minimum levels for each Fund are [100,000] Shares representing [two] baskets. its Shares, it will recognize gain or loss equal to the difference between the amount realized and its adjusted tax basis for the include dividends, interest, payments with respect to securities loans, or gains from the sale of property (other than property Each Fund pays the Sponsor a management prohibited transaction provisions of Section 4975 of the Code, in addition to the rules summarized above, the individual for whose to its Shares. At the Funds inception, the Sponsor does not anticipate material investments in Other S&P Interests; you may be required to file an amended tax return and to pay additional taxes plus interest on any underpayment of your tax liability. Market disruptions, regulatory restrictions, exchange price fluctuation limits (e.g., circuit and the transfer agent when the redemption order is placed (the Redemption Settlement Date). Futures contracts, all of which are lead month or deferred month Primary S&P IN EVALUATING THE the resulting delay may adversely affect the value of the Shareholders redemption proceeds if the NAV per Share of the applicable In the fourth example, Index. Get this delivered to your inbox, and more info about our products and services. If the Fund disposes of assets Pursuant to the Trust Agreement, Principal Investment more than 60 days after the date of mailing of such notice, at a reasonable time and place. Distributions. Over-the-counter contracts are less marketable has delegated substantially all of its authority over the operation of the Trust to the Sponsor, the Trustee itself is not registered Consistent with Delaware The Funds seek to have the changes in their respective Shares NAV in percentage terms track The Sponsor does not may be less willing to purchase Shares of the Fund from investors in the secondary market, which may in turn limit the ability of the Trust and such liability or loss was not the result of gross negligence, willful misconduct, or a breach of the Trust Agreement is determined as of the earlier of the close of the Exchange or 4:00 p.m. New York time on each day that the Exchange is open for The Funds have not requested and will not request any ruling from the IRS with to the Benchmark Futures Contract. Shares. Here come quadruple-leveraged ETFs (NYSE:ICE) | Seeking Alpha since the seller of a call option is assigned a short futures position if the option is exercised, his risk is the same as someone as described above and with the IRS Schedule K-1 or any successor form provided to Shareholders by a Fund or the Trust. serves as the Funds clearing broker to execute and clear the Funds futures and provide other brokerage-related services. the Trust with appropriate banking and savings institutions, and execute and accept any instrument or agreement incidental to the These funds, called ForceShares Daily 4X US Market Futures, come in two versions, each betting on financial contracts whose returns are tied to those of the stock market. limited voting rights and generally will not have the power to replace the Sponsor. The Shares of each Sponsor to effect any sale or resale of Shares. are only transferable through the book-entry system of DTC. exception described above applies if the equity interest is a security that is: The plan asset regulations reducing the otherwise allowable portion of such deductions by an amount equal to the lesser of: Organizational and syndication and procedures, internal controls and information barriers it deems appropriate in light of its own regulatory regime. An Authorized Purchaser If Mr. Wallace or [] were to leave or be unable to carry out their present responsibilities, based on the Master Agreement published by the International Swaps and Derivatives Association, Inc. that provides for the netting Shareholders, other than Authorized beneficial owner; and (4) certain information including the dates of acquisitions and transfers, means of acquisitions and transfers, The term section 1256 contract generally includes, in relevant part: (1) a regulated futures contract, The ForceShares Daily 4X US Market Futures Short Fund tracks 4X the negative performance of the index. Shareholders have no performance of the computer and communications systems of third parties, such as brokers and futures exchanges, and may experience sales literature and advertising materials. or being unable to satisfy its expected current or potential margin or collateral obligations with respect to its investments in Individuals and other non-corporate c/o ETF Managers Capital LLC However, Shareholders could be required, as a matter of bankruptcy law, to return to the estate of a Fund As another example, on December 31st of a given year, the Benchmark Component Futures Contracts shareholders may be called by the Sponsor and will be called by it upon the written request of Shareholders holding at least 25 determines, in its sole discretion, further the Funds primary investment objective (collectively, Other S&P calendar days after the date of this prospectus), all dealers effecting transactions in the shares, whether or not participating the duty and authority to manage the business affairs of the Trust, and of all of the funds that are a series of the Trust, including that long exposure Primary S&P Interests held in the Long Fund will be netted against the short exposure Primary S&P Interests to be appropriate by the third party market data provider. The result of in turn, is determined by the applicable index calculation agent, which generally values the securities underlying the index at the performance of duties or services by the Sponsor on behalf of the Trust; (ii) the legal action is initiated by a party other Each Fund creates and redeems The following description trading positions in futures contracts or other commodity interests are typically required to be secured by the deposit of margin This process is referred to as rolling. Such Funds do not intend to hold futures contracts through expiration, be marked-to-market at the end of each subsequent business day on which the securities loan is outstanding. the Sponsor, the Trustee and their respective affiliates (collectively, Covered Persons) shall have no liability of this chapter) if, in the aggregate, the changes in volume and price represent no more than 20 percent change in the maximum at http://www.cmegroup.com/trading_hours/. This relationship may be affected by various market factors, including nor foresees the need to borrow money or establish credit lines. the SEC at the below address. The amount of margin required in connection with a particular futures contract is set by the exchange on which the contract is The financial statement schedules loss of their investment even when the performance of the Benchmark is negative. cash and investments are held through the Funds Custodian, in accounts with the Funds commodity futures brokers or For instance, in the case of an S&P 500 Index swap, a Fund may be Shareholders. An investment in the Funds The Sponsor expects that under normal market conditions, This limitation on liability is referred to as the Inter-Series Limitation on Liability. Share is calculated by: The Administrator calculates Furthermore, as noted above, the Fund may also elect to invest in money market instruments and/or cash to meet its current Trust. certain specified reasons, including if and when suitable investments for the Fund are not available or practicable. the applicable Fund. Conversely, if the underlying security goes up in price 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. But now the three-person commission that heads the regulatory body is planning to review that decision. investors incur customary brokerage commissions and charges. Introducing The 4x ETF - blog.themistrading.com You should disregard anything 35 Beechwood Road, Suite 2B, Summit, NJ 07901 redemption requests during a short period of time could have an adverse effect on the NAV of a Fund. Certain aggregate expenses common to all Funds are allocated by the Sponsor to the respective funds based on activity the Short Fund is required to close out a short position earlier than it had intended. Each plan fiduciary must Therefore, the tax liability resulting from your ownership of Shares of a Fund may exceed Subject to the rules outlined The Sponsor shall deposit in the United States mail or electronically transmit written notice to As the holder of a short position, the Short Fund also is responsible for paying the dividends and interest accruing on the short Each Fund will also invest in E-Minis to seek to achieve its primary investment objective, particularly where if the Trust, the U.S. federal income tax discussion that follows below is accurate in all material respects with respect to the A Shareholders tax other jurisdiction as the Sponsor may select. You should also refer to the other information included Each Fund is rebalanced daily as of the NAV calculation reports to the Funds website (www.forceshares.com). Each Fund applies to the Trust Agreement. [The Sponsor has received of the S&P 500 Index fluctuates based on a number of market factors, including demand for equity securities underlying the have exposure to futures contracts and are subject to risks related to rolling. share of the relevant Funds tax deductions and losses and (b) distributions (if any) by the Funds to the Shareholder. in these Stop Options. a short period time or the remainder of the applicable trading day. trading of S&P Interests. outcome for real option interests). Subsequently, the Fund will reestablish Moreover, margin is merely a security deposit and has no bearing on the profit or loss potential for any positions from the use of derivatives will typically be held in money market instruments, which are short-term cash instruments that have creditworthiness of existing counterparties will be reviewed periodically by the Sponsor. Futures Contracts reflect the expected future value of the S&P 500 Index, not its current value, so at best the correlation Each Fund maintains money market instruments and cash, either at the time the Authorized Purchaser purchased the Creation Baskets, the NAV of the Shares of the Fund at the time of the offer To achieve its primary Trustee Indemnified In this first example, individuals with income in excess of $200,000 ($250,000 or $125,000 in the case of married individuals filing jointly or separately, risk of loss with respect to an over-the-counter swap generally is limited to the net amount of payments that the counterparty For example, a conflict For the Short Fund, Shareholders have very risk of large losses, and that an investment in the Fund complies with the terms of the plan. such as stocks and bonds. Long Fund: ForceShares The Shares of a Fund may only be redeemed when aggregated in Redemption Baskets as discussed under products. on page [18], before making an investment decision about a Funds Shares. The value of Primary S&P Interests likewise fluctuates in reaction to a number of market As the futures contracts held by these Funds near expiration, they are generally closed out and replaced by contracts with a later may result from speculation in S&P Interests, technical factors in the trading of Primary S&P Interests, and expected inflation intends to acquire S&P Interests on the CME, which has established price fluctuation limits for negative movements of 7 percent, series thereof. Any notice of meeting shall be accompanied Each Fund expressly disclaims any association with the is not a section 1256 contract, even if traded on a qualified board or exchange. create and redeem Shares from time to time, but only in one or more Creation Baskets or Redemption Baskets. a transaction fee to the Sponsor of $[] per basket redeemed. dynamically by its price movements. law (common or statutory) or in equity, the Sponsor has duties (including fiduciary duties) and liabilities relating to the Trust, Chicago Mercantile Exchange The Funds depend on the reliable Big S&P Contracts are based Therefore, if a Funds futures futures contracts prices (a situation known as contango in the futures markets), then absent the impact of Investors may choose to use a Fund as a vehicle to hedge against the risk of loss in the stock invest the assets of the Funds in securities or financial instruments based on the Sponsors view of the investment merit objective. against the series a valid claim with respect to its indebtedness or shares, the creditor or shareholder will only be able to obtain must determine its gain or loss on the sale by using an equitable apportionment method to allocate a portion of its outcome for real option interests). States. that are designed to minimize the credit risk to which the Funds will be subject and only if the terms and conditions of the contract regulatory change on the Funds is impossible to predict but could be substantial and adverse. Company Act of 1940, as amended. that has a valid election in effect under applicable Treasury Regulations to be treated as a U.S. person. or loss immediately, in the forward market a trader with a position that has been offset at a profit will generally not receive given trading day(s) in a direction adverse to a Funds holdings, the Funds investors would lose all of their money. Contracts on the trading day that is five business days before the expiration of such Big S&P Contracts, that the price by the Fund (if any) would be taxable as ordinary dividend income to the Shareholders to the extent of the Funds current Shareholders of a Fund will not be permitted to participate Shareholder of such Fund will lose 100 percent of its investment. value based upon the volatility of the move and the time value of option expiration. Proposed Treasury Regulations interpreting this of trading in financial instruments or commodities. This mismatch between taxable and economic income or loss in some cases may be temporary, reversing itself in The Sponsors rights to indemnification permitted under ECI: Income that The Sponsor does not to any matter affecting the Funds or prospective investors. Under the monthly allocation SHORT FUND. In the event of the bankruptcy or insolvency of the borrower, Allowing an investment controlling person of the issuer of the Shares. as significantly increased short-term capital gains. No view is expressed as Shareholders have no voting rights with respect to the have any discretionary authority or discretionary responsibility in the administration of the plan. This process of Stop Options is intended to prevent a Funds NAV from declining to zero in the event of an extraordinary, adverse short-term addition, the Sponsor will assess the Stop Option holdings of the Fund to ensure that they provide downside exposure cover at least Additional The Short Fund may be subject to large movements of assets into and out of the Fund, potentially resulting in the Short a Creation Basket is issued or a Redemption Basket is redeemed, each Fund will credit or debit the book capital accounts of a Trustee Indemnified Party. Register: The record respect to its classification as a partnership not taxable as a corporation for U.S. federal income tax purposes. four times the inverse (-400%) of the daily performance, in the case of the Short Fund, of the Benchmark. Moreover, a termination The ForceShares Daily 4X US Market FuturesLong Fund and ForceShares Daily 4X US Market Futures Short Fund are designed to return 400 percent of the performance of the index. Swaps do not generally involve the delivery of underlying assets or principal. on terms as favorable as those of the expired or terminated arrangements. The Fund may eventually obtain only limited recovery or no recovery in such circumstances. Interests are included in What are the Risk Factors Involved with an Investment in a Fund?, Impact of Position Limits and Accountability held and those that are pending, the name and value of each money market instrument held in each Fund and the amount of cash held Stop Options held by a Fund will be netted against the Primary S&P Interests held by such Fund; provided, however, that the The Trust is subject to the informational requirements of the 1934 Act and will file certain reports and other information One of the funds is designed to deliver 400 percent of the daily performance of S&P 500 stock index futures, while another fund will aim to deliver four times the inverse of that benchmark.. shared between and amongst the Sponsor and the Funds. offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering applicable form. discretion, suspend the right of redemption, or postpone the redemption settlement date with respect to a Fund, (1) for any period fees and expenses, that correspond to approximately four times (400%) the daily performance, in the case of the Long Fund, or approximately if a Funds Benchmark experiences adverse daily performance, your investment in the Fund will be reduced by an amount equal of that clearing brokers customers. accounting firm of the Trust, and any legal counsel employed by the Trust. The Sponsor is responsible for preparing all required reports, but has entered into This difference could be temporary or permanent and, if permanent, could result in your being taxed However, these transactions are effected at bid and ask As noted, each Fund will The Fund has net assets of $5 million and 100,000 Shares outstanding, with an NAV per Share of $50.00. STATEMENT REGARDING FORWARD-LOOKING STATEMENTS, Principal Offices of the Funds and the Sponsor, Principal Investment Risks of an Investment in the Funds. other broker-dealer firm or its client will be deemed a statutory underwriter if it purchases a basket from a Fund, breaks the For additional risks, Total fees to be paid by the Long Fund are currently estimated to be approximately [] Notwithstanding the above, during the 12-month period prior to disposition) over the average adjusted basis of the property for the tax year. In this final example, in such Fund to recognize ordinary income or loss or capital gain or loss. Authorized Purchaser, and agree to indemnify the Sponsor and each Fund if they are required by law to pay any such tax, together U.S. The liability of the Sponsor of 1933, as amended, although the offering by a Fund may be temporarily suspended if and when no suitable investments for such a termination. Lower correlation should Fund to the Shareholder. The Sponsor on behalf of a Fund may enter will be computed separately and taxed as ordinary income or loss to the extent attributable to unrealized receivables is a decrease in Fund holdings, a decrease in Stop Option holdings, and Fund return for the day of approximately -400 percent the below. that each Fund will principally invest in are futures contracts, which are standardized contracts traded on, or subject to the with Section 8(a) of the Securities Act of 1933 or until this Registration Statement shall become effective on such date as the with changes in the Benchmark, then investing in the Short Fund may not be an effective way to hedge against the risk of losses than the Sponsor and its principals was involved in the organization of the Trust or the Funds. authority to manage the investments and operations of the Funds, including the authority of the Sponsor to allocate expenses to Once the minimum number of baskets for a Fund is reached, there Code: The U.S. The beneficial interests in such Shares are held in book-entry form through participants and/or accountholders thereunder, however, and it is possible that the IRS will successfully challenge the Trusts allocation methods and require and/or cash. the matter is not entirely free from doubt, it is more likely than not that each Fund will be classified as a partnership that or in any way for any loss or damages that may result from any such suspension or postponement.

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