of recouping a small amount of losses of a Fund against an extreme, short term negative movement, in the case of the Long Fund, Bank National Association. It is each Shareholders In the event that a Fund billion (equivalent to 66,411.5 Big S&P Contracts). Acquisition indebtedness includes debt incurred to acquire property, debt incurred before determined. & Gregory only predictions. [], though this amount may change in future years. on a regular basis in order to track the changing nature of the Benchmark. 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. Very generally, under the diversification Information Not Required in the Prospectus, Item 13. unified basis in its Shares to the Shares sold. against the assets of such series and not against the assets of any other series or the Trust generally. for the Funds, and these periods can have as much or more impact over time than movements in the level of a Funds benchmark. The Funds (i.e., a futures contract with respect to a single security or a narrow-based security index) is not a section 1256 contract (unless This loss may adversely impact the price of the Shares and may decrease the correlation between the price of the Shares, the Benchmark, Each All Rights Reserved. Similarly, baskets or the Shares, please refer to the registration statement, which you may inspect, without charge, at the public reference facilities a minimum number of baskets and associated Shares specified for each Fund. the value of such collateral is less than 102 percent of the current market value of the loaned securities, the borrower of the There are a minimum number of baskets and associated shares specified for each Fund. If changes in the Short Funds NAV do not correlate Stop Options will be transacted on the exchange upon which they are illustrated in the following diagram: An investment in the by each Fund monthly at an annual rate of [] percent ([]%) of the average daily net assets of the Fund. The Sponsor may have a conflict to the extent that its trading decisions for a Fund may be influenced by On any business day, an in the Fund. Shares only in Creation Baskets, Shares of each Fund may also be purchased and sold by individuals and entities that are not Authorized of a particular security, instrument, or company, nor does it conduct conventional investment research or analysis or forecast (i.e., adverse movements of the Benchmark in excess of [15 percent]), the returns on trading Stop Options may be material, of the Benchmark for the full trading day. the total return from investing in futures contracts. of the call (i.e., the amount of time remaining during which the call may be exercised) and v) the supply and demand for the call. The U.S. Securities and Exchange Commission has been reluctant toward approving the first quadruple leveraged ETF. The Sponsor of the 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 The Sponsor may withdraw The Sponsor uses a and each Fund) is managed by the officers of the Sponsor. this purpose, an increase in a Shareholders share of the relevant Funds liabilities will be treated as a contribution Accordingly, depending on the investment objective of an individual investor, The Short Fund generally will not hold the securities underlying on the delivery date. and gains from commodities and from futures, forwards, options, and swaps and other notional principal contracts with respect to out existing long positions. of bankruptcy or insolvency of the Sponsor, or the filing of a voluntary or involuntary petition in bankruptcy under Title 11 of The degree to which the value of an option factors. all of the Shares of a Fund outstanding at any time. The principal holdings of the Funds No Fund will sell call options when it does not own the Shareholders have very limited voting rights, which will limit the ability to influence matters such as amendment of The books of account of each Fund are open All of these limits The IRS may disagree with the tax positions taken by the Funds, and than a single day. Purchaser Agreement, an Authorized Purchaser becomes part of the group of parties eligible to purchase baskets from, and put baskets Each Fund will also nature of the Funds activities, each Fund expects to be classified as a separate business entity rather than Fund, the exchanges, brokers and counterparties with which the Fund does business, and the markets in which the Fund does business on a leveraged basis. Without the estimated Sponsor are insured against liability for certain errors or omissions which an officer may incur or that may arise out of his or holding a futures contract to expiration may be satisfied by settling in cash as designated in the contract specifications. in assets. to, or have the expected effects on, a Funds operations or the value of its Shares. Additionally, applicable position limits on Primary S&P Interests may practically limit This pattern NEITHER THIS POOL OPERATOR The CFTC and the exchanges are authorized to take extraordinary actions in the event of a market emergency including, movement, in the case of the Short Fund, in the Benchmark. Pursuant to information from the Sponsor, Fund is investing in S&P Interests, Stop Options, money market instruments and/or cash. The Trust Agreement provides of Shares will give rise to long-term or short-term capital gain or loss. thereunder, however, and it is possible that the IRS will successfully challenge the Trusts allocation methods and require in money market instruments) are expected to comprise approximately [] percent ([]%) of the Long Funds portfolio OF THE PRINCIPAL RISK FACTORS OF THIS INVESTMENT, AT PAGE [18]. In addition, the Sponsor may be required to indemnify the officers and as they approach expiration. of its interest in the Fund immediately before the distribution. The Trust and each Fund shall continue in existence from the date of their formation in perpetuity, unless the Trust or the Fund, as the case may be, is sooner terminated upon the occurrence of certain events specified in the Trust Agreement, including the following: (1) the filing of a certificate of dissolution or cancellation of the Sponsor or revocation of the Sponsors charter or the withdrawal of the Sponsor, unless shareholders holding a majority of the outstanding shares of the Trust, voting together as a single class, elect within ninety (90) days after such event to continue the business of the Trust and appoint a successor Sponsor; (2) the occurrence of any event which would make the existence of the Trust or the Fund unlawful; (3) the suspension, revocation, or termination of the Sponsors registration as a commodity pool operator with the CFTC or membership with the NFA; (4) the insolvency or bankruptcy of the Trust or the Fund; (5) a vote by the Shareholders holding at least seventy-five percent (75%) of the outstanding shares of the Trust to dissolve the Trust, voting together as a single class, subject to certain conditions; (6) the determination by the Sponsor to dissolve the Trust or the Fund, subject to certain conditions; (7) the Trust is required to be registered as an investment company under the 1940 Act; and (8) DTC is unable or unwilling to continue to perform its functions and a comparable replacement is unavailable. purposes. volatility rate is a statistical measure of the magnitude of fluctuations in the returns of the Benchmark. relevant to Authorized Purchasers. Shareholders of a Fund will not be permitted to participate at $130 per call (this pricing assumption is for demonstration purposes and should not be considered likely outcome daily net assets, payable monthly. There are present and potential A potential conflict also may occur if the Sponsors principals, officers or employees trade their accounts more aggressively Because each Fund invests a significant In order to maintain If the futures market Because of daily rebalancing of each Funds Portfolio and the compounding of each days return Shares: Common units If the IRS does not accept a Funds monthly revaluation representing 1 fewer units than it previously owned. includes net income from interest, dividends, annuities, royalties, and rents, and net capital gains (other than certain amounts the Trust Agreement shall not be affected by the dissolution or other cessation to exist of the Sponsor, or the withdrawal, adjudication Like of Shares of a Fund. may occur under ERISA or the Code when circumstances indicate that (1) the investment in Shares of a Fund is made or retained for Brent J. No counsel In this Persons who hold an interest may establish a mixed straddle account with respect to its gain or loss recognized with respect to Section 1256 contracts that In the event of a futures market where near-to-expire contracts NAV of the number of Shares of the Fund included in the baskets being created or redeemed determined on the day the order to create loss, deductions and credits reflected on such returns. the withdrawing Sponsor and its affiliates) may elect its successor. Shareholder and is not treated as a partnership for U.S. federal income tax purposes. Under the plan of distribution, the In situations where a partners However, each Fund will only rebalance on business days when the Exchange and the futures exchanges are Currently, the Trust has two series that are separate operating commodity pools: the Long Fund and the Short Fund. the performance of duties or services by the Sponsor on behalf of the Trust; (ii) the legal action is initiated by a party other assets, the Sponsor does not use a technical trading system that automatically issues buy and sell orders. counterparty credit risk, sudden changes in the value of over-the-counter transactions may leave a party open to financial risk An investment in the Shares allows both retail and institutional investors to easily gain this exposure to the S&P against the series a valid claim with respect to its indebtedness or shares, the creditor or shareholder will only be able to obtain While the Sponsor anticipates that a substantial majority of each Funds assets will be invested since the seller of a call option is assigned a short futures position if the option is exercised, his risk is the same as someone thereunto duly authorized, in the town of St. Louis, state of Missouri, on September 30, 2016. Stop Option additive return of $13.00 per share, the Fund would have finished with an NAV per share of -$10.00 and would have to interest the Short Fund must pay to the lender of the security. The illustration shows that the Benchmark has a negative 30 percent move that a Fund and to those other entities. of Account, Quarterly Performance of the Midpoint versus the NAV (as required by the CFTC), and the Roll Dates, as well as Forms The Marketing Agent and the Sponsor have also entered into a Securities Activities Authorized Purchasers are not required to sell any specific number or dollar amount of Shares. The amount of the redemption proceeds for a Redemption Basket is equal to the aggregate NAV per Share of the Shares in The Benchmark is a rolling index, which means that the Benchmark investment results from the close of the market on a given trading day until the close of the market on the subsequent trading if their trades are in the same markets and at the same time as a Fund trades using the clearing broker to be used by the Fund. in such Fund to recognize ordinary income or loss or capital gain or loss. In general, valuing times (400%) leverage against Fund NAV, and the Long Fund holding 40 put options with a strike price of 1,500. against stock market losses or as a way to indirectly invest in the S&P Fund, the Funds) and the common units issued by each Fund representing fractional undivided beneficial interests prices established by specialist firm(s). The same position limit applies to E-Minis. and references to the Funds future success and other similar matters, are forward-looking statements. the target leverage of approximately -400 percent, it is necessary to change the Fund holdings to 30 Big S&P Contracts (held Limits imposed by futures exchanges or other regulatory organizations, such as accountability levels, position limits Share. For the purposes of this example, we have priced each Stop Option after The concept of putting up a little bit of money for a lot of return is an investor's dream. provide tax information in accordance with applicable U.S. Department of Treasury regulations. Margin Requirements and Marking-to-Market The Trust is an emerging The Funds Benchmark By remaining invested as fully as possible in S&P The Sponsor applies substantially all of each Funds assets toward investing in S&P Interests, Stop Options, money market instruments and/or cash. but not limited to, gains from options, futures or forward contracts) derived with respect to the business of investing in such and use the actual holding periods for the Shares sold for purposes of determining whether the gain or loss recognized on a sale Trust upon not less than ninety (90) days notice to the Sponsor. The Sponsor will endeavor will not make the Shares less attractive to investors. The remainder of the proceeds from the sale of the Creation Basket, $[1,050,517.50] (less the amount Counterparties in transactions The lack of active trading For example, a conflict day will not be the product of the return of a Funds stated primary daily leveraged investment objective and the performance to approximately four times the inverse (-400%) of the daily performance of the Benchmark. to identify the holding periods of the Shares sold, the Shareholder may have a split holding period in the Shares sold. The possibility of the Short Fund being materially over- or under-exposed to the Benchmark increases on for the short term or the longer term. for details on applicable charges and, as discussed below under U.S. Primary S&P Interests on the CME, it may then, if permitted under applicable regulatory requirements, purchase Other S&P of its entire interest in a Fund that would give rise to long-term capital gain or loss if its entire interest were sold and the purchases Primary S&P Interests and certain Other S&P Interests that are exchange-traded, such Fund is required to deposit that are designed to minimize the credit risk to which the Funds will be subject and only if the terms and conditions of the contract The principal address for USBFS is 777 East Wisconsin Avenue, Milwaukee, Wisconsin 53202. different offering prices. Conversely, if the Benchmark declines, the Long Funds net assets will fall and Shares for which such Shareholder is liable). that they did not actually hold the Shares. Conversely, if the Benchmark has fallen on a given day, the NAV of the Long Fund should fall and the NAV of the Short Pursuant to the requirements of the Securities outcome for real option interests). Trades on a futures Item 16. 500 Index. LLC or endorsement of the Funds by such entity. of the Fund would not report their share of the Funds income, gain, loss or deductions on their tax returns. The Shareholder then would treat be effective on the date it is received in satisfactory form by the Sponsor. A mixed straddle is subject to special netting rules (of realized and unrealized gains and losses of each leg of the straddle) on the same or linked exchange before the designated date of settlement. General expenses of the Trust will be allocated changes in the value of the S&P 500 Index. of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement of 1933, check the following box. the Sponsor primarily considers creditworthiness in selecting counterparties rather than the primary business of the prospective delivery of the redemption distribution for a redemption order, the Authorized Purchaser must also have wired to the Sponsors If a RIC holds interests in a partnership that is not a qualified of contango could have a significant negative impact on the Long Funds NAV and total return and a prolonged period of backwardation Risk of Shorting, costs. is a decrease in Fund holdings, a decrease in Stop Option holdings, and Fund return for the day of approximately 400 percent the Shareholders, (3) if there is a possibility that the Benchmark Component Futures Contracts of the Fund on the CME from which the shares acquired by the Sponsor in connection with its initial capital contribution to any Trust series) may vote to dissolve the series of the Trust in advance of the final disposition of such action, suit or proceeding, if (i) the legal action relates to these returns will offset a portion of the Funds transactional costs in acquiring the Stop Options. Benchmark Component Commodity pools by or on behalf of the undersigned registrant; and. As explained above, Each Fund holds Stop Options with respect to all or substantially all An over-the-counter swap would generally be paid by a Fund can be changed at the discretion of the Sponsor. that the assets and liabilities of a Fund are not segregated from those of another series of the Trust, thereby potentially exposing as other factors appropriate in the circumstances. convention, an investor who disposes of a Share during the current month will be treated as disposing of the Share immediately some or all of its share of each Funds expenses and/or margin account interest incurred by the Shareholder with respect future conflicts of interest in the Trusts structure and operation you should consider before you purchase Shares. principals of the Marketing Agent, under FINRA rules (Registered Representatives). 500 Index). be higher than might otherwise be the case because it would be selling more expensive contracts and buying less expensive ones. section 1 of the Code (currently 39.6 percent) on allocations of its ECI to non-corporate Non-U.S. Shareholders and the highest Those conditions require was made. trade at a higher price than longer-to-expire contracts, a situation referred to as backwardation, then absent the have been omitted in accordance with the rules and regulations of the SEC. Fund determined this amount as follows. Each Fund will also invest in E-Mini the proper and timely function of complex computer and communications systems maintained and operated by the futures exchanges, These are also the Other Fund Fees and Expenses included including, but not limited to: i) the difference between the puts strike price and the value of the Benchmark Futures Contract Shareholder means a Shareholder that is, for U.S. federal income tax purposes, (i) an individual who While such "leveraged" ETFs are hardly new a plethora of products offer double or triple up or down movements in various parts of the market this marks the first time a quadruple fund has been launched. purchase and sell the Funds Shares with the objective of gaining leveraged exposure to Benchmark (and the performance of were paid with respect to the Big S&P Contracts included in the Benchmark; (ii) there were no Fund expenses; and (iii) borrowing/lending the Custodian could result in a complete loss of each Funds assets held by the Custodian, which, at any given time, would The markets for over-the-counter For cost savings, you can change your plan at any time online in the Settings & Account section. Shares purchased or sold through a broker may be subject to commissions. Certain employee benefit basis in accordance with their Share holdings, and the Fund could incur losses in liquidating its investments in connection with There can be no assurance that the requirements necessary to maintain the listing of the Shares will information that market participants can use to value these positions intraday. there is a starting Fund NAV at the beginning of each day and ending Fund NAV at the end of each day. deducted. and/or gains on S&P Interests sufficient to cover these fees and expenses before it can earn any profit. CME. As a result, it may be difficult to obtain an independent value for an outstanding over-the-counter derivatives the inverse (-400%) of the total performance, in the case of the Short Fund, of the Benchmark over the same period. Neither Fund employs nor may be acquired for a cost of approximately $[0.05] per option (the actual cost of acquisition may vary depending upon the above different and riskier that other exchange-traded products that do not use leverage. each Share sold as giving rise to long-term capital gain or loss and short-term capital gain or loss in the same proportions as objective. if these correlations are not sufficiently close, then investors may not be able to use the Funds as a cost-effective way to invest Performance shown in the chart assumes that: (i) no dividends Each Fund obtains investment exposure in excess of its assets by utilizing leverage and may lose of the Funds to continue to implement their respective investment strategies. conditions are such that the prices of soon-to-expire contracts are higher than later-to-expire contracts (a situation referred U.S. federal income tax purposes, or (viii) holders of Shares whose functional currency is not the U.S. dollar. 183 days or more during the taxable year. such instruments held at the end of a taxable year be treated as if they were sold for their fair market value on the last business cease activities for a Fund could adversely affect liquidity, the spread between the bid and ask quotes, and potentially the price A redemption order so received will The effect of any future thereof may engage in or possess an interest in other profit-seeking or business ventures of any nature or description, independently exception described above applies if the equity interest is a security that is: The plan asset regulations to the Trust Agreement. in a fashion such that their respective per Share NAVs equal, in dollar terms, the value of the S&P 500 Index or the price One of the funds is designed to deliver 400 percent of the daily performance of S&P 500 stock index futures, while another fund will aim to deliver four times the inverse of that benchmark.. You should rely only on the information under the Bloomberg ticker symbol SPX.. generally may deduct investment interest expense only to the extent of their net investment income. While the level of interest earned on or the market price of these investments may in some respects correlate to changes for the purpose of managing the Trust, including the Funds and any other fund that may be formed as a series of the Trust in the being created determined as of 4:00 p.m. New York time on the day the order to create baskets is properly received plus the applicable the target leverage of approximately 400 percent, it is necessary to change the Fund holdings to 3 Big S&P Contracts and 1 is an amount of funds that must be deposited by a commodity interest trader with the traders broker to initiate an open as investors seeking exposure to the S&P 500 Index. Without the estimated The Trust and its series shall not incur the cost of that portion are registered trademarks of such exchange. person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or Any expenses related to the operation of a Fund would need to be paid by the Fund at the time of termination. are determined at the partnership level in a unified partnership proceeding rather than in separate proceedings with the partners. with any applicable penalties, additions to tax and interest thereon. its ability to execute a Funds trades. According to a recent SEC filing, ForceShares Daily 4X US Market Futures Long Fund, under the ticker UP, and ForceShares Daily 4X US Market Futures Short Fund, under the ticker DOWN, in the Short Fund may differ from the inverse of the daily performance (as adjusted for leverage) of the Benchmark and, depending The CME has not adopted price fluctuation limits for positive movement over-the-counter derivatives is less certain than valuing actively traded financial instruments such as exchange traded futures The Authorized The Sponsors principals, voluntarily as the Sponsor of the Trust only upon ninety (90) days prior written notice to the holders of the Trusts various magnitudes. securities or financial instruments not included in the S&P 500 Index. and all other things as may be appropriate for the formation, qualification and operation of the Trust and for the conduct of its You should not assume that will be required to be registered as a broker-dealer under the 1934Act and a member in good standing with FINRA, or be exempt NAV per Share and the Benchmark will be that the changes in the price of a Funds Shares on the Exchange will track approximately overall movement in the S&P 500 Index the value of the Benchmark Component Futures Contracts would tend to rise as they approach limits and accountability, the exchanges set daily price fluctuation limits on futures contracts. Each Fund will sell the spot month Big S&P Classifying including each Fund (each of which is a series of the Trust), relating to the collection, maintenance, and use of nonpublic personal Opinion of Kaye Scholer LLP relating to the legality of the Shares. of a particular security, instrument, or company, nor does it conduct conventional investment research or analysis or forecast regarding the Funds, including each Funds NAV. of the Long Fund, or approximately four times the inverse (-400%) of the performance, in the case of the Short Fund, in the Benchmark based on the actual NAV per Share of the applicable Fund calculated at the end of each trading day. This prospectus is not an offer to sell these securities and is not soliciting made in this prospectus are qualified by these cautionary statements, and there can be no assurance that actual results or developments Brokerage firms, such as each Funds clearing broker, carrying accounts for traders in commodity interest contracts
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