Direxion Investments Announces Reverse Share Splits of Two Leveraged ETFs
PR Newswire Direxion Investments
1 hour ago
NEW YORK, Nov. 25, 2014 /PRNewswire/ -- Direxion Investments, an ally for both strategic and tactical investors seeking to solve for better investment outcomes, has announced it will execute reverse share splits for two of its leveraged exchange-traded funds ("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.
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Direxion will execute a 1-for-10 reverse split of the shares of the Direxion Daily Junior Gold Miners Bull 3X Shares (JNUG), effective at the opening of the markets on Tuesday, December 23, 2014. The firm will also execute 1-for-6 reverse splits of the shares of the Direxion Daily Russia Bull 3X Shares (RUSL), also effective at the opening of the markets on December 23, 2014.
A summary of the two ETFs undergoing reverse splits is as follows (please note the CUSIP changes, effective Tuesday, December 23, 2014):
ETF
Current CUSIP
New CUSIP
Ratio
Direxion Daily Junior Gold Miners Bull 3X Shares (JNUG)
25459Y611
25459Y157
1:10
Direxion Daily Russia Bull 3X Shares (RUSL)
25459Y645
25459Y140
1:6
As a result of this reverse split, every ten or six shares of a Fund will be exchanged for one share as indicated in the table above. In addition, the per-share net asset value ("NAV") and next day's opening market price will be approximately ten or six times higher for the Funds. Shares of the Funds will begin trading on NYSE Arca, Inc. ("NYSE Arca") on a split-adjusted basis on December 23, 2014 (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 splits. The tables below illustrate the effect of a hypothetical 1-for-10 and 1-for-6 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-6 Reverse Split
Period
# of Shares Owned
Hypothetical NAV
Total Market Value
Pre-Split
120
$10
$1,200
Post-Split
20
$60
$1,200
The Trust's transfer agent will notify the Depository Trust Company ("DTC") of the reverse split and instruct the DTC to adjust each shareholder's investment(s) accordingly. The 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 the Reverse Split
As a result of the reverse split, a shareholder of a Fund's shares potentially could 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 redemptions may have tax implications for those shareholders and a shareholder could recognize gain or loss in connection with the redemption of the shareholder's fractional shares. Otherwise, the reverse split will not result in a taxable transaction for holders of Fund shares. No transaction fee will be imposed on shareholders for such redemptions.
"Odd Lot" Unit
Also as a result of the reverse split, the Funds will have outstanding one aggregation of less than 50,000 shares to make a creation unit, or an "odd lot unit." Thus, the Funds will provide one authorized participant with a one-time opportunity to redeem the odd lot unit at the split-adjusted NAV or 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.
About Direxion Investments:
Direxion Investments offers highly liquid, tactical and strategic institutional-quality ETFs and mutual funds for investors seeking to solve for better investment outcomes. Founded in 1997, the company has approximately $8.7 billion in assets under management as of September 30, 2014. Our diverse suite of products helps investors navigate today's ever-changing markets. For more information, please visit www.direxioninvestments.com.
There is no guarantee that the funds will achieve their objectives.
An investor should consider the investment objectives, risks, charges, and expenses of Direxion ETFs carefully before investing. The prospectus and summary prospectus contains this and other information about Direxion ETFs. Download a prospectus and summary prospectus at direxioninvestments.com. The prospectus and summary prospectus should be read carefully before investing.
Risks:
An investment in the ETFs involves risk, including the possible loss of principal. The ETFs are non-diversified and include risks associated with concentration risk that results from the Funds' investments in a particular industry or sector which can increase volatility. The use of derivatives such as futures contracts, forward contracts, options and swaps are subject to market risks that may cause their price to fluctuate over time. The Fund does not attempt to, and should not be expected to; provide returns which are a multiple of the return of the Index for periods other than a single day. For other risks including leverage, correlation, compounding, market volatility and specific risks regarding each sector, please read the prospectus.
