Obtaining liquidity in the High Yield market with Direxion Funds

Historically, it has been somewhat difficult to get liquid exposure to the High Yield market. This is because transaction costs associated with high yield bond trading have tended to be relatively high. As a result, many fund companies assess fees at redemption to limit the effect of transaction costs on performance.

Direxion's high yield bond funds, however, feature:

> the ability to invest long or short;
> daily liquidity; and
> no transaction fees.

By using a credit derivative index* for core exposure the funds remain liquid, which provides investors with the ability to actively trade the market daily.

Regardless of your perspective of the markets, Direxion offers a fund to help investment professionals and their clients obtain liquid exposure to the High Yield market:

> Dynamic HY Bond Fund
> HY Bear Fund

Dynamic HY Bond Fund (PDHYX)

Finding a fund with daily liquidity in the High Yield market has historically been challenging for most investors. The Direxion Dynamic HY Bond Fund, however, is an actively managed fund that offers investors long exposure to the High Yield market. This Fund has the potential to be a useful tool within a closely monitored portfolio, since liquid exposure has proven to be beneficial to many investors implementing these strategies in recent years.

The Dynamic HY Bond Fund seeks to maximize total return (income plus capital appreciation) by investing primarily in debt instruments, including convertible securities, and derivatives of such instruments, with an emphasis on lower-quality debt instruments.

HY Bear Fund (PHBRX)

Introduced in 2005, the Direxion HY Bear Fund is a unique product that seeks to profit from falling prices by shorting high yield investments. HY Bear also uses a credit derivative index for core exposure, which facilitates daily liquidity in the Fund.

Direxion HY Bear is useful for:

> Hedging: Investors holding illiquid long High Yield positions may be unable to liquidate due to factors such as redemption fees, short-term trading fees, illiquid market conditions, and tax implications. Direxion HY Bear can be used to hedge under such circumstances.
> Shorting: Investors can participate in High Yield market downtrends by actively trading The Direxion HY Bear Fund.
> Long/Short Strategy: Direxion HY Bear can be used in a long/short strategy to give investors the potential to take advantage of downward trends in the market.

*By using a credit derivative index, the Fund takes on counterparty risk. Counterparty risk is easily managed with collateral agreements, but represents an incremental risk to the Fund not found in funds without derivative exposure.

The risks associated with the Dynamic HY Bond Fund and HY Bear Fund are detailed in the prospectus. These include risks of the investment adviser's investment strategy, credit risk and lower-quality debt instruments, market timing activity and high portfolio turnover, risks of aggressive investment techniques, risks of investing in derivatives, swap agreement risks, adverse market conditions, interest rate changes, prepayment risk, risk of non-diversification, and risk of shorting instruments.

An investor should consider the investment objectives, risks, charges, and expenses of the Direxion funds carefully before investing. The prospectus contains this and other information about Direxion funds. To obtain a prospectus, please contact Direxion Funds at 800.851.0511. The prospectus should be read carefully before investing. Investing in index funds may be more volatile than investing in broadly diversified funds.

Date of First Use: May 19, 2009. Distributed by: Rafferty Capital Markets, LLC.