Direxion Plans Reverse Share Split on 6 ETFs
February 4, 2011

SAN DIEGO (ETFguide.com) –   Direxion Shares is planning to execute a series of reverse share splits on its leveraged long and leverage short ETFs.

Additionally, the firm announced it will execute a 1-for-3 reverse split of the shares of the Direxion Daily Small Cap Bear 3x Shares (NYSEArca: TZA).

These changes apply for shareholders of record after the close of the markets on Wednesday, February 23, 2011.

Here’s an example of how share splits work:
For the 1-for-5 reverse split, a shareholder with 100 shares with a hypothetical market value of $10 would end up with 20 post split shares at a hypothetical value of $50. On the other hand, a 1-for-3 reverse split for a shareholder with 90 shares that have a hypothetical value of $10 - they would end up with 30 post split shares at a hypothetical market value of $30.

The shares of each ETF will be offered on a split-adjusted basis on Feb. 24, 2011 and the total market value of the shares outstanding will not be affected as a result of this reverse split, except with respect to the redemption of fractional shares.

Since fractional shares cannot trade on NYSE Arca, each ETF will redeem for cash a shareholder's fractional shares at the fund's split-adjusted NAV as of February 23, 2011. 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 ETF shares. No transaction fee will be imposed on shareholders for such redemption.

Direxion’s leveraged ETFs attempt to magnify the daily performance of their underlying indexes by either 200 or 300 percent.