Direxion/Wilshire Dynamic Fund

A Share
Symbol: DXDWX
CUSIP: 254939416
Inception Date: 03/02/2009

C Share
Symbol: DXWCX
CUSIP: 254939325
Inception Date: 03/01/2010

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.

February 29, 2012

Allocation Summary:

This March the Direxion/Wilshire Dynamic Fund upheld its neutral weight position in the high yield and non-U.S. fixed income asset classes, as well as the overweight position in U.S. investment grade fixed income. The position in U.S. and non-U.S. equities was increased to neutral weight as volatility remains stable and global macro concerns have abated to some extent. The Fund maintained the overweight position in commodities as correlations across asset classes remain favorable to enhance risk diversification through alternative asset classes. The Fund's beta modestly increased to 1.01, making it neutrally positioned relative to the Strategic Asset Allocation (SAA).

The U.S. equity market rallied in February, with the Wilshire 5000 Total Market IndexSM delivering a 4.23 percent return. Continuing from January, all size and style segments were positive this month, with the large-cap growth segment of the market performing the best. After delivering the relative top performance in January, the micro-cap style reversed its trend in February, returning the lowest relative performance of 2.65 percent. Nine out of ten GICS sectors delivered positive performance this month, with the Energy and Information Technology sectors delivering the strongest performance, returning 6.07 and 6.99 percent, respectively. The more defensive Materials and Utilities sectors turned in more muted performance, returning -0.18 and 0.65 percent, respectively. Following the trend from January, developed international equity markets gained more than their domestic peers this month, with the MSCI EAFE Index returning 5.74 percent. Emerging Markets performed slightly better, returning 5.99 percent. On a regional basis the Pacific region lagged, with the MSCI Pacific Index returning 4.81 percent. Europe was the top performer, with the MSCI Europe Index returning 6.33 percent. Global real estate markets also made gains, appreciating by 2.35 percent.

As equities rallied this month, bonds were left nearly unchanged, with the Barclays U.S. Aggregate Bond Index losing -0.02 percent. As investors remained in a risk-on mode, Long-Term Treasuries suffered the widest loss among fixed-income securities, falling by -2.07 percent, while TIPS also struggled, returning -0.33 percent. On the other hand, credit and high yield outperformed this month, returning 0.75 and 2.37 percent, respectively.