| Summary Prospectus |
March 26, 2025 |
| Direxion Shares ETF Trust |
|
Direxion Daily LLY Bull 2X Shares
| Ticker: ELIL |
| Listed on: The Nasdaq Stock Market LLC |
Before you invest, you may
want to review the Fund’s prospectus, which contains more information about the Fund and its risks. You can find the Fund’s prospectus, reports to
shareholders, and other information about the Fund online at http://www.direxion.com/regulatory-documents. You can also get this information at no cost by
calling (866) 476-7523 or by sending an email request to info@direxionshares.com. The Fund’s prospectus and statement of additional information, both dated February 28, 2025, are incorporated by reference into this Summary Prospectus.
Important Information Regarding the
Fund
The Direxion Daily LLY Bull 2X Shares (the
“Fund”) seeks daily leveraged (2X)
investment results and is very different from most other exchange-traded funds. As a
result, the Fund may be riskier than alternatives that do not use leverage
because the Fund’s objective is to magnify the daily performance of
the common shares of Eli Lilly and Company (NYSE: LLY) ("LLY"). The return for investors that invest for periods longer or shorter than a trading day should not be expected to be 200% of the
performance of LLY for the period. The return of the Fund for a period longer than a trading day will be the result of each trading day’s compounded return over the
period, which will very likely differ from 200% of the return of LLY for that period. Longer holding periods, higher volatility of LLY and leverage increase the impact of
compounding on an investor’s returns. During periods of higher LLY volatility, the volatility of LLY may affect the Fund’s return as much as, or more than, the return of LLY.
The Fund is not suitable for all investors. The Fund is designed to be utilized only by knowledgeable investors who
understand the potential consequences of seeking daily leveraged (2X) investment results, understand the risks
associated with the use of leverage and are willing to monitor their portfolios frequently. The Fund is not intended to
be used by, and is not appropriate for, investors who do not intend to actively monitor and manage their portfolios. For periods longer than a single day, the Fund will lose
money if LLY’s performance is flat, and it is possible that the Fund will lose money even if LLY’s performance increases over a period longer than a single day. An investor could lose the full principal value of his/her investment within a single
day if LLY loses more than 50% in one day.
Investment Objective
The Fund seeks daily investment results, before fees and expenses, of 200% of the daily
performance of LLY. The Fund does not seek to achieve
its stated investment objective for a period of time different than a trading day.
Fees and Expenses of the Fund
This table describes the fees and expenses that you may pay if you buy, hold, and sell
shares of the Fund (“Shares”). You may pay other fees, such as brokerage commissions and other fees to financial intermediaries, which are not reflected
in the table and example below.
Annual Fund Operating Expenses (expenses that you pay each year as a percentage of the value of your investment)
| Management Fees |
0.75% |
| Distribution and/or Service (12b-1) Fees |
0.00% |
| Other Expenses of the Fund(1)
|
0.22% |
| Acquired Fund Fees and Expenses(1)
|
0.02% |
| Total Annual Fund Operating Expenses |
0.99% |
| Expense Cap/Reimbursement(2)
|
-0.02% |
| Total Annual Fund Operating Expenses After Expense Cap/Reimbursement |
0.97% |
(1)
Estimated for the Fund's current fiscal year.
(2)
Rafferty Asset Management, LLC (“Rafferty” or the “Adviser”) has entered into an Operating
Expense Limitation Agreement with the Fund. Under the Operating Expense Limitation Agreement, Rafferty has
contractually agreed to waive all or a portion of its management fee and/or reimburse the Fund for Other Expenses through September 1, 2026, to the extent that the
Fund’s Total Annual Fund Operating Expenses exceed 0.95% of the Fund’s average daily net assets
(excluding, as applicable, among other expenses, taxes, swap financing and related costs, acquired fund
fees and expenses, dividends or interest on short positions, other interest expenses, brokerage commissions
and extraordinary expenses).
Any expense waiver or reimbursement is subject to recoupment by the Adviser within the three years after the expense was waived/reimbursed only
if Total Annual Fund Operating Expenses fall below the lesser of this percentage limitation and any percentage limitation in place at the time the expense was waived/reimbursed. This agreement
may be terminated or revised at any time with the consent of the Board of Trustees.
Example - This example is intended to help you
compare the cost of investing in the Fund with the cost of investing in
other mutual funds. The example assumes that you invest $10,000 in the Fund for the time periods indicated and then redeem all of your shares at the end of those periods. The example also assumes that
your investment has a 5% return each year and that the Fund’s operating expenses remain the same. Although your actual costs may be higher or lower, based on these assumptions your costs
would be:
| 1 Year |
3 Years |
| $99 |
$313 |
Portfolio Turnover
The Fund pays transaction costs, such as commissions, when it buys and sells securities
(or “turns over” its portfolio). A higher portfolio turnover rate may indicate higher transaction costs and may result in higher taxes when Fund shares are held in a taxable account.
These costs, which are not reflected
Summary Prospectus
1
Direxion Daily LLY Bull 2X Shares
in Annual Fund Operating
Expenses or in the example, affect the Fund’s performance.
Principal Investment Strategy
The Fund, under normal circumstances, invests at least 80% of its net assets (plus any
borrowings for investment purposes) in the securities of LLY and financial instruments, such as swap agreements and options, that, in combination, provide 2X daily leveraged exposure
to LLY, consistent with the Fund’s investment objective. The financial instrument in which the Fund most commonly invests is swap agreements which are intended to produce economically
leveraged investment results.
Eli Lilly and Company is a global pharmaceutical company dedicated to discovering,
developing, manufacturing, and marketing innovative medicines in various therapeutic areas, including neuroscience, endocrinology, oncology, cardiovascular diseases, and
immunology. Its portfolio encompasses a wide range of prescription drugs, biologics, and animal health products. LLY is registered under the Securities Exchange Act of 1934,
as amended (the “Exchange Act”). Information provided to or filed with the Securities and Exchange Commission by Eli Lilly and Company pursuant to the Exchange Act can be
located by reference to the Securities and Exchange Commission file number 001-06351 through the Securities and Exchange Commission’s website at www.sec.gov. In
addition, information regarding Eli Lilly and Company may be obtained from other sources including, but not limited to, press releases, newspaper articles and other publicly disseminated
documents. As of December 31, 2024, LLY is assigned to the healthcare sector and
pharmaceutical industry.
The Fund will enter
into one or more swap agreements with major global financial institutions whereby the Fund and the global financial institution will agree to exchange the return earned on an
investment by the Fund in LLY that is equal, on a daily basis, to 200% of the value of the Fund's net assets. The Adviser attempts to consistently apply leverage to obtain LLY exposure
for the Fund equal to 200% of the value of its net assets and expects to rebalance the Fund’s holdings daily to maintain such exposure. As a result of its investment strategies, the
Fund will be concentrated in the healthcare sector and the pharmaceutical industry (i.e., hold
25% or more of its total assets in investments that provide leveraged
exposure in the healthcare sector and the pharmaceutical industry).
The Fund will attempt to achieve its investment objective
without regard to overall market movement or the increase or decrease of
the value of LLY. At the close of the markets each trading day, the Adviser rebalances the Fund’s portfolio so that its exposure to LLY is consistent with the Fund’s investment objective.
The impact of LLY’s price movements during the day will affect whether the Fund’s portfolio needs to be rebalanced. For example, if the price of LLY has risen on a given day, net assets
of the Fund should rise, meaning that the Fund’s exposure will need to be increased. Conversely, if the price of LLY has fallen on a given day, net assets of the Fund should fall,
meaning the Fund’s exposure will need to be reduced. This daily rebalancing typically results in high portfolio turnover. On a day-to-day basis, the Fund is expected
to hold money market funds,
deposit accounts with institutions with high quality (investment grade) credit ratings, and/or short-term debt instruments that have terms-to-maturity of less than 397 days and
exhibit high quality (investment grade) credit profiles, including U.S. government securities and repurchase agreements. The Fund may lend securities representing up to
one-third of the value of the Fund’s total assets (including the value of the collateral received).
Generally, the Fund pursues its investment objective regardless of market conditions and
does not generally take defensive positions. If the Fund’s underlying security moves more than 50% on a given trading day in a direction adverse to the Fund, the Fund’s
investors would lose all of their money. The Adviser will attempt to position the Fund’s portfolio to ensure that the Fund does not gain or lose more than 90% of its net asset value on a
given trading day. As a consequence, the Fund’s portfolio should not be responsive to underlying security movements beyond 45% on a given trading day, whether that
movement is favorable or adverse to the Fund. Taking a temporary defensive position may
result in the Fund not achieving its investment objective.
The terms “daily,” “day,” and “trading day,” refer to the period from the close of the markets on one trading day to the close of the markets on
the next trading day. The Fund is “non-diversified,” under the Investment Company Act of 1940, as amended. Additionally, the Fund’s investment objective is not a
fundamental policy and may be changed by the Fund’s Board of Trustees without shareholder approval.
The Fund has derived all disclosures contained in
this document regarding Eli Lilly and Company from the publicly available documents described above. Neither the Fund,
the Trust, the Adviser nor any affiliate has participated in the preparation of such documents. Neither the Fund, the
Trust, the Adviser nor any affiliate makes any representation that such publicly available documents or any other publicly available information regarding Eli Lilly and Company is
accurate or complete. Furthermore, the Fund cannot give any assurance that all events occurring prior to the date of the prospectus (including events that would affect the accuracy or completeness of the publicly available documents described above) that would affect the trading price of
LLY have been publicly disclosed. Subsequent disclosure of any such events or the disclosure of, or failure to disclose, material future events concerning Eli Lilly and Company
could affect the value of the Fund’s investments with respect to LLY and therefore the value of the Fund.
Because of daily rebalancing and the compounding of
each day’s return over time, the return of the Fund for periods longer than a single day will be the result of each day’s returns compounded over the period, which will very likely differ from 200% of the return of the underlying security over the same period. The Fund will lose money if the
underlying security performance is flat over time, and as a result of daily rebalancing, the underlying security’s volatility and the effects of compounding, it is even possible that
the Fund will lose money over time while the underlying security’s performance increases over a period longer than a
single day.
Summary Prospectus
2
Direxion Daily LLY Bull 2X Shares
Principal Investment Risks
An investment in the Fund entails risk. The Fund may not achieve its leveraged investment objective and there is a risk that you could lose all of your money invested in the Fund. The Fund is not a complete investment program. In addition, the Fund presents risks not traditionally
associated with other mutual funds and ETFs. It is important that investors
closely review all of the risks listed below and understand them before making an
investment in the Fund.
Effects of Compounding and Market Volatility Risk — The Fund’s performance for periods greater
than a trading day will be the result of each day's returns compounded over
the period, which is likely to differ from 200% of LLY’s performance, before fees and expenses. Compounding has a significant impact on funds that are leveraged and that rebalance daily. The impact of
compounding becomes more pronounced as volatility and holding periods increase and will impact each shareholder differently depending on the period of time an investment
in the Fund is held and the volatility of LLY during the shareholder’s holding period.
Fund performance for periods greater than one single day can be estimated given any set
of assumptions for the following factors: a) volatility; b) performance; c) period of time; d) financing rates associated with leveraged exposure; e) other Fund expenses;
and f) dividends or interest paid with respect to securities of LLY. The chart below provides examples of how volatility and its return could affect the Fund’s performance. The
chart shows estimated Fund returns for a number of combinations of volatility and performance over a one-year period. Actual Fund returns are expected to vary from these estimates.
Performance shown in the chart assumes that: (i) no dividends were paid with respect to the securities; (ii) there were no Fund expenses; and (iii) borrowing/lending rates
(to obtain leveraged exposure) of 0%. If Fund expenses and/or actual borrowing/lending rates were reflected, the estimated returns would be different than those shown. Particularly
during periods of higher volatility, compounding will cause results for periods longer than a trading day to vary from 200% of the performance of LLY.
As shown in the chart below, the Fund would be expected to lose 6.1% if LLY provided no
return over a one year period during which LLY experienced annualized volatility of 25%. At higher ranges of volatility, there is a chance of a significant loss of value in the
Fund, even if LLY’s return is flat. For instance,
if LLY’s annualized volatility is 100%, the Fund would be expected to lose 63.2% of its value, even if the cumulative return for the year was 0%. Areas shaded red (or dark gray) represent those scenarios where the Fund can be expected to return less
than 200% of the performance of LLY and those shaded green (or light gray) represent those scenarios where the Fund can be expected to return more than 200% of the
performance of LLY. The table below is not a representation of the Fund’s actual returns, which may be significantly better or worse than the returns shown below as a result of any of
the factors discussed above or in “Daily Correlation Risk” below.
| One
Year |
200%
One
Year |
Volatility Rate | ||||
| Return |
Return |
10% |
25% |
50% |
75% |
100% |
| -60% |
-120% |
-84.2% |
-85.0% |
-87.5% |
-90.9% |
-94.1% |
| -50% |
-100% |
-75.2% |
-76.5% |
-80.5% |
-85.8% |
-90.8% |
| -40% |
-80% |
-64.4% |
-66.2% |
-72.0% |
-79.5% |
-86.8% |
| -30% |
-60% |
-51.5% |
-54.0% |
-61.8% |
-72.1% |
-82.0% |
| -20% |
-40% |
-36.6% |
-39.9% |
-50.2% |
-63.5% |
-76.5% |
| -10% |
-20% |
-19.8% |
-23.9% |
-36.9% |
-53.8% |
-70.2% |
| 0% |
0% |
-1.0% |
-6.1% |
-22.1% |
-43.0% |
-63.2% |
| 10% |
20% |
19.8% |
13.7% |
-5.8% |
-31.1% |
-55.5% |
| 20% |
40% |
42.6% |
35.3% |
12.1% |
-18.0% |
-47.0% |
| 30% |
60% |
67.3% |
58.8% |
31.6% |
-3.7% |
-37.8% |
| 40% |
80% |
94.0% |
84.1% |
52.6% |
11.7% |
-27.9% |
| 50% |
100% |
122.8% |
111.4% |
75.2% |
28.2% |
-17.2% |
| 60% |
120% |
153.5% |
140.5% |
99.4% |
45.9% |
-5.8% |
LLY’s annualized historical volatility rate for the five year period ended
December 31, 2024 was 32.56%. LLY’s highest volatility rate for any one calendar year during the five year period was 41.85% and volatility for a shorter period of time may have been
substantially higher. LLY’s annualized performance for the five-year period ended December 31, 2024 was 44.29%. Historical volatility and performance are not indications
of what LLY volatility and performance will be in the future.
For information regarding the effects of volatility
and performance on the long-term performance of the Fund, see “Additional Information Regarding Investment
Techniques and Policies” in the Fund’s statutory prospectus, and "Leverage - Special Note Regarding the Correlation
Risks of the Funds" in the Fund’s Statement of Additional Information under “Investment Policies and Techniques.”
Leverage Risk — The Fund obtains investment exposure
in excess of its net assets by utilizing leverage and may lose more money
in market conditions that are adverse to its investment objective than a fund that does not utilize leverage. An investment in the Fund typically results in the magnification of a decline
in the daily performance of LLY resulting in a larger loss being incurred than if there was no leverage utilized. This means that an investment in the Fund will be reduced by an
amount equal to 2% for every 1% daily decline in LLY, not including the costs of financing leverage and other operating expenses, which would further reduce its value. The Fund
could lose an amount greater than its net assets in the event of a decline of more than 50% of LLY. This would result in a total loss of a shareholder’s investment in one
day even if LLY subsequently reverses all or a portion of its previous loss prior to the end of the day. A total loss of a shareholder’s investment in the Fund may occur in a single
day even if LLY does not lose all of its value. Leverage will also have the effect of magnifying any differences in the Fund’s correlation with LLY and may increase the volatility of the
Fund.
Under market circumstances that cause leverage to be expensive or unavailable, the Fund
may increase its transaction fee, change its investment objective, reduce its leverage or
close.
Derivatives Risk — Derivatives are financial instruments
that derive value from the underlying reference asset or
Summary Prospectus
3
Direxion Daily LLY Bull 2X Shares
assets, such as stocks,
bonds, or funds (including ETFs), interest rates or indexes. Investing in derivatives may be considered aggressive and may expose the Fund to greater risks, and may result in larger losses or
smaller gains, than investing directly in the reference assets underlying those derivatives, which may prevent the Fund from achieving its investment objective.
The Fund’s investments in derivatives may pose risks in addition to, and greater
than, those associated with directly investing in securities or other investments, including risk related to the market, leverage, imperfect correlations with underlying investments or the
Fund’s other portfolio holdings, higher price volatility, lack of availability, counterparty, liquidity, valuation and legal restrictions. The performance of a derivative may not track the
performance of its reference asset for various reasons, including due to fees and other
costs associated with it.
Because derivatives often require only a limited initial investment, the use of derivatives may expose the Fund to losses in excess of the amount
initially invested. As a result, the value of an investment in the Fund may change quickly and without warning. If LLY has a dramatic intraday increase or decrease that causes a
material change in the Fund’s performance and/or net assets, the terms of a swap agreement between the Fund and its counterparty may permit the counterparty to immediately close
the swap agreement with the Fund. In that event, the Fund may not be able to enter into another swap agreement or invest in other derivatives to achieve its investment
objective. This may occur even if LLY reverses all or a portion of its intraday movement by
the end of the day.
Upon entering into certain derivatives contracts, such as swap agreements, and to maintain open positions in such agreements, the Fund may be
required to post collateral, the amount of which may vary. As such, the Fund may maintain cash balances, which may be significant, with service providers such as the
Fund’s custodian or its affiliates in segregated accounts. Maintaining larger cash and cash equivalent positions may also subject the Fund to additional risks, such as increased
credit risk with respect to the custodian bank holding the assets.
Counterparty Risk — If a counterparty is unwilling or unable
to make timely payments to meet its contractual obligations or fails to
return holdings that are subject to the agreement with the counterparty, the Fund will lose money and/or not be able to meet its daily leveraged investment objective.
Because the Fund may enter into swap agreements with a limited number of counterparties, this increases the Fund’s exposure to
counterparty credit risk. Further, there is a risk that no suitable counterparties will be willing to enter into, or continue to enter into, transactions with the Fund and, as a result, the Fund may not
be able to achieve its leveraged investment objective or rebalance properly, which may result in significant losses to the Fund, or the Fund may decide to change its leveraged
investment objective. The risk that no suitable counterparties will enter into or continue to provide swap exposure to the Fund may be heightened when there is significant volatility
in the overall market or the reference asset.
Rebalancing Risk
— If for any reason the
Fund is unable to rebalance all or a part of its portfolio, or if all or a portion of the portfolio is rebalanced incorrectly, the Fund’s investment exposure may not
be consistent with its investment objective which may lead to greater losses or reduced gains. In these instances, the Fund may have investment exposure to LLY that is significantly
greater or significantly less than its stated investment objective. Additionally, the Fund may close to purchases and sales of Shares prior to the close of trading on the Nasdaq or
other national securities listing exchanges where Shares are listed and incur significant losses.
Intra-Day Investment Risk— The intra-day performance of Fund shares traded in the secondary market will be different from the performance of
the Fund when measured from the close of the market on a given trading day until the close of the market on the subsequent trading day. An investor that purchases shares
intra-day may experience performance that is greater than, or less than, the Fund’s stated investment objective.
If there is a significant intra-day market event and/or the securities experience a significant change in value, the Fund may not meet its
investment objective, be unable to rebalance its portfolio appropriately, or may experience significant premiums or discounts, or widened bid-ask spreads.
Daily Correlation Risk - There is no guarantee that the Fund will achieve a high degree of correlation to LLY and therefore
achieve its daily leveraged investment objective. The Fund’s exposure
to LLY is impacted by LLY’s movement. Because of this, it is unlikely that the Fund will be perfectly exposed to LLY at the end of each day. The possibility of the Fund being materially over- or
under-exposed to LLY increases on days when LLY is volatile near the close of the trading day. Market disruptions, regulatory restrictions and high volatility will also adversely
affect the Fund’s ability to adjust exposure to the required levels.
The Fund may have difficulty achieving its
daily leveraged investment objective for many reasons, including fees,
expenses, transaction costs, financing costs related to the use of
derivatives, accounting standards and their application to income items, disruptions, illiquid or high volatility in the markets for the securities or financial instruments in which the Fund invests, early
and unanticipated closings of the markets on which the holdings of the Fund trade, resulting in the inability of the Fund to execute intended portfolio transactions,
regulatory and tax considerations, which may cause the Fund to hold (or not to hold) LLY. The Fund may take or refrain from taking positions in order to improve tax efficiency,
comply with regulatory restrictions, or for other reasons, each of which may negatively affect the Fund’s desired correlation with LLY.
The derivative instruments or other investments the Fund utilizes to obtain exposure may not provide the expected correlation to the LLY,
resulting in the Fund not performing as expected. The Fund may be subject to large movements of assets into and out of the Fund, potentially resulting in the Fund being over- or
under-exposed to LLY. Any of these factors could decrease the correlation between the performance of the Fund and LLY and may hinder the Fund’s
Summary Prospectus
4
Direxion Daily LLY Bull 2X Shares
ability to meet its daily
leveraged investment objective on or around that day.
Market Risk — The Fund’s investments are subject
to changes in general economic conditions, general market fluctuations and
the risks inherent in investment in securities markets. Investment markets can be volatile and prices of investments can change substantially due to various factors including, but not limited to, economic
growth or recession, changes in interest rates, changes in the actual or perceived creditworthiness of issuers, general market liquidity, exchange trading suspensions and
closures, geopolitical events, tariffs, trade wars, natural disasters, and public health risks. Interest rates and inflation rates may change frequently and drastically due to various factors
and the Fund’s investments may be adversely impacted.
The economic, fiscal, monetary and foreign policies of the U.S. government, including the imposition of tariffs, changes to its federal agencies
and changes to regulatory policies, will impact the U.S. economy and could lead to increased market volatility and may adversely impact the overall market and individual securities,
including the various counterparties utilized by the Fund.
Non-Affiliation Risk — Eli Lilly and Company is not
affiliated with the Trust, the Adviser or any affiliates thereof and is not
involved with this offering in any way, and has no obligation to consider the Fund in taking any corporate actions that might affect the value of the Fund. The Trust, the Fund and any affiliate
are not responsible for the performance of LLY and make no representation as to the performance of LLY. Investing in the Fund is not equivalent to investing in LLY. Fund
shareholders will not have voting rights or rights to receive dividends or other distributions or any other rights with respect to LLY.
Eli Lilly and Company Investing Risk — Issuer-specific attributes may cause an investment held by the Fund to be more volatile than the market
generally. The value of an individual security or particular type of security may be more volatile than the market as a whole and may perform differently from the value of
the market as a whole. As of the date of this prospectus, in addition to the risks associated with pharmaceutical companies, Eli Lilly and Company faces risks associated with: costly
and uncertain research and development of its products; maintaining intellectual property protections; intense competition from multinational pharmaceutical companies,
biotechnology companies, and lower-cost generic and biosimilar manufacturers; increasing government price controls and other public and private restrictions on pricing,
reimbursement, and access for its drugs; the development of safety or efficacy concerns; limited product lines and consolidated supply chain entities; cybersecurity breaches or
violations of data protection laws; manufacturing, quality, or supply chain difficulties, disruptions, or shortages that cause product supply problems; reliance on third-party relationships
and outsourcing arrangements; the use of artificial intelligence or other emerging technologies; risks of doing business internationally; and government regulation and
litigation.
Security Volatility Risk — The performance of the Fund is designed to correlate to the leveraged performance of
LLY. Significant short-term price movements in LLY could adversely impact the performance of both LLY and the Fund, increase the Fund’s
bid-ask spread and adversely impact the Fund’s ability to achieve its investment objective. In addition, the net asset value of the Fund over short-term periods may be more volatile than other
investment options due to the volatility of LLY.
Concentration Risk — The Fund will be concentrated in
a particular security, LLY, and therefore, a particular industry and will
have more than 25% of its total assets in investments that provide leveraged exposure to the healthcare sector and the pharmaceutical industry (the risks of which are described below), the same
industry and/or sector to which LLY is assigned. Since the Fund is concentrated in a particular security and therefore industry and/or sector, it presents more risks than a portfolio
broadly diversified over several industries. A portfolio invested in multiple securities and industries typically presents less risk than a portfolio concentrated in one security or
industry because market changes that adversely impact one security or industry may benefit others. Because the Fund only invests in one security and industry, it should be
expected to decrease from any market movements that adversely impact LLY and/or healthcare
sector and the pharmaceutical industry.
Healthcare Sector Risk — The profitability of companies in the healthcare sector may be affected by extensive, costly and uncertain government
regulation, restrictions on government reimbursement for medical expenses, rising costs of medical products and services, pricing pressure (including price discounting),
changes in the demand for medical products and services, an increased emphasis on outpatient services, limited product lines, industry innovation and/or consolidation,
changes in technologies and other market developments. Many healthcare companies are heavily dependent on obtaining and defending patents, which may be time consuming and costly.
The expiration of patents may adversely affect the profitability of these companies. Many healthcare companies are subject to extensive litigation based on product liability
and similar claims. In addition, their products can become obsolete due to industry innovation, changes in technologies or other market developments. Many new products in
the health care sector require significant research and development and may be subject to regulatory approvals, all of which may be time consuming and costly with no
guarantee that any product will come to market.
Pharmaceutical Industry
Risk - The profitability of pharmaceutical companies is highly dependent on the development, procurement and marketing of drugs and the development, protection and
exploitation of intellectual property rights and other proprietary information. These companies may be significantly affected by the expiration of patents or the loss of, or
the inability to enforce, intellectual property rights. Research and other costs associated with developing or procuring new drugs and the related intellectual property rights can be
significant and may not be successful. Many pharmaceutical companies face intense competition from new products and less costly generic products, which may make it
difficult to raise the prices of
Summary Prospectus
5
Direxion Daily LLY Bull 2X Shares
their products and may
result in price discounting. In addition, the process for obtaining regulatory approval from the U.S. Food and Drug Administration or other governmental regulatory authorities is long and
costly and there is no assurance that the necessary approvals will be obtained or
maintained by these companies.
These companies may be adversely affected by government regulation and changes in reimbursement rates from third-party payors, such as Medicare,
Medicaid and other government-sponsored programs, private health insurance
plans and health maintenance organizations. The profitability of these
companies may be dependent on a relatively limited number of products. Additionally, their products can become obsolete due to industry innovation, changes in technologies or other market developments.
Money Market Instrument Risk — The Fund may use a variety of money market instruments for cash management purposes, including money market
funds, depositary accounts and repurchase agreements. Money market funds may be subject to credit risk with respect to the debt instruments in which they invest.
Depository accounts may be subject to credit risk with respect to the financial institution in which the depository account is held. Money market instruments may lose money.
Large-Capitalization Company Risk
— Large-capitalization companies typically have significant financial resources, extensive product lines and
broad markets for their goods and/or services. However, they may be less able to adapt to changing market conditions or to respond quickly to competitive challenges or to
changes in business, product, financial, or market conditions and may not be able to maintain growth at rates that may be achieved by well-managed smaller and mid-size
companies, which may affect the companies’ returns.
Liquidity Risk — Holdings of the Fund may be difficult
to buy or sell or may be illiquid, particularly during times of market
turmoil. There is no assurance that a security or derivative instrument that is deemed liquid when purchased will continue to be liquid. Illiquid securities may be difficult to value, especially in
changing or volatile markets. If the Fund is forced to buy or sell an illiquid security or derivative instrument at an unfavorable time or price, the Fund may be adversely impacted. Certain
market conditions or restrictions may prevent the Fund from limiting losses,
realizing gains or achieving its investment objective. In certain market
conditions the Fund may be one of many market participants that is attempting to transact in the underlying security. Under such circumstances, the market for the underlying security may lack
sufficient liquidity for all market participants' trades. Therefore, the Fund may have more difficulty transacting in the securities or financial instruments and the Fund's
transactions could exacerbate illiquidity and price volatility.
To the extent that the instruments utilized by the Fund are thinly traded or have a limited market, the Fund may be unable to meet its investment
objective due to a lack of available investments or counterparties. During such periods, the Fund’s ability to issue additional Creation Units may be adversely affected.
As a result, the Fund’s shares could
trade at a premium or discount to their net asset value and/or the bid-ask spread of the
Fund’s shares could widen. Under such circumstances, the Fund may be unable to rebalance its exposure properly which may result in significantly more or less exposure and losses
to the Fund. In such an instance, the Fund may increase its transaction fee, change its
investment objective, reduce its exposure or close.
Early Close/Trading Halt Risk — An exchange or market may close or issue trading halts on specific securities or financial instruments. Under
such circumstances, the Fund may be unable to buy or sell certain portfolio securities or financial instruments, may be unable to rebalance its portfolio, may be unable to accurately price
its investments, and may disrupt the Fund’s creation/redemption process which means the Fund may be unable to achieve its investment objective and it may incur substantial losses.
Equity Securities Risk — Publicly issued equity securities, including common stocks, are subject to market risks that may cause their prices to
fluctuate over time. Fluctuations in the value of equity securities in which the Fund invests, and/or has exposure to, will cause the net asset value of the Fund to fluctuate.
Cash Transaction Risk— Unlike most ETFs, the Fund currently
intends to effect creations and redemptions principally for cash, rather
than principally for in-kind securities, because of the nature of the financial instruments held by the Fund. As a result, the Fund is not expected to be tax efficient and will incur brokerage and
financing costs related to buying and selling securities and/or obtaining short derivative exposure to achieve its investment objective thus incurring additional expenses than
other funds that primarily effect creations and redemptions in kind. To the extent that such costs are not offset by transaction fees paid by an authorized participant, the Fund may
bear such costs, which will decrease the Fund’s net asset value.
High Portfolio Turnover Risk— Daily rebalancing of the Fund’s holdings pursuant to its daily investment objective causes a much greater
number of portfolio transactions when compared to most ETFs. Additionally, active secondary market trading of the Shares could cause more frequent creation and redemption activities,
which would increase the number of portfolio transactions. High levels of portfolio transactions may cause higher transaction costs because of increased broker commissions resulting
from such transactions and increased taxable capital gains. The Fund calculates portfolio turnover without including the short-term cash instruments or derivative transactions
that comprise most of the Fund’s trading. As such, if the Fund’s extensive use of derivative instruments were reflected, the calculated portfolio turnover rate would be significantly
higher.
Tax
Risk — In order to qualify
for the special tax treatment accorded a regulated investment company (“RIC”) and its shareholders, the Fund must derive at least 90% of its gross income for each taxable
year from “qualifying income,” meet certain asset diversification tests at the end of each taxable quarter, and meet annual distribution requirements. The Fund’s pursuit of
its investment strategy will potentially be limited by the Fund’s intention to qualify for such treatment and could adversely affect the Fund’s ability to so qualify.
Summary Prospectus
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Direxion Daily LLY Bull 2X Shares
The Fund may make certain
investments, the treatment of which for these purposes is unclear. If, in any year, the Fund were to fail to qualify for the special tax treatment accorded a RIC and its
shareholders, and were ineligible to or were not able to cure such failure, the Fund would be taxed in the same manner as an ordinary corporation subject to U.S. federal income tax on all its
income at the fund level. The resulting taxes could substantially reduce the Fund’s net assets and the amount of income available for distribution. In addition, in order to
requalify for taxation as a RIC, the Fund could be required to recognize unrealized gains, pay substantial taxes and interest, and make certain distributions. Please see the section
entitled “Dividends, Other Distributions and Taxes” in the Statement of Additional Information for more information.
Non-Diversification Risk — The Fund has the ability to invest a relatively high percentage of its assets in the securities of a small number of
issuers or in financial instruments with a single counterparty or a few counterparties. This may increase the Fund’s volatility and increase the risk that the Fund’s
performance will decline based on the performance of a single issuer, the credit of a single counterparty, and/or a single economic, political or regulatory event.
Securities Lending Risk— Securities lending involves the
risk that the Fund may lose money because the borrower of the loaned
securities fails to return the securities in a timely manner or at all. The Fund could also lose money in the event of a decline in the value of collateral provided for loaned securities, a
decline in the value of any investments made with cash collateral, or a “gap” between the return on cash collateral reinvestments and any fees the Fund has agreed to pay a borrower.
These events could also trigger adverse tax consequences for the Fund.
Special Risks of Exchange-Traded Funds
Authorized Participants
Concentration Risk. The Fund may have a limited number of financial institutions that may
act as Authorized Participants. To the extent that those Authorized
Participants exit the business or are unable to process creation and/or redemption orders, Shares may trade at larger bid-ask spreads and/or premiums or discounts to net asset value. Authorized
Participant concentration risk may be heightened for a fund that invests in non-U.S. securities or other securities or instruments that have lower trading volumes.
Absence of Active Market
Risk. Although Shares are listed for trading on a stock exchange, there is no assurance
that an active trading market for them will develop or be maintained. In
the absence of an active trading market for Shares, they will likely trade with a wider bid/ask spread and at a greater premium or discount to net asset value.
Market Price Variance Risk. Fund Shares can be bought and sold in the secondary market at market prices, which may be higher or lower than the net
asset value of the Fund. When Shares trade at a price greater than net asset value, they are said to trade at a “premium.” When they trade at a price less than
net asset value, they are said to trade at a “discount.” The market price of Shares fluctuates based on changes in the value of the Fund’s holdings, the supply
and demand for Shares and
other market factors. The market price of Shares may vary significantly from the Fund’s net asset value especially during times of market volatility or stress. Further, to the
extent that exchange specialists, market makers, Authorized Participants, or other market participants are unavailable or unable to trade the Fund’s Shares and/or create or redeem
Creation Units premiums or discounts may increase.
Trading Cost Risk. When buying or selling Shares in the secondary market, a buyer may incur brokerage commission or other charges. In addition, a buyer may incur the cost of the “spread”
also known as the bid-ask spread, which is the difference between what investors are willing to pay for Fund shares (the “bid” price) and the price at which they are willing to
sell Fund shares (the “ask” price). The bid-ask spread varies over time based on, among other things, trading volume, market liquidity and market volatility. Because of the costs inherent in
buying or selling Fund shares, frequent trading may detract significantly from investment
results.
Exchange Trading Risk. Shares are listed for trading on the Nasdaq. They also may be listed or traded on other U.S. and non-U.S. stock exchanges and
may trade on electronic communication networks. Trading in Shares on their listing exchange may be halted due to market conditions or for reasons that, in the view of the
exchange, make trading in Shares inadvisable, including if they fail to meet the listing requirements of the exchange. Under certain circumstances, Shares may even be delisted.
Trading halts of Shares should be expected to disrupt the Fund’s creation/redemption process and may temporarily prevent investors from buying and selling Shares. Like other listed
securities, Shares of the Fund may be sold short, and short positions in Shares may place
downward pressure on their market price.
Fund Performance
No prior investment performance is provided for the Fund because it had not commenced operations prior to the date of this Prospectus. Upon commencement of operations, updated performance will be available on the Fund’s website
at www.direxion.com/etfs?producttab=performance or by calling the Fund toll-free at (866)
476-7523.
Management
Investment Adviser. Rafferty Asset Management, LLC is the Fund’s investment adviser.
Portfolio Managers. The following members of Rafferty’s investment team are jointly and primarily responsible for the day-to-day management of the Fund:
| Portfolio Managers |
Years of Service
with the Fund |
Primary Title |
| Paul Brigandi |
Since Inception |
Portfolio Manager |
| Tony Ng |
Since Inception |
Portfolio Manager |
Purchase and Sale of Fund Shares
The Fund’s individual shares may only be purchased or sold in the secondary market
through a broker-dealer or other financial intermediaries at market price rather than at net asset value. The market price of Shares will fluctuate in response to changes in the
value of the Fund’s holdings
Summary Prospectus
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Direxion Daily LLY Bull 2X Shares
and supply and demand for
the Shares, which may result in shareholders purchasing or selling the Shares on the secondary market at a market price that is greater than net asset value (a premium) or
less than net asset value (a discount). A shareholder may incur costs attributable to the difference between the highest price a buyer is willing to pay for the Fund’s
Shares (bid) and the lowest price a seller is willing to accept for the Fund’s Shares (ask) when buying or selling Shares on the secondary market (the “bid-ask spread”) in addition
to brokerage commissions. The bid-ask spread may vary over time for Shares based on trading volume and market liquidity. Recent information regarding the Fund Shares such as net asset
value, market price, premiums and discounts and bid-ask spreads and related other information is available on the Fund’s website, www.direxion.com/etfs?producttab=performance.
The Fund’s shares are not individually redeemable by the
Fund. The Fund will issue and redeem Shares only to Authorized Participants
in exchange for cash or a deposit or delivery of a basket of assets (securities and/or cash) in large blocks, known as creation units, each of which is comprised of 25,000 Shares.
Tax Information
The Fund intends to make distributions that may be taxed as ordinary income or long-term
capital gains. Those distributions will be subject to federal income tax and may also be subject to state and local taxes, unless you are investing through a
tax-deferred arrangement, such as a 401(k) plan or an individual retirement account. Distributions or investments made through tax-deferred arrangements may be taxed later upon withdrawal.
Distributions by the Fund may be significantly higher than those of most other ETFs.
Payments to Broker-Dealers and Other Financial Intermediaries
If you purchase shares of the Fund through a broker-dealer or other financial intermediary (such as a bank or financial adviser), the Fund and/or
its Adviser may pay the intermediary for the sale of Fund shares and related services. These payments may create a conflict of interest by influencing the broker-dealer or other
financial intermediary and your salesperson to recommend the Fund over another investment. Ask your salesperson or visit your financial intermediary’s website for more
information.
Summary Prospectus
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Direxion Daily LLY Bull 2X Shares
SEC File Number: 811-22201