Direxion has filed paperwork with the SEC for a new airline ETF “DIREXION AIRLINE SHARES.” The Direxion Airline Shares (“Fund”) will seek daily investment results, before fees and expenses, of the price performance of the Indus Global Airline & Airline Suppliers Index (“Index”). This fund will go up against the Claymore/NYSE Arca Airline etf (FAA) which seeks to replicate, net of expenses, the NYSE Arca Global Airline Index.

Principal Investment Strategies

The Fund, under normal circumstances, invests at least 80% of its net assets in the equity securities that comprise the Index and/or: financial instruments (as defined below) that provide exposure to the Index.  These financial instruments include: futures contracts; options on securities, indices and futures contracts; equity caps, collars and floors; swap agreements; forward contracts; short positions, reverse repurchase agreements; and other financial instruments.  On a day-to-day basis, the Fund also holds 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.

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The Index consists of approximately 30 companies involved in the manufacturing, maintenance, or retailing of aircraft or the broader airline industry.  The Index is global in nature and includes companies based in the United States, Brazil, Chile, Ireland, the Netherlands and Panama.  All companies included in the Index are traded on U.S. exchanges.  As of [ ], the companies included in the Index have an average market capitalization of $[ ] dollars and a median market capitalization of $[ ].
 
The Fund seeks to remain fully invested at all times consistent with its stated goal.  At the close of the markets each trading day, Rafferty positions 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.  The Fund will concentrate its investment in a particular industry or group of industries to approximately the same extent as the Index is so concentrated.

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