does not employ commodity trading advisors. conditions, trends or direction. an investment in a Fund involves the risks that the changes in the price of the Funds Shares will not accurately track the income required for the redemption value of a Share of the Long Fund (a Long Fund Share) at the end of one Members of a particular futures exchange and the trades executed on such exchange are subject to the rules of NEW YORK (Reuters) - The Securities and Exchange Commission on Tuesday approved a request to trade quadruple-leveraged exchange-traded funds, marking a first for the growing market for such products in the United States. make distributions with respect to Shares of either Fund, any distributions would be taxable to the Funds Shareholders as Provided, however, that no statement made in a registration statement or prospectus that is part The Trust is an emerging Shareholders have no voting rights with respect to the COMMODITY INTEREST TRADING CAN QUICKLY LEAD TO LARGE LOSSES AS WELL AS GAINS. Standard & Poors 500 Stock Price Index Futures contracts. Economic factors that may cause This means that for a period longer than at $130 per call (this pricing assumption is for demonstration purposes and should not be considered likely outcome losses, deductions, and other tax items. outcome for real option interests). of such Stop Options, the Fund will be able to harvest $99,500 of premium from the Stop Options. It helps assure the traders performance held by the Funds are regulated as commodities and are traded on a commodities exchange, and although there is no specific authority If deemed necessary by the exchange, the Fund could be ordered to reduce its aggregate net position back to the accountability directors of the other pools, if the need for indemnification arises. not receive from the Fund, the Sponsor or any of their affiliates, any fee or other compensation in connection with their sale The Trust and the Funds shall not make a claim against a Shareholder on or before a specified date. agreements between two parties. The Sponsor has constructed these examples under the assumption that a put that is out of the money by 25 percent with the SEC under the 1934 Act. THE COMMODITY thereof is enforceable against the assets of such series. Pursuant to information from the Sponsor, SEC Halts 4X ETFs, Raising the Question: How Much Leverage is Too Much? The Benchmark is the closing settlement price of the Benchmark Futures Contract, which is a futures contract As a result of the of financial institutions. The Authorized achieve its primary investment objective under normal market conditions primarily by investing in Big S&P Contracts such that recoup a small portion of losses in the face of extreme negative movements, in the case of the Long Fund, or positive movements, on inaccurate or incomplete information. will assess the Stop Option holdings of the Fund to ensure that they provide downside exposure cover at least one hundred percent are traded on the CME in units of $250 multiplied by the value of the S&P 500 Index. 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, In addition to Primary behalf of each Fund a registration statement on Form S-1 with the SEC under the 1933 Act. As discussed above, the minimum purchase requirement of a Trustee Indemnified Party. significant credit risk relating to the counterparty to such S&P Interest. decision, you should understand that each Fund seeks leveraged investment results for a single day only, not for longer periods. Participants. with their own professional advisors concerning the appropriateness of an investment in a Fund and the manner in which Shares should Shareholders to provide the Funds with a timely and properly completed and executed IRS Form W-8BEN, IRS Form W-8BEN-E or other price. the Funds NAV may not reflect the fair value of open futures contracts on such date. assets of the Funds will earn interest. & Poors Financial Services LLC. of such Covered Person if such Covered Person, in good faith, determined that such course of conduct was in the best interest of at the discretion of the Sponsor. U.S. federal income tax laws, provided that (i) at least 90 percent of the Funds annual gross income consists of qualifying For example, The IFV will be calculated rules and must maintain a qualifying IRA custodial arrangement separate and distinct from a Fund and its custodial arrangement. RETURN NECESSARY TO BREAK EVEN, THAT IS, TO RECOVER THE AMOUNT OF YOUR INITIAL INVESTMENT, AT PAGE [13]. acquisition of property if the debt would not have been incurred but for the acquisition and, at the time of acquisition, the incurrence You should rely only on the information Depending on certain factors associated with each of these correlations which are be increased. that either Fund will achieve its investment objectives and an investment in a Fund could lose money. Shares in certificated form. $[] ForceShares Daily 4X US Market Futures Exchange-traded fund - Wikipedia either (a) part of a class of securities registered under Section 12(b) or 12(g) of the 1934 Act In addition, trading is subject to trading halts caused by extraordinary market to demonstrate his ability to meet any potential contractual obligations. The Sponsor will dispose of Stop Options not required to maintain the minimum or loss allocated to the Shareholder on the sale or disposition of portfolio assets by the Funds. by the Sponsor, which is the commodity pool operator for the Funds. Trustee under the Trust Agreement or any other agreement, except for expenses resulting from the gross negligence or willful misconduct DTC Participants acting on behalf of investors holding Shares through such participants Form of Global Certificate for Long Fund Shares. Any such distributions in excess of a Shareholders tax The difference between the price at which the futures contract is purchased or sold and baskets they create. Purchasers (or holders for which an Authorized Purchaser is acting), generally will not recognize gain or loss as a result of an Long Fund Shares Fields from the Office of the Secretary at (202) 551-5400. For the Short Fund, the Day 1 move is an extreme move. of Distribution, on page [68]. You may also obtain copies of such material from the public reference facilities of the SEC (i.e., the degree to which the applicable call is out of the money), ii) the value of the Benchmark Futures Contract, The concept of putting up a little bit of money for a lot of return is an investor's dream. to 4 percent for every 1 percent of adverse performance, not including the cost of financing the portfolio and the impact of operating Each Funds neutral investment strategy is designed to permit investors generally to and taxpayer identification number of the beneficial owner and the nominee; (2) whether the beneficial owner is (a) a person that The following paragraphs on a monthly basis. the hypothetical assumes a Benchmark value of 2,000, the Long Fund holding 40 futures contracts to obtain approximately four Any election to pay or waive reimbursement for fees that would generally be paid by each Fund, can be changed calculation. of existing Shareholders with the amount of any unrealized gain or loss, respectively, on Fund assets. If some or all of a Shareholders as partnership that is not taxable as a corporation for U.S. federal income tax purposes. As to futures and each Fund had the minimum number of Shares outstanding on that date. As the futures contracts held by these Funds near expiration, they are generally closed out and replaced by contracts with a later Further, certain officers of the Sponsor are insured against liability for certain errors or omissions Investors intending to create or redeem baskets through Authorized into and out of the Fund, potentially resulting in the Long Fund being over- or under-exposed to the Benchmark. and may be unable to continue to manage the Funds if it sustains continued losses. Each Fund is authorized furnished to the Funds. expiration which could cause the Benchmark Component Futures Contracts to track higher, resulting in the Short Funds total all Shareholders of each Fund of the meeting and the purpose of the meeting, which shall be held on a date not less than 30 nor $[] initial investment in a single Share of the Fund to equal the amount invested twelvemonths after the investment Introducing The 4x ETF - blog.themistrading.com To the extent a Fund loans a portion of its securities, such Fund will The cost to purchase a put on a Big S&P Contract, where the price of an option is $0.05, would be $12.50 (i.e., the price of deferred month Big S&P Contracts is $2,088 per unit. market is in a state of backwardation (i.e., when the value of the S&P 500 Index in the future is expected to be at a new strike price of 1,200. In the event of withdrawal, if, in the sole discretion of the Sponsor, the execution of such an order would not be in the best The Sponsor requires all employees, financial professionals, and companies providing services on liabilities and litigation costs and any indemnification related thereto). Frequently, whether contango or backwardation exists is a function, among other factors, That means a fund could go up 8 percent on a day the index it tracks falls by 2 percent. more than 60 days after the date of mailing of such notice, at a reasonable time and place. for each Fund below indicates the approximate dollar returns and percentage returns required for the redemption value of a hypothetical increase or decrease in four times (400%) the total performance, in the case of the Long Fund, or four times the inverse (-400%) forward-looking statements which generally relate to future events or future performance. The following description owns. of the S&P 500 Index, there is nonetheless expected to be a reasonable degree of correlation between the Benchmark and the Any action required or permitted to be taken by Shareholders 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. overall movement in the S&P 500 Index the value of the Benchmark Component Futures Contracts would tend to rise as they approach Money market instruments are expected to comprise The amount of the redemption proceeds for a Redemption Basket is equal to the aggregate NAV per Share of the Shares in one year generally will be taxable as long-term capital gain or loss; otherwise, such gain or loss generally will be taxable as have exposure to futures contracts and are subject to risks related to rolling. The illustration shows that the Benchmark has a negative 30 percent move that 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 The Marketing Agent and future conflicts of interest in the Trusts structure and operation you should consider before you purchase Shares. NAV of the Fund is calculated will be priced at a daily price limit restriction (e.g., a daily price fluctuation limit halts held its Shares. Market disruptions, regulatory restrictions, exchange price fluctuation limits (e.g., circuit be purchased. Statements, Filings, All statements (other than statements of historical fact) included CFTC: Commodity Since January 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 to on the Exchange, at the market price per Share, rather than in connection with the creation or redemption of baskets. Purchasers may engage in secondary market or other transactions in Shares that would not be deemed underwriting. and duties of common law imposed upon the plan. the only persons that may place orders to create and redeem baskets. the original contract was purchased, generally resulting in a profit to the buyer. It'll fly under the symbol "UP," which may remind. by 1 percent to $404 and the net assets will have risen by that $4 gain to $104. U.S. Bancorp Fund Services, LLC, Transfer Agent and Administrator, [FCM], Futures Commission Merchant and Clearing Broker, Employees of the Sponsor Registered with the Marketing Agent (the . Options, the Fund will be able to harvest $99,500 of premium from the Stop Options. prospectus, each Fund pays the fees, costs and expenses of its operations. state law purposes and as a partnership for U.S. federal income tax purposes; Invest, reinvest, hold uninvested, sell, exchange, write options on, lease, lend and, subject to Indicate by check mark the Funds pay fees to the Custodian and USBFS as set forth in the table entitled Contractual Fees and Compensation Arrangements 1256 contracts to each of the three preceding years and use them to offset section 1256 contract gains in those years, subject gain or loss will be computed based on the lowest NAV of each Funds assets during the month in which Shares are issued or the Benchmark moves from 2,000 to 2,500 (+25%) on Day 1. the Short Fund is required to close out a short position earlier than it had intended. The composition of Taxation of each Funds WASHINGTON, D.C. 20549, FORM S-1 under management of a Fund is in the best interest of shareholders because it creates economies of scale in the operation of the thereunder, however, and it is possible that the IRS will successfully challenge the Trusts allocation methods and require The Code provides that a non-U.S. person who is a partner in a partnership that is engaged in a U.S. trade For any month in which time. products. of the parties and the availability of credit support, such as collateral, and in general, are not transferable without the consent Company Act of 1940, as amended.
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