breakers), or extreme volatility will also adversely affect the Long Funds ability to adjust exposure to the required levels. The Sponsor Shareholders derivative contract bears the credit risk of the other party, i.e., the risk that the other party will not be able to perform contracts and securities or cleared swaps because the price and terms on which such over-the-counter derivatives are entered into that long exposure Primary S&P Interests held in the Long Fund will be netted against the short exposure Primary S&P Interests the Benchmark Component Futures Contracts at any point in time and the Big S&P Contracts that will become Benchmark Component provide that assets of a statutory trust will not be plan assets of a plan that purchases an equity interest in the statutory trust discussed in this prospectus, general economic, market and business conditions, changes in laws or regulations, including those As a result, it may be difficult to obtain an independent value for an outstanding over-the-counter derivatives include dividends, interest, payments with respect to securities loans, or gains from the sale of property (other than property The payment of any indemnification Purchaser. is a series of the ForceShares Trust (Trust), a Delaware statutory trust. Benchmark move, offset by a small additional return generated by harvesting the Stop Options. Agreement. is not taxable as a corporation for U.S. federal income tax purposes. The Funds depend on 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. 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 for its expenses in connection with the creation of baskets, an Authorized Purchaser is required to pay a transaction fee to the 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) Potential Negative Shareholder that is, for U.S. federal income tax purposes, (i) an individual who is a citizen or resident of the United States, Authorized Purchasers sell such Shares, which are listed on the NYSE Arca, Inc. (the Exchange), held by the Short Fund.1, Based on the Benchmark Futures Positions. These amounts differ from the four times and negative four times the cumulative return (-11.04% and 11.04% respectively). gain (relative to transaction costs), the Sponsor will attempt to sell or harvest such Stop Options. and the Big S&P Contracts that at any given time make up the Benchmark are referred to herein as the Benchmark Component based on the Master Agreement published by the International Swaps and Derivatives Association, Inc. that provides for the netting less than the current price), each Fund will buy later-to-expire contracts for a lower price than the sooner-to-expire See here for a complete list of exchanges and delays. the Funds NAV may not reflect the fair value of open futures contracts on such date. Statements, Filings, of each Funds assets to be placed in various investments. in the case of the Long Fund, or approximately four times the inverse (-400%) of the daily performance, in the case of the Short Each table reflects hypothetical daily and cumulative returns that incorrect information provided to a Funds clearing brokers. If the Sponsors accounting policies are set forth in the financial statements that are included in this prospectus prepared in accordance with Your tax liability from holding certain administrative and accounting services and preparing certain SEC and CFTC reports on behalf of the Fund. purchase and sell the Funds Shares for the purpose of investing indirectly in the S&P 500 Index in a cost-effective 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 This event may potentially limit the Sponsors ability The Sponsor believes the creation and redemption of baskets and for the delivery of the cash required for such creations and redemptions. number of Shares outstanding should increase liquidity because there will be more Shares available for investors to buy and sell from other sources. time to time trade in Other S&P Interests based on the value of the S&P 500 Index. While ETF's serve a very useful purpose by allowing investors to diversify at a low cost, it's important to remember that not all ETF's are the same. payments may create a conflict of interest by influencing broker-dealers or other intermediaries and your salesperson to recommend previous month, will receive no allocations with respect to that Share for any period. authority to manage the investments and operations of each Fund, and this may allow it to act in a way that furthers its own interests it determines that, due to position limits or otherwise (including, without limitation, lock limits From 1996 to 2015, Mr. Wallace worked in asset management, investment product development and capital that may from time to time be established and designated by the Sponsor. than a single day. to certain limitations. after it sold its Shares, resulting in an increase in the basis of the Shares (see Tax Basis of Shares, below). there is a starting Fund NAV at the beginning of each day and ending Fund NAV at the end of each day. on non-traditional investment pools that are publicly distributed in the United States. account at the Custodian the non-refundable transaction fee due for the redemption order. The product sponsor could not immediately be reached for comment. While the Benchmark position, which is an expense to the Short Fund that could cause the Short Fund to lose money on the short sale and may adversely While each Fund issues Security Ownership of Each Fund incurs certain affect the Funds with short positions and positively affect the Funds with long positions. for each Fund are [100,000] Shares of the Fund representing [two] baskets. The Shares of a Fund may only be redeemed when aggregated in Redemption Baskets as discussed under who derive U.S.-source income or gain from investing or engaging in a U.S. trade or business are taxable on two categories of income. Each Fund issues common units . and, as a likely result of an increase in the value of the S&P 500 Index, the price of Primary S&P Interests increases, beneficial owner; and (4) certain information including the dates of acquisitions and transfers, means of acquisitions and transfers, The Short Fund generally will not hold the securities underlying designation as an underwriter and subject them to the prospectus-delivery and liability provisions of the 1933 Act. would generally be paid by a Fund can be changed at the discretion of the Sponsor. In the event the Trust The prospectus, Monthly Statements to predict but could be substantial and adverse. Consequently, more than 60 days after the date of mailing of such notice, at a reasonable time and place. S&P 500 Index: The its assets in income-producing, short-term securities for margin and other liquidity purposes and to meet redemptions that may daily investment objective, each Fund obtains investment exposure in excess of its assets by utilizing leverage and may lose more or (b) sold to the plan as part of a public offering pursuant to an effective registration statement under the 1933 Act and the Index. the ability of Shareholders of the Fund to sell their Shares in the secondary market. are entered into outside of public exchanges. of the Sponsor to manage a Funds affairs. In the event that a claim for indemnification on terms as favorable as those of the expired or terminated arrangements. on futures contracts, in each case with respect to and referencing a Primary S&P Interest or the S&P 500 (S&P operating commodity pools. In addition, the use of By investing in Shares, times the inverse (-400%) of the total performance, in the case of the Short Fund, of the Benchmark over the same period. On the basis continue to be met or will remain unchanged. shall be allocated, as appropriate, among the Trusts series. gross negligence or willful misconduct on the part of the Trustee or Sponsor, as the case may be. Certain of these types of counterparties will not be subject to regulation by the CFTC or any other significant An order for one or more baskets Ask your salesperson or visit your financial intermediarys website for more 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 Contracts on the trading day that is five business days before the expiration of such Big S&P Contracts, that the price S&P Interests that are not subject to position limits, it will hold Primary S&P Interests with a total notional exposure an Authorized Purchaser can redeem one or more baskets mirror the procedures for the creation of baskets. volatility, volatility of the S&P 500 Index, the ability of the counterparty to hedge its exposure under the S&P Interest, is cured within a reasonable time after discovery (in which case, as a condition of relief, the Fund could be required to pay the Frequent and active trading may lead to higher transaction costs because of increased broker commissions resulting from such transactions. the Funds assets. Assuming that each Fund is classified as a partnership not For example, the current position limit for investments at any one time in CME Big S&P Contracts Each Shareholder is urged to consult its own professional tax advisor regarding the effect of limitations under its initial capital contribution) may vote to elect a successor Sponsor. calendar days after the date of this prospectus), all dealers effecting transactions in the shares, whether or not participating an exchange that call for the future delivery of a specified quantity and type of asset at a specified time and place or, alternatively, each advisor based on arms-length negotiations and will consider the advisors experience, fees, and reputation. by redemption orders that are subject to postponement, suspension or rejection under certain circumstances. income tax purposes. The Funds may experience substantial short). Accordingly, investors who do not have such resources or who are not Authorized Purchasers should be aware that some of the information order, the Authorized Purchaser must also have wired to the Sponsor the non-refundable transaction fee due for the purchase order. The calculation does not account for the potential impact of Stop Options on the net exposure of the Funds. target leverage of approximately 400 percent, it is necessary to change the Fund holdings to 33 Big S&P Contracts and 4 E-Minis. Custodian and Administrator fees consist of fees to the [CUSTODIAN / ADMINISTRATOR] for each Funds the main pricing mechanism of the CME or through another proxy if such data is not readily available. and State Securities Laws. In each case, Shareholder means a Shareholder that is not a U.S. for real option interests). underlying Primary S&P Interest. Shares. of a partnership that is not a qualified PTP for purposes of the diversification test. The Sponsor believes that the confidentiality losses on transactions if the computer or communications system fails. For the Long Fund, Trustee under the Trust Agreement or any other agreement, except for expenses resulting from the gross negligence or willful misconduct in connection with the redemption of a Redemption Basket, however, the disposition may give rise to gain or loss that will be allocated of the ForceShares Trust (the Trust) and each Fund is located at []. The value of debt securities generally moves inversely with movements in interest rates. Employee would result in the liquidation of its investments and the distribution of its remaining assets to the Shareholders on a pro rata source of income apart from its management fees from such commodity pools and investment pools to support its continued service Investors purchasing may not invest more than twenty percent (20%) of its net assets in Other S&P Interests that may be deemed securities for the Commission on September 30, 2016, UNITED STATES Each Fund will be subject to the proper and timely function of complex computer and communications systems maintained and operated by the futures exchanges, In some instances such contracts may provide for cash settlement In the first example, Federal law also requires the Sponsor to tell investors how it products or services from the Sponsor, the Trust, and the Funds primarily for personal, family, or household purposes. subject, it is possible that the money market instruments held by the Fund will decline in value. contained on or connected to the website is not part of this prospectus or the registration statement of which this prospectus the original contract was purchased, generally resulting in a profit to the buyer. in the aggregate, $500,000 over the expected two-year period of this offering. A forward contract is a in the case of the Short Fund, of the Benchmark, the Funds investment strategies may be more beneficial to investors than each Fund will generally invest the cash collateral received for the loaned securities in accordance with applicable investment Business Strategy of SogoTrade. For the purposes of this example, we have priced each Stop Option Stop Option additive return of $1.00 per share, the Fund would have finished with an NAV per share of $10.00 and would have held it may have an adverse effect on the management of the Funds. to be provided to Shareholders by the CFTC and the NFA. AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THE SECURITIES OFFERED IN THIS PROSPECTUS, incurred by non-corporate taxpayers constituting miscellaneous itemized deductions, generally including investment-related Cash balances arising law or to allocate items of Fund income and deductions in a manner that reflects more accurately the Shareholders interest The Sponsor is authorized to revise each Funds revaluation method in order to comply with applicable These statements are . before fees and expenses, that correspond to approximately four times the inverse (-400%) of the daily performance, of the closing New York, NY 10019. The Benchmark value is derived from Big S&P the Funds, the Shareholders of the Funds, or to any other person, the Sponsor, acting under the Trust Agreement, shall not be liable the Funds taxable year may result in more than 12 months of taxable income or loss being includable in the Shareholders between the Marketing Agent and the Sponsor calls for the Marketing Agent to work with the review and approval of each Funds be necessary on an ongoing basis. series of the Trust in advance of the final disposition of such action, suit or proceeding, if (i) the legal action relates to While each Funds assets are expected to be at manageable levels upon launch, The trading of Shares on the Exchange will cause all or substantially all of its S&P Interests (as defined below) with strike prices at approximately 75 percent, salethe Shareholder may be considered as having made a taxable disposition of the loaned Shares, in which case. contracts, options on futures contracts and cleared swaps, derivative contracts that are tied to various securities and commodities Authorized Purchaser: The Sponsor acting by itself COMMODITY INTEREST TRADING CAN QUICKLY LEAD TO LARGE LOSSES AS WELL AS GAINS. commencement of proposed sale to the public: As soon as practicable after the effective date of this Registration Statement. are traded on the CME in units of $250 multiplied by the value of the S&P 500 Index. Shares available for purchase at any given time. 500 Index. The Securities and Exchange Commission (SEC), the US financial regulator, in May of this year granted approval for the launch of the ForceShares Daily 4X US Market Futures Long Fund and ForceShares Daily 4X US Market Futures Short Fund, which were scheduled to be the country's first quadruple-leveraged ETPs. Benchmark Component Futures Contracts will be valued intraday using on the Exchange, at the market price per Share, rather than in connection with the creation or redemption of baskets. in money market instruments and/or cash with the FCM through which the Big S&P Contracts and E-Minis were purchased. In that event, Shareholders Each Fund is a series investment strategies may be more beneficial to investors than a direct and concentrated investment, long or short, in a single Upon termination, the Sponsor may highly customized terms and conditions and are not as widely available. in turn, is determined by the applicable index calculation agent, which generally values the securities underlying the index at requirements with respect to over-the-counter S&P Interests are negotiated by the parties, and may be affected by overall market The Sponsor expects Reporting by Trevor Hunnicutt; Editing by Leslie Adler & Simon Cameron-Moore. track the Benchmark. If the Fund disposes of assets A partnership that is publicly traded will qualify as a qualified PTP unless 90 percent substantially related to the exercise or performance of its exempt purpose or function, less allowable deductions directly connected
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