NEW YORK—September 24, 2021— Direxion has announced it will execute forward share splits for two of its exchange-traded funds (“ETFs”), as well as reverse share splits for an additional two 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 will execute a forward split of the issued and outstanding shares of the Direxion Daily Retail Bull 3X Shares and the Direxion Daily Regional Banks Bull 3X Shares (each, a “Fund” and collectively, the “Funds”).
After the close of the markets on October 22, 2021 (the “Payable Date”) the funds affecting forward splits of their issued and outstanding shares as follows:
|Fund Name||Ticker||Forward Split Ratio||Approximate increase in total number of outstanding shares|
|Direxion Daily Retail Bull 3X Shares||RETL||5 for 1||400%|
|Direxion Daily Regional Banks Bull 3X Shares||DPST||5 for 1||400%|
As a result of these share splits, shareholders of each Fund will receive five 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 the approximate percentage indicated above.
All share splits will apply to shareholders of record as of the close of NYSE Arca, Inc. (the “NYSE Arca”) on October 21, 2021 (the “Record Date”), payable after the close of the NYSE Arca on the Payable Date. Shares of the Funds will begin trading on the NYSE Arca on a split-adjusted basis on October 25, 2021 (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 net asset value (“NAV”) and opening market price on the Ex-Date will be approximately one-fifth for the Funds. The table below illustrates the effect of a hypothetical five-for-one split on a shareholder’s investment.
5-for-1 Forward Split
|Period||# of Shares Owned||Hypothetical NAV||Total Market Value|
The forward share splits will not result in a taxable transaction for holders of the Funds’ shares. No transaction fees will be imposed on shareholders in connection with the share splits.
Direxion will execute a reverse split of the issued and outstanding shares of the Direxion Daily MSCI Real Estate Bear 3X Shares and the Direxion Daily Technology Bear 3X Shares (each, a “Fund” and collectively, the “Funds”).
After the close of the markets on October 22, 2021, each Fund will affect reverse splits of its issued and outstanding shares as follows:
|Fund Name||Reverse Split Ratio||Approximate decrease in total number of outstanding shares|
|Direxion Daily MSCI Real Estate Bear 3X Shares||1 for 10||90%|
|Direxion Daily Technology Bear 3X Shares||1 for 10||90%|
Please note the CUSIP changes, effective October 25, 2021:
|Fund Name||Ticker||Current CUSIP||New CUSIP|
|Direxion Daily MSCI Real Estate Bear 3X Shares||DRV||25460E141||25460G419|
|Direxion Daily Technology Bear 3X Shares||TECS||25460G872||25460G393|
As a result of these reverse splits, every ten 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 a Fund 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 ten-times higher for the Funds. Shares of the Funds will begin trading on the NYSE Arca, Inc. (the “NYSE Arca”) on a split-adjusted basis on October 25, 2021.
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 table below illustrates the effect of a hypothetical one-for-ten reverse split anticipated for the Funds as described above:
1-for-10 Reverse Split
|Period||# of Shares Owned||Hypothetical NAV||Total Market Value|
Redemption of Fractional Shares and Tax Consequences of the Reverse Split
As a result of the reverse splits, 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 after the close of the markets on October 22, 2021. 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 splits will not result in a taxable transaction for holders of Fund shares. No transaction fee will be imposed on shareholders for such redemption.
“Odd Lot” Unit
Also as a result of the reverse splits, a Fund may have outstanding one aggregation of less than 50,000 shares to make a creation unit, or an “odd lot unit.” Thus, a Fund 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.
The Trust’s transfer agent will notify the Depository Trust Company (“DTC”) of the splits and instruct 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.
Direxion equips investors who are driven by conviction with ETF solutions built for purpose and fine-tuned for precision. These solutions are available for a broad spectrum of investors, whether executing short-term tactical trades, or investing in thematic strategies. Direxion’s reputation is founded on developing products that precisely express market perspectives and allow investors to manage their risk exposure. Founded in 1997, the company has approximately $26.6 billion in assets under management as of June 30, 2021. For more information, please visit www.direxion.com.
There is no guarantee that the Funds will achieve their investment objectives.
For more information on all Direxion Shares daily leveraged ETFs, go to direxion.com, or call us at 866.301.9214.
Leveraged ETFs are not suitable for all investors and should be utilized only by investors who understand the risks associated with seeking daily leveraged and inverse investment results, and intend to actively monitor and manage their investments. Due to the daily nature of the leveraged and inverse investment strategies employed, there is no guarantee of long-term inverse returns. Past performance is not indicative of future results.
An investor should carefully consider a Fund’s investment objective, risks, charges, and expenses before investing. A Fund’s prospectus and summary prospectus contain this and other information about the Direxion Shares. To obtain a Fund’s prospectus and summary prospectus call 866-716-0735 or visit our website at direxion.com. A Fund’s prospectus and summary prospectus should be read carefully before investing.
Direxion Shares 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 that results from an ETF’s investments in a particular industry or sector which can increase volatility. The use of derivatives such as futures contracts and swaps are subject to market risks that may cause their price to fluctuate over time. The ETFs do not attempt to, and should not be expected to, provide returns which are a multiple of the return of their respective index for periods other than a single day. For other risks including leverage, correlation, daily compounding, market volatility and risks specific to an industry or sector, please read the prospectus.
Distributor: Foreside Fund Services, LLC.