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Direxion Announces Reverse and Forward Share Splits of 16 ETFs

March 1st, 2013

direxion_logoDirexion, a leader in alternative investment solutions, announced today it will execute reverse share splits for eight of its leveraged exchange-traded funds (“ETFs”), as well as forward share splits for another eight leveraged ETFs. The total market value of the shares outstanding will not be affected as a result of these splits, except with respect to the redemption of fractional shares, as outlined below.

The firm will execute a 1-for-6 reverse split of the shares of the Direxion Daily Energy Bear 3X Shares (NYSEARCA:ERY) and a 1-for-5 reverse split of the shares of the Direxion Daily China Bear 3X Shares (NYSEARCA:YANG), Direxion Daily Emerging Markets Bear 3X Shares (NYSEARCA:EDZ), Direxion Daily Technology Bear 3X Shares (NYSEARCA:TECS) and Direxion Daily Gold Miners Bull 3X Shares (NYSEARCA:NUGT) for shareholders of record after the close of the markets on Monday, April 1, 2013. The firm will also execute a 1-for-4 reverse split of the shares of the Direxion Daily Financial Bear 3X Shares (NYSEARCA:FAZ) and Direxion Daily Small Cap Bear 3X Shares (NYSEARCA:TZA), and a 1-for-3 reverse split of the shares of the Direxion Daily Mid Cap Bear 3X Shares (NYSEARCA:MIDZ) for shareholders of record after the close of the markets on Monday, April 1, 2013.

Additionally, Direxion will execute a 3-for-1 forward split of the shares of the Direxion Daily Financial Bull 3X Shares (NYSEARCA:FAS), Direxion Daily Retail Bull 3X Shares (NYSEARCA:RETL), Direxion Daily Emerging Markets Bull 3X Shares (NYSEARCA:EDC) and Direxion Daily S&P 500 Bull 3X Shares (NYSEARCA:SPXL) for shareholders of record after the close of the markets on Monday, April 1, 2013. The firm will also execute a 2-for-1 forward split of the shares of the Direxion Daily Real Estate Bull 3X Shares (NYSEARCA:DRN), Direxion Daily Latin America Bull 3X Shares (NYSEARCA:LBJ), Direxion Daily 7-10 Year Treasury Bull 3X Shares (NYSEARCA:TYD) and Direxion Daily Small Cap Bull 3X Shares (NYSEARCA:TNA) for shareholders of record after the close of the markets on Monday, April 1, 2013.

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A summary of the eight ETFs undergoing reverse splits is as follows:
(Please note the CUSIP changes, effective April 2, 2013)

ETF CURRENT CUSIP NEW CUSIP RATIO
Direxion Daily Energy Bear 3X Shares (ERY) 25459W342 25459Y454 1:6
Direxion Daily China Bear 3X Shares (YANG) 25459W763 25459Y462 1:5
Direxion Daily Emerging Markets Bear 3X Shares (EDZ) 25459W482 25459Y470 1:5
Direxion Daily Technology Bear 3X Shares (TECS) 25459W318 25459Y439 1:5
Direxion Daily Gold Miners Bull 3X Shares (NUGT) 25459W250 25459Y496 1:5
Direxion Daily Financial Bear 3X Shares (FAZ) 25459W144 25459Y447 1:4
Direxion Daily Small Cap Bear 3X Shares (TZA) 25459W110 25459Y488 1:4
Direxion Daily Mid Cap Bear 3X Shares (MIDZ) 25459W136 25459Y421 1:3

A summary of the eight ETFs undergoing forward splits is as follows:

(CUSIPs remain the same)

ETF CURRENT CUSIP RATIO
Direxion Daily Financial Bull 3X Shares (FAS) 25459Y694 3:1
Direxion Daily Retail Bull 3X Shares (RETL) 25459W417 3:1
Direxion Daily Emerging Markets Bull 3X Shares (EDC) 25459Y686 3:1
Direxion Daily S&P 500 Bull 3X Shares (SPXL) 25459W862 3:1
Direxion Daily Real Estate Bull 3X Shares (DRN) 25459W755 2:1
Direxion Daily Latin America Bull 3X Shares (LBJ) 25459Y652 2:1
Direxion Daily 7-10 Year Treasury Bull 3X Shares (TYD) 25459W565 2:1
Direxion Daily Small Cap Bull 3X Shares (TNA) 25459W847 2:1

Shareholders of record of the above ETFs on April 1, 2013 will participate in the reverse and forward splits. The Depository Trust Company (“DTC”), the registered owner of all ETF shares, has been notified of the reverse and forward splits and has been instructed to adjust each shareholder’s investment accordingly.

The shares of each ETF will be offered on a split-adjusted basis on Tuesday, April 2, 2013. As stated previously, the total market value of the shares outstanding will not be affected as a result of the reverse and forward splits, except with respect to the redemption of fractional shares, as outlined below.

Hypothetical Example of 1-for-6 reverse split:

1-for-6 Reverse Split

Period # of Shares Owned Hypothetical Market Price Total Share Value
Pre-Split 120 $10 $1,200
Post-Split 20 $60 $1,200

Hypothetical Example of 3-for-1 forward split:

3-for-1 Forward Split

Period # of Shares Owned Hypothetical Market Price Total Share Value
Pre-Split 30 $30 $900
Post-Split 90 $10 $900

Redemption of Fractional Shares and Tax Consequences for each Reverse and Forward Split

As a result of the reverse and forward splits, a shareholder of each ETF could potentially hold a fractional share. However, fractional shares cannot trade on NYSE Arca. Thus, each ETF will redeem for cash a shareholder’s fractional shares at the Fund’s split-adjusted NAV. Such redemptions could cause a shareholder to realize a gain or loss. Otherwise, the reverse and forward splits will not result in a taxable transaction for holders of ETF shares. No transaction fee will be imposed on shareholders for such redemptions.

“Odd Lot” Unit

As a result of the reverse and forward splits, the ETFs will have outstanding one aggregation of less than 50,000 shares to make a creation unit, or an “odd lot unit.” Thus, each ETF will provide one authorized participant with a one-time opportunity to redeem the respective odd lot unit at its split-adjusted NAV, or at the NAV on such date the authorized participant seeks to redeem the odd lot unit.

For more information about Direxion, please contact James Doyle at 973-850-7308 or jdoyle@jcprinc.com.


NYSE:EDC, NYSE:EDZ, NYSE:FAS, NYSE:FAZ, NYSE:TNA, NYSE:TZA


 

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