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SUGAR SOARS, GOLD FALLS: INSIDE COM ETF’S Q3 MOVES AND PREP FOR Q4

October 18, 2023
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Year to date the Direxion Auspice Broad Commodity Strategy ETF (COM) has once
again demonstrated impressive risk/return characteristics, standing at +3.82%
YTD as of 9/30, outshining the majority of its peers (Bloomberg). Most broad
commodity index peers have lagged behind COM year to date, grappling with higher
volatility and significant drawdowns.

While the commodity markets exhibited a mixed performance in the third quarter,
Crude Oil took the spotlight with a massive rally.

The Energy complex's robust quarterly performance boosted broad commodity
indices overweighted to Energy, such as the S&P GSCI Excess Return Index (S&P
GSCI) and Deutsche Banc Liquid Commodity Optimum Yield Index (DBC CI).

Examining the Auspice Broad Commodity Index (ABCERI) Index, the tactical
rules-based broad commodity index that COM seeks to track; the strategy's
ability to capture the majority of the commodity return stream while mitigating
downside risks relative to commodity index peers becomes evident (ABCERI Index
vs Bloomberg Commodity Excess Return Index (BCOM), S&P GSCI & DBC CI).

ABCERI*S&P GSCI*BCOM*DBC CI* (1) Annualized Returns2.09%-2.12%-2.17%0.57%(2)
Annualized Standard Deviation8.83%21.56%14.66%17.53%(3) Max
Drawdown-43.08%-79.62-66.09%-64.99(4) Correlation1.000.610.710.69

Source: Bloomberg Finance, L.P., from 9/30/2010 – 9/30/2023

Please click here for standardized performance of the fund.

The performance data quoted represents past performance. Past performance does
not guarantee future results. The investment return and principal value of an
investment will fluctuate. An investor’s shares, when redeemed, may be worth
more or less than their original cost. Current performance may be lower or
higher than the performance quoted. Returns for performance under one year are
cumulative, not annualized.

Short-term performance, in particular, is not a good indication of the fund’s
future performance, and an investment should not be made based solely on
returns. Because of ongoing market volatility, fund performance may be subject
to substantial short-term changes. For additional information, see the fund’s
prospectus.

(1) Annualized Return and past performance does not guarantee future results.
Index returns and correlations are historical and are not representative of any
Fund performance. Total returns of the Index include reinvested dividends. One
cannot invest directly in an index. (2) Standard Deviation is a measure of the
dispersion of a set of data from its mean. (3) Maximum Drawdown is the greatest
percent decline from a previous high. (4) Correlation is a statistical measure
of how two securities move in relation to each other.

COM avoided long positions within the Energy complex throughout the first half
of this year, sidestepping steep losses from the previous year. However, as some
individual energy components started trending higher, the strategy implemented
long positions from mid-July into August, excluding Natural Gas due to supply
overhang. The Energy sector experienced significant gains in the quarter led by
Heating Oil and Crude Oil. Although fears of a global demand slowdown pervaded
throughout the quarter, it was more than offset by continued supply concerns.
OPEC+ commitment to longer term supply cuts has limited already tight oil
supplies. In addition, the green energy initiatives are helping to keep refinery
output at muted levels, further hampering supply. Despite China’s current
economic doldrums, particularly in real estate, they continue to stockpile oil.

Other emerging markets economies such as India, have been faring much better
economically this year, and their sustained demand has made up for any perceived
China oil slowdown. In fact, India has supplanted China and is now the world’s
most populated country. India currently has the 3rd largest middle-class
population and expected to be the largest by 2027. India is set to spend nearly
20% of its budget on capital investments for fiscal year 2023, the most in a
decade. The Auspice team has indicated that by 2030 India is expected to have 3x
the consumption China experienced in 2020. This should have significant
ramifications for already tight commodity supplies. Lastly, perhaps the biggest
wildcard when it comes to Oil prices is the ongoing geopolitical risk.

The Metals sector struggled overall during the quarter. Gold and Silver both
sustained losses while Copper treaded water. Copper couldn’t sustain any upward
price momentum as the Chinese economy continued to be under pressure led by
their real estate crisis, directly impacting the Industrial Metal.

During the quarter, COM went to Cash with both Silver and Gold, locking in gains
in Gold from earlier in the year before selling off. The U.S. Dollar rallied
strongly, partly due to U.S. interest rates climbing as the Fed’s narrative
became “higher for longer” regarding rates. As we have discussed, Gold and
Silver are most susceptible to a stronger U.S. Dollar and as result sent metal
prices lower. In addition, with interest rates eclipsing 15+ year highs, Gold
tends to become a less attractive alternative to many investors.

The Grains and Softs had a mixed quarter as all three grain markets were down in
varying degrees, while Sugar and Cotton showed some strong upside. Soybeans and
Wheat led the decline as USDA stockpiles came in higher than analyst forecasts.
Russia’s plentiful wheat supply flooding the market along with above expected
wheat yields sent prices to 3-year lows. The drop in Soybeans and Wheat led to
some indirect pressure on Corn prices. One caveat is the ongoing Russia-Ukraine
conflict and if Black Sea tensions reemerge after the collapse of a safe passage
deal. The Black Sea is the artery for roughly 1/3 of the world’s total wheat
exports.

Sugar had another strong quarter as continued worries about the crop production
in Asian areas hit by dry weather conditions led to USDA cutting Thailand (3rd
largest sugar cane exporter) sugar estimates by over 10%. Also, possible
restrictions by India on its sugar exports to keep prices within the country
more stabilized could lead to further shortages. Additional use of sugar in the
production of ethanol could also impact prices. Sugar is the top performer
within the portfolio in 2023.

As the last quarter of 2023 unfolds, COM holds long positions in six commodities
(Heating Oil, Crude Oil, Gasoline, Soybeans, Sugar and Cotton) out of the
possible twelve, leveraging its ability to enter and exit positions based on
price trends. In the face of persistent inflation, rising energy prices,
elevated food prices, and increasing wages, commodities are poised for another
upswing. With interest rates reaching pre-financial crisis levels, rising yields
tends to coincide with higher commodity prices.

In conclusion, we believe COM ETF's strategic prowess shines in the
ever-shifting commodity markets, offering investors a reliable "all weather"
approach to broad commodity investing.



*Definitions and Index Descriptions

*The Auspice Broad Commodity Index (ABCERI) is a rules-based long/flat broad
commodity index that seeks to capture the majority of the commodity upside
returns, while seeking to mitigate downside risk. The Index is made up of a
diversified portfolio of 12 commodities futures contracts (Silver, Gold, Copper,
Heating Oil, Natural Gas, Gasoline, Crude Oil, Wheat, Soybeans, Corn, Cotton,
and Sugar) that based on price trends can individually be Long or Flat (in
Cash). One cannot directly invest in an index.

*S&P GSCI Excess Return Index (S&P GSCI) is a composite index of commodity
sector returns representing an unleveraged, long-only investment in commodity
futures that is broadly diversified across the spectrum of commodities

*Deutsche Banc Liquid Commodity Optimum Yield Index (DBC CI) is an index
composed of futures contracts on 14 of the most heavily-traded and important
physical commodities in the world.

*Bloomberg Commodity Excess Return Index (BCOM) is a broadly diversified index
that allows investors to track 19 commodity futures through a single, simple
measure.

Investing involves risk including possible loss of principal.

An investor should carefully consider the Fund’s investment objective, risks,
charges, and expenses before investing. The Fund’s prospectus and summary
prospectus contain this and other information about the Direxion Shares. To
obtain the Fund’s prospectus and summary prospectus call 866-476-7523 or visit
our website at www.direxion.com. The Fund’s prospectus and summary prospectus
should be read carefully before investing.

Direxion Shares Risks - An investment in the Fund involves risk, including the
possible loss of principal. The Fund is non-diversified and includes risks
associated with concentration that results from the Fund’s investments in a
particular industry, sector, or geographic region which can result in increased
volatility. The Fund’s use of derivatives such as futures contracts and swaps
are subject to market risks that may cause their price to fluctuate over time.
Risks of the Fund include, but are not limited to, Index Correlation Risk, Index
Strategy Risk, Derivatives Risk, Commodity-Linked Derivatives Risk, Futures
Strategy Risk, Leverage Risk, Counterparty Risk, Cash Transaction Risk,
Subsidiary Investment Risk, Interest Rate Risk, and Tax Risk. Please see the
summary and full prospectuses for a more complete description of these and other
risks of the Fund.

Exchange-traded commodity futures contracts generally are volatile and are not
suitable for all investors. The value of a commodity-linked derivative
investment typically is based upon the price movements of a physical commodity
and may be affected by changes in overall market movements, volatility of the
index, changes in interest rates, or factors affecting a particular industry or
commodity, such as global pandemics, weather and other natural disasters,
changes in supply and production, embargoes, tariffs and international economic,
political and regulatory developments and changes in speculators' and/or
investors' demand. Commodity-linked derivatives also may be subject to credit
and interest rate risks that in general affect the value of debt securities. The
Fund’s investments in derivatives may pose risks in addition to, and greater
than, those associated with directly investing in securities or other
investments.

Risks associated with the use of futures contracts are (a) the imperfect
correlation between the change in market value of the instruments held by the
Fund and the price of the futures contract; (b) possible lack of a liquid
secondary market for a futures contract and the resulting inability to close a
futures contract when desired; (c) losses caused by unanticipated market
movements, which are potentially unlimited; (d) the Index’s inability to predict
correctly the direction of securities prices, interest rates, currency exchange
rates and other economic factors; (e) the possibility that the counterparty will
default in the performance of its obligations; and (f) if the Fund has
insufficient cash, it may have to sell securities or financial instruments from
its portfolio to meet daily variation margin requirements, which may lead to the
Fund selling securities or financial instruments at a time when it may be
disadvantageous to do so.

Distributor: Foreside Fund Services, LLC.

Next Up


NEXT UP: TOP 10 LEVERAGED & INVERSE ETFS IN THE MARKET LATELY

In the latest video, we highlight the top 10 Leverage & Inverse ETF movers and
shakers in the last 10 trading days.

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An investor should carefully consider a Fund’s investment objective, risks,
charges, and expenses before investing. A Fund’s prospectus and summary
prospectus contain this and other information about the Direxion Shares. To
obtain a Fund’s prospectus and summary prospectus call 866-476-7523 or click
here. A Fund’s prospectus and summary prospectus should be read carefully before
investing.

Investing in a Direxion Shares ETF may be more volatile than investing in
broadly diversified funds. The use of leverage by a Fund increases the risk to
the Fund. The Direxion Shares ETFs are not suitable for all investors and should
be utilized only by sophisticated investors who understand leverage risk,
consequences of seeking daily leveraged, or daily inverse leveraged, investment
results and intend to actively monitor and manage their investment.

Direxion Funds Risks - An investment in the Funds involves risk, including the
possible loss of principal. The Funds are non-diversified and include risks
associated with concentration risk which results from the Funds’ investments in
a particular industry or sector and can increase volatility over time. Active
and frequent trading associated with a regular rebalance of a fund can cause the
price to fluctuate, therefore impacting its performance compared to other
investment vehicles. For other risks including correlation, compounding, market
volatility and risks specific to an industry or sector, please read the
prospectus.

Direxion Shares Risks - An investment in the ETFs involves risk, including the
possible loss of principal. The ETFs are non-diversified and include risks
associated with concentration that results from an ETF’s investments in a
particular industry or sector which can increase volatility. The use of
derivatives such as futures contracts and swaps are subject to market risks that
may cause their price to fluctuate over time. The ETFs do not attempt to, and
should not be expected to, provide returns which are a multiple of the return of
their respective index for periods other than a single day. For other risks
including leverage, correlation, daily compounding, market volatility and risks
specific to an industry or sector, please read the prospectus.

Hong Kong Investors - This website and the investment products referenced herein
("Website") are directed to persons who are "Professional Investors" within the
meaning of the Hong Kong Securities and Futures Ordinance (Cap. 571)
("Ordinance"). This Website is not directed to the general public in Hong Kong.
You agree that your use of this Website is subject to you reviewing and
acknowledging the terms of this disclaimer and the website’s terms of use.
Information herein is not intended for Professional Investors in any
jurisdiction in which distribution or purchase is not authorized. This Website
does not provide investment advice or recommendations, nor is it an offer or
solicitation of any kind to buy or sell any investment products. Direxion Asia
Limited ("DAL") is licensed with and regulated by the Securities Futures
Commission of Hong Kong ("SFC") (CE Number: BAZ386) to provide services to
Professional Investors. DAL does not maintain nor is it responsible for the
contents of this Website, which has not been approved by the SFC. DAL is an
affiliate of other companies within the Direxion Group companies which may
manage the products and provide the services described herein, which are not
directed to the general public in Hong Kong. Companies within the Direxion Group
which do not carry out regulated activities in Hong Kong are not subject to the
provisions of the Ordinance. Foreside Fund Services, LLC is the distributor for
the Direxion Shares in the United States only.

Distributor: Foreside Fund Services, LLC.