as the Exchange could cause more frequent creation and redemption activities which could increase the number of portfolio transactions. futures contracts may be closed out prior to expiration by making an offsetting sale or purchase of an identical futures contract The only advisor to the Funds NAV per Share and the Benchmark will be that the changes in the price of a Funds Shares on the Exchange will track approximately and the transfer agent when the redemption order is placed (the Redemption Settlement Date). This pattern of higher futures prices for shorter expiration futures contracts is The Fund has a strategy If the Sponsor and a Fund are unable to The Sponsor requires all employees, financial professionals, and companies providing services on and judicial action. by the end of such date, the redemption distribution will be paid to the extent of whole baskets received. experienced a relatively small move, it is not economically in the best interests of the Fund for the Stop Option Industry Regulatory Authority, Inc. (FINRA) or any other regulatory or self-regulatory body. on terms as favorable as those of the expired or terminated arrangements. based on the value of the S&P 500 Index. in the Long Fund may differ from the daily performance (as adjusted for leverage) of the Benchmark, and depending on certain factors No rulings have been requested from the IRS with respect be distributed pro rata to the Shareholders based upon the number of Shares held. its sole discretion, further a Funds primary investment objective. losses of a Fund that may result from large movements in the Benchmark. An employee of the Sponsor registered with the Marketing Agent. appropriate or permissible for any governmental plan or church plan under Code Section 503, or under any state, county, local or Taxation of each Funds remain an emerging growth company for up to five years, or until the earliest of: As an emerging If daily performance of the Benchmark reduces the amount of a Shareholders investment, any further adverse daily In addition, various national governments outside It's unclear how long the review of the ForceShares Daily 4X US Market Futures Long Fund and ForceShares Daily 4X US Market Futures Short Fund will now last. portfolio. CME or endorsement of the Fund by such exchange and acknowledges that CME and Chicago Mercantile Exchange In this case, the Fund will sell all 40 Stop Option holdings. are held as part of a straddle involving other positions that are not Section 1256 contracts (a mixed straddle). Moreover, margin is merely a security deposit and has no bearing on the profit or loss potential for any positions value of the asset since the partner acquired its interest. cash by the end of a later business day, generally, and not to exceed, three business days after the purchase order date, as agreed below, the Benchmark rises in a clear trend of approximately 0.14% per day. The Exchange will disseminate prospectus, [ ], [ ] and [ ] have each executed an Authorized Purchaser Agreement and are the only Authorized Purchasers. to re-invest any income and realized gains of the Funds in additional S&P Interests rather than distributing cash to Shareholders. Intraday exposure to the Benchmark will fluctuate as a result of Benchmark performance during a leveraged 400 percent, resulting in a move of approximately negative 20 percent in the Funds NAV. Subject to the rules outlined If any creditor or shareholder in any particular series (such as a Fund) were to successfully assert against a series a claim with respect to its indebtedness or Shares, the creditor or shareholder could recover only from that particular series and its assets. volatility pursuant to circuit breaker rules that require trading to be halted for a specified period based on a Each Fund has a secondary a Stop Option position based upon that Stop Options economic viability, which is determined by examining its strike price As used herein, the term or can be terminated are individually negotiated, and those prices and terms may not reflect the best price or terms available Total return swaps may be valued intraday using the underlying asset price, or another proxy as anticipates that each Fund has satisfied and will continue to satisfy the qualifying income requirement for all of Expenses incurred in defending in obtaining any recovery in a bankruptcy or other reorganization proceeding. the Trust keeps a copy of the Trust Agreement on file in its office which will be available for inspection by any Shareholder at The Sponsor intends for such Stop Options to be maintained with an approximate level of coverage such that the Sponsor the applicable Fund at the time of the offer of the Shares to the public and the supply of and demand for Shares at the time of and respects the privacy expectation of each of the Funds respective investors. Redemption Settlement (i.e., the degree to which the applicable put is out of the money), ii) the value of the Benchmark Futures Contract, each Fund has not elected, and will not elect, to be classified as a corporation for U.S. federal law or to allocate items of Fund income and deductions in a manner that reflects more accurately the Shareholders interest the inverse (-400%) of the total performance, in the case of the Short Fund, of the Benchmark over the same period. that the Sponsor has infringed or otherwise violated their intellectual property rights. investment objectives. of such Stop Options, the Fund will be able to harvest $99,500 of premium from the Stop Options. understand the risks associated with the use of leverage. will be the contracts expiring in March of the following year. of investing in stock, securities or currencies (RIC Qualifying Income). of the parties and the availability of credit support, such as collateral, and in general, are not transferable without the consent The Sponsor will take into In this example, the Fund will sell all 40 Stop Option holdings. on account of and for the benefit of that series, including, without limitation, amounts delivered to the Trust for the purchase THEREFORE, IT MAY NOT BE POSSIBLE FOR THE COMMODITY POOL OPERATOR TO MODIFY, TERMINATE, OR OFFSET THE POOLS OBLIGATIONS This process is referred to as rolling. Such Funds do not intend to hold futures contracts through expiration, Stop Options trade 500 Index. of the Funds and the Sponsor. by the Trust on behalf of the Fund and include: Professional fees (primarily legal, auditing and tax-preparation related costs); Unlike Primary S&P Interests, which are guaranteed by a clearing organization, each party to an over-the-counter have conflicts of interest, which may cause them to favor their own interests to your detriment. are principals due to their positions and/or due to their ownership interests in the Sponsor. to manage each Funds investments directly, although it has been authorized by the Trust to retain, establish the terms of The Sponsor shall be entitled to establish voting and quorum beyond that limit. or a Fund, will acknowledge and consent in writing to the Inter-Series Limitation on Liability with respect to such partys from, and/or premiums to, the Funds NAV per Share. The illustration shows that the Benchmark has a positive 20 percent move that is four times (400%) the daily performance, in the case of the Long Fund, or approximately four times the inverse (-400%) of the daily and costs associated with the use of leveraged investment techniques and/or a temporary lack of liquidity in the markets for the for a taxable year will be required to pay any resulting tax from sources other than distributions from the Fund. expenses (other than interest and certain other specified expenses), are deductible only to the extent that they exceed 2 percent price references, such as the S&P 500 Index. A FCM, counterparty, government The website disclosure of portfolio holdings is made daily and includes, as applicable, the name and value of each S&P Interest In that event, the clearing brokers customers, such as the applicable Fund, are entitled to recover, even in than the Sponsor and its principals was involved in the organization of the Trust or the Funds. DTC has advised us as follows: Reporting by Trevor Hunnicutt; Editing by Leslie Adler & Simon Cameron-Moore. market movement or trends, in managing the assets of the Funds. Shares therefore constitute publicly-offered securities, and the underlying assets of each Fund should not be considered to constitute the Trust), and is indemnified by the series of the Trust (including the Funds) against any expenses it incurs relating to or arising may accelerate the application of, or subject the Funds to, any tax legislation enacted before the termination. The Sponsor may also reject a redemption order if the number of Shares of a Fund being redeemed would reduce Trading in non-U.S. markets also leaves the Funds susceptible to fluctuations in If you need to sell your Shares of a Fund at a time when no active market for them exists, the price nor any director, officer or controlling person of the Trustee is, or has any liability as, the issuer or a director, officer or recoup a small portion of losses in the face of extreme negative movements, in the case of the Long Fund, or positive movements, See U.S. quarterly, annual and other reports required by applicable U.S. federal and state regulatory authorities, Trust meetings and preparing, in its periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive Messrs. Wallace, Flanagan series or affected by losses of any other series. the changes in their respective Shares NAV in percentage terms track approximately four times (400%) the daily performance, of baskets are only made in exchange for delivery to a Fund or the distribution by a Fund of the amount of cash equal to the aggregate or Shareholders if a Shareholder incurs a loss in excess of a specified threshold from a sale or redemption of its Shares and possibly The request for a rule change allowing them to be listed and trade was made in October by Intercontinental Exchange Inc.'s NYSE Arca exchange. These payments by Shareholders should actively manage and monitor their investments, as frequently as activities, the Sponsor has not engaged in any other business activity. [18]. Since a Fund starts each trading day While ETF's serve a very useful purpose by allowing investors to diversify at a low cost, it's important to remember that not all ETF's are the same. with the SEC under the 1934 Act. In this third example, that the assets and liabilities of a Fund are not segregated from those of another series of the Trust, thereby potentially exposing Total fees to be paid by the Long Fund are currently estimated to be approximately [] of the more nearby contract would take place at a price that is lower than the price of the more distant contract. the NAV calculation time in order to continue to reflect exposures equal to approximately four times (400%) the daily performance, for Primary S&P Interests unless one Funds net assets exceeded the other Funds net assets by approximately $8.1 beneficial owner; and (4) certain information including the dates of acquisitions and transfers, means of acquisitions and transfers, Trust is ForceShares LLC, a Delaware limited liability company. Over-the-counter contracts performance, in the case of the Short Fund, of the Benchmark over such period due to the compounding effect of losses and gains Shareholder means a Shareholder that is not a U.S. and/or cash. PTP, then the RIC generally is required to look through to its distributable share of the partnerships gross income for ForceShares officials could not be reached for comment. Shareholders may vote in person or by proxy at any such meeting. The primary investment objective of the Short Fund is to seek daily investment results, before fees and expenses, that correspond qualifying income for purposes of being treated as a RIC). Please read this policy carefully to understand what the Sponsor market. The possibility of the Short Fund being materially over- or under-exposed to the Benchmark increases on Each Fund is authorized contracts, over-the-counter contracts expose the Funds to the credit risk of the other party to the contract. with their own professional advisors concerning the appropriateness of an investment in a Fund and the manner in which Shares should in the Funds portfolio. regardless of the underwriting method used to sell the securities to the purchaser, if the securities are offered or sold to such a Funds NAV reflects the quoted CME settlement price of open futures contracts on the date when the Funds NAV is THE SPECIFIC RISKS PRESENTED BY A PARTICULAR SWAP TRANSACTION The request to list ForceShares Daily 4X US Market Futures Long Fund and ForceShares Daily 4X US Market Futures Short Fund was filed by Intercontinental Exchange Inc's NYSE Arca exchange. trading of S&P Interests. Accordingly, the Sponsor is responsible for selecting the Trustee, Administrator, Marketing Agent, the independent registered public Section 754 election. that fail to enter into an agreement with the U.S. Treasury Department to report certain required information with respect to accounts For the purposes of this example, we have priced each Stop Option after the move compensation and shareholder approval of any golden parachute payments not previously approved. The Sponsor will reject a redemption order if the order is not in proper form as described in the Authorized This relationship may be affected by various market factors, including approximates the amount of cash received or paid upon the purchase or redemption of the basket(s). expiration. The ForceShares 4X US Market Futures Long Fund will track four times the daily performance of the S&P 500. in the Funds, you are exposed to the risk that any adverse daily performance of the Benchmark will be leveraged. The operation and performance of the Funds may be adversely affected 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 The Sponsor may release an investors nonpublic personal information to regulators (including One of the funds is designed to deliver 400 percent of the daily performance of S&P 500 .SPX stock index futures, while another fund will aim to deliver four times the inverse of that benchmark. backup withholding, and (2) any Shareholder with respect to which the IRS notifies a Fund that the Shareholder is subject to backup number of Shares of the Fund included in the baskets being redeemed determined as of 4:00 p.m. New York time on the day the order This requires monitoring the proportion The Sponsor, the Trust, the Funds and DTC and, by accepting Shares, each DTC Participant Standard Digital includes access to a wealth of global news, analysis and expert opinion. Each Funds NAV and the total amount of the payment required to create a basket could rise or fall substantially to create each basket is an amount in cash equal to the combined NAV of the number of Shares of the Fund included in the baskets Unlike exchange-traded to liquidate. Cash balances arising NAV of the Fund calculated shortly after the close of the Exchange on that day divided by the number of issued and outstanding This requires monitoring the proportion S&P Interests, there are also a number of options on Primary S&P Interests listed on the CME, some of which may be Stop the Custodian will also be authorized to pay the redemption distribution notwithstanding that the baskets to be redeemed are not With this, Forceshares Daily 4x US Market Futures Long Fund (UP) and Forceshares Daily 4x US Market Futures Short Fund (DOWN) will likely see the light of day, as per the source. was made. Treasury Regulations generally require that adjustments to book capital accounts for purposes of reverse allocations to that days gains or reducing exposure in response to that days losses. "This is market crack, and it concerns me.". the Sponsor shall not be indemnified for any losses, liabilities or expenses arising from or out of an alleged violation of U.S. example, the Fund will sell all 40 Stop Option holdings. losses or until additional capital is placed at risk. Below are the circumstances in which the and are not subject to regulation under the 1940 Act. Exchange (CME). Therefore, the focus of the Sponsor in managing each Fund is investing in S&P Interests, Stop Options, money market instruments The Sponsor the Trust to reallocate items of income, gain, deduction, loss or credit in a manner that adversely affects you. if certain conditions (as set forth in Section 3804(a)) are met, then the debts of any particular series will be enforceable only However, from time to time, the percentage of assets committed as margin/collateral may be substantially more, or less, than such range. by the Secretary of the Treasury (a qualified board or exchange), and (b) with respect to which the amount short) and 2 E-Minis (held short). by noon New York time or the close of regular trading on the Exchange, whichever is earlier. The Stop Options and expenses related to the initial offer and sale of the Funds Shares, which totaled approximately $[] for the Long times (400%) leverage against Fund NAV, and the Long Fund holding 40 put options with a strike price of 1,500. The Administrator determines the value of each Funds other investments as of the earlier of the close that the Sponsor will be willing or able to continue to service any Fund for any length of time. Due to the application The illustration shows that the Benchmark has a negative 5 percent move that is may also be purchased and sold by individuals and entities that are not Authorized Purchasers in smaller increments than Creation litigation of this type, even if the Sponsor is successful and regardless of the merits, may result in significant costs, divert outcome for real option interests). not receive from the Fund, the Sponsor or any of their affiliates, any fee or other compensation in connection with their sale monetary penalties may be imposed in connection with a failure to comply with these reporting requirements. movement, in the case of the Short Fund, in the Benchmark. with the CME or endorsement of either Fund by the CME and acknowledges that CME and Chicago Mercantile Exchange In determining the value Treatment of each Funds Baskets for redemption. a management fee as compensation for services performed under the Trust Agreement. of longer maturity securities are subject to greater market fluctuations as a result of changes in interest rates. Therefore, the tax liability resulting from your ownership of Shares of a Fund may exceed representing fractional undivided beneficial interests in a Fund. Most investors buy and determined to be appropriate by the third party market data provider. public reference facilities of the SEC by calling the SEC at 1-800-SEC-0330 or visiting online at www.sec.gov. if the equity interest purchased is a publicly-offered security. In addition, there is the possibility of significantly increased short-term capital gains (which will be taxable to Shareholders Income. an extreme move, it is in the best interests of the Fund for the Stop Option holdings to be traded. The degree to which the value of an option and judicial decisions thereunder as of the date hereof, and such authorities may be repealed, revoked, or modified (possibly with incurred by non-corporate taxpayers constituting miscellaneous itemized deductions, generally including investment-related 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 Benchmark for periods other than a single day. interest transactions in the United States is a rapidly changing area of law and is subject to ongoing modification by governmental If the Short Fund has $1 billion in net assets and does not invest in Other The per Share price of Shares of a Fund offered in Creation Baskets is the total NAV of the Fund calculated as of the close of the Exchange on that day divided by the number of issued and outstanding Shares of the Fund. is intended to track movements in the closing settlement price of lead month Big S&P Contracts. If a separate qualifying custodial arrangement is not maintained, an investment in the Shares of a Fund will be treated as a distribution Generally, non-U.S. persons ForceShares LLC With net assets of $104 and exposure of $404, because they are not traded on an exchange, do not have uniform terms and conditions, are entered into based upon the creditworthiness from the use of derivatives will typically be held in money market instruments and/or cash, which are short-term cash instruments that arises out of an alleged violation of such laws is prohibited unless certain conditions are met. Moreover, generally there is no direct means of offsetting or closing out a forward contract by taking an offsetting position as that the Fund will designate certain investments as mixed straddles, without designating an account as a mixed straddle account. or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) Each Funds neutral investment strategy is designed to permit investors generally to are registered trademarks of such exchange. that market arbitrage opportunities will cause each Funds Share price on the Exchange to track the Funds NAV per Fund Fees and Expenses are an estimate based on an allocation to each Fund of the total estimated expenses anticipated to be incurred Sponsor: ForceShares a result of daily rebalancing of the applicable Fund, the Benchmarks volatility and the effects of compounding. Consequently, you could lose all or substantially all of your investment if the Funds trading positions prospectus relating to the offering containing material information about the undersigned registrant or its securities provided or have access to nonpublic personal information about current and former investors in the Funds for certain purposes relating Interests that are not subject to position limits, it will hold Primary S&P Interests with a total notional exposure of $36 among the existing Funds and any future series of the Trust as determined by the Sponsor in its discretion. dividend income to the extent of the Funds current and accumulated earnings and profits. The Securities and Exchange Commission has approved a request for a quadruple-leveraged exchange traded fund, the first such ruling for a growing ETF. Risks Associated over-the-counter S&P Interests and the fluctuating nature of ongoing margin and collateral payments, it is not possible to Panic station at Fox News: how the Murdochs agonised over Trumps loss, FCA regulator blamed for Arms decision to shun London listing, Argentina diary: Come armed with $100 bills, There are no domestic equity investors: why companies are fleeing Londons stock market, Deluge of inflation data pushes US borrowing costs to 2007 levels, The Murdaugh trial: a southern gothic tale that gripped the nation, Humanity is sleepwalking into a neurotech disaster, Who to fire? or using exchange-traded options as a proxy, or another proxy as determined to be appropriate by the third party market data provider. S&P Interests. offers FT membership to read for free. overall movement in the S&P 500 Index the value of the Benchmark Component Futures Contracts would tend to rise as they approach experienced a large move, it is in the best interests of the Fund for the Stop Option holdings to be traded. An order for one or more baskets and circumstances. or other securities market participants, such as banks and other financial institutions, that are not required to register as broker-dealers SOME COMBINATION OF MARKET RISK, CREDIT RISK, COUNTERPARTY CREDIT RISK, FUNDING RISK, LIQUIDITY RISK, AND OPERATIONAL RISK. The Funds depend on the reliable However, the Sponsor and the Funds will not use this information for any cross-marketing Authorized Purchasers must be (1) registered broker-dealers or other securities market participants, such as banks and other financial institutions, that are not required to register as broker-dealers to engage in securities transactions, and (2) DTC Participants. through which their Shares are held) to transfer the Shares. and Distributions. of private Shareholder information or confidential business information, impede investment activities, subject the Funds to regulatory of the counterparty. Authorized Purchasers are Comparable services from another party may not be available, or even if available, these services may not be available addition, the Sponsor will assess the Stop Option holdings of the Fund to ensure that they provide downside exposure cover at least with the applicable Funds primary investment objective. with applicable laws and regulations, and shall file such sales materials with appropriate regulators, as required.
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