Reminder of the Limitations of Leveraged (2X & 3X) Instruments

[Normand]

Harry

For more info on the risks of leveraged (2x & 3x) Instruments I have attached the link to the TZA Prospectus.
It is worth reading to fully understand how these instruments work.

http://pe.newriver.com/em.asp?cid=ET...&fid=25459W110

More specificaly: "Intra-Day Investment Risk — The Fund seeks leveraged investment results from the close of the market on a given trading day until the close of the market on the subsequent trading day. The exact exposure of an investment in the Fund intraday in the secondary market is a function of the difference between the value of the Index at the market close on the first trading day and the value of the Index at the time of purchase. The Fund’s gains occur as its market exposure declines and its losses are accompanied by increases in market exposure. If the Index declines, the Fund’s net assets will rise by an amount equal to the decline in the Fund’s exposure. Conversely, if the Index rises the Fund’s net assets will decline by the same amount as the increase in the Fund’s exposure. As an example (using simplified numbers), if the Fund had $100 in net assets at the market close, it would seek –$300 of exposure to the next trading day’s Index performance. If the Index declined by 1% by noon the following trading day, the exposure of the Fund will fall by 1% to –$297 and the net assets will rise by $3 to $103. With net assets of $103 and exposure of –$297, a purchaser at that point would be receiving –288% exposure of her investment instead of –300%."

TZA does not have a direct intra-day correlation with IWM. Its is important to understand these differences.

Also, here is the link to the IWM prospectus:

http://pe.newriver.com/em.asp?cid=ET...&fid=464287655

I hope this helps,

Normand

[Harry]

Thanks Normand!