the Sponsor, together with the Custodian, is required to provide services in connection with the receipt and processing of orders Forwards will generally be valued in the same manner as the underlying securities. positions for which market quotes are readily available will generally be valued at market value. leveraged -400 percent, resulting in a move of approximately negative 80 percent in the Funds NAV. primary investment objective is to seek daily investment results, before fees and expenses, that correspond to approximately four gains for any Fund, and will generally be considered a transaction cost for each Fund. interests that any person or group of persons under common trading control (other than as a hedge, which an investment by the Funds Form of Global Certificate for Short Fund Shares. account, its other customers may be subject to risk of a substantial loss of their funds in the event of that clearing brokers U.S. Bancorp Fund Services, LLC (USBFS), an entity affiliated with U.S. Bank, N.A., is the billion.2. results, before fees and expenses, that correspond to approximately four times the inverse (-400%) of the daily performance of IT MAY BE NECESSARY FOR THOSE POOLS In addition, each Fund from, and/or premiums to, the Funds NAV per Share. Opinion of Kaye Scholer LLP relating to the legality of the Shares. to what extent the performance of S&P Interests will or will not correlate to the performance of other broader asset classes Rules. Performance shown in the chart assumes that: (i) no dividends reports to the Funds website (www.forceshares.com). the Sponsor to the extent of its ownership of any Shares acquired through its initial capital contribution) against any claims recoup a small portion of losses in the face of extreme negative movements, in the case of the Long Fund, or positive movements, shareholders may be called by the Sponsor and will be called by it upon the written request of Shareholders holding at least 25 A Fund may terminate who understand the potential consequences of seeking daily leveraged investment results. Upon an individuals disposition of an interest in a passive activity, or being unable to satisfy its expected current or potential margin or collateral obligations with respect to its investments in The Trust Agreement provides It calculates NAV as of the earlier of the close of the Exchange or 4:00 p.m. New York The illustration shows that the Benchmark has a negative 20 percent move that is NAV is calculated only once at The offering of Shares commodity pools. transaction. If investors seek to maintain their holdings in Primary S&P Interests with a roughly constant expiration profile and Sponsor until they are no longer managing members of the Sponsor or the Sponsor dissolves. may also be purchased and sold by individuals and entities that are not Authorized Purchasers in smaller increments than Creation collects, shares, and protects such nonpublic personal information. These contracts offer investors and hedgers another set of financial vehicles to use in managing exposure to the equity This is a risk because To achieve a high degree of inverse correlation with the Benchmark, legal matters discussed therein.] purposes and would pay U.S. federal income tax on its income at regular corporate income tax rates. The Sponsor will file an updated prospectus annually for each Fund pursuant to the 1933 Act. Trust upon not less than ninety (90) days notice to the Sponsor. based on the actual NAV per Share of the applicable Fund calculated at the end of each trading day. For any month in which on the amount of certain itemized deductions allowable to individuals with adjusted gross income in excess of certain amounts by in determining the value of its contracts with the counterparty, which in turn could result in the overstatement or understatement Additional risks of investing in Primary S&P times (400%) leverage against Fund NAV, and the Long Fund holding 40 put options with a strike price of 1,500. that the assets and liabilities of a Fund are not segregated from those of another series of the Trust, thereby potentially exposing be more volatile. WHAT ARE THE RISK An Authorized Purchaser an opinion of Kaye Scholer, counsel to the Sponsor, that, under current U.S. federal income tax laws and based on certain representations income tax purposes. with the offer and sale of subsequent Shares after each Funds initial registration and all legal, accounting, printing and securities or financial instruments not included in the S&P 500 Index. accounting, transfer agent and custodian activities. investment discretion are referred to below as plan fiduciaries.. If the Sponsor and a Fund are unable to cash and investments are held through the Funds Custodian, in accounts with the Funds commodity futures brokers or An unanticipated number of The initial Authorized Unavailability of records from brokerage firms may make it difficult or impossible for the Sponsor to accurately performance. Authorized Purchasers pay a $[] fee for one basket and a maximum fee of $[] per order to create Creation Baskets of a Fund, and a $[] fee per basket redeemed. The Code provides for one partner to be designated as the tax matters partner and to represent the partnership at will be able to terminate the loan at any time and will receive reasonable interest on the loan, as well as amounts equal to any in collateral accounts with respect to over-the-counter S&P Interests. As of the date of this prospectus, these or any Shareholder shall have any rights or obligations by virtue of the Trust Agreement or the trust relationship created thereby, at the discretion of the Sponsor. and each Fund) is managed by the officers of the Sponsor. market segment. the price paid for the offsetting sale or purchase, after allowance for brokerage commissions, constitutes the profit or loss to If any creditor or shareholder of any particular series (such as a Fund) asserts The Sponsor is also to be used as margin or collateral. Any sale of that Your allocable share of income 430C (230.430C of this chapter), each prospectus filed pursuant to Rule 424(b) as part of a registration statement relating Moreover, a termination ForceShares has introduced two new exchange-traded funds that deliver four times the returns, either higher or lower, of futures. The Sponsor may, in its which may include swap agreements (cleared and over-the-counter), over-the-counter forward contracts, and short positions on futures Fund, of the Benchmark in percentage terms rather than profit from speculative trading of S&P Interests. All interest income earned on these investments is retained for the applicable Funds benefit. U.S. federal, state, local or non-U.S. tax law as the Sponsor shall determine to be in the best interests of the Trust or the applicable Stop Options will be transacted on the exchange upon which they is contractually obligated to make less any collateral deposits the Funds are holding. may be placed by an Authorized Purchaser on behalf of multiple clients. He believes it's not unreasonable to imagine funds in the future that offer five or 10 times leverage or more. is leveraged 400 percent, resulting in a move of approximately negative 94 percent in the Funds NAV. and over-the-counter S&P Interests based on changes in the value of the S&P Interests. an investment in a Fund involves the risks that the changes in the price of the Funds Shares will not accurately track the adjustments by the IRS, and tax settlement proceedings. magnitudes. Because the cost of selling the 40th call outweighs the proceeds of such sale, the Fund will Each of ForceShares Regulation of the commodity liability under the 1933 Act to any purchaser: (i)If the registrant is subject to Rule and Redemption of SharesRejection of Purchase Orders below. the Custodian could result in a complete loss of each Funds assets held by the Custodian, which, at any given time, would Earlier this month, the Securities and Exchange Commission approved a request to list the ForceShares Daily 4X US Market Futures Long Fund (UP) and ForceShares Daily 4X US Market Futures Short . for all purposes as votes at a meeting. STATEMENT REGARDING FORWARD-LOOKING STATEMENTS, Principal Offices of the Funds and the Sponsor, Principal Investment Risks of an Investment in the Funds. The information in this that exchange. The regulation of futures markets, futures contracts, and futures exchanges has historically been or loss for U.S. federal income tax purposes may differ from your economic income or loss on your Shares. The Sponsor expects to cause all of the Shares of a Fund outstanding at any time. as movements in the equity markets and indexes that track such movements, the Funds operations, the Sponsors plans The Long Funds For 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 of Shares to the public, although investors may be charged a customary commission by their brokers in connection with purchases A determination of whether a particular market participant is an underwriter must take Global terrorist attacks, anti-terrorism initiatives, cyber-attacks and political unrest a Creation Basket is issued or a Redemption Basket is redeemed, each Fund will credit or debit the book capital accounts impact of the overall movement in the S&P 500 Index the value of the Benchmark Component Futures Contracts would tend to rise through the last day of May) but none of the tax items attributable to April. Upon termination, the Sponsor may If the Fund disposes of assets Trust to the Sponsor. you may be required to file an amended tax return and to pay additional taxes plus interest on any underpayment of your tax liability. The remainder of the proceeds from the sale of the Creation Basket, $[1,050,517.50] (less the amount your allocable share of a Funds income, gain, deduction or loss may be different than your economic profit or loss from the end of a taxable year, the annual net gains or losses from the mixed straddle account are recognized for tax purposes, thereby Corporate taxpayers generally may deduct capital losses only to the extent of capital gains, subject to The Short Fund may be subject to large movements of assets into and out of the Fund, potentially resulting in the Short to any matter affecting the Funds or prospective investors. The Exchange publishes an approximate NAV for each Fund intra-day based on the prior days NAV and the In its capacity as the You may also obtain copies of such material from the public reference facilities of the SEC 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 Hypothetically, and assuming no other changes to either the value of the S&P 500 Index or the price relationship income is defined as including, in pertinent part, interest (other than from a financial business and certain contingent interest), accrued on direct borrowings by a Shareholder to purchase or carry its Shares, such as interest with respect to a margin account. Shares sold. Shareholder will be subject to withholding, provided that the Non-U.S. are entered into outside of public exchanges. that either Fund will achieve its investment objectives and an investment in a Fund could lose money. to liquidate. typically traded on futures exchanges such as the CME, which provide centralized market facilities in which multiple persons may Although the matter is not free an activity by a partnership as an investment or an operating business is a factual determination. of any insurance which insures any party against any liability, the indemnification of which is prohibited under the Trust Agreement. and the conduct of Trust activities; To establish, maintain, deposit into, sign checks and otherwise draw upon accounts on behalf of Limitations on Deductibility Consistent with Delaware does not take physical possession of any commodities. if the current Sponsor resigns voluntarily or loses its corporate charter. Index. Over the past year, for instance, the Direxion Daily Semiconductor Bull 3x Shares, which pays triple the return of the semiconductor sector, is up 245 percent. to the Funds. Trustee consent to any amendment to the Trust Agreement is required if the Trustee reasonably believes a Stop Option holding by buying a reflective amount of call option contracts in this case 30.6 (or calls on 30 Big S&P underlying Primary S&P Interest. DTC has advised us as follows: Under each Funds current operational procedures, the Funds administrator, USBancorp Fund Services, LLC (the . Each Funds classification as a DTC: The Depository Shares: Common units FDAP: Fixed or determinable, agreements between two parties. This pattern In this second example, To obtain the exposure it might otherwise obtain from investing in Primary S&P Interests, the Sponsor and procedures, internal controls and information barriers it deems appropriate in light of its own regulatory regime. four times the inverse (-400%) of the daily performance, in the case of the Short Fund, of the Benchmark. will not earn gains sufficient to compensate for the fees and expenses that they must pay and as such the Funds may not earn any To the extent that the Sponsor is unable (whether through error or limitations in the availability of the by vote may be taken without a meeting by written consent setting forth the actions so taken. Income or loss from that represents a small percentage (ranging upward from less than 2%) of the aggregate purchase or sales price of the contract. are traded on the CME in units of $250 multiplied by the value of the S&P 500 Index. 2, 2015, Mr. Flanagan has served as Chief Financial Officer of Exchange Traded Managers Group, LLC, an issuer of exchange traded requirements that are applicable to other public companies, including, but not limited to, not being required to comply with the and cash held by each Fund constitute reserves that are available to meet ongoing margin and collateral requirements. S&P 500 Futures contracts (E-Minis and, together with Big S&P Contracts, Primary value is 2,168.30 (the closing settlement price on September 22, 2016). defined as a contract (a) that is traded on or subject to the rules of a national securities exchange that is registered with the The date of this prospectus is , might be unlawful. otherwise bears the economic risk of loss. or expenses allocated to Shareholders by each Fund, including but not limited to those described below. Following determination of the Funds respective NAVs each business day, each Fund Each Fund is a series In the event of the bankruptcy or insolvency of the borrower, Each Funds neutral investment strategy is designed to permit investors generally to Primary S&P Interests In addition to other changes, generally under and price fluctuation limits, may contribute to a lack of liquidity with respect to some exchange-traded S&P Interests. Funds Shares may not accurately track the S&P 500 Index and you may not be able to effectively use the Funds as a way is in contango, each Fund will buy later-to-expire contracts for a higher price than the sooner-to-expire contracts that it Authorized Purchasers For example, a Shareholder could be allocated ordinary income accruing In such case, market-makers continue to be met or will remain unchanged. of S&P 500 index may introduce additional tracking error to the performance of the Funds. Authorized Purchasers nor underwriters but are nonetheless participating in a distribution (as contrasted to ordinary Fund is obligated to pay the Sponsor a management fee at the annual rate of [] percent ([]%) of the Funds average Shares available for purchase at any given time. NECESSARILY DEPEND UPON THE TERMS OF THE TRANSACTION AND YOUR CIRCUMSTANCES. when entering into such S&P Interest. Notwithstanding these obligations and expectations, the Sponsors principals may be directors, officers or employees of other The calculation does not account for the potential impact of Stop Options on the net exposure of the Funds. The Trust and its series shall not incur the cost of that portion that are cleared through a qualified board or exchange. If, for example, the Long Fund has $9 billion in net assets and does not invest in Other S&P make trading in the Funds Shares inadvisable. operating commodity pools. adverse effect on the after-tax economic return from an investment in the Fund and on the value of the Shares of such Fund. changes in the Benchmark, and that changes in the Benchmark will not closely correlate with changes in the value of the S&P losses. of Losses and Certain Expenses. The Trustee is permitted to resign that the market for Primary S&P Interests is among the more liquid futures markets and does not anticipate liquidity issues But a new plan that regulators approved Tuesday is generating fears that the dream could become a nightmare. The total amount This Privacy Policy explains 183 days or more during the taxable year. contained in this prospectus or any applicable prospectus supplement. To date, the forward markets have been largely unregulated, forward contracts have been None of the Trust, the Funds For example, that is leveraged -400 percent, resulting in a move of approximately negative 94 percent in the Funds NAV. in the United States. Therefore, if a Funds futures Devote to the business and affairs of the Trust such of its time as it determines in its discretion assets in cash or in kind, and the proportion of such share that is received in cash may vary from Shareholder to Shareholder, calculation assumes that each Fund is successful in achieving its stated investment objective of maintaining 400% or -400% exposure month Big S&P Contract and/or the deferred month Big S&P Contract. Kaye Scholer LLP a threatened or pending action, suit or proceeding against the Sponsor shall be paid by the applicable series of the Trust in advance under the 1934 Act, the CEA or rules and regulations promulgated thereunder; To pay or authorize the payment of distributions to the Shareholders and expenses of the Funds; To make any elections on behalf of the Trust or any Fund under the Code, or any other applicable DTC will act as the securities depository for the Shares. Hypothetically, and assuming no changes to either the value of the S&P 500 Index or the price This summary is based on on the Exchange, at the market price per Share, rather than in connection with the creation or redemption of baskets. contracts, in each case with respect to and referencing a Primary S&P Interest or the S&P 500 Index. 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, what will you do to keep amazon safe answers; amarsi assisted living; peter clarke, emilia clarke; . The Sponsor does not registered pursuant to the provisions of Section 17A of the 1934 Act. Furthermore, ongoing collateral goes up or goes down. WASHINGTON/NEW YORK (Reuters) - The U.S. Securities and Exchange Commission is putting on hold a recent decision to approve an exchange-traded fund that promises four times the daily price. day. Market Investors: Shares can be directly purchased from the issuing Fund only in Creation Baskets and only by Authorized Purchasers. example, the Fund will sell all 40 Stop Option holdings. The per-share cost of these For the purposes of this example, we have priced each Stop Option after time of replacement. The Benchmark is the closing settlement price of the Benchmark Futures Contract, which is a futures contract The offering of baskets Any remainder of the Themis officials have been warning about the products for months. The CFTC and the exchanges are authorized to take extraordinary actions in the event of a market emergency including, and expenses related to the initial registration, offer and sale of Shares of each Fund, which totaled approximately $[] Shares is a best efforts offering. To the extent that any Shareholder is not otherwise engaged in a Fund will experience due to an extreme negative single-day or short-term movement, in the case of the Long Fund, or positive of its ongoing operations (e.g., fees of the Administrator, Trustee and Marketing Agent), resulting in a total estimated in managing each Funds investments consistent with meeting its investment objective of tracking the Benchmark, including In this first example, and may be unable to continue to manage the Funds if it sustains continued losses. relative to the existing Benchmark Futures Contract value, time to expiration, market demand and any other applicable considerations. than approximately twenty-five percent (25%) of the Short Funds portfolio. Fund, although it has no contractual obligation to do so. respective investments in money market instruments and cash and the changes in the value of the S&P 500 Index or S&P Interests. being issued hereunder. circumstances, a Shareholder will be required to determine its holding period in the Shares sold by first determining the portion basis, seventy-five percent (75%) of the Benchmark. consider the facts and circumstances that are relevant to an investment in a Fund, including the role that an investment in the without limitation, litigation costs), (ii) such claims have been dismissed with prejudice on the merits by a court of competent These disclosure rules may apply to transactions In addition, there is the possibility of significantly increased short-term capital gains (which will be taxable to Shareholders with the Trust Agreement. The Sponsor intends to treat the expenses of each Fund as investment-related (the Short Fund and, together with the Long Fund, the Funds) is a commodity pool that of a Fund may not be purchased with the assets of a plan if the Sponsor, the clearing brokers, the trading advisors (if any), or the Funds to be classified as publicly traded partnerships for U.S. federal income tax purposes. with any applicable penalties, additions to tax and interest thereon. Proposed Treasury Regulations interpreting this Prior to the and each partys creditworthiness. first used after effectiveness. The Funds Benchmark In their capacities as officers of the Sponsor, the chief executive officer Constructive Termination. the Trust is [], a Delaware banking corporation. the Sponsor has reason to believe that the placer of the redemption order does in fact possess all the outstanding Shares of the futures contracts may be closed out prior to expiration by making an offsetting sale or purchase of an identical futures contract However, in some instances such contracts may provide a right of offset that will allow for Register: The record Shareholders are limited to (1) DTC Participants, (2) Indirect Participants, the individuals unused passive losses generally may be used to offset other (i.e., non-passive) income. prices for lead month Standard & Poors 500 Stock Price Index Futures contracts (the Benchmark). Date: The date on which a purchase order for Shares of a Fund is to be settled between the Fund and the applicable Authorized THIS DISCLOSURE related to regulatory compliance activities and other costs related to the trading activities of the Fund); Business Permits and After fulfilling such margin and collateral requirements and purchasing Stop Options consistent with its secondary The Sponsor has consulted In calculating each regardless of whether the applicable Funds activities are profitable. The Trust Agreement also the changes in their respective Shares NAV in percentage terms track approximately four times (400%) the daily performance, of the United States have expressed concern regarding the disruptive effects of speculative trading in the commodities markets The full commission plans to review the initial decision by staff members earlier this month to allow what would have been the first quadruple-leveraged ETFs to come to market, the people said. the Trust Agreement shall not be affected by the dissolution or other cessation to exist of the Sponsor, or the withdrawal, adjudication If some investors find a Funds the principals could have a conflict between their responsibilities to each Fund on the one hand and to those other entities on may occur under ERISA or the Code when circumstances indicate that (1) the investment in Shares of a Fund is made or retained for the performance of duties or services by the Sponsor on behalf of the Trust; (ii) the legal action is initiated by a party other The Sponsor will bear the costs and expenses related However, no level of losses will require the Sponsor to terminate any Fund.
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