SEC Division of Trading and Markets no-action letter: Direxion Shares ETF Trust

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

DIVISION OF
TRADllIlG AND MARKETS October 30, 2008
Francine J. Rosenberger
K&L Gates LLP
1601 K Street, N.W.
Washington, D.C. 20006
Re: Direxion Shares ETF Trust

File No. TP. 08-87

Dear Ms. Rosenberger:
In your letter dated October 30, 2008, as supplemented by conversations with the staff ofthe Division ofTrading and Markets ("Staff'), Direxion Shares ETF Trust (the "Trust") on behalfofitself, NYSE Arca, Inc. ("NYSE Arca") or any other national securities exchange or national securities association on or through which the exchange traded shares of the Trust ("Shares"), may subsequently trade, Foreside Fund Services, LLC, and persons or entities engaging in transactions in Shares, requests from the Staff or from the Commission, exemptions from, or interpretive or no-action advice regarding Rules 14e-5 and 10b-17 under the Securities Exchange Act of 1934 as amended ("Exchange Act"), and Rules 101 and 102 of Regulation M. We have enclosed a photocopy ofyour letter. Each defined term in this letter has the same meaning as defined in your letter, unless we note otherwise. The Trust was organized on April 23, 2008, as a Delaware statutory t~t. The Trust is .registered with the Commission under the Investment Company Act of 1940 (as amended "1940 Act") as an open-end management investment company. The Trust currently consists of32 separate Funds, eight ofwhich are the subject of this request for relief: Large Cap Bull 3X Shares, Small Cap Bull 3X Shares, Energy Bull 3X Shares, Financial Bull 3X Shares (collectively, "Bull Funds"), Large Cap Bear 3X Shares, Small Cap Bear 3X Shares, Energy Bear 3X Shares, and Financial Bear 3X Shares (collectively, "Bear Funds"). Each Fund has a distinct investment objective which is different than that of the other Funds. Each of the Funds attempts to achieve its investment objective by corresponding to a specified multiple of the daily performance, or the inverse daily performance, of a particular Underlying Index. The Funds are indexed funds employing the same types of investment strategies as conventional index funds. Rather than holding positions intended to create exposure to 100% ofthe daily performance of an Underlying Index, the Bull Funds hold positions designed to create exposure equal to three times (300%), before fees and expenses, the daily performance of its Underlying Index. To accomplish this goal, each Bull Fund holds 80% to 100% of its total assets in the component securities that comprise its Underlying Index and the remainder ofits assets is devoted to Financial Instruments and Money Market Instruments that are intended to create the additional exposure needed to such Underlying Index necessary to pursue its investment objectives.