Fund Information

The Indexed Commodity Strategy Fund

How you may benefit from long/short positions in the commodities universe

The Indexed Commodity Strategy Fund is one of the only funds on the market today that seeks to match the performance of the Commodity Trends Indicator (CTI), offering the ability to position each sector either long or short. Most traditional commodity funds only provide long exposure to commodities. The problem? A long-only exposure tends to limit commodities' potential to contribute to a portfolio's long-term performance, due to the extended cyclical nature of commodities—i.e., $1 invested in commodities in 1956 is worth 54 cents (inflation-adjusted) today¹.

The Fund's multi-directional nature not only can provide a hedge against inflation, but also deflation. Furthermore, the Fund's tracking of the CTI can potentially provide investors with an opportunity to take advantage of both rising and falling commodity futures markets, with relatively low volatility.

Why consider long/flat commodities?

Most traditional commodity funds can only benefit if commodity prices rise. However, these long-only commodity strategies have shown to be inconsistent over time because:

commodity returns are typically cyclical and sporadic;
individual commodity sub-sectors tend to perform dissimilarly in different market environments;
significant draw-downs can be damaging to the long-term performance of a portfolio; and
within the inherently volatile commodity markets, a long/flat approach is potentially more adaptive to whip-sawing market conditions.

The following chart illustrates the CTI's performance results from 2004 through 2009, along with the performance of the Auspice Broad Commodity Index, the S&P 500, and DJUBS CI.

*The chart is meant to demonstrate the differences between long-only and long/short indices and is not indicative of the fund's performance.
1 Past performance, especially statistical information, is not necessarily indicative of future results.
2 Standard Deviation is a measure of the dispersion of a set of data from its mean.
3 Correlation is a statistical measure of how two securities move in relation to each other.
4 The expected return of that asset, less the rate of return on a risk-free asset. This rate is denominated by the risk of that asset, which is expressed as the standard deviation of returns.
5 The greatest percent decline from a previous high.

The Indexed Commodity
Startegy Fund

Why
Commodities

Why a Long/Short
Commodity Strategy?

Advantages

The total annual fund operating expense ratio of the Direxion Indexed Commodity Strategy Fund, gross of any fee waivers or expense reimbursements, as stated in the fee table of the funds prospectus is for the investor class is 1.30%, for the institutional class is 1.05% and for the C-Shares is 2.04%. The performance data quoted represents past performance; past performance does not guarantee future results; the investment return and principal value of an investment will fluctuate; an investor’s shares, when redeemed, may be worth more or less than their original cost; current performance may be lower or higher than the performance quoted. Returns for performance for one year and under are cumulative, not annualized. Short term performance, in particular, is not a good indication of the fund’s future performance, and an investment should not be made based solely on returns. For additional information, see the fund(s) prospectus.

An investor should consider the investment objectives, risks, charges, and expenses of the Direxion Funds carefully before investing. The prospectus and summary prospectus contain this and other information about Direxion Funds. To obtain a prospectus or summary prospectus, please contact the Direxion Funds at 800.851.0511. The prospectus or summary prospectus should be read carefully before investing.

Auspice Capital Advisors Ltd. is a registered Portfolio Manager / Investment Fund Manager in Canada and a registered Commodity Trading Advisor (CTA/CPO) and National Futures Association (NFA) member in the US.

Investing in funds that invest in specific industries or geographic regions may be more volatile than investing in broadly diversified funds. The principal risks of investing in the Direxion Indexed Commodity Strategy Fund are Risks of Investing in Commodity-Linked Derivatives, Risks of Investing in Wholly-owned Subsidiary, High Portfolio Turnover, Tax Risk, Risk of Tracking Error, Risks of Aggressive Investment Techniques, Leverage Risk, Derivatives Risks, Counterparty Risks, Risk of Non-Diversification, Risks of Investing in Other Investment Companies and ETFs, Adverse Market Conditions, Risks of Investing in Equity Securities, Credit Risk and Concentration Risk.

Distributor: Rafferty Capital Markets, LLC.

Date of First Use: February 1, 2012