Registrant added a sentence to the end of the Crypto Industry Investing Risk that states the following: “The risks that may negatively impact the stock price of crypto industry companies may benefit the Fund due to its inverse investment objective.”
Tech 100 ETFs
6) Please include disclosure in each Fund’s Principal
Investment Strategy section that ties a company’s listing on the NASDAQ Stock Market to the Funds’ technology theme. The Staff notes that the
current disclosure suggests, without explanation, that a mere listing on the NASDAQ Stock Exchange implies exposure to technology companies.
Registrant notes that Registrant determined to change the name of each Tech
100 ETF to the Direxion Daily Transformative Tech 100 Bull 2X Shares and Direxion Daily Transformative Tech 100 Bear 2X Shares. Registrant added a sentence after the first
sentence of the Principal Investment Strategy section that states the following: “The Index represents those NASDAQ-listed companies that are using technology to transform their business.”
7) Please disclose the exclusion of finance companies from the Index appearing in the second paragraph of each Principal Investment Strategy section at the beginning thereof .
Registrant has moved this disclosure to the beginning of the Principal Investment Strategy section.
8) Each Fund’s Principal Investment Strategy states that:
The components of the Index and the percentages represented by various sectors in the Index may change over time. The Fund will concentrate its investment in a particular industry or group of industries (i.e., hold 25% or more of its total assets in [the stocks of/investments that provide inverse leveraged exposure to] a particular industry or group of industries) to approximately the same extent as the Index is so concentrated.
Please confirm the accuracy of this disclosure and, in doing so, consider whether the Funds will invest in industries other than technology-related industries.
Registrant confirms the accuracy of this disclosure and the Funds will invest
in sectors and industries other than technology-related industries, including the consumer discretionary, communication services, consumer staples, healthcare, and industrials
sectors.
All Funds
9) Please revise each Bull Fund’s “80%
test” in its Principal Investment Strategy section to clarify that each Fund will invest 80% of its net assets in certain securities and/or financial
instruments that provide 200% exposure to the performance of the relevant index.
Registrant will consider making such revisions to each Bull Fund’s 80% test in conjunction
with the Trust’s 2023 annual update.
10) Each Bull
Fund’s Principal Investment Strategy states:
The Fund, under normal circumstances, invests at least 80% of its net assets (plus borrowing for investment purposes) in financial instruments, such as swap agreements, securities of the Index, and exchange-traded funds ("ETFs") that track the Index and other financial instruments that provide daily leveraged exposure to the Index or to ETFs that track the Index.
Please clarify that the swap agreements, or other financial
instruments, that each Fund may invest in are tied to the relevant index.
Registrant respectfully declines to revise such disclosure as it believes the
statement accurately explains that the swap agreements or other financial instruments that each Fund may invest in are tied to the relevant Index.
11) Each Fund’s Principal Investment Strategy states
that the Fund “seeks to remain fully invested at all times, consistent with its stated [inverse leveraged] investment objective, but may not always have
investment exposure to all of the securities in the index…” and the Fund may have exposure to securities not included in the index. Please describe
the circumstances that would cause a Fund to deviate from the relevant index or invest in, or have inverse exposure to, securities not included in the index.
Registrant will consider making such revisions to this disclosure to describe the circumstances that would cause a Fund to deviate from the relevant index or invest in, or have inverse exposure to, securities not included in the index in conjunction with the Trust’s 2023 annual update.
12) As required by Form N-1A, please bold the following sentence in the “Fees and Expenses of the Fund” disclosure: “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.”
Registrant has bolded the noted disclosure for all Funds.
13)Please supplementally provide a list of each index’s current constituents.
Registrant had provided the index constituents supplementally.
14)Please tailor the “Derivatives Risk” disclosure to the types of derivatives that each Fund will invest in. The Staff notes that each Principal Investment Strategy states that the Fund will invest “in financial instruments, including swap agreements,…” but does not explicitly name any other types of derivatives.
Registrant will consider making revisions to the “Derivatives Risk” disclosure in
conjunction with the Trust’s 2023 annual update.