Direxion/Wilshire Dynamic Fund

DXDWX CUSIP: 254939416
DXDWX Inception Date: 3/2/2009
DXWCX CUSIP: 254939325
DXWCX Inception Date: 3/1/2010

The Direxion/Wilshire Dynamic Fund ("Dynamic Fund") seeks capital appreciation. To achieve its investment objective, the Dynamic Fund combines a strategic asset allocation with a "tactical overlay" to position the Dynamic Fund defensively or aggressively, depending upon the outlook of the Subadviser.

Under normal circumstances, the Dynamic Fund is managed by the Adviser pursuant to the Subadviser's traditional asset allocation model which allocates approximately 60% of the Dynamic Fund's total assets to equity securities and 40% to fixed income securities, with a tactical overlay to increase or decrease the Dynamic Fund’s risk exposure based on the Subadviser's outlook for the market. The Subadviser's tactical model evaluates asset class allocations on a monthly basis. In response to market conditions, the Subadviser may recommend that the Adviser rebalance the Dynamic Fund's portfolio, use short positions and/or employ leverage in its tactical allocations.

July 2010

Allocation Summary:

This month the Direxion/Wilshire Dynamic Fund (the Fund) reduced its overweight positions in U.S. investment grade fixed income sectors including Treasuries, TIPS and credit, while maintaining a neutral position in high yield and non-U.S. investment grade fixed income. The Fund reduced the magnitude of its underweight positions in both U.S. and non-U.S. equities and cash continued to be used as part of the Fund’s defensive posture. Relative to the Strategic Asset Allocation (SAA), the Fund's beta increased to .87 from .80.

• Fixed Income: net exposure of 46.5% (an decrease of 4.0% over last month)
• Equities: net exposure of 50.5% (an increase of 4.5% over last month)
• Cash: net exposure of 6% (a decrease of 2.0% over last month)
• Commodities: net exposure of 1.5% (a decrease of 0.5% over last month)

Investor optimism continued to wane in June as the Wilshire 5000 Total Market IndexSM returned -5.54 percent on mixed economic news and continued worries about the sovereign debt crisis in Europe. Nine out of ten GICS sectors posted a negative return, led down by cyclical sectors Consumer Discretionary and Materials, while defensive Utilities generated the only positive performance. Governments across Europe including Germany and France continued to announce austerity measures with the MSCI EAFE Index falling -1.0 percent. Emerging markets performed in line with their developed market counterparts, returning -0.74 percent for the month. The Fund’s enduring underweight to equities, both within the U.S. and abroad, was a benefit to performance as those markets struggled.

As equities suffered, investors flocked to the relative safe haven of bonds with the Barclays Aggregate Bond Index returning 1.57 percent. For June TIPS turned in strong performance of 1.43 percent and high yield reversed course from the negative turn it took in May, up 1.30 percent. Developed market international bonds also did well, up 1.67 percent, while emerging market bonds did even better, up 2.03 percent. The defensive position of the Fund, as reflected in its broad overweight to fixed income, was additive as investors sought the safety of bonds as equities fell.