Form 497K Direxion Shares ETF Trus
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E-mail| Summary Prospectus |
August 6, 2026 |
| Direxion Shares ETF Trust |
|
Direxion Daily SpaceX Bear 2X ETF
| Ticker: LOFD |
| Listed on: NYSE Arca, Inc. |
Before you invest, you may
want to review the Fund’s prospectus, which contains more information about the Fund and its risks. You can find the Fund’s prospectus, reports to
shareholders, and other information about the Fund online at http://www.direxion.com/regulatory-documents. You can also get this information at no cost by
calling (866) 476-7523 or by sending an email request to [email protected]. The Fund’s prospectus and statement of additional information, both dated June 8, 2026, as supplemented, are incorporated by reference into this Summary Prospectus.
Important Information Regarding the
Fund
The Direxion Daily SpaceX Bear 2X ETF (the
“Fund”) seeks daily inverse leveraged (-2X)
investment results and is very different from most other exchange-traded funds. As a
result, the Fund may be riskier than alternatives that do not use leverage
because the Fund’s objective is to magnify the daily inverse performance of the Class A common shares of Space Exploration Technologies Corp. (NASDAQ: SPCX) ("SpaceX"), before fees and expenses. The
return for investors that invest for periods longer or shorter than a trading day should not be expected to be -200% of the performance of SpaceX for the period. The return of the
Fund for a period longer than a trading day will be the result of each trading day’s compounded return over the period, which will very likely differ from -200% of the
return of SpaceX for that period. Longer holding periods, higher volatility of SpaceX and leverage increase the impact of compounding on an investor’s returns. During
periods of higher SpaceX volatility, the volatility of SpaceX may affect the Fund’s return as much as, or more than, the return of SpaceX.
The Fund is not suitable for all investors. The
Fund is designed to be utilized only by knowledgeable investors who understand the potential consequences of seeking daily
inverse leveraged (-2X) investment results, understand the risks associated with the use of leverage and shorting and are willing to monitor their portfolios frequently. The Fund is not intended to be used by, and is not appropriate for, investors who do not intend to actively monitor and manage their portfolios. For periods longer than a single day, the Fund will lose money if SpaceX’s performance is flat, and it is possible that the Fund will lose money even if SpaceX’s performance decreases over a period longer than a single
day. An investor could lose the full principal value of his/her investment within a single day if SpaceX gains more than 50% in one
day.
Investment Objective
The Fund seeks daily investment results, before fees and expenses, of -200% of the daily
performance of SpaceX. The Fund does not seek to achieve its stated investment objective for a period of time different than a trading day.
Fees and Expenses of the Fund
This table describes the fees and expenses that you may pay if you buy, hold, and sell
shares of the Fund (“Shares”). You may pay other fees, such as brokerage commissions and other fees to financial intermediaries, which are not reflected
in the table and example below.
Annual Fund Operating Expenses (expenses that you pay each year as a percentage of the value of your investment)
| Management Fees |
0.75% |
| Distribution and/or Service (12b-1) Fees |
0.00% |
| Other Expenses of the Fund(1)
|
0.22% |
| Acquired Fund Fees and Expenses(1)
|
0.02% |
| Total Annual Fund Operating Expenses |
0.99% |
| Expense Cap/Reimbursement(2)
|
-0.02% |
| Total Annual Fund Operating Expenses After Expense Cap/Reimbursement |
0.97% |
(1)
Estimated for the Fund's current fiscal year.
(2)
Rafferty Asset Management, LLC (“Rafferty” or the “Adviser”) has entered into an Operating
Expense Limitation Agreement with the Fund. Under the Operating Expense Limitation Agreement, Rafferty has
contractually agreed to waive all or a portion of its management fee and/or reimburse the Fund for Other Expenses through September 1, 2027, to the extent that the
Fund’s Total Annual Fund Operating Expenses exceed 0.95% of the Fund’s average daily net assets
(excluding, as applicable, among other expenses, taxes, swap financing and related costs, acquired fund
fees and expenses, dividends or interest on short positions, other interest expenses, brokerage commissions
and extraordinary expenses).
Any expense waiver or reimbursement is subject to recoupment by the Adviser within the three years after the expense was waived/reimbursed only
if Total Annual Fund Operating Expenses fall below the lesser of this percentage limitation and any percentage limitation in place at the time the expense was waived/reimbursed. This agreement
may be terminated or revised at any time with the consent of the Board of Trustees.
Example - This example is intended to help you
compare the cost of investing in the Fund with the cost of investing in
other mutual funds. The example assumes that you invest $10,000 in the Fund for the time periods indicated and then redeem all of your shares at the end of those periods. The example also assumes that
your investment has a 5% return each year and that the Fund’s operating expenses remain the same. Although your actual costs may be higher or lower, based on these assumptions your costs
would be:
| 1 Year |
3 Years |
| $99 |
$313 |
Portfolio Turnover
The Fund pays transaction costs, such as commissions, when it buys and sells securities
(or “turns over” its portfolio). A higher portfolio turnover rate may indicate higher transaction costs and may result in higher taxes when Fund shares are held in a taxable account.
These costs, which are not reflected
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Direxion Daily SpaceX Bear 2X ETF
in Annual Fund Operating
Expenses or in the example, affect the Fund’s performance.
Principal Investment Strategy
The Fund, under normal circumstances, invests at least 80% of the Fund’s net
assets (plus borrowings for investment purposes) in financial instruments, including swap agreements and options, that, in combination, provide (-2X) daily inverse (opposite) or short
exposure to SpaceX, consistent with the Fund’s investment objective.
Space Exploration Technologies Corp. (“SpaceX”) designs, manufactures, and launches advanced rockets and spacecraft. SpaceX also develops and
operates the Starlink satellite constellation and builds artificial intelligence tools. After completion of its initial public offering, SPCX will be registered under the Securities
Exchange Act of 1934, as amended (the “Exchange Act”). Information provided to or filed with the Securities and Exchange Commission by Space Exploration Technologies Corp. can be
located by reference to the Securities and Exchange Commission file number 333-296070 through the Securities and Exchange Commission’s website at www.sec.gov. SpaceX
only recently commenced its initial public offering process. Consequently, public information about the company’s operating history is limited. In addition, information regarding SpaceX may be obtained from other sources including, but not
limited to, press releases, newspaper articles and other publicly disseminated documents. As of the date of this prospectus, SpaceX is expected to be assigned to the communication
services sector and will have exposure to space and space exploration as well as exposure to artificial intelligence.
The Fund will enter into one or more swap agreements with major global financial
institutions whereby the Fund and the global financial institution will agree to exchange the return earned on an investment by the Fund in SpaceX that is equal, on a daily basis, to
-200% of the value of the Fund's net assets. The Adviser attempts to consistently apply leverage to obtain SpaceX exposure for the Fund equal to -200% of the value of its net assets and
expects to rebalance the Fund’s holdings daily to maintain such exposure. As a
result of its investment strategies, the Fund will be concentrated in the
communication services sector (i.e., hold 25% or more of its total assets in investments that provide inverse leveraged exposure in the communication
services sector).
The Fund will attempt to
achieve its investment objective without regard to overall market movement or the increase or decrease of the value of SpaceX. At the close of the markets each trading day, the
Adviser rebalances the Fund’s portfolio so that its exposure to SpaceX is consistent with the Fund’s investment objective. The impact of SpaceX’s price movements during the day will
affect whether the Fund’s portfolio needs to be rebalanced. For example, if the price of SpaceX has fallen 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 price of SpaceX has risen on a given day, net assets of the Fund should fall, meaning the Fund’s exposure will need to be
reduced. This daily rebalancing typically results in high portfolio turnover. In addition, on a day-to-day basis, the Fund is expected to hold money market funds, deposit accounts
with institutions with high quality
(investment grade) credit ratings, and/or short-term debt instruments that have
terms-to-maturity of less than 397 days and exhibit high quality (investment grade) credit profiles, including U.S. government securities and repurchase agreements. The Fund may
lend securities representing up to one-third of the value of the Fund’s total assets (excluding the value of the collateral received).
The terms “daily,” “day,” and “trading day,” refer to the period from the close of the markets on one trading day to the close of the markets on
the next trading day. The Fund is “non-diversified,” under the Investment Company Act of 1940, as amended. Additionally, the Fund’s investment objective is not a
fundamental policy and may be changed by the Fund’s Board of Trustees without shareholder approval.
The Fund has derived all disclosures contained in
this document regarding SpaceX from the publicly available documents described above. Neither the Fund, the Trust,
the Adviser nor any affiliate has participated in the preparation of such documents. Neither the Fund, the Trust, the Adviser nor any affiliate makes any representation that such publicly available documents or any other publicly
available information regarding SpaceX is accurate or complete. Furthermore, the Fund cannot give any assurance that all events occurring prior to the date of the prospectus (including events that would affect the accuracy or
completeness of the publicly available documents described above) that would affect the trading price of SpaceX have been publicly disclosed. Subsequent disclosure of any such events or the disclosure of, or failure to disclose, material future events concerning SpaceX could affect the value of the Fund’s investments with respect to SpaceX and therefore the
value of the Fund.
Because of daily rebalancing and the compounding of each
day’s return over time, the return of the Fund for periods longer than a single day will be the result of each day’s returns compounded over the period, which will very likely differ from -200% of the return of the underlying security over the same period. The Fund will lose money if the
underlying security performance is flat over time, and as a result of daily rebalancing, the underlying security’s volatility and the effects of compounding, it is even possible that
the Fund will lose money over time while the underlying security’s performance decreases over a period longer than a
single day.
Principal Investment Risks
An investment in the Fund entails risk. The Fund may not achieve its inverse leveraged investment objective and there is a risk that you could lose all of your money invested in the Fund. The Fund is not a complete investment program. In addition, the Fund presents risks not traditionally
associated with other mutual funds and ETFs. It is important that investors
closely review all of the risks listed below and understand them before
making an investment in the Fund. The realization of
certain of the risks described below may result in adverse market movements that may actually benefit the Fund due to its inverse investment objective.
Recent Initial Public Offering (“IPO”) and Derivatives Capacity Constraints Risk - The Fund’s ability to achieve its daily
leveragedinverse investment objective depends, in part, on
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Direxion Daily SpaceX Bear 2X ETF
the availability of swaps,
options, and other financial instruments that provide exposure to SpaceX. For a company that recently went public, these instruments may be limited, illiquid, costly, or
unavailable, particularly at the time of or shortly after an IPO or during periods of significant volatility or market demand. Exchange position limits, margin requirements, counterparty risk
limits, limited public float, limited trading history, or other market, regulatory, or operational constraints may also restrict the Fund’s ability to obtain or maintain
its desired leveragedinverse exposure. As a result, the Fund may be unable to achieve exposure equal to -200% of the daily performance of SpaceX, may be unable to rebalance
effectively, or may be required to hold more cash or use less efficient instruments. These constraints may increase costs significantly and thereby increase tracking error, cause
the Fund to return substantially less than -200% the daily performance of SpaceX, or prevent the Fund from achieving its investment objective. Additionally, Shares trading on the
Exchange may experience larger bid-ask spreads and increased premium/discounts, especially on the IPO date as well as the days following the IPO.
The gain or loss that an investor experiences is very likely to be different than the
Fund’s stated investment objective due to intra-day investment risk. On the IPO date and the period following the IPO, investors should expect significant volatility in Share price
and heightened risk of the Fund’s return being substantially less than -200% the daily performance of SpaceX because of the risks stated above. An investor can lose the full
principal value of his/her investment in the Fund within a single day if SpaceX gains more
than 50% in one day.
Shorting or Inverse Risk – The Fund will lose money when the value of SpaceX rises because of the Fund’s
inverse or short exposure – this result is the opposite from a traditional index fund. The Fund’s assets
will increase in value when SpaceX’s daily return decreases. The Fund’s assets will decrease in value when SpaceX’s daily return increases. Because historically most assets
have risen in value over the long term, short exposure or positions and therefore, the value of the Fund is expected to depreciate in value over time, notwithstanding any separate
effects of compounding and the Fund’s daily repositioning of inverse exposure. Additionally, if the level of SpaceX approaches a 50% increase at any point in the day,
an investor could lose their entire investment. Accordingly, short positions and exposure may be riskier and more speculative than traditional investments. The costs of obtaining
short exposure or maintaining short positions will lower the Fund’s returns.
To the extent that the Fund obtains short
exposure from derivatives, the Fund may be exposed to heightened volatility,
reduced correlation to SpaceX or limited liquidity related to the reference
asset of the underlying short position, which will adversely impact the Fund’s ability to meet its investment objective or adversely impact its performance. If the Fund were to experience this
volatility or decreased liquidity, the Fund may be required to obtain short exposure through alternative investment strategies that may have less correlation to SpaceX, less
liquidity or are more costly to implement. If the reference asset underlying the short position
is thinly traded or has a
limited market, there may be a lack of available securities or counterparties for the Fund to enter into a short position or obtain short exposure from a derivative instrument.
Effects of Compounding and Market Volatility Risk — The Fund’s performance for periods greater
than a trading day will be the result of each day's returns compounded over
the period, which is likely to differ from -200% of SpaceX’s performance, before fees and expenses. Compounding has a significant impact on funds that are leveraged and that rebalance daily. The impact of
compounding becomes more pronounced as volatility and holding periods increase and will impact each shareholder differently depending on the period of time an investment
in the Fund is held and the volatility of SpaceX during the shareholder’s holding period.
Fund performance for periods greater than one single day can be estimated given any set of assumptions for the following factors: a) volatility;
b) performance; c) period of time; d) financing rates associated with inverse leveraged exposure; e) other Fund expenses; and f) dividends or interest paid with respect to
securities of SpaceX. The chart below provides examples of how volatility and its return could affect the Fund’s performance. The chart shows estimated Fund returns for a number
of combinations of volatility and performance over a one-year period. Actual Fund returns are expected to vary from these estimates. Performance shown in the chart assumes that:
(i) no dividends were paid with respect to the securities; (ii) there were no Fund expenses; and (iii) borrowing/lending rates (to obtain leveraged inverse exposure) of 0%. If Fund
expenses and/or actual borrowing/lending rates were reflected, the estimated returns would be different than those shown. Particularly during periods of higher volatility,
compounding will cause results for periods longer than a trading day to vary from -200% of
the performance of SpaceX.
As shown in the chart below, the Fund would be expected to lose 17.1% if SpaceX provided
no return over a one year period during which SpaceX experienced annualized volatility of 25%. At higher ranges of volatility, there is a chance of a significant loss of value
in the Fund, even if SpaceX’s return is flat. For instance, if
SpaceX’s annualized volatility is 100%, the Fund would be expected to lose 95% of its value, even if the cumulative return for the year was 0%. Areas shaded red (or dark gray) represent those scenarios where the Fund can be expected to return
less than -200% of the performance of SpaceX and those shaded green (or light gray) represent those scenarios where the Fund can be expected to return more than -200% of the
performance of SpaceX. The table below is not a representation of the Fund’s actual returns, which may be significantly better or worse than the returns shown below as a result of
any of the factors discussed above or in “Daily Inverse Correlation Risk” below.
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Direxion Daily SpaceX Bear 2X ETF
| One
Year |
-200%
One
Year |
Volatility Rate | ||||
| Return |
Return |
10% |
25% |
50% |
75% |
100% |
| -60% |
120% |
506.5% |
418.1% |
195.2% |
15.6% |
-68.9% |
| -50% |
100% |
288.2% |
231.6% |
88.9% |
-26.0% |
-80.1% |
| -40% |
80% |
169.6% |
130.3% |
31.2% |
-48.6% |
-86.2% |
| -30% |
60% |
98.1% |
69.2% |
-3.6% |
-62.2% |
-89.8% |
| -20% |
40% |
51.6% |
29.5% |
-26.2% |
-71.1% |
-92.2% |
| -10% |
20% |
19.8% |
2.3% |
-41.7% |
-77.2% |
-93.9% |
| 0% |
0% |
-3.0% |
-17.1% |
-52.8% |
-81.5% |
-95.0% |
| 10% |
-20% |
-19.8% |
-31.5% |
-61.0% |
-84.7% |
-95.9% |
| 20% |
-40% |
-32.6% |
-42.4% |
-67.2% |
-87.2% |
-96.5% |
| 30% |
-60% |
-42.6% |
-50.9% |
-72.0% |
-89.1% |
-97.1% |
| 40% |
-80% |
-50.5% |
-57.7% |
-75.9% |
-90.6% |
-97.5% |
| 50% |
-100% |
-56.9% |
-63.2% |
-79.0% |
-91.8% |
-97.8% |
| 60% |
-120% |
-62.1% |
-67.6% |
-81.5% |
-92.8% |
-98.1% |
SpaceX had not commenced operations or only recently commenced operations as of the date
of this Prospectus and therefore historical volatility and performance are not yet available. In the future, historical volatility and performance will be presented in
this section. Historical volatility and performance are not indications of what the volatility and performance will be in the future. The volatility of ETFs or financial
instruments utilized by the Fund, such as swaps, may differ from the volatility of SpaceX.
For information regarding the effects of volatility and
performance on the long-term performance of the Fund, see “Additional Information Regarding Investment
Techniques and Policies” in the Fund’s statutory prospectus, and "Leverage - Special Note Regarding the Correlation
Risks of the Funds" in the Fund’s Statement of Additional Information under “Investment Policies and Techniques.”
Leverage Risk — The Fund obtains investment exposure
in excess of its net assets by utilizing leverage and may lose more money
in market conditions that are adverse to its investment objective than a fund that does not utilize leverage. An investment in the Fund typically results in the magnification of a rise in
the daily performance of SpaceX resulting in a larger loss being incurred than if there was no leverage utilized. This means that an investment in the Fund will be reduced by an
amount equal to 2% for every 1% daily rise in SpaceX, not including the costs of financing leverage and other operating expenses, which would further reduce its value. The Fund
could lose an amount greater than its net assets in the event of a rise of more than 50% of SpaceX. This would result in a total loss of a shareholder’s investment in one
day even if SpaceX subsequently reverses all or a portion of its previous movement prior to the end of the day. A total loss of a shareholder’s investment in the Fund may occur in a
single day even if SpaceX’s value does not move fully opposite from the Fund’s investment objective. Leverage will also have the effect of magnifying any differences in the Fund’s
inverse correlation with SpaceX and may increase the volatility of the Fund.
Under market circumstances that cause leverage
to be expensive or unavailable, the Fund may not meet its investment
objective for a period of time, may increase its transaction fee on creation unit transactions, change its investment objective, reduce its leverage or close.
Derivatives Risk — Derivatives are financial instruments
that derive value from the underlying reference asset or assets, such as
stocks, bonds, or funds (including ETFs), interest rates or indexes. Investing in derivatives may be considered aggressive and may expose the Fund to greater risks, and may result in larger losses or
smaller gains, than investing directly in the reference assets underlying those derivatives, which may prevent the Fund from achieving its investment objective.
The Fund’s investments in derivatives may pose risks in addition to, and greater
than, those associated with directly investing in securities or other investments, including risk related to the market, leverage, imperfect correlations with underlying investments or the
Fund’s other portfolio holdings, higher price volatility, lack of availability, counterparty, liquidity, valuation and legal restrictions. The performance of a derivative may not track the
performance of its reference asset for various reasons, including due to fees and other
costs associated with it.
Because derivatives often require only a limited initial investment, the use of derivatives may expose the Fund to losses in excess of the amount
initially invested. As a result, the value of an investment in the Fund may change quickly and without warning. If the underlying security has a dramatic intraday increase or
decrease that causes a material change in the Fund’s performance and/or net assets, the terms of a swap agreement between the Fund and its counterparty may permit the counterparty to
immediately close the swap agreement with the Fund. In that event, the Fund may not be able to enter into another swap agreement or invest in other derivatives to achieve
its investment objective. This may occur even if the underlying security reverses all or a
portion of its intraday movement by the end of the day.
Upon entering into certain derivatives contracts, such as swap agreements, and to maintain open positions in such agreements, the Fund may be
required to post collateral, the amount of which may vary. As such, the Fund may maintain cash balances, which may be significant, with service providers such as the
Fund’s custodian or its affiliates in segregated accounts. Maintaining larger cash and cash equivalent positions may also subject the Fund to additional risks, such as increased
credit risk with respect to the custodian bank holding the assets.
Counterparty Risk — If a counterparty is unwilling or unable
to make timely payments to meet its contractual obligations or fails to
return holdings that are subject to the agreement with the counterparty, the Fund will lose money and/or not be able to meet its daily inverse leveraged investment objective.
Because the Fund may enter into swap agreements with a limited number of counterparties,
this increases the Fund’s exposure to counterparty credit risk. Further, there is a risk that no suitable counterparties will be willing to enter into, or continue to enter
into, transactions with the Fund and, as a result, the Fund may not be able to achieve its inverse leveraged investment objective or rebalance properly, which may result in significant
losses to the Fund. The risk that no suitable counterparties will enter into or continue to provide swap exposure to the Fund may be heightened when
Summary Prospectus
4
Direxion Daily SpaceX Bear 2X ETF
there is significant
volatility in the overall market or the reference asset.
Rebalancing Risk — If for any reason the Fund is unable
to rebalance all or a part of its portfolio, or if all or a portion of the
portfolio is rebalanced incorrectly, the Fund’s investment exposure may not be consistent with its investment objective which may lead to greater losses or reduced gains. In these instances, the
Fund may have investment exposure to SpaceX that is significantly greater or significantly less than its stated investment objective. Additionally, the Fund may close to purchases and
sales of Shares prior to the close of trading on the NYSE Arca or other national securities listing exchanges where Shares are listed and incur significant losses.
Intra-Day Investment Risk— The intra-day performance of Fund shares traded in the secondary market will be
different from the performance of the Fund when measured from the close of
the market on a given trading day until the close of the market on the subsequent trading day. An investor that purchases shares intra-day may experience performance that is greater than, or less
than, the Fund’s stated investment objective.
If there is a significant intra-day market event and/or the securities experience a significant change in value, the Fund may not meet its
investment objective or may be unable to rebalance its portfolio appropriately, resulting in significant losses or reduced gains. In response to significant intraday market volatility, among
other actions, the Adviser may determine to trade a portion or all of the rebalance trade for the Fund prior to market close, which may result in the Fund not achieving its
investment objective. Additionally, the Fund’s Shares traded on the secondary market may experience significant premiums or discounts, or widened bid-ask spreads.
Daily Inverse Correlation Risk - There is no guarantee that the Fund will achieve a high degree of inverse correlation to SpaceX and therefore
achieve its daily inverse leveraged investment objective. The Fund’s exposure to SpaceX is impacted by SpaceX’s movement. Because of this, it is unlikely that the Fund will
be perfectly exposed to SpaceX at the end of each day. The possibility of the Fund being materially over- or under-exposed to SpaceX increases on days when SpaceX is volatile near the
close of the trading day. Market disruptions, regulatory restrictions and high volatility will also adversely affect the Fund’s ability to adjust exposure to the required levels.
The Fund may have difficulty achieving its daily inverse leveraged investment objective
for many reasons, including fees, expenses, transaction costs, financing costs related to the use of derivatives, accounting standards and their application to income items,
disruptions, illiquid or high volatility in the markets for the securities or financial instruments in which the Fund invests, early and unanticipated closings of the markets
on which the holdings of the Fund trade, resulting in the inability of the Fund to execute intended portfolio transactions, regulatory and tax considerations, which may cause the Fund to
hold (or not to hold) SpaceX. The Fund may be required to trade more frequently or may refrain from taking certain positions to ensure compliance
with regulatory restrictions or to ensure qualification as a registered investment company or to improve tax efficiency, or for other reasons, each
of which may negatively impact the Fund’s desired inverse correlation with SpaceX or increase its required distributions.
The derivative instruments or other investments the Fund utilizes to obtain exposure may not provide the expected correlation to SpaceX,
resulting in the Fund not performing as expected. The Fund may be subject to large movements of assets into and out of the Fund, potentially resulting in the Fund being over- or
under-exposed to SpaceX. Any of these factors could decrease the inverse correlation between the performance of the Fund and SpaceX and may hinder the Fund’s ability to meet
its daily inverse leveraged investment objective on or around that day.
Market Risk
— The Fund’s investments are subject
to changes in general economic conditions, general market fluctuations and
the risks inherent in investment in securities markets. Investment markets can be volatile and prices of investments can change substantially due to various factors including, but not limited to, economic
growth or recession, changes in interest rates, changes in the actual or perceived creditworthiness of issuers, general market liquidity, exchange trading suspensions and
closures, geopolitical events, tariffs, trade wars, natural disasters, and public health risks. Interest rates and inflation rates may change frequently and drastically due to various factors
and the Fund’s investments may be adversely impacted.
The economic, fiscal, monetary and foreign policies of the U.S. government, including the imposition of tariffs, changes to its federal agencies
and changes to regulatory policies, will impact the U.S. economy and could lead to increased market volatility and may adversely impact the overall market and individual securities.
Non-Affiliation Risk — SpaceX is not affiliated with the
Trust, the Adviser or any affiliates thereof and is not involved with this
offering in any way, and has no obligation to consider the Fund in taking any corporate actions that might affect the value of the Fund. The Trust, the Fund and any affiliate are not responsible for the
performance of SpaceX and make no representation as to the performance of SpaceX. Investing in the Fund is not equivalent to investing in SpaceX. Fund shareholders will not have
voting rights or rights to receive dividends or other distributions or any other rights with
respect to SpaceX.
Space Exploration Technologies Corp. (“SpaceX”) Investing Risk
— The Fund’s
performance depends on the performance of SpaceX. The price of SpaceX can be affected by a number of factors. Investing in SpaceX involves a high degree of risk. SpaceX operates in a
rapidly changing and highly competitive industry. Returns depend in part on SpaceX’s ability to successfully design, manufacture, launch, and operate space launch vehicles,
spacecraft, and satellite systems while controlling costs and achieving operational reliability. SpaceX faces significant operational and execution risks, and launch failures, delays,
or mission anomalies could result in loss of payloads, contractual penalties, or reputational harm. SpaceX is subject to extensive government regulation, export controls, and
national security requirements, and
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Direxion Daily SpaceX Bear 2X ETF
a significant portion of
its revenue is derived from government contracts that may be delayed, reduced, or terminated. SpaceX may not be able to successfully scale or monetize satellite-based services. SpaceX also
develops and deploys artificial intelligence technologies, and its performance depends in part on its ability to successfully integrate, scale, and commercialize such
technologies. The development and deployment of artificial intelligence systems may expose SpaceX to additional operational, regulatory, reputational, and competitive risks. Any
of these factors may materially and adversely impact the price of SpaceX shares, increase volatility, and negatively impact the performance of the Fund.
SpaceX operates in a highly capital-intensive, technologically
complex, and competitive industry characterized by rapid innovation,
significant research and development costs, and uncertain commercial demand for launch and satellite services. The company’s future growth and profitability will depend on its ability to
execute successful launches, maintain cost efficiencies in rocket and satellite production, scale its Starlink broadband network, and manage risks inherent in manufacturing, launch operations, and
orbital deployment. Operational failures, launch anomalies, manufacturing
defects, or disruptions in critical infrastructure or supply chains could
materially affect its business and financial condition.
SpaceX’s operations are subject to extensive regulation by U.S. and foreign
governmental authorities, including those governing launch licensing, airspace and orbital traffic management, spectrum allocation, export controls, and environmental and safety
compliance. Changes in laws, regulations, or enforcement priorities, or the denial, delay, or revocation of necessary licenses or approvals, could materially restrict
SpaceX’s activities or increase compliance costs. In addition, the global expansion of Starlink’s broadband services subjects SpaceX to international telecommunications, data privacy, and national
security regulations, which may vary across jurisdictions and involve significant legal complexity and compliance risk.
SpaceX may rely on a limited number of government and commercial customers for a
substantial portion of its revenue, including contracts with National Aeronautics and Space Administration (NASA), the U.S. Department of Defense, and other public-sector entities.
The termination, modification, or non-renewal of any such contracts could adversely affect the company’s financial results. SpaceX also depends heavily on key suppliers for
rocket engines, materials, and components, as well as on the performance of its Starlink
satellite network.
SpaceX’s AI products and X platform are subject to complex and evolving U.S. and
foreign laws and regulations regarding privacy, cybersecurity, data use, data combination, data protection, content, AI, competition, youth protection, safety, consumer protection and
notification, advertising, e-commerce, sanctions, export controls, and other matters. Many of these laws and regulations are subject to change and uncertain interpretation,
and they could be required to make changes to our products and business practices, and be exposed to monetary penalties, increased cost of
operations, declines in user growth or engagement, or loss of customers, or other harm to our AI products and X platform.
SpaceX recently commenced its initial public offering (“IPO”) process. The
market value of shares issued in an IPO may fluctuate considerably due to factors such as the absence of a prior public market, unseasoned trading, the small number of shares available for
trading and limited information about a company’s business model, quality of management, earnings growth potential, and other criteria used to evaluate its
investment prospects. Accordingly, investments in shares of a company that recently commenced an IPO involve greater risks than investments in shares of companies that have traded
publicly on an exchange for extended periods of time. The shares of such companies may experience abnormal returns and volatility in the period immediately following its
IPO. Investments in shares of a company that recently commenced an IPO may also involve high transaction costs and are subject to market risk and liquidity risk. The price of
SpaceX shares may be volatile and could decline in value significantly in the future. Any of these factors may materially and adversely impact the price of SpaceX, increase the
volatility of an investment in SpaceX and have a negative impact on the performance of the
Fund.
The Fund’s performance is
significantly tied to the vision, reputation, and continued involvement of the founder and CEO of SpaceX, Elon Musk. Mr. Musk is essential to the company’s strategic
direction and its ability to secure capital and high-level government contracts. However, Mr. Musk manages a diverse portfolio of other major enterprises, including Tesla, Inc., xAI, and
X (formerly Twitter), and may have other advisory roles. These competing priorities could result in a significant diversion of his time and attention away from SpaceX’s
operational milestones, such as the Starship development program or Starlink expansion. Furthermore, Mr. Musk’s public statements and political activities may attract
heightened regulatory scrutiny or result in strained relations with critical government partners like NASA and the Department of Defense. Any sudden departure, incapacity, or significant
reputational impairment of Mr. Musk could lead to extreme volatility in the value of the Fund’s investments, a loss of investor confidence, or the potential cancellation
of key government launch and national security contracts.
Security Volatility Risk — The performance of the Fund is designed to correlate to the inverse leveraged performance of SpaceX. Significant
short-term price movements in SpaceX could adversely impact the performance of both SpaceX and the Fund, increase the Fund’s bid-ask spread and adversely impact the
Fund’s ability to achieve its investment objective. In addition, the net asset value of the Fund over short-term periods may be more volatile than other investment options due to the volatility of
SpaceX.
Concentration Risk — The Fund will be concentrated in
a particular security, SpaceX, and therefore, a particular industry and
will have more than 25% of its total assets in investments that provide inverse leveraged exposure to the communication services sector (the risks of which are described below), the same
industry and/or sector to which SpaceX
Summary Prospectus
6
Direxion Daily SpaceX Bear 2X ETF
is assigned. Since the Fund
is concentrated in a particular security and therefore industry and/or sector, it presents more risks than a portfolio broadly diversified over several industries. A portfolio
invested in multiple securities and industries typically presents less risk than a portfolio concentrated in one security or industry because market changes that adversely impact
one security or industry may benefit others. Because the Fund invests in instruments referencing only one security and industry, it should be expected to decrease from any
market movements that adversely impact SpaceX and/or communication services sector.
Space and Space Exploration Industry Risk — The space and space exploration industry encompasses the building and integration of items to go
into space, including spacecraft, satellites, payloads and products to be used in space or which are related to space. The space industry has seen dramatic increase in investment over a
short period of time. Recent developments and the changing paradigm of space
commercialization, from being dominated by government programs to being
driven by the interests of private companies, are a challenge for regulators. Government regulation, world events, exchange rates and economic conditions, technological
developments and liabilities for environmental damage and general civil liabilities may affect the performance of companies operating within the space industry. Companies engaged in
the transport ecosystem of the space industry may experience share price movements which are cyclical and have occasional sharp price movements which may result from
changes in the economy, fuel prices, labor agreements and insurance costs.
The exploration of space and the utilization of space assets is a business focused on the future and is witnessing new entrants into the market. This
is a global event with a growing number of corporate participants looking to meet the future needs of a growing global population. Therefore, investments in the Fund will be riskier
than traditional investments in established industry sectors and the growth of these companies may be slower and subject to setbacks as new technological advancements are made to expand
into space.
Communication Services Sector Risk — The communication services sector may be dominated by a small number of companies which may lead to
additional volatility in the sector. Communication services companies are particularly vulnerable to the potential obsolescence of products and services due to technological
advances and the innovation of competitors. Communication services companies may also be affected by other competitive pressures, such as pricing competition, as well as
research and development costs, substantial capital requirements, and government regulation. Fluctuating domestic and international demand, shifting demographics, and often
unpredictable changes in consumer demand can drastically affect a communication services company’s profitability. Compliance with governmental regulations, delays or
failure to receive regulatory approvals, or the enactment of new regulatory requirements may negatively affect the business of telecommunication services companies. Certain
companies in the communication services sector may be particular targets of network security breaches, hacking and potential theft of proprietary or consumer
information, or disruptions in services, which would have a material adverse effect on their businesses.
Aerospace and Defense Industry Risk — The aerospace and defense industry can be significantly affected by government regulation and spending
policies because companies involved in this industry rely, to a significant extent, on government demand for their products and services. The financial condition of
companies in this industry is heavily influenced by government defense spending, which may be reduced in efforts to control government budgets. The aerospace industry in
particular has recently been affected by adverse economic conditions and consolidation within the industry.
Artificial Intelligence (AI) and Big Data Company Risk —
Companies engaged in artificial intelligence (“AI”) and big data typically face intense competition and potentially rapid product obsolescence.
These companies are also heavily dependent on intellectual property rights and may be adversely affected by loss or impairment of those rights. There can be no assurance
these companies will be able to successfully protect their intellectual property to prevent the misappropriation of their technology, or that competitors will not develop
technology that is substantially similar or superior to such companies’ technology. AI and big data companies typically engage in significant amounts of spending on research and
development, as well as mergers and acquisitions, and there is no guarantee that the products or services produced by these companies will be successful. The products and services of
AI and big data companies may face obsolescence due to rapid technological
developments and frequent new product or service introduction,
unpredictable changes in growth rates and competition for the services of qualified personnel. AI and big data companies are potential targets for cyberattacks, which can have a materially
adverse impact on the performance of these companies. In addition, AI technology could face increasing regulatory scrutiny in the future, which may limit the development
of this technology and impede the growth of companies that develop and/or utilize this technology. Similarly, the collection of data from consumers and other sources could
face increased scrutiny as regulators consider how the data is collected, stored, safeguarded and used. AI and big data companies may face regulatory fines and penalties, including
forced break-ups, that could hinder the ability of the companies to operate on an ongoing basis. The customers and/or suppliers of AI and big data companies may be concentrated in a
particular country, region or industry. Any adverse event affecting one of these countries, regions or industries could have a negative impact on AI and big data companies.
Country, government, and/or region-specific regulations or restrictions could have an impact
on AI and big data companies.
Money Market Instrument Risk — The Fund may use a variety of money market instruments for cash management purposes, including money market
funds, depositary accounts and repurchase agreements. Money market funds may be subject to credit risk with respect to the debt instruments in which they invest.
Depository accounts may be subject to credit risk with respect to the financial institution in which
Summary Prospectus
7
Direxion Daily SpaceX Bear 2X ETF
the depository account is
held. Money market instruments may lose money.
Liquidity Risk
— Holdings of the Fund may
be difficult to buy or sell or may be illiquid, particularly during times of
market turmoil. There is no assurance that a security or derivative
instrument that is deemed liquid when purchased will continue to be liquid. Illiquid securities may be difficult to value, especially in changing or volatile markets. If the Fund is forced to buy or
sell an illiquid security or derivative instrument at an unfavorable time or price, the Fund may be adversely impacted. Certain market conditions or restrictions may prevent the Fund
from limiting losses, realizing gains or achieving its investment objective. In certain market conditions the Fund may be one of many market participants that is attempting to
transact in the underlying security. Under such circumstances, the market for the underlying security may lack sufficient liquidity for all market participants' trades.
Therefore, the Fund may have more difficulty transacting in the securities or financial instruments and the Fund's transactions could exacerbate illiquidity and price volatility.
To the extent that the instruments utilized by the Fund are thinly traded or have a
limited market, the Fund may be unable to meet its investment objective due to a lack of available investments or counterparties. During such periods, the Fund’s ability
to issue additional Creation Units may be adversely affected. As a result, the Fund’s shares could trade at a premium or discount to their net asset value and/or the bid-ask spread of the
Fund’s shares could widen. Under such circumstances, the Fund may be unable to rebalance its exposure properly which may result in significantly more or less exposure and losses
to the Fund. In such an instance, the Fund may increase its transaction fee, utilize derivatives instruments that are less correlated to SpaceX, change its investment objective, reduce
its exposure for a period of time or close.
Early Close/Trading Halt Risk
— An exchange or market may close early and unexpectedly or issue trading halts on specific securities or
financial instruments. Under such circumstances, the Fund may be unable to execute intended portfolio transactions, rebalance its portfolio, or accurately price its investments,
and may disrupt the Fund’s creation/redemption process which means the Fund may be unable to achieve its investment objective and it may incur substantial losses or reduced
gains.
Equity Securities Risk — Publicly issued equity securities, including common stocks, are subject to market risks that may cause their prices to
fluctuate over time. Fluctuations in the value of equity securities in which the Fund invests, and/or has exposure to, will cause the net asset value of the Fund to fluctuate.
Cash Transaction Risk— At certain times, the Fund may
effect creations and redemptions for cash rather than for in-kind
securities. As a result, the Fund may not be tax efficient and may incur brokerage and financing costs related to buying and selling securities or obtaining derivative exposure to achieve its investment
objective thus incurring additional expenses than if it had effected creations and redemptions in kind. To the extent that such costs are not offset by
transaction fees paid by an authorized participant, the Fund may bear such costs, which will decrease the Fund’s net asset value.
High Portfolio Turnover
Risk— Daily rebalancing of
the Fund’s holdings pursuant to its daily investment objective causes
a much greater number of portfolio transactions when compared to most ETFs. Additionally, active secondary market trading of the Shares could cause more frequent creation and redemption activities,
which would increase the number of portfolio transactions. High levels of portfolio transactions may cause higher transaction costs because of increased broker commissions resulting
from such transactions and increased taxable capital gains. The Fund calculates portfolio turnover without including the short-term cash instruments or derivative transactions
that comprise most of the Fund’s trading. As such, if the Fund’s extensive use of derivative instruments were reflected, the calculated portfolio turnover rate would be significantly
higher.
Tax
Risk — In order to qualify
for the special tax treatment accorded a regulated investment company (“RIC”) and its shareholders, the Fund must derive at least 90% of its gross income for each taxable
year from “qualifying income,” meet certain asset diversification tests at the end of each taxable quarter, and meet annual distribution requirements. The Fund’s pursuit of
its investment strategy will potentially be limited by the Fund’s intention to qualify for such treatment and could adversely affect the Fund’s ability to so qualify. The Fund may make
certain investments, the treatment of which for these purposes is unclear. If, in any year, the Fund were to fail to qualify for the special tax treatment accorded a RIC and its
shareholders, and were ineligible to or were not able to cure such failure, the Fund would be taxed in the same manner as an ordinary corporation subject to U.S. federal income tax on all its
income at the fund level. The resulting taxes could substantially reduce the Fund’s net assets and the amount of income available for distribution. In addition, in order to
requalify for taxation as a RIC, the Fund could be required to recognize unrealized gains, pay substantial taxes and interest, and make certain distributions. Please see the section
entitled “Dividends, Other Distributions and Taxes” in the Statement of Additional Information for more information.
Non-Diversification Risk — The Fund has the ability to invest a relatively high percentage of its assets in the securities of a small number of
issuers or in financial instruments with a single counterparty or a few counterparties. This may increase the Fund’s volatility and increase the risk that the Fund’s
performance will decline based on the performance of a single issuer, the credit of a single counterparty, and/or a single economic, political or regulatory event.
Special Risks of Exchange-Traded Funds
Authorized Participants Concentration Risk. The Fund may have a limited number of financial institutions that may act as Authorized Participants. To the extent that those Authorized Participants exit
the business or are unable to process creation and/or redemption orders, Shares may trade at larger bid-ask spreads and/or premiums or discounts to net asset value. Authorized
Participant concentration risk may be heightened for a fund that invests in non-U.S.
Summary Prospectus
8
Direxion Daily SpaceX Bear 2X ETF
securities or other
securities or instruments that have lower trading volumes.
Absence of Active Market Risk. Although Shares are listed for trading on a stock exchange, there is no assurance that an active trading market for
them will develop or be maintained. In the absence of an active trading market for Shares, they will likely trade with a wider bid/ask spread and at a greater premium or discount to net
asset value.
Market Price Variance Risk. Fund
Shares can be bought and sold in the secondary market at market prices, which may be higher or lower than the net asset value of the Fund. When Shares trade at a price
greater than net asset value, they are said to trade at a “premium.” When they trade at a price less than net asset value, they are said to trade at a
“discount.” The market price of Shares fluctuates based on changes in the value of the Fund’s holdings, the supply and demand for Shares and other market factors. The market price of Shares may vary
significantly from the Fund’s net asset value especially during times of market volatility or stress. Further, to the extent that exchange specialists, market makers, Authorized
Participants, or other market participants are unavailable or unable to trade the Fund’s Shares and/or create or redeem Creation Units premiums or discounts may increase.
Trading Cost Risk. When buying or selling Shares in the secondary market, a buyer may incur brokerage commission or other charges. In addition,
a buyer may incur the cost of the “spread” also known as the bid-ask spread, which is the difference between what investors are willing to pay for Fund shares (the
“bid” price) and the price at which they are willing to sell Fund shares (the “ask” price). The bid-ask spread varies over time based on, among other things, trading volume, market
liquidity and market volatility. Because of the costs inherent in buying or selling Fund shares, frequent trading may detract significantly from investment results.
Exchange Trading Risk. Shares are listed for trading on the NYSE Arca. They also may be listed or traded on other U.S.
and non-U.S. stock exchanges and may trade on electronic communication
networks. Trading in Shares on their listing exchange may be halted due to market conditions or for reasons that, in the view of the exchange, make trading in Shares inadvisable, including
if they fail to meet the listing requirements of the exchange. Under certain circumstances, Shares may even be delisted. Trading halts of Shares should be expected to disrupt the
Fund’s creation/redemption process and may temporarily prevent investors from buying and selling Shares. Like other listed securities, Shares of the Fund may be sold short, and
short positions in Shares may place downward pressure on their market price.
Fund Performance
No prior investment performance is provided for the Fund because it had not commenced operations prior to the date of this Prospectus. Upon commencement of operations, updated performance will be available on the Fund’s website
at www.direxion.com/etfs?producttab=performance or by calling the Fund toll-free at (866)
476-7523.
Management
Investment Adviser. Rafferty Asset Management, LLC is the Fund’s investment adviser.
Portfolio Managers. The following members of Rafferty’s investment team are jointly and primarily responsible for the day-to-day management of the Fund:
| Portfolio Managers |
Years of Service
with the Fund |
Primary Title |
| Paul Brigandi |
Since Inception |
Portfolio Manager |
| Tony Ng |
Since Inception |
Portfolio Manager |
Purchase and Sale of Fund Shares
The Fund’s individual shares may only be purchased or sold in the secondary market
through a broker-dealer or other financial intermediaries at market price rather than at net asset value. The market price of Shares will fluctuate in response to changes in the
value of the Fund’s holdings and supply and demand for the Shares, which may result in shareholders purchasing or selling the Shares on the secondary market at a market
price that is greater than net asset value (a premium) or less than net asset value (a discount). Additionally, a shareholder may incur costs attributable to the difference
between the highest price a buyer is willing to pay for the Fund’s Shares (bid) and the lowest price a seller is willing to accept for the Fund’s Shares (ask) when buying
or selling Shares on the secondary market (the “bid-ask spread”) in addition to brokerage commissions. The bid-ask spread may vary over time for Shares based on trading volume and market
liquidity. Recent information regarding the Fund Shares such as net asset value, market price, premiums and discounts, bid-ask spreads, and related other information is
available on the Fund’s website, www.direxion.com/etfs?producttab=performance.
The Fund’s shares are not individually redeemable by submitting Shares to the Fund. The Fund will issue and redeem Shares for cash only to
Authorized Participants in large blocks, known as creation units, each of which is comprised of 10,000 Shares.
Tax Information
The Fund intends to make distributions that may be taxed as ordinary income or long-term
capital gains. Those distributions will be subject to federal income tax and may also be subject to state and local taxes, unless you are investing through a
tax-deferred arrangement, such as a 401(k) plan or an individual retirement account. Distributions or investments made through tax-deferred arrangements may be taxed later upon withdrawal.
Distributions by the Fund may be significantly higher than those of most other ETFs.
Payments to Broker-Dealers and Other Financial Intermediaries
If you purchase shares of the Fund through a broker-dealer or other financial intermediary (such as a bank or financial adviser), the Fund and/or
its Adviser may pay the intermediary for the sale of Fund shares and related services. These payments may create a conflict of interest by influencing the broker-dealer or other
financial intermediary and your salesperson to recommend the Fund over another investment. Ask your salesperson or visit your financial intermediary’s website for more
information.
Summary
Prospectus
9
Direxion Daily SpaceX Bear 2X ETF
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