Share-split context: A forward split was recorded on Aug 25, 2016 with coefficient 4. A forward split turns each old share into multiple new shares and lowers the quoted price per share proportionally. Proportional ownership is unchanged at the split moment, so the split itself creates neither a gain nor a loss. The price-return figures in this report are already split-adjusted.

ETF Education Report: Direxion Daily Real Estate Bull 3X Shares (DRN)

What this ETF is trying to do

The DRN ETF is a leveraged fund. This means it is designed to amplify the movements of the real estate market. It is not a standard fund that simply tracks an index; it uses financial tools to try to provide three times the daily performance of its target area.

What the numbers show

The current price of DRN is $8.06. Because this fund has a history of "forward splits," we look at split-adjusted returns to understand its performance. In a forward split, one old share becomes multiple new shares, which makes the price per share look lower, even though your total ownership stays the same.

Here is how the fund has performed:

• Year-to-Date (YTD) Price Return: -5.40%

• Year-to-Date (YTD) Total Return: -3.59%

• One-Year Price Return: -13.98%

• One-Year Total Return: -11.82%

• Three-Year Price Return: 24.00%

• Three-Year Total Return: 33.35%

It is important to know the difference between these numbers. The price return only shows how much the share price changed. The total return includes both the price change and any cash distributions (dividends) paid out.

Income and distribution explanation

This ETF pays out cash to investors. The distribution yield is 2.84%. This number describes the cash payments relative to the current ETF price. Over the last 12 months, there were 4 payouts, usually occurring on a quarterly basis. While these payments provide cash income, they do not guarantee that your original investment will stay at the same value.

NAV erosion explanation

"NAV erosion" is a term used to describe a decline in the value of the fund's underlying assets. StockValueFinder uses an erosion-risk score to measure this risk. DRN has an erosion score of 75, which is labeled as "mild price erosion." This is a measurement of risk and not a definitive proof that the fund's value has collapsed.

Pros

• The fund has shown a positive three-year total return of 33.35%.

• It provides regular cash distributions (usually quarterly).

Cons

• The fund has experienced a share-price decline over the last year.

• It is a leveraged fund, which can lead to higher volatility.

• The five-year total return is -58.28%.

Top Holdings

The following are the top holdings in this portfolio (note: this list is partial):

• IXRE SWAP ASSET LEG: 69.31%

• DREYFUS GOVT CASH MAN INS: 3.72%

• WELLTOWER INC: 3.22%

• PROLOGIS INC: 2.48%

• EQUINIX INC: 2.00%

Beginner takeaway

When looking at ETFs like DRN, it is important to distinguish between price returns and total returns. A high distribution yield can provide cash, but it does not protect you from a falling share price. Because this is a leveraged fund, its value can move much faster than the general real estate market.