in Annual Fund Operating
Expenses or in the example, affect the Fund’s performance.
Principal Investment Strategy
The Index is designed to capture the large- and mid-capitalization securities across 23 of the 24
emerging markets (with the exception of China) as defined by MSCI Inc. (the “Index
Provider”). The Index is market cap weighted and covers approximately 85% of the free float-adjusted market capitalization in each of the following countries: Brazil, Chile, Colombia, Czech Republic, Egypt, Greece, Hungary,
India, Indonesia, Korea, Kuwait, Malaysia, Mexico, Peru, Philippines, Poland, Qatar, Saudi Arabia, South
Africa, Taiwan, Thailand, Turkey and the United Arab Emirates.
As of December 29, 2023, the Index had 675 constituents, which had an average float adjusted total market capitalization of $7.7 billion, total market capitalizations ranging from $511 million to $476 billion and were concentrated in the information technology and financial sectors. The Index is rebalanced semi-annually.
The components of the Index and the percentages represented by various sectors in the Index may change over time. The Fund will concentrate its investment in a
particular industry or group of industries (i.e., hold 25% or more of its total assets in the stocks of a particular industry or group of industries) to approximately the same extent as the Index is so concentrated.
The Fund, under normal circumstances, invests at least 80% of its net assets (plus borrowing for investment purposes) in financial instruments, such as swap agreements,
securities of the Index, and exchange-traded funds ("ETFs") that track the Index, that, in combination,
provide 2X daily leveraged exposure to the Index, consistent with the Fund's investment objective. The
financial instruments in which the Fund most commonly invests are swap agreements and futures agreements
which are intended to produce economically leveraged investment results.
The Fund may invest in the securities of the
Index, a representative sample of the securities in the Index that has aggregate characteristics similar
to those of the Index, an ETF that tracks the Index or a substantially similar index, and may utilize
derivatives, such as swaps or futures on the Index or on an ETF that tracks the same Index or a substantially similar index, that provide leveraged exposure to the above.
The Fund seeks to remain fully invested at all times, consistent with its stated investment objective,
but may not always have investment exposure to all of the securities in the Index, or its weighting of
investment exposure to securities or industries may be different from that of the Index. In addition, the
Fund may invest directly or indirectly in securities not included in the Index. In all cases, the investments would be designed to help the Fund track the Index.
The Fund will attempt to achieve its investment objective without regard to overall market movement or
the increase or decrease of the value of the securities in the Index. At the close of the markets each
trading day, Rafferty rebalances the Fund’s portfolio so that its exposure to the Index is
consistent with the Fund’s investment objective. The impact of the Index’s movements during
the day will affect whether
the Fund’s portfolio needs to be re-positioned. For example, if the Index has risen on a given
day, net assets of the Fund should rise, meaning that the Fund’s exposure will need to be
increased. Conversely, if the Index has fallen on a given day, net assets of the Fund should fall, meaning the Fund’s exposure will need to be reduced. This re-positioning strategy typically results in high portfolio turnover. On a
day-to-day basis, the Fund is expected to hold ETFs and money market funds, deposit accounts with
institutions with high quality credit ratings (i.e. investment grade or higher), and/or short-term debt instruments that have terms-to-maturity of less than 397 days and exhibit high quality credit profiles, including U.S. government securities and repurchase
agreements. The Fund may lend securities representing up to one-third of the value of the Fund’s
total assets (excluding the value of the collateral received).
The terms “daily,” “day,” and “trading day,” refer to the period from the close of the markets on one trading day to the close of the markets on the next trading day. The
Fund is “non-diversified,” meaning that a relatively high percentage of its assets may be
invested in a limited number of issuers of securities. Additionally, the Fund’s investment
objective is not a fundamental policy and may be changed by the Fund’s Board of Trustees without
shareholder approval.
Because of daily rebalancing and the compounding of each day’s return over time, the return of the Fund for periods longer than a
single day will be the result of each day’s returns compounded over the period, which will very likely differ from 200% of the return of the Index over the same period. The Fund will lose
money if the Index performance is flat over time, and as a result of daily rebalancing, the Index’s volatility and the effects of compounding, it is even possible that
the Fund will lose money over time while the Index’s performance increases over a period longer than a single day.
Principal Investment Risks
An investment in the Fund entails risk. The Fund may not achieve its leveraged investment objective and there is a risk that you could lose all of your money invested in the
Fund. The Fund is not a complete investment program. In addition, the Fund presents risks not traditionally associated with other mutual funds and ETFs. It is important that
investors closely review all of the risks listed below and understand them before making an investment in
the Fund.
Effects of Compounding and Market Volatility Risk —
The Fund’s performance for periods greater than a trading
day will be the result of each day's returns compounded over the period, which is likely to differ from
200% of the Index’s performance, before fees and expenses. Compounding has a significant impact on
funds that are leveraged and that rebalance daily. The impact of compounding becomes more pronounced as
volatility and holding periods increase and will impact each shareholder differently depending on the
period of time an investment in the Fund is held and the volatility of the Index during the shareholder’s holding period of an investment in the Fund.
Fund performance for periods greater than one single day can be estimated given any set of assumptions for the following factors: a) Index volatility; b) Index performance;