Answers to Questions about SKF and SEF

Due to the emergency action announced by the Securities and Exchange Commission on September 18, 2008, temporarily prohibiting short sales of shares of certain financial companies, Short Financials ProShares (SEF) and UltraShort Financials ProShares (SKF) are not expected to accept orders from Authorized Participants to create shares until further notice. Unless notified otherwise, shares will be available for redemption by Authorized Participants as normal. The shares of these ProShares are expected to trade in the financial markets. As disclosed in the prospectus, ProShares may at times trade at prices that are not in line with their intraday indicative values. Here are some commonly asked questions:

What did the Securities and Exchange Commission do on Thursday, September 18, 2008?
On Thursday, September 18, 2008, the SEC issued an emergency order temporarily prohibiting short sales of certain financial companies. By its terms the order terminates on October 2, 2008, although the SEC has the power to extend it beyond that date.

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What action did ProShares take on Friday, September 19, 2008 with respect to SKF and SEF?
We made the decision that as of 11:25AM on Friday, SKF and SEF would not issue new shares until further notice.

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Why did ProShares decide not to issue new shares of SKF and SEF?
In light of the SEC’s unprecedented action, we thought there was the potential for extraordinary demand to create new shares of these ETFs. We were concerned there might be limitations in getting sufficient short investment exposure to cover any new shares of SKF or SEF. So we decided it would be in the best interests of the ETFs to cease creation of new shares.

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Can I still buy and sell shares of SKF and SEF?
Yes. Shares are currently available to be bought and sold in the financial markets. Please check with your broker regarding current market conditions before placing an order.

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When do you expect to resume creations?
The regulatory and market environment affecting these ETFs has been changing rapidly over the past several days. The decision to resume creating new shares will be based upon the best interests of the ETFs with a view of the then-current regulatory and market environment. We expect to make a public announcement when we decide to resume creating new shares.

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Why did the American Stock Exchange temporarily stop trading in SKF and SEF on Friday morning, September 19th?
The Amex halted trading in SKF and SEF on Friday morning pending the public announcement that we would not be issuing new shares on SKF and SEF. These ETFs resumed trading on the Amex shortly after the announcement was made.

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How will the market prices of SKF and SEF be affected by your decision to stop creating new shares?
As disclosed in the ProShares prospectus, market prices in shares will fluctuate in response to changes in NAV and supply and demand for shares. ProShares cannot predict whether shares will trade above, below or at their NAV. It is possible that because no new shares are currently being created, there could be a supply and demand imbalance in the secondary market for SKF and SEF shares, which may cause those ETFs to trade at a premium or discount to their indicative values for some period of time, although, for a variety of reasons, it is impossible to predict whether or for how long any premium or discount would persist.

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Will trading be halted again?
The American Stock Exchange determines the circumstances under which trading in a listed security is halted. The Amex may halt trading for a variety of reasons.

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How will the SEC restrictions affect SKF's and SEF's ability to track their indexes daily?
ProShares will continue to manage these ETFs with a view to meeting their investment objectives. The evolving regulatory and market environment may affect the ETFs’ ability to meet their investment objectives. As disclosed in the prospectus, there are many factors that affect their ability to meet their objectives and there can be no guarantee that these funds will do so.

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How does the SEC restriction affect your other ProShares?
At this point in time, we have no intention to cease the creation of new shares for other ProShares. As the regulatory and market environment evolves, we will evaluate current conditions and will take any action we believe to be in the best interest of the ETFs.

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