Direxion/Wilshire Dynamic Fund

DXDWX CUSIP: 254939416
DXDWX Inception Date: 3/2/2009
DXWCX CUSIP: 254939325
DXWCX Inception Date: 3/1/2010

The Direxion/Wilshire Dynamic Fund ("Dynamic Fund") seeks capital appreciation. To achieve its investment objective, the Dynamic Fund combines a strategic asset allocation with a "tactical overlay" to position the Dynamic Fund defensively or aggressively, depending upon the outlook of the Subadviser.

Under normal circumstances, the Dynamic Fund is managed by the Adviser pursuant to the Subadviser's traditional asset allocation model which allocates approximately 60% of the Dynamic Fund's total assets to equity securities and 40% to fixed income securities, with a tactical overlay to increase or decrease the Dynamic Fund’s risk exposure based on the Subadviser's outlook for the market. The Subadviser's tactical model evaluates asset class allocations on a monthly basis. In response to market conditions, the Subadviser may recommend that the Adviser rebalance the Dynamic Fund's portfolio, use short positions and/or employ leverage in its tactical allocations.

February 2010

This month the Direxion/Wilshire Dynamic Fund (the Fund) maintained its underweight position in U.S. and international equities and reduced the magnitude of its overweight positions in both domestic and international investment grade fixed income. The Fund's cash position was opportunistically increased this month to express a more defensive market view. The Fund's beta remains fairly consistent at 0.87 relative to the Strategic Asset Allocation (SAA).

Allocation Summary (net exposure levels):

• Fixed Income: net exposure of 45% (a decrease of 11.5% over last month)
• Equities: net exposure of 34% (unchanged from last month)
• Cash: net exposure of 14% (an increase of 12.5% over last month)
• Commodities: net exposure of 1.5% (a decrease of 1.0% over last month)

Equity markets sharply reversed course this January with the Wilshire 5000 Total Market Index^SM falling -3.4 percent. Large and small cap stocks performed in line while value outperformed growth for the month. The cyclical sectors that did well for most of 2009 were the biggest losers in January, namely Materials, Information Technology and Telecom, which all fell more than 8 percent. Health Care was the only GICS sector to post a positive return, up 0.49 percent. Emerging Markets plummeted -5.58 percent, led down by Brazil, India and Taiwan, while the MSCI EAFE returned a comparatively better -4.40 percent. The Fund's underweight to equities both in the U.S. and internationally provided some downside protection this month as stocks fell worldwide.

Bond markets posted nice gains this month with the Barclays Aggregate Index up 1.53 percent. TIPS returned 1.61 percent and High Yield continued its sustained winning streak, up 1.49 percent. Over $17 billion of new deals came to the market over the month including $1 billion and $2 billion deals from Vietnam and Hungary, respectively. The Fund’s overweight to fixed income both in the U.S. and abroad was advantageous as bonds rallied.