Direxion Shares announced it will execute reverse splits for six of its leveraged ETFs.
Five of the funds will experience a a 1-for-5 reverse split:
Direxion Daily Real Estate Bear 3x Shares (DRV)
Direxion Daily Emerging Markets Bull 3x Shares (EDC)
Direxion Daily Financial Bull 3x Shares (FAS)
Direxion Daily Latin America Bull 3x Shares (LBJ)
Direxion Daily 20+ Year Treasury Bear 3x Shares (TMV)
The Direxion Daily Russia Bull 3x Shares (RUSL) will experience a 1-for-3 reverse split
The splits will go into effect for shareholders of record after the close of the markets on Wednesday, November 9, 2011. The shares of each ETF will be offered on a split-adjusted basis on November 10. As is the case with regular stock splits, the total market value of the shares outstanding will not be affected, except with respect to the redemption of fractional shares.
Unlike mutual funds, fractional shares of ETFs can’t be bought or sold. Thus, shareholders may redeem the fractional shares for cash at each ETF’s split-adjusted net asset value (NAV) as of November 9. These 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.
The reverse split will result in each ETF having outstanding one aggregation of less than 50,000 shares to make a creation unit, or an “odd lot unit.” Direxion says each ETF 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.