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Direxion

Direxion will execute the previously announced reverse share splits for six of its leveraged exchange-traded funds. 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 in the original announcement....

 


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Direxion will execute reverse splits of the issued and outstanding shares of the Direxion Daily Gold Miners Index Bull 3X Shares (NUGT), Direxion Daily Natural Gas Related Bull 3X Shares (GASL), Direxion Daily Junior Gold Miners Index Bull 3X Shares (JNUG), Direxion Daily Junior Gold Miners Index Bear 3X Shares (JDST), Direxion Daily Financial Bear 3X Shares (FAZ) and the Direxion Daily Small Cap Bear 3X Shares (TZA), effective at the open of the market on October 1, 2015.

In addition, the per-share net asset value (“NAV”) and next day’s opening market price will be approximately 10, five 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 October 1, 2015.

A summary of the six ETFs undergoing reverse splits is as follows (please note the CUSIP changes, effective October 1, 2015):

ETF Current CUSIP New CUSIP Ratio Approximate
decrease in total
number of
outstanding shares
Direxion Daily Gold Miners Index Bull 3X Shares (NUGT) 25459Y389 25490K570 1:10 90%
Direxion Daily Natural Gas Related Bull 3X Shares (GASL) 25490K828 25490K562 1:5 80%
Direxion Daily Junior Gold Miners Index Bull 3X Shares (JNUG) 25459Y157 25490K554 1:5 80%
Direxion Daily Junior Gold Miners Index Bear 3X Shares (JDST) 25459Y561 25490K547 1:4 75%
Direxion Daily Financial Bear 3X Shares (FAZ) 25459Y447 25490K539 1:4 75%
Direxion Daily Small Cap Bear 3X Shares (TZA) 25459Y488 25490K521 1:4 75%

Accordingly, the total number of the issued and outstanding shares for the Funds will decrease by the approximate percentages indicated above. 

The opening market value of the Funds’ issued and outstanding shares on October 1, 2015, 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, 1-for-5, 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-5 Reverse Split

Period # of Shares Owned Hypothetical NAV Total Market Value
Pre-Split 120 $10 $1,200
Post-Split 24 $50 $1,200


Hypothetical example for 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

The Trust’s transfer agent will notify the Depository Trust Company (“DTC”) of the reverse 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 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 as of the Record Date. Such redemptions 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 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 splits, 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.

Source: ETFWorld.com

WMCR
Wilshire Micro-Cap ETF (based on the Wilshire US Micro-Cap Index)