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Exchange Traded Funds (ETFs) Disclosure

Investors should consider the investment objectives, risks, and charges and expenses of an Exchange Traded Fund (“ETF”) carefully before investing. Before investing in any ETF, you should consider its investment objective, risks, charges, and expenses. Contact us at for a prospectus containing this information.
An ETF is a pooled investment vehicle with shares that can be bought or sold throughout the day on an exchange. ETFs generally will track a particular index, sector, commodity, or other asset. ETFs are subject to market fluctuation and the risks of their underlying investments. ETFs are subject to management fees and other expenses. ETF shares are bought and sold at market price, which may be higher or lower than their NAV, and are not individually redeemed from the fund. Investment returns will fluctuate and are subject to market volatility, so that an investor's shares, when redeemed or sold, may be worth more or less than their original cost. ETFs are subject to risks similar to those of stocks.
Leveraged ETFs may sound very appealing when they offer the amplification of returns by 2 or 3 times the value of a regular ETF, but some characteristics of these products bring about a significant amount of risk. Due to the complicated characteristics of these investments, they are not right for everyone and should be considered carefully before investing. The net asset value (the value of the underlying securities) of an ordinary ETF may deviate from the market price from time to time, but, on the whole, the performance should track the underlying index and equal that performance over long periods. When it comes to a leveraged ETF, however, the fund uses debt and derivatives to amplify the returns of the underlying index at a ratio of 2-to-1 or even 3-to-1, instead of 1-to-1 like a regular ETF. The financial derivatives and debt used in these funds introduce an outsized amount of risk, even as they have the potential to have outsized gains. Leveraged ETFs also often come with higher expense ratios than regular ETFs. In addition to asset management fees and other expenses, such as trading costs and custody fees, there is also interest expense of the debt used to achieve the leverage. All of these expenses will have the effect of lowering the value of the portfolio. In addition to higher expenses, the portfolio of the leveraged ETF is rebalanced daily. This rebalance, especially in times of market volatility will cause the value of the ETF to decline. Due to compounding, leveraged ETFs held over the long term can see strikingly different returns than the fund's target. Because these funds reset each day, you can see significant losses, even if the fund itself appears to be showing a gain.
Leveraged and inverse exchange traded products are not designed for buy and hold investors or investors who do not intend to manage their investment on a daily basis. These products are for sophisticated investors who understand their risks (including the effect of daily compounding of leveraged investment results), and who intend to actively monitor and manage their investments on a daily basis.
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