| Summary Prospectus |
February 28, 2024 |
| Direxion Shares ETF Trust |
|
Direxion Daily Homebuilders & Supplies Bull 3X Shares
| Ticker: NAIL |
| Listed on: NYSE Arca, Inc. |
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, 2024, are incorporated by reference
into this Summary Prospectus.
Important Information Regarding the Fund
The Direxion Daily Homebuilders & Supplies Bull 3X Shares (the “Fund”) seeks daily leveraged (3X) 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
Dow Jones U.S. Select Home Construction Index (the "Index"). The return for investors that invest for
periods longer or shorter than a trading day should not be expected to be 300% of the performance of the
Index 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 300% of the return of the
Index for that period. Longer holding periods, higher volatility of the Index and leverage increase the
impact of compounding on an investor’s returns. During periods of higher Index volatility, the
volatility of the Index may affect the Fund’s return as much as, or more than, the return of the Index.
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 (3X) 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 the Index’s performance is flat, and it is possible that the Fund
will lose money even if the Index’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 the
Index loses more than 33% in one day.
Investment Objective
The Fund seeks daily investment results, before fees and expenses, of 300% of the daily performance of the Index. 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 |
0.18% |
| Acquired Fund Fees and Expenses(1)
|
0.04% |
| Total Annual Fund Operating Expenses |
0.97% |
(1)
"Acquired Fund Fees and Expenses" include fees and expenses incurred indirectly by the Fund as a result of investments in other investment companies, including investments in money
market funds. Because Acquired Fund Fees and Expenses are not borne directly by the Fund, they will not be
reflected in the expense information in the Fund's financial statements and the information presented in
the table will differ from that presented in the Fund's financial highlights included in the Fund's reports to shareholders.
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 |
5 Years |
10 Years |
| $99 |
$309 |
$536 |
$1,190 |
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 in Annual Fund Operating Expenses or in the example, affect the Fund’s
performance. During the most recent fiscal year, the Fund’s portfolio turnover rate was 108% of the average value of its portfolio. However, this portfolio turnover rate is calculated without regard to cash instruments or derivative transactions. If the Fund's extensive use of
derivatives was reflected, the Fund's portfolio turnover rate would be significantly higher.
Principal Investment Strategy
The Index measures U.S companies in the home construction sector that provide a wide range of products and services related to homebuilding, including home construction and
producers, sellers and suppliers of building materials,
Summary Prospectus
1
Direxion Daily Homebuilders & Supplies Bull 3X Shares
furnishings and fixtures
and also home improvement retailers. To be included in the Index, stocks must meet minimum market
capitalization and liquidity requirements and are subject to the following adjustments: 1) The weight of any individual company is capped at 22.5%; 2) If any company’s weight exceeds 22.5%, that company’s weight is
capped at 22.5% and all excess weight is proportionally redistributed to all uncapped companies within
the Index. If after this redistribution, any company breaches the 22.5% weight cap, the process is
repeated iteratively until no company breaches the 22.5% weight cap; 3) Then, the aggregate weight of the
companies in the Index with a weight greater than 4.5% is capped at 45%; and 4) companies classified as
Building Materials & Fixtures, Furnishings, and Home Improvement Retailers are, in aggregate, capped at 35% of the Index. The Index may include large-, mid- or small-capitalization companies. The Index is rebalanced quarterly.
As of December 29, 2023, the Index was comprised of 46 components with a median market capitalization
of $5.6 billion, total market capitalizations ranging from $810.7 million to $346.6 billion and were
primarily included in the consumer discretionary and industrials sectors, which include companies in the
homebuilding industry.
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 a particular industry or group of industries) to approximately the same extent as
the Index is so concentrated.
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, that, in combination, provide 3X daily leveraged
exposure to the Index, consistent with the Fund's investment objective. The financial instruments in
which the Fund most commonly invests are swap agreements and futures agreements which are intended to
produce economically leveraged investment results.
The Fund may invest in the securities of the Index, a representative sample of the securities in the Index that has aggregate characteristics similar to those of the Index,
an ETF that tracks the Index or a substantially similar index, and may utilize derivatives, such as swaps
or futures on the Index or on an ETF that tracks the same Index or a substantially similar index, that
provide leveraged exposure to the above.
The
Fund seeks to remain fully invested at all times, consistent with its stated investment objective, but may not always have investment exposure to all of the securities in the Index, or its weighting of investment exposure to securities
or industries may be different from that of the Index. In addition, the Fund may invest directly or
indirectly in securities not included in the Index. In all cases, the investments would be designed to
help the Fund track the Index.
The Fund will
attempt to achieve its investment objective without regard to overall market movement or the increase
or decrease of the value of
the securities in the Index. At the close of the markets each trading day, Rafferty rebalances the
Fund’s portfolio so that its exposure to the Index is consistent with the Fund’s investment objective. The impact of the Index’s movements during the day will affect whether the Fund’s portfolio needs to be
re-positioned. For example, if the Index 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 Index has fallen on a given day, net assets of the Fund should fall, meaning the Fund’s exposure will need to be reduced. This
re-positioning strategy typically results in high portfolio turnover. On a day-to-day basis, the Fund is
expected to hold ETFs and money market funds, deposit accounts with institutions with high quality credit
ratings (i.e. investment grade or higher), and/or short-term debt instruments that have terms-to-maturity of less than 397 days and exhibit high quality 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 (excluding the value of the
collateral received).
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,” meaning that a
relatively high percentage of its assets may be invested in a limited number of issuers of securities.
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.
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 300% of the
return of the Index over the same period. The Fund will lose money if the Index performance is flat over time, and as a result of daily rebalancing, the Index’s
volatility and the effects of compounding, it is even possible that the Fund will lose money over time while the Index’s performance increases over a period longer than a single
day.
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
300% of the Index’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
Summary Prospectus
2
Direxion Daily Homebuilders & Supplies Bull 3X Shares
the volatility of the Index
during the shareholder’s holding period of an investment in the Fund.
Fund performance for periods greater than one single
day can be estimated given any set of assumptions for the following factors: a) Index volatility; b)
Index 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 the Index. The chart below
provides examples of how Index volatility and its return could affect the Fund’s performance. The
chart shows estimated Fund returns for a number of combinations of Index volatility and Index performance
over a one-year period. Performance shown in the chart assumes that: (i) no dividends were paid with
respect to the securities included in the Index; (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 Index
volatility, compounding will cause results for periods longer than a trading day to vary from 300% of the
performance of the Index.
As shown in the chart below, the Fund would be expected to lose 17.1% if the Index provided no return over a one year period during which the Index experienced annualized
volatility of 25%. At higher ranges of volatility, there is a chance of a near complete loss of value in
the Fund, even if the Index’s return is flat. For instance, if the Index’s
annualized volatility is 100%, the Fund would be expected to lose 95%
of its value, even if the cumulative Index 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 300% of the
performance of the Index and those shaded green (or light gray) represent those scenarios where the Fund
can be expected to return more than 300% of the performance of the Index. 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 Index
Correlation Risk” below. The volatility of exchange traded securities or instruments that reflect the value of the Index may differ from the volatility of the Index.
| One
Year
Index |
300%
One
Year
Index |
Volatility Rate | ||||
| Return |
Return |
10% |
25% |
50% |
75% |
100% |
| -60% |
-180% |
-93.8% |
-94.7% |
-97.0% |
-98.8% |
-99.7% |
| -50% |
-150% |
-87.9% |
-89.6% |
-94.1% |
-97.7% |
-99.4% |
| -40% |
-120% |
-79.0% |
-82.1% |
-89.8% |
-96.0% |
-98.9% |
| -30% |
-90% |
-66.7% |
-71.6% |
-83.8% |
-93.7% |
-98.3% |
| -20% |
-60% |
-50.3% |
-57.6% |
-75.8% |
-90.5% |
-97.5% |
| -10% |
-30% |
-29.3% |
-39.6% |
-65.6% |
-86.5% |
-96.4% |
| 0% |
0% |
-3.0% |
-17.1% |
-52.8% |
-81.5% |
-95.0% |
| 10% |
30% |
29.2% |
10.3% |
-37.1% |
-75.4% |
-93.4% |
| 20% |
60% |
67.7% |
43.3% |
-18.4% |
-68.0% |
-91.4% |
| 30% |
90% |
113.2% |
82.1% |
3.8% |
-59.4% |
-89.1% |
| 40% |
120% |
166.3% |
127.5% |
29.6% |
-49.2% |
-86.3% |
| 50% |
150% |
227.5% |
179.8% |
59.4% |
-37.6% |
-83.2% |
| 60% |
180% |
297.5% |
239.6% |
93.5% |
-24.2% |
-79.6% |
The Index’s annualized historical volatility rate for the five year period ended December 31, 2023 was 34.57%. The Index’s highest volatility rate for any one calendar year
during the five year period was 55.15% and volatility for a shorter period of time may have been
substantially higher. The Index’s annualized performance for the five-year period ended December
31, 2023 was 29.01%. Historical Index volatility and performance are not indications of what the Index
volatility and performance will be in the future. The volatility of ETFs or instruments that reflect the
value of the Index, such as swaps, may differ from the volatility of the Index.
For information regarding the effects of volatility and Index 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.
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
is exposed to the risk that a decline in the daily performance of the Index will be magnified. This means
that an investment in the Fund will be reduced by an amount equal to 3% for every 1% daily decline in the
Index, 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 an Index
decline of more than 33%. This would result in a total loss of a shareholder’s investment in one
day even if the Index subsequently moves in the opposite direction and eliminates all or a portion of its
earlier daily change. A total loss may occur in a single day even if the Index does not lose all of its value. Leverage will also have the effect of magnifying any differences in the Fund’s correlation with the Index 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 by, for example,
seeking to track an alternative index, reduce its leverage or close.
Derivatives Risk — Derivatives are financial instruments
that derive value from the underlying reference asset or 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
Summary Prospectus
3
Direxion Daily Homebuilders & Supplies Bull 3X Shares
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. A swap on an ETF
may not closely track the performance of the Index due to costs associated with trading ETFs, such as an
ETF’s premium or discount and the difference between its market price and its net asset value. If
the Index has a dramatic intraday increase or decrease that causes a material change in the Fund’s 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 the Index
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 and the risk that a counterparty may be unable or
unwilling to honor its obligations.
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 resulting in the Fund losing money or not being able to meet its
daily leveraged investment objective.
In addition, 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 increased when
there is significant market volatility.
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 the Index 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 NYSE Arca
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 of the Index 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 Index Correlation
Risk— A number of factors
may affect the Fund’s ability to achieve a high degree of correlation with the Index and therefore
achieve its daily leveraged investment objective. The Fund’s exposure to the Index is impacted by
the Index’s movement. Because of this, it is unlikely that the Fund will be perfectly exposed to the Index at the end of each day. The possibility of the Fund being materially over- or under-exposed to the Index increases
on days when the Index is volatile near the close of the trading day.
Market disruptions, regulatory restrictions, fees, expenses, transaction costs, financing costs related
to the use of derivatives, investments in ETFs, directly or indirectly, the Fund’s valuation
methodology differing from the Index’s valuation methodology, accounting standards and their
application to income items, disruptions, illiquidity or high volatility in the markets for the
securities or derivatives held by the Fund and regulatory and tax considerations, among other factors,
will also adversely affect the Fund’s ability to adjust exposure to meet its daily leveraged investment objective.
In addition, the Fund may not have investment exposure to all of the securities in the Index or its weighting of investment exposure to the securities may be different from
that of the Index. The Fund may also invest in or have exposure to securities that are not included in
the Index. The Fund may also be subject to large movements of assets into and out of the Fund,
potentially resulting in the Fund being over- or under-exposed to the Index. Activities surrounding
periodic Index reconstitutions and other Index rebalancing events may also hinder the Fund’s
ability to meet its daily leveraged investment objective.
Other Investment Companies (including ETFs)
Risk— The Fund may invest in, or obtain exposure to, another investment company, including an ETF or a money market fund (each, an “underlying fund”), to pursue its investment objective or manage cash. When investing in an
underlying fund, the Fund becomes a shareholder of that underlying fund and as a result, Fund
shareholders indirectly bear the Fund’s proportionate share of the fees and expenses of the
underlying fund, in addition to the fees and expenses of
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4
Direxion Daily Homebuilders & Supplies Bull 3X Shares
the Fund’s own
operations. If the underlying fund fails to achieve its investment objective or an ETF’s shares trade at a significant premium or discount, the Fund’s performance will likely be adversely affected. In addition, to the
extent that the Fund invests in, or has exposure to, an underlying fund that is an ETF, it will be
exposed to all of the risks associated with the ETF structure.
Shares of ETFs may trade at a discount or a premium to an ETF’s net asset value which may result in an ETF’s market price being more or less than the value of the
index that the ETF tracks especially during periods of market volatility or disruption. There may also be
additional trading costs due to an ETF’s bid-ask spread, and/or the underlying fund may suspend
sales of its shares due to market conditions that make it impracticable to conduct such transactions, any
of which may adversely affect the Fund.
Passive Investment and Index Performance Risk —
A third party (the “Index Provider”), who is unaffiliated with the Fund or
Adviser, maintains and exercises complete control over the Index. The Index Provider may delay or add a
rebalance date, which may adversely impact the performance of the Fund and its correlation to the Index.
There is no guarantee that the methodology used by the Index Provider to identify constituents for the
Index will achieve its intended result or positive performance. The Index relies on various sources of
information to assess the potential constituents of the Index, including information that may be based on
assumptions or estimates. There is no assurance that the sources of information are reliable, and the Adviser does not assess the due diligence conducted by the Index Provider with respect to the data it uses or the Index
construction and computation processes. There can be no guarantee that the methodology underlying the
Index or the daily calculation of the Index or its methodology will be free from error or that an error
will be identified and/or corrected, which may have an adverse impact on the Fund.
The Fund generally will not change its investment exposures,
including by buying or selling securities or instruments, in response to market conditions. For example,
the Fund generally will not sell an Index constituent due to a decline in its performance or based on
changes to the prospects of an Index constituent, unless that constituent is removed from the Index with
which the Fund seeks correlated performance.
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, 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.
Homebuilding Industry Risk - The
Fund’s assets will generally be concentrated in the homebuilding industry which means the Fund will
be more affected by the performance of the
homebuilding industry than a fund that is more diversified. The homebuilding industry includes home
builders (including manufacturers of mobile and prefabricated homes), as well as producers, sellers and
suppliers of building materials, furnishings and fixtures. Companies within the industry may be
significantly affected by the national, regional and local real estate markets, changes in government spending, zoning laws, interest rates and commodity prices. This industry is also sensitive to interest rate fluctuations that can
cause changes in the availability of mortgage capital and directly impact the purchasing power of
potential homebuyers. Certain segments of the homebuilding industry may be significantly affected by
environmental cleanup costs and catastrophic events such as pandemics, earthquakes, hurricanes and
terrorist acts. The home building industry can be significantly affected by changes in consumer
confidence, demographic patterns, housing starts and the level of new and existing home
sales.
Consumer
Discretionary Sector Risk
—Because companies in the consumer discretionary sector manufacture products and provide discretionary services directly to the consumer,
the success of these companies is tied closely to the performance of the overall domestic and
international economy, including the functioning of the global supply chain, interest rates, competition
and consumer confidence. Success depends heavily on disposable household income and consumer spending,
and may be strongly affected by social trends and marketing campaigns. Also, companies in the consumer
discretionary sector may be subject to severe competition, which may have an adverse impact on a
company’s profitability. Changes in demographics and consumer tastes also can affect the demand
for, and success of, consumer discretionary products in the marketplace.
Industrials Sector Risk — Stock prices of issuers in the industrials sector are affected by supply and demand both for their specific product or service and for industrials
sector products in general. Government regulation, world events including trade disputes, exchange rates
and economic conditions, technological developments and liabilities for environmental damage and general
civil liabilities will also affect the performance of investment in such issuers. Aerospace and defense
companies, a component of the industrials sector, can be significantly affected by government spending
policies because companies involved in this industry rely to a significant extent on U.S. and foreign government demand for their products and services. Thus, the financial condition of, and investor interest in, aerospace and
defense companies are heavily influenced by government defense spending policies which are typically
under pressure from efforts to control government spending budgets. Transportation companies, another
component of the industrials sector, are subject to cyclical performance and therefore investment in such
companies may experience occasional sharp price movements which may result from changes in the economy,
fuel prices, labor agreements and insurance costs. The industrials sector may also be adversely affected
by changes or trends in commodity prices, which may be influenced by unpredictable factors. Issuers with
high carbon intensity or high switching costs associated with
Summary Prospectus
5
Direxion Daily Homebuilders & Supplies Bull 3X Shares
the transition to low
carbon alternatives may be more impacted by climate transition risks.
Small- and/or Mid-Capitalization Company Risk —
Small- and mid-capitalization companies often have narrower markets for their goods and/or
services, less stable earnings, and more limited managerial and financial resources and often have
limited product lines, services, markets, financial resources or are dependent on a small management group.
Because these stocks are not well-known to the investing public, do not have significant institutional
ownership and are followed by relatively few security analysts, there will normally be less publicly
available information concerning these securities compared to what is available for the securities of
larger companies. Adverse publicity and investor perceptions, whether or not based on fundamental analysis,
can decrease the value and liquidity of such securities resulting in more volatile performance. These
companies may face greater risk of business failure.
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 securities of the Index. Under such circumstances, the
market for securities of the Index 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 in the securities of the Index.
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 by, for example, seeking to track an alternative index, 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.
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.
Cash Transaction Risk— At certain times, the Fund may
effect creations and redemptions for cash rather than for in-kind securities. As a result, the Fund may
not be tax efficient and may incur brokerage and financing costs related to buying and selling securities
or obtaining derivative exposure to achieve its investment objective thus incurring additional expenses
than if it had effected 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.
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. 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
Summary Prospectus
6
Direxion Daily Homebuilders & Supplies Bull 3X Shares
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 NYSE Arca. 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
The following performance information provides some indication of the risks of investing in the Fund by demonstrating how its returns have varied from calendar year to calendar year. The bar chart shows changes in the Fund’s performance from calendar year to calendar year. The table shows how the Fund’s average annual
returns for the one-year, five-year, and since inception periods compare with those of one or more
broad-based market indexes for the same periods. The Fund’s past performance, before and after taxes, is not necessarily an indication of how the Fund will perform in the future. Updated performance is available on the Fund’s website at www.direxion.com/etfs?producttab=performance or by calling the Fund toll-free at (866)
476-7523.
Total Return for the Calendar Years Ended December 31
During the period of time shown in the bar chart, the Fund’s
highest calendar quarter return was 164.31% for the quarter ended June 30, 2020 and its lowest calendar
quarter return
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7
Direxion Daily Homebuilders & Supplies Bull 3X Shares
was -85.05% for the quarter
ended March 31, 2020. The year-to-date return as of December 31, 2023 was 259.67%.
Average Annual Total Returns (for the periods ended
December 31, 2023)
| |
1 Year |
5 Years |
Since Inception 8/19/2015 |
| Return Before Taxes |
259.67% |
35.66% |
13.14% |
| Return After Taxes on Distributions |
259.15% |
35.59% |
13.03% |
| Return After Taxes on Distributions and Sale of Fund Shares |
153.64% |
30.13% |
10.84% |
| S&P
500® Index
(reflects no deduction for fees, expenses or taxes) |
26.29% |
15.69% |
12.38% |
| Dow Jones U.S. Select Home Construction Index (reflects no
deduction for fees,
expenses or taxes) |
69.57% |
29.01% |
16.97% |
After-tax returns are calculated using the historically highest
individual federal marginal income tax rates and do not reflect the impact of state and local taxes.
Actual after-tax returns depend on an investor’s tax situation and may differ from those shown, and after-tax returns are not relevant to investors who hold their Fund shares through tax-deferred
arrangements, such as 401(k) plans or individual retirement accounts.
Annual returns are required to be shown and should not be interpreted as suggesting that the Fund should or should not be held for long periods of time.
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 in August
2015 |
Portfolio Manager |
| Tony Ng |
Since Inception in August
2015 |
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
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
50,000 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.
Index Information
Dow Jones®, Dow Jones Industrial Average® and DJIA® are
trademarks of Dow Jones & Company, Inc. (“Dow Jones®”). Dow
Jones® has no relationship to the Fund, other than the licensing of those service marks for use in connection with the Fund’s materials. Dow Jones® does not sponsor, endorse, sell or promote any of the Funds.
Summary Prospectus
8
Direxion Daily Homebuilders & Supplies Bull 3X Shares
SEC File Number: 811-22201