Direxion has filed paperwork with the SEC for a “IndiaShares Mid- & Small- Cap Shares ETF.” The IndiaShares Mid- & Small-Cap Shares (the “Fund”) seeks investment results, before fees and expenses, that track the Indus India Junior 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 equity 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 composed of 100 securities of medium and small capitalization India companies. To select the 100 securities that comprise the Index, the largest 200 companies on the listed on each of the Bombay Stock Exchange and the National Stock Exchange (the “Index Universe”) are ranked pursuant to the “IndusCap” proprietary metric, developed by the Index provider. IndusCap measures, for each stock, the capitalization available for purchase by foreign investors on any given day, using Indian regulatory foreign-holding limits, current foreign holdings in the stock and other relevant information. Applying the IndusCap metric, 50 securities with the highest IndusCap value are deemed large capitalization stocks and removed from the pool of eligible investments. From the remaining stocks, which the index provider deems small and medium capitalization stocks, the next 100 securities ranked 51 to 150 by IndusCap value are then selected for inclusion in the Index. As of [ ], 2011, the Index had a median capitalization of [ ]. The Index is reconstituted four times a year, on the last day of January, April, July and October, and based on the then-current IndusCap values of the companies in the Index Universe. The Index was started on December 31, 2001.
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