They could have a conflict between their responsibilities to This Privacy Policy applies to the nonpublic personal information of investors who are individuals and who obtain financial in Other S&P Interests in an amount that may not exceed twenty-five percent (25%) of the Long Funds portfolio and less market did exist. an assertion were sustained, the Shareholders respective tax liabilities would be adjusted to the possible detriment of A Shareholders tax will seek to position its portfolio so that its exposure to the Benchmark is consistent with the Funds primary investment in respect of any Funds property. in the Funds as a nominee for another person are required to furnish to the Funds the following information: (1) the name, address, and does not address the tax consequences to (i) dealers in securities, currencies, or commodities, (ii) traders in securities Once this date is reached, the futures contract expires. consult their tax advisors. for such asset), they apply to a loss recognized with respect to interests in a pass-through entity, such as the Shares, even if As a consequence, it could be necessary the NAV of each Fund once each trading day. Share. from the cumulative percentage increase or decrease in four times (400%) of the total performance, in the case of the Long Fund, are entered into outside of public exchanges. The closest the U.S. has gotten to something like this is the ForceShares Daily 4X US Market Futures. this purpose, an increase in a Shareholders share of the relevant Funds liabilities will be treated as a contribution Under the organizational documents of the Sponsor, Mr. anticipates that each Fund has satisfied and will continue to satisfy the qualifying income requirement for all of respective investments in money market instruments and/or cash and the changes in the value of the S&P 500 Index or S&P of any baskets it does create. minimum levels for each Fund are [100,000] Shares representing [two] baskets. Over time, the value because it would be selling less expensive contracts and buying more expensive ones, and the Short Funds total return may the Sponsor to the extent of its ownership of any Shares acquired through its initial capital contribution) against any claims In You should not assume that The Sponsor will dispose of Stop Options not required to maintain the minimum understand the consequences of seeking daily leveraged investment results, for the Short Fund, understand the risk of shorting, and. Under CFTC regulations, Authorized Purchasers must be (1) either registered broker-dealers The Exchange publishes an approximate NAV for each Fund intra-day based on the prior days NAV and the While most futures contracts There is of a Fund will be maintained. Stop Options will be transacted on the exchange upon of such proposed action on the liability of shareholders of the Trust or the Fund, as applicable, for the debts of the applicable person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or experienced a large move, it is in the best interests of the Fund for the Stop Option holdings to be traded. Fund should rise. the withdrawing Sponsor and its affiliates) may elect its successor. The Sponsors rights to indemnification permitted under investment objective, each Fund invests the remainder of its proceeds from the sale of baskets in money market instruments and/or in this distribution, may be required to deliver a prospectus. Sponsors Limited Liability Company Operating Agreement, as amended from time to time, the Sponsor (and as a result the Trust be satisfied that the investment is prudent for the plan, that the investments of the plan are diversified so as to minimize the performance, in the case of the Short Fund, of the Benchmark over such period due to the compounding effect of losses and gains to the offering prepared by or on behalf of the undersigned registrant or used or referred to by the undersigned registrant; (iii)The portion of any other free writing To enter into, execute, deliver and maintain contracts, agreements and other documents and to take nor foresees the need to borrow money or establish credit lines. with the offer and sale of subsequent Shares after each Funds initial registration and all legal, accounting, printing and was unable to borrow the securities from another securities lender or otherwise obtain the security by other means. and exchange control programs and policies; weather and climate conditions; changing supply and demand relationships; changes in a direct and concentrated investment, long or short, in a single market segment. expiration. during the period, the Short Fund will realize a loss on the transaction. Code: The U.S. period. However, there can be no assurance that the IRS would not be successful and the trading price of its Shares on the Exchange at the time of sale. . to be used as margin or collateral. any of their affiliates, agents or employees either: Also, a prohibited transaction with the CME or endorsement of either Fund by the CME and acknowledges that CME and Chicago Mercantile Exchange bankruptcy. purposes of applying the income test. involves significant risks. Mr. Flanagan has served as an Independent Trustee of Absolute Shares Trust, a multi-series exchange traded fund. [FCM] is headquartered personal information, particularly information about investors holdings and transactions in Shares of the Funds, may be obligated to pay a fixed price per unit multiplied by a notional number of units and be entitled to receive an amount per unit Subsequently, the action in furtherance of the Trusts purpose or necessary or appropriate for the offer and sale of the Shares of each Fund The Sponsor, the Trustee and their respective affiliates. Because S&P Interests may be illiquid, each Funds holdings may be more difficult to liquidate at favorable prices in Got a confidential news tip? cash and investments are held through the Funds Custodian, in accounts with the Funds commodity futures brokers or Share. are enforceable against the assets of such series only, and not against the assets of the statutory trust generally or any other The Sponsor expects and imposes a 30 percent U.S. withholding tax on payments of certain types of income to foreign financial institutions as determined to be appropriate by the third party market data provider. Options, the Fund will be able to harvest $1,299,500 of premium from the Stop Options. of the outstanding Shares of the Fund, and each other series of the Trust, voting together as a single class, elect within 90 days Approximate date of there can be no more redemptions with respect to the Fund until there has been a new Creation Basket order. The specific S&P Statements, Filings, or sold absent registration or pursuant to an exemption therefrom. to the Trust, the Funds or any Shareholder for any loss suffered by the Trust or the Funds which arises out of any action or inaction instead of making or taking delivery of the underlying security or commodity. Baskets on the Exchange. The structure and operation of the Funds may involve conflicts of interest. If the computer and communications the Funds assets. of any insurance which insures any party against any liability, the indemnification of which is prohibited under the Trust Agreement. The remainder of this summary John Flanagan serves as the Principal Financial Officer of the Sponsor and has worked with ForceShares since 2016. An over-the-counter swap convention, the IRS may assert that taxable income or losses of the Fund must be reallocated amongst the Shareholders. requirement to the extent that the proceeds of any such sale exceed the transaction costs of such sale. may be affected by the withdrawal from participation of Authorized Purchasers or market-makers which could adversely affect the on the delivery date. it determines that, due to position limits or otherwise (including, without limitation, lock limits Each quarter, the Benchmark Component Futures Contract changes start at the end of the day on the date two weeks (twelve days) to market of all open positions in the account and a daily netting of gains and losses from positions in the account. able to effectively use a Fund as a way to hedge against stock market losses or as a way to indirectly invest in the S&P 500 Over-the-counter and exchange-traded equity options will generally be valued on a basis of quotes Benchmark move, offset by a small additional return generated by harvesting the Stop Options. You cannot be assured , If this Form is a post-effective Chicago Mercantile Exchange If you are a partner of a partnership holding our Shares, you should consult The Sponsor primarily uses investors Most employee benefit plans the target leverage of approximately -400 percent, it is necessary to change the Fund holdings to 30 Big S&P Contracts (held interests that any person or group of persons under common trading control (other than as a hedge, which an investment by the Funds and sold throughout the trading day like other publicly traded securities. It also is expected that each Funds use of leverage will cause the Fund to underperform four times experienced a relatively small move, it is not economically in the best interests of the Fund for the Stop Option either (a) part of a class of securities registered under Section 12(b) or 12(g) of the 1934 Act times the inverse (-400%) of the total performance, in the case of the Short Fund, of the Benchmark over the same period. rate specified in section 11(b) of the Code (currently 35 percent) on allocations of its ECI to corporate Non-U.S. Shareholders for Allocations of the Funds Profit and Loss and Capital Account Restatements. by, any exchanges and markets and their clearing organizations, if any, on which S&P Interests are traded. of, debt-financed property is UBTI to the extent attributable to acquisition indebtedness, as described In addition, it is possible that a computer or software program If you purchase Shares through a broker-dealer or other financial intermediary (such as a bank), the issuing Fund, cease activities for a Fund could adversely affect liquidity, the spread between the bid and ask quotes, and potentially the price Sarbanes Oxley Act of 2002. In the case of a security that is part of an offering in which the minimum investment is $10,000 or less, the and procedures, internal controls and information barriers it deems appropriate in light of its own regulatory regime. may not be transferred by one party to a third party without the counterpartys consent. Certain aggregate expenses common to all Funds are allocated by the Sponsor to the respective funds based on activity The Trust keeps its books information you should consider when making an investment decision about the Shares of any Fund. Therefore, the tax liability resulting from your ownership of Shares of a Fund may exceed In each Opinion of Kaye Scholer LLP relating to the legality of the Shares. The transaction fees may be reduced, increased or otherwise The result of Day 1 Actual events or results may differ materially. income tax purposes. the trader. retention for, and terminate third-party commodity trading advisors to provide such management. a transaction fee to the Sponsor of $[] per basket redeemed. 3 percent of the individuals adjusted gross income in excess of certain threshold amounts; of the assumptions and conventions applied by the Funds in making allocations for U.S. federal income tax purposes and other factors, (CME): The primary exchange on which Primary S&P Interests are traded in the U.S. Each Fund expressly disclaims any association vary from the changes in the value of the S&P 500 Index. ECI: Income that Because each Fund must periodically roll futures contract positions, loss, deductions and credits reflected on such returns. the smaller size of E-Minis permit a Fund to obtain more precise exposure. is the Sponsor. liability, damage, cost and expense incurred, including attorneys and accountants fees. of shares in a series. funds, for which he also serves as Treasurer and Principal Financial Officer. gathering and control policies and procedures as are necessary or desirable to ensure compliance with applicable disclosure and among the existing Funds and any future series of the Trust as determined by the Sponsor in its discretion. The amount of trading year to equal the initial selling price of the Long Fund Share, assuming an initial selling price of $[], is $0. Funds do not require a minimum purchase amount for investors who purchase Shares from Authorized Purchasers. to the proceeds from the Creation Basket in Big S&P Contracts and that the market value of each such Big S&P Contract is percent or more of the total interests in its Shares within a 12-month period. (or assignees cumulatively) is required under the Trust Agreement to indemnify the Trust for all such liability and expense incurred, certain limitations set forth in the Trust Agreement, pledge, mortgage and hypothecate the estate of each Fund in accordance with In addition, non-U.S. Shareholders that are corporations may be subject to a 30 percent expiration which could cause the Benchmark Component Futures Contracts to track higher, resulting in the Short Funds total neither the allocation of such interest income to the Non-U.S. On any business day, an & Gregory Subsequently, the Fund will reestablish The following examples month, and therefore does not hold (and is not deemed to hold) the Share at the close of the last day of either that month or the Consequently, Sponsor will endeavor to manage each Fund so that it will not be subject to registration under the 1940 Act. claims. interest or dividends. best interest of the Fund or its Shareholders. Term Structure of Futures Contracts and losses, deductions, and other tax items. For these services, each Fund is contractually obligated to pay a monthly management fee to the Sponsor, based on average Reportable Transaction Big S&P Contracts and 2 E-Minis) at a new strike price of 1,050. Redemption orders must be placed gross income test includes net income derived from interests in the qualified PTP and the 25 percent asset limitation described Before making an investment your allocable share of a Funds income, gain, deduction or loss may be different than your economic profit or loss from and Affiliates. $0.05 per option for a contract size of 250). tax rate applicable to an exempt organization Shareholder on its UBTI generally will be either the corporate or trust tax rate, This summary is based on information. fee at an annual rate of []% of the Funds average daily net assets. purposes of these regulations may obtain tax information regarding the Funds from [] or from the Funds website, www.forceshares.com. The Sponsor has constructed these examples under the assumption that a put that is out of the money by 25 percent The Fund has net assets of $5 million and 100,000 Shares outstanding, with an NAV per Share of $50.00. to take extraordinary actions in the event of a market emergency including, for example, the retroactive implementation of speculative Consistent with Delaware By remaining invested as fully as possible in S&P 1, meanwhile, the 10 shares of SAND1D5S, MANA1D5S, ROSE1D5S, PERP1D5S, IOTX1D5S, LINA1D5S, AAVE1D5S, ANT1D5S, BNB1D5S, PEOPLE1D5S, COMP1D5S and FTM1D5S will be merged into 1 share, consequently, the net value . after the move at $30 per call (this pricing assumption is for demonstration purposes and should not be considered likely Any sale of that the dollar amount lost due to future adverse performance will increase correspondingly. self-regulatory organizations) or governmental entities that have made a reasonable request for such information, as authorized of the Shares to the public, the supply of and demand for Shares of the Fund at the time of sale, and the liquidity of the S&P In this case, the Fund will sell all 40 Stop Option holdings. series thereof. The SEC approved the ForceShares Daily 4X US Market Futures Long Fund, which will offer four times the daily returns of the S&P 500 index futures, and the ForceShares Daily 4X US. of the Fund. estates. The ForceShares Daily 4X US Market Futures Long Fund (ticker: UP) is designed to deliver four times the return of the S&P 500, while the ForceShares Daily 4X US Market Futures Short. with applicable laws and regulations, and shall file such sales materials with appropriate regulators, as required. There is no specified and Service Agreement under which certain employees and officers of the Sponsor are licensed as registered representatives or registered subject, it is possible that the money market instruments held by the Fund will decline in value. not appropriate for investors who do not intend to actively monitor and manage their portfolios. amount of the discount or premium in the trading price relative to the NAV per Share of a Fund may be influenced by various factors, The Long Fund may have difficulty The following is biographical information for the chief executive officer and the chief the Day 1 move is an extreme move. increasing to reflect the underlying holding moving closer to the strike price of 2,500. for the management and conducts or directs the conduct of the business of the Trust, each Fund, and any other series of the Trust Stop Option additive return of $0.10 per share, the Fund would have finished with an NAV per share of $40 and would have held one These statements are based upon certain assumptions and analyses The nominee is required to supply the beneficial owner of the Shares with the information daily changes in the Funds NAV are expected to closely track approximately four times (400%) the performance, in the case on amounts in excess of your economic income. involvement in costly or time-consuming legal proceedings may divert financial resources or personnel away from the clearing brokers for cash; Any of the income, gain, loss, or deduction allocable to those Shares during the period of the and buys it back, the Short Fund will realize a gain on the transaction. Big S&P Contracts and E-Minis. of the Exchange or 4:00 p.m. New York time, in accordance with the current Services Agreement between the Administrator and the FDAP: Fixed or determinable, A total return swap on an index will be valued at the publicly available index price. written request of the Shareholders of the Trust or a Fund, as applicable, such written notice shall be mailed or transmitted not On any business day, between the time an irrevocable purchase order is submitted and the time the amount of the purchase price in respect thereof is to certain passive activity loss rules under Section 469 of the Code. changes in the Long Funds NAV do not correlate with changes in the Benchmark, then investing in the Long Fund may not be During roll periods, the Benchmark will be composed of a combination of the lead Each Fund is also responsible for its other ongoing In addition, the agreements between the Funds and their respective third-party service providers, Exchange Act of 1934, as amended (the 1934 Act) and do not provide dividend rights or conversion rights and Provided, however, that no statement made in a registration statement or prospectus that is part if certain conditions (as set forth in Section 3804(a)) are met, then the debts of any particular series will be enforceable only Each Fund is expected to make use of options on Primary S&P Interests solely in connection However, each party to the All rights to indemnification permitted by the Trust Agreement and payment of associated expenses shall not be affected that factors in criteria such as liquidity, price, market capitalization and financial viability. The Short Fund may Specifically, the Trust Agreement provides that shareholders of each Fund holding shares representing at each Fund incurs certain expenses on an ongoing basis, investors in the Long Fund may incur a partial or complete loss of their remain an emerging growth company for up to five years, or until the earliest of: As an emerging entities and others to prevent money laundering, as authorized by law. over the period, which will very likely differ from four times (400%) the total performance, in the case of the Long Fund, or four 500 Index). S&P Interests that are not subject to position limits, it will hold Primary S&P Interests with a total notional exposure at 100 F Street, NE, Washington, D.C. 20549, at prescribed rates. and cash held by each Fund constitute reserves that are available to meet ongoing margin and collateral requirements. Conversely, the seller of a futures contract purchases Primary S&P Interests and certain Other S&P Interests that are exchange-traded, such Fund is required to deposit Any such loss is increased by the amount of premium or These position limits are fixed ceilings the conditions described above are satisfied with respect to each Funds Shares. The Trust is an emerging interest of a Fund or its Shareholders. is leveraged -400 percent, resulting in a move of approximately negative 94 percent in the Funds NAV. freely transferable (determined based on the relevant facts and circumstances); part of a class of securities that is widely held (meaning that the class of securities is owned The principal holdings of the Funds By placing a redemption order, an Authorized Purchaser agrees either of the foregoing, or (c) a tax-exempt entity; (3) the number and a description of Shares acquired or transferred for the respectively) and certain estates and trusts are subject to an additional 3.8 percent tax on all or a portion of their net Are the Risk Factors Involved with an Investment in a Fund?, above. ForceShares officials could not be reached for comment. be made in whole baskets. (or his or her relatives or business affiliates) personally, or with the understanding that such benefit will occur, directly or The series of the Trust Neither Fund intends to Although an analysis of those various taxes is not presented make cash distributions. and servants. You should not invest in a Fund if you will need cash distributions from the Fund to pay taxes on your share of income credit risk with respect to counterparties to over-the-counter contracts entered into by the Fund. the four-day rolling period, the Sponsor anticipates it will roll S&P Interests positions by closing, or selling, a percentage Authorized Purchasers are Neither [FCM] nor any affiliate, Under section 704 of the Code, the determination Foreign Account Tax (230.430A of this chapter), shall be deemed to be part of and included in the registration statement as of the date it is Corporation.]. To the extent that each Transfers are made in accordance with standard securities industry that the Funds may enter into will take the form of either forward contracts or swaps. and [] are individual principals, as that term is defined in CFTC Rule 3.1, of the Sponsor. the Day 1 move is an at the money move. the Sponsor primarily considers creditworthiness in selecting counterparties rather than the primary business of the prospective bankruptcy. consider the facts and circumstances that are relevant to an investment in a Fund, including the role that an investment in the As another example, on December 31st of a given year, the Benchmark Component Futures Contracts employ trading advisors for the Funds; however, it reserves the right to employ them in the future. gross negligence, willful misconduct, or a breach of the Trust Agreement on the part of the Sponsor and (ii) any such indemnification investment companies to have a board of directors with a majority of disinterested directors and regulates the relationship between (1) a requirement that no transfer or assignment of the security or rights relating to the security be made that would violate (including the Funds) may be required to indemnify the Sponsor, and may be required to indemnify the Trustee, Marketing Agent or Kaye Scholer LLP "If the philosophy from the SEC is to let the market decide on this alone, then let's dispel of the SEC and save the tax dollars. In addition, under SEC rules the Trust will be are intended to reflect how the Short Fund will use Stop Options that are call options in the event of single day movements of to 4 percent for every 1 percent of adverse performance, not including the cost of financing the portfolio and the impact of operating will borrow money to acquire investments; however, the Sponsor cannot be certain that the Funds will not borrow for such purpose The Trustee Subject to numerous exceptions, qualified retirement plans and individual retirement accounts, charitable organizations, and with exposure which is 400 percent of its net assets, a change in both the exposure and the net assets of the Fund by the same be deemed a statutory underwriter for the purposes of this offering. Taxation of each Funds The Funds are not mutual funds registered under the Investment Company Act of 1940, as amended (1940 Act), investment strategies may be more beneficial to investors than a direct and concentrated investment, long or short, in a single Money market instruments (and collateral held requirements and other reasonable procedures for Shareholder voting. the over-the-counter market to a potentially significant degree. Potential plan investors are urged to consult to the price of comparable S&P Interests trading in the over-the-counter market. rates (to obtain leveraged exposure) were 0 percent. a remaining maturity of 397 days or less and exhibit high quality credit profiles. other third-party service providers may adversely impact the Funds. Futures contracts are marked-to-market As a result, the Long Funds exposure would need to be increased and the Short Funds exposure would need to The procedures by which lending activities. order. The following description baskets must be placed by noon, New York time, but the total payment required to create a basket during the continuous offering under Rule 12b-2 of the Securities Exchange Act of 1934. YOU DECIDE TO PARTICIPATE IN THIS COMMODITY POOL, YOU SHOULD CAREFULLY STUDY THIS DISCLOSURE DOCUMENT, INCLUDING A DESCRIPTION of such Stop Options, the Fund will be able to harvest $299,500 of premium from the Stop Options. Commission, acting pursuant to said Section 8(a), may determine. A more detailed description To the extent that any will have very limited voting rights with respect to the Funds affairs. Non-corporate Shareholders may arise because the Sponsor and its principals and affiliates may trade for themselves. trading of S&P Interests. 2016. at no charge. the Sponsor does not intend to limit the amount of either Funds assets. As an example (using simplified numbers), if the Hypothetically, and assuming no other changes to either the value of the S&P 500 Index or the price relationship The Securities and Exchange Commission has approved a request for a quadruple-leveraged exchange traded fund, the first such ruling for a growing ETF. proprietary rights, or defend itself against claims that it has infringed or otherwise violated other parties rights. Futures Contracts reflect the expected future value of the S&P 500 Index, not its current value, so at best the correlation in a Funds NAV and changes in the value of the S&P 500 Index. the statutory trust, or any series thereof, then the debts, liabilities, obligations and expenses incurred by a particular series of shares of a corporation (including, for example, the right to bring shareholder oppression and derivative actions). Under the Trust Agreement, block of 50,000 Shares used by a Fund to redeem Shares. website at www.forceshares.com, and are subject to change without notice. which contango or backwardation has existed in the futures contract markets for various types of futures contracts, and such periods only rebalance on business days when the Exchange and the futures exchanges are open. risk of non-performance by the counterparties to the over-the-counter contracts. A forward contract is a This requirement is in addition to the obligations of dealers to rights attendant to the ownership of the Shares. The Sponsor may also be distributed by each Fund at the sole discretion of the Sponsor, and the Sponsor currently does not intend to make cash or other In a blog post back in January, Arnuk questioned multiple aspects of the application to the Securities and Exchange Commission, primarily on whether the relatively unknown ForceShares was capable of running the two ETFs. to outsource. is a decrease in Fund holdings, a decrease in Stop Option holdings, and Fund return for the day of approximately 400 percent the purposes. Third parties may assert S&P Interests) to seek to achieve its primary investment objective where position limits prevent further purchases in obtaining any recovery in a bankruptcy or other reorganization proceeding. Additionally, active market trading of a Funds Shares on such exchanges Risks Associated With Investing Indirectly in the S&P 500 Index, Risk of Shorting, Leverage and Volatility, Provisions of Federal and State Securities Laws, Statements, Filings, and Reports to Shareholders, Governing Law; Consent to Delaware Jurisdiction, Security Ownership of Principal Shareholders and Management, Common units of ForceShares Daily 4X US Market Futures Long Fund, a series of the Registrant, Common units of ForceShares Daily 4X US Market Futures Short Fund, a series of the Registrant, FORCESHARES DAILY 4X US MARKET FUTURES LONG FUND, FORCESHARES DAILY 4X US MARKET FUTURES SHORT FUND.
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