Smoking, riding a motorcycle without a helmet, and investing in inverse or leveraged mutual funds are exhilarating experiences that can be hazardous to your health over time.

ProFunds is making sure that it's warning its investors accordingly, by beefing up the risk descriptions in its prospectuses.

"The Fund is different from most funds in that it seeks leveraged returns and only on a daily basis," reads the latest filing for its Ultra exchange-traded funds, which use futures and derivatives to double or even triple the daily return of an index.

"Accordingly, the Fund may not be suitable for all investors and should be used only by knowledgeable investors who understand the potential consequences of seeking daily leveraged investment results."

That's a sobering admission, but how many investors of UltraPro S&P500 (NYSE:UPRO) and UltraPro Short S&P500 (NYSE:SPXU) -- two summer debutantes in the ProFunds family that aim for 300% of the SPDR Trust (NYSE:SPY) on the long and short side, respectively -- do you think actually take the time to read the prospectus? How many speculators dabbling in these vehicles classify as "knowledgeable investors"?

Let's take a closer look at the problem with these funds by checking in on the older ProFunds ETFs that aim to double the S&P 500's return.

Fund

2009 Return

SPDR Trust

15%

Ultra S&P 500 (NYSE:SSO)

24.4%

UltraShort S&P 500 (NYSE:SDS)

(39.7%)

Source: Morningstar.

An investor buying into the bullish Ultra S&P 500 isn't smarting. A dividend-adjusted 24.4% return is great, but it's far short of double the S&P's 15% return. Those investors may not be complaining, but the risk they are taking is clear in light of the 39.7% return of the bearish UltraShort ETF. It has fallen by far more than double the return of shorting SPDR Trust.

The problem is that these funds may work just fine for a single day, but the perpetual compounding creates havoc over longer stretches of time.

The best example of the dangers can be found in Direxion Daily Financial Bull 3x Shares (NYSE:FAS) and Direxion Daily Financial Bear 3x Shares (NYSE:FAZ). They play both sides of the financial-services stocks within the Russell 1000 index, swinging for 300% of the movements.

One should be up huge, but that's just not the case. Both ETFs have executed reverse splits to beef up their share prices. The bullish fund is trading 43% lower than it was when the year began. If you think that's bad, the bearish fund is off by a whopping 93%.

The risks are clear, and now they are even spelled out bluntly on the ProFunds prospectus.

Will it work? What do you think? If the surgeon general's fine print on a pack of smokes isn't much of a deterrent, how effective do you think the warning will be when it's written where few ETF inhalers are looking?

Have you had good or bad trading experiences with leveraged ETFs? Share your experiences in the comment box below.

Longtime Fool contributor Rick Munarriz always seems to have a fund or two in his portfolio, but he owns no shares in any of the companies or funds mentioned in this story. He is also part of the Motley Fool Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early.Try any of our Foolish newsletter services free for 30 days. The Fool has a disclosure policy.