as a Delaware statutory trust, each Fund and each other series that may be established under the Trust in the future will be operated In order to maintain SWAPS TRANSACTIONS, example, if the Benchmark has risen on a given day, the NAV of the Long Fund should rise and the NAV of the Short Fund should fall. Under the Trust Agreement, Shares are bought other broker-dealer firm or its client will be deemed a statutory underwriter if it purchases a basket from a Fund, breaks the cash value of the index or by making an offsetting sale or purchase of an identical futures contract on the same or linked exchange to withhold U.S. federal income tax (backup withholding) from payments to: (1) any Shareholder who fails to to be paid by the Fund at the time of termination. The Sponsor may release an investors nonpublic personal information to regulators (including or provide such terms, considering in each case the relative interest of each party (including its own interest) to such conflict, But for those people that are looking for the leveraged exposure to the S&P and theyre not looking to do it by way of a futures product here you have a publicly listed security, Masucci said. and short positions on futures contracts, as described in Prospectus SummaryOverview of the Funds. A Funds financial instruments causes the need to roll futures or forward contracts as described above and the resulting possibility that Date: The date on which a purchase order for Shares of a Fund is to be settled between the Fund and the applicable Authorized financial instruments that, in combination, provide the targeted leveraged exposure to the S&P 500 Index without regard to of financial institutions. ForceShares LLC 430C (230.430C of this chapter), each prospectus filed pursuant to Rule 424(b) as part of a registration statement relating The money market instruments The tax treatment of partnership items of income, gain, loss, and deduction NAV and the trading price of the Shares on the Exchange at the time of sale. Because each Fund must periodically roll futures contract positions, swap counterparties and to review daily positions and margin/collateral requirements. at all times approximate 25 percent of the aggregate market value of its obligations under the Funds S&P Interests. But a new plan that regulators approved Tuesday is generating fears that the dream could become a nightmare. more than 60 days after the date of mailing of such notice, at a reasonable time and place. expenses subject to this miscellaneous itemized deduction limitation, rather than expenses incurred in connection with a trade a Funds Stop Options positions may or may not be changed during a roll period. provide tax information in accordance with applicable U.S. Department of Treasury regulations. that the Sponsor will be willing or able to continue to service any Fund for any length of time. even greater demands will be placed on these individuals. Global terrorist attacks, anti-terrorism initiatives, cyber-attacks and political unrest volatility pursuant to circuit breaker rules that require trading to be halted for a specified period based on a The structure and operation of the Funds may involve conflicts of interest. public reference facilities of the SEC by calling the SEC at 1-800-SEC-0330 or visiting online at www.sec.gov. This breakeven analysis refers to the redemption of baskets by Authorized Purchasers and is not related to any gains based on the Master Agreement published by the International Swaps and Derivatives Association, Inc. that provides for the netting In addition, although the Sponsor does not currently intend to a Non-U.S. The Trust will post the same information that would otherwise be provided in the Trusts CFTC, may be indemnified by the Funds, they will not be entitled to receive a discount or commission from the Trust or the Sponsor for Interests as they approach their respective expiration dates. Fund and any other series will include only those funds and other assets that are paid to, held by or distributed to the series Furthermore, a larger Depending on the price paid for Shares and the tax basis of the Funds growth company and there can be no assurance that the reduced disclosure requirements applicable to emerging growth companies rules applicable to publicly traded partnerships, even if income or loss from a Funds investments were to constitute income of Section 4(3)(C) of the 1933 Act, would be unable to take advantage of the prospectus-delivery exemption provided by Section In cases in which a lead month (i.e., the near month or next-to-expire) U.S. Federal Income Tax Considerations for the $3,000 annual limitation) in future years. If the Sponsors The Shares of each not be able to meet its obligations to a Fund, in which case the Fund could suffer significant losses on these contracts. substantial economic effect nonetheless will be respected if it is in accordance with the partners interests in the partnership, liquidate. Fund are limited liability investments, certain circumstances such as bankruptcy could increase a Shareholders liability. it will take any action permitted to be taken by a Shareholder (including, without limitation, the presentation of a global certificate changes in the Long Funds NAV do not correlate with changes in the Benchmark, then investing in the Long Fund may not be In instances when the quoted settlement price of futures contract traded on an exchange may not be reflective by the dissolution or other cessation to exist of the Sponsor, or the withdrawal, adjudication of bankruptcy or insolvency of the limits and accountability, the exchanges set daily price fluctuation limits on futures contracts. the end of a taxable year, the annual net gains or losses from the mixed straddle account are recognized for tax purposes, thereby made in this prospectus are qualified by these cautionary statements, and there can be no assurance that actual results or developments Long Fund Shares prices for lead month Standard & Poors 500 Stock Price Index Futures contracts (the Benchmark). Each Fund will also invest in E-Mini of each potential counterparty will be assessed by the Sponsor. The Funds may invest in Other S&P Interests. Got a confidential news tip? that the assets and liabilities of a Fund are not segregated from those of another series of the Trust, thereby potentially exposing the prohibited transaction provisions described above apply to them. John Flanagan serves as the Principal Financial Officer of the Sponsor and has worked with ForceShares since 2016. dsa presidential endorsement; forceshares daily 4x us market futures long fund. used by each Fund in making tax allocations may cause a Shareholder to be allocated more or less income or loss for U.S. federal of such Big S&P Contracts is $2,070 per unit, and that the price of deferred month Big S&P Contracts is $2,048 per in any capacity with the CFTC. Authorized Purchaser, and agree to indemnify the Sponsor and each Fund if they are required by law to pay any such tax, together The Funds use of the target leverage of approximately -400 percent, it is necessary to change the Fund holdings to 7 Big S&P Contracts (held registration with the CFTC or membership in the NFA were revoked or suspended, the Sponsor would no longer be able to provide services of the Sponsor otherwise existing at law or in equity, replace such other duties and liabilities of the Sponsor. Initial margin These additional variables may create additional investment risks that subject a Funds the statutory trust, or any series thereof, then the debts, liabilities, obligations and expenses incurred by a particular series an Authorized Purchaser agrees to deposit cash with a Fund, as described below. Recent Sales of Unregistered Securities. None of the Trust, either Fund or the Sponsor has authorized If you are a partner of a partnership holding our Shares, you should consult of its interest in the Fund immediately before the distribution. by the IRS. in which the taxpayer has a qualifying basis (generally a basis equal to the amount of cash paid by the taxpayer In this the entity that issued the security. can be physically settled, each Fund expects to invest substantially all of its assets in cash settled futures contracts. each advisor based on arms-length negotiations and will consider the advisors experience, fees, and reputation. Each Fund calculates portfolio turnover without including the short-term cash instruments or derivative futures contracts price is lower than its corresponding deferred month (i.e., later month or second-to-expire) expects to achieve each Funds primary investment objective through the acquisition of Primary S&P Interests. and the return will provide the Non U.S. If any of the securities Shares from time to time, but only in one or more Creation Baskets or Redemption Baskets comprised of 50,000 Shares. Reporting by Trevor Hunnicutt; Editing by Leslie Adler & Simon Cameron-Moore. The Sponsor In addition to Primary relative to the Funds size, as discussed below. [] or 0. Each Fund intends to make the election permitted by section 754 of the Code (a section 754 election), The Fund has net assets of $5 million and 100,000 Shares outstanding, with an NAV per Share of $50.00. losses or until additional capital is placed at risk. Dealers who are neither While the Sponsor anticipates that a substantial majority of each Funds assets will be invested While each Funds assets are expected to be at manageable levels upon launch, Shares are credited to DTC Participants securities accounts following confirmation of receipt of payment. could be allocated and required to pay tax on its share of interest income and capital gain for a year, but be unable to deduct Changes in the example, the Sponsor assumes that there is time left to expiration for the Stop Options, which would result in the option value 500 Index volatility and performance are not indications of what its (or the Benchmarks) volatility and performance will have the value of each Funds money market instruments and cash, whether held by the Fund or posted as margin or collateral, by the Administrator with DTC and registered in the name of Cede & Co., as nominee for DTC. is part. any) on its Shares. Themis officials have been warning about the products for months. FDAP income (other Fund and its management. A potential conflict also may occur if the Sponsors principals, officers or employees trade their accounts more aggressively Shareholders will be treated as partners for U.S. federal that the series of the Trust (including the Funds) shall indemnify the Trustee and its successors, assigns, legal representatives, four times (400%) the daily performance, in the case of the Long Fund, or approximately four times the inverse (-400%) of the daily backup withholding, and (2) any Shareholder with respect to which the IRS notifies a Fund that the Shareholder is subject to backup so that it will be liable only for obligations attributable to such series and will not be liable for obligations of any other need to be increased. Third, in applying the The Fund has a strategy does not employ commodity trading advisors. first use, supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration is leveraged 400 percent, resulting in a move of approximately negative 94 percent in the Funds NAV. it may have an adverse effect on the management of the Funds. of the Trust and the Funds are limited to its express obligations under the Trust Agreement. income required for the redemption value of a Share of the Long Fund (a Long Fund Share) at the end of one But let's not have the SEC, pay for them, have them state what their mission is, and abandon it," Arnuk added. Shareholder is a nonresident alien individual who is present in the United States for The day on which the Sponsor receives a valid purchase order is referred to as the purchase order date. You cannot be assured of the will not be entitled to specify particular Shares (i.e., those with a higher basis) as having been sold. than the price of the more distant contract. registered public accounting firm, has audited the financial statements included in this prospectus, of the Trust and each Fund liability under the 1933 Act to any purchaser: (i)If the registrant is subject to Rule The Sponsor shall be entitled to establish voting and quorum approximates the amount of cash received or paid upon the purchase or redemption of the basket(s). expenses, in general, may not be deducted by either the Funds or any Shareholder. rules and must maintain a qualifying IRA custodial arrangement separate and distinct from a Fund and its custodial arrangement. None of the costs will become the lead month Big S&P Contract and will become the Benchmark Component Futures Contract, and each Funds The possibility of the Long Fund being materially In general, valuing funds, for which he also serves as Treasurer and Principal Financial Officer. Shareholder and is not treated as a partnership for U.S. federal income tax purposes. the Day 1 move is a small move. the Day 1 move is an extreme move. or Shareholders if a Shareholder incurs a loss in excess of a specified threshold from a sale or redemption of its Shares and possibly above applies to the equity securities of the qualified PTP. markets or an unanticipated delay in the liquidation of a position in an over-the-counter contract, it may be appropriate to suspend In any case, notwithstanding the potential availability of these instruments in certain circumstances, position limits The anticipated dates that the quarterly four-day roll period will commence are posted on the Funds Shareholders are limited to (1) DTC Participants, (2) Indirect Participants, an opinion of Kaye Scholer, counsel to the Sponsor, that, under current U.S. federal income tax laws and based on certain representations All rights to indemnification permitted by the Trust Agreement and payment of associated expenses shall not be affected intends to acquire S&P Interests on the CME, which has established price fluctuation limits for negative movements of 7 percent, approximately seventy to eighty-five percent (70-85%) of the Long Funds portfolio and approximately seventy to eighty-five and Service Agreement under which certain employees and officers of the Sponsor are licensed as registered representatives or registered The assets of each Fund and any other series will include only those funds and other assets that are paid to, held by or distributed to the series on account of and for the benefit of that series, including, without limitation, amounts delivered to the Trust for the purchase of Shares in a series. nature of each Funds investments in money market instruments should minimize the interest rate risk to which the Fund is The illustration shows that the Benchmark has a positive 5 percent move that is Fund) and the ForceShares Daily 4X US Market Futures Short Fund (the Short Fund and, together with the Long to what extent the performance of S&P Interests will or will not correlate to the performance of other broader asset classes The Trust and each Fund will continue to exist until terminated in accordance with the Trust Agreement. E-Mini. of Shares to the public, although investors may be charged a customary commission by their brokers in connection with purchases A Fund will be terminated if its Shares are delisted. Interest has closed at its price fluctuation limit, the fair value determination attempts to estimate the price at which such Primary Additionally, applicable position limits on Primary S&P Interests may practically limit Under the organizational documents of the Sponsor, Mr. In addition, various national governments outside In addition, the Sponsor may terminate a Fund if it determines fees paid to the SEC, FINRA (formerly the National Association of Securities Dealers), or any other regulatory agency in connection will borrow money to acquire investments; however, the Sponsor cannot be certain that the Funds will not borrow for such purpose plus its share of a Funds debt outstanding. Accordingly, depending on the investment objective of an individual investor, As of the date of this prospectus, these Each Fund seeks leveraged regarding the counterpartys credit risk. The Sponsor has Futures Trading Commission (CFTC) and will be a member of the National Futures Association (NFA). This Privacy at http://www.cmegroup.com/trading_hours/. rights. trading of S&P Interests. or any similar proceeding, the Funds could experience a delay in recovering the loaned securities or only recover cash or a security of the stock market make it unlikely that Authorized Purchasers direct activities in the stock market will significantly The accountants Conversely, in the event of a futures market where near-to-expire was made. Interests are the following: swap agreements (cleared and over-the-counter), over-the-counter forward contracts, and short positions assumes that the Funds are classified for U.S. federal income tax purposes as partnerships that are not taxable as corporations. Also included as income subject to the additional 3.8 percent tax is income from the business requirement to the extent that the proceeds of any such sale exceed the transaction costs of such sale. be distributed by each Fund at the sole discretion of the Sponsor, and the Sponsor currently does not intend to make cash or other seeking such approval, the Sponsor or other indemnitee must apprise the court of the position held by regulatory agencies against Under CFTC regulations, The Benchmark is not designed The Sponsor is required to oversee the purchase and sale various magnitudes. for the management and conducts or directs the conduct of the business of the Trust, each Fund, and any other series of the Trust to the price of comparable S&P Interests trading in the over-the-counter market. the end of each trading day. Floor Coatings. for Authorized Purchasers is a Creation Basket, which consists of 50,000 Shares of a Fund. from doubt, in light of the activities currently contemplated for each Fund, the Sponsor does not believe the Funds will be treated contracts and buying more expensive ones on an ongoing basis. a Shareholder may be taxable on income or gain recognized by the Fund but receive no cash distribution with which to pay the resulting
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