Comparing MLFM-ES vs. IQ Hedge Multi-Strategy Index The IQ Hedge Multi-Strategy Index uses 68 factors to represent the risk-adjusted return characteristics of a broad group of hedge fund investment styles, including long/short equity, global macro, market neutral, event-driven, fixed income arbitrage and emerging markets equity. The table below shows the top five components of each index in July 2015. MLFM-ES Has Lower Fixed Income Exposure As of last rebalance3 Merrill Lynch Factor Model – Exchange Series IQ Hedge Multi-Strategy Index Factor Weight 3-month Treasury bills 61.7% Vanguard Short-Term Bond ETF 19.5% MSCI EAFE S&P 500 ProShares UltraShort Euro ETF (EUO)4 Russell 2000 Factor Vanguard Total Bond Market ETF iShares Core U.S. Aggregate 11.9% Bond ETF iShares 1-3 Yr Treasury -7.3% Bond ETF SPDR® Barclays Convertible 4.3% Securities ETF 17.3% Weight 15.3% 14.1% 10.6% 9.7% Last rebalance for MLFM-ES was 7/2/2015 and for IQ Hedge Multi-Strategy Index was 7/9/2015. The EUO weight of 3.65% reflects euro exposure of -7.3%.

For illustrative purposes only. 3 4 As of the last rebalance, both indexes had a large component of fixed income, which is not surprising since hedge replication indexes typically have a low beta to the S&P 500. MLFM-ES had a factor weight of 61.7% entirely in Treasury bills, which have a very low duration. IQ Hedge Multi-Strategy Index had weights in a variety of fixed income ETFs that combined to a total of approximately 65% in bonds and 10% in convertibles.

Though the index uses 68 factors, note that the top five factors represented just under 70% of the index. Also notable is the longer duration of IQ Hedge Multi-Strategy Index’s fixed income exposure. The takeaway If you own or are considering a hedge fund replication strategy to help diversify your portfolio, it’s important to look under the hood to understand what factors are used and how they are combined to capture hedge fund-like returns. It’s also important to understand what risks you are trying to offset and what risks you are comfortable taking. For example, if the strategy you’re considering has a high level of fixed income exposure, ask yourself what level of duration aligns with your portfolio objectives. HDG ProShares Hedge Replication ETF • Unlocks the potential of hedge funds  •  iquid, flexible access to hedge fund replication L •  an be a valuable component of an alternative C asset allocation •  eeks to track the Merrill Lynch Factor Model S Exchange Series (MLFM-ES).

There is no guarantee HDG or MLFM-ES will achieve their objectives. Find out more Visit ProShares.com or consult your financial advisor. This information is not meant to be investment advice. Indexes are unmanaged and one cannot invest directly in an index. Index performance does not reflect any management fees, transaction costs or expenses.

Past performance is not a guarantee of future results. Investing involves risk, including the possible loss of principal. ProShares ETFs are generally non-diversified and each entails certain risks, which may include risk associated with the use of derivatives (swap agreements, futures contracts and similar instruments), imperfect benchmark correlation, leverage and market price variance. Short positions lose value as security prices increase.

Leverage can increase market exposure and magnify investment risk. These risks can increase volatility and decrease performance. Please see their summary and full prospectuses for a more complete description of risks. There is no guarantee any ProShares ETF will achieve its investment objective. ProShares Hedge Replication ETF (HDG) does not invest in any hedge funds or funds-of-hedge-funds.

There is no guarantee that HDG will successfully achieve its investment objective or that the “Merrill Lynch Factor Model®– Exchange Series” (MLFM-ES) will successfully provide the risk/return characteristics of a broad universe of hedge funds or achieve a high correlation with the HFRI Fund Weighted Composite Index (HFRI). Performance differences between MLFM-ES and HFRI are expected to be material at times. Even if HDG achieves its benchmark tracking objective, MLFM-ES may not produce the risk/return characteristics of a broad universe of hedge funds, as measured by HFRI or any other hedge fund benchmark.

Individual hedge funds or funds-of-hedgefunds have the potential to provide materially higher or lower returns than HDG, MLFM-ES, or the average return of a broad universe of hedge funds. Carefully consider the investment objectives, risks, charges and expenses of ProShares before investing. This and other information can be found in their summary and full prospectuses. Read them carefully before investing.

Obtain them from your financial advisor or broker/dealer representative or visit ProShares.com. “Merrill Lynch Factor Model®– Exchange Series,” “Merrill Lynch Factor Model,®” and “Merrill Lynch InternationalTM” are intellectual property of Merrill Lynch, Pierce, Fenner & Smith IncorporatedTM or its affiliates (“BofAML”) and have been licensed for use by ProShares. Certain trademarks and other marks are property of Standard & Poor’s Financial Services LLC, MSCI, Inc., Russell Investments, or their respective affiliates (collectively, “the Index Entities”) and have been licensed for use by BofAML. ProShares have not been passed on by BofAML or the Index Entities as to their legality or suitability. ProShares are not sponsored, endorsed, recommended, sold or promoted by BofAML or the Index Entities, and they make no representation regarding the advisability of investing in ProShares. THE ML FACTOR MODEL AND THE MARKS ARE LICENSED ON AN “AS IS” BASIS.

BOFAML AND THE INDEX ENTITIES MAKE NO WARRANTIES AND BEAR NO LIABILITY WITH RESPECT TO THE ML FACTOR MODEL OR MARKS, THEIR USE, OR PROSHARES. ProShares are distributed by SEI Investments Distribution Co., which is not affiliated with the funds’ advisor. © 2015 PSA 2015-3286 .