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Direxion changes objective of leveraged index mutual funds

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Direxion, a provider of alternative investment strategies to sophisticated investors, is changing the investment objective for all of its leveraged index mutual funds.

Effective 30 September 2009, the funds will begin seeking monthly investment results, rather than daily results.

Also effective with this change, funds that sought to achieve 250 per cent or -250 per cent of the performance of their index on a daily basis will now seek to achieve 200 per cent or -200 per cent of the performance of their index on a monthly basis.

"Direxion’s leveraged products are powerful investment tools for sophisticated investors who seek magnified exposure to the markets," says Dan O’Neill, Direxion’s president. "While our leveraged daily ETFs are designed primarily for traders seeking more immediate results based on short-term market movements, our leveraged monthly mutual funds are well-suited for investors implementing sophisticated investment strategies with slightly longer time frames."

The monthly mutual funds are intended for investors seeking to use leverage to execute short- to medium-term tactical investment manoeuvres.

The effects of compounding may still be substantial for the monthly mutual funds over multiple-month periods. However, monthly rebalancing funds can allow for greater manageability of market exposure levels throughout each month. The exposure levels that investors obtain when they purchase a fund remain constant until the fund rebalances on the last trading day of the month, or until the investor sells, whichever occurs earlier.

If investors make intra-month purchases – on any day other than the last trading day of the month – the total exposure of the fund may be higher or lower than the stated (2x or -2x) monthly objective.

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