Direxion Shares Announces Reverse Share Split of ETF
NEWTON, Mass., Feb. 26 /PRNewswire/ -- Direxion , a pioneer in providing alternative and tactically-oriented investment strategies to sophisticated investors, announced today that it will execute a 1-for-10 reverse split of the shares of Direxion Daily Emerging Markets Bear 3x Shares ETF (EDZ) for shareholders of record after the close of the markets on Wednesday, March 3, 2010. EDZ shares will begin trading on NYSE Arca, Inc. (NYSE Arca) on a split-adjusted basis on Thursday March 4, 2010.
The CUSIP for EDZ will change to 25459W 482 from 25459W 409.
As a result of the EDZ 1-for-10 reverse split, every ten shares of EDZ will be exchanged for one share. Accordingly, the number of EDZ shares issued and outstanding, will decrease by approximately 90% and the net asset value ("NAV") and price of each share at the opening of the markets on Thursday March 4, 2010 will increase 10-fold.
The shares of each Fund will be offered on a split-adjusted basis on March 4, 2010. The total market value of the EDZ shares outstanding will not be affected as a result of this reverse split except with respect to the redemption of fractional shares, as discussed below.
Hypothetical Example of 1-for-10 reverse split:
Hypothetical Example of 1-for-10 Reverse Split
# of Shares Hypothetical Total Market
Period Owned Hypothetical NAV Market Price Value
------ ----------- ---------------- ------------ ------------
Pre-Split 100 $6.00 $6.06 $606.00
--------- --- ----- ----- -------
Post-Split 10 $60.00 $60.60 $606.00
---------- --- ------ ------ -------
Shareholders of EDZ on March 3, 2010 will participate in the reverse splits. The Depository Trust Company ("DTC"), the registered owner of all EDZ shares, has been notified of the reverse splits and has been instructed to adjust each shareholder's investment accordingly.
Redemption of Fractional Shares and Tax Consequences for each Reverse Split
As a result of the reverse split, a shareholder of EDZ could potentially hold a fractional share. However, fractional shares cannot trade on NYSE Arca. Thus, EDZ will redeem for cash a shareholder's fractional shares at the Fund's split-adjusted NAV as of March 3, 2010. Such redemptions could cause a shareholder to realize a gain or loss. Otherwise, the reverse split will not result in a taxable transaction for holders of EDZ shares. No transaction fee will be imposed on shareholders for such redemption.
"Odd Lot" Unit
As a result of the reverse split, EDZ will have outstanding one aggregation of less than 50,000 shares to make a creation unit, or an "odd lot unit." Thus, each fund 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.
To speak to a member of the Direxion team, or request more information, please contact Katrine Winther-Olesen at (973) 400-1341 or [email protected].
About Direxion
Direxion Funds and Direxion Shares, managed by Rafferty Asset Management, LLC, offer long and short tactically oriented investments including leveraged index funds, ETFs and alternative-class fund products for investment advisors and sophisticated investors who seek to effectively manage risk and return in both bull and bear markets. Founded in 1997, the company has approximately $6.3 billion in assets under management as of 2/11/10. The company's business model is built on continuous product innovation, exceptional customer service and a commitment to building strategic relationships with distribution partners. For more information, please visit www.direxionshares.com.
Shares of Direxion Shares ETFs are bought and sold at market price (not NAV) and are not individually redeemed from the Fund. Brokerage commissions will reduce returns. Market Price returns are based upon the midpoint of the bid/ask spread at 4:00 PM Eastern time (when NAV is normally determined), and do not represent the returns you would receive if you traded shares at other times.
Disclosure:
An investor should consider the investment objectives, risks, charges, and expenses of Direxion Shares carefully before investing. The prospectus contains this and other information about Direxion Shares. To obtain a prospectus, please visit www.direxionshares.com. The prospectus should be read carefully before investing.
Investing in index funds may be more volatile than investing in broadly diversified funds. The use of leverage by a fund increases the risk to the fund. The more a fund invests in leveraged instruments the more the leverage will magnify gains or losses on those investments. There is no assurance that the Funds will achieve their objectives and an investment in a Fund could lose money. No single Fund is a complete investment program. The Funds are not designed to, and will not necessarily, track the underlying index or benchmark over a longer period of time.
The Funds are not suitable for all investors. The Funds should be utilized only by sophisticated investors who (a) understand the risks associated with the use of leverage, (b) understand the consequences of seeking daily leveraged investment results, (c) understand the risk of shorting and (d) intend to actively monitor and manage their investments on a daily basis. Investors who do not understand the Funds or do not intend to manage the Funds on a daily basis should not buy the Funds.
The risks associated with the funds are detailed in the prospectus which include: adverse market condition risk, adviser's investment strategy risk, aggressive investment techniques risk, concentration risk, counterparty risk, credit and lower quality debt securities risk, equity securities risk, currency exchange risk, daily correlation risk, daily rebalancing and market volatility risk, depository receipt risk, foreign and emerging markets securities risk, sector securities risk, interest rate risk, inverse correlation risk, leverage risk, market risk, non-diversification risk, shorting risk, small and mid cap company risk, tracking error risk, and special risks of exchange traded funds.
Foreside Fund Services, LLC. distributor for Direxion Shares
SOURCE Direxion
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