ETFs involve risk including possible loss of principal. There is no assurance that the Fund will achieve its investment objective. The Funds pose risks that are unique and complex. The Fund is riskier than alternatives that do not use leverage and the volatility of the underlying security may affect the Fund's return as much as, or more than, the return of the underlying security.
Leverage Risk. Leverage increases the risk of a total loss of an investor’s investment, may increase the volatility of the Fund, and may magnify any differences between the performance of the Fund and APP. Because the Fund includes a multiplier of two times (200%) APP, a single day decline in APP approaching 50% at any point in the day could result in the total loss of an investor’s investment if that movement is contrary to the investment objective of the Fund, even if APP subsequently rises or moves in an opposite direction, eliminating all or a portion of the earlier decline. This would be the case with any such single day movements in APP, even if APP maintains a level greater than zero at all times.
Compounding Risk: The Funds have a single day investment objective, and performance for any other period is the result of their returns for each day compounded over the period. The performance of the Funds for periods longer than a single day will very likely differ in amount, and possibly even direction, from the intended leverage multiplier of the daily return of the underlying stock for the same period, before accounting for fees and expenses.
Derivatives Risk: The Funds’ use of derivatives may be considered aggressive and may expose the Funds to greater risks and larger losses or smaller gains than investing directly in the reference asset(s) underlying those derivatives. A derivative refers to any financial instrument whose value is derived, at least in part, from the price of an underlying security, asset, rate or index.
Swap agreement risk: A swap is an agreement between two parties to exchange an asset's benefits on a specific date, in an exchange of a series of payments. The Fund expects to use swap agreements as a means to achieve its investment objective, which may expose the Fund to greater risks and larger losses or smaller gains than investing directly in the reference asset(s) underlying those derivatives. The use of swap agreements are also subject to additional risks such as the lack of regulation, counterparty risk, liquidity risk and could expose investors to significant losses.
Options Risk. Ownership of options involves the payment of premiums, which may adversely affect the Fund’s performance. The Fund may not fully benefit from or may lose money on an option if changes in its value do not correspond as anticipated to changes in the value of the underlying securities.
Concentration Risk. The Fund will be concentrated in the industry assigned to APP (i.e., hold more than 25% of its total assets in investments that provide leveraged exposure to the industry assigned to APP). A portfolio concentrated in a particular industry may present more risks than a portfolio broadly diversified over several industries.
