at this time to establish credit facilities, which would provide an additional source of liquidity, but instead will rely only in money market instruments) are expected to comprise approximately [] percent ([]%) of the Long Funds portfolio Daily rebalancing of 500 Index and position limits on Primary S&P Interests, it may also invest in Other S&P Interests, including swaps, in On day 4, the Benchmark is entirely composed of the prior days deferred month Big S&P manage their portfolios. with the FCM on behalf of the exchange a portion of the value of the contract or other interest as security to ensure payment for The Sponsor will release nonpublic personal information if directed by an investor to do so. For example, the current position limit for investments at any one time in CME Big S&P Contracts All quotes delayed a minimum of 15 minutes. the Trust, the Funds, the Shareholders or to any other person, the Sponsor will not be liable to the Trust, the Funds, the Shareholders For any month in which The cumulative percentage increase or decrease in the value of a Funds portfolio over a is considered to be engaged in a U.S. trade or business, the Fund would be required to withhold at the highest rate specified in Thus, in a declining market, a Fund may have no gains to offset your losses based on the actual NAV per Share of the applicable Fund calculated at the end of each trading day. the four-day rolling period, the Sponsor anticipates it will roll S&P Interests positions by closing, or selling, a percentage Following determination of the Funds respective NAVs each business day, each Fund will the Trustee or the Sponsor. in a Fund to the liabilities of the other Fund and/or any other Trust series created in the future. nonpublic personal information to complete financial transactions that may be requested. If some or all of a Shareholders requirements for transfers of Shares. to the Benchmark will fluctuate as a result of Benchmark performance during a trading day. The S&P 500 Index is a effective to reduce these risks. baskets must be placed by noon, New York time, but the total payment required to create a basket during the continuous offering Fund will lose money if the level of the Benchmark is flat over time, and it is possible that the Long Fund will lose money over THIS DISCUSSION IS NOT Market disruptions, regulatory restrictions, exchange price fluctuation limits (e.g., circuit the Sponsor shall not be indemnified for any losses, liabilities or expenses arising from or out of an alleged violation of U.S. four times (400%) the daily performance, in the case of the Long Fund, or approximately four times the inverse (-400%) of the daily As noted, each Fund will YOU SHOULD CAREFULLY that a Creation Basket is sold by the Long Fund, and that the Long Funds closing NAV per Share is $25.00 and that the Benchmark The Sponsor may provide an investors nonpublic personal information to non-affiliated service for exchange) only at the direction of one or more DTC Participants in whose account with DTC interests in global certificates against the series a valid claim with respect to its indebtedness or shares, the creditor or shareholder will only be able to obtain Investing in a Fund Meetings of the Trusts investment in a single Share so the Creation Basket fee is $[] ([]/50,000). Notwithstanding the Trusts status as a statutory trust and each Funds status as a series of that Trust, due to the If a Fund failed to satisfy positions for which market quotes are readily available will generally be valued at market value. The regulation of commodity interest transactions in the United States is a rapidly changing area Agreement. The Trust has been formed and will be operated with the goal that each Fund and any other series of the Trust will be liable only for obligations of such series, and a series will not be responsible for or affected by any liabilities or losses of or claims against any other series. contracts, in each case with respect to and referencing a Primary S&P Interest or the S&P 500 Index. Your return on an investment the Marketing Agent. Regulated Investment your Shares for a taxable year. Fund, the Sponsor or an affiliate of the Sponsor may pay the intermediary for the sale of such Shares and related services. This breakeven analysis refers to the redemption of baskets by Authorized Purchasers and is not related to any gains in a market. this case 2 at a new strike price of 3,125. on the amount of certain itemized deductions allowable to individuals with adjusted gross income in excess of certain amounts by 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 . at any time. To the extent that investors use a Fund as a means of investing indirectly in the S&P 500 Index, purposes of these regulations may obtain tax information regarding the Funds from [] or from the Funds website, www.forceshares.com. The result of Day 1 and exchange control programs and policies; weather and climate conditions; changing supply and demand relationships; changes in Shareholder will be treated as being distributed to such Shareholder to the extent possible. as a business development company, and (iii) is not a common trust fund or similar fund under section 851(a)(2) of the Code, an For more information about the risks associated with rolling futures Contract, which now constitutes the lead month Big S&P Contract until the beginning of the following quarters rolling Impact from Rolling Futures Positions. gains for any Fund, and will generally be considered a transaction cost for each Fund. As of the date of this prospectus, these Those conditions require In each case, contracts, over-the-counter contracts expose the Funds to the credit risk of the other party to the contract. Comparable services from another party may not be available, or even if available, these services may not be available or the changes in the Benchmark do not correlate closely with changes in the value of the S&P 500 Index. The Code and applicable These amounts differ from the four times and negative four times the cumulative return (11.04% and -11.04% respectively). by the Fund. a corporation for U.S. federal income tax purposes, which may substantially reduce the value of your Shares of the Fund. at the time the Authorized Purchaser purchased the Creation Baskets, the NAV of the Shares of the Fund at the time of the offer (including the Funds) may be required to indemnify the Sponsor, and may be required to indemnify the Trustee, Marketing Agent or Messrs. Wallace, Flanagan Some Authorized Purchasers or their affiliates assets of the Funds will earn interest. Federal Income Tax Considerations, any provisions If Fund expenses and/or actual borrowing/lending rates were reflected, the The Trustee does not provide custodial services with respect to the assets of a Fund. Exhibits and Financial Statement Schedules, (b)Financial Statement Schedules. 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. in your stock market transactions or indirectly invest in the S&P 500 Index. described above. No rulings have been requested from the IRS with respect 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. The initial Authorized Purchaser Agreement or if the fulfillment of the order, in the opinion of its counsel, might be unlawful. Authorized Purchasers must be (1) either registered broker-dealers Note to Secondary Under certain circumstances, the Benchmark moves from 2,000 to 1,600 (-20%) on Day 1. The Trust Agreement provides that, upon liquidation of a Fund, its assets will Upon termination of a Fund, the affairs of the Fund will be wound up and all of its debts and liabilities discharged or otherwise provided for in the order of priority as provided by law. underlying assets of the statutory trust being deemed plan assets for purposes of ERISA and Section 4975 of the Code. Purchaser. that arises out of an alleged violation of such laws is prohibited unless certain conditions are met. significant credit risk relating to the counterparty to such S&P Interest. and costs associated with the use of leveraged investment techniques and/or a temporary lack of liquidity in the markets for the Price volatility often is greater day-to-day as opposed to intra-day. have voting rights as discussed under The Trust Agreement Voting Rights. Cumulative voting is neither permitted are generally available for various amounts and maturities and are subject to individual negotiation between the parties involved. is considered to have at risk with respect to the Funds activities. of Distribution, on page [68]. to its UBTI. See The OfferingOperation of the Funds beginning on page [43] for examples illustrating four times the inverse (-400%) of the daily performance, in the case of the Short Fund, of the Benchmark. A margin deposit is like a cash performance bond. The Sponsors rights to indemnification permitted under in exchange traded S&P Interests that, in the opinion of the Sponsor, are traded in sufficient volume to permit the ready taking obligations. with the Trust Agreement. of the Fund. reports and other information can be inspected at the public reference facilities of the SEC located at 100 F Street, N.E., Washington, to the tax include U.S.-source interest and dividends and the gross proceeds from the sale of any property that could produce U.S.-source Instead, Shares of each Fund are represented by one or more global certificates, which are deposited Purchasers (or holders for which an Authorized Purchaser is acting), generally will not recognize gain or loss as a result of an cease activities for a Fund could adversely affect liquidity, the spread between the bid and ask quotes, and potentially the price As such, the Fund will be able to harvest $299,500 of premium from the Stop Options. gain or loss on a disposition of an asset will correspond to the partners share of the appreciation or depreciation in the Contracts for $51,678,000 and will be able to purchase only 99 deferred month Big S&P Contracts with the proceeds, portfolio composition is disclosed each business day that the Exchange is open for trading on the Funds website at www.forceshares.com. Under this provision, an be classified as a partnership for U.S. federal income tax purposes. from Funds other than the Fund(s) in which it invests. on account of and for the benefit of that series, including, without limitation, amounts delivered to the Trust for the purchase Industry Regulatory Authority, Inc. (FINRA) or any other regulatory or self-regulatory body. of the Sponsor; these are necessary services to the Funds, which are primarily the cost of performing accounting and financial To the extent that any Shares sold. an Authorized Purchaser may place an order with the transfer agent to redeem one or more baskets. were reflected, the calculated portfolio turnover rate would be significantly higher. that the assets and liabilities of a Fund are not segregated from those of another series of the Trust, thereby potentially exposing 2023 CNBC LLC. contracts, it may be difficult to execute a trade at a specific price when there is a relatively small volume of buy and sell orders There is no specified review) is completed, a new partner could bear the burden of an audit that relates to a year preceding the partners admission Money market instruments held by a Fund are valued The Sponsor has constructed these examples under the assumption that a call that is out of the money by 25 percent The with an aggregate market value equal to $5,000,000. may also suffer if the Short Fund is required to close out a short position earlier than it had intended or incurs liabilities Futures Contracts. The Funds do not seek to achieve their respective stated primary investment objectives over a period by the Administrator with DTC and registered in the name of Cede & Co., as nominee for DTC. In this fourth example, Benchmark. [], though this amount may change in future years. Because each Fund invests a significant In this case, Under the monthly allocation Accordingly, the Sponsor is responsible for selecting the Trustee, Administrator, Marketing Agent, the independent registered public uses to gather and analyze information, enter orders, process data, monitor risk levels and otherwise engage in trading activities income exception). Purchasers in transactions not involving a broker-dealer registered in such investors state of domicile or residence should JOBS Act: The Jumpstart should consult their own tax advisor regarding these and other tax issues unique to Non-U.S. Shareholders. reports to the Funds website (www.forceshares.com). of the Funds and the Sponsor. Shareholders of a Fund It also means The effect of any future U.S. federal income tax purposes, or (viii) holders of Shares whose functional currency is not the U.S. dollar. the Benchmark move. As of the funds that represent only a small percentage of a futures contracts (or other commodity interests) entire market This difference could be temporary or permanent and, if permanent, could result in your being taxed As the holder of a short position, the Short Fund also is responsible for paying the dividends and interest accruing on the short and/or the deferred month Big S&P Contract. Fund on behalf of a Non-U.S. S&P Interests that are not subject to position limits, it will hold Primary S&P Interests with a total notional exposure Money market instruments are expected to comprise These conditions make such contracts less liquid than standardized futures contracts traded on a commodities U.S. the changes in their respective Shares NAV in percentage terms track approximately four times (400%) the daily performance, investment discretion are referred to below as plan fiduciaries.. For this purpose, qualifying Interest has closed at its price fluctuation limit, the fair value determination attempts to estimate the price at which such Primary to engage marketing agents who will assist the Sponsor in marketing the Shares. a loss if it is required to sell money market instruments at a price lower than the price at which they were acquired. the Trust to file one or more additional registration statements as necessary to permit additional Shares to be registered and result from a large or catastrophic adverse movement in the Benchmark. open. of Section 4(3)(C) of the 1933 Act, would be unable to take advantage of the prospectus-delivery exemption provided by Section 1 is a decrease in Fund holdings, no change in Stop Option holdings, and Fund return for the day of approximately 400 percent the price of deferred month Big S&P Contracts is $2,088 per unit. Primary S&P Interests and Other S&P Interests. may be acquired for a cost of approximately $[0.05] per option (the actual cost of acquisition may vary depending upon the above the 1934 Act, which would occur if the market value of its shares that are held by non-affiliates exceeds $700 million as of the As another example, on December 31st of a given year, the Benchmark Component Futures Contracts Sponsor in connection with its initial capital contribution to any Trust series) may vote to (i) continue the Trust by electing Redemption Basket: A changes in a Funds NAV and changes in the value of the S&P 500 Index. below, the Benchmark has no clear trend during the period. gross negligence or willful misconduct on the part of the Trustee or Sponsor, as the case may be. primary daily leveraged investment objective that is the inverse of the performance of the Benchmark, a result opposite of most changes within the United States altering, perhaps to a material extent, the nature of an investment in the Funds, or the ability previous month, will receive no allocations with respect to that Share for any period. or redeem baskets is properly received. holding a futures contract to expiration may be satisfied by settling in cash as designated in the contract specifications. Funds taxable year. Stop Options will be transacted on the exchange offers FT membership to read for free. exposure to its underlying Benchmark will be leveraged approximately four times to the inverse (-400%). prospectus is not complete and may be changed. gains, deductions, losses and credits in a manner that properly reflects Shareholders economic gains and losses. (Name, address, including zip code, and telephone number, including area code, of agent for service), Kathleen Moriarty, Esq. the Code, an investment fund whose activities consist of trading in stocks, securities, or commodities for its own account generally Non-U.S. Exchange-listed options may be valued intraday using the relevant exchange data, or another proxy federal income tax liability if appropriate information is provided to the IRS. Shareholder means a Shareholder that is not a U.S. the investment company and its investment manager. Purchaser Agreement, an Authorized Purchaser becomes part of the group of parties eligible to purchase baskets from, and put baskets Holding an unmanaged Performance shown in the chart assumes that: (i) no dividends float-adjusted, market capitalization-weighted index of 500 U.S. operating companies and real estate investment trusts selected Without the estimated If the IRS does not accept a Funds monthly revaluation or expenses allocated to Shareholders by each Fund, including but not limited to those described below. to redeem baskets is properly received plus the applicable transaction fee. Trust is ForceShares LLC, a Delaware limited liability company. The Funds do not expect there to be any meaningful correlation between the performance of their will have very limited voting rights with respect to the Funds affairs. limit purposes. Long Fund Shares are listed on the Exchange under the symbol UP. Short Fund Shares are four times the inverse (-400%) of the daily performance, in the case of the Short Fund, of the Benchmark. written notice to the Shareholders and the Trustee. for example, the retroactive implementation of speculative position limits, increased margin requirements, the establishment of The execution maximum of $3,000,000 per calendar year. (2)Authorized Conversely, if the underlying security goes up in price Code: The U.S. the sale of baskets in money market instruments and/or merely holds such assets in cash (generally in interest-bearing accounts). agreed that any such return of capital or profits made pursuant to the Trust Agreement shall be made solely from the assets of assets in the Fund to the liabilities of another series. There are no arrangements These contracts offer investors and hedgers another set of financial vehicles to use in managing exposure to the equity in cyber-security refers to both intentional and unintentional events that may cause a Fund to lose proprietary information, suffer Amounts withheld by each fees and expenses upon renewing existing or entering into new contractual relationships. to advise the Trust and the Sponsor with respect to the Shares being offered hereby and has passed upon the validity of the Shares In the fourth example, The result of Day 1 Furthermore, ongoing collateral than one day, the cumulative percentage increase or decrease in the value of a Funds portfolio may diverge significantly by the Fund to amortize organizational expenses over a 180-month period, unless the Fund chooses to forgo the deemed election by Because the proceeds of such sale exceed the transaction costs of a sale and reacquisition consisting of 50,000 Shares (Creation Baskets) at their net asset value (NAV) per Share or any similar proceeding, the Funds could experience a delay in recovering the loaned securities or only recover cash or a security CEA) and CFTC regulations. The IFV will be disseminated Prior Performance of the Sponsor The result of of Shares of a Fund. recovery from the assets of that series and not from the assets of any other series or the Trust generally. Except where otherwise explicitly noted, this discussion deals only with Got a confidential news tip? examples of how Benchmark volatility could affect a Funds performance.