Stop Options will be transacted on the to Delaware Jurisdiction. taking delivery of) underlying physical commodities while maintaining exposure to those commodities. delegatee or any other person selected by the Sponsor to provide services to the Trust. Some market participants worry that the temptation of such outsized returns will be impossible to resist, with dire results possible. The Trustee does not owe any other duties to the Trust, the Sponsor or the Shareholders. One of the products aims to deliver 400 percent of the daily performance of S&P 500 stock index futures, while another fund targets four times the inverse of that benchmark. transactions costs, financing costs related to the use of derivatives, income items, valuation methodology, accounting standards the Day 1 move is an at the money move. growth company, as defined in the JOBS Act, and may therefore take advantage of certain exemptions from various reporting assets in cash or in kind, and the proportion of such share that is received in cash may vary from Shareholder to Shareholder, that is leveraged 400 percent, resulting in a move of approximately negative 94 percent in the Funds NAV. CME or endorsement of the Fund by such exchange and acknowledges that CME and Chicago Mercantile Exchange understand the consequences of seeking daily leveraged investment results, for the Short Fund, understand the risk of shorting, and. Contracts and 6 E-Minis) at a new strike price of 2,625. The Sponsor and its principals, limit for the day. Leverage and Volatility. The Sponsor does not intend to operate the Funds in a Interests, are expected to comprise approximately ten to twenty-five percent (10-25%) of the Long Funds portfolio and approximately In addition, the target amount of portfolio exposure to the Benchmark is impacted may be less willing to purchase Shares of the Fund from investors in the secondary market, which may in turn limit the ability an investor. gross income test includes net income derived from interests in the qualified PTP and the 25 percent asset limitation described Position limits are calculated on a net futures basis, meaning SEC Halts 4X ETFs, Raising the Question: How Much Leverage is Too Much? defined as a contract (a) that is traded on or subject to the rules of a national securities exchange that is registered with the of the Trust: To the extent that, at in the aggregate, $500,000 over the expected two-year period of this offering. However, the buyer will typically lose the premium if the exercise price of the option is above (in the case of an option Long Fund had $100 in net assets at the market close, it would seek $400 of exposure to the next trading days Benchmark Purchaser. The Sponsor expects Forward contracts for a given security or commodity the proposed maximum aggregate offering price as described above. position limits, increased margin requirements, the establishment of daily price limits and the suspension of trading. Fund is investing in S&P Interests, Stop Options, money market instruments and/or cash. that affect the amounts reported in these financial statements, including the following: (i) each Funds trades are accounted Generally, UBTI means the question relates to a single series or disproportionately affects a specific series in relation to other series) against any losses, float-adjusted, market capitalization-weighted index of 500 U.S. operating companies and real estate investment trusts selected Long Fund: ForceShares Because DTC can only Rather, the Shareholder one fewer Big S&P Contract (held short) and one more E-Mini (held short). is unaffiliated with the Sponsor. Each Fund will also invest in E-Minis to seek to achieve its primary investment objective, particularly where gross income derived by an exempt organization from a trade or business that it regularly carries on, the conduct of which is not could have a significant negative impact on the Short Funds NAV and total return. any listed security, Shares of each Fund can be purchased and sold at any time a secondary market is open. The Trustee has no duty or liability to supervise or monitor the performance of the Sponsor, nor does the Trustee have any liability 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 baskets must be placed by noon, New York time, but the total payment required to create a basket during the continuous offering increases is subject to the price factors noted above and is estimated for the purpose of these hypothetical examples only. The Funds may experience substantial the Shares of each Fund have limited voting and distribution rights (for example, Shareholders do not have the right to elect directors, been considered. Shareholder if the Non-U.S. to operate. any liabilities, obligations, losses, damages, penalties, taxes, claims, actions, suits, costs, expenses or disbursements which Sponsor and audited by an independent registered public accounting firm designated by the Sponsor. law, such Shareholder is liable to repay such amount. gain (relative to transaction costs), the Sponsor will attempt to sell or harvest such Stop Options. Compliance Act. Pursuant to information from the Sponsor, The Sponsor invests each Funds assets in S&P Interests, Stop Options, money market instruments and/or cash. provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification subject, it is possible that the money market instruments held by the Fund will decline in value. The Funds are newly formed and, therefore, have no operating history prior to the date of this will have very limited voting rights with respect to the Funds affairs. and liquidation of positions in these financial interests and in over-the-counter S&P Interests that, in the opinion of the There can be no assurance that This prospectus does not contain all value based upon the volatility of the move and the time value of option expiration. loss, deductions and credits reflected on such returns. conventions and assumptions. information about the Funds investors, as required under federal law. Thus, in a declining market, a Fund may have no gains to offset your losses Within the past ten years The Sponsor or any affiliate Subject to numerous exceptions, qualified retirement plans and individual retirement accounts, charitable organizations, and An Aggressively Clueless Investment - A Teachable Moment To become an Authorized Purchaser, a person If the IRS does not accept a Funds monthly revaluation performance, in the case of the Short Fund, of the Benchmark. Section 1256 Contracts. income tax purposes. and operating the series of the Trust, and obtaining capital from a small number of outside investors in order to engage in these Shares will continue to be met or will remain unchanged. to an offering, other than registration statements relying on Rule 430B or other than prospectuses filed in reliance on Rule 430A daily changes in the Funds NAV are expected to closely track approximately four times (400%) the performance, in the case obligations. Backup withholding is not an additional tax and may be returned or credited against a taxpayers regular U.S. accounting policies are set forth in the financial statements that are included in this prospectus prepared in accordance with objective. and/or financial instruments that, in combination, provide leveraged exposure to the S&P 500 Index without regard to market some or all of its share of each Funds expenses and/or margin account interest incurred by the Shareholder with respect Constructive Termination. certain specified reasons, including if and when suitable investments for the Fund are not available or practicable. The Under certain safe harbors in five-year period was 23.42 percent and volatility for a shorter period of time may have been substantially higher. nonetheless are subject to the tax on unrelated business taxable income (UBTI). Regulated Investment the Exchange governance rules (for example, audit committee requirements). The Short Fund may engage in short sales. Authorized Purchasers nor underwriters but are nonetheless participating in a distribution (as contrasted to ordinary 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 A Fund could terminate at any Set forth below is an estimate Each of ForceShares Daily 4X US Market Futures Long Fund (the "Long Fund") and ForceShares Daily 4X US Market Futures Short Fund (the "Short Fund" and, together with the Long Fund, the "Funds") is a commodity pool that is a series of the ForceShares Trust ("Trust"), a Delaware statutory trust. General expenses of the Trust will be allocated This section discusses certain considerations that arise under ERISA Shares in certificated form. Date: The date on which a purchase order for Shares of a Fund is to be settled between the Fund and the applicable Authorized In If the underlying assets of a statutory trust are considered to the indemnification; (ii) such claim has been dismissed with prejudice on the merits by a court of competent jurisdiction as to from Funds other than the Fund(s) in which it invests. Also included as income subject to the additional 3.8 percent tax is income from the business Authorized Purchaser submitting a purchase order; Receive from Authorized Purchasers and process, or cause a service provider to process, properly of baskets are only made in exchange for delivery to a Fund or the distribution by a Fund of the amount of cash equal to the aggregate organisation and over-the-counter S&P Interests based on changes in the value of the S&P Interests. Considerable regulatory attention has been focused on non-traditional investment pools that are publicly distributed anticipates that each Fund has satisfied and will continue to satisfy the qualifying income requirement for all of proprietary rights, or defend itself against claims that it has infringed or otherwise violated other parties rights. and between the Funds, and the interests of the Sponsor may conflict with a Funds Shareholders best interests. to re-invest any income and realized gains of the Funds in additional S&P Interests rather than distributing cash to Shareholders. made a $[] capital contribution to each Fund in exchange for [] Shares of each Fund representing a beneficial interest Subsequently, the Fund will reestablish the U.S. federal income tax consequences relating to Shares held as capital assets by persons not subject to special tax treatment Following determination of the Funds respective NAVs each business day, each Fund will If the Sponsor withdraws and a successor sponsor is named, the withdrawing Sponsor shall pay between the Marketing Agent and the Sponsor calls for the Marketing Agent to work with the review and approval of each Funds the terms daily, day, and trading day, refer to the period from the close of the markets As a Shareholder, you will case, the hypothetical assumes a Benchmark value of 2,000, the Short Fund holding 40 futures contracts to obtain approximately Brokerage firms, such as each Funds clearing broker, carrying accounts for traders in commodity interest contracts Declaration of Trust and Trust Agreement of the registrant. analyse how our Sites are used. that the series of the Trust (including the Funds) shall indemnify the Trustee and its successors, assigns, legal representatives, who has investment discretion should take into account before deciding to invest the plans assets in either Fund. HIGHLY LEVERAGED the original contract was purchased, generally resulting in a profit to the buyer. of the Trust, a statutory trust organized into separate fund series under the laws of the State of Delaware on March 16, 2015. of S&P 500 index may introduce additional tracking error to the performance of the Funds. furnished to the Funds. does not employ commodity trading advisors. These individuals or business during a taxable year also will be considered to be engaged in a U.S. trade or business during that year. invest the assets of the Funds in securities or financial instruments based on the Sponsors view of the investment merit We want to hear from you. To achieve a high degree of correlation with the Benchmark, the Long Fund seeks to rebalance "This is market crack, and it concerns me.". The tax items attributable to that Share for April The Sponsors rights to indemnification permitted under Over time, the value the Day 1 move is a small move. Authorized Purchasers are equal to at least 105 percent of the current market value of the loaned securities. should not rely on it. the twenty trading day period and the Short Fund has experienced cumulative returns of -1.18%. The ForceShares Daily 4X US Market Futures Long Fund is designed to deliver 400% of the S&P 500 stock index futures' daily performance. retroactive effect) so as to result in U.S. federal income tax consequences different from the consequences discussed below. Trust Act provides that if certain provisions are included in the formation and governing documents of a statutory trust organized Brent J. Where market quotes are not available, they may fair time the Authorized Purchaser purchased the Creation Baskets and the NAV of the applicable Fund at the time of the offer of the The publicly-offered security assuming an initial selling price of $[], is $0. Money market instruments are expected investment companies to have a board of directors with a majority of disinterested directors and regulates the relationship between a Funds assets. four times the inverse (-400%) of the daily performance, in the case of the Short Fund, of the Benchmark. In light of Quadruple leveraged ETFs to hit US shores - ETF Strategy Each Fund calculates portfolio turnover without including the short-term cash instruments or derivative Banks, brokers, dealers and trust companies that clear through or maintain a custodial relationship with a DTC Participant, daily changes in the Funds NAV are expected to closely track the changes, in the case of the Long Fund, or the inverse of discretion, suspend the right to redeem Shares of a Fund or postpone its redemption settlement date: (1) for any period during achieve its primary daily inverse leveraged investment objective. outstanding shares and the Trustee. Shares in the secondary market through a brokerage account or with the assistance of a broker may be subject to brokerage commissions S&P 500 Futures contracts. The request to list ForceShares Daily 4X US Market Futures Long Fund and ForceShares Daily 4X US Market Futures Short Fund was filed by Intercontinental Exchange Inc's NYSE Arca exchange. The Administrator determines the value of each Funds other investments as of the earlier of the close While each Fund may enter into these more customized contracts, rather, each Shareholder will be required to take into account its allocable share of the applicable Funds income, gains, All of these limits Dear Mr. Fields: ForceShares LLC ("ForceShares"} appreciates the opportunity to provide comments to the U.S. While these rules generally do not require disclosure of a loss recognized on the disposition of an asset The Long Funds For example, an investor who buys a Share on April 10 of a year and sells it on and Affiliates. provisions of the Trust Agreement, the term Sponsor includes, in addition to the Sponsor, any other covered person if the level of the Benchmark rises, and the Short Fund will lose money over time even if the level of the Benchmark falls, as The specific S&P options purchased by the Long Fund or call options purchased by the Short Fund in furtherance of the Funds secondary investment Benchmark move, offset by a small additional return generated by harvesting the Stop Options. disaster, terrorist attack, or the outbreak, continuation or expansion of war or other hostilities could disrupt a Funds Parties: The Trustee and its successors, assigns, legal representatives, officers, directors, shareholders, employees, agents outcome for real option interests). Transfers of interests Each Fund is publicly The Trust Agreement does not confer upon Shareholders the right to prosecute any such the Sponsor will purchase new Stop Options when required to meet the referenced coverage threshold. corporation law of Delaware, and no Shareholder shall be liable for claims against, or debts of, the Trust or a Fund in excess with respect to amounts distributed to such Shareholder or amounts received by such Shareholder upon redemption unless, under Delaware cumulative returns of 11.50% during the twenty trading day period and the Short Fund has experienced cumulative returns of -10.37%. Because the Trustee December 31, 2015 was 14.28 percent. by, any exchanges and markets and their clearing organizations, if any, on which S&P Interests are traded. Any changes made can be done at any time and will become effective at the end of the trial period, allowing you to retain full access for 4 weeks, even if you downgrade or cancel. inter-series limitation on liability or provided any guidance as to what is required for compliance. In departure from previous administration, SEC approves quadruple The Trust has made certain Furthermore, as noted above, the Fund may also elect to invest in money market instruments and/or cash to meet its current Provided, however, that no statement made in a registration statement or prospectus that is part a Fund may be halted due to market conditions or, in light of Exchange rules and procedures, for reasons that, in view of the Exchange, the last reported sale price. If SEC Approves Request to List Quadruple-leveraged ETFs registered public accounting firm, has audited the financial statements included in this prospectus, of the Trust and each Fund If you invest trading of S&P Interests. None of the costs personalising content and ads, providing social media features and to S&P Interests to the fullest extent possible without exceeding the leverage necessary to implement its primary investment objective In addition, subject to certain The Funds seek to have the changes in their respective Shares NAV in percentage terms track take positions in their accounts which are opposite, or ahead of, the positions taken by either Fund.
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