Leveraged/Inverse Products Acknowledgment

Throughout 2023, E*TRADE Securities LLC (“ETS”) will be transitioning existing clients to Morgan Stanley Smith Barney LLC (“MSSB” and together with ETS, the “Company”, “we”, “our” or “us”). To identify which entity is currently servicing your account(s), please check the bottom of your most recent account statement.

There are special characteristics and risks associated with trading in leveraged, inverse, and leveraged inverse products (certain exchange-traded funds and exchange-traded notes)(collectively, “Leveraged/Inverse ETPs”). In transacting in such products, including on any E*TRADE from Morgan Stanley (“E*TRADE”) trading platform and mobile application, you acknowledge that you understand the risks of trading Leveraged/Inverse ETPs, including those described herein and in the offering documents for the products, and you agree to the terms and conditions provided in this Acknowledgment.

1. Risks Associated with Leveraged/Inverse ETPs

Investing in Leveraged/Inverse ETPs involves heightened risks and may not be appropriate for most investors. Leveraged/Inverse ETPs are complex products that present unique and significant risks, especially during times of market volatility. See https://us.etrade.com/l/f/disclosure-library/inverse-leveraged-etfs for more information. Exchange-traded notes present additional and distinct risks from exchange-traded funds. See https://us.etrade.com/l/f/disclosure-library/exchange-traded-notes for more information. Leveraged/Inverse ETPs are intended for experienced and aggressive investors who are able to manage their investments on a daily basis and understand the risks of such investments. If you do not understand these risks or their significance, or if you would like to learn more about Leveraged/Inverse ETPs, please visit the Help Center or call us at 800-786-2575.

• Holding risks. Leveraged/Inverse ETPs are designed to be short-term trading tools, typically seeking to achieve their investment objectives on a daily basis (i.e., over one trading session). They are not intended to be held overnight or on a long term basis. The performance of these products over periods longer than one day can differ significantly from the stated multiple of the performance (or inverse of the performance) of the underlying index or benchmark during the same period. Multi-day performance of Leveraged/Inverse ETPs is difficult to forecast due to their path-dependent nature even if one has a view of the benchmark index performance. This is due to the fact that most of these products reset daily. And even small differences in daily performance can be magnified over time by the effects of compounding, as the compounding effect from the daily reset can cause these securities to perform worse than their multiple would suggest over any period longer than one day.
• Risk of higher volatility. Volatility refers to the frequency and magnitude of changes in the prices of a financial instrument like Leveraged/Inverse ETPs. Generally, the higher the volatility of an instrument, the greater its price swings and the more risk associated with the instrument. Because Leveraged/Inverse ETPs use derivatives and other leveraged products to achieve reverse and/or amplified market results, there may be greater volatility trading in these products. In addition, the compounding mentioned above may be further aggravated in volatile markets.
• Risk of lower liquidity. Liquidity refers to the ability of market participants to buy and sell securities. Generally, the more orders that are available in a market, the greater the liquidity. Liquidity is important because with greater liquidity it is easier for investors to buy or sell securities; as a result, investors are more likely to pay or receive a competitive price for securities purchased or sold. Greater volatility in these products may lead to higher probability that the product may be restricted from trading or be liquidated. As a result, there may be lower liquidity involving Leveraged/Inverse ETPs, especially exchange-traded notes.
• Unknown risks. You understand that the Company may not be able to predict and describe all the special trading risks that could arise with trading in these products. Therefore, you agree not to hold the Company, its affiliates, and their employees responsible for any risks you undertake, regardless of whether described herein or in the products’ offering documents, by transacting in such products.

2. Account Holder/Authorized Agent Acknowledgment

By choosing to transact in Leveraged/Inverse ETPs, you understand and acknowledge the following.

i. You have reviewed the product’s offering documents.

ii. You understand the risks of the product, including the potential loss of the entire amount invested; are acting as a self-directed investor; and, accordingly, are capable of making your own investment decisions.

iii. Although the Company identifies these investments on its web and mobile platforms and provides certain education about them, it does not provide any investment advice or make any recommendations regarding Leveraged/Inverse ETPs. As such, you have not relied, nor will you rely, on the Company or its representatives for any information or guidance in determining the appropriateness of the product for your account.

iv. This Acknowledgment applies to all purchases of these products for all accounts, and failure to provide this Acknowledgment may result in your being prohibited from purchasing the products.