Direxion/Wilshire Dynamic Fund

A Share
Symbol: DXDWX
CUSIP: 254939416
Inception Date: 03/02/2009

C Share
Symbol: DXWCX
CUSIP: 254939325
Inception Date: 03/01/2010

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.

January 2012

Allocation Summary:

This January the Direxion/Wilshire Dynamic Fund maintained its neutral weight positions in the high yield and non-U.S. fixed income asset classes. Additionally, the Fund's overweight position in U.S. investment grade fixed income was modestly reduced. The Fund maintained its underweight positions in both U.S. and non-U.S. equity as volatility remains elevated as the European debt crisis continues to unfold, however the underweight position in U.S. equities was modestly reduced. The Fund increased its overweight position in commodities this month. The Fund's beta increased to 0.93 relative to the Strategic Asset Allocation's (SAA) neutral position of 1.0.

It was a modestly positive December for domestic equity markets, with the Wilshire 5000 Total Market IndexSM returning 0.91 percent. Developed and emerging international equity markets fell more sharply than their domestic peers, with the MSCI EAFE Index returning -0.95 percent and the MSCI Emerging Markets Index returning -1.21 percent. On a style basis, value significantly outpaced growth, with the large and small cap value styles returning 3.0 and 1.25 percent, respectively. The growth style struggled more, with large and small cap growth returning -1.1 and -0.78 percent, respectively. Real Estate was a top performer this month, with the Wilshire U.S. REIT IndexSM returning 4.74 percent. On a sector basis the Telecomm, Utilities and Health Care sectors were top performers, while the Energy, Materials and Information Technology sectors all delivered negative performance. Developed international equity markets struggled much more than their domestic peers this December, with the MSCI EAFE Index returning -0.95 percent. Within developed international markets the Europe ex-U.K. region struggled most, falling -2.44 percent. The Pacific ex-Japan region also underperformed, falling by -0.93 percent. Emerging Markets declined even more than their developed market counterparts, falling -1.21 percent.

Bonds delivered solid positive performance this month, with the Barclays U.S. Aggregate Bond Index returning 1.10 percent. As investors switched into a more risk-on mode, high yield and non-U.S. bonds were among the top performing fixed income asset classes, returning 2.48 and 0.84 percent, respectively.