The Board of Trustees of the Direxion Shares ETF Trust has approved changes to the names, investment strategies and investment objectives of 10 leveraged funds, based on the recommendation of the funds’ adviser, Rafferty Asset Management, LLC.
The funds’ investment objectives will seek daily results, before fees and expenses, of 300% or -300% of the performance of the Fund’s target index. The funds previously sought daily results of 200% or -200%.
Currently, the investment objective of each of the funds with “Bull” in its name is to seek daily investment results, before fees and expenses, of 200% of the fund’s target index. The investment objective of each of the funds with “Bear” in its name is to seek daily investment results, before fees and expenses, of -200% of the fund’s target index.
Effective 1 December, 2011, each fund’s investment objective will be changed to seek daily investment results, before fees and expenses, of 300% or -300% of the performance of its specific target index.
With the funds seeking to magnify the daily performance of their underlying indexes and benchmarks to a greater extent under their new investment objectives, each fund will have the potential for greater gains but will also be subject to the risks of greater losses relative to benchmark performance.
Additionally, for a period longer than one day, the pursuit of daily goals may result in daily leveraged compounding for the funds, which means that the return of a target index over a period of time greater than one day, multiplied by the fund’s daily target (300% or -300%), generally will not equal a fund’s performance over that same period. The effects of such leveraged compounding will be greater for the funds once their new investment objective is effective, due to the fact that each fund will attempt to magnify the performance of its benchmark to a greater extent (i.e., 300% compared with 200%, or -300% compared with -200%).
