UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number 811-22001
db-X Exchange-Traded Funds Inc.
(Exact name of Registrant as specified in charter)
60 Wall Street
New York, New York 10005
(Address of principal executive offices) (Zip code)
Alex Depetris
db-X Exchange-Traded Funds Inc.
60 Wall Street
New York, New York 10005
(Name and address of agent for service)
Registrants telephone number, including area code: (212) 250-4352
Date of fiscal year end: May 31, 2012
Date of reporting period: November 30, 2012
Item 1. Report to Stockholders.
The Registrants semi-annual report transmitted to shareholders pursuant to Rule 30e-1 under the Investment Company Act of 1940 is as follows:
SEMI-ANNUAL REPORT
November 30, 2012
Unaudited
db-X Exchange-Traded Funds Inc.
db-X 2010 Target Date Fund (TDD)
db-X 2020 Target Date Fund (TDH)
db-X 2030 Target Date Fund (TDN)
db-X 2040 Target Date Fund (TDV)
db-X In-Target Date Fund (TDX)
db-X Exchange-Traded Funds Inc.
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Dear Shareholder,
We are pleased to present this Semi-Annual Report for db-X Exchange-Traded Funds Inc, which covers the six-month period ending November 30, 2012.
We believe that these funds provide convenience and clarity for investors seeking a sophisticated product in one single investment. Over the past six months, the funds have continued to highlight the benefits of target-date investing. During the six months covered by this report, investors with a longer investment horizon benefitted from higher exposure to equities as the db-X 2040 Target Date Fund and the db-X 2030 Target Date Fund, which allocate a large percentage of assets to domestic and international equity securities, experienced net asset value (NAV) returns of 11.31% and 9.58%, respectively. The db-X 2020 Target Date Fund, with a more balanced allocation between equity and fixed income securities, experienced a NAV return of 6.36%. The db-X 2010 Target Date Fund and the db-X In-Target Date Fund, which have the greatest percentage allocations to fixed income securities experienced NAV returns of 1.74% and 3.44%, respectively.
Deutsche Bank, a leading global banking institution, has managed and operated a successful and growing platform of exchange-traded products since 2006. Our team at Deutsche Bank values the trust that you have placed in us and we look forward to meeting your investment needs by continuing to offer innovative index-driven strategies.
Very truly yours,
|
Alex Depetris Chairman, President and Chief Executive Officer |
Performance quoted above represents past performance, assumes reinvestment of all dividends and capital gains distributions at net asset value (NAV), and does not guarantee future results. A Funds NAV return is based on the changes in the Funds NAV per share for the period indicated. A Funds NAV per share is calculated by dividing the value of the Funds total assets less total liabilities by the number of shares outstanding. Current Fund performance may be higher or lower than the performance quoted. Fund performance data current to the most recent month end may be obtained by visiting www.dbxstrategicadvisors.db.com.
An index is a statistical measure of a specified financial market or sector. An index is unmanaged and one cannot invest directly in an index. An index does not actually hold a portfolio of securities, incur expenses, or pay any transaction costs. Therefore, index returns do not reflect deductions for fees or expenses. In comparison, a Funds performance is negatively impacted by these deductions. Fund returns do not reflect brokerage commissions or taxes that a shareholder would pay on Fund distributions or on transactions in Fund shares.
The views expressed in this report reflect those of the portfolio management team only through the end of the period of the report as stated on the cover. The management teams views are subject to change at any time based on market and other conditions and should not be construed as a recommendation. Current and future portfolio holdings are subject to risk. Investment in the Funds poses investment risk, including possible loss of principal. The investment return and principal value of an investment will fluctuate, so that shares, when sold or redeemed, may be worth more or less than their original cost.
1
db-X Exchange-Traded Funds Inc.
db-X 2010 Target Date Fund (TDD) (Unaudited)
The db-X 2010 Target Date Fund (the Fund) commenced investment operations and its shares began trading on NYSE Arca, Inc. (NYSE Arca) on October 1, 2007. The Fund seeks to track the performance, before fees and expenses, of the Zacks 2010 Lifecycle Index. Both the Funds equity and bond portfolios held fewer securities than the Zacks 2010 Lifecycle Index, a constraint imposed by the relatively small size of the Fund.
For the six-month period ended November 30, 2012, the Funds net asset value increased 1.74%, compared to an increase of 1.92% for the Zacks 2010 Lifecycle Index and 3.95% for the Dow Jones Target 2010 Index.
Performance as of 11/30/12
Average Annual Total Returns | ||||||||
Net Asset Value | Market Price | Zacks 2010 Lifecycle Index |
Dow Jones Target 2010 Index | |||||
One Year |
2.13% | -6.89% | 2.63% | 7.21% | ||||
Since Inception1 |
0.95% | -1.32% | 1.24% | 4.46% | ||||
Cumulative Total Return | ||||||||
Net Asset Value | Market Price | Zacks 2010 Lifecycle Index |
Dow Jones Target 2010 Index | |||||
Six Months |
1.74% | -3.58% | 1.92% | 3.95% | ||||
One Year |
2.13% | -6.89% | 2.63% | 7.21% | ||||
Since Inception1 |
5.02% | -6.63% | 6.56% | 25.33% |
1 Total returns are calculated based on the commencement of trading, 10/1/07 (Inception).
An index is a statistical measure of a specified financial market or sector. An index does not actually hold a portfolio of securities, incur expenses or pay any transaction costs. Therefore index returns do not reflect deductions for fees or expenses and are not available for direct investment. In comparison, the Funds performance is negatively impacted by these deductions. Fund returns do not reflect brokerage commissions or taxes that a shareholder would pay on Fund distributions or on transactions in Fund shares.
Target Date refers to a time in the future, generally a specified year, in which the investor expects to retire or otherwise require the use of the invested funds. Target date funds are generally more aggressive the further the target date is from the present, with an objective of capital appreciation. As the target date approaches, the funds objective will generally become more conservative, aiming to achieve a higher level of capital preservation. Upon reaching the target date, the index whose performance the Fund seeks to track will have approximately a 10% allocation to equity securities. Over the next five years, allocations shift from conservative to more moderately-conservative allocations, allowing for a larger exposure to equities than at the target date (Moderately-Conservative Allocation).
Investors should note that although target date funds aim to preserve capital as the target date approaches, there is no guarantee that the Fund will achieve this objective.
2
db-X Exchange-Traded Funds Inc.
PERFORMANCE SUMMARY
db-X 2010 Target Date Fund (TDD) (Unaudited) (Continued)
3
db-X Exchange-Traded Funds Inc.
PERFORMANCE SUMMARY
db-X 2020 Target Date Fund (TDH) (Unaudited)
The db-X 2020 Target Date Fund (the Fund) commenced investment operations and its shares began trading on NYSE Arca, Inc. (NYSE Arca) on October 1, 2007. The Fund seeks to track the performance, before fees and expenses, of the Zacks 2020 Lifecycle Index. Both the Funds equity and bond portfolios held fewer securities than the Zacks 2020 Lifecycle Index, a constraint imposed by the relatively small size of the Fund.
For the six-month period ended November 30, 2012, the Funds net asset value increased 6.36%, compared to an increase of 6.64% for the Zacks 2020 Lifecycle Index and 5.98% for the Dow Jones Target 2020 Index.
Performance as of 11/30/12
Average Annual Total Returns | ||||||||
Net Asset Value | Market Price | Zacks 2020 Lifecycle Index |
Dow Jones Target 2020 Index | |||||
One Year |
8.20% | 1.35% | 7.96% | 9.00% | ||||
Since Inception1 |
0.91% | -0.58% | 1.06% | 2.84% | ||||
Cumulative Total Return | ||||||||
Net Asset Value | Market Price | Zacks 2020 Lifecycle Index |
Dow Jones Target 2020 Index | |||||
Six months |
6.36% | 5.76% | 6.64% | 5.98% | ||||
One Year |
8.20% | 1.35% | 7.96% | 9.00% | ||||
Since Inception1 |
4.78% | -2.98% | 5.59% | 15.59% |
1 Total returns are calculated based on the commencement of trading, 10/1/07 (Inception).
An index is a statistical measure of a specified financial market or sector. An index does not actually hold a portfolio of securities, incur expenses or pay any transaction costs. Therefore index returns do not reflect deductions for fees or expenses and are not available for direct investment. In comparison, the Funds performance is negatively impacted by these deductions. Fund returns do not reflect brokerage commissions or taxes that a shareholder would pay on Fund distributions or on transactions in Fund shares.
Target Date refers to a time in the future, generally a specified year, in which the investor expects to retire or otherwise require the use of the invested funds. Target date funds are generally more aggressive the further the target date is from the present, with an objective of capital appreciation. As the target date approaches, the funds objective will generally become more conservative, aiming to achieve a higher level of capital preservation. Upon reaching the target date, the index whose performance the Fund seeks to track will have approximately a 10% allocation to equity securities. Over the next five years, allocations shift from conservative to more moderately-conservative allocations, allowing for a larger exposure to equities than at the target date (Moderately-Conservative Allocation).
Investors should note that although target date funds aim to preserve capital as the target date approaches, there is no guarantee that the Fund will achieve this objective.
4
db-X Exchange-Traded Funds Inc.
PERFORMANCE SUMMARY
db-X 2020 Target Date Fund (TDH) (Unaudited) (Continued)
5
db-X Exchange-Traded Funds Inc.
PERFORMANCE SUMMARY
db-X 2030 Target Date Fund (TDN) (Unaudited)
The db-X 2030 Target Date Fund (the Fund) commenced investment operations and its shares began trading on NYSE Arca, Inc. (NYSE Arca) on October 1, 2007. The Fund seeks to track the performance, before fees and expenses, of the Zacks 2030 Lifecycle Index. Both the Funds equity and bond portfolios held fewer securities than the Zacks 2030 Lifecycle Index, a constraint imposed by the relatively small size of the Fund.
For the six-month period ended November 30, 2012, the Funds net asset value increased 9.58%, compared to an increase of 10.36% for the Zacks 2030 Lifecycle Index and 8.11% for the Dow Jones Target 2030 Index.
Performance as of 11/30/12
Average Annual Total Returns | ||||||||
Net Asset Value | Market Price | Zacks 2030 Lifecycle Index |
Dow Jones Target 2030 Index | |||||
One Year |
14.30% | 9.06% | 15.33% | 11.08% | ||||
Since Inception1 |
-0.06% | -1.57% | 0.40% | 1.61% | ||||
Cumulative Total Return | ||||||||
Net Asset Value | Market Price | Zacks 2030 Lifecycle Index |
Dow Jones Target 2030 Index | |||||
Six Months |
9.58% | 8.39% | 10.36% | 8.11% | ||||
One Year |
14.30% | 9.06% | 15.33% | 11.08% | ||||
Since Inception1 |
-0.32% | -7.86% | 2.07% | 8.63% |
1 Total returns are calculated based on the commencement of trading, 10/1/07 (Inception).
An index is a statistical measure of a specified financial market or sector. An index does not actually hold a portfolio of securities, incur expenses or pay any transaction costs. Therefore index returns do not reflect deductions for fees or expenses and are not available for direct investment. In comparison, the Funds performance is negatively impacted by these deductions. Fund returns do not reflect brokerage commissions or taxes that a shareholder would pay on Fund distributions or on transactions in Fund shares.
Target Date refers to a time in the future, generally a specified year, in which the investor expects to retire or otherwise require the use of the invested funds. Target date funds are generally more aggressive the further the target date is from the present, with an objective of capital appreciation. As the target date approaches, the funds objective will generally become more conservative, aiming to achieve a higher level of capital preservation. Upon reaching the target date, the index whose performance the Fund seeks to track will have approximately a 10% allocation to equity securities. Over the next five years, allocations shift from conservative to more moderately-conservative allocations, allowing for a larger exposure to equities than at the target date (Moderately-Conservative Allocation).
Investors should note that although target date funds aim to preserve capital as the target date approaches, there is no guarantee that the Fund will achieve this objective.
6
db-X Exchange-Traded Funds Inc.
PERFORMANCE SUMMARY
db-X 2030 Target Date Fund (TDN) (Unaudited) (Continued)
7
db-X Exchange-Traded Funds Inc.
PERFORMANCE SUMMARY
db-X 2040 Target Date Fund (TDV) (Unaudited)
The db-X 2040 Target Date Fund (the Fund) commenced investment operations and its shares began trading on NYSE Arca, Inc. (NYSE Arca) on October 1, 2007. The Fund seeks to track the performance, before fees and expenses, of the Zacks 2040 Lifecycle Index. Both the Funds equity and bond portfolios held fewer securities than the Zacks 2040 Lifecycle Index, a constraint imposed by the relatively small size of the Fund.
For the six-month period ended November 30, 2012, the Funds net asset value increased 11.31%, compared to an increase of 11.41% for the Zacks 2040 Lifecycle Index and 9.64% for the Dow Jones Target 2040 Index.
Performance as of 11/30/12
Average Annual Total Returns | ||||||||
Net Asset Value | Market Price | Zacks 2040 Lifecycle Index |
Dow Jones Target 2040 Index | |||||
One Year |
15.02% | 18.96% | 13.94% | 12.49% | ||||
Since Inception1 |
-0.96% | -0.89% | -1.00% | 0.95% | ||||
Cumulative Total Return | ||||||||
Net Asset Value | Market Price | Zacks 2040 Lifecycle Index |
Dow Jones Target 2040 Index | |||||
Six Months |
11.31% | 10.31% | 11.41% | 9.64% | ||||
One Year |
15.02% | 18.96% | 13.94% | 12.49% | ||||
Since Inception1 |
-4.87% | -4.50% | -5.05% | 5.00% |
1 Total returns are calculated based on the commencement of trading, 10/1/07 (Inception).
An index is a statistical measure of a specified financial market or sector. An index does not actually hold a portfolio of securities, incur expenses or pay any transaction costs. Therefore index returns do not reflect deductions for fees or expenses and are not available for direct investment. In comparison, the Funds performance is negatively impacted by these deductions. Fund returns do not reflect brokerage commissions or taxes that a shareholder would pay on Fund distributions or on transactions in Fund shares.
Target Date refers to a time in the future, generally a specified year, in which the investor expects to retire or otherwise require the use of the invested funds. Target date funds are generally more aggressive the further the target date is from the present, with an objective of capital appreciation. As the target date approaches, the funds objective will generally become more conservative, aiming to achieve a higher level of capital preservation. Upon reaching the target date, the index whose performance the Fund seeks to track will have approximately a 10% allocation to equity securities. Over the next five years, allocations shift from conservative to more moderately-conservative allocations, allowing for a larger exposure to equities than at the target date (Moderately-Conservative Allocation).
Investors should note that although target date funds aim to preserve capital as the target date approaches, there is no guarantee that the Fund will achieve this objective.
8
db-X Exchange-Traded Funds Inc.
PERFORMANCE SUMMARY
db-X 2040 Target Date Fund (TDV) (Unaudited) (Continued)
9
db-X Exchange-Traded Funds Inc.
PERFORMANCE SUMMARY
db-X In-Target Date Fund (TDX) (Unaudited)
The db-X In-Target Date Fund (the Fund) commenced investment operations and its shares began trading on NYSE Arca, Inc. (NYSE Arca) on October 1, 2007. The Fund seeks to track the performance, before fees and expenses, of the Zacks In-Target Lifecycle Index. Both the Funds equity and bond portfolios held fewer securities than the Zacks In-Target Lifecycle Index, a constraint imposed by the relatively small size of the Fund.
For the six-month period ended November 30, 2012, the Funds net asset value 3.44%, compared to an increase of 3.69% for the Zacks In-Target Lifecycle Index and an increase of 3.41% for the Dow Jones Target Today Index.
Performance as of 11/30/12
Average Annual Total Returns | ||||||||
Net Asset Value | Market Price | Zacks In-Target Lifecycle Index |
Dow Jones Target Today Index | |||||
One Year |
4.32% | -1.23% | 4.83% | 6.54% | ||||
Since Inception1 |
2.57% | 0.96% | 2.76% | 5.36% | ||||
Cumulative Total Return | ||||||||
Net Asset Value | Market Price | Zacks In-Target Lifecycle Index |
Dow Jones Target Today Index | |||||
Six Months |
3.44% | 3.43% | 3.69% | 3.41% | ||||
One Year |
4.32% | -1.23% | 4.83% | 6.54% | ||||
Since Inception1 |
14.01% | 5.05% | 15.11% | 30.99% |
1 Total returns are calculated based on the commencement of trading, 10/1/07 (Inception).
An index is a statistical measure of a specified financial market or sector. An index does not actually hold a portfolio of securities, incur expenses or pay any transaction costs. Therefore index returns do not reflect deductions for fees or expenses and are not available for direct investment. In comparison, the Funds performance is negatively impacted by these deductions. Fund returns do not reflect brokerage commissions or taxes that a shareholder would pay on Fund distributions or on transactions in Fund shares.
Target Date refers to a time in the future, generally a specified year, in which the investor expects to retire or otherwise require the use of the invested funds. Target date funds are generally more aggressive the further the target date is from the present, with an objective of capital appreciation. As the target date approaches, the funds objective will generally become more conservative, aiming to achieve a higher level of capital preservation. Upon reaching the target date, the index whose performance the Fund seeks to track will have approximately a 10% allocation to equity securities. Over the next five years, allocations shift from conservative to more moderately-conservative allocations, allowing for a larger exposure to equities than at the target date (Moderately-Conservative Allocation).
Investors should note that although target date funds aim to preserve capital as the target date approaches, there is no guarantee that the Fund will achieve this objective.
10
db-X Exchange-Traded Funds Inc.
PERFORMANCE SUMMARY
db-X In-Target Date Fund (TDX) (Unaudited) (Continued)
11
db-X Exchange-Traded Funds Inc.
As a shareholder of one or more of the funds of db-X Exchange-Traded Funds Inc. (each, a Fund and collectively, the Funds or db-X Target Date Funds), you incur advisory fees and other Fund expenses. The expense examples below are intended to help you understand your ongoing costs (in dollars) of investing in the Funds and to compare these costs with the ongoing costs of investing in other funds.
The examples are based on an investment of $1,000 made at the beginning of the period and held through the six month period ended November 30, 2012.
ACTUAL EXPENSES
The first line in the following tables provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line under the heading Expenses Paid During the Period to estimate the expenses you paid on your account during this period.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The second line in the following tables provides information about hypothetical account values and hypothetical expenses based on the Funds actual expense ratios and an assumed rate of return of 5% per year before expenses (which is not the Funds actual return). The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the tables are meant to highlight your ongoing costs only, and do not reflect any transactional costs. Therefore the second line in the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
Beginning Account Value June 1, 2012 |
Ending Account Value November 30, 2012 |
Annualized Expense Ratio(1) based on the number of days in the period |
Expenses Paid During the Period(2) June 1, 2012 to November 30, 2012 |
|||||||||||||
db-X 2010 Target Date Fund | ||||||||||||||||
Actual |
$ | 1,000.00 | $ | 1,017.40 | 0.65 | % | $ | 3.29 | ||||||||
Hypothetical (5% return before expenses) |
$ | 1,000.00 | $ | 1,021.81 | 0.65 | % | $ | 3.29 | ||||||||
db-X 2020 Target Date Fund | ||||||||||||||||
Actual |
$ | 1,000.00 | $ | 1,063.60 | 0.65 | % | $ | 3.36 | ||||||||
Hypothetical (5% return before expenses) |
$ | 1,000.00 | $ | 1,021.81 | 0.65 | % | $ | 3.29 | ||||||||
db-X 2030 Target Date Fund | ||||||||||||||||
Actual |
$ | 1,000.00 | $ | 1,095.80 | 0.65 | % | $ | 3.42 | ||||||||
Hypothetical (5% return before expenses) |
$ | 1,000.00 | $ | 1,021.81 | 0.65 | % | $ | 3.29 | ||||||||
db-X 2040 Target Date Fund | ||||||||||||||||
Actual |
$ | 1,000.00 | $ | 1,113.10 | 0.65 | % | $ | 3.44 | ||||||||
Hypothetical (5% return before expenses) |
$ | 1,000.00 | $ | 1,021.81 | 0.65 | % | $ | 3.29 | ||||||||
db-X In-Target Date Fund | ||||||||||||||||
Actual |
$ | 1,000.00 | $ | 1,034.40 | 0.65 | % | $ | 3.31 | ||||||||
Hypothetical (5% return before expenses) |
$ | 1,000.00 | $ | 1,021.81 | 0.65 | % | $ | 3.29 |
(1) DBX Strategic Advisors LLC (the Advisor), has contractually agreed to reduce its fees and/or pay Fund operating expenses (excluding, among other things, acquired fund fees and expenses, interest, taxes and extraordinary expenses) in order to limit each Funds net annual operating expenses for shares of each Fund to 0.65% of the Funds average net assets (the Expense Cap). The Expense Cap will remain in effect until September 30, 2013. The Advisor is permitted to be reimbursed for fee reductions and/or expense payments made in the prior three fiscal years. This reimbursement may be paid to the Advisor if the aggregate amount actually paid by a Fund toward operating expenses for such fiscal year (taking into account the reimbursement) does not exceed the Expense Cap. Ratios would have been higher if fees were not reduced by the Advisor.
(2) Expenses are calculated using the annualized expense ratio, which represents the ongoing expenses as a percentage of net assets for the period June 1, 2012 to November 30, 2012. Expenses are calculated by multiplying the Funds annualized expense ratio by the average account value for the period; then multiplying the result by 183 days and then dividing the result by 365.
12
db-X Exchange-Traded Funds Inc.
November 30, 2012 (Unaudited)
See Notes to Financial Statements. | 13 |
db-X Exchange-Traded Funds Inc.
SCHEDULE OF INVESTMENTS
db-X 2010 Target Date Fund (Continued)
November 30, 2012 (Unaudited)
See Notes to Financial Statements. | 14 |
db-X Exchange-Traded Funds Inc.
SCHEDULE OF INVESTMENTS
db-X 2010 Target Date Fund (Continued)
November 30, 2012 (Unaudited)
See Notes to Financial Statements. | 15 |
db-X Exchange-Traded Funds Inc.
SCHEDULE OF INVESTMENTS
db-X 2010 Target Date Fund (Continued)
November 30, 2012 (Unaudited)
See Notes to Financial Statements. | 16 |
db-X Exchange-Traded Funds Inc.
SCHEDULE OF INVESTMENTS
November 30, 2012 (Unaudited)
See Notes to Financial Statements. | 17 |
db-X Exchange-Traded Funds Inc.
SCHEDULE OF INVESTMENTS
db-X 2020 Target Date Fund (Continued)
November 30, 2012 (Unaudited)
See Notes to Financial Statements. | 18 |
db-X Exchange-Traded Funds Inc.
SCHEDULE OF INVESTMENTS
db-X 2020 Target Date Fund (Continued)
November 30, 2012 (Unaudited)
See Notes to Financial Statements. | 19 |
db-X Exchange-Traded Funds Inc.
SCHEDULE OF INVESTMENTS
db-X 2020 Target Date Fund (Continued)
November 30, 2012 (Unaudited)
See Notes to Financial Statements. | 20 |
db-X Exchange-Traded Funds Inc.
SCHEDULE OF INVESTMENTS
db-X 2020 Target Date Fund (Continued)
November 30, 2012 (Unaudited)
See Notes to Financial Statements. | 21 |
db-X Exchange-Traded Funds Inc.
SCHEDULE OF INVESTMENTS
November 30, 2012 (Unaudited)
See Notes to Financial Statements. | 22 |
db-X Exchange-Traded Funds Inc.
SCHEDULE OF INVESTMENTS
db-X 2030 Target Date Fund (Continued)
November 30, 2012 (Unaudited)
See Notes to Financial Statements. | 23 |
db-X Exchange-Traded Funds Inc.
SCHEDULE OF INVESTMENTS
db-X 2030 Target Date Fund (Continued)
November 30, 2012 (Unaudited)
See Notes to Financial Statements. | 24 |
db-X Exchange-Traded Funds Inc.
SCHEDULE OF INVESTMENTS
db-X 2030 Target Date Fund (Continued)
November 30, 2012 (Unaudited)
See Notes to Financial Statements. | 25 |
db-X Exchange-Traded Funds Inc.
SCHEDULE OF INVESTMENTS
db-X 2030 Target Date Fund (Continued)
November 30, 2012 (Unaudited)
See Notes to Financial Statements. | 26 |
db-X Exchange-Traded Funds Inc.
SCHEDULE OF INVESTMENTS
db-X 2030 Target Date Fund (Continued)
November 30, 2012 (Unaudited)
See Notes to Financial Statements. | 27 |
db-X Exchange-Traded Funds Inc.
SCHEDULE OF INVESTMENTS
November 30, 2012 (Unaudited)
See Notes to Financial Statements. | 28 |
db-X Exchange-Traded Funds Inc.
SCHEDULE OF INVESTMENTS
db-X 2040 Target Date Fund (Continued)
November 30, 2012 (Unaudited)
See Notes to Financial Statements. | 29 |
db-X Exchange-Traded Funds Inc.
SCHEDULE OF INVESTMENTS
db-X 2040 Target Date Fund (Continued)
November 30, 2012 (Unaudited)
See Notes to Financial Statements. | 30 |
db-X Exchange-Traded Funds Inc.
SCHEDULE OF INVESTMENTS
db-X 2040 Target Date Fund (Continued)
November 30, 2012 (Unaudited)
See Notes to Financial Statements. | 31 |
db-X Exchange-Traded Funds Inc.
SCHEDULE OF INVESTMENTS
db-X 2040 Target Date Fund (Continued)
November 30, 2012 (Unaudited)
See Notes to Financial Statements. | 32 |
db-X Exchange-Traded Funds Inc.
SCHEDULE OF INVESTMENTS
db-X 2040 Target Date Fund (Continued)
November 30, 2012 (Unaudited)
See Notes to Financial Statements. | 33 |
db-X Exchange-Traded Funds Inc.
SCHEDULE OF INVESTMENTS
November 30, 2012 (Unaudited)
See Notes to Financial Statements. | 34 |
db-X Exchange-Traded Funds Inc.
SCHEDULE OF INVESTMENTS
db-X In-Target Date Fund (Continued)
November 30, 2012 (Unaudited)
See Notes to Financial Statements. | 35 |
db-X Exchange-Traded Funds Inc.
SCHEDULE OF INVESTMENTS
db-X In-Target Date Fund (Continued)
November 30, 2012 (Unaudited)
See Notes to Financial Statements. | 36 |
db-X Exchange-Traded Funds Inc.
SCHEDULE OF INVESTMENTS
db-X In-Target Date Fund (Continued)
November 30, 2012 (Unaudited)
See Notes to Financial Statements. | 37 |
db-X Exchange-Traded Funds Inc.
SCHEDULE OF INVESTMENTS
db-X In-Target Date Fund (Continued)
November 30, 2012 (Unaudited)
See Notes to Financial Statements. | 38 |
This Page is Intentionally Left Blank
39
db-X Exchange-Traded Funds Inc.
STATEMENTS OF ASSETS AND LIABILITIES
November 30, 2012 (Unaudited)
db-X 2010 Target Date Fund |
db-X 2020 Target Date Fund |
db-X 2030 Target Date Fund |
db-X 2040 Target Date Fund |
db-X In-Target Date Fund |
||||||||||||||||
Assets |
||||||||||||||||||||
Investments at fair value |
$ | 9,585,589 | $ | 28,962,271 | $ | 32,491,489 | $ | 26,898,690 | $ | 10,690,240 | ||||||||||
Investments in Affiliates at fair value (See Note 5) |
2,472 | 36,108 | 58,577 | 58,444 | 8,475 | |||||||||||||||
Cash |
21,798 | 20,577 | 26,586 | 20,208 | 11,229 | |||||||||||||||
Foreign currency at value |
4,503 | 12,654 | 14,169 | 11,060 | 15,258 | |||||||||||||||
Receivables: |
||||||||||||||||||||
Investment securities sold |
561 | 3,964 | 5,874 | 6,006 | 740 | |||||||||||||||
Interest and dividends |
33,718 | 122,253 | 143,371 | 86,445 | 39,583 | |||||||||||||||
From investment advisor |
6,828 | 11,709 | 11,246 | 10,980 | 7,062 | |||||||||||||||
Foreign tax reclaim |
929 | 20,898 | 25,516 | 28,052 | 2,087 | |||||||||||||||
Prepaid expenses |
2,929 | 3,659 | 3,614 | 3,576 | 2,962 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total Assets |
$ | 9,659,327 | $ | 29,194,093 | $ | 32,780,442 | $ | 27,123,461 | $ | 10,777,636 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Liabilities |
||||||||||||||||||||
Payables: |
||||||||||||||||||||
Investment advisory fees |
$ | 5,119 | $ | 15,368 | $ | 17,201 | $ | 14,159 | $ | 5,694 | ||||||||||
Accrued expenses and other liabilities |
36,838 | 67,142 | 62,369 | 59,693 | 38,298 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total Liabilities |
41,957 | 82,510 | 79,570 | 73,852 | 43,992 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Net Assets |
$ | 9,617,370 | $ | 29,111,583 | $ | 32,700,872 | $ | 27,049,609 | $ | 10,733,644 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Net Assets Consist of |
||||||||||||||||||||
Paid-in capital |
$ | 11,140,420 | $ | 31,749,451 | $ | 35,435,722 | $ | 31,892,928 | $ | 10,623,093 | ||||||||||
Undistributed net investment income |
33,875 | 301,610 | 603,951 | 491,557 | 46,860 | |||||||||||||||
Accumulated net realized gain (loss) |
(1,665,311 | ) | (3,927,740 | ) | (4,866,866 | ) | (6,592,824 | ) | (237,307 | ) | ||||||||||
Net unrealized appreciation (depreciation) |
108,386 | 988,262 | 1,528,065 | 1,257,948 | 300,998 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Net Assets |
$ | 9,617,370 | $ | 29,111,583 | $ | 32,700,872 | $ | 27,049,609 | $ | 10,733,644 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Number of Common Shares outstanding |
400,800 | 1,200,800 | 1,400,800 | 1,200,800 | 400,800 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Net Assets Value |
$ | 24.00 | $ | 24.24 | $ | 23.34 | $ | 22.53 | $ | 26.78 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Investments at cost |
$ | 9,476,685 | $ | 27,944,743 | $ | 30,925,762 | $ | 25,601,385 | $ | 10,386,909 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Investments in Affiliates at cost |
$ | 3,167 | $ | 65,674 | $ | 96,596 | $ | 97,612 | $ | 10,979 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Foreign currency at cost |
$ | 4,401 | $ | 12,498 | $ | 13,949 | $ | 11,235 | $ | 15,137 | ||||||||||
|
|
|
|
|
|
|
|
|
|
See Notes to Financial Statements. | 40 |
db-X Exchange-Traded Funds Inc.
For the Six Months Ended November 30, 2012 (Unaudited)
db-X 2010 Target Date Fund |
db-X 2020 Target Date Fund |
db-X 2030 Target Date Fund |
db-X 2040 Target Date Fund |
db-X In-Target Date Fund |
||||||||||||||||
Investment Income |
||||||||||||||||||||
Unaffiliated interest income |
$ | 25,872 | $ | 61,627 | $ | 136,267 | $ | 35,460 | $ | 19,224 | ||||||||||
Affiliated dividend income |
42 | 589 | 936 | 1,087 | 84 | |||||||||||||||
Unaffiliated dividend income* |
17,910 | 195,790 | 282,008 | 312,411 | 37,821 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total investment income |
43,824 | 258,006 | 419,211 | 348,958 | 57,129 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Expenses |
||||||||||||||||||||
Advisory fees |
31,162 | 103,513 | 103,673 | 97,123 | 34,601 | |||||||||||||||
Professional fees |
15,607 | 23,902 | 23,115 | 22,611 | 15,951 | |||||||||||||||
Directors |
8,167 | 27,668 | 25,818 | 24,634 | 8,974 | |||||||||||||||
Insurance |
8,023 | 8,023 | 8,023 | 8,023 | 8,023 | |||||||||||||||
Listing fees |
9,025 | 9,025 | 9,025 | 9,025 | 9,025 | |||||||||||||||
Printing |
4,299 | 14,563 | 13,588 | 12,966 | 4,724 | |||||||||||||||
Other |
196 | 207 | 205 | 204 | 198 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total Expenses |
76,479 | 186,901 | 183,447 | 174,586 | 81,496 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Less fees waived and expenses reimbursed: (See Note 3) |
(45,125 | ) | (83,196 | ) | (79,581 | ) | (77,301 | ) | (46,894 | ) | ||||||||||
Net Expenses |
31,354 | 103,705 | 103,866 | 97,285 | 34,602 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Net Investment Income |
12,470 | 154,301 | 315,345 | 251,673 | 22,527 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Net Realized and Unrealized Gain (Loss) |
||||||||||||||||||||
Net realized gain (loss) on: |
||||||||||||||||||||
Investments |
13,473 | (180,261 | ) | 991,546 | (108,781 | ) | (11,759 | ) | ||||||||||||
In-kind redemptions |
| 434,484 | | 649,462 | | |||||||||||||||
Foreign currency related transactions |
(203 | ) | (575 | ) | 115 | 1,424 | (345 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Net realized gain (loss) |
13,270 | 253,648 | 991,661 | 542,105 | (12,104 | ) | ||||||||||||||
Net change in unrealized appreciation (depreciation) on: |
||||||||||||||||||||
Investments |
136,937 | 1,652,988 | 1,557,293 | 2,347,627 | 346,125 | |||||||||||||||
Foreign currency translations |
516 | 2,663 | 2,501 | 1,781 | 797 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Net change in unrealized appreciation (depreciation) |
137,453 | 1,655,651 | 1,559,794 | 2,349,408 | 346,922 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Net Gain (loss) on investment and foreign currency transactions |
150,723 | 1,909,299 | 2,551,455 | 2,891,513 | 334,818 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Net Increase (Decrease) in Net Assets from Operations |
$ | 163,193 | $ | 2,063,600 | $ | 2,866,800 | $ | 3,143,186 | $ | 357,345 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
* Foreign taxes withheld |
$ | 288 | $ | 3,419 | $ | 4,389 | $ | 4,930 | $ | 840 |
See Notes to Financial Statements. | 41 |
db-X Exchange-Traded Funds Inc.
STATEMENTS OF CHANGES IN NET ASSETS
db-X
2010 Target Date Fund |
db-X
2020 Target Date Fund |
|||||||||||||||
For
the Six Months Ended November 30, 2012 (Unaudited) |
Year Ended May 31, 2012 |
For
the Six Months Ended November 30, 2012 (Unaudited) |
Year Ended May 31, 2012 |
|||||||||||||
Increase (Decrease) in Net Assets from Operations |
|
|||||||||||||||
Net investment income |
$ | 12,470 | $ | 92,947 | $ | 154,301 | $ | 424,297 | ||||||||
Net realized gain (loss) |
13,270 | 399,249 | 253,648 | 2,435,613 | ||||||||||||
Net change in unrealized appreciation (depreciation) |
137,453 | (567,383 | ) | 1,655,651 | (4,161,490 | ) | ||||||||||
|
|
|
|
|
|
|
|
|||||||||
Net increase (decrease) resulting from operations |
163,193 | (75,187 | ) | 2,063,600 | (1,301,580 | ) | ||||||||||
|
|
|
|
|
|
|
|
|||||||||
Distributions to Shareholders from |
|
|||||||||||||||
Net investment income |
| (120,259 | ) | | (585,276 | ) | ||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total distributions |
| (120,259 | ) | | (585,276 | ) | ||||||||||
|
|
|
|
|
|
|
|
|||||||||
Fund Shares Transactions |
|
|||||||||||||||
Value of shares redeemed |
| (4,758,317 | ) | (4,870,232 | ) | (4,607,004 | ) | |||||||||
|
|
|
|
|
|
|
|
|||||||||
Net increase (decrease) in net assets resulting from fund share transactions |
| (4,758,317 | ) | (4,870,232 | ) | (4,607,004 | ) | |||||||||
|
|
|
|
|
|
|
|
|||||||||
Total increase (decrease) in Net Assets |
163,193 | (4,953,763 | ) | (2,806,632 | ) | (6,493,860 | ) | |||||||||
Net Assets |
||||||||||||||||
Beginning of period |
9,454,177 | 14,407,940 | 31,918,215 | 38,412,075 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
End of period |
$ | 9,617,370 | $ | 9,454,177 | $ | 29,111,583 | $ | 31,918,215 | ||||||||
|
|
|
|
|
|
|
|
|||||||||
Undistributed net investment income |
$ | 33,875 | $ | 21,405 | $ | 301,610 | $ | 147,309 | ||||||||
|
|
|
|
|
|
|
|
|||||||||
Changes in Shares Outstanding |
|
|||||||||||||||
Shares outstanding, beginning of period |
400,800 | 600,800 | 1,400,800 | 1,600,800 | ||||||||||||
Shares redeemed |
| (200,000 | ) | (200,000 | ) | (200,000 | ) | |||||||||
|
|
|
|
|
|
|
|
|||||||||
Shares outstanding, end of period |
400,800 | 400,800 | 1,200,800 | 1,400,800 | ||||||||||||
|
|
|
|
|
|
|
|
See Notes to Financial Statements. | 42 |
db-X Exchange-Traded Funds Inc.
STATEMENTS OF CHANGES IN NET ASSETS (Continued)
db-X
2030 Target Date Fund |
db-X
2040 Target Date Fund |
|||||||||||||||
For
the Six Months Ended November 30, 2012 (Unaudited) |
Year Ended May 31, 2012 |
For
the Six Months Ended November 30, 2012 (Unaudited) |
Year Ended May 31, 2012 |
|||||||||||||
Increase (Decrease) in Net Assets from Operations |
|
|||||||||||||||
Net investment income |
$ | 315,345 | $ | 684,410 | $ | 251,673 | $ | 530,421 | ||||||||
Net realized gain (loss) |
991,661 | 2,499,650 | 542,105 | 2,407,190 | ||||||||||||
Net change in unrealized appreciation (depreciation) |
1,559,794 | (3,713,126 | ) | 2,349,408 | (4,641,115 | ) | ||||||||||
|
|
|
|
|
|
|
|
|||||||||
Net increase (decrease) resulting from operations |
2,866,800 | (529,066 | ) | 3,143,186 | (1,703,504 | ) | ||||||||||
|
|
|
|
|
|
|
|
|||||||||
Distributions to Shareholders from |
|
|||||||||||||||
Net investment income |
| (672,939 | ) | | (533,276 | ) | ||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total distributions |
| (672,939 | ) | | (533,276 | ) | ||||||||||
|
|
|
|
|
|
|
|
|||||||||
Fund Shares Transactions |
|
|||||||||||||||
Value of shares redeemed |
| (4,271,271 | ) | (4,451,251 | ) | (4,128,167 | ) | |||||||||
|
|
|
|
|
|
|
|
|||||||||
Net increase (decrease) in net assets resulting from fund share transactions |
| (4,271,271 | ) | (4,451,251 | ) | (4,128,167 | ) | |||||||||
|
|
|
|
|
|
|
|
|||||||||
Total increase (decrease) in Net Assets |
2,866,800 | (5,473,276 | ) | (1,308,065 | ) | (6,364,947 | ) | |||||||||
Net Assets |
||||||||||||||||
Beginning of period |
29,834,072 | 35,307,348 | 28,357,674 | 34,722,621 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
End of period |
$ | 32,700,872 | $ | 29,834,072 | $ | 27,049,609 | $ | 28,357,674 | ||||||||
|
|
|
|
|
|
|
|
|||||||||
Undistributed net investment income |
$ | 603,951 | $ | 288,606 | $ | 491,557 | $ | 239,884 | ||||||||
|
|
|
|
|
|
|
|
|||||||||
Changes in Shares Outstanding |
|
|||||||||||||||
Shares outstanding, beginning of period |
1,400,800 | 1,600,800 | 1,400,800 | 1,600,800 | ||||||||||||
Shares redeemed |
| (200,000 | ) | (200,000 | ) | (200,000 | ) | |||||||||
|
|
|
|
|
|
|
|
|||||||||
Shares outstanding, end of period |
1,400,800 | 1,400,800 | 1,200,800 | 1,400,800 | ||||||||||||
|
|
|
|
|
|
|
|
See Notes to Financial Statements. | 43 |
db-X Exchange-Traded Funds Inc.
STATEMENTS OF CHANGES IN NET ASSETS (Continued)
db-X In-Target Date Fund |
||||||||
For
the Six Months Ended November 30, 2012 (Unaudited) |
Year Ended May 31, 2012 |
|||||||
Increase (Decrease) in Net Assets from Operations |
| |||||||
Net investment income |
$ | 22,527 | $ | 88,664 | ||||
Net realized gain (loss) |
(12,104 | ) | 595,460 | |||||
Net change in unrealized appreciation (depreciation) |
346,922 | (894,564 | ) | |||||
|
|
|
|
|||||
Net increase (decrease) resulting from operations |
357,345 | (210,440 | ) | |||||
|
|
|
|
|||||
Distributions to Shareholders from |
| |||||||
Net investment income |
| (107,883 | ) | |||||
|
|
|
|
|||||
Total distributions |
| (107,883 | ) | |||||
|
|
|
|
|||||
Fund Shares Transactions |
| |||||||
Value of shares redeemed |
| (5,253,424 | ) | |||||
|
|
|
|
|||||
Net increase (decrease) in net assets resulting from fund share transactions |
| (5,253,424 | ) | |||||
|
|
|
|
|||||
Total increase (decrease) in Net Assets |
357,345 | (5,571,747 | ) | |||||
Net Assets |
||||||||
Beginning of period |
10,376,299 | 15,948,046 | ||||||
|
|
|
|
|||||
End of period |
$ | 10,733,644 | $ | 10,376,299 | ||||
|
|
|
|
|||||
Undistributed net investment income |
$ | 46,860 | $ | 24,333 | ||||
|
|
|
|
|||||
Changes in Shares Outstanding |
| |||||||
Shares outstanding, beginning of period |
400,800 | 600,800 | ||||||
Shares redeemed |
| (200,000 | ) | |||||
|
|
|
|
|||||
Shares outstanding, end of period |
400,800 | 400,800 | ||||||
|
|
|
|
See Notes to Financial Statements. | 44 |
db-X Exchange-Traded Funds Inc.
For a Share outstanding throughout each period
For the Six Months Ended November 30, 2012 (Unaudited) |
Year Ended May 31, | For the Period October 1, 2007* through May 31, 2008 |
||||||||||||||||||||||
db-X 2010 Target Date Fund | 2012 | 2011 | 2010 | 2009 | ||||||||||||||||||||
Net Asset Value, beginning of period |
$ | 23.59 | $ | 23.98 | $ | 23.24 | $ | 22.09 | $ | 24.93 | $ | 25.39 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Income from Investment Operations: |
||||||||||||||||||||||||
Net investment income** |
0.03 | 0.16 | 0.37 | 0.55 | 0.69 | 0.55 | ||||||||||||||||||
Net realized and unrealized gain (loss)** |
0.38 | (0.35 | ) | 0.99 | 1.11 | (2.67 | ) | (0.80 | ) | |||||||||||||||
Contributions from advisor |
| | 0.04 | | | | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Net increase (decrease) in net asset value from operations |
0.41 | (0.19 | ) | 1.40 | 1.66 | (1.98 | ) | (0.25 | ) | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Distributions paid to shareholders from: |
||||||||||||||||||||||||
Net investment income |
| (0.20 | ) | (0.66 | ) | (0.51 | ) | (0.86 | ) | (0.18 | ) | |||||||||||||
Net realized capital gains |
| | | | | (0.03 | ) | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Total distributions |
| (0.20 | ) | (0.66 | ) | (0.51 | ) | (0.86 | ) | (0.21 | ) | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Net Asset Value, end of period |
$ | 24.00 | $ | 23.59 | $ | 23.98 | $ | 23.24 | $ | 22.09 | $ | 24.93 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Total Return*** |
1.74 | % | (0.79 | )% | 6.09 | % | 7.51 | % | (7.87 | )% | (0.99 | )% | ||||||||||||
Ratios/Supplemental Data |
||||||||||||||||||||||||
Net Assets, end of period (000s omitted) |
$ | 9,617 | $ | 9,454 | $ | 14,408 | $ | 18,610 | $ | 17,693 | $ | 24,953 | ||||||||||||
Ratios to average net assets: |
||||||||||||||||||||||||
Expenses, net of expense reimbursements |
0.65 | % | 0.65 | % | 0.65 | % | 0.65 | % | 0.65 | % | 0.65 | % | ||||||||||||
Expenses, prior to fee waiver and expense reimbursements |
1.60 | % | 1.39 | % | 1.70 | % | 2.10 | % | 1.70 | % | 1.55 | % | ||||||||||||
Net investment income |
0.26 | % | 0.67 | % | 1.56 | % | 2.32 | % | 3.09 | % | 3.33 | % | ||||||||||||
Portfolio turnover rate |
73 | % | 65 | % | 58 | % | 51 | % | 54 | % | 22 | % | ||||||||||||
For the Six Months Ended November 30, 2012 (Unaudited) |
Year Ended May 31, | For the Period October 1, 2007* through May 31, 2008 |
||||||||||||||||||||||
db-X 2020 Target Date Fund | 2012 | 2011 | 2010 | 2009 | ||||||||||||||||||||
Net Asset Value, beginning of period |
$ | 22.79 | $ | 24.00 | $ | 20.69 | $ | 18.56 | $ | 24.18 | $ | 25.52 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Income from Investment Operations: |
||||||||||||||||||||||||
Net investment income** |
0.12 | 0.28 | 0.44 | 0.51 | 0.61 | 0.44 | ||||||||||||||||||
Net realized and unrealized gain (loss)** |
1.33 | (1.12 | ) | 3.39 | 2.10 | (5.64 | ) | (1.67 | ) | |||||||||||||||
Contributions from advisor |
| | 0.01 | | | | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Net increase (decrease) in net asset value from operations |
1.45 | (0.84 | ) | 3.84 | 2.61 | (5.03 | ) | (1.23 | ) | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Distributions paid to shareholders from: |
||||||||||||||||||||||||
Net investment income |
| (0.37 | ) | (0.53 | ) | (0.48 | ) | (0.59 | ) | (0.10 | ) | |||||||||||||
Net realized capital gains |
| | | | (0.00 | )(a) | (0.01 | ) | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Total distributions |
| (0.37 | ) | (0.53 | ) | (0.48 | ) | (0.59 | ) | (0.11 | ) | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Net Asset Value, end of period |
$ | 24.24 | $ | 22.79 | $ | 24.00 | $ | 20.69 | $ | 18.56 | $ | 24.18 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Total Return*** |
6.36 | % | (3.49 | )% | 18.71 | % | 13.99 | % | (20.73 | )% | (4.82 | )% | ||||||||||||
Ratios/Supplemental Data |
||||||||||||||||||||||||
Net Assets, end of period (000s omitted) |
$ | 29,112 | $ | 31,918 | $ | 38,412 | $ | 41,405 | $ | 37,142 | $ | 43,539 | ||||||||||||
Ratios to average net assets: |
||||||||||||||||||||||||
Expenses, net of expense reimbursements |
0.65 | % | 0.65 | % | 0.65 | % | 0.65 | % | 0.65 | % | 0.65 | % | ||||||||||||
Expenses, prior to fee waiver and expense reimbursements |
1.17 | % | 1.16 | % | 1.42 | % | 1.90 | % | 1.60 | % | 1.32 | % | ||||||||||||
Net investment income |
0.24 | % | 1.20 | % | 1.97 | % | 2.43 | % | 3.17 | % | 2.69 | % | ||||||||||||
Portfolio turnover rate |
49 | % | 55 | % | 49 | % | 37 | % | 64 | % | 20 | % |
* | Commencement of operations. |
** | Based on average shares outstanding. |
*** | Total Return is calculated assuming an initial investment made at the Net Asset Value at the beginning of the period, reinvestment of all dividends and capital gain distributions at Net Asset Value during the period, and redemption at Net Asset Value on the last day of the period. Total Return calculated for a period of less than one year is not annualized. The Total Return would have been lower if certain fees had not been reimbursed by the investment sub-advisor, Amerivest Investment Management LLC (from October 1, 2007 through October 20, 2010) and the Advisor, DBX Strategic Advisors LLC. |
| Annualized. |
| Portfolio turnover rate is not annualized and does not include securities received or delivered from processing creations or redemptions. |
(a) | Amount represents less than $0.01 or greater than $(0.01). |
See Notes to Financial Statements. | 45 |
db-X Exchange-Traded Funds Inc.
FINANCIAL HIGHLIGHTS (Continued)
For a Share outstanding throughout each period
For the Six Months Ended November 30, 2012 (Unaudited) |
Year Ended May 31, | For the Period October 1, 2007* through May 31, 2008 |
||||||||||||||||||||||
db-X 2030 Target Date Fund | 2012 | 2011 | 2010 | 2009 | ||||||||||||||||||||
Net Asset Value, beginning of period |
$ | 21.30 | $ | 22.06 | $ | 18.18 | $ | 16.07 | $ | 23.57 | $ | 25.60 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Income from Investment Operations: |
||||||||||||||||||||||||
Net investment income** |
0.23 | 0.46 | 0.39 | 0.37 | 0.44 | 0.35 | ||||||||||||||||||
Net realized and unrealized gain (loss) ** |
1.81 | (0.74 | ) | 3.90 | 2.07 | (7.54 | ) | (2.29 | ) | |||||||||||||||
Contributions from advisor |
| | 0.00 | (a) | | | | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Net increase (decrease) in net asset value from operations |
2.04 | (0.28 | ) | 4.29 | 2.44 | (7.10 | ) | (1.94 | ) | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Distributions paid to shareholders from: |
||||||||||||||||||||||||
Net investment income |
| (0.48 | ) | (0.41 | ) | (0.33 | ) | (0.40 | ) | (0.08 | ) | |||||||||||||
Net realized capital gains |
| | | | | (0.01 | ) | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Total distributions |
| (0.48 | ) | (0.41 | ) | (0.33 | ) | (0.40 | ) | (0.09 | ) | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Net Asset Value, end of period |
$ | 23.34 | $ | 21.30 | $ | 22.06 | $ | 18.18 | $ | 16.07 | $ | 23.57 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Total Return*** |
9.58 | % | (1.17 | )% | 23.74 | % | 15.13 | % | (30.08 | )% | (7.59 | )% | ||||||||||||
Ratios/Supplemental Data |
||||||||||||||||||||||||
Net Assets, end of period (000s omitted) |
$ | 32,701 | $ | 29,834 | $ | 35,307 | $ | 32,740 | $ | 28,937 | $ | 33,021 | ||||||||||||
Ratios to average net assets: |
||||||||||||||||||||||||
Expenses, net of expense reimbursements |
0.65 | % | 0.65 | % | 0.65 | % | 0.65 | % | 0.65 | % | 0.65 | % | ||||||||||||
Expenses, prior to fee waiver and expense reimbursements |
1.15 | % | 1.18 | % | 1.43 | % | 1.95 | % | 1.62 | % | 1.38 | % | ||||||||||||
Net investment income |
0.50 | % | 2.17 | % | 1.93 | % | 2.01 | % | 2.52 | % | 2.13 | % | ||||||||||||
Portfolio turnover rate |
43 | % | 40 | % | 39 | % | 42 | % | 64 | % | 13 | % | ||||||||||||
For the Six Months Ended November 30, 2012 (Unaudited) |
Year Ended May 31, | For the Period October 1, 2007* through May 31, 2008 |
||||||||||||||||||||||
db-X 2040 Target Date Fund | 2012 | 2011 | 2010 | 2009 | ||||||||||||||||||||
Net Asset Value, beginning of period |
$ | 20.24 | $ | 21.69 | $ | 17.48 | $ | 15.35 | $ | 23.49 | $ | 25.64 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Income from Investment Operations: |
||||||||||||||||||||||||
Net investment income** |
0.18 | 0.37 | 0.32 | 0.32 | 0.37 | 0.29 | ||||||||||||||||||
Net realized and unrealized gain (loss)** |
2.11 | (1.44 | ) | 4.25 | 2.08 | (8.15 | ) | (2.38 | ) | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Net increase (decrease) in net asset value from operations |
2.29 | (1.07 | ) | 4.57 | 2.40 | (7.78 | ) | (2.09 | ) | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Distributions paid to shareholders from: |
||||||||||||||||||||||||
Net investment income |
| (0.38 | ) | (0.36 | ) | (0.27 | ) | (0.36 | ) | (0.06 | ) | |||||||||||||
Net realized capital gains |
| | | | | (0.00 | )(a) | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Total distributions |
| (0.38 | ) | (0.36 | ) | (0.27 | ) | (0.36 | ) | (0.06 | ) | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Net Asset Value, end of period |
$ | 22.53 | $ | 20.24 | $ | 21.69 | $ | 17.48 | $ | 15.35 | $ | 23.49 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Total Return*** |
11.31 | % | (4.86 | )% | 26.32 | % | 15.59 | % | (33.03 | )% | (8.14 | )% | ||||||||||||
Ratios/Supplemental Data |
||||||||||||||||||||||||
Net Assets, end of period (000s omitted) |
$ | 27,050 | $ | 28,358 | $ | 34,723 | $ | 31,477 | $ | 27,651 | $ | 37,605 | ||||||||||||
Ratios to average net assets: |
||||||||||||||||||||||||
Expenses, net of expense reimbursements |
0.65 | % | 0.65 | % | 0.65 | % | 0.65 | % | 0.65 | % | 0.65 | % | ||||||||||||
Expenses, prior to fee waiver and expense reimbursements |
1.17 | % | 1.20 | % | 1.43 | % | 1.97 | % | 1.65 | % | 1.36 | % | ||||||||||||
Net investment income |
0.42 | % | 1.84 | % | 1.64 | % | 1.79 | % | 2.21 | % | 1.89 | % | ||||||||||||
Portfolio turnover rate |
31 | % | 34 | % | 35 | % | 38 | % | 56 | % | 10 | % |
* | Commencement of operations. |
** | Based on average shares outstanding. |
*** | Total Return is calculated assuming an initial investment made at the Net Asset Value at the beginning of the period, reinvestment of all dividends and capital gain distributions at Net Asset Value during the period, and redemption at Net Asset Value on the last day of the period. Total Return calculated for a period of less than one year is not annualized. The Total Return would have been lower if certain fees had not been reimbursed by the investment sub-advisor, Amerivest Investment Management LLC (from October 1, 2007 through October 20, 2010) and the Advisor, DBX Strategic Advisors LLC. |
| Annualized. |
| Portfolio turnover rate is not annualized and does not include securities received or delivered from processing creations or redemptions. |
(a) | Amount represents less than $0.01 or greater than $(0.01). |
See Notes to Financial Statements. | 46 |
db-X Exchange-Traded Funds Inc.
FINANCIAL HIGHLIGHTS (Continued)
For a Share outstanding throughout each period
For the Six Months Ended November 30, 2012 (Unaudited) |
Year Ended May 31, | For the Period October 1, 2007* through May 31, 2008 |
||||||||||||||||||||||
db-X In-Target Date Fund | 2012 | 2011 | 2010 | 2009 | ||||||||||||||||||||
Net Asset Value, beginning of period |
$ | 25.89 | $ | 26.54 | $ | 25.07 | $ | 24.38 | $ | 25.46 | $ | 25.08 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Income from Investment Operations: |
||||||||||||||||||||||||
Net investment income** |
0.06 | 0.16 | 0.25 | 0.33 | 0.47 | 0.43 | ||||||||||||||||||
Net realized and unrealized gain (loss)** |
0.83 | (0.63 | ) | 1.61 | 0.70 | (0.96 | ) | 0.10 | ||||||||||||||||
Contributions from advisor |
| | 0.00 | (a) | | | | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Net increase (decrease) in net asset value from operations |
0.89 | (0.47 | ) | 1.86 | 1.03 | (0.49 | ) | 0.53 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Distributions paid to shareholders from: |
||||||||||||||||||||||||
Net investment income |
| (0.18 | ) | (0.39 | ) | (0.34 | ) | (0.59 | ) | (0.15 | ) | |||||||||||||
Net realized capital gains |
| | | | (0.00 | )(a) | (0.00 | )(a) | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Total distributions |
| (0.18 | ) | (0.39 | ) | (0.34 | ) | (0.59 | ) | (0.15 | ) | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Net Asset Value, end of period |
$ | 26.78 | $ | 25.89 | $ | 26.54 | $ | 25.07 | $ | 24.38 | $ | 25.46 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Total Return*** |
3.44 | % | (1.77 | )% | 7.44 | % | 4.23 | % | (1.87 | )% | 2.12 | % | ||||||||||||
Ratios/Supplemental Data |
||||||||||||||||||||||||
Net Assets, end of period (000s omitted) |
$ | 10,734 | $ | 10,376 | $ | 15,948 | $ | 20,074 | $ | 24,400 | $ | 30,576 | ||||||||||||
Ratios to average net assets: |
||||||||||||||||||||||||
Expenses, net of expense reimbursements |
0.65 | % | 0.65 | % | 0.65 | % | 0.65 | % | 0.65 | % | 0.65 | % | ||||||||||||
Expenses, prior to fee waiver and expense reimbursements |
1.53 | % | 1.36 | % | 1.66 | % | 2.06 | % | 1.57 | % | 1.61 | % | ||||||||||||
Net investment income |
0.11 | % | 0.59 | % | 0.96 | % | 1.30 | % | 1.91 | % | 2.62 | % | ||||||||||||
Portfolio turnover rate |
53 | % | 59 | % | 60 | % | 42 | % | 75 | % | 21 | % |
* | Commencement of operations. |
** | Based on average shares outstanding. |
*** | Total Return is calculated assuming an initial investment made at the Net Asset Value at the beginning of the period, reinvestment of all dividends and capital gain distributions at Net Asset Value during the period, and redemption at Net Asset Value on the last day of the period. Total Return calculated for a period of less than one year is not annualized. The Total Return would have been lower if certain fees had not been reimbursed by the investment sub-advisor, Amerivest Investment Management LLC (from October 1, 2007 through October 20, 2010) and the Advisor, DBX Strategic Advisors LLC. |
| Annualized. |
| Portfolio turnover rate is not annualized and does not include securities received or delivered from processing creations or redemptions. |
(a) | Amount represents less than $0.01 or greater than $(0.01). |
See Notes to Financial Statements. | 47 |
db-X Exchange-Traded Funds Inc.
NOTES TO FINANCIAL STATEMENTS (Unaudited)
1. Organization
db-X Exchange-Traded Funds Inc. (the Company) was organized as a Maryland corporation on December 22, 2006 and is registered under the Investment Company Act of 1940, as amended (the Act).
As of November 30, 2012, there were five (5) series of exchange-traded funds (ETF) (each, a Fund, and collectively, the Funds) in operation and trading:
db-X 2010 Target Date Fund | db-X 2010 Fund | |
db-X 2020 Target Date Fund | db-X 2020 Fund | |
db-X 2030 Target Date Fund | db-X 2030 Fund | |
db-X 2040 Target Date Fund | db-X 2040 Fund | |
db-X In-Target Date Fund | db-X In-Target Fund |
On January 16, 2013, the Board of Trustees approved a change in the Funds names. Effective January 31, 2013, each of these Funds names will be changed as follows:
Current Fund Name |
New Fund Name | |
db-X 2010 Target Date Fund | db X-trackers 2010 Target Date Fund | |
db-X 2020 Target Date Fund | db X-trackers 2020 Target Date Fund | |
db-X 2030 Target Date Fund | db X-trackers 2030 Target Date Fund | |
db-X 2040 Target Date Fund | db X-trackers 2040 Target Date Fund | |
db-X In-Target Date Fund | db X-trackers In-Target Date Fund |
DBX Strategic Advisors LLC (DBX or the Advisor) serves as investment advisor to the Funds and has overall responsibility for the general management and administration of the Funds, subject to the supervision of the Funds Board of Directors.
Each Fund offers shares, that are listed and traded on the NYSE Arca, Inc. (NYSE Arca). Unlike conventional mutual funds, each Fund issues and redeems shares on a continuous basis, at net asset value, only in large specified lots consisting of 200,000 shares, each called a Creation Unit. Except when aggregated in Creation Units, shares are not individually redeemable securities of the Funds.
The investment objective of each Fund is to track the performance, before fees and expenses, of a particular index (the Underlying Index). Zacks Investment Research (Zacks) is the creator of each Underlying Index. Each Underlying Index is comprised of a mix of securities from three broad asset classes: international equities, domestic equities, and fixed income, which includes cash, cash equivalents or short-term money market instruments. Short-term instruments include obligations of the U.S. government and its agencies or instrumentalities; commercial paper, variable amount master demand notes and other debt securities, including high quality U.S. dollar-denominated short-term bonds and notes issued by domestic and foreign corporations; variable and floating rate securities; bank obligations; repurchase agreements collateralized by these securities; and shares of other investment companies that primarily invest in any of the above-referenced securities. These Underlying Indexes are designed to reflect a portfolio of investments that can be used for lifecycle investing. Lifecycle investing is an investment technique that starts by targeting a particular investment horizon. That investment horizon corresponds to the date the investor expects to need his or her invested assets.
The underlying indexes for the Funds are:
Fund |
Underlying Index | |
db-X 2010 Fund | Zacks 2010 Lifecycle Index | |
db-X 2020 Fund | Zacks 2020 Lifecycle Index | |
db-X 2030 Fund | Zacks 2030 Lifecycle Index | |
db-X 2040 Fund | Zacks 2040 Lifecycle Index | |
db-X In-Target Fund | Zacks In-Target Lifecycle Index |
Each Fund is entitled to use its respective Underlying Index pursuant to a licensing agreement between Zacks and DBX. There is no charge to the Funds in connection with these licensing agreements.
Each Fund may invest in securities of non-U.S. issuers that may trade in non-U.S. Markets. This may involve certain considerations and risks not typically associated with securities of U.S. issuers. Such risks include, but are not limited to: generally less liquid and less efficient securities markets; generally greater price volatility; exchange rate fluctuations and exchange controls; imposition of restrictions on the expatriation of funds or other assets of the Fund; less publicly available information about issuers; the imposition of withholding or other taxes; higher transaction and custody costs; settlement delays and risk of loss attendant in settlement procedures; difficulties in enforcing contractual obligations; less regulation of
48
db-X Exchange-Traded Funds Inc.
NOTES TO FINANCIAL STATEMENTS (Unaudited) (Continued)
securities markets; different accounting, disclosure and reporting requirements; more substantial governmental involvement in the economy; higher inflation rates; greater social, economic and political uncertainties; the risk of nationalization or expropriation of assets and the risk of war.
Pursuant to the Companys organizational documents, the Companys officers and directors are indemnified against certain liabilities that may arise out of the performance of their duties to the Funds. Additionally, in the normal course of business the Company enters into contracts that contain a variety of representations that provide indemnification for certain liabilities. The directors maximum exposure under these arrangements is unknown, as this would involve future claims that may be made against the Funds that have not yet occurred. However, the Company expects the risk of loss to be remote.
2. Significant Accounting Policies
The financial statements have been prepared in conformity with U.S. generally accepted accounting principles (U.S. GAAP), which require management to make certain estimates and assumptions that affect the reported amounts and disclosures in the financial statements. Actual results could differ from those estimates. The following is a summary of significant accounting policies followed by the Funds.
Investment Valuation The Net Asset Value (NAV), of each Funds shares is calculated each business day as of the close of regular trading on the New York Stock Exchange, generally 4:00 p.m. Eastern Time. NAV per share is calculated by dividing a Funds net assets by the number of Fund shares outstanding. Any assets or securities for which market quotations are not readily available are valued at fair-value in accordance with procedures adopted by the Board of Directors. The Board of Directors has delegated to the Advisor the responsibility to exercise oversight in the administration of these procedures.
Foreign securities (including foreign exchange contracts) are converted into U.S. dollar amounts using the applicable exchange rates as of the close of the New York Stock Exchange (NYSE). If market quotations are available and reliable for foreign exchange traded equity securities, the securities will be valued at the market quotations. Because trading hours for certain foreign securities end before the close of the NYSE, closing market quotations may become unreliable. If between the time trading ends on a particular security and the close of the customary trading session on the NYSE, events occur that are significant and make the closing price unreliable, the Funds may fair value the security. If the event is likely to have affected the closing price of the security, the security will be valued at fair value in good faith using procedures approved by the Board of Trustees. Adjustments to closing prices to reflect fair value may also be based on a screening process of an independent pricing service to indicate the degree of certainty, based on historical data, that the closing price in the principal market where a foreign security trades is not the current value as of the close of the NYSE. Foreign securities meeting the approved degree of certainty that the price is not reflective of current value will be priced at the indication of fair value from the independent pricing service. Multiple factors may be considered by the independent pricing service in determining adjustments to reflect fair value and may include information relating to sector indices, American Depositary Receipts and domestic and foreign index futures. Foreign securities may have additional risks including exchange rate changes, potential for sharply devalued currencies and high inflation, political and economical upheaval, the relative lack of issuer information, relatively low market liquidity and the potential lack of strict financial and accounting controls and standards.
In general, the market value of securities which are readily available and deemed reliable are determined as follows: securities listed on a national securities exchange (other than securities listed on the NASDAQ Stock Market, Inc. (NASDAQ)) or on a foreign securities exchange are valued at the last sale price at the close of the exchange or foreign securities exchange. If there has been no sale on such day, the securities are valued at the last traded price from the previous day. Securities listed on more than one exchange are valued by reference to the principal exchange on which the securities are traded; securities listed only on NASDAQ are valued in accordance with the NASDAQ Official Closing Price.
U.S. government securities and other debt instruments having 60 days or less remaining until maturity are valued at amortized cost if their original maturity was 60 days or less; or by amortizing their fair value as of the 61st day prior to maturity if their original term to maturity exceeded 60 days; fixed-income securities may be valued on the basis of prices provided by a pricing service or at a price obtained from one or more of the major broker/dealers. In cases where broker/dealer quotes are obtained, the Advisor may establish procedures whereby changes in market yields or spreads are used to adjust, on a daily basis, a recently obtained quoted price on a security.
Cash Cash consists of cash held at banks.
Fair Value Measurement The Funds are subject to fair value accounting standards that define fair value, establish the framework for measuring fair value and provide a three-tier hierarchy to maximize the use of observable market data and minimize the use of unobservable inputs. Inputs refer broadly to the assumptions that market participants would use in pricing the asset or liability, including assumptions about risk, for example, the risk inherent in a particular valuation technique used to measure fair value. Inputs may be based on independent market data (observable inputs) or they may be internally developed
49
db-X Exchange-Traded Funds Inc.
NOTES TO FINANCIAL STATEMENTS (Unaudited) (Continued)
(unobservable inputs). The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (level 1 measurement) and the lowest priority to unobservable inputs (level 3 measurements). The three levels of the fair value hierarchy are as follows:
| Level 1 quoted prices in active markets for identical securities |
| Level 2 Inputs other than quoted prices included within Level 1 that are observable for the asset or liability either directly or indirectly, including quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not considered to be active, inputs other than quoted prices that are observable for the asset or liability, and inputs that are derived principally from or corroborated by observable market data by correlation or other means |
| Level 3 significant unobservable inputs (including a Funds own assumption in determining the fair value of investments |
The level of a value determined for a financial instrument within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement in its entirety. However, the determination of what constitutes an observable input may require significant judgment by the Funds. The Funds consider observable inputs to be market data that is readily available, regularly distributed or updated, reliable and verifiable, and provided by independent sources that are actively involved in the relevant market. The categorization of a value determined for a financial instrument within the hierarchy is based upon the pricing transparency of the instrument and does not necessarily correspond to the Funds perceived risk of that instrument.
Level 1 investments consist of active listed equities.
Level 2 investments generally include certain U.S. government and sovereign obligations, most government agency securities, investment-grade corporate bonds and rights.
Level 3 investments may include unlisted securities related to corporate actions, securities whose trading have been suspended or which have been de-listed from their primary trading exchange and less liquid corporate debt securities. When observable prices are not available for these securities, the Funds use one or more valuation techniques (e.g., the market approach or the income approach) for which sufficient and reliable data is available. Within Level 3 of the fair value hierarchy, the use of the market approach generally consists of using comparable market transactions, while the use of the income approach generally consists of the net present value of estimated future cash flows, adjusted as appropriate for liquidity, credit, market and/or other risk factors.
The inputs used by the Funds in estimating the value of investments classified as Level 3 may include the original transaction price, quoted prices for similar securities or assets in active markets, completed or pending third-party transactions in the underlying investment or comparable issuers, and changes in financial ratios or cash flows. Level 3 securities may also be adjusted to reflect illiquidity and/or non-transferability, with the amount of such discount estimated by the Funds in the absence of market information. The fair value measurement of Level 3 securities does not include transaction costs that may have been capitalized as part of the securitys cost basis. Assumptions used by the Funds due to the lack of observable inputs may significantly impact the resulting fair value and therefore the Funds results of operations. There were no securities classified as Level 3 at November 30, 2012.
Fair value pricing could result in a difference between the prices used to calculate a Funds net asset value and the prices used by the Funds underlying index, which in turn could result in a difference between the Funds performance and the performance of the Funds underlying index.
The following table summarizes the valuation of each Funds investments by the above fair value hierarchy levels as of November 30, 2012 (see the Schedule of Investments for security categories). For the six-month period ended November 30, 2012, there were no transfers between investment levels.
Investments in Securities | ||||||||||||||||
Level 1 | Level 2 | Level 3 | Fair
Value at 11/30/2012 |
|||||||||||||
db-X 2010 Fund | ||||||||||||||||
Investments in Securities |
||||||||||||||||
Common Stocks |
$ | 1,703,214 | $ | | $ | | $ | 1,703,214 | ||||||||
Preferred Stocks |
3,270 | | | 3,270 | ||||||||||||
Corporate Bonds |
| 1,213,174 | | 1,213,174 | ||||||||||||
United States Government & Agencies Obligations |
| 6,668,403 | | 6,668,403 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total Investments |
$ | 1,706,484 | $ | 7,881,577 | $ | | $ | 9,588,061 | ||||||||
|
|
|
|
|
|
|
|
50
db-X Exchange-Traded Funds Inc.
NOTES TO FINANCIAL STATEMENTS (Unaudited) (Continued)
Investments in Securities | ||||||||||||||||
Level 1 | Level 2 | Level 3 | Fair Value
at 11/30/2012 |
|||||||||||||
db-X 2020 Fund | ||||||||||||||||
Investments in Securities |
||||||||||||||||
Common Stocks |
$ | 15,761,158 | $ | | $ | | $ | 15,761,158 | ||||||||
Preferred Stocks |
21,395 | | | 21,395 | ||||||||||||
Corporate Bonds |
| 3,463,787 | | 3,463,787 | ||||||||||||
United States Government & Agencies Obligations |
| 9,752,039 | | 9,752,039 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total Investments |
$ | 15,782,553 | $ | 13,215,826 | $ | | $ | 28,998,379 | ||||||||
|
|
|
|
|
|
|
|
|||||||||
db-X 2030 Fund | ||||||||||||||||
Investments in Securities |
||||||||||||||||
Common Stocks |
$ | 25,502,810 | $ | | $ | | $ | 25,502,810 | ||||||||
Preferred Stocks |
32,975 | | | 32,975 | ||||||||||||
Corporate Bonds |
| 6,449,188 | | 6,449,188 | ||||||||||||
United States Government & Agencies Obligations |
| 565,093 | | 565,093 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total Investments |
$ | 25,535,785 | $ | 7,014,281 | $ | | $ | 32,550,066 | ||||||||
|
|
|
|
|
|
|
|
|||||||||
db-X 2040 Fund | ||||||||||||||||
Investments in Securities |
||||||||||||||||
Common Stocks |
$ | 25,226,972 | $ | | $ | | $ | 25,226,972 | ||||||||
Preferred Stocks |
32,800 | | | 32,800 | ||||||||||||
Corporate Bonds |
| 836,886 | | 836,886 | ||||||||||||
United States Government & Agencies Obligations |
| 860,476 | | 860,476 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total Investments |
$ | 25,259,772 | $ | 1,697,362 | $ | | $ | 26,957,134 | ||||||||
|
|
|
|
|
|
|
|
|||||||||
db-X In-Target Fund | ||||||||||||||||
Investments in Securities |
||||||||||||||||
Common Stocks |
$ | 3,534,060 | $ | | $ | | $ | 3,534,060 | ||||||||
Preferred Stocks |
6,749 | | | 6,749 | ||||||||||||
Corporate Bonds |
| 1,099,350 | | 1,099,350 | ||||||||||||
United States Government & Agencies Obligations |
| 6,058,556 | | 6,058,556 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total Investments |
$ | 3,540,809 | $ | 7,157,906 | $ | | $ | 10,698,715 | ||||||||
|
|
|
|
|
|
|
|
In December 2011, FASB issued ASU No. 2011-11 related to Disclosures about Offsetting Assets and Liabilities. The amendments in this ASU require an entity to disclose information about offsetting and related arrangements to enable users of its financial statements to understand the effect of those arrangements on its financial position. The ASU is effective for annual reporting periods beginning on or after January 1, 2013, and interim periods within those annual periods. The guidance requires retrospective application for all comparative periods presented. The Advisor is currently evaluating the impact ASU 2011-11 will have on the financial statement disclosures.
Investment Transactions and Investment Income Investment transactions are recorded as of the date that the
securities are purchased or sold (trade date). Realized gains and losses from the sale or disposition of securities are calculated on the identified cost-method. Dividend income is net of any foreign taxes withheld at source. Interest income is recorded on the accrual basis. Discounts and premiums on securities purchased are accreted/amortized over the lives of the respective securities.
Tax Information and Dividends and Distributions to Shareholders It is each Funds policy to comply with all requirements of the Internal Revenue Code of 1986, as amended (the Code). Each fund intends to qualify for and to elect treatment as a separate Regulated Investment Company (RIC) under Subchapter M of the Code. It is the policy of each Fund to pay out dividends, if any, to investors at least annually sufficient to relieve it from all, or substantially all, Federal income and excise taxes. Taxable net realized gains from investment transactions, reduced by capital loss carryforwards, if any, are declared and distributed to shareholders at least annually. The capital loss carryforward amount, if any, is available
51
db-X Exchange-Traded Funds Inc.
NOTES TO FINANCIAL STATEMENTS (Unaudited) (Continued)
to offset future net capital gains. The Funds may occasionally be required to make supplemental distributions at some other time during the year. The Funds reserve the right to declare special distributions if, in their reasonable discretion, such action is necessary or advisable to preserve the status of each Fund as a RIC or to avoid imposition of income or excise taxes on undistributed income. Dividends and distributions to shareholders, if any, are recorded on the ex-dividend date. The amount of dividends and distributions from net investment income and net realized capital gains are determined in accordance with Federal income tax regulations which may differ from U.S. GAAP. These book/tax differences are either considered temporary or permanent in nature. To the extent these differences are permanent in nature, such amounts are reclassified at the end of the year within the components of net assets based on their federal tax treatment; temporary differences do not require reclassification. Dividends and distributions, which exceed earnings and profits for the full year for tax purposes, are reported as a tax return of capital. Each Fund pays out dividends from its net investment income to investors annually. Each Fund distributes any net capital gains annually.
The Funds are subject to accounting standards that establish a minimum threshold for recognizing, and a system for measuring, the benefits of a tax position taken or expected to be taken in a tax return. In accordance with U.S. GAAP requirements regarding accounting for uncertainties in income taxes, management has analyzed the Funds tax positions taken or expected to be taken on foreign, federal and state income tax returns for all open tax years and has concluded that no provision for income tax is required in the Funds financial statements.
Foreign Taxes The Funds may be subject to foreign taxes (a portion of which may be reclaimable) on income, capital gains on investments, certain foreign currency transactions or other corporate events. All foreign taxes are recorded in accordance with the applicable foreign tax regulations and rates that exist in the foreign jurisdictions in which the Funds invest. These foreign taxes, if any, are paid by the Funds and are reflected in their Statements of Operations as follows: foreign taxes withheld at source are presented as a reduction of income, foreign taxes on capital gains from sales of investments and foreign currency transactions are included in their respective net realized gain (loss) categories, and foreign taxes on other corporate events are reflected in Other foreign taxes. Foreign taxes payable as of November 30, 2012, if any, are disclosed in the Funds Statements of Assets and Liabilities.
Expenses Expenses that are directly related to a specific Fund are charged to that respective Fund. Expenses which are not readily identifiable to a specific Fund are allocated in such a manner as deemed equitable, taking into consideration the nature and type of expense and the relative net assets of each Fund.
Foreign Currency Translation The accounting records of the Funds are maintained in U.S. dollars. Foreign currencies, as well as investment securities and other assets and liabilities denominated in currencies other than the U.S. dollar are translated into U.S. dollars using an exchange rate deemed appropriate by the investment advisor. The effects of changes in foreign currency exchange rates on investments in securities are not segregated in the Statements of Operations from the effects of changes in market prices of those securities, but are included with the net realized and unrealized gain or loss on investments in securities. Unrealized gains and losses on assets and liabilities, other than investments in securities, which result from changes in foreign currency exchange rates have been included in Net change in unrealized appreciation (depreciation) on foreign currency translations on the Statements of Operations. The portion of foreign currency gains and losses related to fluctuations in exchange rates between the initial purchase trade date and subsequent sale trade date is included in Net realized gain (loss) from foreign currency related transactions on the Statements of Operations. Certain foreign exchange gains and losses included in realized and unrealized gains or losses are included in or are a reduction of ordinary income in accordance with U.S. Federal income tax regulations.
3. Investment Advisory and Other Agreements
The Advisor has overall responsibility for the general management and administration of the Funds, subject to the supervision of the Funds Board of Directors. Under an investment advisory agreement between the Company, on behalf of the Funds, and the Advisor (the Investment Advisory Agreement), the Advisor is responsible for arranging sub-advisory, transfer agency, custody, fund administration, and all other non-distribution related services for the Funds to operate. The Advisor is also responsible for employing any sampling strategy for the Funds.
TDAM USA Inc. (TDAM) acts as investment sub-advisor to the Funds (Sub-Advisor). TDAM is a direct, wholly-owned subsidiary of The Toronto-Dominion Bank. The Sub-Advisor is responsible for the day-to-day management of the Funds, subject to the supervision of the Advisor and the Funds Board of Directors. In this regard, the Sub-Advisor is responsible for implementing the replication strategy for each Fund with regard to its underlying index and for general administration, compliance and management services as may be agreed between the Advisor and Sub Advisor from time to time.
52
db-X Exchange-Traded Funds Inc.
NOTES TO FINANCIAL STATEMENTS (Unaudited) (Continued)
For the services it provides to the Funds, the Advisor receives a unified advisory fee computed daily and payable monthly in an amount equal to 0.65% on an annualized basis of each Funds average daily net assets. Out of the advisory fee, the Advisor pays, or arranges for the payment of, all fees and expenses of the Transfer Agent, the Administrator and Accounting Agent and the Custodian. Each Fund is responsible for the payment of all other expenses associated with its operations, including but not limited to, brokerage expenses, taxes, interest, fees and expenses of counsel to the Funds, fees and expenses of the Disinterested Directors (including legal counsel fees), certain out-of-pocket expenses of the Advisor or Sub-Advisor, including, but not limited to, cost of obtaining prices for security valuations (including manual broker quotes), Federal Reserve charges related to securities transactions, postage and insurance on physical transfer items, telecommunication charges, and proxy voting execution, advice and reporting etc., fees and expenses of the Chief Compliance Officer and expenses associated with the Funds compliance program, litigation expenses, fees and expenses of the Funds independent auditors, registration fees, expenses associated with compliance by the Funds with regulatory requirements, including those relating to the development and distribution of its prospectus and shareholder reports, and extraordinary expenses. Pursuant to the Investment Advisory Agreement, the Advisor is authorized to engage one or more sub-advisors to perform any of the services contemplated to be performed by the Advisor under the Investment Advisory Agreement.
The Advisor pays TDAM, out of its own resources, a fee based on a percentage of the average daily net assets of each Fund as set forth below:
| 10 basis points (0.10%) of the first $100 million in combined daily net assets of all Funds; and |
| 5 basis points (0.05%) of the combined daily net assets of all Funds in excess of $100 million. |
The Advisor pays TDAM a minimum annual fee of $35,000 per Fund.
The Advisor has contractually agreed to reduce its fees and/or pay Fund operating expenses (excluding, among other things, acquired fund fees and expenses, interest, taxes and extraordinary expenses) in order to limit each Funds net annual operating expenses to 0.65% of the Funds average daily net assets (the Expense Cap). The Expense Cap will remain in effect until September 30, 2013. The Advisor is permitted to be reimbursed for fee reductions and/or expense payments made in the prior three fiscal years. This reimbursement may be paid to the Advisor if the aggregate amount actually paid by a Fund toward operating expenses for such fiscal year (taking into account the reimbursement) does not exceed the Expense Cap. No amounts were reimbursed under this contractual arrangement during the six-month period ended November 30, 2012.
The amounts subject to potential reimbursement to the Advisor as of November 30, 2012 were as follows:
Reimbursements available through: | ||||||||||||
5/31/2013 | 5/31/2014 | 5/31/2015 | ||||||||||
db-X 2010 Fund |
$ | 322,172 | $ | 147,959 | $ | 45,125 | ||||||
db-X 2020 Fund |
574,480 | 261,902 | 83,196 | |||||||||
db-X 2030 Fund |
515,809 | 247,454 | 79,581 | |||||||||
db-X 2040 Fund |
489,569 | 235,093 | 77,301 | |||||||||
db-X In-Target Fund |
335,077 | 153,462 | 46,894 |
For the six-month period ended November 30, 2012, the advisory fee waivers and expenses assumed by the Advisor were as follows:
Advisory Fees Waived by DBX |
Fees & Expenses Assumed by DBX |
|||||||
db-X 2010 Fund |
$ | 31,162 | $ | 13,963 | ||||
db-X 2020 Fund |
83,196 | | ||||||
db-X 2030 Fund |
79,581 | | ||||||
db-X 2040 Fund |
77,301 | | ||||||
db-X In-Target Fund |
34,601 | 12,293 |
The Bank of New York Mellon, a wholly-owned subsidiary of The Bank of New York Mellon Corporation, serves as Administrator, Custodian, Accounting Agent and Transfer Agent for each Fund.
ALPS Distributors, Inc. serves as the distributor of Creation Units for each Fund on an agency basis. The Distributor does not maintain a secondary market in shares of the Funds.
The Board of Directors is currently comprised of four Directors, of whom three are Independent Directors. The Company pays each Independent Director an annual fee of $30,000, plus a fee of $4,000 per meeting attended in-person or $1,000 per meeting attended telephonically. Each Independent Director also receives $2,000 per Audit Committee meeting attended
53
db-X Exchange-Traded Funds Inc.
NOTES TO FINANCIAL STATEMENTS (Unaudited) (Continued)
in-person or $1,000 per meeting attended telephonically, although the Audit Committee Chairman receives $3,000 per Audit Committee meeting attended in-person. The Company reimburses each Director for their costs and expenses associated with the performance of their duties hereunder, including the cost and expenses associated with attendance at meetings of the Board. Directors fees and expenses are allocated among the Funds based on each Funds relative average daily net assets.
4. Federal Income Taxes
As of May 31, 2012, the components of accumulated earnings (losses) were as follows:
Accumulated Earnings |
Net Accumulated Capital and Other Gains (Losses) |
Unrealized Appreciation (Depreciation) |
Total Accumulated Earnings (Losses) |
|||||||||||||
db-X 2010 Fund |
$ | 21,405 | $ | (1,669,212 | ) | $ | (38,436 | ) | $ | (1,686,243 | ) | |||||
db-X 2020 Fund |
147,309 | (4,152,770 | ) | (696,007 | ) | (4,701,468 | ) | |||||||||
db-X 2030 Fund |
288,606 | (5,825,356 | ) | (64,900 | ) | (5,601,650 | ) | |||||||||
db-X 2040 Fund |
239,884 | (7,098,396 | ) | (1,127,993 | ) | (7,986,505 | ) | |||||||||
db-X In-Target Fund |
24,333 | (220,545 | ) | (50,582 | ) | (246,794 | ) |
For the years ended May 31, 2012 and May 31, 2011, the tax characterization of distributions paid for each Fund was equal to the book characterization of distributions paid. The total distributions and distributions per share are disclosed in the accompanying Statement of Changes in Net Assets and the Financial Highlights for all Funds.
At May 31, 2012, for Federal income tax purposes, the Funds have capital loss carryforwards available as shown in the table below, to the extent provided by regulations, to offset future capital gains through the years indicated. To the extent that these loss carryforwards are used to offset future capital gains, it is probable that the capital gains so offset will not be distributed to shareholders.
Year of Expiration | Post-effective no expiration ST |
Post-effective no expiration LT |
Total Amount |
|||||||||||||||||||||
2017 | 2018 | 2019 | ||||||||||||||||||||||
db-X 2010 Fund |
$ | 648,585 | $ | 1,020,627 | $ | | $ | | $ | | $ | 1,669,212 | ||||||||||||
db-X 2020 Fund |
418,939 | 3,713,736 | | | | 4,132,675 | ||||||||||||||||||
db-X 2030 Fund |
1,185,474 | 4,568,179 | 71,703 | | | 5,825,356 | ||||||||||||||||||
db-X 2040 Fund |
1,809,203 | 4,936,668 | 352,525 | | | 7,098,396 | ||||||||||||||||||
db-X In-Target Fund |
| 220,545 | | | | 220,545 |
db-X 2010 Fund, db-X 2020 Fund, db-X 2030 Fund, db-X 2040 Fund and db-X In-Target Fund utilized $323,969, $2,223,566, $2,064,299, $1,729,486 and $362,754 respectively, of capital loss carryforwards during the fiscal year ended May 31, 2012.
Under the recently enacted Regulated Investment Company Modernization Act of 2010 (the Act), the Funds will be permitted to carry forward capital losses incurred in taxable years beginning after December 22, 2010 for an unlimited period. However, any losses incurred during those future taxable years (beginning on June 1, 2011) will be required to be utilized prior to the losses incurred in pre-enactment taxable years. As a result of this ordering rule, pre-enactment capital loss carryforwards presented in the table above may be more likely to expire unused. Additionally, post-enactment capital losses that are carried forward will retain their character as either short-term or long-term capital losses rather than being considered all short-term as under previous law.
Capital losses incurred after October 31 (post-October losses) within the taxable year are deemed to arise on the first business day of each Funds next taxable year.
During the fiscal year ended May 31, 2012, the Funds incurred and elected to defer net capital losses as follows:
Post-October Losses on Capital |
||||
db-X 2010 Fund |
$ | | ||
db-X 2020 Fund |
20,095 | |||
db-X 2030 Fund |
| |||
db-X 2040 Fund |
| |||
db-X In-Target Fund |
|
54
db-X Exchange-Traded Funds Inc.
NOTES TO FINANCIAL STATEMENTS (Unaudited) (Continued)
In order to present paid-in capital and accumulated net realized gains or losses on the Statements of Assets and Liabilities that more closely represent their tax character, certain adjustments have been made to additional paid-in capital, undistributed net investment income or loss and accumulated net realized gains or losses on investments. These differences are primarily due to currency gain/(loss) and redemptions-in-kind. For the fiscal year ended May 31, 2012, the adjustments were as follows:
Undistributed Net Investment Income (Loss) |
Undistributed Capital Gains (Accumulated Losses) |
Paid-in Capital |
||||||||||
db-X 2010 Fund |
$ | (405 | ) | $ | (73,559 | ) | $ | 73,964 | ||||
db-X 2020 Fund |
(1,479 | ) | (224,068 | ) | 225,547 | |||||||
db-X 2030 Fund |
(3,075 | ) | (427,639 | ) | 430,714 | |||||||
db-X 2040 Fund |
(2,662 | ) | (674,780 | ) | 677,442 | |||||||
db-X In-Target Fund |
(1,044 | ) | (231,719 | ) | 232,763 |
As of November 30, 2012, the cost of investments for Federal income tax purposes and the aggregated gross unrealized appreciation/depreciation on investments was as follows:
Cost | Gross Unrealized Appreciation |
Gross Unrealized (Depreciation) |
Net Unrealized Appreciation |
|||||||||||||
db-X 2010 Fund |
$ | 9,489,221 | $ | 242,436 | $ | (143,596 | ) | $ | 98,840 | |||||||
db-X 2020 Fund |
28,039,035 | 2,379,461 | (1,420,117 | ) | 959,344 | |||||||||||
db-X 2030 Fund |
31,055,529 | 3,821,789 | (2,327,252 | ) | 1,494,537 | |||||||||||
db-X 2040 Fund |
25,735,530 | 3,655,194 | (2,433,590 | ) | 1,221,604 | |||||||||||
db-X In-Target Fund |
10,402,546 | 518,831 | (222,662 | ) | 296,169 |
5. Investments in Affiliates
The Advisor is a wholly-owned subsidiary of Deutsche Bank AG. Therefore, Deutsche Bank AG is considered to be affiliated with the Funds. The table below shows the transactions in and earnings from investments in Deutsche Bank AG Securities for the six-month ended November 30, 2012.
Fair Value 5/31/2012 |
Purchases at Cost |
Proceeds from Sales |
Change in Unrealized Appreciation/ (Depreciation) |
Realized Gain |
Fair Value 11/30/2012 |
Dividend Income |
||||||||||||||||||||||
db-X 2010 Fund |
||||||||||||||||||||||||||||
Deutsche Bank AG (Common Stock) |
$ | 2,014 | $ | | $ | | $ | 458 | $ | | $ | 2,472 | $ | 42 | ||||||||||||||
db-X 2020 Fund |
||||||||||||||||||||||||||||
Deutsche Bank AG (Common Stock) |
28,230 | 5,103 | (5,583 | ) | 6,888 | 1,470 | 36,108 | 589 | ||||||||||||||||||||
db-X 2030 Fund |
||||||||||||||||||||||||||||
Deutsche Bank AG (Common Stock) |
40,314 | 8,887 | | 9,376 | | 58,577 | 936 | |||||||||||||||||||||
db-X 2040 Fund |
||||||||||||||||||||||||||||
Deutsche Bank AG (Common Stock) |
46,787 | 7,324 | (9,565 | ) | 10,967 | 2,931 | 58,444 | 1,087 | ||||||||||||||||||||
db-X In-Target Fund |
||||||||||||||||||||||||||||
Deutsche Bank AG (Common Stock) |
4,028 | 2,401 | | 2,046 | | 8,475 | 84 |
6. Investment Portfolio Transactions
For the six-month ended November 30, 2012, the cost of investments purchased and proceeds from sale of investments (excluding in-kind transactions and short-term investments) were as follows:
Purchases | Sales | |||||||||||||||
Other | U.S. Government |
Other | U.S. Government |
|||||||||||||
db-X 2010 Fund |
$ | 4,551,197 | $ | 876,923 | $ | 1,460,562 | $ | 5,133,279 | ||||||||
db-X 2020 Fund |
7,736,955 | 8,177,428 | 7,280,612 | 8,194,598 | ||||||||||||
db-X 2030 Fund |
13,323,232 | 524,846 | 10,694,092 | 2,809,047 | ||||||||||||
db-X 2040 Fund |
8,816,269 | 406,219 | 8,927,190 | 13,661 | ||||||||||||
db-X In-Target Fund |
1,706,714 | 3,025,165 | 1,910,526 | 3,425,250 |
55
db-X Exchange-Traded Funds Inc.
NOTES TO FINANCIAL STATEMENTS (Unaudited) (Continued)
For the six-month ended November 30, 2012 the cost of in-kind purchases and the proceeds from in-kind sales were as follows:
Purchases | Sales | |||||||
db-X 2020 Fund |
$ | | $ | 4,858,033 | ||||
db-X 2040 Fund |
| 4,448,289 |
7. Fund Share Transactions
As of November 30, 2012, there were 12.5 billion Fund shares of $0.0001 par value authorized by the Company. Fund shares are issued and redeemed by each Fund only in Creation Units or multiples thereof. Except when aggregated in Creation Units, shares of each Fund are not redeemable. Transactions in capital shares for each Fund are disclosed in detail in the Statements of Changes in Net Assets. The consideration for the purchase of Creation Units of a Fund generally consists of the in-kind contribution of a designated portfolio of securities constituting a portfolio sampling representation of the securities included in the respective Funds underlying index and an amount of cash. Investors purchasing and redeeming Creation Units pay a purchase transaction fee and a redemption transaction fee to offset transfer and other transaction costs associated with the issuance and redemption of Creation Units.
8. Subsequent Events
The Company evaluated the need for disclosure and/or adjustment resulting from subsequent events through the date the financial statements were available to be issued. This evaluation did not result in any subsequent events that necessitated disclosure and/or adjustment.
56
db-X Exchange-Traded Funds Inc.
Proxy Voting Policies and Procedures
A description of the policies and procedures that the Company uses to determine how to vote proxies related to each Funds portfolio securities, (and information on how the Funds voted proxies during the period ended June 30, 2010 on Form N-PX) is available without charge, upon request, (i) by calling 877-369-4617; (ii) on the Companys website at www.dbxstrategicadvisors.db.com; and (iii) on the Securities and Exchange Commissions (SEC) website at www.sec.gov.
Quarterly Portfolio Disclosure
The Funds are required to file their complete schedule of portfolio holdings with the SEC for their first and third fiscal quarters on Form N-Q. Copies of the filings are available without charge, upon request on the SECs website at www.sec.gov and are available by calling the Company at 877-369-4617. You can also obtain copies of Form N-Q by (i) visiting the SECs Public Reference Room in Washington, DC (information on the operation of the Public Reference Room may be obtained by calling 800-SEC-0330); (ii) sending your request and a duplicating fee to the SECs Public Reference Room, Washington, DC 20549-0102; or (iii) sending your request electronically to publicinfo@sec.gov.
Information about each Funds portfolio holdings is available daily at www.dbxstrategicadvisors.db.com.
57
db-X Exchange-Traded Funds Inc.
This report is intended for the shareholders of the db-X Exchange-Traded Funds. It may not be distributed to prospective Investors unless it is preceded or accompanied by the current prospectus.
An Investor should consider the funds investment objective, risks, charges and expenses carefully before investing. For this and more complete information about the fund call 877-369-4617 or visit the website www.dbxstrategicadvisors.db.com. Please read the prospectus carefully before investing.
There are risks involved with investing in exchange-traded funds including possible loss of money. db-X Exchange-Traded Funds are not actively managed and are subject to risks similar to stocks, including those related to short selling and margin maintenance. Losses from short sales may be unlimited, and losses from purchases on margin may exceed original investment.
Investments in small and medium capitalization companies will be subject to higher volatility than larger, more established companies.
Investments in foreign securities will be subject to certain risks not associated with domestic securities, such as currency fluctuations, and changes in political and economic conditions.
Investments in fixed income securities will be subject to certain risks as well. The prices of fixed income securities respond to economic developments, particularly interest rate changes, as well as to perceptions about the credit risk of individual issuers. Generally, fixed income securities will decrease in value if interest rates rise, and the volatility of lower rated securities is even greater than that of higher rated securities.
There is no assurance that the investment process will consistently lead to successful investing. Diversification does not eliminate the risk of experiencing investment losses.
The prospectus is not an offer to buy or sell the portfolio shares, nor is the fund soliciting an offer to buy its shares in any jurisdiction where the offer or sale is not permitted.
db-X Exchange-Traded Funds are distributed by ALPS Distributors, Inc., member of FINRA, which is neither affiliated with db-X Exchange-Traded Funds Inc. or any other affiliate, nor is it affiliated with The Bank of New York Mellon, Amerivest Investment Management, LLC, or TDAM USA Inc.
Target Date refers to a time in the future, generally a specified year, in which the investor expects to retire or otherwise require the use of the invested funds. Target date funds are generally more aggressive the further the target date is from the present, with an objective of capital appreciation. As the target date approaches, the funds objective will generally become more conservative, aiming to achieve a higher level of capital preservation.
Investors should note that although target date funds aim to preserve capital as the target date approaches, there is no guarantee that the fund will achieve this objective.
db-X Exchange-Traded Funds Inc.
INVESTMENT ADVISOR
DBX Strategic Advisors LLC
60 Wall Street
New York, NY 10005
INVESTMENT SUB-ADVISOR
TDAM USA Inc.
161 Bay Street, 35th Floor
TD Canada Trust Tower
Toronto, Ontario Canada M5J 2T2
ADMINISTRATOR, CUSTODIAN, FUND ACCOUNTANT & TRANSFER AGENT
The Bank of New York Mellon
101 Barclay Street
New York, NY 10286
DISTRIBUTOR
ALPS Distributors, Inc.
1290 Broadway
Suite 1100
Denver, CO 80203
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Ernst & Young LLP
5 Times Square
New York, NY 10036
LEGAL COUNSEL
Dechert LLP
1095 Avenue of the Americas
New York, NY 10036
Item 2. Code of Ethics.
Not required for a semi-annual period.
Item 3. Audit Committee Financial Expert.
Not required for a semi-annual period.
Item 4. Principal Accountant Fees and Services.
Not required for a semi-annual period.
Items 5. Audit Committee of Listed Registrants.
Not required for a semi-annual period.
Item 6. Schedule of Investments.
(a) | The schedule is included as a part of the report to shareholders filed under Item 1 of this Form. |
(b) | Not Applicable. |
Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies.
Not applicable.
Item 8. Portfolio Managers of Closed-End Management Investment Companies.
Not applicable.
Item 9. Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers.
Not applicable.
Item 10. Submission of Matters to a Vote of Security Holders.
There have been no material changes to the procedures by which the shareholders may recommend nominees to the Registrants Board of Directors that would require disclosure herein.
Item 11. Controls and Procedures.
a) | Based on their evaluation of the Registrants disclosure controls and procedures (as defined in Rule 30a-3-(c) under the Investment Company Act of 1940) as of a date within 90 days of the filing date of this report, the Registrants Chief Executive Officer (principal executive officer) and Chief Financial Officer (principal financial officer) have concluded that such disclosure controls and procedures are reasonably designed and are operating effectively to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to them by others within those entities, particularly during the period in which this report is being prepared, and that the information required in filings on Form N-CSR is recorded, processed, summarized and reported on a timely basis. |
b) | There were no significant changes in the Registrants internal controls over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) that occurred during the Registrants last fiscal quarter that have materially affected, or are reasonably likely to materially affect, the Registrants internal control over financial reporting. |
Item 12. Exhibits.
(a)(2) Certifications of the Registrants Chief Executive Officer and Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 are attached as Exhibit 302CERT.
(b) Certifications of the Registrants Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 are attached as Exhibit 906CERT.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
(Registrant) db-X Exchange-Traded Funds Inc.
By: | /s/ Alex Depetris | |
Name: | Alex Depetris | |
Title: | President and Chief Executive Officer | |
Date: | January 30, 2013 |
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.
By: | /s/ Alex Depetris | |
Name: | Alex Depetris | |
Title: | President and Chief Executive Officer | |
Date: | January 30, 2013 |
By: | /s/ Michael Gilligan | |
Name: | Michael Gilligan | |
Title: | Treasurer, Chief Financial Officer and Controller | |
Date: |
January 30, 2013 |
EXHIBIT 302CERT
CERTIFICATIONS PURSUANT TO SECTION 302 OF
THE SARBANES-OXLEY ACT OF 2002
I, Alex Depetris, certify that:
1. I have reviewed this report on Form N-CSR of db-X Exchange-Traded Funds Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the Registrant as of, and for, the periods presented in this report;
4. The Registrants other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the Registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the Registrants disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and
(d) Disclosed in this report any change in the Registrants internal control over financial reporting that occurred during the most recent fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the Registrants internal control over financial reporting; and
5. The Registrants other certifying officer and I have disclosed to the Registrants auditors and the audit committee of the Registrants board of directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrants ability to record, process, summarize, and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrants internal control over financial reporting.
Date: January 30, 2013
/s/ Alex Depetris |
Alex Depetris |
President and Chief Executive Officer |
CERTIFICATIONS PURSUANT TO SECTION 302 OF
THE SARBANES-OXLEY ACT OF 2002
I, Michael Gilligan, certify that:
1. I have reviewed this report on Form N-CSR of db-X Exchange-Traded Funds Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the Registrant as of, and for, the periods presented in this report;
4. The Registrants other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the Registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the Registrants disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and
(d) Disclosed in this report any change in the Registrants internal control over financial reporting that occurred during the most recent fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the Registrants internal control over financial reporting; and
5. The Registrants other certifying officer and I have disclosed to the Registrants auditors and the audit committee of the Registrants board of directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrants ability to record, process, summarize, and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrants internal control over financial reporting.
Date: January 30, 2013
/s/ Michael Gilligan |
Michael Gilligan |
Treasurer, Chief Financial Officer and Controller |
EXHIBIT 906CERT
CERTIFICATIONS PURSUANT TO SECTION 906 OF
THE SARBANES-OXLEY ACT OF 2002
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of section 1350, chapter 63 of title 18, United States Code), each of the undersigned officers of db-X Exchange-Traded Funds Inc. (the Registrant), do hereby certify, to such officers knowledge, that:
(1) | The Form N-CSR of the Registrant for the period ended November 30, 2012 (the Form N-CSR) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
(2) | the information contained in the Form N-CSR fairly presents, in all material respects, the financial condition and results of operations of the Registrant. |
Date: | January 30, 2013 | |
By: | /s/ Alex Depetris | |
Name: | Alex Depetris | |
Title: | President and Chief Executive Officer |
Date: | January 30, 2013 | |
By | /s/ Michael Gilligan | |
Name: | Michael Gilligan | |
Title: | Treasurer, Chief Financial Officer and Controller |
This certification is being furnished solely pursuant to 18 U.S.C. ss.1350 and is not being filed as part of the Report or as a separate disclosure document.
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