Fees and Expenses
The
following table describes the fees and expenses that you will incur if you own shares of the Fund.
You will also incur usual and customary brokerage
commissions when buying or selling shares of the Fund, which are not reflected in the example that follows:
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Annual Fund Operating Expenses
(expenses that you pay each year as a
percentage of the value of your investment)
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Management Fee
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0.60%
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Other Expenses
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0.53%
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Total Annual Fund Operating Expenses
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1.13%
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Fee Waivers and Expense Reimbursement(1)
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0.53%
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Total Annual Operating Expenses After Fee Waivers and Expense Reimbursement
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0.60%
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(1)
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Effective September 28, 2012, the Adviser has contractually agreed through September 30, 2013 to waive fees and/or reimburse the Funds expenses in order to limit
the Funds net annual operating expenses to 0.60% of the Funds average daily net assets, except for interest expense, taxes, brokerage expenses, distribution fees or expenses, litigation expenses and other extraordinary expenses (the
Expense Cap). The impact of the Expense Cap is that, in accordance with and as required thereunder, the Adviser will reimburse the Fund for the cost of compensation paid to the Trusts non-interested trustees (the Independent
Trustees) in respect of the Independent Trustees service to the Fund (Independent Trustee Fees). The Expense Cap will remain in effect until at least September 30, 2013 and may only be terminated with the consent of the
Trusts Board (and may not be terminated by the Adviser) prior to that time. The fee table reflects the effect of the Expense Cap.
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Example.
This example is intended to help you compare the cost of investing in the Fund with the cost of
investing in other funds.
This example assumes that you invest $10,000 in the Fund for the time periods indicated and then sell all of your Shares at
the end of those periods. The example also assumes that your investment has a 5% return each year and that the Funds operating expenses remain the same. Although your actual costs may be higher or lower, based on these assumptions your costs
would be:
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1 Year
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3 Years
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5 Years
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10 Years
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$36
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$161
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$298
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$696
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Portfolio Turnover.
The Fund pays transaction costs, such as commissions, when it buys and sells securities (or turns
over its portfolio). A higher portfolio turnover rate may indicate higher transaction costs and may result in higher taxes when Fund shares are held in a taxable account. These costs, which are not reflected in annual fund operating expenses
or in the example, affect the Funds performance. During the most recent fiscal year, the Funds portfolio turnover rate was 34% of the average value of its portfolio.
Principal Investment Strategies
The Underlying Index is designed to provide exposure to Brazilian equity markets, while at the same time mitigating exposure to fluctuations between the value of
the U.S. dollar and Brazilian real. As of March 31, 2013, the MSCI Brazil US Dollar Hedged Index consisted of 81 securities with an average market capitalization of approximately $6.0 billion and
a minimum market capitalization of approximately $469.4 million. The Underlying Index hedges the Brazilian real to the U.S. dollar by selling Brazilian real currency forwards at the one-month forward rate published by WM/Reuters.
For U.S. investors, international equity investments include two components of return. The first is the return attributable to stock prices in the non-U.S. market
or markets in which an investment is made. The second is the return attributable to the value of non-U.S. currencies in these markets relative to the U.S. dollar. The Underlying Index and the Fund seek to track the performance of equity securities
in the Brazilian markets that is attributable solely to stock prices.
The Fund, using a passive or indexing investment approach, attempts
to approximate the investment performance of the Underlying Index. The Adviser and/or Sub-Adviser expect that, over time, the correlation between the Funds performance and that of the Underlying Index before fees and expenses will be 95% or
better. A figure of 100% would indicate perfect correlation.
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The Adviser and/or Sub-Adviser use a representative sampling indexing strategy to manage the Fund.
Representative sampling is an indexing strategy that involves investing in a representative sample of securities that collectively has an investment profile similar to the Underlying Index. The securities selected are expected to have,
in the aggregate, investment characteristics (based on factors such as market capitalization and industry weightings), fundamental characteristics (such as return variability and yield) and liquidity measures similar to those of the Underlying
Index. The Fund may or may not hold all of the securities in the Underlying Index. The Fund intends to enter into forward currency contracts designed to offset the Funds exposure to non-U.S. currencies. A forward currency contract is a
contract between two parties to buy or sell a specific currency in the future at an agreed-upon rate. The amount of forward contracts in the Fund is based on the aggregate exposure of the Fund and Underlying Index to each non-U.S. currency. While
this approach is designed to minimize the impact of currency fluctuations on Fund returns, this does not necessarily eliminate exposure to all currency fluctuations. The return of the forward currency contracts may not perfectly offset the actual
fluctuations of non-U.S. currencies relative to the U.S. dollar.
The Fund will normally invest at least 80% of its net assets, plus the amount of any borrowings for investment
purposes, in equity securities of issuers from Brazil and in instruments designed to hedge the Funds exposure to Brazilian real. In addition, the Fund will invest at least 80% of its total assets (but typically far more) in instruments that
comprise the Underlying Index. The Fund may also invest in depositary receipts in respect of equity securities that comprise the Underlying Index to seek performance that corresponds to the Underlying Index. Investments in such depositary receipts
will count towards the 80% investment policy discussed above with respect to instruments that comprise the Underlying Index.
Industry Concentration
Policy.
The Fund will concentrate its investments (
i.e.
, hold 25% or more of its total assets) in a particular industry or group of industries to the extent that its Underlying Index is concentrated.
As of March 31, 2013, the Underlying Index was substantially comprised of issuers in the financial services sector.
Summary of Principal Risks
As with any investment, you
could lose all or part of your investment in the Fund, and the Funds performance could trail that of other investments. The Fund is subject to the principal risks noted
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below, any of which may adversely affect the Funds NAV, trading price, yield, total return and ability to meet its investment objective, as well as numerous other risks that are described
in greater detail in the section of the Prospectus entitled Further Discussion of Principal Risks and in the Statement of Additional Information (SAI).
Risks Related to Investing in Brazil.
Investments in securities of Brazilian companies are subject to regulatory and economic interventions that the Brazilian government has frequently exercised in
the past, including the setting of wage and price controls, blocking access to bank accounts, imposing exchange controls and limiting imports. In addition, the Brazilian securities markets may be subject to greater market volatility, lower trading
volume, greater risk of market shut down, higher transactional and custody costs, decreased market liquidity and various administrative difficulties, such as delays in clearing and settling portfolio transactions. The Brazilian government has often
changed monetary, taxation, credit, tariff and other policies to influence the core of Brazils economy. Investments are also subject to certain restrictions on foreign investment as provided by Brazilian law. The market for Brazilian
securities is directly influenced by the flow of international capital, and economic and market conditions of certain countries, especially
emerging market countries. The Brazilian economy has historically been subject to high rates of inflation and a high level of debt, all of which may stifle economic growth. Brazil is heavily
dependent on exports to its trading partners, including the United States, China and other countries in Central and South America, and reduction in spending on Brazilian products or adverse economic events in any of these countries may impact the
Brazilian economy. Despite rapid development in recent years, Brazil still suffers from high levels of corruption, crime and income disparity. There is the possibility that such conditions may lead to social unrest and political upheaval in the
future, which may have adverse effects on the Funds investments. In addition, the Fund may invest in depositary receipts which involve similar risks to those associated with investments in foreign securities.
Currency Risk.
The Fund enters into forward currency contracts to attempt to minimize the impact of changes in the value of the non-U.S. currencies
included in the Underlying Index against the U.S. dollar. These contracts may not be successful. Changes in currency exchange rates and the relative value of non-U.S. currencies may affect the value of the Funds investment and the value of
your Fund shares. To the extent the Funds forward currency contracts are not successful in hedging against such changes, the U.S. dollar value of your investment in
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the Fund may go down if the value of the local currency of the non-U.S. markets in which the Fund invests depreciates against the U.S. dollar. Furthermore, because no changes in the currency
weights in the Underlying Index are made during the month to account for changes in the Underlying Index due to price movement of securities, corporate events, additions, deletions or any other changes, changes in the value of the non-U.S.
currencies included in the Underlying Index against the U.S. dollar during the month may affect the value of the Funds investment. Currency exchange rates can be very volatile and can change quickly and unpredictably. Therefore, the value of
an investment in the Fund may also go up or down quickly and unpredictably and investors may lose money.
Forward Currency Contracts Risk.
The Fund invests in forward currency contracts. A forward currency contract is a negotiated agreement between the contracting parties to exchange a specified amount of currency at a specified future time at a specified rate. The rate can be higher
or lower than the spot rate between the currencies that are the subject of the contract. Forward currency contracts may be used to protect against uncertainty in the level of future foreign currency exchange rates or to gain or modify exposure to a
particular currency. Hedging the Funds currency risks involves the risk of mismatching the Funds
objectives under a forward contract with the value of securities denominated in a particular currency. Furthermore, such transactions reduce or preclude the opportunity for gain if the value of
the currency should move in the direction opposite to the position taken. There is an additional risk to the effect that currency contracts create exposure to currencies in which the Funds securities are not denominated. Unanticipated changes
in currency prices may result in poorer overall performance for the Fund than if it had not entered into such contracts.
Equity Securities
Risk.
An investment in the Fund involves risks similar to those of investing in any fund of equity securities, such as market fluctuations, changes in interest rates and perceived trends in stock prices. Equity securities are subject to
volatile changes in value and their values may be more volatile than other asset classes.
Financial Services Sector Risk.
The Fund
invests a significant portion of its assets in securities of issuers in the financial services sector in order to track the Underlying Indexs allocation to that sector. The financial services sector is subject to extensive government
regulation, can be subject to relatively rapid change due to increasingly blurred distinctions between service segments, and can be significantly affected by availability and cost of capital
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funds, changes in interest rates, the rate of corporate and consumer debt defaults, and price competition. In addition, the deterioration of the credit markets since late 2007 generally has
caused an adverse impact in a broad range of markets, including U.S. and international credit and interbank money markets generally, thereby affecting a wide range of financial institutions and markets. In particular, events in the financial sector
since late 2008 have resulted, and may continue to result, in an unusually high degree of volatility in the financial markets, both domestic and foreign. This situation has created instability in the financial markets and caused certain financial
services companies to incur large losses. Numerous financial services companies have experienced substantial declines in the valuations of their assets, taken action to raise capital (such as the issuance of debt or equity securities), or even
ceased operations. These actions have caused the securities of many financial services companies to experience a dramatic decline in value. Moreover, certain financial companies have avoided collapse due to intervention by the U.S. or foreign
regulatory authorities, but such interventions have often not averted a substantial decline in the value of such companies common stock. Issuers that have exposure to the real estate, mortgage and credit markets have been particularly affected
by the foregoing events and the general
market turmoil, and it is uncertain whether or for how long these conditions will continue.
Market Risk.
The prices of the securities in the Fund are subject to the risks associated with investing in equity securities, including general
economic conditions and sudden and unpredictable drops in value. The Funds NAV and market price, like security prices generally, will fluctuate within a wide range in response to these and other factors.
Small and Medium Capitalization Company Risk.
Investing in securities of small and medium capitalization companies involves greater risk than
customarily is associated with investing in larger, more established companies. These companies securities may be more volatile and less liquid than those of more established companies. These securities may have returns that vary, sometimes
significantly, from the overall securities market. Often small and medium capitalization companies and the industries in which they focus are still evolving and, as a result, they may be more sensitive to changing market conditions.
Passive Investment Risk.
The Fund is managed with a passive investment strategy, attempting to track the performance of an unmanaged index of
securities. This differs from an actively managed fund, which typically seeks to outperform a benchmark
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index. As a result, the Fund may hold constituent securities of the Underlying Index regardless of the current or projected performance of a specific security or a particular industry or market
sector. Maintaining investments in securities regardless of market conditions or the performance of individual securities could cause the Funds return to be lower than if the Fund employed an active strategy.
Tracking Error Risk.
The performance of the Fund may diverge from that of its Underlying Index due to operating expenses, transaction costs, cash
flows and operational inefficiencies. In addition, the Funds use of a representative sampling approach may cause the Fund to not be as well correlated with the return of the Underlying Index as would be the case if the Fund purchased all of
the securities in the Underlying Index in the proportions represented in the Underlying Index. Because the Fund bears the costs and risks associated with buying and selling securities while such costs and risks are not factored into the return of
the Underlying Index, the Funds return may deviate significantly from the return of the Underlying Index.
Cash Redemption Risk.
Because the Fund invests a portion of its assets in foreign currency forward contracts, the Fund may pay out a portion of its redemption proceeds in cash rather than through the
in-
kind delivery of portfolio securities. The Fund may be required to unwind such contracts or sell portfolio securities in order to obtain the cash needed to distribute redemption proceeds. This
may cause the Fund to recognize a capital gain that it might not have incurred if it had made a redemption in-kind. As a result the Fund may pay out higher annual capital gains distributions than if the in-kind redemption process was used. Only
certain institutional investors known as authorized participants who have entered into an agreement with the Funds distributor may redeem shares from the Fund directly; all other investors buy and sell shares at market prices on an exchange.
Valuation Risk.
The value of the securities in the Funds portfolio may change on days when shareholders will not be able to
purchase or sell the Funds shares.
Non-Diversification Risk.
The Fund is non-diversified and may invest a large percentage of its
assets in securities issued by or representing a small number of issuers. As a result, the Fund may be more exposed to the risks associated with and developments affecting an individual issuer or a smaller number of issuers than a fund that invests
more widely. This may increase the Funds volatility and cause the performance of a relatively smaller number of issuers to have a greater impact on the Funds performance.
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Concentration Risk.
To the extent that the Funds investments are concentrated in a particular
industry, the Fund will be susceptible to loss due to adverse occurrences affecting that industry.
Geographic Investment Risk.
Because
the Fund invests a significant portion of its assets in the securities of a single country, it is more likely to be impacted by events or conditions affecting that country. For example, political and economic conditions and changes in regulatory,
tax or economic policy in a country could significantly affect the market in that country and in surrounding or related countries and have a negative impact on the Funds performance.
Performance Information
The bar chart and table below provide some indication of the risks of investing in
the Fund by showing changes in the Funds performance from year to year and by showing how the Funds average annual returns for one year and since inception compare with those of the Index and a broad measure of market performance. The
Funds past performance (before and after taxes) is not necessarily an indication of how the Fund will perform in the future. Updated performance information is available on the Funds website at www.dbxus.com.
Calendar Year Total Return as of 12/31
The Funds year-to-date return was -3.66% as of March 31, 2013.
During the periods shown in the above chart, the Funds highest and lowest calendar quarter returns were 8.59% and -11.14%, respectively, for the quarters
ended March 31, 2012 and June 30, 2012.
Average Annual Total Returns for the Periods Ended December 31, 2012
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Year 1
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Since
Inception
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Returns Before Taxes
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2.53
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%
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(5.67
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%)
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Returns After Taxes on Distributions
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0.68
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%
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(7.30
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%)
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Returns After Taxes on Distributions and Sale of Fund Shares
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2.83
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%
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(5.37
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%)
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MSCI Brazil US Dollar Hedged Index
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3.60
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%
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(2.97
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%)
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MSCI Brazil Index
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0.05
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%
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(12.67
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%)
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All after-tax returns are calculated using the historical highest individual federal marginal income tax rates and do
not reflect the impact of any state or local tax. Your own actual after-tax returns will depend on your tax situation and may differ from what is shown here. After-tax returns are not relevant to investors who hold shares of the Fund in tax-deferred
accounts such as individual retirement accounts (IRAs) or employee-sponsored retirement plans.
Management
Investment Adviser.
DBX Advisors LLC.
Sub-Adviser.
TDAM USA Inc.
Portfolio Managers.
Vishal Bhatia and Dino Bourdos, each a Portfolio Manager, are primarily responsible for the day-to-day
management of the Fund. Each Portfolio Manager functions as a member of a portfolio manager team. Messrs. Bhatia and Bourdos have been Portfolio Managers of the Fund since the Funds inception.
Payment to Broker-Dealers and Other Financial Intermediaries.
If you purchase shares of the Fund through a
broker-dealer or other financial intermediary (such as a bank), the Adviser or other related companies may pay the intermediary for marketing activities and presentations, educational training programs, the support of technology platforms and/or
reporting systems or other services related to the sale or promotion of the Fund. These payments may create a conflict of interest by influencing the broker-dealer or other intermediary and your salesperson to recommend the Fund over another
investment. Ask your salesperson or visit your financial intermediarys website for more information.
For important information about the
purchase and sale of Fund shares and tax information, please turn to Summary Information about Purchases and Sales of Fund Shares and Taxes on page 61 of the Prospectus.
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