Direxion has filed paperwork with the SEC for an “IndiaShares Fixed-Income Shares ETF.” The IndiaShares Fixed-Income Shares (the “Fund”) seeks investment results, before fees and expenses, that track the Indus India Fixed-Income Index. They did not specify a trading symbol in the initial filing.
Total Annual Fund Operating Expenses After Expense Waiver/Reimbursement: 0.95%
Principal Investment Strategies
The Fund seeks its investment objective by investing substantially all of its assets in a wholly-owned subsidiary in the Republic of Mauritius (the “Subsidiary”), which in turn invests at least 80% of its net assets in the fixed-income securities that comprise the Index and/or investments that have economic characteristics that are substantially identical to the economic characteristics of the securities that comprise the Index. Unless the context otherwise requires, descriptions in this prospectus of securities and transactions, and their associated risks, generally refer to investments made indirectly by the Fund through the Subsidiary.
The Fund currently intends to invest in swaps and other types of derivative instruments that have economic characteristics that are substantially identical to the economic characteristics of the securities that comprise the Index, including swaps on the Index and/or the securities that comprise the Index. The Fund also may invest in swaps on funds that seek to replicate the performance of the Index or directly in securities of such funds. The notional values of these swaps and other derivative instruments will count towards the Fund’s 80% investment policy and cash and cash equivalents related to the swaps and other derivative instruments will not be counted towards the calculation of total assets. On a day-to-day basis, the Fund also may hold 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. The Adviser serves as the investment adviser to both the Fund and the Subsidiary. Through this investment structure, the Fund expects to gain certain benefits under a tax treaty between the Republic of Mauritius and India.
India 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.
The Index is a “hybrid index” composed of 25 component securities, which are (a) sovereign debt issued by the government of India and (b) highly-rated corporate debt of Indian companies, including debt issued by Public Sector Undertakings in which the government of India has a majority interest. The two categories of investment are both weighted equally. Maturities of the fixed-income investments are staggered between approximately 1 year and 10 years, with a target portfolio average maturity of 5.5 years. The Index undergoes reconstitution on the maturity date of any component security, with the maturing security being replaced with another qualifying security with an approximate maturity of 10 years. The Index was started on December 31, 2005.
The Fund may gain exposure to only a representative sample of the securities in the Index that have aggregate characteristics similar to those of the Index. The Fund seeks to remain fully invested at all times consistent with its investment objective. The Fund repositions its portfolio in response to assets flowing into or out of the Fund. To the extent the Fund experiences regular purchases or redemptions of its shares, it may reposition its portfolio more frequently. Additionally, the impact of the Index’s movements will affect whether the Fund’s portfolio needs to be re-positioned. For example, if the Index has added or removed a security, the Fund’s portfolio may have to be re-positioned to account for this change to the Index. These re-positioning strategies typically result in high portfolio turnover. 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.
For the complete filing click: HERE