What does “estimated upside market participate rate” mean?

The estimated upside market participation rate tells an investor how much of the gains (after the initial hurdle) they get to keep if the market goes up.

Let’s break that down in the case of the ARK Defined Innovation Exposure Term ETFs (ARK DIET): 

• If the reference asset, ARKK – the ARK Innovation ETF, rises 20% over the outcome period: 
• An investor skips the first 5% due to the hurdle.
• Then, the investor participates in 50-80% of the remaining 15% = 7.5-12% return. 

That 50- 80% is the upside participation rate. 

It’s called “estimated” because the exact rate is determined at the beginning of each outcome period and can vary depending on: 

• Volatility in the market
• Interest rates 
• Pricing of options at the time the fund is reset 

This number is key to understanding how much growth an investor will see in a strong market.