Bad News: FAZ 1:10 Reverse Split; FAS 1:5 Reverse Split

天真的冷酷

Direxion Shares Daily Financial Bull (FAS) ETF and the Direxion Shares Daily Financial
Bear (FAZ) ETF will each be undergoing a Reverse Split after market close on Wednesday,
July 8th, 2009 (the “Record Date”), which will be effective on Thursday, July 9th, 2009 (the
“Effective Date”).

Exchange Traded Fund Ticker Old CUSIP New CUSIP Share Ratio

Direxion Daily Financial Bull 3X Shares FAS 25459W 508 25459W 516 1:5
Direxion Daily Financial Bear 3X Shares FAZ 25459W 607 25459W 490 1:10

Q: Will this affect the total value of my investment in FAS or FAZ?
A: No. A reverse split simply means there will be a reduction in the number of the ETF’s shares
outstanding and a proportionate increase in the ETF’s price per share. This means you will own
less shares, however, the price per share will be proportionately higher and as a result; your
investment value will not change.

Q: How many shares will I receive after the reverse split?
A: The Direxion Daily Financial Bull 3X Shares (FAS) will effect a 1 for 5 reverse split and the
Direxion Daily Financial Bear 3x Shares (FAZ) will effect a 1 for 10 reverse split. This means, for
every 5 shares of FAS an investor owns, they will now receive 1 share and for every 10 shares an
investor owns of FAZ, they will receive 1 share. Please note: As a result, the share price will be
adjusted proportionately higher.

Q: Will the reverse split create a taxable event for me?
A: For shareholders that hold a number of shares that is not an exact multiple of 5 or 10, the
reverse splits will result in the creation of fractional shares. However, fractional shares cannot
trade on the New York Stock Exchange (NYSE) Arca (or any other exchange on which
Direxionshares trade). Thus, each Fund will redeem for cash a shareholder’s fractional shares at
that Fund’s split-adjusted NAV on the Record Date (7/8/09) of the reverse split. This transaction
may cause shareholders to recognize gains or losses, which would generate a taxable event..
Otherwise, neither reverse split will result in a taxable transaction for holders of Funds’ shares.
No transaction fee will be imposed on shareholders for such redemption.

soulvirus

偶靠,真的要这么干了.这叫吃人不吐骨头哈

seabiscuit

Thanks for sharing the information.   Why is it bad news?  Will it follow the story of AIG?  I think not necessarily...

seabiscuit

还有， 那option strike price 怎么算？  我晕，我有一大把options.

dara

I like it, it is more easy to trade option.

xiaoxiaozhang

哈哈，赤裸裸的圈钱运动。

天真的冷酷

对我来说，是bad news,  因为$4 跌不到哪里去，$40 可以跌倒 $4 again

seabiscuit

I like it, it is more easy to trade option.
dara 发表于 2009-7-2 18:57

You should say "it is easier to trade options".  哈哈， 周末找机会灌水。

flyingdust

Many thanks for sharing!

seabiscuit

8# 天真的冷酷

百分比还是一样的呀， tracking 3X financial returns 。。。

For example, 你买了1000 股 @ 5.00 FAZ, 也就是你投了$5000 on faz
那，financial 哪天长了5%，
你会approximatly lose 15% on faz, 也就是5000×0.15=750.

after the reverse split, 你有100 股@50.00 faz,
你还是lose 15% of $5000 呀。Nothing changed.

tog

what is I am shorting fas? what will happen to me?

天真的冷酷

8# 天真的冷酷

百分比还是一样的呀， tracking 3X financial returns 。。。

For example, 你买了1000 股 @ 5.00 FAZ, 也就是你投了$5000 on faz
那，financial 哪天长了5%，
你会approximatly lose 15% o ...
seabiscuit 发表于 2009-7-2 15:08

还是让soulvirus来替我解释一下比较好，数学的冬冬我很笨的

开小差

thx for sharing.

seabiscuit

13# 天真的冷酷
呀，这么谦虚~~~

javamood

good news ah, transaction fee is lower with less shares.

天真的冷酷

good news ah, transaction fee is lower with less shares.
javamood 发表于 2009-7-2 15:15

seabiscuit

我倒是想明白了option contracts 怎么办。

faz:
# of contracts should be divided by 10
Strike price should be multiplied by 10.

For example , if you have 50 contracts at strike price $8, then you will have 5 contracts at strike price $80 after the reverse split.

Yes, if you only have one contract, then you will have a fraction 0.1.

对于fas, 以此类推啊。我就不赘述了。

Diver

1# 天真的冷酷

风清扬