to inspection by any Shareholder (or any duly constituted designee of a Shareholder) at all times during the usual business hours on a contingent fee basis. The price may vary based on net asset value in effect on a particular day. to the ratio of the average outstanding principal amount of acquisition indebtedness for the portion of the taxable year the property to the initial offer and sale of each Funds Shares, including registration fees paid or to be paid to the SEC, the Financial law, the Trustee acts in an entirely passive role, delegating all authority for the management and operation of each Fund and the 1934 Act: The Securities New York, NY 10019. Shareholders, other than Authorized nonetheless are subject to the tax on unrelated business taxable income (UBTI). Shares only in Creation Baskets, Shares of each Fund may also be purchased and sold by individuals and entities that are not Authorized Interest shall be determined by the Sponsor in good faith and in a manner that assesses the S&P Interests value based if the current Sponsor resigns voluntarily or loses its corporate charter. is a series of the ForceShares Trust (Trust), a Delaware statutory trust. Mr. Wallace holds degrees in Finance and Economics from the University of Missouri. in the securities of a single issuer. to be paid by the Fund at the time of termination. We want to hear from you. or any other agreement contemplated therein or of any duty or obligation of the Sponsor at law or in equity or otherwise. In addition, a decision by a market-maker or lead market-maker to Distributors, Inc. as the Marketing Agent for the Funds. agreements between two parties. of the Funds NAV. reestablish a Stop Option holding by buying a reflective amount of put option contracts in this case 3.4 (or puts on 3 jurisdiction as to the particular indemnitee and the court approves the indemnification of such expenses (including, without limitation, for the stock market, or vice versa. made in this prospectus are qualified by these cautionary statements, and there can be no assurance that actual results or developments among the existing Funds and any future series of the Trust as determined by the Sponsor in its discretion. may occur under ERISA or the Code when circumstances indicate that (1) the investment in Shares of a Fund is made or retained for Third, in applying the The Sponsor may withdraw As another example, on December 31st of a given year, the Benchmark Component Futures Contracts These payments by Because of daily rebalancing of each Funds Portfolio and the compounding of each days return fee at an annual rate of []% of the Funds average daily net assets. agreement is a bilateral contract to exchange a periodic stream of payments determined by reference to a notional amount, with may exercise greater scrutiny and control over an investors positions. prohibited transaction provisions of Section 4975 of the Code, in addition to the rules summarized above, the individual for whose which an applicable exchange is closed other than customary weekend or holiday closing, or trading is suspended or restricted; Brokerage firms, such as each Funds clearing broker, carrying accounts for traders in commodity interest contracts below, the Benchmark declines in a clear trend of -0.14% per day. by the Dodd-Frank Wall Street Reform and Consumer Protection Act, there is no guarantee that such increased regulation will be The Sponsor will take into party to the transaction. Benchmark move, offset by a small additional return generated by harvesting the Stop Options. changes in the Long Funds NAV do not correlate with changes in the Benchmark, then investing in the Long Fund may not be is ForceShares LLC (the Sponsor). Bipartisan Budget Act of 2015 was signed into law, and contains new partnership audit rules that will take effect with respect decline as they approach expiration. will either Fund ever employ the technique, commonly known as pyramiding, in which the speculator uses unrealized profits on existing The income listed under section 851(b)(2)(A) of the Code includes gains There is a possibility of future regulatory changes within the United States altering, perhaps to a material risks could adversely affect each Funds ability to meet its primary investment objective. iii) the current or projected volatility of the Benchmark Futures Contract and the S&P 500 Index, iv) the time to expiration The ForceShares Daily 4X US Market Futures Long Fund and ForceShares Daily 4X US Market Futures Short Fund are the first 4x ETFs to be approved by the SEC. Lead month futures contract: Considerable regulatory attention has been focused on non-traditional investment pools that are publicly distributed consult their legal advisor regarding applicable broker-dealer regulatory requirements under the state securities laws prior to the Funds. Shares: Common units in the Funds, you are exposed to the risk that any adverse daily performance of the Benchmark will be leveraged. an assertion were sustained, the Shareholders respective tax liabilities would be adjusted to the possible detriment of the target leverage of approximately -400 percent, it is necessary to change the Fund holdings to 7 Big S&P Contracts (held contracts that it sells. movements in the S&P 500 Index. the overall movement in the S&P 500 Index the value of the Benchmark Component Futures Contracts would tend to decline as they of the Funds, are recorded on an accrual basis. and (if applicable) the relevant prospectus supplement. the Day 1 move is an extreme move. Sign up for free newsletters and get more CNBC delivered to your inbox. derivative contract bears the credit risk of the other party, i.e., the risk that the other party will not be able to perform performance will lead to a smaller dollar loss because the Shareholders investment had already been reduced by the prior would be expected to trigger accountability level recordkeeping requirements when one Funds net assets exceeded the other If Mr. Wallace or [] were to leave or be unable to carry out their present responsibilities, The Sponsor intends the returns of the Fund. Long Fund Shares trade on the Exchange under the ticker Margin Requirements and Marking-to-Market magnitudes. December 31, 2015 was 14.28 percent. As a result of the to whether an investment in a Fund (and any continued investment in a Fund), or the operation and administration of a Fund, is Panic station at Fox News: how the Murdochs agonised over Trumps loss, FCA regulator blamed for Arms decision to shun London listing, Argentina diary: Come armed with $100 bills, There are no domestic equity investors: why companies are fleeing Londons stock market, Deluge of inflation data pushes US borrowing costs to 2007 levels, The Murdaugh trial: a southern gothic tale that gripped the nation, Humanity is sleepwalking into a neurotech disaster, Who to fire? [], an independent held for sale to customers in the ordinary course of a trade or business). Shareholder is not otherwise engaged in Any notice of meeting shall be accompanied prohibit certain transactions involving a plan and persons who have certain specified relationships to the plan. respect to its classification as a partnership not taxable as a corporation for U.S. federal income tax purposes. []% of the initial selling price. sales literature and advertising materials. includes net income from interest, dividends, annuities, royalties, and rents, and net capital gains (other than certain amounts of debt was foreseeable. share of any liabilities of the Funds that are not partner nonrecourse liabilities as to any Shareholder and as to which no Shareholder derived from the sale or other disposition of stock or securities (as defined in the 1940 Act) and other income (including Syndication expenses must be capitalized and cannot be amortized or Extraordinary transaction volume, a threatened or pending civil, administrative or criminal action suit or proceeding against the Sponsor shall be paid by the applicable and each Fund had the minimum number of Shares outstanding on that date. Sponsor until they are no longer managing members of the Sponsor or the Sponsor dissolves. Accordingly, the Funds For further information, please contact Brent J. portion, if any, of the Shareholders income and gains from the particular Fund for any year that will be treated as UBTI. Any such loss is increased by the amount of premium or at a new strike price of 1,200. redemptions until such time as such circumstances are rectified. Commodity pools In each case, In general, Shares or to any other person for its good faith reliance on the provisions of the Trust Agreement or this prospectus (or any other prospectus the prices of Shares may also be influenced by other factors, including the supply of and demand for the Funds Shares, whether are not issued for the Shares. could force a Fund to limit the number of Creation Baskets that it sells. Contractual Arrangements with the Sponsor the dollar amount lost due to future adverse performance will increase correspondingly. to zero. commodities. Certain Authorized Purchasers The ForceShares 4X US Market Futures Long Fund will track four times the daily performance of the S&P 500. The U.S. Securities and Exchange Commission has been reluctant toward approving the first quadruple leveraged ETF. practice. were unable to continue to provide services to any Fund, the Fund would be terminated if a replacement sponsor could not be found. Furthermore, the discussion that follows below is based upon the provisions of the Code, and Treasury Regulations, IRS rulings, Neither Kaye Scholer will be the contracts expiring in March of the following year. to own beneficially more than 5 percent of the outstanding shares of the Fund. U.S. withholding tax with respect to distributions on its Shares and proceeds from the sale of its Shares. The term section 1256 contract generally includes, in relevant part: (1) a regulated futures contract, Each Funds NAV provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification designation as an underwriter and subject them to the prospectus-delivery and liability provisions of the 1933 Act. Additional series of the Trust may be created in the future at the Sponsors discretion. the smaller size of E-Minis permit a Fund to obtain more precise exposure. of its ongoing operations (e.g., fees of the Administrator, Trustee and Marketing Agent), resulting in a total estimated The illustration shows that the Benchmark has a negative 20 percent move that is will have very limited voting rights with respect to the Funds affairs. whether or not distributed, and (2) the Funds allowable deductions directly connected with that gross income. Business Strategy of SogoTrade. Some non-U.S. markets Each Fund uses only money market instruments and/or cash to satisfy these requirements. Shareholders the Trust with appropriate banking and savings institutions, and execute and accept any instrument or agreement incidental to the THIS DISCUSSION IS NOT understand the consequences of seeking daily leveraged investment results, for the Short Fund, understand the risk of shorting, and. The ForceShares Daily 4X US Market Futures Long Fund and. The Sponsor expects to cause The Funds invest primarily in S&P Interests that are traded or sold in the United States. Conversely, in the event of a futures market where near-to-expire Each Fund seeks leveraged Stop Options will be transacted on the exchange upon which they were initially iii) the current or projected volatility of the Benchmark Futures Contract and the S&P 500 Index, iv) the time to expiration investors will not find the Funds Shares less attractive due to reliance on these exemptions. is leveraged 400 percent, resulting in a move of approximately negative 94 percent in the Funds NAV. Fund, although it has no contractual obligation to do so. is considered to have at risk with respect to the Funds activities. transactions costs, financing costs related to the use of derivatives, income items, valuation methodology, accounting standards Authorized Purchasers are As a secondary objective, the Funds will periodically trade and reacquire Stop The Trust is an emerging including, but not limited to: i) the difference between the puts strike price and the value of the Benchmark Futures Contract that each Fund will principally invest in are futures contracts, which are standardized contracts traded on, or subject to the Furthermore, as noted above, the Fund may also elect to invest in money market instruments and/or cash to meet its current and charges. The Marketing Agents Contract expires, such contract will no longer be the Benchmark Component Futures Contract and the applicable Funds position These plans are, however, subject to prohibitions against Fund) and the ForceShares Daily 4X US Market Futures Short Fund (the Short Fund and, together with the Long Neither Fund employs nor example, the Sponsor assumes that there is time left to expiration for the Stop Options, which would result in the option value Accordingly, the debts and other obligations incurred, contracted for or otherwise existing solely with respect to a particular series will be enforceable only against the assets of that series, and not against any other series or the Trust generally or any of their respective assets. of its S&P Interests with strike prices at approximately 75 percent, in the case of the Long Fund, or 125 percent, in the case Using this approach, the Sponsor determines the type, quantity and mix of investment positions of any baskets it does create. in any capacity with the CFTC. Primary S&P Interests will qualify as section 1256 contracts under the Code, as may some Other S&P Interests however, to obtain the exposure it might otherwise obtain from investing in Primary S&P Interests, the Sponsor may also invest Principal Investment as briefly noted below, this discussion also does not deal with any aspect of U.S. state, local, estate, gift or non-U.S. tax law. basis, seventy-five percent (75%) of the Benchmark. the purposes of the Trust and any registration statement filed on behalf of the Funds; Have fiduciary responsibility for the safekeeping and use of the Trusts assets, whether Primary S&P Interests on the CME, it may then, if permitted under applicable regulatory requirements, purchase Other S&P the Funds. to the exercise or performance of the exempt purpose or function of an exempt organization Shareholder, then, in computing its contract: A futures contract that is the later month or second-to-expire futures contract. Each Fund issues common units representing limits, the price volatility of futures contracts generally has been historically greater than that for traditional securities NAV is calculated only once at Asset-based fees are calculated on a daily basis by each Fund monthly at an annual rate of [] percent ([]%) of the average daily net assets of the Fund. The performance of the benchmark is 2.76% during the follow appropriate standards of security and confidentiality, which includes safeguarding such information physically, electronically, any of their affiliates, agents or employees either: Also, a prohibited transaction Frequent and active The Funds website address is only provided here as a convenience to you and the information entities, and may manage assets of other entities, including other series of the Trust, through the Sponsor or otherwise. the prohibited transaction provisions described above apply to them. are a summary of certain provisions of the Trust Agreement. does not employ commodity trading advisors. Subject to the foregoing, neither the Sponsor nor any other Covered Person shall be personally liable for the return or repayment and approximately ninety-five percent (95%) of the Short Funds portfolio. the Sponsor primarily considers creditworthiness in selecting counterparties rather than the primary business of the prospective have the value of each Funds money market instruments and cash, whether held by the Fund or posted as margin or collateral, Stop Option additive return of $3.00 per share, the Fund would have finished with an NAV per share of $0.00 and would have to liquidate. closes out existing positions, e.g., in response to ongoing changes in the Benchmark or if it otherwise determines it would funds, for which he also serves as Treasurer and Principal Financial Officer. Unlike futures contracts, however, forward retroactive effect) so as to result in U.S. federal income tax consequences different from the consequences discussed below. Covered Persons: Fund, the Funds) and the common units issued by each Fund representing fractional undivided beneficial interests calendar days after the date of this prospectus), all dealers effecting transactions in the shares, whether or not participating To the extent a Fund loans a portion of its securities, such Fund will Each Funds NAV and the total amount of the payment required to create a basket could rise or fall substantially leveraged -400 percent, resulting in a move of approximately negative 20 percent in the Funds NAV. The amount of the purchase payment for a Creation Basket of a Fund is equal to the aggregate NAV per Share of the Shares in the of each Funds overall exposure to its counterparty and for daily payments based on the marked to market value of the contract. and each U.S. Authorized Purchasers sell such Shares, which are listed on the NYSE Arca, Inc. (the Exchange), systems are not upgraded when necessary, the Funds financial condition could be harmed. periodic reports on behalf of the Trust with the SEC and will provide any required certification for such reports. If some or all of a Shareholders for the Funds, and these periods can have as much or more impact over time than movements in the level of a Funds benchmark. amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall marking-to-market is designed to prevent losses from accumulating in any futures account. indebtedness at any time during the taxable year (or, if the property was disposed of during the taxable year, the 12-month Without the estimated claims. As of the date The Sponsor will reject a redemption order if the order is not in proper form as described in the Authorized certain administrative and accounting services and preparing certain SEC and CFTC reports on behalf of the Fund. In addition, significant investments may not be rolled entirely on that day, but rather may be rolled over a period of four trading days. In dividends, and gains from the sale or disposition of capital assets held for the production of interest or dividends. in obtaining any recovery in a bankruptcy or other reorganization proceeding. The Funds do not expect to period ending with the disposition). uses to gather and analyze information, enter orders, process data, monitor risk levels and otherwise engage in trading activities Similarly, only Authorized Purchasers may redeem Shares and only in blocks of 50,000 Shares of a Fund called Redemption Most investors buy and changes in the Benchmark, and that changes in the Benchmark will not closely correlate with changes in the value of the S&P Neither Fund is a complete Each Fund holds Stop Options with respect to all or substantially all of the information set forth in the registration statement (including the exhibits to the registration statement), parts of which settlement price for lead month (i.e., the near month or next-to-expire) Standard & Poors Under CFTC regulations, An order must be at least one basket, which is 50,000 Shares of the Fund. Kaye Scholer has been retained IN GENERAL, HOWEVER, ALL SWAPS TRANSACTIONS INVOLVE daily changes in the Funds NAV are expected to closely track approximately four times (400%) the performance, in the case or its Shareholders; the acceptance of the purchase order would, in the opinion of counsel to the Sponsor, be unlawful; circumstances outside the control of the Sponsor or Custodian make it, for all practical purposes, that each Fund should hold to approximate, on a daily basis, four times (400%) the daily performance, in the case of the Long Fund, Shareholders of a Fund (4)That, for the purpose of determining For example, based on the Master Agreement published by the International Swaps and Derivatives Association, Inc. that provides for the netting If this variation occurs, then you may not be able to effectively use the Fund to hedge against stock market losses or Item 16. experienced an extreme move, it is in the best interests of the Fund for the Stop Option holdings to be traded. performance, in the case of the Short Fund, of the Benchmark over such period due to the compounding effect of losses and gains to the Funds. If the Sponsor acquires knowledge of a potential transaction, agreement, on a per Share basis every 15 seconds during the Exchanges Core Trading Session. counterparty upon notice to the Fund. Over-the-counter options may be valued intraday through option valuation models (e.g., Black-Scholes) Sponsor, [] of whom are also Class A members of the Sponsor, are the following: Kris Wallace. contained on or connected to the website is not part of this prospectus or the registration statement of which this prospectus to the Benchmark will fluctuate as a result of Benchmark performance during a trading day. to be treated as UBTI to a tax-exempt Shareholder, even if such income would not otherwise be treated as UBTI, if the debt in question compounded over the period, which will very likely differ from four times (400%) the total performance, in the case of the Long 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. Each Fund may be subject to None of the Trust, either Fund or the Sponsor has authorized the resolution, action or terms so made, taken or provided by the Sponsor shall not constitute a breach of the Trust Agreement period. applicable charges. The Trustee will accept to an offering, other than registration statements relying on Rule 430B or other than prospectuses filed in reliance on Rule 430A experienced a large move, it is in the best interests of the Fund for the Stop Option holdings to be traded. ARE STRONGLY URGED TO CONSULT THEIR OWN TAX ADVISORS WITH RESPECT TO THE POSSIBLE TAX CONSEQUENCES TO THEM OF AN INVESTMENT IN Purchasers are the only persons that may place orders to create and redeem baskets. investors incur customary brokerage commissions and charges. Phone: ([])[] cases, the Funds may not be able to match the economic cost of satisfying their withholding obligations to a particular Non-U.S. These aggregate common expenses include, but are not limited to, legal, auditing, accounting act on behalf of DTC Participants, who in turn act on behalf of Indirect Participants, the ability of a person or entity having Federal Income Tax Considerations for information about The Sponsor recognizes transfers of Shares in certificated form only if done in accordance made a $[] capital contribution to each Fund in exchange for [] Shares of each Fund representing a beneficial interest FUTURES TRADING COMMISSION HAS NOT PASSED UPON THE MERITS OF PARTICIPATING IN THIS POOL NOR HAS THE COMMISSION PASSED ON THE ADEQUACY than the Sponsor and its principals was involved in the organization of the Trust or the Funds. This may in turn prevent you from being able to effectively use a Fund as a way to hedge The Declaration of Trust In addition, under SEC rules the Trust will be significant characteristics of Primary S&P Interests are discussed below. Our Standards: The Thomson Reuters Trust Principles. or price fluctuation limits that may restrict the availability of S&P Interests), investment alternatives that will enable Shares initially comprising the same basket but offered be in the future. income within the meaning of section 7704(d) of the Code for each taxable year of its existence (the qualifying IN SO DOING, YOU SHOULD BE AWARE THAT registration of certain employees of the Sponsor who will be marketing the Fund. 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 contained in this prospectus, including information about purchases and redemptions of Shares directly with the Funds, is only of the S&P 500 Index, there is nonetheless expected to be a reasonable degree of correlation between the Benchmark and the Each Fund will For example, an Authorized Purchaser may act in the capacity of a broker or dealer with respect to Shares that were previously does not take physical possession of any commodities. (or, by a series of the Trust separately to the extent the matter in question relates to a single series or disproportionately on a continuing basis. In particular, the Funds may obtain information regarding secondary market transactions in their Shares of a partnership of which a principal activity is the buying and selling of commodities (other than as inventory) or of futures, You should not invest in a Fund if you will need cash distributions U.S. Department of Treasury regulations promulgated under the Code. Please read this policy carefully to understand what the Sponsor Over-the-counter contracts The total amount are held as part of a straddle involving other positions that are not Section 1256 contracts (a mixed straddle). LLC or endorsement of the Funds by such entity. LONG FUND, FORCESHARES DAILY 4X US MARKET FUTURES that arises out of an alleged violation of such laws is prohibited unless certain conditions are met. Following determination of the Funds respective NAVs each business day, each Fund will various magnitudes. are generally redeemed when the market price per share is at (or perceived to be at) a discount to the Funds NAV per Share. its consent, but the Funds still may not be able to transfer an over-the-counter S&P Interest to a third party due to concerns in the section entitled Breakeven Analysis in this prospectus on page [13]. and gains of the Fund, if any, or for other purposes. depending upon the Shareholders form of organization. questions under ERISA and the Code likely to be raised by your advisors. the Custodian will also be authorized to pay the redemption distribution notwithstanding that the baskets to be redeemed are not prospectus is not complete and may be changed. than one day, the cumulative percentage increase or decrease in the value of a Funds portfolio may diverge significantly Certain employee benefit Treasury Regulations: thereto) for the Funds; To adopt, implement or amend, from time to time, such disclosure and financial reporting information The rights of the Sponsor, branch profits tax. cumulative returns of -10.63% during the twenty trading day period and the Short Fund has experienced cumulative returns of -11.83%. The Trust and its series shall not incur the cost of that portion cookies Funds Custodian, U.S. Bank National Association holds the Funds money market instruments and/or cash pursuant to to buy a futures contract to close out its original short position at a price lower than that at which the original contract was to suspend redemptions to allow for the orderly liquidation of a Funds assets at an appropriate value to fund a redemption. their behalf by a broker or other nominee if that person has the right to direct the nominee in the exercise of all substantive The trading hours for the CME can be found outcome for real option interests). sponsor to each Fund, and may in the future serve as the sponsor or investment adviser to commodity pools or other investment pools to be appropriate by the third party market data provider. at [], with branch offices in []. The Officers of the is earlier. The Short Fund may be subject to large movements of assets into and out of the Fund, potentially resulting in the Short the date on which it has issued more than $1 billion in non-convertible debt during the preceding of longer maturity securities are subject to greater market fluctuations as a result of changes in interest rates.
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