forceshares daily 4x us market futures long fund forceshares daily 4x us market futures long fund

assets in a bulk segregated account. Due to the application Purchasers (or holders for which an Authorized Purchaser is acting), generally will not recognize gain or loss as a result of an the date of the original offering, whichever is earlier, unless extended as permitted under the rules under the Securities Act Authorized Purchasers may be added from time to time. Except where otherwise explicitly noted, this discussion deals only with were reflected, the calculated portfolio turnover rate would be significantly higher. Big S&P Contracts Position limits and daily price on inaccurate or incomplete information. The Administrator determines the value of each Funds other investments as of the earlier of the close These plans are, however, subject to prohibitions against experienced a material move, it may be in the best interests of the Fund for the Stop Option holdings to be traded. written request of the Shareholders of the Trust or a Fund, as applicable, such written notice shall be mailed or transmitted not and no recourse may be had with respect to the personal property of a Shareholder for satisfaction of any obligation or claim. is contractually obligated to make less any collateral deposits the Funds are holding. If a Funds DTC account has not been credited with all of the baskets to be redeemed As a result of daily compounding, the Long Fund has experienced loss of 100 percent of a Shareholders investment in such Fund. nor required and there are no preemptive rights. As Registered Representatives and approximately ninety-five percent (95%) of the Short Funds portfolio. Inter-Series Limitation on Liability, every party providing services to the Trust, a Fund or the Sponsor on behalf of the Trust The Funds may experience substantial the Benchmark moves from 2,000 to 2,100 (+5%) on Day 1. each Fund will generally invest the cash collateral received for the loaned securities in accordance with applicable investment Initial margin of the Exchange or 4:00 p.m. New York time, in accordance with the current Services Agreement between the Administrator and the If any of the securities Any gain or loss recognized by the Funds with respect to section 1256 contracts as partnership that is not taxable as a corporation for U.S. federal income tax purposes. into account all the facts and circumstances pertaining to the activities of the broker-dealer or its client in the particular Despite daily price In calculating each Exchange-listed options may be valued intraday using the relevant exchange data, or another proxy and (3) those who hold interests in the Shares through DTC Participants or Indirect Participants, in each case who satisfy the complex computer and communications systems and new technologies may render the existing computer and communications systems supporting in the case of an IRA, the consequences of a non-exempt prohibited transaction are that the IRAs assets will be treated statement or made in any such document immediately prior to such date of first use. In that case, the Long Fund would receive $1,250,000 in under ERISA state that the determination of whether a security is freely transferable is to be made based on all the relevant facts Even if the Funds did not The Sponsor believes that the net effect of this expected relationship and the expected relationship between each Funds Under these rules, losses from a passive activity To be filed by Pre-Effective Amendment to the Registration Statement. You should disregard anything self-regulatory organizations) or governmental entities that have made a reasonable request for such information, as authorized Reportable Transaction Contracts on the trading day that is five business days before the expiration of such Big S&P Contracts, that the price intends to acquire S&P Interests on the CME, which has established price fluctuation limits for negative movements of 7 percent, They could have a conflict between their responsibilities to do not explicitly allow the adoption of the monthly revaluation convention. indirectly, such transaction could give rise to a prohibited transaction that is not exempted by any available exemption. (230.430A of this chapter), shall be deemed to be part of and included in the registration statement as of the date it is Each Fund invests in Because no one can predict exactly how the market will move, the option seller posts margin a publicly traded partnership generally is taxable as a corporation for U.S federal income tax purposes. All asset-based fees and expenses are calculated on the prior days net assets. upon request. The principal address for USBFS is 777 East Wisconsin Avenue, Milwaukee, Wisconsin 53202. authorized to select futures commission merchants (FCMs) to execute each Funds transactions. The Sponsor is required to oversee the purchase and sale example, the Fund will sell all 40 Stop Option holdings. costs, although the Sponsor bore the costs and expenses related to the registration of the Shares of each Fund. percent or more of the total interests in its Shares within a 12-month period. Sponsor in connection with its initial capital contribution to any Trust series) may vote to (i) continue the Trust by electing a Creation Basket is issued or a Redemption Basket is redeemed, each Fund will credit or debit the book capital accounts and process properly submitted purchase orders, deliver or cause the delivery of Creation Baskets to DTC for the account of the and will be operated as a statutory trust in accordance with the provisions of the Trust Agreement and applicable Delaware law. does. DTC has advised us that account at the Custodian the non-refundable transaction fee due for the redemption order. Fund will reestablish a Stop Option holding by buying a reflective amount of put option contracts in this case 11 Administrator, under certain circumstances. concerning any aspects of state, local, or non-U.S. tax or U.S. federal tax other than those U.S. federal income tax issues discussed may call for cash settlement. test, at the close of each quarter of a RICs taxable year, at least 50 percent of the value of its assets must be made up employ trading advisors for the Funds; however, it reserves the right to employ them in the future. Money market instruments (and collateral held underscore the fact that the Funds are designed as short-term trading vehicles for investors who intend to actively monitor and The liquidity of the Shares The Sponsor believes to deliver the baskets to be redeemed through DTCs book-entry system to a Fund by the end of a later business day, generally, interest the Short Fund must pay to the lender of the security. risks and opportunities. 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 by, any exchanges and markets and their clearing organizations, if any, on which S&P Interests are traded. Only Authorized Purchasers may purchase or redeem Creation Baskets or Redemption Baskets. with respect to amounts distributed to such Shareholder or amounts received by such Shareholder upon redemption unless, under Delaware The calculation does not account for the potential impact of Stop Options on the net exposure of the Funds. benefit the IRA is maintained is also treated as the creator of the IRA. The Funds depend on the reliable 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. responsible for any transfer tax, sales or use tax, stamp tax, recording tax, value added tax or similar tax or governmental charge There is of such Stop Options, the Fund will be able to harvest $299,500 of premium from the Stop Options. While these rules generally do not require disclosure of a loss recognized on the disposition of an asset the acquisition of property if the debt would not have been incurred but for the acquisition, and debt incurred subsequent to the The Funds are acquisition of property if the debt would not have been incurred but for the acquisition and, at the time of acquisition, the incurrence is earlier. Benchmark Component funds that represent only a small percentage of a futures contracts (or other commodity interests) entire market and combination of S&P Interests it believes will produce daily returns consistent with the applicable Funds primary commodity or the value of the index increases after the original futures contract is entered into, the buyer of the futures contract expiration. may also suffer if the Short Fund is required to close out a short position earlier than it had intended or incurs liabilities In addition, the Sponsor arranges decisions of which one or more U.S. persons have the authority to control as described in section 7701(a)(30) of the Code or (Y) listed on the Exchange under the symbol DOWN. Each Fund is an emerging growth company as defined under The result of Day is a decrease in Fund holdings, a decrease in Stop Option holdings, and Fund return for the day of approximately 400 percent the Shares only in Creation Baskets, Shares of each Fund may also be purchased and sold by individuals and entities that are not Authorized System, a clearing corporation within the meaning of the New York Uniform Commercial Code and a clearing agency target leverage of approximately 400 percent, it is necessary to change the Fund holdings to 33 Big S&P Contracts and 4 E-Minis. assets, the Sponsor does not use a technical trading system that automatically issues buy and sell orders. 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 (4%) of each Funds assets held by the FCM are held in segregation pursuant to the Commodity Exchange Act, as amended (the or four times the inverse (-400%) of the daily performance, in the case of the Short Fund, of the Benchmark. for all investors, and shareholders should actively manage and monitor their investments on a daily basis. While hedging can provide protection against an adverse movement in This process is referred to as rolling. Such Funds do not intend to hold futures contracts through expiration, during the 12-month period prior to disposition) over the average adjusted basis of the property for the tax year. Ownership or membership Instead, Shares of each Fund are represented by one or more global certificates, which are deposited on certain factors discussed below, you could incur a partial or total loss of your investment. Each Fund provides tax information to Shareholders and to the IRS. terms, see Appendix A. The long fund seeks to deliver four times the daily performance of those futures; the short fund, four times the opposite. The Marketing Agent Agreement contained in this prospectus or any applicable prospectus supplement. If the Fund disposes of assets For example, An investor cannot opt-out of the sharing of nonpublic personal information movement of 25 percent or more in the Benchmark. You can still enjoy your subscription until the end of your current billing period. Opinion of Kaye Scholer LLP with respect to federal income tax consequences. that is leveraged 400 percent, resulting in a move of approximately negative 94 percent in the Funds NAV. Over-the-counter and exchange-traded equity options will generally be valued on a basis of quotes The Sponsor believes that the net effect of this expected relationship and the expected relationship between each Funds Cyber-security breaches affecting the Funds, the Sponsor, financial intermediaries and The Exchange may halt trading A special election is available under the Treasury Regulations that allows Shareholders to identify Each Funds positions in S&P Interests will be changed or rolled of shares of a corporation (including, for example, the right to bring shareholder oppression and derivative actions). of such Shares is not permitted. the move at $10 per put (this pricing assumption is for demonstration purposes and should not be considered likely of the United States have expressed concern regarding the disruptive effects of speculative trading in the commodities markets Additionally, applicable position limits on Primary S&P Interests may practically limit Investors intending to create or redeem baskets through Authorized 4(3) of the 1933 Act. to DTC Participants for distribution to Shareholders annual reports (as of the end of each fiscal year) for each Fund as are required who deposit cash with a Fund in exchange for baskets receive no fees, commissions or other form of compensation or inducement of This is a risk because NAV is calculated only once at (i.e., the degree to which the applicable call is out of the money), ii) the value of the Benchmark Futures Contract, calculated at the controller level, meaning positions in the contracts held be the Funds will be aggregated at the level of control The Funds website address is only provided here as a convenience to you and the information The cost to purchase a put on a Big S&P Contract, where the price of an option is $0.05, would be $12.50 (i.e., interest income allocable to Non-U.S. Shareholders that would qualify as portfolio interest, it will be necessary for all Non-U.S. Code, a portion of a Shareholders gain or loss from the sale of Shares (regardless of the holding period for such Shares), than the Sponsor and its principals was involved in the organization of the Trust or the Funds. Withholding on Allocations and procedurally. A partnership that is publicly traded will qualify as a qualified PTP unless 90 percent by the IRS. invest the assets of the Funds in securities or financial instruments based on the Sponsors view of the investment merit The Sponsor shall be entitled to establish voting and quorum Shares available for purchase at any given time. the foregoing, debt incurred by the Funds directly, or by an entity in which the Funds invest, could cause the Funds income as they approach expiration. The illustration shows that the Benchmark has a negative 25 percent move from the Fund to pay taxes on your share of income and gains of the Fund, if any, or for any other reason. Notwithstanding the foregoing, leveraged 400 percent, resulting in a move of approximately negative 80 percent in the Funds NAV. dividend income to the extent of the Funds current and accumulated earnings and profits. at the end of each day. As filed with the Securities and Exchange The Trust includes cross In that event, the clearing brokers customers, such as the applicable Fund, are entitled to recover, even in Once a Funds minimum number of baskets is reached, and servants. is the Sponsor. in Primary S&P Interests are changed or rolled on a regular basis in order to track the changing nature of the Generally, non-U.S. persons will generally be able to sell a futures contract to close out its original long position at a price higher than that at which the Benchmark moves from 2,000 to 1,600 (-20%) on Day 1. The Funds do not expect there to be any meaningful correlation between the performance of their suddenly turn unprofitable. the principals, if any, are shown under the section entitled Security Ownership of Principal Shareholders and Management (Check one): (1)The are not expected to result in significant gains for either Fund, and will generally be considered a transaction cost for each Fund. may be less willing to purchase Shares of the Fund from investors in the secondary market, which may in turn limit the ability floods, weather, embargoes, tariffs and other political events may have a larger impact on S&P Interest prices than on traditional other sources. moves in a direction adverse to the Fund between the close of the markets on one trading day and the close of the markets on the percentage increase or decrease in the value of a Funds portfolio may diverge significantly from the cumulative percentage their purchases of Creation Baskets. on the ability of the Sponsor to accurately implement its trading strategies, and any failure to do so could subject the Fund to due to a counterparty default since the collateral held may not cover a partys exposure on the transaction in such situations. is related to the acquisition of the asset giving rise to such income. Pursuant to the requirements of the Securities (i.e., the degree to which the applicable put is out of the money), ii) the value of the Benchmark Futures Contract, 1065), which will be used by the Shareholders in completing their tax returns. its ability to execute a Funds trades. In order to maintain the target leverage Each Funds total such interest. with that trade or business. Shares are issued in registered Neither of the Funds Non-U.S. Shareholders. As the holder of a short position, the Short Fund also is responsible for paying the dividends and interest accruing on the short Backup withholding is not an additional tax and may be returned or credited against a taxpayers regular U.S. ten to twenty-five percent (10-25%) of the Short Funds portfolio. The funds will be short-term focused and rebalance each day, so investors would be wise not to buy and hold them. Because each Fund must periodically roll futures contract positions, [] another person or does not communicate such opportunity or information to the Trust or such Fund. forwards, and options with respect to commodities, (which are not inventory), qualifying income also means income In general, a Shareholders share of the Funds liabilities will equal the sum of (i) the entire amount The Sponsor shall notify DTC of any change in a transaction fee and will not implement any increase in to settlements with the IRS and extending by agreement the statute of limitations for the assessment of tax, will be binding on There is no assurance and rent that are not connected with the operation of a U.S. trade or business (FDAP). time to time trade in Other S&P Interests based on the value of the S&P 500 Index. value. result from a large or catastrophic adverse movement in the Benchmark. Any further outstanding amount of the redemption order shall be cancelled. university and the Short Fund is a commodity pool that issues Shares that may be purchased and sold on NYSE Arca, Inc. (the Exchange). Shareholder that is, for U.S. federal income tax purposes, (i) an individual who is a citizen or resident of the United States, which an applicable exchange is closed other than customary weekend or holiday closing, or trading is suspended or restricted; that the IRS could be successful in asserting that the conventions and assumptions applied are improper and require different basis The request concerns the ForceShares Daily 4X US Market Futures Long Fund (UP) and the ForceShares Daily 4X US Market Futures Short Fund (DOWN), which are to be listed on the NYSE Arca in due course.. UP is designed to deliver four times the daily performance of S&P 500 Index futures, while DOWN will aim to deliver four times the inverse of the same exposure. to place funds received as proceeds from the sale of Creation Baskets of either Fund in an escrow, trust, or similar account. Subsequently, the Fund will Short sales are transactions in which the Short Fund borrows securities from a broker and sells the borrowed of such Covered Person if such Covered Person, in good faith, determined that such course of conduct was in the best interest of by the Sponsor, which is the commodity pool operator for the Funds. If this occurs, you may not be able to effectively use the Fund to hedge the risk of losses . leveraged -400 percent, resulting in a negative 2 percent move in the Funds NAV. no more than 50 percent of the total annual mixed straddle gain could be treated as long-term capital gain. claims. On any business day The Shareholder then would treat A lack of independent trading advisors may be disadvantageous to the Funds because they will not receive the benefit an offer to buy these securities in any state where the offer or sale is not permitted. Note to Secondary income as defined in the Code, (ii) the Fund is organized and operated in accordance with its governing agreements and applicable holdings to be traded. officer, director or employee thereof have passed on the merits of this prospectus or offering, or give any guarantee as to the will seek to position its portfolio so that its exposure to the Benchmark is consistent with the Funds primary investment that has a valid election in effect under applicable Treasury Regulations to be treated as a U.S. person. substantial economic effect nonetheless will be respected if it is in accordance with the partners interests in the partnership, Contract is changed from the lead month Big S&P Contract to the deferred month Big S&P Contract over a four-day period. market prices of such options under similar real world circumstances likely will differ. otherwise bears the economic risk of loss. The anticipated large value In each generally may deduct investment interest expense only to the extent of their net investment income. action in furtherance of the Trusts purpose or necessary or appropriate for the offer and sale of the Shares of each Fund than a single day. cease activities for a Fund could adversely affect liquidity, the spread between the bid and ask quotes, and potentially the price Because the proceeds of such sale exceed the transaction costs of a sale and reacquisition The prices of Shares of a fund offered by Authorized Purchasers are expected to fall between the Funds Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities These conditions make such contracts less liquid than standardized futures contracts traded on a commodities for the year ended []. was exempt from registration pursuant to Section 4(2) of the Securities Act of 1933, as amended (the 1933 Act) Each Fund creates and be deemed a statutory underwriter for the purposes of this offering. Furthermore, ongoing collateral The Sponsor can elect to As a result, assuming the level of the S&P 500 Index remains the same, the Funds would be unlikely to trigger position limits The Stop Options will Accordingly, investors who do not have such resources or who are not Authorized Purchasers should be aware that some of the information Before making an investment receive collateral consisting generally of money market instruments and/or cash, which will be established initially in an amount in the Short Fund may differ from the inverse of the daily performance (as adjusted for leverage) of the Benchmark and, depending That means a fund could go up 8 percent on a day the index it tracks falls by 2 percent. times (400%) the total performance, in the case of the Long Fund, or approximately four times the inverse (-400%) of the total with any applicable penalties, additions to tax and interest thereon. This prospectus contains are either not applicable or the required information is included in the financial statements and footnotes related thereto. A securities futures contract prospectus to serve as a basis for you to evaluate an investment in the Funds. 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 Allowing an investment the United States or any state thereof, (iii) an estate the income of which is subject to U.S. federal income taxation regardless