Direxion Funds is about to slim down its fund lineup. The Newton, Massachusetts-based leveraged index fund specialists' fund board of trustees has decided to close and liquidate four of the firm's offerings: the China Bear 2X Fund, the Dow 30 Bull 1.25X Fund, the Latin America Bear 2X Fund and the NASDAQ-100 Bull 1.25X Fund. The funds will close on October 31 and liquidate on November 14.

Andy O'Rourke, vice president and marketing director with Direxion, said that all four funds had simply failed to "generate as much assets" as hoped. For the NASDAQ bull fund, O'Rourke said that the more-leveraged version, the NASDAQ-100 Bull 2.5X Fund, has gained more traction, while the Dow generated less interest than the NASDAQ ones. As for these two bear funds, O'Rourke said that Direxion had hoped the recent down markets would boost them, and when no such boost occurred, the decision to shut them down made sense.

"More people go to cash than go to the bear fund," O'Rourke told MFWire, adding that Direxion has more new funds, including ETFs, on the way.

"We're focused on expanding our product offering in other ways," O'Rourke said.

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NASDAQ-100® Bull 1.25X Fund
Dow 30SM Bull 1.25X Fund
Latin America Bear 2X Fund
China Bear 2X Fund

each a Series of the
DIREXION FUNDS

Supplement dated October 17, 2008
to the Prospectus dated August 28, 2008

On October 6, 2008, the Board of Trustees of the Direxion Funds (the “Trust”), based upon the recommendation of management, determined to close four of its series, the NASDAQ-100® Bull 1.25X Fund, Dow 30SM Bull 1.25X Fund, Latin America Bear 2X Fund and China Bear 2X Fund (the “Funds”). The Funds will be closed to new purchases of additional shares as of the close of trading on October 31, 2008 (except purchases made through reinvestment of dividends, if any) and will be liquidated on or about November 14, 2008 (the “Liquidation Date”). Each Fund will no longer pursue its stated investment objective after November 7 and may no longer pursue its objective earlier if a Fund’s assets fall below $2 million, as noted in the “Investment Techniques and Policies – Defensive Policy” section on page 5 of the Prospectus.

Any shareholder who has not redeemed his or her shares of the Funds, or exchanged them for shares of other investment series of the Trust, prior to the Liquidation Date, will receive a check representing the shareholder's proportionate interest in the net assets of the Funds as of the Liquidation Date.

Please retain this Supplement with the Prospectus.

 

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