Direxion Long/Short Global IPO Fund

DXIIX CUSIP: 254939887
DXCGX CUSIP: 254939317
Inception Date: 3/1/2010

The Fund seeks capital appreciation through a risk controlled portfolio. To achieve its investment objective, the Fund invests in initial public offerings ("IPO's") and spin-offs using a combined long/short strategy developed by the Sub advisor – IPOX Capital Management, LLC.

The fund uses the methodology developed by IPOX® Capital Management to establish a long/short portfolio made up of IPOs and new equity issues.

This portfolio is managed through three distinct parts of the IPO Life cycle;

June 2010

Provided by: IPOX Capital Management, LLC.

The fund was insulated from the big falls in the global benchmarks last month, declining to by -0.13% from its March 1st inception value, while continuing to trade at a negative correlation to global benchmarks. Throughout most of the quarter, the fund carried a net long position of 20%. Our foreign currency exposure remained unhedged, which pressured the long portfolio.

Global IPO activity remained robust and the fund participated in a number of IPOs, including L'Occitaine, the French cosmetics group going public in Hong Kong, Christian Hansen, the Danish producer of food ingredients, Jupiter Asset Management, the UK-based Fund Manager, Life Healthcare, the South African hospital operator and Telsa, the US based battery car manufacturer.

Performance was disappointing in the Large, more heavily weighted companies in the 74 member, $149bn market-cap long portfolio. For example, heavily weighted Dai-Ichi Life and Samsung Life were pressured more than the markets after the cancellation of Prudential's planned takeover of AIGs Asian insurance operations. However, the relative weakness of the heavyweights was compensated by strongly positive performance in emerging growth companies such as Gree Inc., a 2.7% position in the fund which grew +22.13%, and selected IPOs from Emerging South East Asia, such as Indorama Ventures, a 2.3% position in the fund, up +27.91% and Bank Tabundan Negarak, 2.0% of the fund, which grew +30.77%.

Throughout the course of the quarter, short exposure to companies domiciled in the US was increased at the expense of companies domiciled in China. This helped the fund to regain traction towards the end of the quarter as the 100 member, $258bn market cap short portfolio fell sharply.

Global IPO activity is expected to run at a brisk pace during Q3 2010. The fund seeks to remain net long by participating in upcoming deals, including China Agricultural Bank, the world’s largest IPO YTD and Ocado, the UK online grocer. Following successful investments in South East Asian IPOs, we intend to also increase our focus on Indonesian, Korean, Malaysian and Thailand IPOs.