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Deutsche Asset
& Wealth Management
Deutsche X-trackers MSCI international
currency-hedged equity ETFs
Strategy overview
Important information
DBX Advisors LLC (DBX) is the investment advisor to the Deutsche X-trackers ETFs, which are distributed by ALPS Distributors, Inc.
(ALPS). DBX is a subsidiary of Deutsche Bank AG, neither of which is affiliated with ALPS.
Carefully consider the funds’ investment objectives, risk factors and charges and expenses before investing. This and other important
information can be found in the funds’ prospectuses, which may be obtained by downloading a prospectus at deutsche-etfs.com.
Read the prospectus carefully before investing.
Risks
Investing involves risk, including possible loss of principal. Funds that invest in specific countries or geographic regions may be more
volatile than investing in broadly diversified funds. Securities focusing on a single country may be more volatile. In addition to the
normal risks associated with investing, international investments may involve risk of capital loss from unfavorable currency
fluctuations, from differences in generally accepted accounting principles or from economic or political instability in other nations.
Emerging markets involve heightened risks related to the same factors as well as increased volatility and lower trading volume. There
are additional risks because of potential fluctuations in currency and interest rates. Investing in derivatives entails special risks relating
to liquidity, leverage and credit that may reduce returns and increase volatility.
Indexes are unmanaged and you cannot invest directly in an index.
Shares of the funds may be sold throughout the day on the exchange through any brokerage account. However, shares may only be
purchased and redeemed directly from the funds by authorized participants in very large creation/redemption units. There is no
assurance that an active trading market for shares of a fund will develop or be maintained.
MSCI is a servicemark of MSCI Inc. (MSCI) and has been licensed for use by DBX. The funds are not sponsored, endorsed, issued,
sold or promoted by MSCI nor does MSCI make any representation regarding the advisability of investing in the funds.
Deutsche Asset & Wealth Management represents the asset management and wealth management activities conducted by Deutsche
Bank AG or any of its subsidiaries. Clients will be provided Deutsche Asset & Wealth Management products or services by one or
more legal entities that will be identified to clients pursuant to the contracts, agreements, offering materials or other documentation
relevant to such products or services.
Deutsche Asset
& Wealth Management
1
Definitions
Price-to-earnings ratio (P/E) ratio compares a company’s current share price to its per-share earnings.
Standard deviation is often used to represent the volatility of an investment and depicts how widely an investment’s returns vary from the investment’s average return over a
certain period.
The MSCI EAFE Index captures large- and mid-cap representation across developed-market countries around the world, excluding the United States and Canada. The MSCI
EAFE U.S. Dollar Hedged Index is calculated using the same methodology as its corresponding MSCI EAFE Index, but is designed to mitigate exposure to fluctuations between
the value of the U.S. dollar and non-U.S. currencies.
The MSCI Emerging Markets Index captures large- and mid-cap representation across 21 emerging markets. The MSCI Emerging Markets U.S. Dollar Hedged Index is calculated
using the same methodology as its corresponding MSCI Emerging Markets Index, but is designed to mitigate exposure to fluctuations between the value of the U.S. dollar and
non-U.S. currencies.
The MSCI Brazil Index is designed to track the performance of the large- and mid-cap segments of the Brazilian market. The MSCI Brazil U.S. Dollar Hedged Index is calculated
using the same methodology as its corresponding MSCI Brazil Index, but is designed to mitigate exposure to fluctuations between the value of the U.S. dollar and Brazilian real.
The MSCI Germany Index is designed to track the performance of the large- and mid-cap segments of the German market. The MSCI Germany U.S. Dollar Hedged Index is
calculated using the same methodology as its corresponding MSCI Germany Index, but is designed to mitigate exposure to fluctuations between the value of the U.S. dollar and
euro.
The MSCI Japan Index is designed to track the performance of the large- and mid-cap segments of the Japanese market. The MSCI Japan U.S. Dollar Hedged Index is
calculated using the same methodology as its corresponding MSCI Japan Index, but is designed to mitigate exposure to fluctuations between the value of the U.S. dollar and
Japanese yen.
The MSCI Europe Index captures large- and mid-cap representation across 15 developed-market countries and five emerging-market countries in Europe. The MSCI Europe U.S.
Dollar Hedged Index is designed to provide exposure to equity securities in 16 developed European stock markets, while at the same time mitigating exposure to fluctuations
between the value of the U.S. dollar and selected non-U.S. currencies.
The MSCI Asia ex Japan Index captures large- and mid-cap representation across two of three developed-markets countries (excluding Japan) and eight emerging-market
countries in Asia. The MSCI Asia Pacific Ex Japan U.S. Dollar Hedged Index is designed to provide exposure to equity securities in developed and emerging stock markets in the
Asia-Pacific region (excluding Japan), while at the same time mitigating exposure to fluctuations between the value of the U.S. dollar and selected non-U.S. currencies.
The MSCI United Kingdom Index is designed to measure the performance of the large- and mid-cap segments of the UK market. The MSCI United Kingdom U.S. Dollar Hedged
Index is designed to provide exposure to the equity market of the United Kingdom, while at the same time mitigating exposure to fluctuations between the value of the U.S. dollar
and British pound sterling.
The MSCI ACWI ex USA U.S. Dollar Hedged Index is designed to provide exposure to equity securities in developed and emerging stock markets (excluding the United States),
while at the same time mitigating exposure to fluctuations between the value of the U.S. dollar and selected non-U.S. currencies.
The MSCI Korea 25/50 U.S. Dollar Hedged Index is designed to provide exposure to South Korean equity markets, while at the same time mitigating exposure to fluctuations
between the value of the U.S. dollar and the South Korean won.
The MSCI Mexico IMI 25/50 U.S. Dollar Hedged Index is designed to provide exposure to the Mexican equity markets, while at the same time mitigating exposure to fluctuations
between the value of the U.S. dollar and Mexican peso.
The U.S. Dollar Index measures the performance of the U.S. dollar vs. a basket of currencies including the euro, yen, British pound, Canadian dollar and Swiss franc.
The S&P 500 Index tracks the performance of 500 leading U.S. stocks and is widely considered representative of the U.S. equity market.
It is not possible to invest directly in an index.
G10 is the eleven industrialized nations that meet on an annual basis to consult each other, debate and cooperate on international financial matters. The member countries are:
France, Germany, Belgium, Italy, Japan, the Netherlands, Sweden, the United Kingdom, the United States and Canada, with Switzerland playing a minor role.
DAX is a blue chip index consisting of 30 major German companies trading on the Frankfurt Stock Exchange.
Deutsche Asset
& Wealth Management
2
Agenda
01
About Deutsche Asset & Wealth Management
02
International Investing
03
Understanding foreign currency risk
04
Deutsche X-trackers MSCI international currency-hedged equity ETF suite
05
Appendix: How currency hedging works
About Deutsche Asset & Wealth Management
Deutsche Asset & Wealth Management is proud to offer a complete suite of active,
passive and alternative investments catering to retail, institutional and wealth
management clients.
By the numbers
About us
— With more than $1.31 trillion of invested assets
globally as of 6/30/14, Deutsche Asset & Wealth
Management is one of the world’s largest and
best-known investment organizations.1
— Deutsche Asset & Wealth Management’s
investment platform is structured to deliver worldclass investment strategies across the entire
asset class spectrum.
— #2 in provider of exchange-traded products in
Europe,1 #5 in provider of ETFs globally.2
— The extensive capabilities of our integrated
organization creates new opportunities to bolster
our traditional active management product line.
— #1 retail asset manager in Germany1
— #1 insurance asset manager globally1
(1) Sample selection only. All rankings based on AUM / IA. Definition of wealth segment varies by player for Wealth Management. Market positions as of 2013.
(2) Source: Synthetic Equity & Index Strategy: Europe Monthly ETF Market Review, Sebastian Mercado, Ari Ragendra, Shan Lan, dbResearch, April 8, 2014, pg. 35
Source: Scorpio Partnership, BCG Asset Management Benchmark database, BVI, eVestment, Insurance Asset Manager, DB Research, Towers Watson, Hedge Fund Manager,
Company Annual Reports, DeAWM analysis. Deutsche Asset & Wealth Management represents the asset management and wealth management activities conducted by
Deutsche Bank AG or any of its subsidiaries including DBX Advisors.
Deutsche Asset
& Wealth Management
4
Exchange-traded products by Deutsche Asset &
Wealth Management
A global ETP powerhouse
Our U.S. business
— We manage more than 350 exchange-traded products
worldwide, with more than $68 billion in assets in the
United States, Europe, Africa and Asia, making us one of
the world’s leading providers of exchange-traded
products. 1
— We launched the first exchange-traded fund (ETF) for
U.S. investors that provides broad exposure to
commodities, along with the first ETF to provide U.S.
investors with direct access to China A-shares.2
— In the United States, we manage over 60 products,
including ETFs and exchange-traded notes (ETNs), with
approximately $11.6 billion in assets under
management.1
— Our full lineup provides innovative solutions in costeffective, exchange-listed wrappers.
— We offer a full suite of Deutsche X-trackers MSCI
international currency-hedged equity ETFs.
— We are the first provider to offer comprehensive access
to China's equity markets.
Product breakdown (ETFs)1
International Currency
Hedged
9%
9%
Target Date
34%
9%
Commodity
Currency
24%
15%
Income
China
(1) Source: Deutsche Asset & Wealth Management as of 6/30/14.
(2) Source: Deutsche Asset & Wealth Management.
Deutsche Asset & Wealth Management represents the asset management and wealth management activities conducted by Deutsche Bank AG or any of its subsidiaries including DBX Advisors.
Deutsche Asset
& Wealth Management
5
Deutsche Asset & Wealth Management
U.S. exchange-traded funds and notes1
Deutsche X-trackers
PowerShares DB
China-focused equity
Commodities
—
Deutsche X-trackers Harvest MSCI All China Equity ETF (CN)
—
PowerShares DB Agriculture Fund (DBA)
—
Deutsche X-trackers Harvest CSI 300 China A-Shares ETF (ASHR)
—
PowerShares DB Base Metals Fund (DBB)
—
Deutsche X-trackers Harvest CSI 500 China A-Shares Small Cap ETF (ASHS)
—
PowerShares DB Commodity Index Tracking Fund (DBC)
International currency-hedged equity
—
PowerShares DB Energy Fund (DBE)
—
Deutsche X-trackers MSCI All World ex U.S Hedged Equity ETF (DBAW)
—
PowerShares DB Gold Fund (DGL)
—
Deutsche X-trackers MSCI EAFE Hedged Equity ETF (DBEF)
—
PowerShares DB Oil Fund (DBO)
—
Deutsche X-trackers MSCI Emerging Markets Hedged Equity ETF (DBEM)
—
PowerShares DB Precious Metals Fund (DBP)
—
PowerShares DB Silver Fund (DBS)
—
Deutsche X-trackers MSCI Asia Pacific ex Japan Hedged Equity ETF (DBAP)
Currencies
—
Deutsche X-trackers MSCI Europe Hedged Equity ETF (DBEU)
—
PowerShares DB G10 Currency Harvest Fund (DBV)
—
Deutsche X-trackers MSCI Brazil Hedged Equity ETF (DBBR)
—
PowerShares DB U.S. Dollar Index Bearish Fund (UDN)
—
Deutsche X-trackers MSCI Germany Hedged Equity ETF (DBGR)
—
PowerShares DB U.S. Dollar Index Bullish Fund (UUP)
—
Deutsche X-trackers MSCI Japan Hedged Equity ETF (DBJP)
—
Deutsche X-trackers MSCI Mexico Hedged Equity ETF (DBMX)
—
Deutsche X-trackers MSCI South Korea Hedged Equity ETF (DBKO)
—
Deutsche X-trackers MSCI United Kingdom Hedged Equity ETF (DBUK)
Target date
—
Deutsche X-trackers 2010 Target Date ETF (TDD)
—
Deutsche X-trackers 2020 Target Date ETF (TDH)
—
Deutsche X-trackers 2030 Target Date ETF (TDN)
—
Deutsche X-trackers 2040 Target Date ETF (TDV)
—
Deutsche X-trackers In Target Date ETF (TDX)
Income
—
Deutsche X-trackers Municipal Infrastructure Revenue Bond ETF (RVNU)
—
Deutsche X-trackers Solactive Investment Grade Subordinated Debt ETF (SUBD)
—
Deutsche X-trackers Regulated Utilities ETF (UTLT)
Deutsche Asset
& Wealth Management
Funds focusing on a single sector generally experience greater volatility. PowerShares DB
funds invest directly in commodity or currency futures. You may lose principal and these
products will be successful only if significant losses are avoided. PowerShares DB branded
funds and the exchange-traded funds are not mutual funds or any other type of
investment company within the meaning of the Investment Company Act of 1940, as
amended, and are not subject to regulation thereunder. Certain PowerShares DB ETFs are
registered with the SEC under the Securities Act of 1933, as amended, and distributed by
ALPS Distributors, Inc. Commodities and futures are volatile and are not suitable for all
investors. The PowerShares DB branded funds must be preceded or accompanied by a
prospectus. To view a prospectus, please click on the fund name above.
You may lose principal and these products will be successful only if significant losses are
avoided. Carefully consider the funds’ investment objectives, risk factors, charges and
expenses before investing. This and other information can be found in each fund
prospectus, available at 1-855-DBX-ETFS (1-855-329-3837). Read the prospectus
carefully before investing
(1) Our platform also includes 32 exchange-traded notes.
6
International Investing
Deutsche X-trackers MSCI international currency-hedged equity ETFs
A broader opportunity set
International equities not only outweigh U.S. equities in the MSCI ACWI Index, but international countries have
become more prominent contributors to the world’s gross domestic product (GDP)
Country weights in MSCI ACWI Index
International
United States
U.S. Contribution to world GDP
45%
40%
15.2%
1.7%
2.0%
2.8%
3.3%
3.4%
3.7%
3.9%
35%
30%
48.9%
25%
20%
15%
7.4%
7.8%
10%
5%
United States 48.9%
Japan 7.4%
France 3.7%
Switzerland 3.3%
China 2.0%
Other 15.2%
Country weighting source: MSCI 6/30/2014.
GDP from World Bank as of 12/31/2013.
See Index and GDP definitions on slide 2.
Deutsche Asset
& Wealth Management
United Kingdom 7.8%
Canada 3.9%
Germany 3.4%
Australia 2.8%
Korea 1.7%
0%
U.S. Contribution to world GDP
8
Still attractive recovery potential ahead for
international equities
Eurozone equity market has lagged other markets since trough in 2009
S&P 500
172.48%
DAX
158.69%
MSCI World
145.98%
MSCI Europe
MSCI Emerging Markets
MSCI EMU
~26%
Recovery
potential to
match U.S.
138.49%
120.85%
120.62%
~25%
Recovery potential
to market average
Source: Thomson Reuters Datastream, Return indices in €, January 27th, 2014. Past performance is no guarantee of future results.
Deutsche Asset
& Wealth Management
9
Adding international diversification
International investments can complement current U.S. allocations. Many international vs. U.S. correlations have
decreased over the past few years, giving the potential for increased diversification and lower risks.
Correlations between MSCI international indexes and the MSCI USA Index
Year
ACWI ex
USA vs
EM
EAFE
Brazil
Germany
Japan
AC Asia
Pacific ex
Japan
Europe
U.K.
Mexico
Korea
2010
0.95
0.91
0.94
0.88
0.79
0.77
0.88
0.92
0.92
0.83
0.78
2011
0.96
0.85
0.91
0.78
0.83
0.43
0.86
0.92
0.96
0.72
0.65
2012
0.87
0.79
0.85
0.78
0.85
0.70
0.79
0.83
0.80
0.53
0.81
2013
0.81
0.59
0.83
0.45
0.75
0.38
0.58
0.86
0.84
0.71
0.22
Source: MSCI, see index definitions on slide 2.
Correlation refers to how securities perform in relation to one another. A 1.0 correlation indicates that two security types move in exactly the same direction. A –1.0 correlation
indicates movement in exactly opposite directions. A zero correlation implies no relation in the movements. Diversification does not eliminate the risk of experiencing investment
losses.
Deutsche Asset
& Wealth Management
10
Understanding foreign currency risk
Deutsche X-trackers MSCI international currency-hedged equity ETFs
Identifying the risks of international investing:
Control the contrallables
Even when investing in U.S.
dollars, an international equity
investor is exposed to
fluctuations in local currencies of
underlying holdings.
Currency risk
Equity Risk
Typically, investors
are unaware of this
risk and how to
control it.
Typically, investors
manage this through
portfolio
diversification.
International equity investors
are also exposed to the equity
risk that comes with any
economic and/or political
changes of individual countries.
With various central banks
implementing monetary policies,
currency shifts can be
unpredictable.
Hedged products are designed to mitigate the exposure to fluctuations between the value of the
U.S. dollar and non-U.S. currencies while allowing pure exposure to international equity markets.
Diversification does not guarantee protection against losses.
Deutsche Asset
& Wealth Management
12
Currency risk misconceptions vs. realities
Misconceptions
Realities
Currency risk is an inherent component of
international equity investing and cannot be
controlled in an efficient and cost-effective manner.
Through the use of currency-hedged equity ETFs,
investors are able to strip out or dampen currency
fluctuations from their international equity
portfolios.
Currency risk can be avoided or mitigated through
the use of American Depositary Receipts (ADRs).
ADRs are still exposed to currency risk despite
being U.S. dollar-denominated.
Currency risk is not significant enough to
warrant concern.
Currency fluctuations are often significant and
unpredictable–driven by central bank activities,
policy rhetoric, international trade flows and
speculators.
Currency hedges are not necessary with a neutral
view or lack of opinion on currency.
A hedged position can mitigate the risk of the
unknown. For a firmly neutral view, a blended
hedged/unhedged position can reduce exposure to
unexpected currency changes.
An ADR is a certificate issued by banks representing shares in a foreign stock traded on a U.S. exchange.
Deutsche Asset
& Wealth Management
13
Trends in the U.S. dollar (U.S. Dollar Index)
— Since 1968, the average U.S. dollar cycle has been approximately eight years.
— The current cycle—with the U.S. Dollar Index near all-time lows—is in its 12th year.
The dollar has been in a secular decline for more than a decade. With the average USD cycle at about eight
years and the USD near all-time lows, that tide could shift at any time.
U.S. Dollar Index (2/3/67‒12/31/13)
10.8 Yrs.
6.3 Yrs.
180
160
140
7.5 Yrs.
6.1 Yrs.
9.4 Yrs.
+95.57% (+11.11% ann)
End of Bretton
Woods
Black
Wednesday,
Sept. 1992
Plaza Accord
Sept. 1985
Sept. 11, 2001
+52.06% (+4.56% ann)
120
Lehman
collapse
Sept. 2008
100
80
Quantitative
Easing
-32.61% (-4.26% ann)
-51.70% (-9.25% ann)
Asian currency
crisis
-40.09% (-7.91% ann)
60
1967 1969 1971 1973 1975 1977 1979 1981 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013
Source: Deutsche Bank and Bloomberg as of 12/31/13. See slide 2 for index definitions. Past performance is no guarantee of future results. The numbers on the vertical axis
represent index levels for the U.S. Dollar Index.
Deutsche Asset
& Wealth Management
14
Adjusting to a Central Bank-driven era
Monetary Policy Spectrum
Federal Reserve
Bank of England
Tightening
Easing
European Central Bank
(ECB)
Tightening
— Reduced government spending
— Raising short-term interest rates
— Selling government securities
— Decreased money supply
Deutsche Asset
& Wealth Management
Bank of Japan
(BoJ)
Easing
— Increase in government spending
— Lowering interest rates
— Buying government securities
— Increased money supply
15
Contribution to MSCI EAFE Index return from
currency (1983–2013)
Currency contribution to return can be unpredictable (1983-2013)
MSCI EAFE Local Return
Currency Return
2013
2012
2011
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
1999
1998
1997
1996
1995
1994
1993
1992
1991
1990
1989
1988
1987
1986
1985
1984
1983
70
65
60
55
50
45
40
35
30
25
20
15
10
5
0
-5
-10
-15
-20
-25
-30
MSCI EAFE Unhedged Return
Potential return impact: Since 1983, a significant portion of international equity return has come from currency
moves, which can be positive or negative.
Source: Bloomberg as of 12/31/13. Past performance is no guarantee of future returns. See slide 2 for index definitions.
Deutsche Asset
& Wealth Management
16
MSCI EAFE Index (unhedged) vs.
MSCI EAFE Index (local currency)
The story behind returns – how much comes from currency
200
45%
180
160
The G20 agrees
to global stimulus
worth $5 trillion
140
Index performance
87%
37%
120
100
80
Sept: US Gov bails out
Fannie & Freddie,
Lehman files for
bankruptcy
60
Sept. 11, 2001
40
Draghi voices ECB’s
“whatever it takes”
mentality to preserve
euro
Fed raises
interest rates
20
Unhedged
01/06/2014
01/12/2013
01/06/2013
01/12/2012
01/06/2012
01/12/2011
01/06/2011
01/12/2010
01/06/2010
01/12/2009
01/06/2009
01/12/2008
01/06/2008
01/12/2007
01/06/2007
01/12/2006
01/06/2006
01/12/2005
01/06/2005
01/12/2004
01/06/2004
01/12/2003
01/06/2003
01/12/2002
01/06/2002
01/12/2001
01/06/2001
01/12/2000
0
Hedged
Source: MSCI as of 6/30/14. Past performance is no guarantee of future results. For comparison purposes, each entry begins with a value of 100.
(1) LTRO: Longer-term refinancing operations
Deutsche Asset
& Wealth Management
17
Hedging currency risk: Impact on returns
— Hedged indices represent equity returns excluding currency returns.
— Unhedged indices combine equity and currency returns.
— More recently, Japan has shown currency’s possible negative effects.
3 year hedged vs. unhedged MSCI Japan return (as of 6/30/14)
25%
20%
15%
10%
5%
0%
-5%
-10%
-15%
6/30/2011 9/30/2011 12/30/2011 3/30/2012 6/29/2012 9/28/2012 12/31/2012 3/29/2013 6/28/2013 9/30/2013 12/31/2013 3/31/2014 6/30/2014
Hedged Returns
Unhedged Returns
Source: MSCI as of inception of hedged index. Past performance does not guarantee future results. Index returns do not reflect fees or expenses and it is not possible to
invest directly in an index. Current performance may differ from the results above. See slide 2 for index definitions. * Indexes are unmanaged and you cannot invest
directly in an index.
Deutsche Asset
& Wealth Management
18
Currency risk: Very real, very volatile
Ranking of major currency performance from best to worst performers since 1999
(% change vs. the USD)
Best performers
vs. USD
Worst performers
vs. USD
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
JPY
10.8%
AUD
7.3%
CAD
5.8%
KRW
5.7%
MXN
4.7%
NZD
-0.5%
SGD
-0.9%
GBP
-2.2%
ZAR
-4.2%
SEK
-4.6%
NOK
-4.8%
CHF
-13.6%
EUR
-14.1%
BRL
-33.0%
CHF
-1.2%
MXN
-1.8%
CAD
-3.5%
SGD
-4.0%
EUR
-6.4%
BRL
-7.4%
GBP
-7.5%
NOK
-8.6%
SEK
-9.6%
KRW
-10.1%
JPY
-10.6%
AUD
-14.9%
NZD
-15.3%
ZAR
-19.0%
MXN
5.3%
NOK
-2.0%
GBP
-2.8%
CHF
-3.0%
KRW
-3.8%
EUR
-5.5%
CAD
-5.9%
NZD
-6.0%
SGD
-6.1%
AUD
-8.6%
SEK
-9.9%
JPY
-13.2%
BRL
-15.6%
ZAR
-36.6%
ZAR
40.1%
NOK
29.1%
NZD
25.8%
SEK
20.4%
CHF
20.1%
EUR
17.9%
JPY
10.9%
GBP
10.8%
KRW
10.7%
AUD
9.9%
SGD
6.5%
CAD
1.2%
MXN
-11.7%
BRL
-34.7%
AUD
34.0%
ZAR
28.0%
NZD
25.0%
BRL
22.3%
CAD
21.2%
SEK
20.7%
EUR
19.9%
CHF
11.4%
GBP
10.8%
JPY
10.6%
NOK
3.9%
SGD
2.1%
KRW
-0.5%
MXN
-7.7%
ZAR
18.3%
KRW
15.2%
NOK
9.8%
NZD
9.7%
CHF
9.0%
BRL
8.9%
SEK
8.1%
CAD
7.8%
EUR
7.7%
GBP
7.5%
JPY
4.8%
AUD
4.0%
SGD
4.0%
MXN
0.9%
BRL
13.6%
MXN
4.8%
CAD
3.5%
KRW
2.7%
SGD
-1.8%
NZD
-4.9%
AUD
-6.2%
NOK
-9.9%
GBP
-10.3%
ZAR
-10.6%
EUR
-12.7%
JPY
-13.1%
CHF
-13.4%
SEK
-16.2%
SEK
16.0%
GBP
13.8%
EUR
11.5%
BRL
9.5%
SGD
8.4%
KRW
8.4%
NOK
8.2%
CHF
7.8%
AUD
7.6%
NZD
3.2%
CAD
-0.2%
JPY
-0.9%
MXN
-1.6%
ZAR
-9.8%
BRL
20.0%
CAD
16.9%
NOK
14.7%
AUD
11.0%
EUR
10.6%
NZD
8.9%
CHF
7.5%
JPY
6.9%
SGD
6.4%
SEK
5.9%
ZAR
2.2%
GBP
1.3%
KRW
-0.7%
MXN
-0.9%
JPY
22.9%
CHF
6.2%
SGD
0.8%
EUR
-4.2%
SEK
-17.3%
CAD
-18.1%
AUD
-19.2%
MXN
-20.2%
NOK
-21.7%
BRL
-23.1%
NZD
-23.9%
KRW
-25.9%
GBP
-26.3%
ZAR
-27.5%
BRL
32.7%
ZAR
27.7%
AUD
26.8%
NZD
24.1%
NOK
19.9%
CAD
15.7%
GBP
10.4%
SEK
9.1%
KRW
8.5%
MXN
4.5%
CHF
3.0%
EUR
2.4%
SGD
1.8%
JPY
-2.5%
JPY
14.5%
AUD
13.7%
ZAR
12.0%
CHF
10.9%
SGD
9.6%
NZD
7.6%
SEK
6.7%
MXN
5.7%
CAD
5.5%
BRL
5.0%
KRW
3.9%
NOK
-0.5%
GBP
-3.4%
EUR
-6.6%
JPY
5.5%
AUD
0.2%
NZD
-0.1%
GBP
-0.4%
CHF
-0.4%
SGD
-1.1%
CAD
-2.2%
SEK
-2.6%
NOK
-2.6%
EUR
-3.2%
KRW
-3.3%
BRL
-10.9%
MXN
-11.4%
ZAR
-18.2%
KRW
9.0%
MXN
8.4%
NOK
7.4%
NZD
6.4%
SGD
6.2%
SEK
6.0%
GBP
4.6%
CAD
2.7%
CHF
2.4%
EUR
1.9%
AUD
1.6%
ZAR
-4.6%
BRL
-9.0%
JPY
-11.3%
EUR
3.0%
CHF
1.2%
GBP
0.9%
KRW
0.3%
SEK
-0.2%
NZD
-0.5%
MXN
-1.8%
SGD
-2.5%
CAD
-6.8%
NOK
-8.7%
AUD
-12.1%
BRL
-13.8%
JPY
-15.4%
ZAR
-18.1%
AUD = Australian dollar
GBP = British pound
NZD = New Zealand dollar
BRL = Brazilian real
JPY = Japanese yen
SEK = Swedish krona
CAD = Canadian dollar
KRW = South Korean won
SGD = Singapore dollar
CHF = Swiss franc
MXN= Mexican peso
ZAR = South African rand
EUR = Euro
NOK = Norwegian krone
Source: Deutsche Bank, EcoWin.com as of 12/31/13. Past performance is no guarantee of future returns.
Deutsche Asset
& Wealth Management
19
Hedging currency risk: Volatility
— Currency fluctuations have a significant impact on portfolio volatility.
— In general, hedged indices have had lower volatility than unhedged indices.
— Although unhedged investors have benefitted from higher returns over some time periods, in most cases they
have also experienced higher volatility.
— Hedged investments can possibly offer smoother long term investments
— The graphs below display the 1 year volatilities of seven MSCI indexes.
Since inception hedged vs. unhedged volatility (as of 6/30/14)
25%
20%
15%
Hedged
10%
Unhedged
5%
0%
MSCI Europe
MSCI EAFE
MSCI EM
MSCI Brazil
MSCI Germany
MSCI AP ex.
Japan
MSCI UK
Source: Bloomberg. Past performance does not guarantee future results. It is not possible to invest directly in an index. Current performance may differ from the data shown.
See slide 2 for important definitions. Volatility is measured by standard deviation. *Indexes are unmanaged and you cannot invest directly in an index.
Deutsche Asset
& Wealth Management
20
Deutsche X-trackers MSCI international
currency-hedged equity ETF suite
Deutsche X-trackers MSCI international
currency-hedged equity ETF information
Inception
date
NYSE
ticker
Number of
Holdings
Total Expense
Ratio2
1/23/14
DBAW
1298
0.40%
Deutsche X-trackers MSCI EAFE Hedged Equity ETF
6/9/11
DBEF
905
0.35%
Deutsche X-trackers MSCI Emerging Markets Hedged Equity ETF
6/9/11
DBEM
398
0.65%
Deutsche X-trackers MSCI Asia Pacific ex Japan Hedged Equity ETF
10/1/13
DBAP
397
0.60%
Deutsche X-trackers MSCI Europe Hedged Equity ETF
10/1/13
DBEU
437
0.45%
Deutsche X-trackers MSCI Brazil Hedged Equity ETF
6/9/11
DBBR
73
0.60%
Deutsche X-trackers MSCI Germany Hedged Equity ETF1
6/9/11
DBGR
55
0.45%
Deutsche X-trackers MSCI Japan Hedged Equity ETF
6/9/11
DBJP
313
0.45%
Deutsche X-trackers MSCI Mexico Hedged Equity ETF
1/23/14
DBMX
56
0.50%
Deutsche X-trackers MSCI South Korea Hedged Equity ETF
1/23/14
DBKO
103
0.58%
Deutsche X-trackers MSCI United Kingdom Hedged Equity ETF
10/1/13
DBUK
108
0.45%
ETF
Deutsche X-trackers MSCI All World ex U.S. Hedged Equity ETF
(1) Prior to 5/31/13, this fund was known as the db X-trackers MSCI Canada Hedged Equity Fund and had a different investment objective and followed a different investment
objective.
(2) Table information as of 9/3//2014
Deutsche Asset
& Wealth Management
22
Appendix: How currency hedging works
Deutsche X-trackers MSCI international currency-hedged equity ETFs
About the MSCI equity indices
Overview
— MSCI’s international indices in U.S. dollars (the unhedged version of the MSCI indices), which convert the local
currencies into U.S. dollars, are some of MSCI’s most widely followed U.S. indices, tracked by billions of dollars
and numerous ETFs.
The unhedged versions of the MSCI indices are:
— free-float-adjusted, market-capitalization-weighted versions; and
— designed to measure the foreign equity market performance where the equity prices used are the local prices
on the primary exchange on which a security is traded and converted into U.S. dollars.
The currency-hedged versions of the MSCI indices (the versions underlying the Deutsche X-trackers international
currency-hedged equity ETFs):
— were recently developed in order to create a version of the local currency indices available to U.S. investors
— reflect the investment process of hedging the currency exposures inherent in the unhedged MSCI indices by
investing in currency forwards.
— Both the currency-hedged and local currency versions are calculated using the same methodology as the
corresponding parent MSCI index.
Limited history
— Since the currency-hedged versions were recently developed (2/11), they have limited histories.
Index histories are for illustrative purposes and do not represent actual fund performance. Index returns do not reflect fees, transaction costs or expenses. Indices are unmanaged
and you cannot invest directly in an index. Past performance is no guarantee of future performance.
Market-capitalization-weighted: an index whose individual components are weighted according to their market capitalization so that larger components carry a larger percentage
weighting.
Deutsche Asset
& Wealth Management
24
How the MSCI currency-hedged indices work
International equity investments and Foreign Exchange (FX) forward contracts
These indices combine international equity investments with FX forward contracts in an attempt to mitigate the
impact on performance of the currency exposure of MSCI equity indices against a U.S. dollar-based investor.
Month Start[i]
Month
start[i]
— The index is long
equity
constituents.
— The index goes
long a series of
U.S. dollar onemonth forwards.1
Month Start[i+1]
Month
start[i+1]
— The notional
value of the
forwards
represents the
relative marketcap weights of the
equities within the
index.2
— The index does
not adjust the
hedge intramonth.
Time
Time
— Forward positions
are rolled over
using the new
value of the index
and any changes
in the portfolio.
Equity indices + hedge = Hedged indices
The MSCI hedged indices provide benchmarks for funds that aim to help investors mitigate the effects of FX
movements on their equity exposures and therefore have access solely to the equity returns.3
(1)
(2)
(3)
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.
An index where 50% of the underlying equity market cap is denominated in euros would buy U.S. dollar one-month forwards against euros in a notional amount equalling 50% of the index’s
equity market capitalization.
MSCI hedged indices do not adjust the hedge intramonth and therefore actual currency exposure may fluctuate. “FX” is the exchange of one currency for another, or the conversion of one
currency into another currency.
Deutsche Asset
& Wealth Management
25
Structure of the Deutsche X-trackers MSCI
international currency-hedged equity ETFs
MSCI
Equity
indices
Hedged
indices
Hedge
Fund replication of index
Investment
Deutsche X-trackers currency-hedged ETFs
Investor (U.S. dollars)
Deutsche AWM provides ETFs based on the MSCI hedged indices.
Deutsche’s suite of exchange-traded funds provides investors with solutions
that attempt to mitigate the FX component in their investments benchmarked to
MSCI international indices.
Deutsche Asset
& Wealth Management
26
R-035677-1 8/14
Deutsche Asset
& Wealth Management
DBX1016 (9/15)
27