Direxion Is Rolling Out Four New 3X Leveraged ETFs Tomorrow (Thursday)

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December 2, 2009 10:07am NYSE:CZI NYSE:CZM

direxion-3xDirexion is launching four new funds which seek to deliver 300 percent and -300 percent of both the BNY China Select ADR Index and S&P Latin America


 40 Index. The four new ETFs are the Direxion Daily China Bull 3X Shares (CZM), Direxion Daily China Bear 3X Shares (CZI), Direxion Daily Latin America Bull 3X Shares (LBJ), Direxion Daily Latin America Bear 3X Shares (LHB).

Direxion Daily China Bull 3X Shares (CZM) & Direxion Daily China Bear 3X Shares (CZI)

Investment Objective. The Direxion Daily China Bull 3X Shares seeks daily investment results, before fees and expenses, of 300% of the price performance of the BNY China Select ADR Index (the “China Index”). The Direxion Daily China Bear 3X Shares seeks daily investment results, before fees and expenses, of 300% of the inverse (or opposite) of the price performance of the China Index. (Collectively, the Direxion Daily China Bull 3X Shares and Direxion Daily China Bear 3X Shares are referred to as the “China Funds”).

China is considered an “emerging market.” The term “emerging market” refers to an economy that is in the initial stages of industrialization and has been historically marked by low per capita income and lack of capital market transparency, but appears to be implementing political and/or market reforms resulting in greater capital market transparency, increased access for foreign investors and generally improved economic conditions. Emerging markets have the potential for significantly higher or lower rates of return and carry greater risks than more developed economies.

Principal Investment Strategy. The Direxion Daily China Bull 3X Shares, under normal circumstances, creates long positions by investing at least 80% of its net assets in the equity securities that comprise the China Index. The Direxion Daily China Bull 3X Shares also will invest in Financial Instruments that, in combination, provide leveraged and unleveraged exposure to the China Index. The Direxion Daily China Bear 3X Shares does not invest in equity securities. Under normal circumstances, it creates short positions by investing at least 80% of its net assets in Financial Instruments that, in combination, provide leveraged and unleveraged exposure to the China Index, and the remainder in Money Market Instruments. On a day-to-day basis, the Direxion Daily China Bull 3X Shares also holds Money Market Instruments.

Risks. The principal risks of investing in the China Funds are Adverse Market Conditions Risk, Adviser’s Investment Strategy Risk, Aggressive Investment Techniques Risk, Counterparty Risk, Credit Risk, Currency Exchange Rate Risk, Daily Correlation Risk, Daily Rebalancing and Market Volatility Risk, Depositary Receipt Risk (Direxion Daily China Bull 3X Shares only), Emerging Markets Risk, Equity Securities Risk, Foreign Securities Risk, Gain Limitation Risk, Geographic Concentration Risk, Interest Rate Risk, Leverage Risk, Market Risk, Non-Diversification Risk, Regulatory Risk, Tracking Error Risk, Valuation Time Risk and Special Risks of Exchange Traded Funds.

Additional risks of investing in the Direxion Daily China Bear 3X Shares are Inverse Correlation Risk and Shorting Risk. For more information on the China Funds, including a description of each risk, please refer to the “Principal Risks” section above.

Also, it is important to note that China is a totalitarian country and the central government has historically exercised substantial control over virtually every sector of the Chinese economy. Government power raises the risk of nationalization, expropriation, or confiscation of property. The legal system is still developing and the ability to obtain or enforce judgments is uncertain. China’s relationship with Taiwan is poor and the possibility of military action exists. China differs, often unfavorably, from more developed countries in such respects as structure, general development, government involvement, wealth distribution, rate of inflation, growth rate, allocation of resources and capital reinvestment, among others.

Target Index. The BNY China Select ADR Index is a free float-adjusted capitalization-weighted index designed by the Bank of New York to track the performance of a basket of companies who have their primary equity listing on a stock exchange in China and which also have depositary receipts that trade on a U.S. exchange or on the NASDAQ. Decisions regarding additions to and deletions form the Index are guided by conditions established by the bank of New York with the intention of creating and maintaining a benchmark for emerging market equity performance. As of April 3, 2009, the index comprised of ADRs of 75 companies with an average market capitalization of over $11.8 billion dollars and a median market capitalization of $381 million dollars.

Performance. The China Funds are newly organized and have not yet commenced operations; therefore, performance information is not yet available.

Fees and Expenses. These tables describe the estimated fees and expenses that you may pay if you buy, hold or sell Creation Units of the China Funds. Annual fund operating expenses are estimates. Investors purchasing Shares in the secondary market will not directly pay the transaction fees paid by Authorized Participants,(1) but may be subject to costs (including customary brokerage commissions) charged by their broker.

Annual Operating Expenses(2) (as a percentage of daily assets):

         
Direxion Daily China Bull 3X Shares
       
Management Fees
    0.75%  
Distribution and/or Service (12b-1) Fees(3)
    0.00%  
Other Expenses(4)(5)
    0.19%  
         
Total Annual Operating Expenses
    0.94%  
         
Direxion Daily China Bear 3X Shares
       
Management Fees
    0.75%  
Distribution and/or Service (12b-1) Fees(3)
    0.00%  
Other Expenses(4)(5)
    0.21%  
         
Total Annual Operating Expenses
    0.96%  
         
Expense Waiver/Reimbursement
    0.01%  
Net Annual Operating Expenses
    0.95%  
         

Direxion Daily Latin America Bull 3X Shares (LBJ) & Direxion Daily Latin America Bear 3X Shares (LHB)

Investment Objective. The Direxion Daily Latin America Bull 3X Shares seeks daily investment results, before fees and expenses, of 300% of the price performance of the S&P Latin America 40 Index (“Latin America Index”). The Direxion Daily Latin America Bear 3X Shares seeks daily investment results, before fees and expenses, of 300% of the inverse (or opposite) of the price
performance of the Latin America Index. (Collectively, the Direxion Daily Latin America Bull 3X Shares and Direxion Daily Latin America Bear 3X Shares are referred to as the “Latin America Funds”).

Latin America is considered an “emerging market.” The term “emerging market” refers to an economy that is in the initial stages of industrialization and has been historically marked by low per capita income and lack of capital market transparency, but appears to be implementing political and/or market reforms resulting in greater capital market transparency, increased access for foreign investors and generally improved economic conditions. Emerging markets have the potential for significantly higher or lower rates of return and carry greater risks than more developed economies.

Principal Investment Strategy. The Direxion Daily Latin America Bull 3X Shares, under normal circumstances, creates long positions by investing at least 80% of its net assets in the equity securities that comprise the Latin America Index. The Direxion Daily Latin America Bull 3X Shares also will invest in Financial Instruments that, in combination, provide leveraged and unleveraged exposure to the Latin America Index. The Direxion Daily Latin America Bear 3X Shares does not invest in equity securities. Under normal circumstances, it creates short positions by investing at least 80% of its net assets in Financial Instruments that, in combination, provide leveraged and unleveraged exposure to the Latin America Index, and the remainder in Money Market Instruments. On a day-to-day basis, the Direxion Daily Latin America Bull 3X Shares also holds Money Market Instruments.

Risks. The principal risks of investing in the Latin America Funds are Adverse Market Conditions Risk, Adviser’s Investment Strategy Risk, Aggressive Investment Techniques Risk, Counterparty Risk, Credit Risk, Currency Exchange Rate Risk, Daily Correlation Risk, Daily Rebalancing and Market Volatility Risk, Depositary Receipt Risk (Direxion Daily Latin America Bull 3X Shares only), Emerging Markets Risk, Equity Securities Risk, Foreign Securities Risk, Gain Limitation Risk, Geographic Concentration Risk, Interest Rate Risk, Leverage Risk, Market Risk, Non-Diversification Risk, Regulatory Risk, Tracking Error Risk, Valuation Time Risk and Special Risks of Exchange Traded Funds.

Additional risks of investing in the Direxion Daily Latin America Bear 3X Shares are Inverse Correlation Risk and Shorting Risk. For more information on the Latin America Funds, including a description of each risk, please refer to the “Principal Risks” section above.

Also, it is important to note that Latin America has generally been characterized by substantial economic instability resulting from, among other things, political unrest, high interest and inflation rates, currency devaluations and government deficits. The economies of Latin America are heavily dependent on the health of the U.S. economy and, because commodities such as oil and gas, minerals, and metals, represent a significant percentage of the region’s exports, the economies of Latin American countries are sensitive to fluctuations in commodity prices. The
economies of the countries in the region may be impacted by the policies or economic problems of other Latin American countries. As a result of these factors, an investment in the Latin America Funds may experience significant volatility.

Target Index. The S&P Latin America 40 Index is an equity index drawn from five major Latin American markets: Argentina, Brazil, Chile, Mexico and Peru. The index constituents are leading, large liquid companies from the Latin American markets with a total market capitalization of $142 billion and a median market capitalization of $262 million, each as of April 3, 2009. Brazil, Mexico, Chile, Argentina and Peru provide 17, 10, 10, 2 and 1 companies, respectively. The Brazilian companies provide 61% of the market capitalization of the index, with Mexican, Chilean, Argentinean and Peruvian companies accounting for 25%, 10%, 2% and 1%, respectively.

Performance. The Latin America Funds are newly organized and have not yet commenced operations; therefore, performance information is not yet available.

Fees and Expenses. These tables describe the estimated fees and expenses that you may pay if you buy, hold or sell Creation Units of the Latin America Funds. Annual fund operating expenses are estimates. Investors purchasing Shares in the secondary market will not directly pay the transaction fees paid by Authorized Participants,(1) but may be subject to costs (including customary brokerage commissions) charged by their broker.

 

Annual Operating Expenses(2) (as a percentage of daily assets):

         
Direxion Daily Latin America Bull 3X Shares
       
Management Fees
    0.75 %
Distribution and/or Service (12b-1) Fees(3)
    0.00 %
Other Expenses(4)(5)
    0.19 %
         
Total Annual Operating Expenses
    0.94 %
         
Direxion Daily Latin America Bear 3X Shares
       
Management Fees
    0.75 %
Distribution and/or Service (12b-1) Fees(3)
    0.00 %
Other Expenses(4)(5)
    0.21 %
         
Total Annual Operating Expenses
    0.96 %
         
Expense Waiver/Reimbursement
    0.01 %
Net Annual Operating Expenses
    0.95 %

 For the full prospectus click: HERE

 

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