| Summary Prospectus |
April 2, 2024 |
| Direxion Shares ETF Trust |
|
Direxion Daily AMZN Bull 2X Shares
| Ticker: AMZU |
| 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, 2024, as supplemented, are
incorporated by reference into this Summary Prospectus.
Important Information Regarding the Fund
Please note: Effective April 2, 2024, the investment objective of the
Fund changed and the Fund now seeks daily leveraged investment results, before fees and expenses, of 200% of the daily performance of the underlying security noted below.
The Direxion Daily AMZN Bull 2X Shares (formerly the Direxion Daily
AMZN Bull 1.5X 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
Amazon.com, Inc. (NASDAQ: AMZN) ("AMZN"). 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 AMZN 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 AMZN for that period.
Longer holding periods, higher volatility of AMZN and leverage increase the impact of compounding on an
investor’s returns. During periods of higher AMZN volatility, the volatility of AMZN may affect the
Fund’s return as much as, or more than, the return of AMZN.
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 AMZN’s
performance is flat, and it is possible that the Fund will lose money even if AMZN’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 AMZN 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 AMZN. 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 |
0.22% |
| Acquired Fund Fees and Expenses(1)
|
0.11% |
| Total Annual Fund Operating Expenses |
1.08% |
| Expense Cap/Reimbursement(2)
|
-0.02% |
| Total Annual Fund Operating Expenses After Expense Cap/Reimbursement |
1.06% |
(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.
(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, 2025, 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
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1
Direxion Daily AMZN Bull 2X Shares
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 |
| $108 |
$341 |
$594 |
$1,315 |
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 0% 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 Fund, under normal circumstances, invests at least 80% of its net assets (plus any borrowings for investment purposes) in the securities of AMZN and financial instruments,
such as swap agreements and options, that, in combination, provide 2X daily leveraged exposure to AMZN,
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.
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 AMZN 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 AMZN 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 industry to which AMZN is assigned (i.e., hold 25% or more of its total assets in investments that provide leveraged exposure in the industry to which AMZN is assigned).
The Fund will attempt to achieve its investment objective without regard to overall market movement or the increase or decrease of the value of AMZN. At the close of the
markets each trading day, the Adviser rebalances the Fund’s portfolio so that its exposure to AMZN
is consistent with the Fund’s investment objective. The impact of AMZN’s price movements
during the day will affect whether the Fund’s portfolio needs to be rebalanced. For example, if the
price of AMZN 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 AMZN 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 50% 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.
Amazon.com, Inc. engages in the retail sale of consumer products and subscriptions in North America and
internationally. The company operates through three segments: North America, International, and Amazon
Web Services. AMZN 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 Amazon.com, Inc. pursuant to the Exchange Act can be located by reference to the Securities and Exchange
Commission file number 000-22513 through the Securities and Exchange Commission’s website at
www.sec.gov. In addition, information regarding Amazon.com, Inc. may be obtained from other sources
including, but not limited to, press releases, newspaper articles and other publicly disseminated
documents. As of December 31, 2023, AMZN is assigned to the consumer discretionary sector and the
catalog/specialty distribution industry.
The Fund has derived all disclosures contained in this document
regarding Amazon.com, Inc. 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 Amazon.com, Inc. 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 AMZN have been publicly
disclosed. Subsequent disclosure
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Direxion Daily AMZN Bull 2X Shares
of any
such events or the disclosure of, or failure to disclose, material future events concerning Amazon.com, Inc. could affect the value of the Fund’s investments with respect to AMZN 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.
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 AMZN’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 AMZN 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) 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 AMZN. 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. 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 AMZN.
As shown in the chart below, the Fund would be expected to lose 6.1% if AMZN provided no return over a
one year period during which AMZN 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 AMZN’s return is
flat. For instance, if AMZN’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 AMZN 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 AMZN. 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% |
AMZN’s annualized historical volatility rate for the five year period ended December 31, 2023 was
34.58%. AMZN’s highest volatility rate for any one calendar year during the five year period was
49.26% and volatility for a shorter period of time may have been substantially higher. AMZN’s annualized performance for the five-year period ended December 31, 2023 was 15.51%. Historical volatility and performance are not indications of what AMZN 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.
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 AMZN will be
magnified. This means that an investment in the Fund will be reduced by an amount equal to 2% for every
1% daily decline in AMZN, 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 security decline of more than
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Direxion Daily AMZN Bull 2X Shares
50%. This would result in a
total loss of a shareholder’s investment in one day even if AMZN 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 AMZN does not lose all of its value. Leverage will also have the effect of magnifying any
differences in the Fund’s correlation with AMZN 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 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 AMZN 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 AMZN 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 AMZN 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 AMZN and therefore achieve its daily leveraged investment objective.
The Fund’s exposure to AMZN is impacted by AMZN’s movement. Because of this, it is unlikely
that the Fund will be perfectly exposed to AMZN at the end of each day. The possibility of the Fund being
materially over- or under-exposed to AMZN increases on days when AMZN 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
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Direxion Daily AMZN Bull 2X Shares
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) AMZN.
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 AMZN. 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 AMZN. Additionally, the Fund’s underlying investments and/or reference assets may trade on markets that may not be open on the same day as the Fund, which
may cause a difference between the changes in the daily performance of the Fund and changes in the
performance of AMZN. Any of these factors could decrease the correlation between the performance of the
Fund and AMZN and may hinder the Fund’s 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, 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.
Indirect Investment Risk — Amazon.com, Inc. 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 AMZN and make
no representation as to the performance of AMZN. Investing in the Fund is not equivalent to investing in
AMZN. Fund shareholders will not have voting rights or rights to receive dividends or other distributions
or any other rights with respect to AMZN.
Amazon.com, Inc. 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 companies in the consumer discretionary
sector, Amazon.com, Inc. faces risks associated with: intense competition across different industries,
including physical, e-commerce omnichannel retail, e-commerce services, web and infrastructure computing
services, electronic devices, digital content, advertising, grocery, and transportation and logistics
services; the expansion into new products, services, technologies and geographic regions; its
international activities; the variability in the demand for its products and services; fraudulent and
unlawful activities of sellers; intellectual property rights;
foreign exchange risk; expansion of global operations, significant fluctuations in operating results and growth rate; successfully optimizing and operating its fulfilment
network and data centers; data loss or other security breaches; system interruption and lack of
redundancy; maintaining key senior management personnel and the ability to hire and retain highly skilled
and other key personnel; maintaining good supplier relationships, including content and technology
licensors; commercial agreements and business relationships expose the company to greater liability; the
success of acquisitions or joint ventures or other investments; significant inventory disruptions due to
seasonality, obsolescence, defective merchandise, changing consumer spending and interests and other
factors; ever changing regulations and compliance related to the various payments accepted; its rapidly
evolving and expanding business model; and legal, regulatory, tax liability, and litigation issues.
Security Volatility Risk
— The performance of the
Fund is designed to correlate to the performance of Amazon.com, Inc. Significant short-term price
movements in Amazon.com, Inc., could adversely impact the performance of both AMZN 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 underlying security.
Industry Concentration Risk — The Fund will be concentrated in the industry to which AMZN is assigned (i.e., hold more than 25% of its total assets in investments that provide leveraged exposure to the industry to which AMZN is assigned). A portfolio concentrated in a particular industry
may present more risks than a portfolio broadly diversified over several industries.
Artificial Intelligence (AI) and Big Data
Company Risk — Companies engaged in artificial intelligence
(“AI”) and big data typically face intense competition and potentially rapid product
obsolescence. These companies are also heavily dependent on intellectual property rights and may be
adversely affected by loss or impairment of those rights. There can be no assurance these companies will
be able to successfully protect their intellectual property to prevent the misappropriation of their
technology, or that competitors will not develop technology that is substantially similar or superior to
such companies’ technology. AI and big data companies typically engage in significant amounts of spending on research and development, as well as mergers and acquisitions, and there is no guarantee that the products or services produced by these companies will be successful. AI and big data companies are potential targets for
cyberattacks, which can have a materially adverse impact on the performance of these companies. In
addition, AI technology could face increasing regulatory scrutiny in the future, which may limit the
development of this technology and impede the growth of companies that develop and/or utilize this
technology. Similarly, the collection of data from consumers and other sources could face increased scrutiny as regulators consider how the data is collected, stored, safeguarded and used. AI and big data companies may face
regulatory fines and penalties, including forced break-ups,
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Direxion Daily AMZN Bull 2X Shares
that could hinder the
ability of the companies to operate on an ongoing basis. The customers and/or suppliers of AI and big
data companies may be concentrated in a particular country, region or industry. Any adverse event affecting
one of these countries, regions or industries could have a negative impact on AI and big data companies.
Country, government, and/or region-specific regulations or restrictions could have an impact on AI and
big data companies.
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.
Internet
Company Industry Risk— The market prices of internet securities tend to exhibit a greater degree of market risk and sharp price fluctuations than the market
prices of other types of securities. Internet company securities may fall in and out of favor with
investors rapidly, which may cause sudden selling and dramatically lower market prices. These companies
are subject to rapid changes in technology, worldwide competition, rapid obsolescence of products and
services, loss of patent protections, evolving industry standards and frequent new product productions.
Internet securities also may be affected adversely by changes in consumer and business purchasing
patterns and government regulations. These companies may have high market valuations and may appear less
attractive to investors, which may cause sharp decreases in their market prices.
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— 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
Summary Prospectus
6
Direxion Daily AMZN Bull 2X Shares
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 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
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 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.
The performance shown below reflects the Fund’s previous investment objective, seeking daily
leveraged investment results, before fees and expenses, of 150% of the daily performance of AMZN.
Beginning April 2, 2024, the Fund
Summary Prospectus
7
Direxion Daily AMZN Bull 2X Shares
now seeks daily leveraged
investments results, before fees and expenses, of 200% of the daily performance of AMZN.
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 38.19% for the quarter ended June 30, 2023 and its lowest calendar
quarter return was -6.19% for the quarter ended September 30, 2023. The year-to-date return as of
December 31, 2023 was 118.46%.
Average Annual Total Returns (for the periods ended
December 31, 2023)
| |
1 Year |
Since Inception 9/7/2022 |
| Return Before Taxes |
118.46% |
9.90% |
| Return After Taxes on Distributions |
115.17% |
8.49% |
| Return After Taxes on Distributions and Sale of Fund Shares |
69.91% |
6.87% |
| S&P
500® Index
(reflects no deduction for fees, expenses or taxes) |
26.29% |
18.28% |
| Amazon.com, Inc. (reflects no
deduction for fees, expenses or
taxes) |
80.88% |
15.19% |
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 September
2022 |
Portfolio Manager |
| Tony Ng |
Since Inception in September
2022 |
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 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
8
Direxion Daily AMZN Bull 2X Shares
SEC File Number: 811-22201