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Direxion announces reverse splits of two leveraged ETFs


Direxion has announced it will execute 1:10 reverse share splits for two of its leveraged exchange-traded funds – the Direxion Daily Gold Miners Index Bear 3X Shares (DUST), and the Direxion Daily Junior Gold Miners Index Bear 3X Shares (JDST) – on 18 May.

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 a result of this reverse split, every 10 shares of a Fund will be exchanged for one share. Accordingly, the total number of the issued and outstanding shares for the Funds 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 on a split-adjusted basis on 18 May, 2016.

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 Trust's transfer agent will notify the Depository Trust Company (DTC) of the reverse 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.

As a result of the reverse split, 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. 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 split will not result in a taxable transaction for holders of Fund shares. No transaction fee will be imposed on shareholders for such redemption.

Also as a result of the reverse split, each Fund may 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 authorised participant with a one-time opportunity to redeem the odd lot unit at the split-adjusted NAV or the NAV on such date the authorised participant seeks to redeem the odd lot unit.

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