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Direxion Investments has announced it
will execute reverse share splits for eight of its leveraged exchange-traded
funds ("ETFs"), as well as forward share splits for another 11 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.
Direxion Investments Logo
8 Reverse Splits
Direxion will execute a 1-for-10 reverse split of the shares of the Direxion
Daily Brazil Bull 3X Shares, Direxion Daily FTSE China Bear 3X Shares, and
Direxion Daily Natural Gas Related Bull 3X Shares, effective at the open of
the market on May 20, 2015. The firm will also execute a 1-for-4 reverse split
of the Direxion Daily Mid Cap Bear 3X Shares, Direxion Daily Latin America
Bull 3X Shares, Direxion Daily Russia Bear 3X Shares, Direxion Daily
Semiconductor Bear 3X Shares, and Direxion Daily Technology Bear 3X Shares,
effective at the open of the market on May 20, 2015.
A summary of the eight ETFs undergoing reverse splits is as follows (please
note the CUSIP changes, effective May 20, 2015):
Approximate
ETF Current CUSIP New CUSIP Ratio decrease in total
number of
outstanding shares
Direxion Daily Brazil Bull 3X 25459Y546 25490K844 1:10 90%
Shares (BRZU)
Direxion Daily FTSE China
Bear 3X Shares 25459Y462 25490K836 1:10 90%
(YANG)
Direxion Daily Natural Gas
Related Bull 3X Shares 25459W227 25490K828 1:10 90%
(GASL)
Direxion Daily Mid Cap Bear 25459Y421 25490K810 1:4 75%
3X Shares (MIDZ)
Direxion Daily Latin America 25459Y652 25490K794 1:4 75%
Bull 3X Shares (LBJ)
Direxion Daily Russia Bear 3X 25459W284 25490K786 1:4 75%
Shares (RUSS)
Direxion Daily Semiconductor
Bear 3X Shares 25459Y314 25490K778 1:4 75%
(SOXS)
Direxion Daily Technology 25459Y439 25490K760 1:4 75%
Bear 3X Shares (TECS)
As a result of this reverse split, every 10 or four shares of a Fund will be
exchanged for one share as indicated in the table above. Accordingly, the
total number of the issued and outstanding shares for the Funds will decrease
by the approximate percentage indicated above. In addition, the per-share net
asset value ("NAV") and next day's opening market price will be approximately
10- or four-times higher for the Funds. Shares of the Funds will begin trading
on NYSE Arca, Inc. ("NYSE Arca") on a split-adjusted basis on May 20, 2015
(the "Effective Date").
The next day's opening market value of the Funds' issued and outstanding
shares, and thus a shareholder's investment value, will not be affected by the
reverse split. The tables below illustrate the effect of a hypothetical
1-for-10 and 1-for-4 reverse split anticipated for the Funds, as applicable
and described above:
Hypothetical example of 1-for-10 Reverse Split
Period # of Shares Owned Hypothetical NAV Total Market Value
Pre-Split 120 $10 $1,200
Post-Split 12 $100 $1,200
Hypothetical example of 1-for-4 Reverse Split
Period # of Shares Owned Hypothetical NAV Total Market Value
Pre-Split 120 $10 $1,200
Post-Split 30 $40 $1,200
11 Forward Splits
Additionally, Direxion will execute forward splits of the shares of the
Direxion Daily Mid Cap Bull 3X Shares, Direxion Daily India Bull 3X Shares,
Direxion Daily Healthcare Bull 3X Shares, Direxion Daily Retail Bull 3X
Shares, Direxion Daily Semiconductor Bull 3X Shares, Direxion Daily Financial
Bull 3X Shares, Direxion Daily Technology Bull 3X Shares, Direxion Daily S&P
500^® Bull 2X Shares, Direxion Daily Mid Cap Bull 2X Shares, Direxion Daily
Small Cap Bull 2X Shares, and Direxion Daily 7-10 Year Treasury Bull 2X
Shares.
After the close of the markets on May 19, 2015 (the "Payable Date"), each Fund
will affect a split of each Fund's issued and outstanding shares as follows:
Approximate
ETF Forward Split Ratio increase in total
number of
outstanding shares
Direxion Daily Mid Cap Bull 3X Shares 4 for 1 400%
(MIDU)
Direxion Daily India Bull 3X Shares 4 for 1 400%
(INDL)
Direxion Daily Healthcare Bull 3X 4 for 1 400%
Shares (CURE)
Direxion Daily Retail Bull 3X Shares 4 for 1 400%
(RETL)
Direxion Daily Semiconductor Bull 3X 4 for 1 400%
Shares (SOXL)
Direxion Daily Financial Bull 3X Shares 4 for 1 400%
(FAS)
Direxion Daily Technology Bull 3X 4 for 1 400%
Shares (TECL)
Direxion Daily S&P 500^® Bull 2X Shares 4 for 1 400%
(SPUU)
Direxion Daily Mid Cap Bull 2X Shares 4 for 1 400%
(MDLL)
Direxion Daily Small Cap Bull 2X Shares 4 for 1 400%
(SMLL)
Direxion Daily 7-10 Year Treasury Bull
2X Shares 2 for 1 200%
(SYTL)
As a result of these share splits, shareholders of each Fund will receive an
additional four or two shares for each share held of the applicable Fund as
indicated in the table above. Accordingly, the number of each Fund's issued
and outstanding shares will increase by approximately 400% or 200% as
indicated above.
All forward share splits will apply to shareholders of record as of the close
of the NYSE Arca on May 18, 2015 (the "Record Date"), payable after the close
of the NYSE Arca on May 19, 2015 (the "Payable Date"). Shares of the Funds
will begin trading on the NYSE Arca on a split-adjusted basis on May 20, 2015
(the "Ex-Date"). On the Ex-Date, the opening market value of each Fund's
issued and outstanding shares, and thus a shareholder's investment value, will
not be affected by the share split. However, the per-share NAV and opening
market price on the Ex-Date will be approximately one-fourth and one-half for
the Funds. The tables below illustrate the effect of a hypothetical
four-for-one and two-for-one share split on a shareholder's investment.
Hypothetical Example of 4-for-1 Forward Share Split
Period # of Shares Owned Hypothetical NAV Total Market Value
Pre-Split 100 $40 $4,000
Post-Split 400 $10 $4,000
Hypothetical Example of 2-for-1 Forward Share Split
Period # of Shares Owned Hypothetical NAV Total Market Value
Pre-Split 100 $40 $4,000
Post-Split 200 $20 $4,000
The Trust's transfer agent will notify the Depository Trust Company ("DTC") of
the reverse and forward splits and instruct the DTC to adjust each
shareholder's investment(s) accordingly. DTC is the registered owner of the
Funds' shares and maintains a record of the Funds' record owners.
Redemption of Fractional Shares and Tax Consequences for Each Reverse and
Forward Split
As a result of the reverse or forward split, a shareholder of a Fund's shares
could potentially hold a fractional share. However, fractional shares cannot
trade on the NYSE Arca. Thus, a Fund will redeem for cash a shareholder's
fractional shares at the Fund's split-adjusted NAV as of the Record Date. Such
redemption may have tax implications for those shareholders and a shareholder
could recognize a gain or loss in connection with the redemption of the
shareholder's fractional shares. Otherwise, the reverse or forward split will
not result in a taxable transaction for holders of Fund shares. No transaction
fee will be imposed on shareholders for such redemption.
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