, any Securities Depository, settlement system, dematerialized book entry system or similar system (together a

“ Securities Depository ”) on such terms as such systems customarily operate and Customer will provide Bank with such documentation or acknowledgements that Bank may require to hold the Financial Assets in such systems. Bank shall deposit and/or maintain Financial Assets in a Securities Depository provided that such Financial Assets are represented in an account of Bank in the Securities Depository that includes only assets held by Bank as a fiduciary, custodian or otherwise for customers. The books and records of Bank shall at all times identify those Financial Assets belonging to any one or more Funds which are maintained in a Securities Depository.

(b) Bank shall pay for Financial Assets purchased for the Account of a Fund upon receipt of advice from the Securities Depository that such Financial Assets have been credited to the account of Bank in accordance with the rules of the Securities Depository, and the making of an entry on the records of Bank to reflect such payment and transfer for the Account of such Fund. Bank shall transfer Financial Assets sold for the Account of a Fund only upon receipt of advice from the Securities Depository that payment for such Financial Assets has been credited to the account of Bank in accordance with the rules of the Securities Depository, and the making of an entry on the records of Bank to reflect such transfer and payment for the Account of such Fund.

(c) Bank will not be liable for any act or omission by (or the insolvency of) any Securities Depository. In the event Customer incurs a loss due to the negligence, willful misconduct, or insolvency of a Securities Depository, Bank will make reasonable efforts, in its discretion, to seek recovery from the Securities Depository, but Bank will not be obligated to institute legal proceedings, file a proof of claim in any insolvency proceeding, or take any similar action.

5.2

Use of Agents .

(a) Bank may provide certain ancillary services under this Agreement through third parties, which may be Affiliates. Bank will not be responsible for any loss as a result of a failure by any broker or any other third party that it selects and retains using reasonable care to provide ancillary services that it may not customarily provide itself, including, without limitation, delivery services and providers of information regarding matters such as pricing, proxy voting, and Corporate Actions and class action litigation. Nevertheless, Bank will be liable for the performance of any such broker or other third party selected by Bank that is an Affiliate to the same extent as Bank would have been liable if it performed such services itself.

(b) In the case of the sale under Section 2.9(c) of a fractional interest (or in other cases where Customer has requested Bank to arrange for execution of a trade) Bank will place trades with a broker which is an Affiliate to the extent that Bank has established a program for such trading with such Affiliate. An affiliated broker may charge its customary commission (or retain its customary spread) with respect to any such transaction.

6. ADDITIONAL PROVISIONS RELATING TO CUSTOMER

6.1

Representations of Customer and Bank .

(a) Customer represents and warrants that (i) it has full authority and power, and has obtained all necessary authorizations and consents, to deposit and control the Financial Assets and cash in the Accounts, to use Bank as its custodian in accordance with the terms of this Agreement, to borrow money or otherwise incur indebtedness as contemplated by this Agreement, to pledge Financial Assets as contemplated by Section 4.3; (ii) assuming execution and delivery of this Agreement by Bank, this Agreement is Customer’s legal, valid and binding obligation, enforceable in accordance with its terms and it has full power and authority to enter into and has taken all necessary corporate action to authorize the execution of this Agreement; (iii) it has not relied on any oral or written representation made by Bank or any person on its behalf, and acknowledges that this Agreement sets out to the fullest extent the duties of Bank; and (iv) it is a resident of the United States and shall notify Bank of any changes in residency. Bank may rely upon the above or the certification of such other facts as may be required to administer Bank’s obligations hereunder. Customer shall indemnify Bank against all losses, liability, claims, or demands arising directly or indirectly from any such certifications.

(b) Bank represents and warrants that (i) assuming execution and delivery of this Agreement by Customer, this Agreement is Bank’s legal, valid and binding obligation, enforceable in accordance with its terms; (ii) Bank is not affiliated with the American Stock Exchange, any other listing exchange or any underlying index provider for any Fund; and (iii) assuming execution and delivery of this Agreement by Customer, this Agreement is Bank’s legal, valid and binding obligation, enforceable in accordance with its terms and it has full power and authority to enter into and has taken all necessary corporate action to authorize the execution of this Agreement. Customer may rely upon the above or the certification of such other facts as may be required for Customer to administer its obligations hereunder.

6.2

Customer to Provide Certain Information to Bank .

Upon request, Customer will promptly provide to Bank such information about itself and its financial status as Bank may reasonably request, including Customer’s organizational documents and its current audited and unaudited financial statements.

6.3

Customer is Liable to Bank Even if it is Acting for Another Person .

If Customer is acting as an agent for a disclosed or undisclosed principal in respect of any transaction, cash, or Financial Asset, Bank nevertheless will treat Customer as its principal for all purposes under this Agreement. In this regard, Customer will be liable to Bank as a principal in respect of any transactions relating to the Account. The foregoing will not affect any rights Bank might have against Customer’s principal.

6.4

Several Obligations of the Funds .

This Agreement is executed on behalf of the Board of Trustees of Customer as Trustees and not individually and the obligations of this Agreement are not binding upon any of the Trustees, officers or shareholders personally but are binding only upon the assets and property of the Funds. With respect to the obligations of each Fund arising hereunder, Bank shall look for payment or satisfaction of any such obligation solely to the assets of the Fund to which such obligation relates as though Bank had separately contracted by separate written instrument with respect to each Fund, and in no event shall Bank have recourse, by set-off or otherwise, to or against any assets of any other Fund.

7. WHEN BANK IS LIABLE TO CUSTOMER

7.1

Standard of Care; Liability .

(a) Bank will use reasonable care in performing its obligations under this Agreement.

(b) Bank will be liable for Customer’s direct damages (i) to the extent they result from Bank’s negligence, willful misconduct or bad faith in performing or failing to perform its duties as set out in this Agreement and (ii) to the extent provided in Section 5.2(a). Nevertheless, under no circumstances will Bank be liable for any indirect, incidental, consequential or special damages (including, without limitation, lost profits) of any form incurred by any person or entity, whether or not foreseeable and regardless of the type of action in which such a claim may be brought, with respect to the Accounts, Bank’s performance hereunder, or Bank’s role as custodian.

(c) Customer will indemnify Bank Indemnitees against, and hold them harmless from, any Liabilities that may be imposed on, incurred by or asserted against any of Bank Indemnitees in connection with or arising out of (i) Bank’s performance under this Agreement, provided Bank Indemnitees have not acted with negligence or engaged in fraud or willful misconduct in connection with the Liabilities in question or (ii) any Bank Indemnitee’s status as a holder of record of Customer’s Financial Assets. Nevertheless, Customer will not be obligated to indemnify any Bank Indemnitee under the preceding sentence with respect to any Liability for which Bank is liable under Section 5.2 of this Agreement.

(d) Without limiting Subsections 7.1(a), (b) or (c), Bank will have no duty or responsibility to: (i) question Instructions or make any suggestions to Customer or an Authorized Person regarding such Instructions; (ii) supervise or make recommendations with respect to investments or the retention of Financial Assets; (iii) advise Customer or an Authorized Person regarding any default in the payment of principal or income of any security other than as provided in Section 2.7(b) of this Agreement; (iv) evaluate or report to Customer or an Authorized Person regarding the financial condition of any broker, agent or other party to which Bank is instructed to deliver Financial Assets or cash; or (v) review or reconcile trade confirmations received from brokers (and Customer or its Authorized Persons issuing Instructions will bear any responsibility to review such confirmations against Instructions issued to and Statements of Account issued by Bank).

7.2

Force Majeure .

Bank will maintain and update from time to time business continuation and disaster recovery procedures with respect to its custody business that it determines from time to time meet reasonable commercial standards. Bank will have no liability, however, for any damage, loss, expense or liability of any nature that Customer may suffer or incur, caused by an act of God, fire, flood, civil or labor disturbance, war, act of any governmental authority or other act or threat of any authority (de jure or de facto), legal constraint, fraud or forgery (except by Bank Indemnitees), malfunction of equipment or software (except where such malfunction is primarily attributable to Bank’s negligence or willful misconduct in selecting, operating or maintaining the equipment or software), failure of or the effect of rules or operations of any external funds transfer system, inability to obtain or interruption of external communications facilities, or any cause beyond the reasonable control of Bank (including without limitation, the non-availability of appropriate foreign exchange), provided that Bank has notified Customer promptly when it becomes aware of a specific occurrence or event and, subject to the circumstances, has used its reasonable best efforts to resolve the adverse effects of the specific occurrence or event.

7.3

Bank May Consult With Counsel .

Bank will be entitled to rely on, and may act upon the advice of professional advisers in relation to matters of law, regulation or market practice (which may be the professional advisers of Customer), and will not be liable to Customer for any action taken or omitted pursuant to such advice. In the event that Bank shall have need to seek advice of counsel, Bank will notify Customer where such advice may adversely affect Customer and, where possible, prior to taking any action on such advice.

7.4

Bank Provides Diverse Financial Services and May Generate Profits as a Result .

Customer acknowledges that Bank or its Affiliates may have a material interest in transactions entered into by Customer with respect to the Accounts or that circumstances are such that Bank may have a potential conflict of duty or interest. For example, Bank or its Affiliates may act as a market maker in the Financial Assets to which Instructions relate, provide brokerage services to other customers, act as financial adviser to the issuer of such Financial Assets, act in the same transaction as agent for more than one customer, have a material interest in the issue of the Financial Assets; or earn profits from any of these activities. Customer further acknowledges that Bank or its Affiliates may be in possession of information tending to show that the Instructions received may not be in the best interests of Customer but that Bank is not under any duty to disclose any such information.

8. TAXATION

8.1

Tax Obligations .

(a) Customer confirms that Bank is authorized to deduct from any cash received or credited to the Cash Account any taxes or levies required by any revenue or governmental authority for whatever reason in respect of Customer’s Accounts.

(b) Customer will provide to Bank such certifications, documentation, and information as it may require in connection with taxation, and warrants that, when given, this information is true and correct in every respect, not misleading in any way, and contains all material information. Customer undertakes to notify Bank immediately if any information requires updating or correcting. Bank shall not be liable for any taxes, penalties, interest or additions to tax, payable or paid that result from (i) the inaccurate completion of documents by Customer or any third party; (ii) the provision to Bank or a third party of inaccurate or misleading information by Customer or any third party; (iii) the withholding of material information by Customer or any third party; or (iv) any delay by any revenue authority or any other cause beyond Bank’s control.

(c) If Bank does not receive appropriate certifications, documentation and information then, as and when appropriate and required, additional tax shall be deducted from all income received in respect of the Financial Assets issued (including, but not limited to, United States non-resident alien tax and/or backup withholding tax which shall be deducted from United States source income).

(d) Customer will be responsible in all events for the timely payment of all taxes relating to the Financial Assets in the Securities Account. Customer will indemnify and hold Bank harmless from and against any and all liabilities, penalties, interest or additions to tax with respect to or resulting from, any delay in, or failure by, Bank (i) to pay, withhold or report any U.S. federal, state or local taxes or foreign taxes imposed on, or (ii) to report interest, dividend or other income paid or credited to the Cash Account, regardless of the reason for such delay or failure; provided however, that Customer will not be liable to Bank for any penalty or additions to tax due as a result of Bank’s negligent acts or omissions with respect to paying or withholding tax or reporting interest, dividend or other income paid or credited to the Cash Account.

8.2

Tax Relief Services with respect to American Depository Receipts .

(a) Subject to the provisions of this Section, Bank will apply for a reduction of withholding tax and any refund of any tax paid or tax credits in respect of income payments on Financial Assets comprising American depository receipts credited to the Securities Account that Bank believes may be available. To defray expenses pertaining to nominal tax claims, Bank may from time-to-time set minimum thresholds as to a de minimus value of tax relief claims or reduction of withholding which it will pursue in respect of income payments under this Section 8.2.

(b) The provision of a tax relief service by Bank is conditional upon Bank receiving from Customer (i) a declaration of its identity and place of residence and (ii) certain other documentation (pro forma copies of which are available from Bank), prior to the receipt of Financial Assets comprising American depository receipts in the Account or the payment of income.

(c) Bank will perform tax relief services only with respect to taxation levied by the revenue authorities of the countries advised to Customer from time to time and Bank may, by notification in writing, in its absolute discretion, supplement or amend the countries in which the

tax relief services are offered. Other than as expressly provided in this Section 8.2, Bank will have no responsibility with regard to Customer’s tax position or status in any jurisdiction.

(d) Customer confirms that Bank is authorized to disclose any information requested by any revenue authority or any governmental entity in relation to the processing of any tax relief reclaim.

9. TERMINATION

Either party may terminate this Agreement on sixty (60) days’ written notice to the other party or by mutual agreement of the parties. If Customer gives notice of termination, it must provide full details of the persons to whom Bank must deliver Financial Assets and cash. If Bank gives notice of termination, then Customer must, within sixty (60) days of receipt of such notice, notify Bank of details of its new custodian, failing which Bank may elect (at any time after the sixty day notice period following receipt of such notice) either to retain the Financial Assets and cash until such details are given, continuing to charge fees due (in which case Bank’s sole obligation will be for the safekeeping of the Financial Assets and cash), or deliver the Financial Assets and cash to Customer. Bank will in any event be entitled to deduct cash in satisfaction of any amounts owing to it by Customer prior to delivery of the Financial Assets and cash (and, accordingly, Bank will be entitled, following written notice to Customer, to sell Financial Assets and apply the sale proceeds in satisfaction of amounts owing to it). Customer will reimburse Bank promptly for all out-of-pocket expenses it incurs in delivering Financial Assets upon termination, except where Bank has terminated this Agreement without cause. Termination will not affect any of the liabilities either party owes to the other arising under this Agreement prior to such termination. Anything herein to the contrary notwithstanding, if either the Fund Services Agreement or the Agency Services Agreement is terminated then this Agreement shall automatically terminate on the date that the Fund Services Agreement or Agency Services Agreement terminates.

10. MISCELLANEOUS

10.1

Notices .

Notices (other than Instructions) will be served by registered mail or hand delivery to the address of the respective parties as set out on the first page of this Agreement, unless notice of a new address is given to the other party in writing. Notice will not be deemed to be given unless it has been received.

10.2

Successors and Assigns .

This Agreement will be binding on each of the parties’ successors and assigns, but the parties agree that neither party can assign its rights and obligations under this Agreement without the prior written consent of the other party, which consent will not be unreasonably withheld.

10.3

Interpretation .

Headings are for convenience only and are not intended to affect interpretation. References to sections are to sections of this Agreement and references to sub-sections and paragraphs are to sub-sections of the sections and paragraphs of the sub-sections in which they appear.

10.4

Entire Agreement .

(a) The following Rider(s) are incorporated into this Agreement: Cash Trade Execution.

(b) This Agreement, including the Fee Schedule, and Exhibit 1, (and any separate agreement which Bank and Customer may enter into with respect to any Cash Account), sets out the entire Agreement between the parties in connection with the subject matter, and this Agreement supersedes any other agreement, statement, or representation relating to custody, whether oral or written. Amendments must be in writing and signed by both parties. Annexed hereto as an exhibit is the service level document for domestic custody service (the “Service Level Document”). While not legally binding, the Service Level Document sets forth the manner in which Bank and Customer anticipate services will be delivered and Bank will use reasonable diligence to adhere to the same, it being understood that adherence in every case is not possible. In the event of any conflict or inconsistency between the Service Level Document and the terms of this Agreement, this Agreement shall govern. The Service Level Document shall be subject to change from time to time by Bank to accommodate market conditions or other events and Bank shall promptly advise Customer of such changes.

10.5

Insurance .

Bank will not be required to maintain any insurance coverage for the benefit of Customer.

10.6

Governing Law and Jurisdiction .

This Agreement will be construed, regulated, and administered under the laws of the United States or State of New York, as applicable, without regard to New York’s principles regarding conflict of laws and to the extent applicable, the choice of law forum provisions contained in New York General Obligations Law Sections 5-1401 and 5-1402, respectively. The United States District Court for the Southern District of New York will have the sole and exclusive jurisdiction over any lawsuit or other judicial proceeding relating to or arising from this Agreement. If that court lacks federal subject matter jurisdiction, the Supreme Court of the State of New York, New York County will have sole and exclusive jurisdiction. Either of these courts will have proper venue for any such lawsuit or judicial proceeding, and the parties waive any objection to venue or their convenience as a forum. The parties agree to submit to the jurisdiction of any of the courts specified and to accept service of process to vest personal jurisdiction over them in any of these courts. The parties further hereby knowingly, voluntarily and intentionally waive, to the fullest extent permitted by Applicable Law, any right to a trial by jury with respect to any such lawsuit or judicial proceeding arising or relating to this Agreement or the transactions contemplated hereby.

10.7

Severability; Waiver; and Survival .

(a) If one or more provisions of this Agreement are held invalid, illegal or unenforceable in any respect on the basis of any particular circumstances or in any jurisdiction, the validity, legality and enforceability of such provision or provisions under other circumstances or in other jurisdictions and of the remaining provisions will not in any way be affected or impaired.

(b) Except as otherwise provided herein, no failure or delay on the part of either party in exercising any power or right hereunder operates as a waiver, nor does any single or partial exercise of any power or right preclude any other or further exercise, or the exercise of any other power or right. No waiver by a party of any provision of this Agreement, or waiver of any breach or default, is effective unless in writing and signed by the party against whom the waiver is to be enforced.

10.8

Counterparts .

This Agreement may be executed in several counterparts each of which will be deemed to be an original and together will constitute one and the same agreement.

10.9

Confidentiality .

Bank will not disclose any confidential information concerning business and operation of Customer or the Financial Assets and/or cash held for Customer except as is reasonably necessary to provide services to Customer, as required by law or regulation or the organizational documents of the issuer of any Financial Asset, or with the written consent of Customer. Customer agrees to keep the terms and conditions of this Agreement confidential and, except where disclosure is required by law or regulation, will only disclose it (or any part of it) with the prior written consent of Bank.

10.10

Limited Restriction on Business .

During the period that the Service Agreements are in effect and for an additional six months after their termination, the Investor Services Division of JPMorgan and J.P. Morgan Investor Services Co. will not provide custody, transfer agent or fund accounting and administration services to investment companies which are structured as exchange traded funds with the investment objective or strategy to produce a return that is a multiple of (or an inverse multiple of) the return of the particular underlying index, and which are managed, advised or sponsored by, and is an Affiliate of (as defined below), Padco Advisors, Inc., Padco Advisors, Inc. II, or Rydex Distributors, Inc. (collectively “Padco/Rydex”) or a Padco/Rydex Affiliate. For purposes hereof “Affiliate” means an entity controlling, controlled by, or under common control with Padco/Rydex, and “control” and “controlling” means owning more than 50% of the controlled companies voting stock. (For purposes of clarity, the term “Affiliate” shall not mean an “Affiliated person” as such term is defined under section 2(a) of the Investment Company Act of 1940, as amended.) The term “Service Agreements” as used in this Section 10.10 means collectively the agreements between the Trust and Bank entitled: “Domestic Custody Agreement” and “Agency Services Agreement”; and the agreement between the Trust and J.P.

Morgan Investor Services Co. entitled “Fund Service Agreement” for fund administration, accounting, compliance and regulatory services.

IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written above.


PROSHARES TRUST						JPMORGAN CHASE BANK, N.A.

By:						By:

Title:						Title:


ACCEPTED AND AGREED TO WITH RESPECT TO SECTION 10.10 ONLY J.P. MORGAN INVESTOR SERVICES CO.

By:

Title:

Date:

EXHIBIT 1

PROSHARES TRUST PORTFOLIOS

THAT ARE

PARTIES TO THIS DOMESTIC CUSTODY AGREEMENT

SHORT500 PROSHARES

SHORT400 PROSHARES

SHORT30 PROSHARES

SHORT100 PROSHARES

ULTRASHORT500 PROSHARES

ULTRASHORT400 PROSHARES

ULTRASHORT30 PROSHARES

ULTRASHORT100 PROSHARES

ULTRA500 PROSHARES

ULTRA400 PROSHARES

ULTRA30 PROSHARES

ULTRA100 PROSHARES

SCHEDULE A

PROSHARES TRUST

FEE SCHEDULE

FOR

CUSTODY AND AGENCY SERVICES

from

JPMORGAN CHASE BANK, N.A.

A.	Domestic Custody Core Service Fees


Market Value Fees
All domestic assets	Annual Fee
First $2 billion	[	] bp
Over $2 billion	[	] bp
U.S. Market Transaction Charges	Per Transaction
DTC	[	]
Fed Book Entry	[	]
Physical Transactions	[	]
Futures/Options	[	]
Wire Transfers	[	]

B.	Out-of-Pocket Fees

The Trust shall reimburse JPMorgan for all reasonable out-of-pocket expenses incurred on its behalf.

FEE SCHEDULE (continued)

FOR

CUSTODY AND AGENCY SERVICES

C.	Agency Services

JPMorgan shall be entitled to a Quarterly Administration Fee determined as follows:

The Quarterly Administration Fee payable to JPMorgan shall be the greater of (i) the total Basket Fees (including additional transaction fees described below) for all Trust Portfolios (each a “Fund”) collected by JPMorgan during a given calendar quarter; and (ii) the Minimum Quarterly Administration Fee. “Basket Fees” means the fixed transaction fees set forth on the below sliding scale that are collected from Authorized Participants.

The Minimum Quarterly Administration Fee is based on an assumption of nine creation/redemption baskets per quarter (13 weeks) per Fund.

The Minimum Quarterly Administration Fee shall be equal to the aggregate of each Fund’s Basket Fee (see below) times nine (9).


Fund		Basket Fee*
Over 1000 lines		[ ]
750 to 999 lines		[ ]
500 to 749 lines		[ ]
250 to 499 lines		[ ]
Under 249 lines		[ ]

NOTE: For purposes of calculating the Quarterly Administration Fee, Fund(s) launched during the quarter will be prorated based on the number of days active during the quarter after the first creation basket is issued.

*	*Additional Transaction Fees.*

An additional charge of up to three (3) times the normal Basket Fee (for a total charge of up to four (4) times the normal Basket Fee) will be collected with respect to transactions effected by Authorized Participants outside the Clearing Process.

FORM OF C ASH T RADE E XECUTION R IDER

RIDER TO DOMESTIC CUSTODY AGREEMENT

CASH TRADE EXECUTION PRODUCT

This Rider to Domestic Custody Agreement (this “Rider”) dated as of _______, 200__ supplements and forms a part of the Domestic Custody Agreement (the “Agreement”), dated as of the date hereof between ProShares Trust (“Customer”) and JPMorgan Chase Bank, N.A. (“Bank”). Capitalized terms in this Rider that are not defined herein have the meaning set forth in the Agreement

Subject to the terms and conditions of this Rider, Bank, as agent for Customer, shall place cash held in Customer’s Account(s) as of the applicable cut-off time listed on Schedule A to this Rider (“ Schedule A ”) which Customer has not notified Bank as being needed to settle pending trades or to effect Customer’s cash instructions into short-term investments (including undivided interests in such investments held in common with other customers of Bank) of the type and in the allocation percentages set forth on Schedule A , as the same may be amended from time to time by mutual agreement of the parties hereto (“Cash Instruments”). Customer shall remain fully responsible for overdrafts of the Account(s) resulting from the placement of cash in a Cash Instrument other than overdrafts resulting from the negligence, bad faith or willful misconduct of Bank or its affiliates.

The placement of cash into Cash Instruments shall be subject to the minimum balance requirements set forth in Schedule A . Bank is hereby authorized to enter into Cash Instrument transactions on Customer’s behalf with counterparties listed on Schedule B to this Rider (“ Schedule B ”), including executing any necessary documents associated therewith; provided, however, that Bank may only enter into Cash Instruments which are repurchase agreement obligations. Schedule A and Schedule B may be amended by the parties from time to time, provided that (i) Customer must consent to the addition of any type of instrument to those eligible as Cash Instruments and (ii) Customer and Bank must approve any changes to counterparties listed in Schedule B . Customer may instruct Bank to delete any of the counterparties listed in Schedule B at any time in its sole discretion.

Customer’s interest in any Cash Instrument shall be an asset of the Account(s) and shall be subject to the terms and conditions, if any, imposed by the applicable counterparty, local law, or local governmental authorities. Cash Instruments which are repurchase agreement obligations are not liabilities of or guaranteed by Bank. Bank shall not be responsible for any losses incurred by Customer in the event of the insolvency or failure of any counterparty with respect to a Cash Instrument, other than losses resulting from the negligence, bad faith or willful misconduct of Bank.

Bank shall be entitled to an administration fee for placing Customer’s cash in Cash Instruments, which shall be paid out of interest paid on Customer’s undivided interest in the various Cash Instruments. Any interest earnings on Cash Instruments reflected on statements or confirmations shall be net of Bank’s administrative fee. Upon request, Bank shall disclose the fees charged with respect to Cash Instruments without charge to Customer. The fees charged with respect to Cash Instruments are listed in Schedule C hereof.

This Rider may only be terminated by Bank or Customer upon termination of the Agreement. In the event of a conflict of the terms hereof and the terms of the Agreement, the terms hereof shall govern.

IN WITNESS WHEREOF, the parties have executed or caused their duly authorized representatives to execute this Rider as of the date of the Agreement.


JPMORGAN CHASE BANK, N.A.						PROSHARES TRUST

By:						By:
Title:						Title:

Schedule A (United States Contract) ⁽¹⁾

Currencies and Instruments Used for Cash Trade Execution

Currency

Minimum Balance

EST Cash Sweep Time

(Subject to change on
notice by the Bank or
the Customer)

US Dollar

NONE

3:00 PM Same Day

Cash Instruments:


Cash Instrument		Maximum Maturity
Repurchase Agreements* (2)		60 days

*	Standing instructions shall be for use of overnight maturity. Longer maturities will be used only upon instructions from Customer.

Effective

Date:

Initials (Required only for revisions adding types of eligible Cash Instruments)

Customer ⁽³⁾ :

The Bank:

(1)	Subject to change on notice by the Bank, except that the Customer must consent to the addition of any eligible Cash Instrument.

(2)

Repurchase agreements will be secured by collateral that is deemed acceptable to the Bank and Customer*. The value of the instruments collateralizing the repurchase agreement shall be at least equal to the resale price multiplied by at least 102%, measured at the time into which the repurchase agreement is entered. The Bank will provide the details of collateral information upon request by the Customer.

(3)	Customer’s initials required only for initial version of this Schedule A and additions of eligible Cash Instruments.

*	Bills, bonds or notes issued or guaranteed by the United States Treasury, or other securities guaranteed as to principal and interest by the Government of the United States, its agencies, or instrumentalities, with a period to maturity not greater than ten (10) years.

Schedule B (United States Contract) ⁽⁴⁾

Counterparty List

Repurchase Agreement Counterparties ⁽⁵⁾

ABN Amro Inc.

Banc of America Securities LLC

J. P. Morgan Securities Inc.

Societe Generale (NY Branch)

BNP Paribas Securities Corp

HSBC Securities (USA) Inc

FIMAT USA Inc

Barclays Capital Inc

Countrywide Securities Corp

ING Financial Markets LLC

TD Securities (USA) Inc

Pershing LLC

(4)	This Counterparty List may be changed only by the consent of ProShares Trust and JPMorgan Chase Bank, N.A.

(5)	Securities purchased under repurchase agreements may be held with other custodial banks under tri-party arrangements.

Schedule C

Fees charged with respect to Cash Instruments


Cash Balance Level	Fees
$0-500,000,000	[	]%
Over $500,000,000 to $1,000,000,000	[	]%
Over $1,000,000,000	[	]%

Exhibit (h)(1)

FORM OF FUND SERVICES AGREEMENT

• A DMINISTRATION AND C OMPLIANCE S ERVICES

• R EGULATORY S ERVICES

• A CCOUNTING S ERVICES

PROSHARES TRUST

, 2006

FUND SERVICES AGREEMENT

Table of Contents


Section		Page
1.	Appointment	2

2.	Representations and Warranties	2

3.	Delivery of Documents	5

4.	Services Provided	5

5.	Fees and Expenses	7

6.	Limitation of Liability and Indemnification	10

7.	Term	13

8.	Notices	13

9.	Waiver	14

10.	Force Majeure	14

11.	Amendments	14

12.	Severability	15

13.	Governing Law	15

14.	Obligations of the Trust	15

15.	Separate Agreements	15

16.	Privacy	16

17.	Intellectual Property	16

Signatures		17

(i)

FUND SERVICES AGREEMENT

Table of Contents (continued)


			Page
Schedule A	—	List of ETF Series	B-1

Schedule B	—	Fees and Expenses	B-2

Schedule C	—	Description of Fund Administration and Compliance Services	C-1

Schedule D	—	Description of Fund Regulatory Services	D-1

Schedule E	—	Description of Fund Accounting Services	E-1

FUND SERVICES AGREEMENT

AGREEMENT made as of , 2006 by and between PROSHARES TRUST (the “Trust”), a Delaware business trust, and J.P. MORGAN INVESTOR SERVICES CO. (“J.P. Morgan”), a Delaware corporation and a wholly-owned subsidiary of JP Morgan Chase & Co.

WITNESSETH:

WHEREAS, the Trust is registered as an investment company under the Investment Company Act of 1940, as amended (the “1940 Act”); and

WHEREAS, the Trust wishes to contract with J.P. Morgan to provide certain services with respect to certain ETF Series (as defined below);

WHEREAS, the Trust is authorized to issue shares of capital stock in separate series, with each such series representing interests in a separate portfolio of securities and other assets (each an “ ETF Series”). The Trust intends that the shares of each such ETF Series (the “ETF Shares”) will be traded on a national securities exchange or other securities market. The ETF Shares shall be issued in bundles called “Creation Units”, which means the minimum number of ETF Shares that may be created or redeemed at any one time as described in the prospectus with respect to such ETF Series. The Trust, on behalf of the ETF Series, shall issue and redeem ETF Shares of each ETF Series only in Creation Unit size in-kind for portfolio securities of the particular ETF Series (“Deposit Securities”) or for cash, each as more fully described in the current prospectus and statement of additional information with respect to such ETF Series, included in its registration statement on Form N-1A, No. ; and as authorized under the Order of Exemption dated , 200 of the Securities and Exchange Commission (the “SEC”), Investment Company Act Release No. ; File No. (“Order of Exemption”).

NOW, THEREFORE, in consideration of the premises and mutual covenants herein contained, it is agreed between the parties hereto as follows:

1. A PPOINTMENT . The Trust hereby appoints J.P. Morgan to provide services for the ETF Series listed on Schedule A hereto (the “Funds”), as described hereinafter, subject to the supervision of the Board of Trustees of the Funds (the “Board”), for the period and on the terms set forth in this Agreement. J.P. Morgan accepts such appointment and agrees to furnish the services herein set forth in return for the compensation as provided in Section 5 of and Schedule B to this Agreement.

The Trust’s Board of Trustees may appoint one or more third parties (each, a “Service Provider”) to perform certain services provided for under this Agreement on behalf of the Trust. In each case, the Trust shall notify J.P. Morgan in writing of the scope of services to be provided by a Service Provider; the commencement date (and, if applicable, termination date) for such services; and the location where the books and records related thereto shall be maintained. J.P. Morgan shall have no responsibility for any services rendered by any such Service Provider. The provisions of Schedule C, D or E, as applicable, shall be amended accordingly to remove certain services from those required to be provided hereunder, and the parties shall mutually agree upon a change to the fees payable under Schedule B, and the changes to services and fees shall become effective upon the date set forth in an executed amendment to this Agreement specifying those changes. In the event the Trust appoints any Service Provider other than J.P. Morgan to provide any of the services listed in Schedule C, D or E, J.P. Morgan reserves the right to terminate this Agreement, as well as the Domestic Custody Agreement between the Trust and JPMorgan Chase Bank N.A., dated ______, within 60 days after such appointment.

2. R EPRESENTATIONS AND W ARRANTIES .

(a) J.P. Morgan represents and warrants to the Trust that:

(i) J.P. Morgan is a corporation, duly organized and existing under the laws of the State of Delaware;

(ii) J.P. Morgan is duly qualified to carry on its business in the Commonwealth of Massachusetts;

(iii) J.P. Morgan is empowered under applicable laws and by its Articles of Incorporation and By-Laws to enter into and perform this Agreement;

(iv) all requisite corporate proceedings have been taken to authorize J.P. Morgan to enter into and perform this Agreement;

(v) J.P. Morgan has, and will continue to have, access to the facilities, personnel and equipment required to fully perform its duties and obligations hereunder;

(vi) no legal or administrative proceedings have been instituted or threatened which would impair J.P. Morgan’s ability to perform its duties or obligations under this Agreement;

(vii) J.P. Morgan’s entrance into this Agreement shall not cause a material breach or be in material conflict with any other agreement or obligation of J.P. Morgan or any law or regulation applicable to J.P. Morgan; and

(viii) J.P. Morgan will maintain and update from time to time business continuation and disaster recovery procedures with respect to its services under this Agreement that meet reasonable commercial standards, subject to Section 10 of this Agreement.

(ix) J.P. Morgan will comply with all policies and procedures of the Trust and all applicable federal laws, including but not limited to the Investment Company Act of 1940, as amended (“the 1940 Act”), and the Securities Exchange Act of 1934, as amended, and any and all rules and regulations of applicable governmental or regulatory agencies. To the extent applicable, J.P. Morgan agrees that it will comply with any requirements set forth in (i) the Exchange Act Rule 19b-4 relief provided to the American Stock Exchange LLC (Release No. 34-52197; File No. SR-Amex-2004-62) or similar relief which may be provided to any other listing exchange; (ii) the Third Amended and Restated Application for an Order under Section 6(c) of the 1940 Act for an exemption from Sections 2(a)(32), 5(a)(1), 22(d) and 24(d) of the 1940 Act and Rule 22c-1 under the 1940 Act and under Sections 6(c) and 17(b) of the 1940 Act for an exemption from Sections 17(a)(1) and 17(a)(2) of the 1940 Act, File No. 812-12354; (iii) the registration statement of the Funds; and (iv) the Request for Exemptive, Interpretive or No-Action Relief from Section 11(d)(1) of the Exchange Act and Rules 10a-1,

10b-10, 10b-17, 11d1-2, 14e-5, 15c1-5, 15c1-6, Rules 101 and 102 of Regulation M and Rule 200(g) of Regulation SHO .

(x) J.P. Morgan will comply with the Trust’s portfolio holdings disclosure policy.

(b) The Trust represents and warrants to J.P. Morgan that:

(i) the Trust is a Delaware business trust, duly organized and existing and in good standing under the laws of Delaware;

(ii) the Trust is empowered under applicable laws and by its Charter Document and By-Laws to enter into and perform this Agreement;

(iii) all requisite proceedings have been taken to authorize the Trust to enter into and perform this Agreement;

(iv) the Trust is an investment company properly registered under the 1940 Act;

(v) a registration statement under the Securities Act of 1933, as amended (“1933 Act”) and the 1940 Act on Form N-1A (the “Registration Statement”) and the Order of Exemption have been filed with the SEC and will be effective and will remain effective as required by law, and all necessary filings under the laws of the states will have been made and will be current during the term of this Agreement;

(vi) no legal or administrative proceedings have been instituted or threatened which would impair the Trust’s ability to perform its duties or obligations under this Agreement;

(vii) the Funds’ registration statements comply in all material respects with the 1933 Act and the 1940 Act (including the rules and regulations thereunder) and none of the Fund’s prospectuses and/or statements of additional information contain any untrue statement of material fact or omit to state a material fact necessary to make the statements therein not misleading; however, this representation and warranty does not eliminate any obligations of J.P. Morgan to comply with the applicable laws as they relate to information provided by J.P. Morgan that is included in any of the Fund’s prospectuses and/or statements of additional information; and

(viii) the Trust’s entrance into this Agreement shall not cause any breach or conflict with any other agreement or obligation of the Fund or any law or regulation applicable to it where such breach or conflict would impair the Trust’s ability to perform its duties or obligations hereunder.

3. D ELIVERY OF D OCUMENTS . The Trust or its agent will promptly furnish to J.P. Morgan such copies, properly certified or authenticated, of contracts, documents and other related information that J.P. Morgan may reasonably request or requires to properly discharge its duties hereunder. Such documents may include but are not limited to the following:

(a) Resolutions of the Board authorizing the appointment of J.P. Morgan to provide certain services to the Funds and approving this Agreement;

(b) The Trust’s Declaration of Trust;

(d) The Trust’s Notification of Registration on Form N-1A under the 1940 Act, as filed with the SEC;

(e) The Registration Statement including all exhibits thereto , as hereafter amended and supplemented with respect to the Funds;

(f) Any Orders of Exemption with respect to the Funds;

(g) Copies of the Investment Advisory Agreement between the Funds and their investment adviser (the “Advisory Agreement”);

(h) Opinions of counsel and auditors’ reports;

(i) Such other relevant agreements as the Trust may enter into with respect to the Funds from time to time including securities lending agreements, futures and commodities account agreements, brokerage agreements and options agreements necessary for J.P. Morgan to fulfill its obligations to maintain all necessary Trust records.

4. S ERVICES P ROVIDED .

(a) J.P. Morgan will provide the following services subject to the control, direction and supervision of the Board and in compliance with the objectives, policies and limitations set forth in the Registration Statement, Organization Documents and By-Laws; applicable U.S. laws and regulations; and all resolutions and policies implemented by the Board with respect to the Funds, of which J.P. Morgan has been notified by the Trust:

(i) Fund Administration and Compliance Services;

(ii) Fund Regulatory Services; and

(iii) Fund Accounting Services.

A detailed description of each of the above services is contained in Schedules C, D and E, respectively, to this Agreement.

(b) J.P. Morgan will also:

(i) provide office facilities with respect to the provision of the services contemplated herein (which may be in the offices of J.P. Morgan or a corporate affiliate of J.P. Morgan);

(ii) provide the services of individuals to serve as officers of the Trust who will be designated by J.P. Morgan and elected by the Board subject to reasonable Board approval;

(iii) provide or otherwise obtain personnel sufficient for provision of the services contemplated herein;

(iv) furnish equipment and other materials, which are necessary or desirable for provision of the services contemplated herein; and

(v) keep all Fund records in such form and manner as J.P. Morgan may deem appropriate or advisable, consistent with Section 2(a)(viii) hereof, as required by the 1940 Act and the rules thereunder and any other applicable rules. To the extent required by Section 31 of the 1940 Act and the rules thereunder, J.P. Morgan agrees that all such records prepared or maintained by J.P. Morgan relating to the services provided hereunder are the property of the Fund and will be preserved for the periods prescribed under the 1940 Act thereunder, and, depending on volume, potentially maintained off-site, only for required periods of time, at the Funds’ expense without markup, and made available in accordance with the 1940 Act and the rules thereunder. In addition, J.P. Morgan agrees to make such books and records available for inspection by the Trust or by regulatory authorities such as the SEC at reasonable times and otherwise to keep confidential all books and records and other information relative to the Trust and its shareholders, except when authorized by the Trust or when legally obligated to divulge such information by duly constituted authorities or court process.

J.P. Morgan shall promptly, upon reasonable notice by the Trust, turn over to the Trust and cease to retain the Trust’s files, records and documents created and maintained by J.P. Morgan pursuant to this Agreement.

5. F EES AND E XPENSES .

(a) As compensation for the services rendered to the Funds pursuant to this Agreement the Funds shall pay J.P. Morgan monthly fees determined as set forth in Schedule B to this Agreement. Such fees are to be billed monthly and shall be due and payable thirty (30) days after receipt of the invoice. Upon any termination of the provision of services under this Agreement before the end of any month, the fee for the part of the month before such termination shall be prorated according to the proportion which such part bears to the full monthly period and shall be payable upon the date of such termination.

(b) For the purpose of determining fees calculated as a function of a Fund’s assets, the value of the Fund’s assets and net assets shall be computed as required by its currently effective Prospectus, generally accepted accounting principles, and resolutions of the Board.

(c) The Trust may request additional services, additional processing, or special reports for the Funds, with such specifications and requirements documentation as may be reasonably required by J.P. Morgan. In addition, significant regulatory and legal changes and changes in the Funds’ status may necessitate additional services, processing or reports. In either instance, if the parties hereto agree that J.P. Morgan will provide such services or arrange for their provision, J.P. Morgan shall be entitled to additional fees and expenses as mutually agreed by the parties hereto.

(d) J.P. Morgan will bear its own expenses in connection with the performance of the services under this Agreement except as provided herein or as agreed to by the parties. The Trust agrees to promptly reimburse J.P. Morgan for any services, equipment or supplies ordered by or for a Fund through J.P. Morgan at the Trust’s request or for any other commercially reasonable expenses that J.P. Morgan may incur on a Fund’s behalf, at the Trust’s request. Expenses and costs to be incurred by the Funds in the operation of the Funds and to be

borne by the Funds (“Fund Expenses”) may include but are not limited to the following: organizational costs; taxes; interest; brokerage fees and commissions; salaries and fees of officers and trustees who are not officers, directors, shareholders or employees of J.P. Morgan, or the Fund’s investment adviser (except the Trust’s Compliance Analyst and a portion of the compensation for the Trust’s Chief Compliance Officer) or distributor; SEC and state Blue Sky registration and qualification fees, levies, fines and other charges; EDGAR filing fees; NSCC transaction fees, postage and mailing costs directly related to the distribution of shareholder materials; advisory and administration fees; charges and expenses of pricing and data services, independent public accountants and custodians; insurance premiums including fidelity bond premiums; legal expenses incurred at the request of the Trust; customary bank charges and fees; costs of maintenance of trust existence; expenses of typesetting and printing of Prospectuses for regulatory purposes and for distribution to current shareholders of the Funds (the Funds’ distributor or other third party to bear the expense of all other printing, production, and distribution of Prospectuses, and marketing materials); expenses of printing and production costs of shareholders’ reports and proxy statements and materials; expenses of proxy solicitation, edgarization, proxy tabulation and annual meetings; costs and expenses of Fund stationery and forms; microfilm and storage, costs associated with Trust, shareholder, and Board meetings (and with respect to Board meetings, travel-related expenses for J.P. Morgan employees who are requested by the Trust’s adviser to attend); reasonable service termination and conversion costs; reasonable telephone, courier and photocopying services, and any extraordinary Fund expenses. To the extent that Fund Expenses are actually incurred (and without any markup) by J.P. Morgan on behalf of a Fund, such Fund will reimburse J.P. Morgan, provided, that such Fund Expenses are customary, commercially reasonable or are approved by the Trust after being incurred by J.P. Morgan. In addition, J.P. Morgan may utilize one or more independent pricing services designated by the Trust to obtain securities prices , in connection with determining the net asset values of the Funds. For shared costs, including pricing services, the Trust will reimburse J.P. Morgan for the Trust’s share of the cost of such services based upon the actual usage, or a pro-rata estimate of the use, of the services for the benefit of the Trust. The Short Funds (those Funds which seek to provide daily investment

results, before fees and expenses, that match or correspond to a percentage of the inverse (opposite) of the daily performance of the applicable index) will be excluded from the pricing service allocation.

With respect to the foregoing, J.P. Morgan shall provide, upon request by the Trust, original invoices, calculations related to the Trust’s share of the cost and other reasonable items requested by the Trust.

(e) All fees, out-of-pocket expenses, or additional charges of J.P. Morgan shall be billed on a monthly basis and shall be due and payable within thirty (30) days of receipt of the invoice, unless disputed by the Trust. Disputed amounts of fees, out-of-pocket expenses, or additional charges of J.P. Morgan are not due and payable while they are being resolved. With respect to out-of-pocket expenses, the methodology underlying the calculation of such expenses invoiced to the Trust by J.P. Morgan shall be presented to the Trust in the event of a dispute.

(f) J.P. Morgan will render, after the close of each month in which services have been furnished, a statement reflecting all of the charges for such month. Undisputed charges remaining unpaid after thirty (30) days of the receipt of an invoice with respect to such charges shall bear interest in finance charges equivalent to, in the aggregate, the Prime Rate plus two percent (2%) per year, and all costs and expenses of effecting collection of any such sums, including reasonable attorney’s fees, shall be paid by the Trust to J.P. Morgan, unless such delay in payment is attributable to J.P. Morgan or its affiliates, in which case no interest shall be charged and no collection costs shall be paid by the Trust.

(g) In the event that the Fund is more than sixty (60) days delinquent in its payments of monthly billings due and payable in connection with this Agreement (with the exception of specific amounts which may be contested in good faith by the Fund) this Agreement may be terminated upon one-hundred twenty (120) days written notice to the Fund by J.P. Morgan.

(h) Anything herein to the contrary notwithstanding, if either the Domestic Custody Agreement or the Agency Services Agreement between JPMorgan Chase Bank, N.A. and the Trust is terminated, then this Agreement shall automatically terminate on the date that the Domestic Custody Agreement or the Agency Services Agreement terminates.

6. L IMITATION OF L IABILITY AND I NDEMNIFICATION .

(a) J.P. Morgan shall exercise reasonable care in the performance of all of its obligations under this Agreement, but shall not be liable for any error of judgment or mistake of law or for any loss or expense suffered by the Funds or third parties, in connection with the matters to which this Agreement relates, except to the extent such loss or expense is caused by or results from J.P. Morgan’s negligence, willful misconduct or reckless disregard of its duties and obligations.

(b) J.P. Morgan shall not be responsible for, and, to the extent that J.P. Morgan has not acted with negligence, engaged in willful misfeasance or acted in reckless disregard of its obligations and duties, the Trust shall indemnify and hold J.P. Morgan and its directors, officers, agents and employees (collectively the “Indemnitees”) harmless from and against any and all claims, liabilities, losses, damages, fines, penalties and expenses, including out-of-pocket and incidental expenses and legal fees (“Losses”) that may be imposed on, incurred by, or asserted against, the Indemnitees or any of them in the performance of its/their duties hereunder, including but not limited to those arising out of or attributable to:

(i) any and all actions of the Indemnitees required to be taken pursuant to this Agreement;

(ii) reliance on or use by the Indemnitees of information, records, or documents which are received by the Indemnitees and furnished to it or them by or on behalf of the Funds, other than by employees of J.P. Morgan and which have been prepared or maintained by the Fund, or any third party on behalf of the Funds;

(iii) any Fund’s refusal or failure to comply with the terms of this Agreement or lack of good faith, or its actions, or lack thereof, involving negligence or willful misfeasance;

(iv) the breach of any material representation or warranty of a Fund hereunder;

(v) following any instructions or other directions reasonably believed to be requests of a Fund or otherwise duly authorized, other than by employees of J.P. Morgan, and upon which J.P. Morgan is authorized to rely pursuant to the terms of this Agreement;

(vi) any delays, inaccuracies, errors in or omissions from information or data provided to J.P. Morgan by the Funds, their investment advisers and/or sub-advisers, and providers of other services such as NSCC, data services, corporate action services, pricing services, or securities brokers, unless such delays, inaccuracies, errors or omissions are the result of any action by the Indemnitees;

(vii) the offer or sale of shares by the Funds in violation of any requirement under the Federal securities laws or regulations or the securities laws or regulations of any state, or in violation of any stop order or other determination or ruling by any Federal agency or any state agency with respect to the offer or sale of such shares in such state (1) resulting from activities, actions, or omissions by the Trust, or (2) existing or arising out of activities, actions or omissions by or on behalf of the Trust prior to the effective date of this Agreement;

(viii) any failure of the Trust’s Registration Statement with respect to the Funds, to comply with the 1933 Act and the 1940 Act (including the rules and regulations thereunder), the Order of Exemption and any other applicable laws, or any untrue statement of a material fact or omission of a material fact necessary to make any statement therein not misleading in a Fund’s prospectus, provided that this obligation to indemnify shall not apply if such statement or omission or alleged statement or omission was made in reliance upon and in conformity with information furnished by J.P. Morgan;

(ix) the actions taken by the Funds, their investment adviser and/or sub-advisers, and their distributor in compliance with applicable securities, tax, commodities and other laws, rules and regulations, or the failure to so comply; and

(x) all actions, inactions, omissions, or errors caused by third parties to whom the Trust or the Indemnitees have assigned any rights and/or delegated any duties under this Agreement at the request of or as required by the Trust, or the investment adviser or sponsor of the Funds.

(c) In addition to and not in limitation of paragraph (b) immediately above, the Trust also agrees to indemnify and hold the Indemnitees and each of them harmless from and against any and all losses that may be imposed on, incurred by, or asserted against, the Indemnitees or any of them in connection with or arising our of J.P. Morgan’s performance under

this Agreement, provided the Indemnitees have not acted with negligence, engaged in willful misconduct or acted with reckless disregard of their obligations and duties.

(d) In the event of a claim for indemnification, the Trust shall be fully and promptly advised of all pertinent facts concerning the situation in question, and it is further understood that J.P. Morgan will use all reasonable care to identify and notify the Trust promptly concerning any situation which presents or appears likely to present the probability of a claim for indemnification against the Trust, but failure to do so in good faith shall not affect the rights hereunder.

The Trust shall be entitled to participate at its own expense or, if it so elects, to assume the defense of any suit brought to enforce any claims subject to this indemnity provision. If the Trust elects to assume the defense of any such claim, the defense shall be conducted by counsel chosen by the Trust and satisfactory to J.P. Morgan, whose approval shall not be unreasonably withheld. In the event that the Trust elects to assume the defense of any suit, retain counsel, and bear the fees and expenses of same, J.P. Morgan, if it desires to retain any additional counsel, shall bear the fees and expenses of any additional counsel retained by it. If the Trust does not elect to assume the defense of a suit, it will reimburse J.P. Morgan for the reasonable fees and expenses of any counsel retained by J.P. Morgan, and satisfactory to the Trust, whose approval shall not be unreasonably withheld.

(e) In performing its services hereunder, J.P. Morgan shall be entitled to rely on any oral or written instructions, notices or other communications, including electronic transmissions, from the Funds and their custodians, officers and directors, investment adviser and sub-advisers, investors, agents and other service providers which J.P. Morgan reasonably believes to be genuine, valid and authorized. J.P. Morgan shall also be entitled to consult with and rely on the advice and opinions of outside legal counsel and public accountants retained by the Funds, as necessary or appropriate.

(f) In no event shall J.P. Morgan or the Trust be liable for any indirect, incidental, special or consequential losses or damages of any kind whatsoever (including but not

limited to lost profits), even if J.P. Morgan or the Trust has been advised of the likelihood of such loss or damage and regardless of the form of action in which any such loss or damage may be claimed. This provision and the indemnity obligations provided herein shall survive the termination of this Agreement.

7. T ERM . Subject to Board approval, this Agreement shall become effective on the date first hereinabove written and may be modified or amended from time to time by mutual agreement between the parties hereto. The Agreement shall continue in effect unless terminated by either party on 180 days’ prior written notice or by mutual agreement of the parties; provided, however, that the fees set forth on Schedule B hereto shall be valid, and not subject to change, for a period of three (3) years following the effective date of this Agreement.

Upon termination of this Agreement, the Trust shall pay to J.P. Morgan such compensation and any Fund Expenses incurred by J.P. Morgan on behalf of a Fund which may become due or payable under the terms hereof as of the date of termination or after the date that the provision of services ceases, whichever is later provided that such Fund Expenses are customary, commercially reasonable or were approved by the Trust.

8. N OTICES . Any notice required or permitted hereunder shall be in writing and shall be deemed effective on the date of personal delivery (by private messenger, courier service or otherwise) or upon confirmed receipt of telex or facsimile, whichever occurs first, or upon receipt if by mail to the parties at the following address (or such other address as a party may specify by notice to the other):

If to the Trust:

7501 Wisconsin Avenue

Suite 1000

Bethesda, MD 20814

Attention: General Counsel

Fax: (240) 497-6530

If to J.P. Morgan:

J.P. Morgan Investor Services Co.

73 Tremont Street

Boston, MA 02108

Attention: Legal Department

Fax: (617) 557-8616

9. W AIVER . The failure of a party to insist upon strict adherence to any term of this Agreement on any occasion shall not be considered a waiver nor shall it deprive such party of the right thereafter to insist upon strict adherence to that term or any term of this Agreement. Any waiver must be in writing signed by the waiving party.

10. F ORCE M AJEURE . J.P. Morgan will maintain and update from time to time business continuation and disaster recovery procedures with respect to its business which provides the services set forth in this Agreement that it determines from time to time meet reasonable commercial standards. J.P. Morgan shall not be responsible or liable for any harm, loss or damage suffered by the Funds, their investors, or other third parties or for any failure or delay in performance of J.P. Morgan’s obligations under this Agreement arising out of or caused, directly or indirectly, by an act of God, fire, flood, civil or labor disturbance, war, act of any governmental authority or other act or threat of any authority (de jure or de facto), legal constraint, fraud or forgery (except by employees of J.P. Morgan), malfunction of equipment or software (except where such malfunction is primarily attributable to J.P. Morgan’s negligence or willful misconduct in selecting, operating or maintaining the equipment or software), or any cause beyond the reasonable control of J.P. Morgan, provided that J.P. Morgan has notified the Trust promptly when it becomes aware of a specific occurrence or event and, subject to the circumstances, has used its best efforts to resolve the adverse effects of the specific occurrence or event.

11. A MENDMENTS . This Agreement may be modified or amended from time to time by mutual written agreement between the parties. No provision of this Agreement may be changed, discharged, or terminated orally, but only by an instrument in writing signed by the party against which enforcement of the change, discharge or termination is sought.

12. S EVERABILITY . If any provision of this Agreement is invalid or unenforceable, the balance of the Agreement shall remain in effect, and if any provision is inapplicable to any person or circumstance it shall nevertheless remain applicable to all other persons and circumstances.

13. G OVERNING L AW . THIS AGREEMENT SHALL BE GOVERNED BY THE SUBSTANTIVE LAWS OF THE STATE OF NEW YORK and the applicable provisions of the 1940 Act. To the extent that the applicable laws of the State of New York, or any of the provisions herein, conflict with the applicable provisions of the 1940 Act, the latter shall control.

14. O BLIGATIONS OF THE T RUST . It is expressly agreed that the obligations of the Trust hereunder shall not be binding upon any of the Trustees, shareholders, nominees, officers, agents or employees of the Trust personally, but shall bind only the property of the Trust. The execution and delivery of this Agreement have been authorized by the Trustees, and this Agreement has been signed and delivered by an authorized officer of the Trust, acting as such, and neither such authorization by the Trustees nor such execution and delivery by such officer shall be deemed to have been made by any of them individually or to impose any liability on any of them personally, but shall bind only the trust property of the Trust as provided in the Trust’s Agreement and Declaration of Trust.

15. S EPARATE A GREEMENTS . Each Fund shall be regarded for all purposes hereunder as a separate party apart from each other Fund. Unless the context otherwise requires, with respect to every transaction covered by this Agreement, every reference herein to the Trust shall be deemed to relate solely to the particular Fund to which such transaction relates. Under no circumstances shall the rights, obligations or remedies with respect to a particular Fund constitute a right, obligation or remedy applicable to any other Fund. Without limiting the generality of the foregoing, in no event shall J.P. Morgan have recourse, whether by set-off or otherwise, with respect to any amounts owed or any liabilities incurred by a Fund, to or against any assets of any other Fund. The use of this single document to memorialize the

separate agreement of each Fund is understood to be for clerical convenience only and shall not constitute any basis of joining the Funds for any reason.

16. P RIVACY . In accordance with the Securities and Exchange Commission’s Regulation S-P (“Regulation S-P”), nonpublic personal financial information relating to consumers or customers of the Trust provided by, or at the direction of the Trust to J.P. Morgan, or collected or retained by J.P. Morgan in the course of performing its duties shall be considered confidential information. J.P. Morgan agrees that it shall not use such confidential information for any purpose other than to carry out its obligations under this Agreement, and further agrees that it shall not give, sell or in any way transfer or disclose such confidential information to any person or entity, other than (i) affiliates of J.P. Morgan or third parties who have entered into contractual arrangements with the Trust or with J.P. Morgan, and then only to the extent necessary to carry out the obligations under such contractual arrangements, (ii) at the direction of the Trust, (iii) as required by law or (iv) subject to (i) above, as permitted by law. J.P. Morgan represents that it has in place and shall maintain physical, electronic, and procedural safeguards reasonably designed to protect the security, confidentiality and integrity of, and to prevent unauthorized access to or use of records and information related to consumers or customers of the Trust. J.P. Morgan warrants that it shall not disclose such confidential information to any person or entity as permitted in the previous sentence unless such person or entity has agreed to keep such information confidential. The Trust represents to J.P. Morgan that it has adopted a Statement of its privacy policies and practices as required by Regulation S-P and agrees to provide J.P. Morgan with a copy of that statement annually.

17. I NTELLECTUAL P ROPERTY . J.P. Morgan acknowledges and agrees that all intellectual property rights of the Trust, ProShare Advisors LLC or any of their affiliates, including without limitation, patent, trademark, copyright, and trade secret rights, shall remain in the Trust, ProShare Advisors LLC or their affiliates, as applicable. J.P. Morgan disclaims any right, title or interest in such intellectual property rights.

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their officers designated below as of the date first written above.


PROSHARES TRUST

By:
Name:
Title:

J.P. MORGAN INVESTOR SERVICES CO.

By:
Name:
Title:

FUND SERVICES AGREEMENT

SCHEDULE A

SHORT500 PROSHARES

SHORT400 PROSHARES

SHORT30 PROSHARES

SHORT100 PROSHARES

ULTRASHORT500 PROSHARES

ULTRASHORT400 PROSHARES

ULTRASHORT30 PROSHARES

ULTRASHORT100 PROSHARES

ULTRA500 PROSHARES

ULTRA400 PROSHARES

ULTRA30 PROSHARES

ULTRA100 PROSHARES

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FUND SERVICE AGREEMENT

SCHEDULE B

FEES AND EXPENSES Fund Accounting, Fund Administration and Standard Fund Regulatory Services

FEES AND EXPENSES

Fund Accounting, Fund Administration and Standard Fund Regulatory Services

The per annum fees set forth on this Schedule B include the (1) per fund charges (2) market value fees, and (3) out-of-pocket expenses described in Section 5, which will be valid for the services described in this Agreement , and will not be subject to change by J.P. Morgan, for a period of three (3) years following the effective date of this Agreement, or the commencement of operations, whichever is later.

(1)

Per Fund Charge (calculated monthly based on average net assets)


First 6 Months
$0 to $50 million		[ ]
Over $50 million		[ ]


Next 6 Months
$0 to $50 million		[ ]
Over $50 million		[ ]

Year 2


First Level Charge
$0 to $50 million or		[ ]
Over $50 million		[ ]
Second Level Charge (in addition to the First Level Charge above for Funds with assets less than $50 million)
$0 to $20 million or		[ ]
$20 million to $50 million*		[ ]

*	In Year 2, the maximum amount a single Fund will pay for the Per Fund Charge will be [ ]

Year 3 and thereafter


Charge per fund		[ ]

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(2)

Market Value Fees (calculated monthly based on average net assets)


Based on Total Average Net Assets
First $1 billion		[ ]
$1 billion to $2 billion		[ ]
$2 billion to $5 billion		[ ]
Over $5 billion		[ ]

(3)

Out-of-Pocket Expenses

The Trust will reimburse J.P. Morgan for Fund expenses incurred by J.P. Morgan on behalf of the Trust, including those set forth in Section 5 of this Agreement, provided that such expenses are without markup, customary and commercially reasonable. With respect to the foregoing, J.P. Morgan shall provide, upon request by the Trust, invoices and other reasonable items requested by the Trust in order to verify such expenses.

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FUND SERVICES AGREEMENT

SCHEDULE C

DESCRIPTION OF FUND ADMINISTRATION

AND COMPLIANCE SERVICES

J.P. Morgan’s Fund Administration and Compliance Services are designed and intended to address the Funds’ financial and tax reporting, portfolio compliance and general administration needs. J.P. Morgan will work closely with the Funds’ experts, such as public accountants and legal counsel, with respect to these services.

I.	Financial Reporting Services

Coordinate, prepare and review the Fund’s financial statements (annual and semiannual), in accordance with all applicable rules and regulations, including:

(1)

Schedules of Investments;

(2)

Statements of Assets and Liabilities;

(3)

Statements of Operations;

(4)

Statements of Changes in Net Assets;

(5)

Financial Highlights; including expense ratios and portfolio turnover rates;

(6)

Notes to Financial Statements;

(7)

Review of other Financial Data included in annual and semi-annual reports;

(8)

MDFP line graphs and performance information;

(9)

Tax disclosure information;

(10)

Supplemental premium/discount charts (e.g. Net Asset Value compared to the midpoint between the bid-ask spread);

(11)

Shareholder meeting results;

(12)

Trustees and Officers information;

(13)

Expense Examples;

(14)

Portfolio Holdings and Index Composition Data; and

(15)

Any additional information that may be required by rule or regulation.

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Coordinate printing and distribution of prospectuses, annual and semi-annual reports, quarterly filings, and proxies (including tabulation), subject to oversight by the investment adviser of the Trust.

Coordinate, prepare, review and filing of SEC Form N-CSR Filings, including certifications by fund officers, if applicable, subject to review and approval by the Treasurer of the Trust.

Coordinate, prepare, review, and filing of Form N-SAR.

Prepare and file Form N-Q for all Funds.

Prepare, review and coordinate the financial highlights for the prospectus.

Prepare and file Form NP-X, provided that the Trust or its agents timely provide the relevant information to J.P. Morgan.

Additional Services (subject to additional fees):

(1)

Pro-Forma Statements;

(2)

In-house Publishing (Frame maker);

(3)

Maintenance of Customized Industries and Descriptions; and

(4)

Additional Graphics, other than those required by rule, regulation or form applicable to open-end investment companies (i.e., pie charts).

II.

TAX SERVICES

Responsibility for preparation and review of the following:

(1)

Fiscal and excise tax provisions (includes all book/tax adjustments except those noted in subsection I below) in accordance with the Internal Revenue Code and any applicable rules and regulations;

(2)

Federal and state income and excise tax returns (Forms 1120-RIC, 8613, etc.) (including filings by extended due dates and including filing of same); Review includes signature of J.P. Morgan as Trust officer, but excludes signature as paid preparer;

(3)

State income tax returns for the state of incorporation and, if required, for the state where the investment adviser is located. Additional state filings as required and will be treated as an added service and billed accordingly.

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(4)

All applicable data (including, but not limited to, year-end distribution reclassifications, return of capital, foreign tax credit, tax-exempt income, treasury income, income by state, income by country, long-term capital gains, qualified interest income and qualified short-term gain and qualified dividend income) required for year end shareholder tax reporting to the Trust’s transfer agent, the ICI distribution list, and other parties as applicable.

(5)

Calculation of periodic distribution rates and review to reasonably ensure that distributions are not considered preferential under the Internal Revenue Code.

(6)

Calculation of all required 60-day designation information to be included in the Trust’s annual report (including, but not limited to, foreign tax credit, long-term capital gain designation, tax exempt income, dividend received deduction, and qualified dividend income).

(7)

Quarterly tax exempt asset test and annual foreign security asset test.

(8)

Tax equalization calculations.

(9)

Real-time wash sale calculations (including the impact of redemption in kind on wash sales reversals and the possible impact of contributions in kind on wash sale deferrals).

(10)

Calculation of income/capital gain distributions (in compliance with income/excise tax distribution requirements) in accordance with the Internal Revenue Code and any applicable rules or regulations.

(11)

Calculation of one tax capital gain estimate for excise tax distribution purposes.

(12)

Maintain tax basis books and records sufficient for investment security transaction lot selections.

(13)

Prepare and file Form 1099s, if applicable.

Tax preparation and review of all items regarding liquidations or mergers including completion of the final tax provision(s), return(s) and calculations of all tax attributes.

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Support annual report, semiannual report and N-Q process by preparing and reviewing the following:

(1)

Identify and track all book/tax differences; and

(2)

Tax-related footnote disclosure (includes tax cost, Return of Capital/Statement of Position, undistributed and distributed tax income, if applicable).

Monitor and advise the Trust and the Funds concerning their regulated investment company status under the Internal Revenue Code (Subchapter M), including qualification testing (e.g., asset diversification, good income and distribution tests);

Review complex corporate actions.

Prepare and review one tax basis income estimate, including capital gains, during each Fund’s fiscal and excise year.

Assist with testing for personal holding company status, as deemed necessary.

Additional services (subject to additional fees):

(1)

REMIC OID calculations

(2)

Accelerated fiscal or Excise Tax Reporting;

(3)

Mutually agreed upon tax consulting.

(4)

Assistance with Internal Revenue Service audits.

(5)

Determine personal holding company status, as deemed necessary.

(6)

Determine ownership changes, as deemed necessary.

(7)

Prepare and review greater than one tax basis income estimate, including capital gains, during each Fund’s fiscal and excise year.

III.

Compliance Services

J.P. Morgan will provide assistance to the Funds and their investment adviser with respect to compliance with federal tax and securities laws. J.P. Morgan’s provision of compliance services is designed to assist the Funds and their investment adviser but is not intended as an assumption by J.P. Morgan of the investment adviser’s fiduciary duties and legal responsibilities to the Funds.

Portfolio compliance .

(1)

Implement written procedures for J.P. Morgan as the Trust’s service provider reasonably designed to prevent violations of federal securities laws;

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(2)

Prepare quarterly reports for the Fund’s compliance officer listing any known material compliance violations that occurred;

(3)

Monitor and test each Fund’s compliance with such investment restrictions and other regulatory requirements, as may be agreed to among the Funds’ investment adviser, J.P. Morgan and each Fund as necessary to meet industry regulations (e.g., issuer or industry diversification, etc.);

(4)

Perform independent daily/monthly portfolio compliance review of information contained in fund accounting source reports;

(5)

Coordinate mailing of all IRS quarterly compliance reminder letters to investment adviser of the Trust;

(6)

Prepare brokerage commission reports for review by the Funds’ investment adviser;

(7)

Prepare compliance reports for the Funds’ Board of Trustees;

(8)

Communicate results of compliance testing to the investment adviser for the Trust on a daily basis;

(9)

Provide access to compliance records and compliance tracking systems;

(10)

Develop, maintain, and monitor a compliance calendar for the Trust; and

(11)

Assist in monitoring best execution by providing quarterly brokerage commission reports.

Compliance with policies and procedures .

(1)

Assist the Funds’ investment adviser with monitoring its compliance with Fund Board directives, including but not limited to Joint Repurchase Agreements and “Approved Issuers Listings for Repurchase Agreements” with J.P. Morgan parties, and procedures required under Rules 17a-7, 17e-1, 17(g), 17(j) and 12d3-1 of the 1940 Act;

(2)

Monitor compliance by each Fund with conditions imposed by Rule 18f-3 relating to multiple classes of shares, if applicable, and notify the Funds as to the results thereof;

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(3)

With respect to J.P. Morgan services: (i) assist with the development and monitoring of the Trust’s Disclosure Controls and Procedures and ensure compliance with the Sarbanes-Oxley Act of 2002; (ii) responsible for required Board communications related to the Sarbanes-Oxley Act; and (iii) responsible for obtaining sub-certifications and any additional materials for Sarbanes-Oxley attestation with respect to financial reports;

(4)

Coordinate due diligence pursuant to the Funds’ Pricing and Valuation Procedures and report conclusions to the Board of Trustees;

(5)

Make required filings with respect to the Trust’s fidelity bond;

(6)

Monitor compliance with the 1940 Act and with rules, and amendments to rules, adopted thereunder, and notify the Funds of the results thereof;

(7)

Oversee and maintain required books and records for each Fund, as required by all applicable statutes, rules and regulations, including without limitation Rules 31(a)-1 and 31(a)-2 of the 1940 Act; and

(8)

Develop and implement appropriate policies and procedures in response to applicable regulatory developments.

(9)

Oversee compliance with the Funds’ Pricing and Valuation Procedures, in accordance with the 1940 Act.

38a-1 Compliance

(1)

Provide information and assistance reasonably required by the Trust’s Chief Compliance Officer or the Board in connection with the Board’s determination regarding the adequacy and effectiveness of the compliance policies and procedures;

(2)

Maintain certain records for the Trust in accordance with Rule 38a-1, including (a) a copy of the policies and procedures adopted by the Trust required pursuant to Rule 38a-1 that are in effect, or at any time within the past five years were in effect, in an easily accessible place; (b) copies of materials provided to the Board in connection with their approval of policies and written reports provided to the Board pursuant to Rule 38a-1 for at least five years after the end of the fiscal year in which the documents were provided, the first two years in an easily accessible place; and (c) any records documenting the Trust’s annual review pursuant to Rule 38a-1 for at least five years after the end of the

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fiscal year in which the annual review was conducted, the first two years in an easily accessible place;

(3)

Assist in the development of policies of the Trust and establish procedures to support such policies as requested by the Trust; and

(4)

Make modifications to policies and procedures as necessary and in coordination with the Trust.

IV.

General Administration Services

Expense accruals .

(1)

Calculate estimated expense ratio projections for new Funds to be included in the Fund’s prospectus.

(2)

Prepare Fund budgets and calculate expense ratio projections on a monthly or more frequent basis as needed.

(3)

Monitor expense accruals including expenses based on a percentage of average daily net assets (e.g., management, advisory and administrative fees) and expenses based on actual charges annualized and accrued daily (audit fees, registration fees, directors’ fees, etc.). for adequacy and make adjustments as needed (at least monthly).

(4)

Calculate contractual Trust expenses, monitor all Funds’ expense ratios.

(5)

Implement and determine methodology for allocating expenses within the Trust.

(6)

Ensure allocations are appropriate and in compliance with Rule 18f-3 relating to multiple classes of shares

(7)

Calculate and monitor fee waivers, if necessary, under and Expense Limitation Agreement approved by the Board of Trustees

(8)

Prepare, calculate, review and coordinate fee table and fee example information and disclosures for the prospectus.

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Expense payments .

(1)

Review invoices directed to the funds and effect payments as appropriate;

(2)

Calculate Trust expense allocations when appropriate;

(3)

Arrange, if directed by the appropriate client Fund officers, for the payment by wire of a Fund’s expenses;

(4)

Prepare and file form 1099-MISC for fund expense payments, including Trustees’ fees; and

(5)

Provide expense details to the Funds’ investment adviser for periodic review.

(6)

Assist in the verification of the appropriateness of all Fund expenses including out-of-pocket costs charged to the Funds

Prepare and review all monthly performance calculations :

(1)

Total return;

(2)

SEC yield;

(3)

Distribution yield;

(4)

After-tax performance calculations (once per year per Fund);

(5)

Total return at varying sales charges; and

(6)

Other calculations required for the annual report, prospectus, statement of additional information, Form N-CSR and/or Form N-SAR.

Reports to statistical service providers :

(1)

Coordinate and facilitate all registration and reporting to fund data reporting companies (e.g., Lipper, Morningstar, etc.). Disseminate daily net asset values and daily/periodic distribution factors. Verify the accuracy of total returns and other Fund data and information published by Lipper, Morningstar, etc. and prepare quarterly reports detailing inaccuracies. Provide all changes/corrections to data reporting companies;

(2)

Coordinate and facilitate NASDAQ registration process and symbol selection;

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(3)

Report Fund performance to twelve (12) outside statistical service agencies per month as directed by the Trust;

(4)

Review the accuracy of data published by such reporting agencies and prepare quarterly reports describing material inaccuracies; and

(5)

Prepare Fund information surveys requested by the Investment Company Institute.

Examinations . Provide support, prepare for, and coordinate communications and collection of records and documents held by J.P. Morgan on the Trust’s behalf, with respect to regulatory agency examinations and inspections (e.g., SEC, NASD, IRS and bank regulators) of the Funds including industry-wide inspections to which the Funds may be subject (all of the foregoing “Examinations”). Prepare draft responses to Examinations with respect to information in the possession of J.P. Morgan or which implicate J.P. Morgan services provided to the Funds.

Officers . Furnish appropriate officers for the Trust, including assistant treasurer and assistant secretary. The assistant treasurer and assistant secretary of the Trust will perform duties attendant with their position including the following duties:

(1)

Attend and represent the Trust at periodic Board meetings, as necessary;

(2)

Work with audit firm on tax and reporting issues;

(3)

Work with other fund officers on fund strategy and accounting policies;

(4)

Assist in the development and evaluation of the Trust’s Disclosure Controls and Procedures; and

(5)

Record minutes and maintain official Board records.

Other general administration :

(1)

Maintain and manage annual regulatory filing calendar and follow-up with responsible parties;

(2)

Prepare, review and file Form 24f-2 and coordinate the Trust’s payment of appropriate fees;

(3)

Apply for all portfolio Tax I.D. numbers and CUSIP numbers;

(4)

Maintain insurance files for the Funds;

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(5)

Review materials and reports prepared by Fund auditors, and materials prepared by Fund counsel which are submitted to J.P. Morgan;

(6)

Review Fund registration statements for new products and proxy materials prepared by Fund counsel and prepare organizational meeting board materials for new products;

(7)

Assist in coordinating seed money and establish control accounts for new funds;

(8)

Maintain open file summary, authorized signers list, and fund compliance calendars;

(9)

Assist the Trust in obtaining Fund ratings from NRSRO’s.

(10)

Respond to and coordinate requests from independent fund accountants related to Fund audits and other Fund related business.

(11)

Review materials and reports prepared by Trust auditors, and materials prepared by Trust counsel which is submitted to J.P. Morgan.

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FUND SERVICES AGREEMENT

SCHEDULE D

DESCRIPTION OF FUND REGULATORY SERVICES

A.	Prepare standard Fund agreements for J.P. Morgan services, subject to review by Fund counsel, including: (i) administration agreements; (ii) fund accounting agreements; and (iii) transfer agency agreements;

B.	Prepare post-effective amendments to the Registration Statement representing the annual update of financial and other information for such registration statement, file such documents with the SEC and review for compliance with applicable rules and forms, subject to review by Fund counsel;

C.	For new Fund products, review prospectuses, supplements, statements of additional information, other registration statement materials and proxy materials prepared by Fund counsel and file such documents with the SEC (services for which additional mutually agreed fees may be charged);

D.	Maintain files of registration statements, Fund contracts, Fund proxies, compliance materials and other Fund documents as required by the 1940 Act and rules adopted thereunder, as they may be amended from time to time, and other requirements;

E.	Prepare for, conduct and record minutes for up to two shareholder meetings per year ;

F.	Assist with the design, development, and operation of the Funds, including new classes, modifying investment objectives, policies and structure;

G.	Provide J.P. Morgan procedures relevant to Chief Compliance Officer’s preparation of fund compliance manual;

H.	Provide additional manuals and revisions subject to additional mutually agreed fees;

I.	Provide regulatory calendar on a monthly basis;

L.	Board Process and Meetings :

(1)

Prepare or compile performance and expense information, financial reports, and compliance data and information for inclusion in the Trust’s regular quarterly Board meeting materials;

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(2)

Prepare quarterly Board meeting time and responsibility chart;

(3)

Provide at least two persons to attend quarterly and other Board meetings;

(4)

Prepare all quarterly Board materials, minutes and agendas and assist in preparation of narrative materials such as memoranda on routine items and new regulatory developments, subject to review by Trust counsel;

(5)

Prepare all Board minutes subject to review by Trust counsel;

(6)

Prepare special Board meeting and organizational Board meeting materials;

(7)

Coordinate Board book production and distribution;

(8)

Coordinate the provision of certain 1940 Act Section 15(c) materials and provide fee comparison reporting, subject to the direction and oversight of the investment adviser for the Trust;

(9)

Maintain calendar and files for all Board and shareholder meeting materials; and

(10)

Coordinate and facilitate distribution of trustee/officer questionnaires including audit committee financial expert questionnaire, subject to review and approval by Trust counsel and respond to trustees/officers questions relating thereto. Coordinate and facilitate distribution of questionnaires and other materials to trustees/officers regarding board self-assessment, as provided by Trust counsel.

(11)

Initiate and coordinate execution of Board approved documents as necessary.

M.	At the request of the Trust, draft and prepare Registration Statements for new products (subject to additional mutually agreed fees).

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FUND SERVICES AGREEMENT

SCHEDULE E

DESCRIPTION OF FUND ACCOUNTING SERVICES

J.P. Morgan shall provide the following accounting services to the Funds:

Maintenance on behalf of the Funds of all books (in accordance with GAAP and Tax Basis) and records which the Funds are, or may be, required to keep and maintain pursuant to any applicable statutes, rules and regulations, including without limitation Rules 31a-1 and 31a-2 under the 1940 Act, relating to the maintenance of books and records in connection with the services to be provided hereunder;

Calculation of each Fund’s Net Asset Value in accordance with the following procedure: obtain security prices from independent pricing services, or if such quotes are unavailable, then obtain such prices from each Fund’s investment adviser or its designee, as approved by the Board; provided, however, that J.P. Morgan shall not be responsible for determining on its own any prices for securities or other instruments held by any of the Funds. The Fund’s Fair Value Committee will determine fair value security prices;

C.	Accounting for net investment income received and distributions made by each Fund;

D.	As mutually agreed upon, J.P. Morgan will provide reports to interested parties;

E.	Calculation of the cash component of the portfolio composition file and transmit the same to the NSCC and the Distributor;

F.	Apply dual sell selection methodology when calculating realized gains and losses (highest cost for market trades and lowest cost for in kind redemption trades);

G.	Review and compare each Fund’s NAV to the closing market price and/or 4:00 p.m. price for such Fund on the national securities exchange on which ETF Shares of such fund are traded, and report;

H.	Verify and reconcile with the Trust’s custodian all daily cash activity and with each Fund’s investment adviser, all daily trade activity;

I.	Accrue expenses of each Fund according to instructions received from the Trust’s Administrator;

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J.	Determine the outstanding receivables and payables for all (1) security trades, (2) Fund share transactions and (3) income and expense accounts;

K.	Review daily the net asset value calculation for each Fund, check and confirm the net asset values for reasonableness and deviations, and distribute net asset values to the respective national securities exchange on which ETF Shares of such Fund are traded, as directed by such Fund;

L.	Post Fund transactions to appropriate general ledger categories;

M.	Amortize premiums and accrete discounts on securities purchased at a price other than face value, if requested by a Fund;

N.	Provide daily NAV, stale price and such periodic reports as the parties shall agree upon;

O.	Differentiate between and track gains/losses from redemption in kind trades and gains/losses from market trades;

P.	Provide internet access to accounting reports;

Q.	Determine unrealized appreciation and depreciation on securities held in variable net asset value Funds;

R.	Provide accounting reports in connection with the Trust’s regular annual audit and other audits and examinations given by regulatory agencies;

S.	Record swap trading costs on trade date as requested by and provided by the Funds’ investment adviser;

T.	Prepare data for premium/discount calculation of NAV to secondary market price and provide data to interested parties daily as necessary;

U.	Perform mark-to-market and report on securities designated by each Fund’s investment adviser for their SEC Rule 10666 compliance and

V.	Upon approval from each Fund’s investment adviser, send daily Intraday Intrinsic Value (“IIV” files) to the Trust’s website.

For each ETF Series, the PCF file and IIV file on any given business day will be created, and (i) the PCF file transmitted for each fund to the NSCC before 9:00 a.m. ET the next business day and (ii) the IIV file transmitted to a password protected website designated by the Trust before 9:00 a.m. ET the next business day. The PCF file shall include deposit securities and redemption securities for

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each ETF Series, as applicable, as well as the cash component. The IIV file shall include, as applicable, (i) the value of the deposit securities for each ETF Series, (ii) the notional value of the swaps held by such ETF Series (together with an indication of the index on which such swap is based and whether the ETF Series’ position is long or short), (iii) the most recent valuation of the swaps held by the ETF Series, (iv) the notional value of any futures contracts (together with an indication of the index on which such contract is based, whether the ETF Series’ position is long or short and the contract’s expiration date), (v) the number of futures contracts held by the ETF Series (together with an indication of the index on which such contract is based, whether the ETF Series’ position is long or short and the contract’s expiration date), (vi) the most recent valuation of the futures contracts held by the ETF Series, (vii) the ETF Series’ total assets and total shares outstanding, (viii) a “net other assets” figure reflecting expenses and income of the ETF Series to be accrued during and through the following business day and accumulated gains or losses on the ETF Series derivatives through the end of the business day immediately preceding the publication of the IIV file, and (ix) to the extent that any ETF Series holds cash or money market instruments about which information is not available in a PCF file, information regarding such ETF Series’ cash and money market instrument positions will be disclosed in the IIV File for such ETF Series. Both the PCF file and IIV file will reflect dividends paid to date and accruals for expenses incurred to date as well as the next business day’s estimated dividend and expense accrual information.

On a daily basis portfolio holdings will be made publicly available for each ETF Series on a website designated by the Trust and/or a website of the American Stock Exchange or other listing exchange. Such portfolio holdings information for each ETF Series shall include names and number of shares held of each specific equity security, the specific types of financial instruments and characteristics of same, money market instruments and amount of cash held in the portfolio of each ETF Series.

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Exhibit (h)(2)

FORM OF AGENCY SERVICES AGREEMENT

THIS AGENCY SERVICES AGREEMENT made as of the ___ day of ____________, 2006 by and between PROSHARES TRUST , a Delaware business trust and registered investment company under the Investment Company Act of 1940, as amended (the “1940 Act”), with offices at 7501 Wisconsin Avenue, Suite 1000, Bethesda, Maryland 20814. (the “Trust”) and JPMORGAN CHASE BANK , N.A. a national banking association with a place of business at 3 Chase MetroTech Center, Brooklyn, New York 11245 (“Bank”).

PREMISE

Bank, in its capacity as custodian of the Trust has been engaged to provide U.S. domestic custody services to the Trust and its various series pursuant to the terms of a Domestic Custody Agreement dated as of the date hereof (the “Custody Agreement”). The Trust intends to issue in respect of its series listed on Exhibit A hereto, as amended from time to time (each an “ETF Series”), exchange-traded shares in respect of each such ETF Series known as “ETF Shares.” The ETF Shares shall be issued in bundles called “Creation Units” (hereinafter defined). The Trust, on behalf of the ETF Series, shall issue and redeem ETF Shares of each ETF Series only in Creation Units principally in kind for portfolio securities of the particular ETF Series (“Deposit Securities”) or cash, as more fully described in the current prospectus and statement of additional information of the Trust, included in its registration statement on Form N-1A, No. _____; and as authorized under the Order of Exemption dated ____________ of the Securities and Exchange Commission, Investment Company Act Release No. ______; File No. _________. Only brokers or dealers that are “Authorized Participants” (hereinafter defined) and that have entered into an Authorized Participant Agreement substantially in the form of Exhibit B hereto with the Distributor (hereinafter defined), acting on behalf of the Trust, shall be authorized to purchase and redeem ETF Shares in Creation Units from the Trust. The Trust wishes to engage Bank to perform certain services on behalf of the Trust with respect to the purchase and redemption of ETF Shares, as the Trust’s agent, namely: to provide transfer agent services for ETF Shares of each ETF Series; to act as Index Receipt Agent (as such term is defined in the rules of the National Securities Clearing Corporation) with respect to the settlement of trade orders with Authorized Participants; and to provide custody services under the terms of the Custody Agreement, as supplemented hereby, for the settlement of purchases of Creation Units against Deposit Securities or cash that shall be delivered by Authorized Participants in exchange for ETF Shares and the redemption of ETF Shares in Creation Units against the delivery of “Redemption Securities” (hereinafter defined) or cash of each ETF Series.

NOW THEREFORE , in consideration of the premise and other good and valuable consideration the receipt and sufficiency of which is hereby acknowledged, the Trust and Bank agree as follows:

1. DEFINITIONS . The following terms as used in this Agreement shall have the meanings as set forth below:

Agreement : means this Agency Services Agreement.

Authorized Participant : a broker or dealer that is a DTC participant and that has executed an Authorized Participant Agreement with the Distributor for the purchase and redemption of Creation Units.

Authorized Participant Agreement : the agreement, substantially in the form of Exhibit B hereto, between the Distributor, on behalf of the Trust, and a broker or dealer that is a DTC participant governing the purchase and redemption of Creation Units.

Authorized Person : means any person who has been designated by written notice from the Trust (or by any agent designated by the Trust, including, without limitation, an investment manager), to act on behalf of the Trust hereunder. Such persons will continue to be Authorized Persons until such time as Bank receives Instructions from the Trust (or its agent) that any such person is no longer an Authorized Person.

Bank : as the context requires means JPMorgan Chase Bank, N.A. in its capacity as Transfer Agent, Index Receipt Agent or Custodian for the Trust.

Balancing Amount : means an amount of cash equal to the difference between the net asset value of a Creation Unit and the market value of the Deposit Securities (in the case of a purchase) or the market value of the Redemption Securities (in the case of a redemption). For purchases of Creation Units, if the Balancing Amount is a positive number, then it will be an amount that is payable to the ETF Series by the Authorized Participant and if the Balancing Amount is a negative number, then it will be an amount that is payable by the ETF Series to the Authorized Participant. For redemptions of Creation Units, if the Balancing Amount is a positive number, then it will be an amount that is payable by the ETF Series to the Authorized Participant and if the Balancing Amount is a negative number, then it will be an amount that is payable to the ETF Series by the Authorized Participant.

“ Bank Indemnitees ” means Bank, and its nominees, directors, officers, employees and agents.

Bearish ProShare : means each ETF Series that issues and redeems Creation Units against the delivery of cash only. Bearish ProShares will not use the Clearing Process to effectuate their settlements.

Bullish ProShare : means each ETF Series that issues and redeems Creation Units against delivery of a Creation Deposit. Bullish ProShares will use the Clearing Process to effectuate their settlements except as otherwise agreed by the Trust and Bank with respect to particular Creation Unit issuances.

Cash Component : means an amount of cash consisting of the Balancing Amount and a Transaction Fee.

Clearing Process : means CNS, the NSCC clearing and settlement process for the purchase and redemption of Creation Units for securities in kind.

CNS : means the Continuous Net Settlement System of NSCC.

Creation Unit : means a large block of a specified number of ETF Shares, as specified in the ETF Series’ prospectus. A Creation Unit is the minimum number of ETF Shares that may be created or redeemed at any one time.

Creation Deposit : means the consideration for the purchase of a Creation Unit consisting of Deposit Securities and the Balancing Amount.

Custody Agreement : means the custody agreement entitled “Domestic Custody Agreement” between the Trust and Bank dated as of the date hereof as it may be amended from time to time.

Custodian : means Bank acting in the capacity as custodian for the Trust.

Deposit Securities : means the designated basket of securities that must be tendered to a Bullish ProShares ETF Series by an Authorized Participant to purchase one or more Creation Units of the ETF Shares of that ETF Series except as otherwise agreed by the Trust and an Authorized Participant with respect to a customized basket of securities.

Distributor : means the party identified as distributor in the Trust prospectus that signs the Authorized Participant Agreement on behalf of the Trust.

DTC : means The Depository Trust Company, a limited purpose trust company organized under the law of the State of New York.

DTC Participant : means a “participant” as such term is defined in the rules of DTC.

DTC Participant Account : means an “account” as such term is defined in the rules of DTC.

ETF Series : means the series of the Trust that are listed on Exhibit A hereto, as amended from time to time.

ETF Shares : means the shares of each ETF Series.

Index Receipt Agent : means Bank acting in the capacity as “index receipt agent”, as such term is defined in the rules of NSCC, for the Trust.

Instructions : means instructions which: (i) contain all necessary information required by Bank to enable Bank to carry out the Instructions; (ii) are received by Bank in writing or via Bank’s electronic instruction system, SWIFT, telephone, tested telex, facsimile or such other methods as are for the time being agreed by the Trust (or an Authorized Person) and Bank; and (iii) Bank reasonably believes have been given by an Authorized Person or are transmitted with proper testing or authentication pursuant to terms and conditions which Bank may specify.

Liabilities : means any liabilities, losses, claims, costs, damages, penalties, fines, obligations, or expenses of any kind whatsoever (including, without limitation, reasonable attorneys’, accountants’, consultants’ or experts’ fees and disbursements).

NSCC : National Securities Clearing Corporation, a clearing agency that is registered with the Securities and Exchange Commission (the “SEC”).

Outside the Clearing Process : means processing purchase and redemption orders concerning Creation Units and Deposit Securities and Redemption Securities for settlement exclusively through DTC or, when the settlement is not DTC eligible, as a window delivery to the offices of the Custodian.

Redemption Securities : means the designated basket of securities provided by the Trust to an Authorized Participant redeeming a Creation Unit. On any given day, the Redemption Securities may or may not be identical to the Deposit Securities.

Shareholder : means DTC or its nominee. A single global certificate for each ETF Series will be issued in the name of DTC or its nominee. DTC or its nominee shall be the sole registered holder of ETF Shares of each ETF Series.

Transaction Fee : means a transaction fee imposed by the Trust and payable by the Authorized Participant in connection with the issuance or redemption of Creation Units.

Transfer Agent : means Bank acting in the capacity as transfer agent for the ETF Shares of each ETF Series of the Trust.

Trust : means ProShares Trust, a Delaware business trust and registered investment company under the 1940 Act.

2. APPOINTMENT . The Trust hereby appoints Bank to provide services for the Trust, as described hereinafter, subject to the supervision of the Board of Trustees of the Trust (the “Board”), on the terms set forth in this Agreement. Bank accepts such appointment and agrees to furnish the services herein set forth in return for the compensation as provided in Section 6 of this Agreement.

3. REPRESENTATIONS AND WARRANTIES.

(a) Bank represents and warrants to the Trust that:

(i) Bank is a corporation, duly organized and existing as a banking corporation under the laws of the State of New York;

(ii) Bank is duly qualified to carry on its business in the State of New York;

(iii) Bank is empowered under applicable laws and by its charter and by-laws to enter into and perform the services described in this Agreement;

(iv) all requisite corporate action has been taken to authorize Bank to enter into and perform this Agreement;

(v) Bank has, and shall continue to have, access to the facilities, personnel and equipment required to fully perform its duties and obligations hereunder;

(vi) no legal or administrative proceedings have been instituted or threatened against Bank which would impair Bank’s ability to perform its duties and obligations under this Agreement; and

(vii) Bank’s entrance into this Agreement shall not cause a material breach or be in material conflict with any other agreement or obligation of Bank or any law or regulation applicable to Bank;

(viii) Bank, has established pursuant to the Bank Secrecy Act, and other U.S. laws and regulations applicable to it, Anti-Money Laundering (AML) compliance programs, including but not limited to: (1) the development of internal policies, procedures, and controls; (2) the designation of a compliance officer; (3) the implementation of ongoing employee training programs; and (4) the creation of an independent audit function to test such programs.

(ix) Bank has a customer identification program (CIP) consistent with the rules under section 326 of the USA Patriot Act and application of such program in respect of the services under this Agency Services Agreement shall be limited to the review of the Trust as a customer of Bank. The Depository Trust Company is exempt from CIP requirements;

(x) To the extent that Bank is required to effect currency transactions related to the services under this Agency Services Agreement, Bank, in respect of those transactions, will (1) file all necessary

anti-money laundering reports including, but not limited to, currency transaction reports and suspicious activity reports, and (2) screen all new and existing customers against the Office of Foreign Asset Control list and any other government list that is or becomes required under the USA Patriot Act, and (3) allow appropriate regulators to examine its anti-money laundering books and records.

(xi) Bank: (i) has in place policies and procedures reasonably designed to ensure compliance with the transfer agent rules of the Securities Exchange Act of 1934, as amended; (ii) will upon request provide certifications and any updates to such policies and procedures to the Trust’s Chief Compliance Officer, and (iii) will maintain appropriate records in accordance with said transfer agent rules.

(xii) Bank will comply with the Trust’s portfolio holdings disclosure policy (a copy of which is attached hereto and marked Exhibit B).

(xiii) Bank is not affiliated with the American Stock Exchange and other listing exchange or any underlying index provider for any ETF Series.

Bank further agrees that upon the Trust’s request, but no more frequently than annually, to provide the Trust’s Chief Compliance Officer with an assurance letter regarding compliance with Bank’s AML programs.

(b) The Trust represents and warrants to Bank that:

(i) the Trust is duly organized and existing and in good standing under the laws of the State of Delaware;

(ii) the Trust is empowered under applicable laws and by its charter document and by-laws to enter into and perform this Agreement;

(iii) all requisite proceedings have been taken to authorize the Trust to enter into and perform this Agreement;

(iv) the Trust is an open-end management investment company properly registered under the 1940 Act,;

(v) a registration statement under the Securities Act of 1933, as amended (“1933 Act”), and the 1940 Act on Form N-1A has been filed and shall be effective and shall remain effective during the term of this Agreement, and all necessary filings under the laws of the states shall have been made and shall be current during the term of this Agreement;

(vi) no legal or administrative proceedings have been instituted or threatened which would impair the Trust’s ability to perform its duties and

obligations under this Agreement, other than as described in the Trust’s registration statement;

(vii) the Trust’s registration statement complies in all material respects with the 1933 Act and the 1940 Act (including the rules and regulations thereunder) and none of the Trust’s prospectuses and/or statements of additional information contain any untrue statement of material fact or omit to state a material fact necessary to make the statements therein not misleading; and

(viii) the Trust’s entrance into this Agreement shall not cause a material breach of or be in material conflict with any other agreement or obligation of the Trust or any law or regulation applicable to it.

(ix) the Trust has established pursuant to the USA Patriot Act and other U.S. laws and regulations applicable to it, Anti-Money Laundering (AML) compliance programs, including but not limited to: (1) the development of internal policies, procedures, and controls; (2) the designation of a compliance officer; (3) the implementation of ongoing employee training programs; and (4) the creation of an independent audit function to test such programs; (5) a customer identification program consistent with the rules under section 326 of the USA Patriot Act; (6) filing of all necessary anti-money laundering reports including, but not limited to, currency transaction reports and suspicious activity reports, (7) screening all new and existing customers against the Office of Foreign Asset Control list and any other government list that is or becomes required under the USA Patriot Act, and (8) allows for appropriate regulators to examine its anti-money laundering books and records. The Trust further agrees to provide upon Bank’s request, but no more frequently than annually, the Trust’s Chief Compliance Officer’s assurance letter regarding compliance with Trust’s AML programs. It is understood that the Trust may retain one or more service providers to implement the foregoing requirements on its behalf.

4. DELIVERY OF DOCUMENTS.

The Trust shall promptly furnish to Bank such copies, properly certified or authenticated, of contracts, documents and other related information that Bank may reasonably request or require to properly discharge its duties. Such documents may include but are not limited to the following:

(i) Resolutions of the Board of Trustees of the Trust authorizing the appointment of Bank to provide certain services to the Trust;

(ii) The Trust’s charter documents;

(iii) The Trust’s by-laws;

(iv) The Trust’s Notification of Registration on Form N-8A under the 1940 Act as filed with the SEC;

(v) The Trust’s registration statement including exhibits, as amended, on Form N-1A (the “Registration Statement”) under the 1933 Act and the 1940 Act, as filed with the SEC;

(vi) The Trust’s application for an Order of Exemption with respect to the ETF Series and ETF Shares, and the Order of Exemption of the SEC granting the relief requested in the application.

(vii) Opinions of counsel for information purposes only and regarding the Trust securities issuances- and auditors’ reports;

(viii) The Trust’s prospectuses and statements of additional information relating to all funds, series, portfolios and classes, as applicable, and all amendments and supplements thereto (such prospectuses and statements of additional information and supplements thereto, as presently in effect and as from time to time hereafter amended and supplemented, herein referred to as the “Prospectuses”);

(ix) The Trust’s current and ongoing annual and semi-annual reports; and

(x) Such other agreements as the Trust may enter into from time to time including securities lending agreements, futures and commodities account agreements, brokerage agreements and options agreements.

Upon the Trust’s request , from time to time, Bank shall promptly furnish to the Trust a copy of Bank’s most current SAS 70 report prepared by Bank’s external auditors on Bank’s system of internal accounting controls.

5. SERVICES PROVIDED.

Bank shall provide the following services subject to the control, direction and supervision of the Board of Trustees of the Trust and its designated agents and in compliance with the objectives, policies and limitations set forth in the Trust’s Registration Statement, charter document and by-laws; all applicable laws, rules and regulations; and all resolutions and policies implemented by the Board:

(i) Transfer Agency Services described in Schedule A to this Agreement;

(ii) Index Receipt Agent Services described in Schedule B to this Agreement, and

(iii) such other services in connection with ETF Shares as the parties may mutually agree in writing.

Such services shall be performed by Bank in accordance with the service standards set forth in Schedule A and Schedule B to this Agreement, respectively, and in accordance with any operating procedures that may be agreed upon by the parties hereto.

6. FEES AND EXPENSES.

(a) As compensation for the Agency Services rendered to the Trust pursuant to this Agreement the Trust shall pay to Bank the fees referenced in the Fee Schedule to the Custody Agreement. The Agency Services fees are to be billed quarterly at the end of each calendar quarter and shall be due and payable upon receipt of the invoice. Upon any termination of the provision of Agency Services under this Agreement before the end of any quarter, the fee for the part of the quarter before such termination shall be prorated according to the proportion which such part bears to the full quarterly period and shall be payable upon the date of such termination.

(b) Bank shall render, after the close of each quarter in which services have been furnished, a statement reflecting all of the fees and expenses for such quarter). Fees and expenses remaining unpaid after thirty (30) days from the date of receipt of the applicable statement shall bear interest, from the date of the statement to the date of repayment to Bank by the Trust, at the Federal Funds Rate + 50 basis points (0.50%) and all costs and expenses of effecting collection of any such sums, including reasonable attorney’s fees, shall be paid by the Trust to Bank. In the event that the Trust disputes a fee or fees for a particular billing period and it is determined by the parties that an adjustment of the fees in favor of the Trust is in order, interest shall not be charged on the amount of the fee that is the subject of such adjustment, provided that the adjusted amount due is paid promptly.

(c) In the event that the Trust is more than sixty (60) days delinquent in payments of monthly billings in connection with this Agreement (with the exception of specific amounts which may be contested in good faith by the Trust), this Agreement may be terminated by Bank upon thirty (30) days’ written notice to the Trust. The Trust must notify Bank in writing of any disputed amounts within thirty (30) days of its receipt of the billing for such amounts. Amounts disputed in good faith are not due and payable while they are being investigated.

7. INSTRUCTIONS.

(a) Trust authorizes Bank to accept and act upon any Instructions received by it without inquiry. Trust will indemnify Bank Indemnitees against, and hold each of them harmless from, any Liabilities that may be imposed on, incurred by, or asserted against Bank Indemnitees as a result of any action or omission taken in accordance with any Instructions or other directions upon which Bank is authorized to rely under the terms of this Agreement.

(b) Unless otherwise expressly provided, all Instructions shall continue in full force and effect until canceled or suspended.

(c) Bank may (in its sole discretion and without affecting any part of this Section 7) seek reasonable clarification or confirmation of an Instruction from an Authorized Person and may decline to act upon the Instruction if it does not receive clarification or confirmation satisfactory to it. Bank shall not be liable for any loss arising from any delay while it seeks such clarification or confirmation, except to the extent that such delay results from the bad faith or willful misconduct of Bank.

(d) Either party may record any of their telephonic communications with the other party.

8. LIMITATIONS OF LIABILITY AND INDEMNIFICATION.

(a) Bank shall use reasonable care in performing its duties under this Agreement.

(b) Bank shall be liable to the Trust for its direct damages to the extent they result from Bank’s negligence, bad faith or willful misconduct in performing its duties as set out in this Agreement. Nevertheless, under no circumstances shall Bank be liable for any indirect, special or consequential damages (including, without limitation, lost profits) of any form, whether or not foreseeable and regardless of the type of action in which such a claim may be brought.

(c) Without limiting subsections (a) and (b) above, Bank shall not be responsible for, and the Trust shall indemnify and hold Bank, its officers, employees and agents harmless from and against, any and all Liabilities, incurred by Bank, any of its officers, employees or agents, or the Trust’s agents in the performance of its/their duties hereunder, including but not limited to those arising out of or attributable to:

(i) any and all actions of Bank or its officers, employees or agents required to be taken pursuant to this Agreement;

(ii) the reasonable reliance on or use by Bank or its officers, employees or agents of information, records, or documents which are received by Bank or its officers, employees or agents and furnished to it or them by or on behalf of the Trust, and which have been prepared or maintained by the Trust or any third party on behalf of the Trust;

(iii) the Trust’s refusal or failure to comply with the terms of this Agreement or the Trust’s lack of good faith, or its actions, or lack thereof, involving negligence or willful misconduct;

(iv) the breach of any representation or warranty of the Trust hereunder;

(v) reliance by Bank, its officers, employees or agents on any share certificates which are reasonably believed to bear the proper manual or facsimile signature of an Authorized Person;

(vi) any delays, inaccuracies, errors in or omissions from information or data provided to Bank by data, corporate action or pricing services, depositories or clearing systems, or securities brokers or dealers;

(vii) the offer or sale of ETF Shares by the Trust in violation of any requirement under the Federal securities laws or regulations or the securities laws or regulations of any state, or in violation of any stop order or other determination or ruling by any Federal agency or any state agency with respect to the offer or sale of such ETF Shares in such state (1) resulting from activities, actions, or omissions by the Trust or its other service providers and agents, or (2) existing or arising out of activities, actions or omissions by or on behalf of the Trust prior to the effective date of this Agreement;

(viii) any failure of the Trust’s registration statement to comply with the 1933 Act and the 1940 Act (including the rules and regulations thereunder) and any other applicable laws, or any untrue statement of a material fact or omission of a material fact necessary to make any statement therein not misleading in the Trust’s Prospectuses;

(ix) the actions taken by the Trust, the Distributor or by the Trust’s investment advisers in compliance with applicable securities, tax, commodities and other laws, rules and regulations, or the failure to so comply; and

(x) all actions, omissions, or errors caused by third parties to whom Bank or the Trust have assigned any rights and/or delegated any duties under this Agreement at the request of or as required by the Trust or the Distributor, or by the Trust’s investment advisers, administrator or sponsor.

Notwithstanding subsections (a) above, Bank shall have no duty or obligation of reasonable care with respect to any of the activities described in clauses (vii), (viii), (ix) or (x) of this subsection (c).

(d) The Trust shall defend Bank or, at the Trust’s option, settle any claim, demand or cause of action, whether groundless or otherwise, that the ETF Shares or any of the services provided herein for the Trust infringes on, violates or misappropriates any patent, copyright, trademark, trade secret or any other proprietary right, and shall indemnify and hold harmless Bank, its officers, employees and agents against all Liabilities, including court and settlement costs incurred by Bank or any of them as a result of or relating to such claim, demand or cause of action (“Third Party Claim”). Bank shall notify the Trust in writing of any such Third Party Claim, and give the Trust all reasonably necessary information and assistance to defend or settle such Third Party Claim. Bank may participate in the defense or settlement of the Third Party Claim but shall not enter into any settlement with respect to such Third Party Claim without the prior written consent of the Trust, which consent shall not be withheld in a manner contrary to reasonable business practice.

(e) This Section 8 shall survive the termination of this Agreement, regardless of the party that terminated the Agreement or the reason therefor.

9. TERM. This Agreement shall become effective on the date first hereinabove written. The Agreement may be modified or amended from time to time by mutual agreement between the parties hereto. This Agreement shall continue in effect until terminated by either party and may be terminated without penalty (i) by either party upon the provision of at least sixty (60) days’ advance written notice, or (ii) by mutual agreement of the parties. The terminating party in its notice to the other party shall specify the date of termination. If either of the Mutual Funds Service Agreement or the Custody Agreement is terminated prior to the date of any termination hereunder, then this Agreement shall automatically terminate on the date that the Mutual Funds Service Agreement or Custody Agreement terminates, anything herein to the contrary notwithstanding. Upon termination of this Agreement, the Trust shall pay to Bank such compensation and any reasonable out-of-pocket or other reimbursable expenses which may become due or payable under the terms of this Agreement as of the date of termination or, if Bank, with the written consent of the Trust, continues to perform any one or more of the services contemplated by this Agreement, after the date that the provision of such services ceases, whichever is later.

10. NOTICES. Any notice required or permitted hereunder shall be in writing and shall be deemed effective on the date of personal delivery (by private messenger, courier service or otherwise) or upon confirmed receipt of telex or facsimile, whichever occurs first, or upon receipt if by mail to the parties at the following address (or such other address as a party may specify by notice to the other):

If to the Trust:

ProShares Trust

c/o ProFunds Advisors LLC

7501 Wisconsin Avenue,

Suite 1000,

Bethesda, Maryland 20814

Attention: General Counsel

Telephone: (240) 497-6504

Fax: (240) 497-6530

If to Bank in its capacity as Transfer Agent to:

JPMorgan Chase Bank, N.A.

1 JPMorgan Intl Plaza/11

14201 Dallas Pkwy, Floor 11,

Dallas, TX 752542917

Attention: Violet Smith

Telephone: (469) 477-1071

Fax: (469) 477-1894

If to Bank in its capacity as Index Receipt Agent to:

JPMorgan Chase Bank, N.A.

3 MetroTech Center 8 ^th Floor

Brooklyn New York 11245

Attention: Adrian Dmytrenko

Telephone: (718) 242-0866

Fax: (718) 242-2240

If to Bank in its capacity as Custodian, as provided for in the Custody Agreement.

11. WAIVER. The failure of a party to insist upon strict adherence to any term of this Agreement on any occasion shall not be considered a waiver nor shall it deprive such party of the right thereafter to insist upon strict adherence to that term or any term of this Agreement. Any waiver must be in writing signed by the waiving party.

12. FORCE MAJEURE . Bank shall maintain and update from time to time business continuation and disaster recovery procedures with respect to its Transfer Agent, Index Receipt Agent and domestic custody business that it determines from time to time meet reasonable commercial standards. Bank shall have no liability, however, for any damage, loss or expense of any nature that the Trust may suffer or incur, caused by an act of God, fire, flood, civil or labor disturbance, war, act of any governmental authority or other act or threat of any authority (de jure or de facto), legal constraint, fraud or forgery (except to the extent that such fraud or forgery is attributed to Bank or to Bank’s employees), malfunction of equipment or software (except to the extent such malfunction is primarily attributable to Bank’s negligence or willful misconduct in selecting, operating or maintaining the equipment or software), failure of or the effect of rules or operations of any external funds transfer system, inability to obtain or interruption of external communications facilities, or any cause beyond the reasonable control of Bank (including without limitation, the non-availability of appropriate foreign exchange), provided that Bank has notified the Trust promptly when it becomes aware of a specific occurrence or event and, subject to the circumstances, has used its best efforts to resolve the adverse effects of the specific occurrence or event.

13. AMENDMENTS. This Agreement may only be modified or amended from time to time by mutual written agreement between the parties.

14. ASSIGNMENT. Bank may not assign and delegate this Agreement and its rights and obligations hereunder without the prior written consent of the Trust, except that any corporation or banking association into which Bank may be merged or with which Bank may be consolidated, or any corporation or banking association resulting from any merger or consolidation to which Bank shall be a party, or any corporation or banking association succeeding to Bank’s corporate custody business, shall succeed to all Bank’s rights, obligations and immunities hereunder without the execution or filing of any consent or further act on the part of any of the parties hereto, anything herein to the contrary notwithstanding.

15. SEVERABILITY. If any provision of this Agreement is invalid or unenforceable, the balance of the Agreement shall remain in effect, and if any provision is inapplicable to any person or circumstance it shall nevertheless remain applicable to all other persons and circumstances.

16. GOVERNING LAW AND JURISDICTION. This Agreement shall be construed, regulated, and administered under the laws of the United States or State of New York, as applicable, without regard to New York’s principles regarding conflict of laws and to the extent applicable, the choice of law forum provisions contained in New York General Obligations Law Sections 5-1401 and 5-1402, respectively. The United States District Court for the Southern District of New York shall have the sole and exclusive jurisdiction over any lawsuit or other judicial proceeding relating to or arising from this Agreement. If that court lacks federal subject matter jurisdiction, the Supreme Court of the State of New York, New York County shall have sole and exclusive jurisdiction. Either of these courts shall have proper venue for any such lawsuit or judicial proceeding, and the parties waive any objection to venue or their convenience as a forum. The parties agree to submit to the jurisdiction of either of the courts specified and to accept service of process to vest personal jurisdiction over them in such courts. The parties further hereby knowingly, voluntarily and intentionally waive, to the fullest extent permitted by applicable law, any right to a trial by jury with respect to any such lawsuit or judicial proceeding arising or relating to this Agreement or the transactions contemplated hereby.

17. USE OF BANK NAME. The Trust shall not use Bank’s name in any offering material, shareholder report, advertisement or other material relating to the Trust, other than for the purpose of merely identifying and describing the functions of Bank hereunder, in a manner not approved by Bank in writing prior to such use; provided, however, that Bank shall consent to all uses of its name required by the SEC, any state securities commission, or any federal or state regulatory authority; and provided, further, that in no case shall such approval be unreasonably withheld.

18 COUNTERPARTS. This Agreement may be executed in counterparts each of which shall be an original and together shall constitute one and the same agreement.

19. HEADINGS. Headings are for convenience only and are not intended to affect interpretation. References to sections are to sections of this Agreement and references to sub-sections and paragraphs are to sub-sections of the sections and paragraphs of the sub-sections in which they appear.

20. ENTIRE AGREEMENT. This Agreement, including the Schedules and Exhibits hereto, and also including (i) the Custody Agreement to the extent custody services are provided by Bank in conjunction with Index Receipt Agent Services for ETF Shares, and (ii) the Fund Services Agreement to the extent fund accounting and administration services are provided by Bank in conjunction with the Transfer Agency Services for ETF Shares, sets out the entire Agreement between the parties in connection with the subject matter, and this Agreement supersedes any other agreement, statement, or representation relating to the services provided herein for ETF Shares, whether oral or written.

21. CONFIDENTIALITY. Bank will not disclose the terms and conditions of this Agreement or any confidential or proprietary information concerning the business and operation of the Trust and the ETF Series except as is reasonably necessary to provide services to the Trust pursuant to this Agreement, as required by law or regulation, or with the prior written consent of the Trust. The Trust agrees to keep the terms and conditions of this Agreement confidential and, except where disclosure is required by law or regulation, will only disclose it (or any part of it) with the prior written consent of Bank.

22. SEVERAL OBLIGATIONS OF THE ETF SERIES. This Agreement is executed on behalf of the Board of Trustees of the Trust as Trustees and not individually, and the obligations of this Agreement are not binding upon any of the Trustees, officers or shareholders personally but are binding only upon the assets and property of the ETF Series. With respect to the obligations of each ETF Series arising hereunder, Bank shall look for payment or satisfaction of any such obligation solely to the assets of the ETF Series to which such obligation relates as though Bank had separately contracted by separate written instrument with respect to each ETF Series, and in no event shall Bank have recourse, by set-off or otherwise, to or against any assets of any other ETF Series.

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their officers designated below as of the date first written above.


PROSHARES TRUST

By:
Name:
Title:

JPMORGAN CHASE BANK, N.A.

By:
Name:
Title:

AGENCY SERVICES AGREEMENT

SCHEDULE A

TRANSFER AGENCY SERVICES

FOR ETF SERIES

Following are the Transfer Agency Services that shall be provided by Bank for the Trust in its capacity as Transfer Agent for each ETF Series.

A.	Issuance and Redemption of ETF Shares of each ETF Series.

1. Pursuant to such purchase orders that Index Receipt Agent shall receive from the Distributor or the Trust, Transfer Agent shall register the appropriate number of book entry only ETF Shares in the name of DTC or its nominee as the sole shareholder (the “Shareholder”) for each ETF Series and deliver the ETF Shares of the applicable ETF Series in Creation Units on the business day next following the trade date to the DTC Participant Account of the Custodian for settlement. It is understood and agreed that Bank, in its capacity as Transfer Agent, Index Receipt Agent or Custodian, shall not be responsible for determining whether any order, if accepted, shall result in the depositor of the Creation Deposit owning or appearing to own eighty percent (80%) or more of the outstanding ETF Shares of such ETF Series.

2. Pursuant to such redemption orders that Index Receipt Agent shall receive from the Distributor, the Trust or its agent, Transfer Agent shall redeem the appropriate number of ETF Shares of the applicable ETF Series in Creation Units that are delivered to the designated DTC Participant Account of Custodian for redemption and debit such shares from the account of the Shareholder on the register of the applicable ETF Series.

3. Transfer Agent shall issue ETF Shares of the applicable ETF Series in Creation Units for settlement with purchasers through DTC as the purchaser is authorized to receive. Beneficial ownership of ETF Shares shall be shown on the records of DTC and DTC Participants and not on any records maintained by the Transfer Agent. In issuing ETF Shares of the applicable ETF Series through DTC to a purchaser, Transfer Agent shall be entitled to rely upon the latest Instructions that are received from the Trust or its agent by the Index Receipt Agent (as set forth in Schedule B, Section A. Subsection 3(b) of this Agreement) concerning the issuance and delivery of such shares for settlement.

4. Transfer Agent shall not issue any ETF Shares for a particular ETF Series where it has received an Instruction from the Trust or written notification from

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any federal or state authority that the sale of the ETF Shares of such ETF Series has been suspended or discontinued, and Transfer Agent shall be entitled to rely upon such Instructions or written notification.

5. Upon the issuance of ETF Shares of any ETF Series as provided herein, Transfer Agent shall not be responsible for the payment of any original issue or other taxes, if any, required to be paid by the Trust in connection with such issuance.

6. ETF Shares of any ETF Series may be redeemed in accordance with the procedures set forth in the Prospectus of the Trust and in the Authorized Participant Agreement and Bank shall duly process all redemption requests in accordance with such procedures.

B.	Payment of Dividends and Distributions on ETF Shares of each ETF Series.

1. Bank shall prepare and make payments for dividends and distributions declared by the Trust on behalf of the ETF Shares of the applicable ETF Series.

2. The Trust or its duly qualified agent identified to Bank (“Agent”) shall promptly notify both the Custodian and the Transfer Agent of the declaration of any dividend or distribution in respect of ETF Shares of each ETF Series. The Trust or the Agent shall furnish to Bank a statement signed by an Authorized Person: (i) indicating that dividends have been declared on a specific periodic basis and Instructions specifying the date of the declaration of such dividend or distribution, the date of payment thereof, the record date as of which the Shareholder shall be entitled to payment, the total amount payable to the Shareholder and the total amount payable to Bank as Transfer Agent on the payment date; or (ii) setting forth the date of the declaration of any dividend or distribution by an ETF Series in respect of ETF Shares, the date of payment thereof, the record date as of which the Shareholder is entitled to payment, and the amount payable per share to the Shareholder as of that date and the total amount payable to Transfer Agent on the payment date. The Trust’s Board of Trustees shall approve the Authorized Persons to provide such information to Bank.

3. Upon its receipt from the Trust or the Agent of the information set forth in Subsection 2 immediately above, the Transfer Agent, based upon the amount of ETF Shares for the applicable ETF Series outstanding on its records, shall calculate the total dollar amount of the dividend or distribution on each ETF Series and notify the Trust or the Agent of this amount. The Trust or the Agent shall verify this total dollar amount as calculated by the Transfer Agent. Provided the Trust or the Agent is in agreement with the Transfer Agent, the Trust or the Agent shall instruct the Custodian to place in a dividend disbursing account maintained by the Transfer Agent funds equal to the total cash amount of the dividend or distribution to be paid out in respect of ETF Shares of each ETF Series. Should Custodian determine that it does not have sufficient cash in the

A-2

Custody Account to pay the total amount of the dividend or distribution to the Transfer Agent, Custodian shall advise the Trust and the Trust shall either adjust the rate of the dividend or distribution or provide additional cash to Custodian for credit to the dividend disbursing account maintained by Transfer Agent. The Transfer Agent shall credit such dividend or distribution to the account of the Shareholder.

4. Should Transfer Agent not receive from Custodian sufficient cash to make payment as provided in the immediately preceding Subsection, Transfer Agent or Custodian shall notify the Trust, and Transfer Agent shall withhold payment to the Shareholder until sufficient cash is provided to Bank and Bank shall not be liable for any claim arising out of such withholding.

C.	Recordkeeping.

1. Bank shall create and maintain such records which the Bank is, or may be, required to create and maintain in accordance with all laws, rules and regulations applicable to Bank as a registered transfer agent, including, without limitation, Section 17A of the Securities Exchange Act of 1934, as amended (the “1934 Act”), and Rules 31a-1 and 31a-2 under the 1940 Act. Bank agrees to make all books and records available for inspection and use by the Trust or by the SEC at reasonable times, and to otherwise keep all such books and records confidential. Bank shall maintain all such books and records for at least six years or for such other period as Bank and the Trust may mutually agree or as required by all applicable laws, rules and regulations.

2. Upon reasonable notice by the Trust, Bank shall make available during regular business hours all records and other data created and maintained by Bank as Transfer Agent for reasonable audit and inspection by the Trust, or any person retained by the Trust.

3. Bank shall record the issuance of ETF Shares of each ETF Series and maintain, pursuant to Rule 17Ad-10(e) under the 1934 Act, a record of the total number of ETF Shares of each ETF Series that are authorized, based upon data provided to Bank by the ETF Series, issued and outstanding. Also, Bank shall provide the Trust on a regular basis with the total number of ETF Shares authorized, issued and outstanding in respect of each ETF Series but shall not be responsible for, when recording the issuance of ETF Shares of each ETF Series, monitoring the issuance of such shares or compliance with any laws relating to the validity of the issuance or the legality of the sale of such shares.

A-3

D.	Establish Procedures.

Procedures applicable to the transfer agent services to be performed hereunder may be established from time to time by agreement between the Trust and Bank. Bank shall have the right to utilize any shareholder accounting and record-keeping systems that, in its reasonable opinion, enables it to perform any services to be performed hereunder.

A-4

AGENCY SERVICES AGREEMENT

SCHEDULE B

INDEX RECEIPT AGENT

AND RELATED CUSTODY SERVICES FOR ETF SERIES

Following are the Services that shall be provided by Bank for the Trust in respect of each ETF Series. Bank shall perform these services in conjunction with the custody services that are provided by Bank, as Custodian, to each ETF Series under the terms of the Custody Agreement. Bank shall be entitled to all the protective provisions in the Custody Agreement in respect of its duties and its performance as Index Receipt Agent and Custodian for the settlement of purchases and redemptions of Creation Units of each ETF Series.

A.	Index Receipt Agent Services for Bullish ProShares.

1. Bank, with the assistance of the Trust, shall make application to NSCC to be the Index Receipt Agent on behalf of the Trust for the processing, clearance and the settlement of purchase and redemption orders for ETF Shares of each Bullish ProShares and Creation Deposits through the facilities of NSCC and DTC.

2. The Distributor, on behalf of the Trust, shall enter into an Authorized Participant Agreement in the form of Exhibit B hereto with each Authorized Participant, which Bank, in its capacity as Index Receipt Agent, shall acknowledge.

3. In connection with the procedures that may be established from time to time between Bank and the Trust on behalf of each Bullish ProShares for the processing, clearance and settlement of the purchase and redemption of Creation Units of ETF Shares of the applicable ETF Series through the Clearing Process, Bank shall:

(a) receive from the Distributor daily, a computer generated file that is in form and substance acceptable to NSCC containing a list of the Deposit Securities for each ETF Series, the Balancing Amount and the Transaction Fee, and transmit the file as received from the Distributor to NSCC;

(b) receive from the Distributor on each trade date a computer generated file that is in form and substance acceptable to NSCC and that contains purchase orders from Authorized Participants that have been received and accepted by the Distributor on behalf of the Trust for each ETF Series, for the purchase of Creation Units against delivery of Deposit Securities and a Cash Component; transmit the file of purchase orders as received from the Distributor to NSCC; receive back from NSCC the file of purchase orders enhanced with NSCC generated prices for the Deposit Securities contained in the

file and deliver the enhanced file to Custodian for settlement; and, pursuant to such purchase orders, instruct the Transfer Agent to issue the appropriate number of ETF Shares of the applicable ETF Series for deposit to the Custodian’s DTC Participant Account;

(c) receive from the Distributor on each trade date a computer generated file that is in form and substance acceptable to NSCC and that contains redemption orders from Authorized Participants that have been received and accepted by the Distributor on behalf of the Trust for each Fund; transmit the file of redemption orders as received from the Distributor to NSCC; receive back from NSCC the file of redemption orders enhanced with NSCC generated prices for the Redemption Securities that are in the file and deliver the enhanced file to Custodian for settlement; and, pursuant to such redemption orders, instruct the Transfer Agent to redeem the appropriate number of ETF Shares of the applicable ETF Series in Creation Units and reduce the account of the Shareholder accordingly; and

(d) at the appropriate times, cause to be paid over to Authorized Participants Balancing Amounts on the purchase or redemption of Creation Units, as instructed by the Distributor or the Trust on behalf of each ETF Series.

4. Bank, from time to time, may receive from the Distributor a computer generated file similar in form and content to the file described in Subsection 3(a) above, but meeting NSCC’s requirements for the delivery of a customized basket of Deposit Securities or Redemption Securities, in respect of one or more of the ETF Series. Bank shall transmit this file as received from the Distributor to NSCC.

5. The Trust understands and agrees that all risk associated with the processing, clearance and settlement of the purchase and redemption of ETF Shares, Deposit Securities and Redemption Securities and cash through the Clearing Process shall be that of the Trust and each ETF Series, irrespective of whether in effecting such purchases and redemptions for the Trust on behalf of each ETF Series through the Clearing Process, Bank, as a member of NSCC, is acting as principal or as agent; and, in respect hereof, the Trust and each Series, shall be bound by all the rules and procedures of NSCC and DTC as though it were the member or participant of such clearing and settlement systems.

6. A creation order may be rejected by the Distributor or the Trust where a deposit basket does not contain securities specified, and the Bank shall monitor for such event and promptly advise the Distributor and the Trust of same.

B	Delivery of Bearish ProShares Creation and Redemption Orders.

Purchase and redemption orders for Creation Units for all Bearish ProShares will be transmitted to Bank by Distributor on behalf of the Trust on each trading day in the same computer generated files that contain Bullish ProShares purchase and redemption orders (referred to in paragraphs A3(b) and A3(c) above). Each such purchase and redemption order shall contain the CUSIP number of the particular Bullish and Bearish ProShares.

Prior to Bank’s delivery to NSCC of these computer generated files that it has received from Distributor and containing Bullish and Bearish ProShares trades, Bank shall remove from these files by their identifying CUSIP numbers the Bearish ProShares orders at DTC and post these Bearish ProShares orders to Bank’s custody system for settlement to the Bank’s designated participant account at DTC.

C.	Outside the Clearing Process.

The following transactions shall be handled Outside the Clearing Process:

(i)

the settlement of purchase and redemption orders for Bearish ProShares;

(ii)

any purchase or redemption of ETF Shares that the Trust, its Distributor or another authorized agent shall instruct Bank to settle Outside the Clearing Process; and

(iii)

any security issue that is part of a Creation Deposit or redemption of ETF Shares and that according to NSCC rules is deemed to be ineligible for the Clearing Process, including securities that are not eligible to be settled through DTC.

All such transactions shall be effected by Bank on a delivery versus payment and receive versus payment basis through DTC and according to DTC’s rules, and the Trust or the ETF Series shall provide to Bank the information and terms that are necessary to settle each transaction, including the cash value of each security settlement, unless the Trust or the ETF Series Instruction is that delivery is to be made free of payment; provided, however, that any security that is not DTC-eligible shall be settled as a window delivery pursuant to street practice. All such transactions shall be effected by Bank as Custodian and subject to the terms of the Custody Agreement.

D.	Settlement of Cash Component.

Any Cash Component to a particular transaction shall be handled over the funds transfer wire (Fedwire) or as part of Bank’s overall daily net cash settlement at DTC.

E.	Creation Deposits through the Clearing Process: Allocation of Fails; Posting of Accounts.

1. The Trust recognizes that fails to receive (including partial fails) may occur from time to time with respect to one or more of the security issues in a basket of Deposit Securities settled through the Clearing Process. The Trust acknowledges and agrees that, whenever a fail to receive shall occur on a settlement date, Bank shall book to a single control account maintained for all funds for which Bank provides Index Receipt Agent services (the “Control Account”), the quantity of the security that it failed to receive (each such fail a “short receive position”) and the cash value of that short position that it receives from NSCC (and that NSCC, pursuant to its rules, marks to

market daily) pending settlement. Bank shall not post to any ETF Series account any cash that it receives from NSCC on a short receive position pending settlement.

2 Bank shall make available to the Trust a daily listing of all short receive positions that are in the Control Account and that relate to any ETF Series. Bank will allocate daily, on a pro-rata or other basis deemed by it to be fair and equitable, short receive positions in the same security that is common to the securities accounts of such ETF Series and to the securities accounts of such other funds for whom Bank is acting as Index Receipt Agent. The Trust agrees that any such allocation shall be conclusive on the Trust and the affected ETF Series. When the Deposit Securities that are subject of the short receive positions are received by Bank, they will be credited by Bank on a FIFO basis to the custody accounts of the applicable funds. Bank shall not process a securities transaction in a security having a short receive position in the Control Account to the extent the Trust does not have a sufficient quantity of that security in its ETF Series accounts with Bank to settle the transaction. Custodian shall post Deposit Securities to the applicable ETF Series custody accounts on a contractual settlement basis pursuant to the terms of the Custody Agreement.

3 Should a short receive position in a security remain in the Control Account for two (2) or more NSCC business days, Bank, on notice and consultation with Trust, may elect to exercise NSCC’s buy-in rules with respect to that short position. If an ETF Series needs to sell a short security in its account, the Trust may request that Bank exercise a buy-in of the short security under applicable NSCC rules.

F	Redemptions through the Clearing Process: Delivery Fails; Posting of Cash.

1. The Trust recognizes that on the redemption of Creation Units of an ETF Series through the Clearing Process Bank on behalf of the applicable ETF Series is obligated to deliver to NSCC on the settlement date the required type and amount of Redemption Securities to redeem the Creation Units of the applicable ETF Series. It shall be the responsibility of the Trust and each ETF Series to maintain in the custody account the required type and amount of Redemption Securities for the redemption of Creation Units of each ETF Series. Should the custody account of an ETF Series for any reason ( for example, through the Trust’s participation in a securities lending program on behalf of the ETF Series) have a short position in respect of any of the securities issues comprising the basket of Redemption Securities (a “short delivery position”) with the result that, on settlement date, Bank is unable to deliver a sufficient quantity of the Redemption Securities to NSCC, the Trust acknowledges that Bank shall be obligated under NSCC’s rules to fund the short delivery position with cash pending delivery of the quantity of securities needed to cover the short delivery position. Bank shall be entitled to charge to the account of the applicable ETF Series the amount of cash needed to cover the short delivery position. In the event that Bank advances its own funds to cover an ETF Series short delivery position, Bank, in its discretion, may charge the applicable EFT Series interest on the amount of the advance at the rate that Bank charges for advances of a similar nature to similar customers of Bank, unless Bank and the Trust have mutually agreed in writing upon another rate.

2. In the event that Bank shall have advanced its own funds to cover a short delivery position at NSCC for an ETF Series, Bank shall have, to the extent of the amount of the advance, a security interest in the securities that remain in the ETF Series custody account as provided by Section 4.3(a) of the Custody Agreement. Nothing herein or in the Custody Agreement shall be construed to mandate that Bank, acting as Index Receipt Agent for the Trust and each ETF Series, effect redemptions of Creation Units where Bank, acting in good faith, believes that it may not be repaid an advance by the Trust or the ETF Series or otherwise not receive from the ETF Series delivery of the Redemption Securities that are the subject of a short delivery position.

G	Establish Procedures.

The Trust and Bank, from time to time, may establish written procedures for the processing and settlement and related activities effected for ETF Shares of each ETF Series through the Clearing Process and Outside the Clearing Process.

AGENCY SERVICES AGREEMENT

EXHIBIT A

LIST OF PROSHARES ETF SERIES

SHORT500 PROSHARES

SHORT400 PROSHARES

SHORT30 PROSHARES

SHORT100 PROSHARES

ULTRASHORT500 PROSHARES

ULTRASHORT400 PROSHARES

ULTRASHORT30 PROSHARES

ULTRASHORT100 PROSHARES

ULTRA500 PROSHARES

ULTRA400 PROSHARES

ULTRA30 PROSHARES

ULTRA100 PROSHARES

Exhibit (h)(4)

ProShares Trust

FORM OF AUTHORIZED PARTICIPANT AGREEMENT

This Authorized Participant Agreement (the “Agreement”) is entered into by and between SEI Investments Distribution Co. (the “Distributor”) and __________________________________ (the “Participant”) and is subject to acceptance by J.P. Morgan Chase Bank, as index receipt agent (the “Index Receipt Agent”) for the ProShares Trust (the “Trust”).

WHEREAS, the Distributor serves as the principal underwriter of the Trust in connection with the sale and distribution of shares of beneficial interest (“Shares”) of each series of the Trust (each, a “Fund”); and

WHEREAS, the Index Receipt Agent serves as the index receipt agent and transfer agent for the Funds and is an Index Receipt Agent as that term is defined in the rules of the NSCC; and

WHEREAS, the Shares of any Fund may be purchased or redeemed from the Trust only by or through a Participant who has entered into an Authorized Participant Agreement; and

WHEREAS, the Distributor, the Index Receipt Agent and the Participant acknowledge and agree that the Trust and each Fund shall be a third party beneficiary of this Agreement and shall receive the benefits contemplated by this Agreement to the extent specified herein.

NOW THEREFORE, the parties hereto, in consideration of the premises and of the mutual agreements contained herein, agree as follows:

1.	ORDERS FOR PURCHASE AND REDEMPTION

a. Creation Units . The Shares of any Fund may be purchased or redeemed only in aggregations of a specified number of Shares, as stated in the Prospectus, referred to herein as a “Creation Unit”. The Participant is hereby authorized to purchase and redeem Creation Units of any Fund listed in the Prospectus except for those Funds set forth in Annex I, which may be revised by the Trust from time to time.

b. Procedures for Orders . The Participant may purchase and/or redeem Creation Units of Shares through (i) the CNS Process or (ii) the DTC Process. The procedures for placing and processing an order to purchase Shares (each a “Purchase Order”) and a request to redeem Shares (each a “Redemption Request”) (together, referred to as “Orders”) are described in the Fund’s Prospectus and in the Procedures Handbook, which shall be provided to the Participant. All Orders shall be made in accordance with the terms and procedures set forth in the Prospectus and Procedures Handbook, as amended from time to time; provided that in the event of a conflict, the terms and procedures of the Prospectus shall control. Each party hereto agrees to comply with the provisions of such documents to the extent applicable to it. The Trust reserves the right to issue additional or other procedures relating to the manner of purchasing or redeeming Creation Units,

and the Participant agrees to comply with such procedures as may be issued from time to time.

c. NSCC Authorization . Solely with respect to Orders through the CNS Process, the Participant, hereby authorizes the Index Receipt Agent to transmit to the NSCC on behalf of the Participant such instructions, including amounts of the Deposit Securities and the Cash Amount or All Cash Payment as are necessary consistent with such Orders. The Participant agrees to be bound by the terms of such instructions issued by the Index Receipt Agent and reported to NSCC as though such instructions were issued by the Participant directly to NSCC.

d. Consent to Recording . It is contemplated that the phone lines used by the Distributor, the Index Receipt Agent, the Trust or their affiliated persons will be recorded, and the Participant hereby consents to the recording of all calls with any of those parties.

e. Irrevocability . The Trust reserves the absolute right to reject any Order. Once accepted, all Orders are irrevocable.

f. Prospectus Delivery . The Authorized Participant consents to the delivery of Fund prospectuses (each, a “Prospectus”) electronically, and understands that unless this consent is revoked, the Authorized Participant can only obtain access to Fund Prospectuses from the Distributor electronically. The Authorized Participant understands that current Prospectuses and all required reports for each applicable Fund are available at the Funds’ website at www.proshares.com. The Authorized Participant can revoke this consent to delivering Fund Prospectuses electronically at any time by calling 1-800-991-7851. The Authorized Participant agrees to maintain a valid e-mail address, and further agrees to promptly notify the Distributor if its e-mail address changes. The Authorized Participant understands that it must have regular and continuous Internet access to access all documents relating to a Fund Prospectus.

2.	EXECUTION OF PURCHASE ORDERS

a. Purchase Orders for Bull Funds . To effect the purchase of a Creation Unit of a particular Bull Fund, the Participant agrees on behalf of itself, and any Participant Client, to deliver to the Fund a Fund Deposit plus a purchase transaction fee as described in the Prospectus and/or the Procedures Handbook. The amount of such purchase transaction fee shall be determined by the Trust, or the investment advisor to the Trust (the “Advisor”), in its sole discretion and may be changed from time to time. The Fund Deposit shall consist of the requisite Deposit Securities plus or minus a Balancing Amount. The Balancing Amount will be payable to or receivable by the Fund depending on the net asset value of Shares of the Fund next determined after the Order has been placed. The Fund may permit or require the substitution of an amount of cash to be added to the Balancing Amount to replace any Deposit Securities (i.e. “cash in lieu”). The Fund may, in its sole discretion, accept collateral up to 125% of the value of the Deposit Securities in anticipation of delivery of all or a portion of the requisite Deposit Securities, and the Fund may use such cash or collateral to purchase Deposit Securities.

An additional amount of cash shall be required to be deposited with the Fund pending delivery of the missing Deposit Securities to the extent necessary to maintain cash collateral in an amount at least equal to 125% of the daily marked to market value of the missing Deposit Securities. The Participant shall be responsible for any and all expenses and costs incurred by the Fund in connection with Purchase Orders, including expenses arising from the use of “cash in lieu” or collateral.

b. Purchase Orders for Bear Funds . To effect the purchase of a Creation Unit of a particular Bear Fund, the Participant agrees on behalf of itself, and any Participant Client, to deliver to the Fund an All-Cash Payment plus a purchase transaction fee, as described in the Prospectus and/or the Procedures Handbook. The amount of such purchase transaction fee shall be determined by the Trust, or the investment advisor to the Trust, in its sole discretion and may be changed from time to time.

c. Title to Securities; Restricted Shares . The Participant shall deliver the Deposit Securities to the Custodian free and clear of all liens, restrictions, charges, duties, encumbrances and not subject to any adverse claims, including, without limitation, any restriction upon sale or transfer arising out of (i) any agreement or arrangement entered into by the Participant or any Participant Client, (ii) any provision of the 1933 Act, and any regulations there under (except that portfolio securities of issuers other than U.S. issuers shall not be required to have been registered under the 1933 Act if exempt from such registration), or of the applicable laws or regulations of any other applicable jurisdiction or (iii) such securities being designated “restricted securities” as such term is used in Rule 144(a)(3)(i) promulgated under the 1933 Act.

d. Corporate Actions . With respect to a Purchase Order of a particular Fund, the Fund acknowledges and agrees to return to the Participant or the Participant Client any dividend, distribution or other corporate action paid to the Fund in respect of any Deposit Security transferred to the Fund that, based on the valuation of such Deposit Security at the time of transfer, should have been paid to the Participant or the Participant Client.

e. Bull Funds Cash Amount . The Participant hereby agrees that it will make available or transfer funds for each purchase of Shares of a Bull Fund an amount sufficient to pay the Balancing Amount plus the purchase transaction fee and the additional variable charge for cash purchases (when, in the sole discretion of the Fund, cash purchases are available or specified (other than with respect to Purchase Orders for the Bear Funds) (the “Cash Amount”). Computation of the Cash Amount shall exclude any taxes, duties or other fees and expenses payable upon the transfer of beneficial ownership of the Deposit Securities, which shall be the sole responsibility of the Participant. Computation of the Cash Amount shall exclude any stamp duty and other similar fees and expenses payable upon the transfer of beneficial ownership of the Deposit Securities, which shall be the sole the responsibility of the Participant and not of the Fund. The Participant hereby agrees to ensure that the Cash Amount is provided in accordance with the procedures set forth in the Procedures Handbook.

f. Bear Funds Cash Amount . The Participant hereby agrees that it will make available or transfer funds for each purchase of Shares of a Bear Fund an amount sufficient to pay

the All-Cash Payment plus a purchase transaction fee. The Participant hereby agrees to ensure that the Cash Amount is provided in accordance with the procedures set forth in the Procedures Handbook.

g. Rejection of Purchase Orders . Trust or Distributor may reject any Purchase Order that is not submitted in proper form by 3:00 p.m., Eastern Time (or 4:00 p.m. via the U.S. Postal Service), as applicable. In addition, the Distributor on behalf of each Fund may reject any Purchase Order (based on information provided by the Index Receipt Agent, the Advisor or the Trust or obtained by the Distributor, as the case may be), if:

(1) the purchaser or purchasers, upon obtaining the Creation Units so ordered, would own eighty percent (80%) or more of the outstanding Shares of such particular Fund;

(2) the Fund Deposit delivered does not contain the securities that the Advisor specified and the Advisor has not consented to acceptance of an in-kind deposit that varies from the designated portfolio;

(3) the acceptance of the Fund Deposit would have certain adverse tax consequences, such as causing the particular Fund to no longer meet RIC status under the Code for federal tax purposes;

(4) the acceptance of the Fund Deposit would, in the opinion of counsel, be unlawful, as in the case of a purchaser who was banned from trading in securities;

(5) the acceptance of the Fund Deposit would otherwise, in the discretion of the Trust or the Advisor, have an adverse effect on the Trust or the particular Fund or on the rights of the shareholders, including but not limited to the Beneficial Owner of the Shares;

(6) the value of the Creation Units to be created for an All-Cash Payment, or the amount of the Balancing Amount to accompany an in-kind payment of Deposit Securities, exceeds a purchase authorization limit afforded to the Participant by the Custodian and the Participant has not deposited an amount in excess of such purchase authorization with the Custodian prior to 3:00 p.m., Eastern Time, on the Transmittal Date; or

(7) there exist circumstances outside the control of the Trust or the Distributor that make it impossible to process purchases of Shares for all practical purposes. Examples of such circumstances include: acts of God or public service or utility problems such as fires, floods, extreme weather conditions and power outages resulting in telephone, telecopy and computer failures, market conditions or activities causing trading halts, systems failures involving computer or other information systems affecting the Trust, the Advisor, any sub-Advisor(s), the Index Receipt Agent, the Custodian, the Distributor, DTC, NSCC or any other participant in the purchase process, and similar extraordinary events.

3.	EXECUTION OF REDEMPTION REQUESTS

a. Redemption Request for Bull Funds . To effect the redemption of a Creation Unit of a particular Bull Fund, the Participant agrees on behalf of itself and any Participant Client to deliver to the Index Receipt Agent the requisite number of Shares comprising the number of Creation Units being redeemed as described in the Prospectus and/or Procedures Handbook. Proceeds of the redemption of a Creation Unit shall consist of Fund Securities plus or minus the Balancing Amount. The Balancing Amount will be payable to or receivable from the Fund depending on the net asset value of Shares of the Fund next determined after the Order has been received. Participant shall be responsible for paying any redemption transaction fee and/or additional variable charge assessed by the Fund. The amount of such redemption transaction fee and/or additional variable charge shall be determined by the Trust, or the Advisor, in its sole discretion and may be changed from time to time. The Fund may permit the Participant to redeem a Creation Unit when the Participant is unable to deliver all or part of a Creation Unit upon the delivery of collateral up to 125% of the value of the requisite Shares, marked to market on a daily basis, in anticipation of delivery of all or a portion of the requisite Shares, and the Fund may use such cash or collateral to purchase Shares. In addition, the Participant shall be responsible for any and all expenses and costs incurred in connection with any Redemption Requests, including expenses arising out of the use of collateral.

b. Redemption Request for Bear Funds . To effect the redemption of a Creation Unit of a particular Bear Fund, the Participant agrees on behalf of itself and any Participant Client to deliver to the Index Receipt Agent the requisite number of Shares comprising the number of Creation Units being redeemed. The Fund may permit the Participant to redeem a Creation Unit when the Participant is unable to deliver all or part of a Creation Unit upon the delivery of collateral up to 125% of the value of the requisite Shares, marked to market on a daily basis in anticipation of delivery of all or a portion of the requisite Shares, and the Fund may use such cash or collateral to purchase Shares. Proceeds of the redemption of a Creation Unit shall consist of an All-Cash Payment.

c. Failure to Deliver Collateral or Shares . The Participant understands and agrees that in the event collateral or Shares are not transferred to the Fund, a Redemption Request may be rejected by the Fund and the Participant will be solely responsible for all costs and losses and fees incurred by the Fund, the Index Receipt Agent or the Distributor related to the rejected Order.

d. Legal and Beneficial Ownership . The Participant represents and warrants that it will not attempt to place a Redemption Request for the purpose of redeeming any Creation Unit of Shares of any Fund unless it first ascertains that it or the Participant Client, as the case may be, owns outright or has full legal authority and legal and beneficial right to tender for redemption the requisite number of Shares of the Fund, and that such Shares have not been loaned or pledged to another party and are not the subject of a repurchase agreement, securities lending agreement or any other arrangement that would preclude the delivery of such Shares to the Index Receipt Agent.

e. Corporate Actions . With respect to any Redemption Request, the Participant on behalf of itself and any Participant Client acknowledges and agrees to return to the Fund any dividend, distribution or other corporate action paid to it or a Participant Client in respect of any Fund Security that is transferred to the Participant or any Participant Client that, based on the valuation of such Fund Security at the time of transfer, should have been paid to the Fund. The Fund is entitled to reduce the amount of proceeds due to the Participant or any Participant Client by an amount equal to any dividend, distribution or other corporate action paid to the Participant or to the Participant Client in respect of any Fund Security that is transferred to the Participant or any Participant Client that, based on the valuation of such Fund Security at the time of transfer, should have been paid to the Fund.

BENEFICIAL OWNERSHIP LIMITATION . The Participant represents and warrants to the Distributor and the Trust that, based upon the number of outstanding Shares of each Fund made publicly available by the Fund, it does not, and will not in the future, own or hold for the account of any single Beneficial Owner of Shares of any Fund eighty percent (80%) or more of the currently outstanding Shares of such Fund, so as to cause the Fund to have a basis in the portfolio securities deposited with the Fund different from the market value of such portfolio securities on the date of such deposit, pursuant to section 351 of the Internal Revenue Code. The Participant agrees that the confirmation relating to any order for one or more Creation Units of Shares of a Fund shall state as follows: “Purchaser represents and warrants that, after giving effect to the purchase of Shares to which this confirmation relates, it will not hold eighty percent (80%) or more of the outstanding Shares of the relevant Fund and that it will not treat such purchase as eligible for tax-free treatment under section 351 of the Code. If purchaser is a dealer, it agrees to deliver similar written confirmations to any person purchasing any of the Shares to which this confirmation relates from it.” The Fund and its Index Receipt Agent and Distributor shall have the right to require information from the Participant regarding Share ownership of each Fund, and to rely thereon to the extent necessary to make a determination regarding ownership of eighty percent (80%) or more of the currently outstanding Shares of any Fund by a Beneficial Owner as a condition to the acceptance of a deposit of Deposit Securities.

5.	AUTHORIZED PERSONS

a. Certification . Concurrently with the execution of this Agreement and as requested from time to time by the Fund and/or Distributor, the Participant shall deliver to the Distributor and the Fund, with copies to the Index Receipt Agent, a certificate (the form of which is set forth in Annex II) signed by a duly authorized officer of the Participant setting forth the names, e-mail addresses and telephone and facsimile numbers of all persons authorized to give instructions relating to any activity contemplated hereby or any other notice, request or instruction on behalf of the Participant (each an “Authorized Trader”). Such certificate may be accepted and relied upon by the Distributor and the Fund as conclusive evidence of the facts set forth therein and shall be considered to be in full force and effect until delivery to the Distributor and the Fund of a superseding certificate in a form approved by the Fund bearing a subsequent date.

b. PIN Numbers . The Distributor shall issue to each Participant a unique personal identification number (“PIN Number”) by which such Participant shall be identified and instructions issued by the Participant hereunder shall be authenticated. The PIN Number shall be kept confidential by the Participant and shall only be provided to Authorized Traders. The Participant may revoke the PIN Number at any time upon written notice to the Distributor and the Fund. Upon receipt of such written request, the Distributor shall promptly de-activate the PIN Number. If a Participant’s PIN Number is changed, the new PIN Number will become effective on a date and time mutually agreed upon by the Participant and the Distributor.

c. Termination of Authority . In the event that the Participant becomes aware that an unauthorized person has obtained access to its PIN Number or has or intends to use the PIN Number in an unauthorized manner or upon the termination or revocation of authority of such Authorized Trader by the Participant, the Participant shall give immediate written notice of such fact to the Distributor and the Fund and such notice shall be effective upon receipt by both the Distributor and the Fund. Upon receipt of such written request, the Distributor shall promptly de-activate the PIN Number. If a Participant’s PIN Number is changed, the new PIN Number will become effective on a date and time mutually agreed upon by the Participant and the Distributor.

d. Verification . The Distributor shall assume that all instructions issued to it using the Participant’s PIN Number have been properly placed by an Authorized Trader, unless the Distributor has actual knowledge to the contrary or the Participant has revoked its PIN Number. The Distributor shall not verify that an Order is being placed by an Authorized Trader.

e. Limitation of Liability . The Participant agrees that the Distributor, the Index Receipt Agent and the Trust shall not be liable, absent fraud or willful misconduct, for losses incurred by the Participant as a result of unauthorized use of the Participant’s PIN Number, unless the Participant previously submitted written notice to revoke its PIN Number in accordance with the terms of this Agreement.

6.	STATUS OF PARTICIPANT

a. Clearing Status . The Participant hereby represents, covenants and warrants that (i) it is and will continue to be a member in good standing of the NSCC so long as this Agreement is in full force and effect and that (ii) with respect to (x) all Orders of Creation Units of Shares of any Fund, it is a DTC Participant, and (y) any Order of Creation Units of Shares of any Fund initiated through the CNS Process, it is a member of NSCC and a participant in the CNS System of NSCC (a “Participating Party”). Any change in the foregoing status of the Participant shall terminate this Agreement and the Participant shall give prompt written notice to the Distributor and the Trust of such change.

b. Broker-Dealer Status . The Participant hereby represents and warrants that it is (i) registered as a broker-dealer under the Securities Exchange Act of 1934, as amended, (ii) qualified to act as a broker or dealer in the states or other jurisdictions where it transacts

business, and (iii) a member in good standing of the NASD. The Participant agrees that it will maintain such registrations, qualifications, and membership in good standing and in full force and effect throughout the term of this Agreement. The Participant further agrees to comply with all applicable Federal laws, the laws of the states or other jurisdictions concerned, and the rules and regulations promulgated hereunder and with the Constitution, By-Laws and Conduct Rules of the NASD, and that it will not offer or sell Shares of any Fund in any state or jurisdiction where they may not lawfully be offered and/or sold. The Participant acknowledges that the Shares are registered for sale only in the United States.

c. Distributor Status . The Participant understands and acknowledges that the method by which Creation Units will be created and traded may raise certain issues under applicable securities laws. For example, because new Creation Units of Shares may be issued and sold by the Fund on an ongoing basis, at any point a “distribution”, as such term is used in the 1933 Act, may occur. The Participant understands and acknowledges that some activities on its part, depending on the circumstances, may result in its being deemed a participant in a distribution in a manner which could render it a statutory underwriter and subject it to the prospectus delivery and liability provisions of the 1933 Act. The Participant also understands and acknowledges that dealers who are not “underwriters” but are effecting transactions in Shares, whether or not participating in the distribution of Shares, are generally required to deliver a prospectus.

d. Creditworthiness . The Participant understands that it will be required to satisfy certain creditworthiness criteria established and approved by the Trust.

7.	ROLE OF PARTICIPANT

a. Independent Contractor . The Participant acknowledges and agrees that for all purposes of this Agreement, the Participant will be deemed to be an independent contractor, and will have no authority to act as agent for the Trust, the Index Receipt Agent or the Distributor in any matter or in any respect. The Participant agrees to make itself and its employees available, upon request, during normal business hours to consult with the Trust, the Index Receipt Agent or the Distributor or their designees concerning the performance of the Participant’s responsibilities under this Agreement.

b. Rights and Obligations of DTC Participant . In executing this Agreement, the Participant agrees that, in connection with any purchase or redemption transactions in which it acts for a Participant Client or for any other DTC Participant or indirect participant, or any other Beneficial Owner, that it shall extend to any such party all of the rights, and shall be bound by all of the obligations, of a DTC Participant in addition to any obligations that it undertakes hereunder or in accordance with the Prospectus or the Procedures Handbook.

c. Maintenance of Records . The Participant agrees to maintain records of all sales of Shares made by or through it and to furnish copies of such records to the Trust or the Distributor upon their reasonable request.

d. Privacy . The Participant affirms that it has procedures in place reasonably designed to protect the privacy of non-public personal consumer/customer financial information to the extent required by applicable law, rule and regulation.

e. Anti-Money Laundering . The Participant further represents that its anti-money laundering program (“AML Program”), at a minimum, (i) designates a compliance officer to administer and oversee the AML Program, (ii) provides ongoing employee training, (iii) includes an independent audit function to test the effectiveness of the AML Program, (iv) establishes internal policies, procedures, and controls that are tailored to its particular business, (v) includes a customer identification program consistent with the rules under section 326 of the USA Patriot Act, (vi) provides for the filing of all necessary anti-money laundering reports including, but not limited to, currency transaction reports and suspicious activity reports, (vii) provides for screening all new and existing customers against reports and suspicious activity reports, (vii) provides for screening all new and existing customers against the Office of Foreign Asset Control list and any other government list that is or becomes required under the USA Patriot Act, and (viii) allows for appropriate regulators to examine its anti-money laundering books and records.

f. No Affiliation . The Participant represents and warrants that, during the term of this Agreement, it will not be an affiliated person of a fund, a promoter or a principal underwriter of a fund or an affiliated person of such persons, except under 2(a)(3)(A) or 2(a)(3)(C) of the Investment Company Act of 1940, as amended (the “1940 Act”) due to ownership of Shares.

MARKETING MATERIALS AND REPRESENTATIONS . The Participant represents, warrants and agrees that it will not make any representations concerning the Shares other than those contained in the Trust’s Prospectus or in any promotional materials or sales literature furnished to the Participant by the Distributor. The Participant agrees not to furnish or cause to be furnished to any person or display or publish any information or materials relating to the Shares (including, without limitation, promotional materials and sales literature, advertisements, press releases, announcements, statements, posters, signs or other similar materials), except such information and materials as may be furnished to the Participant by the Distributor and such other information and materials as may be approved in writing by the Distributor. The Participant understands that the Funds comprising the Trust will not be advertised or marketed as open-end investment companies, i.e., as mutual funds, which offer redeemable securities, and that any advertising materials will prominently disclose that the Shares are not individually redeemable units of beneficial interest in the Trust. In addition, the Participant understands that any advertising material that addresses redemptions of Shares, including the Trust’s Prospectus, will disclose that the owners of Shares may acquire Shares and tender Shares for redemption to the Trust in Creation Unit aggregations only. Notwithstanding the foregoing, the Participant or an affiliate of the Participant may, without the written approval of the Distributor, prepare and circulate in the regular course of its business research reports that include information, opinions or recommendations relating to the Shares (i) for public dissemination, provided that such

research reports compare the relative merits and benefits of Shares with other products and are not used for purposes of marketing Shares and (ii) for internal use by the Participant.

9.	INDEMNIFICATION; LIMITATION OF LIABILITY . This paragraph shall survive the termination of this Agreement.

The Participant hereby agrees to indemnify and hold harmless the Distributor, the Trust, the Index Receipt Agent, their respective subsidiaries, affiliated persons, directors, officers, employees and agents, and each person, if any, who controls such persons within the meaning of Section 15 of the 1933 Act (each an “Indemnified Party”) from and against any loss, liability, cost and expense (including attorneys’ fees) incurred by such Indemnified Party as a result of (i) any breach by the Participant (or an affiliate of the Participant with respect to research report generated by such affiliate) of any provision of this Agreement that relates to the Participant; (ii) any failure on the part of the Participant to perform any of its obligations set forth in the Agreement; (iii) any failure by the Participant (or an affiliate of the Participant with respect to research report generated by such affiliate) to comply with applicable laws, including rules and regulations of self-regulatory organizations; or (iv) actions of such Indemnified Party in reliance upon any instructions issued by Participant reasonably believed by such Indemnified Party to be genuine and to have been given by the Participant.

The Distributor hereby agrees to indemnify and hold harmless the Participant, its respective subsidiaries, affiliated persons, directors, officers, employees and agents, and each person, if any, who controls such persons within the meaning of Section 15 of the 1933 Act (each an “Indemnified Party”) from and against any loss, liability, cost and expense (including attorneys’ fees) incurred by such Indemnified Party as a result of (i) any breach by the Distributor of any provision of this Agreement that relates to the Distributor; (ii) any failure on the part of the Distributor to perform any of its obligations set forth in this Agreement; (iii) any failure by the Distributor to comply with applicable laws, including rules and regulations of self-regulatory organizations; or (iv) actions of such Indemnified Party in reliance upon any instructions issued by the Distributor reasonably believed by the Participant to be genuine and to have been given by the Distributor.

The Distributor shall not be liable to the Participant for any damages arising out of (i) mistakes or errors in data provided in connection with purchase or redemption transactions except for data provided by the Distributor; (ii) mistakes or errors arising out of interruptions or delays of communications with the Participant, the Index Receipt Agent, the Trust or the Adviser, (iii) mistakes or errors of the Index Receipt Agent, or (iv) differences in performance between the Fund’s Net Asset Value (“NAV”), the Intraday Indicative Value (“IIV”), the Deposit Securities, or the underlying index benchmark of the Fund.

10.

TRUST AS THIRD PARTY BENEFICIARY . The Participant and the Distributor understand and agree that the Trust as a third party beneficiary to this Agreement is entitled and intends to proceed directly against the Participant in the event that the Participant fails to honor any of its obligations pursuant to this Agreement that benefit the Trust.

11.

INCORPORATION BY REFERENCE . The Participant acknowledges receipt of the Prospectus and Procedures Handbook, represents that it has reviewed such documents and understands the terms thereof, and further acknowledges that the procedures contained therein pertaining to the creation and redemption of Shares are incorporated herein by reference.

12.

NOTICES . Except as otherwise specifically provided in this Agreement, all notices required or permitted to be given pursuant to this Agreement shall be given in writing and delivered by personal delivery or by postage prepaid registered or certified United States first class mail, return receipt requested, or by facsimile or similar means of same day delivery (with a confirming copy by mail). Unless otherwise notified in writing, all notices shall be at the address or telephone, facsimile or telex numbers as follows:


DISTRIBUTOR:		PARTICIPANT:
Attn: General Counsel		Attn:
SEI Investments Distribution Co.
One Freedom Valley Drive
Oaks, Pennsylvania 19456-1100
Telephone: (610) 676-3250		Telephone:
Facsimile: (484) 676-3250		Facsimile:

INDEX RECEIPT AGENT AND FUND:
Attn:
JPMorgan Chase Bank, N.A.
3 MetroTech Center, 8 ^th Floor
Brooklyn, NY 11245
Telephone: (718) 242-4891
Fax: (718) 242-4577

13.

COMMENCEMENT OF TRADING . The Participant may not submit an Order pursuant to this Agreement until five Business Days after effectiveness of this Agreement (which shall not take effect until acknowledged by the Index Receipt Agent) or such earlier date agreed upon between the Distributor and the Participant.

14.	INFORMATION ABOUT PORTFOLIO DEPOSITS . The Participant understands that the number and names of the designated portfolio of the Deposit Securities will be made available by the Advisor through the facilities of NSCC on each day that the AMEX, or primary listing exchange, is open for trading.

15.	DEFINITIONS . The capitalized terms used in this Agreement are defined as follows. Any capitalized terms used herein that are not defined shall have the meaning set forth in the Prospectus.

“1933 Act” means the Securities Act of 1933, as amended.

“Affiliated Person” shall have the meaning given to it by Section 2(a) of the 1940 Act, subject to such exemptions as may be granted by the SEC by any rule, regulation or order.

“All-Cash Payment” will be an amount in cash equal to the net asset value per Share of a Bear Fund multiplied by the number of Shares constituting a Creation Unit of such Fund multiplied by the number of Creation Units of such Bear Fund being purchased or redeemed in a particular Order.

“Balancing Amount” will be an amount equal to the differential, if any, between the total aggregate market value of the Deposit Securities and the NAV per Creation Unit next determined.

“Beneficial Owner” shall have the meaning given to it by Rule 16a-1(a)(2) of the Securities Exchange Act of 1934.

“Business Day” shall mean each day the New York Stock Exchange is open for regular trading and the Trust and the Custodian are open for business.

“Cash Amount” means the Balancing Amount (or All-Cash Payment) plus the applicable transaction fee.

“Cash” shall mean same day funds in United States dollars.

“CNS Process” means the Continuous Net Settlement clearing processes of NSCC, as such processes have been enhanced to effect purchases and redemptions of Creation Units.

“CNS System” means the Continuous Net Settlement clearing processes of NSCC.

“Code” means the Internal Revenue Code of 1986, as amended.

“Contractual Settlement Date” means the date as specified in the Prospectus and the Procedures Handbook upon which delivery of Deposit Securities must be made to the Fund.

“Creation Unit” means an aggregation of a specified number of Shares of a particular Fund of the Trust as stated in the Prospectus.

“Custodian” means the Fund’s custodian, JPMorgan Chase Bank, N.A.

“Deposit Securities” means an in-kind deposit of a designated portfolio of equity securities selected by the Advisor.

“DTC Process” means the process for effecting purchases orders or redemption requests of Creation Units through DTC other than through the use of the CNS System.

“DTC” means The Depository Trust Company.

“Fund Deposit” means the Deposit Securities plus or minus the Balancing Amount.

“Fund Securities” means in-kind redemption proceeds of a designated portfolio of equity securities selected by the Advisor.

“NASD” means the National Association of Securities Dealers, Inc.

“NSCC” means the National Securities Clearing Corporation.

“Participant Client” means any party on whose behalf the Participant acts in connection with an Order (whether a customer or otherwise).

“Procedures Handbook” means the ProShares Trust Procedures Handbook, as supplemented or amended from time to time.

“Prospectus” means the Trust’s then current prospectus and statement of additional information included in its effective registration statement, as supplemented or amended from time to time.

16.

EFFECTIVENESS, TERMINATION, AND AMENDMENT . This Agreement shall become effective in this form upon delivery to and execution by the Distributor. This Agreement may be terminated at any time by any party upon sixty days prior written notice to the other parties and may be terminated earlier by the Trust or the Distributor at any time in the event of a breach by the Participant of any provision of this Agreement or the procedures described or incorporated herein. This Agreement supersedes any prior such agreement between or among the parties. This Agreement may be amended by the Trust or the Distributor from time to time without the consent of the Participant or any Beneficial Owner by the following procedure. Amendments to the Prospectus and Procedures Handbook can be made unilaterally without notice by the Trust and Distributor, respectively. The Trust or the Distributor will mail a copy of the amendment to the Participant. For purposes of this Agreement, mail will be deemed received by the Participant on the fifth (5th) Business Day following the deposit of such mail into the U.S. Postal system. If neither the Participant nor the other party objects in writing to the amendment within five days after its receipt, the amendment will become part of this Agreement in accordance with its terms.

17.

GOVERNING LAW . This Agreement shall be governed by and interpreted in accordance with the laws of the State of New York. The parties irrevocably submit to the non-exclusive jurisdiction of any New York State or United States Federal court sitting in New York, New York over any suit, action or proceeding arising out of or relating to this Agreement.

18.	COUNTERPARTS . This Agreement may be executed in several counterparts, each of which shall be an original and all of which shall constitute but one and the same instrument.

IN WITNESS WHEREOF, the parties have caused this Agreement to be executed and delivered as of the day and year written below.

DATED: ______________________


SEI INVESTMENTS DISTRIBUTION CO.						[NAME OF PARTICIPANT]

BY:						BY:
NAME:						NAME:
TITLE:						TITLE:


ACCEPTED BY:

JPMORGAN CHASE BANK, N.A. (AS INDEX RECEIPT AGENT)

BY:
NAME:
TITLE:

ANNEX I

ProShares Trust

FUNDS NOT AUTHORIZED TO CREATE OR REDEEM

Pursuant to Paragraph 1.a of the Authorized Participant Agreement, the Participant is not authorized to purchase or redeem Creation Units of the following Funds of the Trust:

ANNEX II

ProShares Trust

AUTHORIZED TRADERS OF PARTICIPANT

The following employees of the Participant are authorized, subject to Paragraph 5 of the Authorized Participant Agreement, to act as agent for the Participant, to submit purchase and redemption requests to the Distributor on behalf of the Participant and in its name with respect to those Funds subject to Paragraph 1.a of the Authorized Participant Agreement.

Name: ______________________________________

E-Mail Address: ______________________________

Telephone: __________________________________

Fax: ________________________________________

Name: ______________________________________

E-Mail Address: ______________________________

Telephone: __________________________________

Fax: ________________________________________

Name: ______________________________________

E-Mail Address: ______________________________

Telephone: __________________________________

Fax: ________________________________________

Name: ______________________________________

E-Mail Address: ______________________________

Telephone: __________________________________

Fax: ________________________________________

Name: ______________________________________

E-Mail Address: ______________________________

Telephone: __________________________________

Fax: ________________________________________


Certified By: ________________________________

Name: _____________________________________

Title: ______________________________________

Date: ______________________________________

Exhibit (i)

[LETTERHEAD OF CLIFFORD CHANCE US LLP]

May 22, 2006

ProShares Trust (the “Fund”)

7501 Wisconsin Avenue, Suite 1000

Bethesda, Maryland 20814

Re:	Opinion of Counsel Regarding Issuance of Shares by the Fund (File Nos. 333-89822, 811-21114)

Dear Ladies and Gentlemen:

We have acted as counsel to the Fund, a statutory trust organized under the laws of the State of Delaware, in connection with the registration of eight separate series (each, a “Series”) of its shares of beneficial interest, $.001 par value (“Shares”) under the Securities Act of 1933, as amended (the “1933 Act”). In such capacity, we have reviewed the Fund’s Registration Statement on Form N-1A under the 1933 Act and the Investment Company Act of 1940, as amended, as filed by the Fund with the Securities and Exchange Commission (the “Registration Statement”). We are familiar with the actions taken by the Fund and its Board of Trustees in connection with the organization of the Fund and the authorization, and the proposed issuance and sale, of each Series of Shares, including but not limited to the adoption of a resolution authorizing the issuance of each Series of Shares in the manner described in the prospectus contained in the Registration Statement (the “Prospectus”). In addition, we have reviewed the Fund’s Agreement and Declaration of Trust and such other documents and matters as we have deemed necessary to enable us to render this opinion. With your permission, all assumptions and statements of reliance herein have been made without any independent investigation or verification on our part except to the extent otherwise expressly stated, and we express no opinion with respect to the subject matter or accuracy of such assumptions or items relied upon.

Based upon, and subject to, the foregoing, we are of the opinion that each Series of Shares to which the Registration Statement relates when issued and sold in the manner described in the Prospectus, will be legally issued, fully paid and non-assessable.

We are attorneys licensed to practice only in the State of New York. The foregoing opinion is limited to the Federal laws of the United States and the Delaware Statutory Trust Act, and we are expressing no opinion as to the effect of the laws of any other jurisdiction.

We have consented to the filing of this opinion as an exhibit to the Registration Statement and to the reference to us under the heading “Legal Counsel” in the Statement of Additional Information forming a part of the Registration Statement. In giving this consent, we do not concede that we are in the category of persons whose consent is required under Section 7 of the 1933 Act.

Very truly yours,

/s/ Clifford Chance US LLP

Clifford Chance US LLP

Exhibit (m)

DISTRIBUTION PLAN

ProFunds ETF Trust

WHEREAS, ProFunds ETF Trust (the “Trust”) is engaged in business as an open-end investment company registered under the Investment Company Act of 1940 (the “1940 Act”) and the Trust desires to adopt a Distribution and Service Plan pursuant to Rule 12b-1 under the Investment Company Act of 1940 on behalf of the Trust’s Funds (the “Funds”); and

WHEREAS, the Trustees of the Trust have determined that there is a reasonable likelihood that the following Plan will benefit the Funds and their Shareholders;

NOW, THEREFORE, the Trustees of the Trust hereby adopt this Plan.

Section 1 . The Trust has adopted this Plan on behalf of each Fund to enable each Fund to directly or indirectly bear expenses relating to the distribution of the shares of beneficial interest (“Shares”) of the Fund.

Section 2 . The Trust may pay the Trust’s distributor (“Distributor”) a fee for distribution and other services provided pursuant to any Distribution Agreement. The Trust also may pay other service providers for services rendered in connection with the sale and promotion of Shares and the furnishing of services to Shareholders. Such services include, but are not limited to, (i) marketing and promotional services, including advertising; (ii) provision of, printing and distributing to persons other than current Shareholders the reports, prospectuses, notices and similar materials that are prepared by the Trust for current Shareholders; (iii) preparing, printing and distributing any literature used in connection with the offering of the Shares and which is not covered by (ii) above; (iv) the promotion and sale of the Shares, including travel, communications and the provision of sales personnel; (v) distribution assistance through financial institutions and intermediaries such as banks, savings and loan associations, insurance companies and investment counselors, broker-dealers, and the affiliates and subsidiaries of the Trust’s service providers; and (vi) services to Shareholders, including assistance in answering inquiries related to Shareholder accounts.

Amounts paid or payable by a Fund under this Plan or any agreement related hereto shall not exceed .25% (twenty-five basis points) of the Fund’s average daily net assets.

As of the end of a Fund’s fiscal year, the expenses incurred in connection with the sale and promotion of the Shares and the furnishing of services to Shareholders, as described above, may exceed .25% of the Fund’s average daily net assets. Although the Fund is not permitted to pay any such excess expenses during that same fiscal year, such excess expenses may be reimbursed during any of the Fund’s subsequent three fiscal years, provided and to the extent that the current expenses plus the excess expenses do not exceed the .25% limitation for that subsequent year. All or any portion of such excess expenses may be reimbursed by the Fund during any one or more of the three subsequent fiscal years.

Section 3 . This Plan shall not take effect with respect to any Fund until it has been approved (a) by a vote of at least a majority of the outstanding voting securities of the Shares of such Fund, if adopted after the public offering of such Shares; and (b) together with any related

agreements, by votes of the majority of both (i) the Trustees of the Trust and (ii) the Qualified Trustees (as defined in Section 9 herein), cast in person at a Board of Trustees meeting called for the purpose of voting on this Plan or such agreement.

Section 4 . This Plan shall continue in effect for a period of more than one year after it takes effect, only for so long as such continuance is specifically approved at least annually in the manner provided in Part (b) of Section 3 herein for the approval of this Plan.

Section 5 . Any person authorized to direct the disposition of monies paid or payable by the Trust pursuant to this Plan or any related agreement shall provide to the Trustees of the Trust, at least quarterly, a written report of the amounts so expended and the purposes for which such expenditures were made. Such report shall include any division or allocation of expenses between or among Funds.

Section 6 . This Plan may be terminated at any time by the vote of a majority of the Qualified Trustees or by vote of a majority of the outstanding voting securities of the Shares of the Funds.

Section 7 . All agreements with any person relating to implementation of this Plan shall be in writing, and any agreement related to this Plan shall provide (a) that such agreement may be terminated at any time, without payment of any penalty, by the vote of a majority of the Qualified Trustees or by the vote of a majority of the outstanding voting securities of the Shares of the Funds, on not more than 60 days written notice to any other party to the agreement; and (b) that such agreement shall terminate automatically in the event of its assignment.

Section 8 . This Plan may not be amended to increase materially the amount of distribution expenses permitted pursuant to Section 2 hereof without the approval of Shareholders holding a majority of the outstanding voting securities of the Shares of the Funds, and all material amendments to this Plan shall be approved in the manner provided in Part (b) of Section 3 herein for the approval of this Plan.

Section 9 . As used in this Plan, (a) the term “Qualified Trustees” shall mean those Trustees of the Trust who are not interested persons of the Trust, and have no direct or indirect financial interest in the operation of this Plan or any agreements related to it, and (b) the terms “assignment” and “interested person” shall have the respective meanings specified in the 1940 Act and the rules and regulations thereunder, subject to such exemptions as may be granted by the Securities and Exchange Commission.

Section 10 . While this Plan is in effect, the selection and nomination of those Trustees who are not interested persons of the Trust within the meaning of Section 2(a)(19) of the 1940 Act shall be committed to the discretion of the Trustees then in office who are not interested persons of the Trust.

Section 11 . This Plan shall not obligate the Trust or any other party to enter into an agreement with any particular person.

Exhibit (p)(1)

ProShares Trust

CODE OF ETHICS

Dated November 14, 2005

The following Code of Ethics is adopted by ProShares Trust (the “Trust”) pursuant to Rule 17j-1 under the Investment Company Act of 1940 (the “Act”). This Code of Ethics is intended to ensure that all acts, practices and courses of business engaged in by access persons (as defined) of the Trust reflect high standards and comply with the requirements of Section 17(j) of the Act and Rule 17j-1 thereunder. Any such access person shall not be subject to this Code of Ethics if such person is subject to another organization’s code of ethics that has been approved by the Board of Trustees of the Trust.

I.	Definitions

A. “ Access person ” means any director, trustee, officer, general partner, managing member, or advisory person (as defined) of the Trust or ProShare Advisors LLC (“ProShare Advisors”).

B. “ Advisory person ” means (1) any employee of the Trust or ProShare Advisors (or of any company in a control relationship to the Trust or ProShare Advisors) who, in connection with his or her regular functions or duties, makes, participates in, or obtains information regarding the purchase or sale of a security (as defined) by the Trust, or whose functions relate to the making of any recommendations with respect to such purchases or sales; and (2) any natural person in a control relationship to the Trust or ProShare Advisors who obtains information concerning recommendations made to the Trust with regard to the purchase or sale of a security by the Trust.

C. “ Beneficial ownership ” shall be interpreted in the same manner as it would be under Rule 16a-1(a)(2) in determining whether a person is subject to the provisions of Section 16 of the Securities Exchange Act of 1934 and the rules and regulations thereunder.

D. “ Control ” shall have the same meaning as that set forth in Section 2(a)(9) of the Act. Section 2(a)(9) provides that “control” generally means the power to exercise a controlling influence over the management or polices of a company, unless such power is solely the result of an official position with such company.

E. A “ security held or to be acquired ” means: (1) any security which, within the most recent 15 days: (a) is or has been held by the Trust; or (b) is being or has been considered by the Trust or ProShare Advisors for purchase by the Trust; and (2) any option to purchase or sell, and any security convertible into or exchangeable for, a security described in clause (1) above.

F. An “ initial public offering ” means an offering of securities registered under the Securities Act of 1933, the issuer of which, immediately before the registration, was not subject to the reporting requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934.

G. “ Investment personnel ” means: (1) any employee of the Trust or ProShare Advisors (or of any company in a control relationship to the Trust or ProShare Advisors) who, in connection with his or her regular functions or duties, makes or participates in making recommendations regarding the purchase or sale of securities by the Trust; and (2) any natural person who controls the Trust or ProShare Advisors and who obtains information concerning recommendations made to the Trust regarding the purchase or sale of securities by the Trust.

H. A “ limited offering ” means an offering that is exempt from registration under the Securities Act of 1933 pursuant to Section 4(2) or Section 4(6) or pursuant to Rule 504, Rule 505, or Rule 506 under the Securities Act of 1933.

I. “ Purchase or sale” for purposes of this Code of Ethics and each Exhibit or other appendix hereto includes, among other things, the writing of an option to purchase or sell a security.

J. “ Security ” shall have the meaning set forth in Section 2(a)(36) of the Act, except that it shall not include direct obligations of the Government of the United States, bankers’ acceptances, bank certificates of deposit, commercial paper and high quality short-term debt instruments, including repurchase agreements, and shares of registered open-end investment companies, or such other securities as may be excepted under the provisions of Rule 17j-1.

II.

Prohibitions

A. Generally . Rule 17j-l under the Act makes it unlawful for any affiliated person of the Trust, SEI Investments Distribution Co. or any affiliated person of ProShare Advisors or SEI Investments Distribution Co., directly or indirectly, in connection with the purchase or sale of a security held or to be acquired by the Trust:

(1) To employ any device, scheme or artifice to defraud the Trust;

(2) To make to the Trust any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements made to the Trust, in light of the circumstances under which they are made, not misleading;

(3) To engage in any act, practice, or course of business which operates or would operate as a fraud or deceit upon the Trust; or

(4) To engage in any manipulative practice with respect to the Trust.

It is the policy of the Trust that no access person shall engage in any act, practice or course of conduct that would violate the provisions of Rule 17j-1 set forth above.

B. Initial Public Offerings and Limited Offerings . No investment personnel may acquire any direct or indirect beneficial ownership in any securities in an initial public offering or in a limited offering unless the President of the Trust (or his or her delegate) or the Chief Compliance Officer of ProShare Advisors (or his or her delegate) has authorized the transaction in advance.

III.

Procedures

A. Reporting . In order to provide the Trust with information to enable it to determine with reasonable assurance whether the provisions of Rule 17j-1 are being observed by its access persons, each access person of the Trust, other than a Trustee who is not an “interested person” (as defined in the Act) of the Trust, shall submit the following reports in the forms attached hereto as Exhibits A-D to the Trust’s President (or his or her delegate) showing all transactions in securities in which the person has, or by reason of such transaction acquires, any direct or indirect beneficial ownership:

(1) Initial Holding Report. Exhibit A shall initially be filed no later than 10 days after that person becomes an access person.

(2) Periodic Reports. Exhibits B and C shall be filed no later than 30 days after the end of each calendar quarter, but transactions over which such person had no direct or indirect influence or control need not be reported. No such periodic report needs to be made if the report would duplicate information contained in broker trade confirmations or account statements received by the Trust no later than 30 days after the end of each calendar quarter and/or information contained in the Trust’s records.

(3) Annual Report. Exhibit D must be submitted by each access person within 45 days after the end of each calendar year.

B. Independent Trustees. A Trustee who is not an “interested person” of the Trust shall not be required to submit the reports required under paragraph III.A, except that such a Trustee shall file a Securities Transaction Report in the form attached as Exhibit B with respect to a transaction in a security where he or she knew at the time of the transaction or, in the ordinary course of fulfilling his or her official duties as a Trustee, should have known that during the 15 day period immediate preceding or after the date of the transaction, such security is or was purchased or sold by the Trust, or was considered for purchase or sale by ProShare Advisors or the Trust. No report is required if the Trustee had no direct or indirect influence or control over the transaction.

C. Notification . The Trust’s Chief Compliance Officer (or his or her delegate) shall identify each access person of the Trust who may be required to make reports pursuant to this Code of Ethics, shall notify each such person that he or she is subject to the reporting requirements contained herein and shall deliver a copy of this Code of Ethics to each such person.

IV.

Review and Enforcement

A. Review .

(1) The President of the Trust (or his or her delegate) shall [regularly] review the reported personal securities transactions of access persons for compliance with the requirements of this Code of Ethics.

(2) If the President of the Trust (or his or her delegate) determines that a violation of this Code of Ethics may have occurred, before making a final determination that a material violation has been committed by an individual, the President of the Trust (or his or her delegate) may give such person an opportunity to supply additional information regarding the transaction in question.

B. Enforcement .

(1) If the President of the Trust (or his or her delegate) determines that a material violation of this Code of Ethics has occurred, he or she shall promptly report the violation to the Trustees of the Trust. The Trustees, with the exception of any person whose transaction is under consideration, shall take such actions as they consider appropriate, including imposition of any sanctions that they consider appropriate.

(2) No person shall participate in a determination of whether he or she has committed a violation of this Code of Ethics or in the imposition of any sanction against himself or herself. If, for example, a securities transaction of the President of the Trust is under consideration, a Trustee of the Trust designated for the purpose by the Trustees of the Trust shall act in all respects in the manner prescribed herein for the President.

C. Reporting to Board . No less frequently than annually, the Trust shall furnish to the Trust’s Board of Trustees, and the Board must consider, a written report that:

(1) Describes any issues arising under the Code of Ethics or procedures since the last report to the Board of Trustees, including, but not limited to, information about material violations of the Code of Ethics or procedures and sanctions imposed in response to the material violations; and

(2) Certifies that the Trust has adopted procedures reasonably necessary to prevent access persons from violating the Code of Ethics.

V.	Records

The Trust shall maintain records in the manner and to the extent set forth below, under the conditions described in Rule 17j-1(f) under the Act, which records shall be available for appropriate examination by representatives of the Securities and Exchange Commission.

•

A copy of this Code of Ethics and any other code of ethics which is, or at any time within the past five years has been, in effect shall be preserved in an easily accessible place;

•

A record of any violation of this Code of Ethics and of any action taken as a result of such violation shall be preserved in an easily accessible place for a period of not less than five years following the end of the fiscal year in which the violation occurs;

•

A copy of each report made pursuant to this Code of Ethics by an access person, including any information provided in lieu of reports, shall be preserved by the Trust for a period of not less than five years from the end of the fiscal year in which it is made, the first two years in an easily accessible place;

•

A list of all persons who are, or within the past five years have been, required to make reports pursuant to this Code of Ethics, or who are or were responsible for reviewing these reports, shall be maintained in an easily accessible place;

•

A copy of each report to the Board shall be preserved by the Trust for at least five years after the end of the fiscal year in which it is made, the first two years in an easily accessible place; and

•

The Trust shall preserve a record of any decision, and the reasons supporting the decision, to approve the acquisition by investment personnel of securities under Section II.B of this Code of Ethics for at least five years after the end of the fiscal year in which the approval is granted, the first two years in an easily accessible place.

VI.

Miscellaneous

A. Confidentiality . All reports of securities transactions and any other information filed with the Trust pursuant to this Code of Ethics shall be treated as confidential, except as regards appropriate examinations by representatives of the Securities and Exchange Commission.

B. Amendment; Interpretation of Provisions . The Trustees may from time to time amend this Code of Ethics or adopt such interpretations of this Code of Ethics as they deem appropriate.

ANNUAL CERTIFICATION OF

PROSHARES TRUST

The undersigned hereby certifies on behalf of ProShares Trust (the “Trust”), to the Board of Trustees pursuant to Rule 17j-1(c)(2)(B) under the Investment Company Act of 1940, and pursuant to Section IV.C(2) of the Trust’s Code of Ethics, that the Trust has adopted procedures that are reasonably necessary to prevent access persons from violating the Code of Ethics.



Date:
								President

EXHIBIT A

ProShares Trust

Initial Holdings Report

To the President:

As of the below date, I held the following position in these securities in which I may be deemed to have a direct or indirect beneficial ownership, and which are required to be reported pursuant to the Trust’s Code of Ethics:

This report (i) excludes holdings with respect to which I had no direct or indirect influence or control, and (ii) is not an admission that I have or had any direct or indirect beneficial ownership in the securities listed above.



Date:						Signature:

A-1

EXHIBIT B

ProShares Trust

Securities Transaction Report

For the Calendar Quarter Ended _________________

To the President:

During the quarter referred to above, the following transactions were effected in securities in which I may be deemed to have had, or by reason of such transaction acquired, direct or indirect beneficial ownership, and which are required to be reported pursuant to the Trust’s Code of Ethics:

Security

(including interest and maturity date, if any)

Date of
Transaction

No. of
Shares

Principal
Amount of
Transaction

Nature of
Transaction
(Purchase,
Sale, Other)

Price

Broker/Dealer or
Bank Through
Whom Effected

This report (i) excludes transactions with respect to which I had no direct or indirect influence or control, and (ii) is not an admission that I have or had any direct or indirect beneficial ownership in the securities listed above.



Date:						Signature:

B-1

EXHIBIT C

ProShares Trust

Account Establishment Report

For the Calendar Quarter Ended _________________

To the President:

During the quarter referred to above, the following accounts were established for securities in which I may be deemed to have a direct or indirect beneficial ownership, and is required to be reported pursuant to the Trust’s Code of Ethics:


Broker/Dealer or Bank Where Account Was Established		Date Account Was Established



Date:						Signature:

C-1

EXHIBIT D

ProShares Trust

Annual Holdings Report

To the President:

As of December 31, ___, I held the following positions in securities in which I may be deemed to have a direct or indirect beneficial ownership, and which are required to be reported pursuant to the Trust’s Code of Ethics:

This report is not an admission that I have or had any direct or indirect beneficial ownership in the securities listed above.



Date:						Signature:

D-1

Exhibit (p)(2)

ProShare Advisors LLC

CODE OF ETHICS

November 2005

The following Code of Ethics is adopted by ProShare Advisors LLC (“ProShare Advisors”), the investment adviser to investment companies and other persons or entities (“Clients”), pursuant to Rule 17j-1 under the Investment Company Act of 1940 and Rule 204A-1 under the Investment Advisers Act of 1940. This Code of Ethics is intended to ensure that all acts, practices and courses of business engaged in by Access Persons of ProShare Advisors reflect high standards and comply with the requirements of the federal securities laws.

I.	Definitions

A. “Access Person” means:

(1) any director, trustee, officer, general partner, managing member, or advisory person of ProShare Advisors.

(2) any employee of ProShare Advisors (or of any company in a control relationship to ProShare Advisors) who, in connection with his or her regular functions or duties, makes, participates in, obtains or has access to information regarding the purchase or sale of a Security (as defined in this Code of Ethics) under the direction of ProShare Advisors, or whose functions relate to or provide access to the making of any recommendations with respect to such purchases or sales; and (3) any natural person in a control relationship to ProShare Advisors who obtains information concerning recommendations made to Clients with regard to the purchase or sale of a Security by ProShare Advisors.

B. “Beneficial Ownership” shall be interpreted in the same manner as it would be under Rule 16a-1(a)(2) in determining whether a person is subject to the provisions of Section 16 of the Securities Exchange Act of 1934 and the rules and regulations thereunder.

C. “ Control” shall have the same meaning as that set forth in Section 2(a)(9) of the Act. Section 2(a)(9) provides that “control” generally means the power to exercise a controlling influence over the management or policies of a company, unless such power is solely the result of an official position with such company.

D. A “ Security held or to be acquired” means: (1) any Security which, within the most recent 15 days: (a) is or has been held by a client under the direction; or (b) is being considered by ProShare Advisors for purchase or sale; and (2) any option to purchase or sell, and any Security convertible onto or exchangeable for, a Security described in clause (1) above.

E. An “initial public offering” means an offering of securities registered under the Securities Act of 1933, the issuer of which, immediately before the registration, was not subject to the reporting requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934.

F. A “limited offering” means an offering that is exempt from registration under the Securities Act of 1933 pursuant to Section 4(2) or Section 4(6) or pursuant to Rule 504, Rule 505, or Rule 506 under the Securities Act of 1933.

G. “Portfolio manager” means an employee of ProShare Advisors who is authorized to make investment decisions on behalf of Clients.

H. “Purchase or sale” for purposes of this Code of Ethics and each Appendix thereto includes, among other things, the writing of an option to purchase or sell a Security.

I. “Security” shall have the meaning set forth in Section 2(a)(36) of the Investment Company Act, except that: (1) the term “Security” shall include futures contracts on securities indices, and options on such futures contracts; and (2) the term “Security” shall not include direct obligations of the Government of the United States, bankers’ acceptances, bank certificates of deposit, commercial paper and high quality short-term debt instruments, including repurchase agreements, and shares of registered open-end investment companies except those advised or subadvised by ProShare Advisors, or such other securities as may be excepted under the provisions of Rule 17j-1.

II.

Legal Requirement

The federal securities laws make it unlawful for ProShare Advisors, as investment adviser, or any affiliated person of ProShare Advisors in connection with the purchase and sale by such person of a Security held or to be acquired by Clients:

(1) To employ any device, scheme or artifice to defraud Clients;

(2) To make to any Clients any untrue statement of a material fact or omit to state to Clients a material fact necessary in order to make the statements made, in light of the circumstances under which they are made, not misleading;

(3) To engage in any act, practice, or course of business that operates or would operate as a fraud or deceit upon Clients; or

(4) To engage in any manipulative practice with respect to Clients.

To assure compliance with these restrictions, ProShare Advisors adopts and agrees to be governed by the provisions contained in this Code of Ethics.

III.

General Principles

ProShare Advisors and each of its Access Persons shall be governed by the following principles:

A. No Access Person shall engage in any act, practice or course of conduct that would violate the provisions of this Code of Ethics, including the provisions under the Legal Requirement section, or any other applicable federal securities law;

B. The interests of Clients are paramount and come before the interests of any Access Person or employee;

C. Personal investing activities of all Access Persons shall be conducted in a manner that shall avoid actual or potential conflicts of interest with Clients; and

D. Access Persons shall not use such positions, or any investment opportunities presented by virtue of such positions, to the detriment of Clients.

IV.

Substantive Restrictions

A. Restricted lists . From time to time the Chief Compliance Officer or Chief Legal Officer may publish a restricted list of securities. No Access Person may purchase or sell, or modify any prior order to purchase or sell, any Security on the restricted list.

B. Short-Term Trading Restriction. Access Persons are prohibited from profiting (which shall include limiting or avoiding a loss) from the purchase and sale, or the sale and purchase, of the same (or equivalent) securities within two (2) business days. Employees may purchase an option on a long Security position to cover existing holdings within the two day period.

C. Initial Public Offerings and Limited Offerings .

(1) No Access Person may acquire any direct or indirect Beneficial Ownership in any securities in an initial public offering or in a limited offering unless the Chief Compliance Officer of ProShare Advisors has authorized the transaction in advance.

(2) Any Access Person who have been authorized to acquire securities in a limited offering must disclose his or her interest if he or she is involved in ProShare Advisors’ consideration of an investment in such issuer. Any decision to acquire such issuer’s securities on behalf of Clients shall be subject to review by an Access Person with no personal interest in the issuer.

D. Acceptance of Gifts and Service on Boards . Access Persons who in connection with his or her regular functions or duties, make or participate in making recommendations regarding the purchase or sale of securities of clients or controls such persons:

(1) must not accept gifts in excess of limits contained in the Conduct Rules of the National Association of Securities Dealers, Inc. from any entity doing business with or on behalf of ProShare Advisors. Currently, the limit imposed by the Conduct Rules is $100, although occasional meals, tickets to sporting events or the theater, gifts of a personal nature, promotional items of nominal value, and comparable items are not included within this limit and;

(2) shall not serve on the boards of directors of publicly traded companies, or in any similar capacity, absent the prior approval of such service by the Chief Compliance Officer following the receipt of a written request for such approval. In the event such a request is approved, procedures shall be developed to avoid potential conflicts of interest.

E. Disgorgement . Any profits derived from securities transactions in violation of paragraphs IV.A-IV.C, above, shall be forfeited and paid to a charity selected by ProShare Advisors. Gifts accepted in violation of paragraph IV.D shall be forfeited, if practicable, and/or dealt with in any manner determined appropriate and in the best interests of Clients.

F. Exemptions . The restrictions of the Code of Ethics shall not apply to the following transactions unless the Chief Compliance Officer determines that such transactions violate the provisions of other provisions of the federal securities laws:

(1) Reinvestments of dividends pursuant to a plan;

(2) Transactions in instruments which are excepted from the definition of Security in this Code of Ethics.

(3) Transactions in which direct or indirect Beneficial Ownership is not acquired or disposed of;

(4) Transactions in accounts as to which an Access Person has no investment control;

(5) Transactions in accounts of an Access Person for which investment discretion is not maintained by the Access Person but is granted to any of the following that are unaffiliated with ProShare Advisors: a registered broker-dealer, registered investment adviser or other investment manager acting in a similar fiduciary capacity, provided the following conditions are satisfied:

(a) The terms of the account agreement (“Agreement”) must be in writing and furnished to the Chief Compliance Officer prior to any transactions;

(b) Any amendment to the Agreement must be furnished to the Chief Compliance Officer prior to its effective date;

(d) The exemption provided by this Section in F(5) shall not be available for a transaction or class of transactions which is suggested or directed by the Access Person or as to which the Access Person acquires advance information.

G. Persons With Knowledge of the Composition of a Creation Deposit. The Trust will make available, prior to the opening of trading on the American Stock Exchange, a list of the names and the required number of shares of each security to be included in the Creation Deposit for each Bullish Fund. Personnel of ProShare Advisors LLC with knowledge about the composition of a Creation Deposit are prohibited from disclosing such information to any other person except as authorized in the course of their employment, until such information is made publicly available through the facilities of the National Securities Clearing Corporation or otherwise.

V.	Procedures

A. Reporting . In order to provide ProShare Advisors with information to enable it to determine with reasonable assurance whether the provisions of the Code of Ethics are being observed by its Access Persons, each Access Person of ProShare Advisors shall submit the following reports in the forms attached hereto as Exhibits A-C to ProShare Advisors’ Chief Compliance Officer (or his or her delegate) showing all transactions in securities in which the person has, or by reason of such transaction acquires, any direct or indirect Beneficial Ownership:

(1) Holding Report. Exhibit A shall initially be filed with the Chief Compliance Officer no later than 10 days after that person becomes an Access Person. Each Access Person shall thereafter file Exhibit A with the Chief Compliance Officer once each year on December 31.

(2) Periodic Reports. Exhibits B and C shall be filed no later than 10 days after the end of each calendar quarter, but transactions over which such person had no direct or indirect influence or control need not be reported. No such periodic report needs to be made if the report would duplicate information required to be recorded under Rule 204-2(a)(12) under the Investment Advisers Act of 1940, or information contained in broker trade confirmations or periodic account statements received by ProShare Advisors no later than 10 days after the end of each calendar quarter, or information contained in ProShare Advisors’ records. In lieu of filing periodic reports, broker trade confirmations or periodic account statements, an access person, with respect to a brokerage account in which such access person has any beneficial interest, may arrange for the broker to mail directly to the Compliance Officer at the same time they are mailed or furnished to such access person (a) duplicate copies of the broker’s trade confirmation

covering each transaction in securities in such account, or (b) copies of periodic statements with respect to the account.

B. Notification; Annual Certification . The Chief Compliance Officer (or his or her delegate) shall notify each Access Person of ProShare Advisors who may be required to make reports pursuant to this Code of Ethics, that such person is subject to reporting requirements and shall deliver a copy of this Code of Ethics to each such person. The Chief Compliance Officer shall annually obtain written assurances in the form attached hereto from each Access Person that he or she is aware of his or her obligations under this Code of Ethics and has complied with the Code of Ethics and with its reporting requirements.

VI.

Review and Enforcement

A. Review and Reporting .

(1) The Chief Compliance Officer (or his or her delegate) shall from time to time review the reported personal securities transactions of Access Persons for compliance with the requirements of this Code of Ethics.

(2) Any Access Person who is or becomes aware of any violation of the Code of Ethics must promptly report any such violation to the Chief Compliance Officer.

(3) If the Chief Compliance Officer (or his or her delegate) determines that a violation of this Code of Ethics may have occurred, before making a final determination that a material violation has been committed by an individual, the Chief Compliance Officer (or his or her delegate) may give such person an opportunity to supply additional information regarding the matter in question.

B. Enforcement.

(1) If the Chief Compliance Officer (or his or her delegate) determines that a material violation of this Code of Ethics has occurred, he or she shall promptly report the violation to the applicable investment company Board. The Chief Compliance Officer and/or the Chief Legal Officer shall take actions as they consider appropriate, including imposition of any sanctions they consider appropriate including termination of employment.

(2) No person shall participate in a determination of whether he or she has committed a violation of this Code of Ethics or in the imposition of any sanction against himself or herself.

C. Reporting to the investment company boards . No less frequently than annually, ProShare Advisors shall furnish to each investment company board, and the board must consider, a written report that:

(1) Describes any issues arising under the Code of Ethics or procedures since the last report to the board, including, but not limited to, information about material violations of the Code of Ethics or procedures and sanctions imposed in response to the material violations; and

(2) Certifies that ProShare Advisors has adopted procedures reasonably necessary to prevent Access Persons from violating this Code of Ethics.

VII.

Records

ProShare Advisors shall maintain records in the manner and to the extent set forth below, which records shall be available for appropriate examination by representatives of the Securities and Exchange Commission.

•

A copy of this Code of Ethics and any other code of ethics which is, or at any time within the past five years has been, in effect shall be preserved in an easily accessible place;

•

A copy of each report made pursuant to this Code of Ethics by an Access Person, including any information provided in lieu of reports, shall be preserved by ProShare Advisors for a period of not less than five years from the end of the fiscal year in which it is made, the first two years in an easily accessible place;

•

A copy of each report to the Board shall be preserved by ProShare Advisors for at least five years after the end of the fiscal year in which it is made, the first two years in an easily accessible place; and

•

ProShare Advisors shall preserve a record of any decision, and the reasons supporting the decision, to approve the acquisition by Access Persons of securities under Section IV.B of this Code of Ethics for at least five years after the end of the fiscal year in which the approval is granted, the first two years in an easily accessible place.

VIII.

Confidentiality

All reports of securities transactions and any other information filed with ProShare Advisors pursuant to this Code of Ethics, shall be treated as confidential, except as regards appropriate examinations by representatives of the Securities and Exchange Commission.

ANNUAL CERTIFICATION OF

PROSHARE ADVISORS LLC

The undersigned hereby certifies on behalf of ProShare Advisors LLC (“ProShare Advisors”) to the Board of _________________________________________________________ that ProShare Advisors has adopted procedures that are reasonably necessary to prevent Access Persons from violating the Code of Ethics.



Date: ____________________________
								Chief Compliance Officer

ANNUAL CERTIFICATE OF COMPLIANCE

Name (please print)

This is to certify that the attached Code of Ethics and policies and procedures assigned to detect and prevent insider trading was distributed to me on ____________, 200___. I have read and understand the Code of Ethics, and I understand my obligations thereunder. I certify that I have complied with the Code of Ethics during the course of my association with ProShare Advisors LLC, and that I will continue to do so in the future. Moreover, I agree to promptly report to the Chief Compliance Officer any violation or possible violation of the Code of Ethics of which I become aware.

I understand that violation of the Code of Ethics will be grounds for disciplinary action or dismissal and may also be a violation of federal and/or state securities laws.

Signature

Date

EXHIBIT A

ProShare Advisors

Holdings Report

To the Chief Compliance Officer:



Date: ____________________________						Signature:

A-1

EXHIBIT B

ProShare Advisors

Securities Transaction Report

For the Calendar Quarter Ended _________________

To the Chief Compliance Officer:

Title of Security (including ticker symbol, CUSIP number, and interest
and maturity date, if any)

Date of
Transaction

No. of
Shares

Principal
Amount of
Transaction

Nature of
Transaction
(Purchase,
Sale, Other)

Price

Broker/Dealer or
Bank Through
Whom Effected



Date: ____________________________						Signature:

B-1

EXHIBIT C

ProShare Advisors

Account Establishment Report

For the Calendar Quarter Ended _________________

To the Chief Compliance Officer:


Broker/Dealer or Bank Where Account Was Established		Date Account Was Established



Date: ____________________________						Signature:

Exhibit (p)(3)

SEI INVESTMENTS DISTRIBUTION CO.

RULE 17j-1 CODE OF ETHICS

A copy of this Code may be accessed on the SEI intranet site under the Corporate Governance section.

This is an important document. You should take the time to read it thoroughly before you submit the required annual certification.

Any questions regarding this Code of Ethics should be referred to a member of the SIDCO Compliance Department

January 2005

TABLE OF CONTENTS


I.	General Policy		3
II.	Code of Ethics		4

	A.	Purpose of Code	4
	B.	Employee Categories	4
	C.	Prohibitions and Restrictions	4
	D.	Pre-clearance of Personal Securities Transactions	6
	E.	Reporting Requirements	9
	F.	Detection and Reporting of Code Violations	13
	G.	Violations of the Code of Ethics	13
	H.	Confidential Treatment	14
	I.	Recordkeeping	14
	J.	Definitions Applicable to the Code of Ethics	15

III.	Exhibits - Code of Ethics Reporting Forms		17

I.	GENERAL POLICY

SEI Investments Distribution Co. (“SIDCO”) serves as principal underwriter for investment companies that are registered under the Investment Company Act of 1940 (“Investment Vehicles”). In addition, certain employees of SIDCO may serve as directors and/or officers of certain Investment Vehicles. This Code of Ethics (“Code”) sets forth the procedures and restrictions governing personal securities transactions for certain SIDCO personnel.

SIDCO has a highly ethical business culture and expects that its personnel will conduct any personal securities transactions consistent with this Code and in such a manner as to avoid any actual or potential conflict of interest or abuse of a position of trust and responsibility. Thus, SIDCO personnel must conduct themselves and their personal securities transactions in a manner that does not create conflicts of interest with the firm’s clients.

Pursuant to this Code, SIDCO personnel, their family members, and other persons associated with SIMC may be subject to various pre-clearance and reporting standards for their personal securities transactions based on their status as defined by this Code. Therefore, it is important that every person pay special attention to the categories set forth to determine which provisions of this Code applies to him or her, as well as to the sections on restrictions, pre-clearance, and reporting of personal securities transactions.

Each person subject to this Code must read and retain a copy of this Code and agree to abide by its terms. Failure to comply with the provisions of this Code may result in the imposition of serious sanctions, including, but not limited to, disgorgement of profits, penalties, dismissal, substantial personal liability and/or referral to regulatory or law enforcement agencies.

Please note that employees and registered representatives of SIDCO are subject to the supervisory procedures and other policies and procedures of SIDCO, and are also subject to the Code of Conduct of SEI Investments Company, which is the parent company of SIDCO. The requirements and limitations of this Code of Ethics are in addition to any requirements or limitations contained in these other policies and procedures. All employees are required to comply with federal securities laws and any regulations set forth by self-regulatory organizations (NASD, MSRB, etc.) of which SIDCO is a member.

Any questions regarding this Code of Ethics should be directed to a member of the SIDCO Compliance Department.

II.

CODE OF ETHICS

A.	Purpose of Code

This Code is intended to conform to the provisions of Section 17(j) of the Investment Company Act of 1940 (“the 1940 Act”), as amended, and Rule 17j-l thereunder, as amended, to the extent applicable to SIDCO’s role as principal underwriter to Investment Vehicles. Those provisions of the U.S. securities laws are designed to prevent persons who are actively engaged in the management, portfolio selection or underwriting of registered investment companies from participating in fraudulent, deceptive or manipulative acts, practices or courses of conduct in connection with the purchase or sale of securities held or to be acquired by such companies. Certain SIDCO personnel will be subject to various requirements based on their responsibilities within SIDCO and accessibility to certain information. Those functions are set forth in the categories below.

B.	Access Persons

(1) any director, officer or employee of SIDCO who serves as a director or officer of an Investment Vehicle for which SIDCO serves as principal underwriter;

(2) any director or officer of SIDCO who, in the ordinary course of business, makes, participates in or obtains information regarding, the purchase or sale of Covered Securities by an Investment Vehicle for which SIDCO serves as principal underwriter, or whose functions or duties in the ordinary course of business relate to the making of any recommendation to the Investment Vehicle regarding the purchase or sale of a Covered Security.

C.	Prohibitions and Restrictions

Prohibition Against Fraud, Deceit and Manipulation

Access Persons may not, directly or indirectly, in connection with the purchase or sale of a security held or to be acquired by an Investment Vehicle for which SIDCO serves as principal underwriter:

(a) employ any device, scheme or artifice to defraud the Investment Vehicle;

(b) make to the Investment Vehicle any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements made, in light of the circumstances under which they were made, not misleading;

(c) engage in any act, practice or course of business that operates or would operate as a fraud or deceit upon the Investment Vehicle; or

(d) engage in any manipulative practice with respect to the Investment Vehicle.

Excessive Trading of Mutual Fund Shares

Access Persons may not, directly or indirectly, engage in excessive short-term trading of shares of Investment Vehicles for which SIDCO serves as principal underwriter. Exhibit 6 hereto provides a list of the Investment Vehicles for which SIDCO provided such services. For purposes of this section, a person’s trades shall be considered “excessive” if made in violation of any stated policy in the mutual fund’s prospectus or if the trading involves multiple short-term round trip trades in a Fund for the purpose of taking advantage of short-term market movements.

Note that the SEI Funds are Covered Securities. ¹ Trades in the SEI Funds do not have to be pre-cleared but do have to be reported in accordance with this Code. Trades in SEI Funds done through the SEI Capital Accumulation (401(k)) Plan and trades done through an employee account established at SEI Private Trust Company will be deemed to satisfy the reporting requirements of the Code. Any trades in SEI Funds done in a different channel must be reported to the SIDCO Compliance Officer or the designated representative of the SIDCO Compliance Department.

Personal Securities Restrictions

Access Persons:

•

may not purchase or sell, directly or indirectly, any Covered Security within 24 hours before or after the time that the same Covered Security (including any equity related security of the same issuer such as preferred stock, options, warrants and convertible bonds) is being purchased or sold by any Investment Vehicle for which SIDCO serves as principal underwriter.

¹	The SEI Family of Funds includes the following Trusts: SEI Asset Allocation Trust, SEI Daily Income Trust, SEI Index Funds, SEI Institutional International Trust, SEI Institutional Investments Trust, SEI Institutional Managed Trust, SEI Liquid Asset Trust and SEI Tax Exempt Trust.

•

may not acquire securities as part of an Initial Public Offering (“IPO”) without obtaining the written approval of the SIDCO Compliance Officer or the designated representative of the SIDCO Compliance Department before directly or indirectly acquiring a beneficial ownership in such securities.

•

may not acquire a Beneficial Ownership interest in securities issued in a private placement transaction without obtaining prior written approval from the SIDCO Compliance Officer or the designated representative of the SIDCO Compliance Department.

•

may not profit from the purchase and sale or sale and purchase of a Covered Security within 60 days of acquiring or disposing of Beneficial Ownership of that Covered Security. This prohibition does not apply to transactions resulting in a loss, or to futures or options on futures on broad-based securities indexes or U.S. Government securities. This prohibition also does not apply to transactions in the SEI Funds, which are separately covered under the “Excessive Trading of Mutual Fund Shares” discussed in Section II.C.2 above.

•

may not serve on the board of directors of any publicly traded company.

D.	Pre-Clearance of Personal Securities Transactions

Transactions Required to be Pre-Cleared:

•

Access Persons must pre-clear with the SIDCO Compliance Officer or the designated representative of the SIDCO Compliance Department a proposed transaction in a Covered Security if he or she has actual knowledge at the time of the transaction that, during the 24 hour period immediately preceding or following the transaction, the Covered Security was purchased or sold or was being considered for purchase or sale by any Investment Vehicle. The pre-clearance obligation applies to all Accounts held in the person’s name or in the name of others in which they hold a Beneficial Ownership interest. Note that, among other things, this means that these persons must pre-clear such proposed securities transactions by their spouse or domestic partner, minor children, and relatives who reside in the person’s household.

•

The SIDCO Compliance Officer or designated representative of the SIDCO Compliance Department may authorize a Pre-clearing Person to conduct the requested trade upon determining that the transaction for which pre-clearance is requested would not result in a conflict of interest or violate any other policy embodied in this Code. Factors to be considered may include: the discussion with the requesting person as to the background for the exemption request, the requesting person’s work role, the size and holding period of the requesting person’s position in the security, the market capitalization of the issuer, the liquidity of the security, the reason for the requesting person’s requested transaction, the amount and timing of client trading in the same or a related security, and other relevant factors. The person granting the authorization must document the basis for the authorization.

Transactions that do no have to be pre-cleared:

•

purchases or sales over which the person pre-clearing the transactions (the “Pre-clearing Person”) has no direct or indirect influence or control;

•

purchases, sales or other acquisitions of Covered Securities which are non-volitional on the part of the Pre-clearing Person or any Investment Vehicle, such as purchases or sales upon exercise or puts or calls written by Pre-clearing Person, sales from a margin account pursuant to a bona fide margin call, stock dividends, stock splits, mergers consolidations, spin-offs, or other similar corporate reorganizations or distributions;

•

purchases or withdrawals made pursuant to an Automatic Investment Program; however, any transaction that overrides the preset schedule or allocations of the automatic investment plan must be reported in a quarterly transaction report;

•

purchases effected upon the exercise of rights issued by an issuer pro rata to all holders of a class of its securities, to the extent such rights were acquired for such issuer; and

•

acquisitions of Covered Securities through gifts or bequests.

Pre-clearance Procedures:

•

All requests for pre-clearance of securities transactions must be submitted to the SIDCO Compliance Officer or designated representative of the SIDCO Compliance Department by using the SEI Automated Pre-Clearance Trading system.

•

The following information must be provided for each request:

a. Name, date, phone extension and job title

b. Transaction detail, i.e. whether the transaction is a buy or sell; the security name and security type; number of shares; price; date acquired if a sale; and whether the security is traded in a portfolio or Investment Vehicle, part of an initial public offering, or part of a private placement transaction; and

c. Signature and date; if electronically submitted, initial and date.

•

The SIDCO Compliance Officer or designated representative of the SIDCO Compliance Department will notify the requesting person whether the trading request is approved or denied through the SEI Automated Pre-Clearance Trading system.

•

A Pre-clearance Request should not be submitted for a transaction that the requesting person does not intend to execute.

•

Pre-clearance trading authorization is valid from the time when approval is granted through the next business day. If the transaction is not executed within this period, an explanation of why the previous pre-cleared transaction was not completed must be submitted to the SIDCO Compliance department or entered into the SEI Automated Pre-clearance Trading system. Also, Open and Limit Orders must be resubmitted for pre-clearance approval if not executed within the permitted time period.

•

With respect to any transaction requiring pre-clearance, the person subject to pre-clearance must submit to the SIDCO Compliance Officer or designated representative of the SIDCO Compliance Department transaction reports showing the transactions for all the Investment Vehicles with respect to which such

person has knowledge regarding purchases and sales that triggered the requirement to pre-clear under Section D.1. The transaction information must be provided for the 24 hour period before and after the date on which their securities transactions were effected. These reports may be submitted in hard copy or viewed through the SEI Pre-clearance Trading system. Transaction reports need only cover the Investment Vehicles that hold or are eligible to purchase and sell the types of securities proposed to be bought or sold by person subject to pre-clearance requirements. For example, if a person seeks approval for a proposed equity trade, only the transactions reports for the Investment Vehicles effecting or eligible to effect transactions in equity securities are required.

•

The SIDCO Compliance Department will maintain pre-clearance records and records of exemptions granted for 5 years.

E.	Reporting Requirements

Duplicate Brokerage Statements

•

Access Persons are required to instruct their broker/dealer to file duplicate statements with the SIDCO Compliance Department at SEI Oaks. Statements must be filed for all Accounts (including those in which the person has a Beneficial Ownership interest), except those that trade exclusively in open-end funds other than Reportable Funds, government securities or Automatic Investment Plans. Failure of a broker/dealer to send duplicate statements will not excuse a violation of this Section.

•

Sample letters instructing the broker/dealer firms to send the statements to SIDCO are attached in Exhibit 1 of this Code. If the broker/dealer requires a letter authorizing a SIDCO employee to open an account, the permission letter may also be found in Exhibit 1. Please complete the necessary brokerage information and forward a signature ready copy to the SIDCO Compliance Officer.

•

If no such duplicate statement can be supplied, the employee should contact the SIDCO Compliance Department.

Initial Holdings Report

•

Access Persons must submit an Initial Holdings Report to the SIDCO Compliance Officer or designated representative of the SIDCO Compliance Department disclosing every Covered Security, including mutual fund accounts, beneficially owned directly or indirectly by such person within 10 days of becoming an Access Person. Any person who returns the report late may be subject to the penalties in Section G regarding Code of Ethics violations.

•

The following information must be provided on the report:

a. the title of the security;

b. the number of shares held;

c. the principal amount of the security;

d. the name of the broker, dealer, transfer agent; bank or other location where the security is held; and

e. the date the report is submitted.

The information disclosed in the report should be current as of a date no more than 45 days prior to the date the person becomes an Access Person. If the above information is contained on the Access Person’s brokerage statement, he or she may attach the statement and sign the Initial Holdings Report.

•

The Initial Holdings Report is attached as Exhibit 2 to this Code.

Quarterly Report of Securities Transactions

•

Access Persons must submit quarterly transaction reports of the purchases and/or sales of Covered Securities in which such persons have a direct or indirect Beneficial Ownership interest. The report will be provided to all of the above defined persons before the end of each quarter by the SIDCO Compliance Officer or designated representative of the SIDCO Compliance Department and must be completed and returned no later than 30 days after the end of each calendar quarter. Quarterly Transaction Reports that are not returned by the date they are due will be considered late and will be noted as violations of the Code of Ethics. Any person who repeatedly returns the reports late may

be subject to the penalties in Section G regarding Code of Ethics violations.

•

The following information must be provided on the report:

a. the date of the transaction, the description and number of shares, and the principal amount of each security involved;

b. whether the transaction is a purchase, sale or other acquisition or disposition;

c. the transaction price;

d. the name of the broker, dealer or bank through whom the transaction was effected;

e. a list of securities accounts opened during the quarterly including the name of the broker, dealer or bank and account number; and

f. the date the report is submitted.

•

The Quarterly Report of Securities Transaction is attached as Exhibit 3 to this Code.

Annual Report of Securities Holdings

•

On an annual basis, Access Persons must submit to the SIDCO Compliance Officer or designated representative of the SIDCO Compliance Department an Annual Report of Securities Holdings that contains a list of all Covered Securities, including mutual fund accounts, in which they have any direct or indirect Beneficial Ownership interest.

•

The following information must be provided on the report:

a. the title of the security;

b. the number of shares held;

c. the principal amount of the security;

d. the name of the broker, dealer, transfer agent, bank or other location where the security is held; and

e. the date the report is submitted.

The information disclosed in the report should be current as of a date no more than 45 days before the report is submitted. If the above information is contained on the Access Person’s brokerage statement, he or she may attach the statement and sign the annual holdings report.

•

Annual Reports must be completed and returned to the SIDCO Compliance Officer or designated representative of the SIDCO Compliance Department within 30 days after the end of the calendar year-end. Annual Reports that are not returned by the date they are due will be considered late and will be noted as violations of the Code of Ethics. Any person who repeatedly returns the reports late may be subject to the penalties in Section G regarding Code of Ethics violations.

•

The Annual Report of Securities Holdings is attached as Exhibit 4 to this Code.

Annual Certification of Compliance

•

Access Persons will be required to certify annually that they:

•

have read the Code of Ethics;

•

understand the Code of Ethics; and

•

have complied with the provisions of the Code of Ethics.

•

The SIDCO Compliance Officer or designated representative from the SIDCO Compliance Department will send out annual forms to all Access Persons that must be completed and returned no later than 30 days after the end of the calendar year. Any person who repeatedly returns the forms late may be subject to the penalties in Section G regarding Code of Ethics violations.

•

The Annual Certification of Compliance is attached as Exhibit 5 to this Code.

Exception to Reporting Requirements

•

An Access Person who is subject to the Code of Ethics of an affiliate of SIDCO (“Affiliate Code”), and who pursuant to the Affiliate Code submits reports consistent with the reporting requirements of paragraphs 1 through 4 above, will not be required to submit such reports under this Code.

F.	Detection and Reporting of Code Violations

The SIDCO Compliance Officer or designated representative of the SIDCO Compliance Department will:

•

review the personal securities transaction reports or duplicate statements filed by Access Persons and compare the reports or statements of the Investment Vehicles’ completed portfolio transactions. The review will be performed on a quarterly basis. If the SIDCO Compliance Officer or the designated representative of the SIDCO Compliance Department determines that a compliance violation may have occurred, the Officer will give the person an opportunity to supply explanatory material;

•

prepare an Annual Issues and Certification Report to the Board of Trustees or Directors of any Investment Vehicle that (1) describes the issues that arose during the year under this Code, including, but not limited to, material violations of and sanctions under the Code, and (2) certifies that SIDCO has adopted procedures reasonably necessary to prevent its Access Persons from violating this Code;

•

prepare a written report to SIDCO management outlining any violations of the Code together with recommendations for the appropriate penalties; and

•

prepare a written report detailing any approval(s) granted for the purchase of securities offered in connection with an IPO or a private placement. The report must include the rationale supporting any decision to approve such a purchase.

An employee who in good faith reports illegal or unethical behavior will not be subject to reprisal or retaliation for making the report. Retaliation is a serious violation of this policy and any concern about retaliation should be reported immediately. Any person found to have retaliated against an employee for reporting violations will be subject to appropriate disciplinary action.

G.	Violations of the Code of Ethics

Penalties:

•

Persons who violate the Code of Ethics may be subject to serious penalties, which may include:

•

written warning;

•

reversal of securities transactions;

•

restriction of trading privileges;

•

disgorgement of trading profits;

•

fines;

•

suspension or termination of employment; and/or

•

referral to regulatory or law enforcement agencies.

Penalty Factors:

•

Factors which may be considered in determining an appropriate penalty include, but are not limited to:

•

the harm to clients;

•

the frequency of occurrence;

•

the degree of personal benefit to the employee;

•

the degree of conflict of interest;

•

the extent of unjust enrichment;

•

evidence of fraud, violation of law, or reckless disregard of a regulatory requirement; and/or

•

the level of accurate, honest and timely cooperation from the employee.

Confidential Treatment

•

The SIDCO Compliance Officer or designated representative from the SIDCO Compliance Department will use their best efforts to assure that all requests for pre-clearance, all personal securities reports and all reports for securities holding are treated as personal and confidential. However, such documents will be available for inspection by appropriate regulatory agencies and other parties, such as counsel, within and outside SIDCO as necessary to evaluate compliance with or sanctions under this Code.

Recordkeeping

•

SIDCO will maintain records relating to this Code of Ethics in accordance with Rule 31a-2 under the 1940 Act. They will be available for examination by representatives of the Securities and Exchange Commission and other regulatory agencies.

•

A copy of this Code that is, or at any time within the past five years has been, in effect will be preserved in an easily accessible place for a period of five years.

•

A record of any Code violation and of any sanctions taken will be preserved in an easily accessible place for a period of at least five years following the end of the fiscal year in which the violation occurred.

•

A copy of each Quarterly Transaction Report, Initial Holdings Report, and Annual Holdings Report submitted under this Code, including any information provided in lieu of any such reports made under the Code, will be preserved for a period of at least five years from the end of the fiscal year in which it is made, for the first two years in an easily accessible place.

•

A record of all persons, currently or within the past five years, who are or were required to submit reports under this Code, or who are or were responsible for reviewing these reports, will be maintained in an easily accessible place for a period of at least five years from the end of the calendar year in which it is made.

J.	Definitions Applicable to the Code of Ethics

•

Account - a securities trading account held by a person and by any such person’s spouse, minor children and adults residing in his or her household (each such person, an “immediate family member”); any trust for which the person is a trustee or from which the person benefits directly or indirectly; any partnership (general, limited or otherwise) of which the person is a general partner or a principal of the general partner; and any other account over which the person exercises investment discretion.

•

Automatic Investment Plan - a program in which regular periodic purchases (or withdrawals) are made automatically in (or from) investment accounts in accordance with a predetermined schedule and allocation. An Automatic Investment Plan includes a dividend reinvestment plan.

•

Beneficial Ownership - Covered Security ownership in which a person has a direct or indirect financial interest. Generally, a person will be regarded as a beneficial owner of Covered Securities that are held in the name of:

a spouse or domestic partner;

a relative who resides in the person’s household; or

any other person IF : (a) the person obtains from the securities benefits substantially similar to those of ownership (for example, income from securities that are held by a spouse); or (b) the person can obtain title to the securities now or in the future.

•

Covered Security - except as noted below, includes any interest or instrument commonly known as a “security”, including notes, bonds, stocks (including closed-end funds), debentures, convertibles, preferred stock, security future, warrants, rights, and any put, call, straddle, option, or privilege on any security (including a certificate of deposit) or on any group or index of securities. The term “Covered Securities” specifically includes the SEI Funds. See the definition of Reportable Funds below.

A “Covered Security” does not include (i) direct obligations of the U.S. Government, (ii) bankers’ acceptances, (iii) bank certificates of deposit, (iv) commercial paper and other high quality short-term debt instruments, including repurchase agreements, (v) shares issued by money market funds and (vi) shares issued by open-end investment companies other than a Reportable Fund.

•

Initial Public Offering - an offering of securities for which a registration statement has not been previously filed with the U.S. SEC and for which there is no active public market in the shares.

•

Purchase or sale of a Covered Security - includes the writing of an option to purchase or sell a security.

•

Reportable Fund - Any non-money market fund for which SIDCO serves as principal underwriter.

SEI INVESTMENTS DISTRIBUTION CO.

CODE OF ETHICS EXHIBITS


Exhibit 1		Account Opening Letters to Brokers/Dealers

Exhibit 2		Initial Holdings Report

Exhibit 3		Quarterly Transaction Report

Exhibit 4		Annual Securities Holdings Report

Exhibit 5		Annual Compliance Certification

Exhibit 6		SIDCO Client List

EXHIBIT 1

Date:

Your Broker

street address

city, state zip code

Re:

Your Name

your S.S. number or account number

Dear Sir or Madam:

Please be advised that I am an employee of SEI Investments Distribution Co. Please send duplicate statements only of this brokerage account to the attention of:

SEI Investments Distribution Co.

Attn: The Compliance Department

One Freedom Valley Drive

Oaks, PA 19456

This request is made pursuant to SEI’s Code of Ethics.

Thank you for your cooperation.

Sincerely,

Your name

Date:

[Address]

Re:

Employee Name

Account #

SS#

Dear Sir or Madam:

Please be advised that the above referenced person is an employee of SEI Investments Distribution Co. We grant permission for him/her to open a brokerage account with your firm, provided that you agree to send duplicate statements only of this employee’s brokerage account to:

SEI Investments Distribution Co.

Attn: The Compliance Department

One Freedom Valley Drive

Oaks, PA 19456

This request is made pursuant to SEI’s Code of Ethics.

Thank you for your cooperation.

Sincerely,

SEI Compliance Officer

EXHIBIT 2

SEI INVESTMENTS DISTRIBUTION CO.

INITIAL HOLDINGS REPORT

Name of Reporting Person: _______________________________________________________________

Date Person Became Subject to the Code’s Reporting Requirements: _______________________________

Information in Report Dated as of: _________________________________________________________

Date Report Due: _______________________________________________________________________

Date Report Submitted: __________________________________________________________________

Securities Holdings

If you have no securities holdings to report, please check here. ¨

Securities Accounts

If you have no securities accounts to report, please check here. ¨

I certify that I have included on this report all securities holdings and accounts in which I have a direct or indirect beneficial interest and required to be reported pursuant to the Code of Ethics and that I will comply with the Code of Ethics.



Signature:						Date:

Received by:

EXHIBIT 3

SEI INVESTMENTS DISTRIBUTION CO.

QUARTERLY TRANSACTION REPORT

Transaction Record of Securities Directly or Indirectly Beneficially Owned

For the Quarter Ended ____________________

Name: _________________________________________________________

Submission Date: ________________________________________________

Securities Transactions

Date of Transaction

Name of Issuer and

Title of Security

No. of Shares
(if applicable)

Principal Amount,
Maturity Date and
Interest Rate (if
applicable)

Type of
Transaction

Price

Name of Broker,

Dealer or Bank

Effecting
Transaction

If you had no reportable transactions during the quarter, please check here. ¨

NOTE: Trades in SEI Funds done through the SEI Capital Accumulation (401(k)) Plan and trades done through an employee account established at SEI Private Trust Company will be deemed to satisfy the reporting requirements of the Code and do not have to be reported here. Any trades in SEI Funds done in a different channel must be reported.

This report is required of all officers, directors and certain other persons under Rule 17j-l of the Investment Company Act of 1940 and is subject to examination. Transactions in direct obligations of the U.S. Government need not be reported. In addition, persons need not report transactions in bankers’ acceptances, certificates of deposit, commercial paper or open-end investment companies

other than Reportable Funds. The report must be returned within 30 days of the applicable calendar quarter end. The reporting of transactions on this record shall not be construed as an admission that the reporting person has any direct or indirect beneficial ownership in the security listed.

Securities Accounts

If you established an account within the quarter, please provide the following information:


Name of Broker, Dealer or Bank	Account Number	Names on Account	Date Account was Established	Type of Account

If you did not establish a securities account during the quarter, please check here. ¨

By signing this document, I represent that all reported transactions were pre-cleared through the Compliance Department or the designated Compliance Officer in compliance with the SIDCO Code of Ethics. In addition, I certify that I have included on this report all securities transactions and accounts required to be reported pursuant to the Policy.



Signature:

Received by:

EXHIBIT 4

SEI INVESTMENTS DISTRIBUTION CO.

ANNUAL SECURITIES HOLDINGS REPORT

As of December 31, ________________

Name of Reporting Person: ________________________________

Securities Holdings

If you had no securities holding to report this year, please check here. ¨

Securities Accounts

If you established an account during the year, please provide the following information:


Name of Broker, Dealer or Bank	Date Account was Established	Account Number	Names on Account	Type of Account

If you have no securities accounts to report this year, please check here. ¨

I certify that the above list is an accurate and complete listing of all securities in which I have a direct or indirect beneficial interest.




Signature				Received by


Date

Note: Do not report holdings of U.S. Government securities, bankers’ acceptances, certificates of deposit, commercial paper and mutual funds other than Reportable Funds.

EXHIBIT 5

SEI INVESTMENTS DISTRIBUTION CO.

RULE 17J-1 CODE OF ETHICS

ANNUAL COMPLIANCE CERTIFICATION

Please return the signed form via email or

interoffice the form to SEI Compliance Department – Meadowlands Two

1.	I hereby acknowledge receipt of a copy of the Code of Ethics.

2.	I have read and understand the Code of Ethics and recognize that I am subject thereto. In addition, I have raised any questions I may have on the Code of Ethics with the SIDCO Compliance Officer and have received a satisfactory response[s].

3.	For all securities/accounts beneficially owned by me, I hereby declare that I have complied with the terms of the Code of Ethics during the prior year.


Print Name:



Signature:



Date:



Received by SIDCO:

EXHIBIT 6

As of December 31, 2004 (WILL ADD), SIDCO acts as distributor for the following:

SEI Daily Income Trust

SEI Liquid Asset Trust

SEI Tax Exempt Trust

SEI Index Funds

SEI Institutional Managed Trust

SEI Institutional International Trust

The Advisors’ Inner Circle Fund

STI Classic Funds

The Arbor Fund

Bishop Street Funds

STI Classic Variable Trust

SEI Asset Allocation Trust

SEI Institutional Investments Trust

HighMark Funds

Expedition Funds

Oak Associates Funds

The Nevis Fund, Inc.

CNI Charter Funds

Amerindo Funds Inc.

iShares Inc.

iShares Trust

Pitcairn Funds

JohnsonFamily Funds, Inc.

The MDL Funds

Causeway Capital Management Trust

The Japan Fund, Inc.

TT International U.S.A. Master Trust

TT International U.S.A. Feeder Trust

Exhibit (q)

POWER OF ATTORNEY

KNOW ALL BY THESE PRESENTS, that the person whose signature appears below constitutes and appoints Steven Brancato to act as attorney-in-fact and agent, with power of substitution and resubstitution, for the undersigned in any and all capacities to sign the Registration Statements of ProFunds, Access One Trust and ProShares Trust and any pre- or post-effective amendments thereto, and to file the same, with exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, hereby ratifying and confirming all that said attorney-in-fact, or his substitute or substitutes, may do or cause to be done by virtue hereof.



/s/ Russell S. Reynolds, III				April 7, 2006
Russell S. Reynolds, III

POWER OF ATTORNEY



/s/ Michael C. Wachs				April 7, 2006
Michael C. Wachs