Two High-Profile ETFs Undergo Major Share Restructuring: DRIP & SOXS Set for 1-for-10 Reverse Split

Direxion has initiated a significant restructuring of two leveraged inverse ETFs, with the Direxion Daily S&P Oil & Gas Exp. & Prod. Bear 2X Shares (DRIP) and Direxion Daily Semiconductor Bear 3X Shares (SOXS) both undergoing reverse split operations. The move, effective after market close on March 25, 2022, marks a critical portfolio adjustment affecting millions of shares currently held across these funds.

Understanding the Reverse Split Mechanics

The restructuring follows a 1-for-10 reverse split ratio for both funds. This means every ten existing shares will consolidate into a single share, reducing the total outstanding share count by approximately 90% for each fund. While this dramatic reduction in share quantity may sound alarming to retail holders, the underlying market value remains entirely unchanged. A shareholder holding 100 shares valued at $10 each ($1,000 total) will see this consolidate to 10 shares at $100 each—still worth $1,000.

The key shift occurs in per-share net asset value (NAV) and opening market pricing, which will increase by a factor of ten to reflect the new share structure. Trading will resume on a split-adjusted basis starting March 28, 2022, on NYSE Arca.

Technical Updates and CUSIP Changes

The administrative implications are straightforward but critical for record-keeping. DRIP’s CUSIP will transition from 25460G658 to 25460G328, while SOXS will shift from 25460G690 to 25460G336. These identifier changes take effect on March 28, 2022, ensuring proper settlement and portfolio tracking across the depository system.

Fractional Shares and Tax Considerations

A nuance inherent to reverse splits is the treatment of fractional shares. Since fractional shares cannot trade on NYSE Arca, Direxion will redeem any fractional positions held by shareholders at the split-adjusted NAV as of market close on March 25, 2022. Shareholders should note that while the reverse split itself is not a taxable event, the redemption of fractional shares may trigger capital gains or losses depending on individual cost basis.

Odd Lot Units and Authorized Participant Relief

The restructuring may also result in “odd lot units”—aggregations of fewer than 50,000 shares unable to form a standard creation unit. To address this, Direxion will grant authorized participants a one-time opportunity to redeem such units at the split-adjusted NAV on the date of redemption. This provision protects market structure integrity and prevents operational gridlock.

Investment Risk Framework

Both DRIP and SOXS are leveraged inverse products designed for active, conviction-driven investors executing tactical trades rather than long-term buy-and-hold strategies. These funds employ daily compounding mechanics and derivatives exposure that can diverge significantly from their stated indices over extended periods. The reverse split does not alter these underlying risk profiles—investors should continue to treat these as specialized tactical instruments rather than core holdings.

Direxion, managing approximately $30.8 billion in assets under management as of year-end 2021, has built its reputation on precisely calibrated leveraged solutions. For detailed risk disclosures and prospectus information, investors can contact the firm at 866-301-9214 or visit direxion.com.