Annual Report DBX ETF Trust
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May 31, 2021 Annual Report DBX ETF Trust Xtrackers MSCI All World ex US Hedged Equity ETF (DBAW) Xtrackers MSCI Emerging Markets Hedged Equity ETF (DBEM) Xtrackers MSCI Europe Hedged Equity ETF (DBEU) Xtrackers MSCI Eurozone Hedged Equity ETF (DBEZ) Xtrackers MSCI Germany Hedged Equity ETF (DBGR) Xtrackers MSCI Japan Hedged Equity ETF (DBJP) DBX ETF Trust Table of Contents Page Shareholder Letter ....................................................................... 1 Management’s Discussion of Fund Performance ............................................. 3 Performance Summary Xtrackers MSCI All World ex US Hedged Equity ETF ...................................... 6 Xtrackers MSCI Emerging Markets Hedged Equity ETF .................................... 8 Xtrackers MSCI Europe Hedged Equity ETF .............................................. 10 Xtrackers MSCI Eurozone Hedged Equity ETF ............................................ 12 Xtrackers MSCI Germany Hedged Equity ETF ............................................ 14 Xtrackers MSCI Japan Hedged Equity ETF ............................................... 16 Fees and Expenses ....................................................................... 18 Schedule of Investments Xtrackers MSCI All World ex US Hedged Equity ETF ...................................... 19 Xtrackers MSCI Emerging Markets Hedged Equity ETF .................................... 46 Xtrackers MSCI Europe Hedged Equity ETF .............................................. 66 Xtrackers MSCI Eurozone Hedged Equity ETF ............................................ 74 Xtrackers MSCI Germany Hedged Equity ETF ............................................ 83 Xtrackers MSCI Japan Hedged Equity ETF ............................................... 86 Statements of Assets and Liabilities ........................................................ 92 Statements of Operations ................................................................. 94 Statements of Changes in Net Assets ....................................................... 96 Financial Highlights ...................................................................... 99 Notes to Financial Statements ............................................................. 102 Report of Independent Registered Public Accounting Firm .................................... 115 Liquidity Risk Management ................................................................ 116 Board Considerations in Approval of Investment Advisory and Sub-Advisory Contracts ........... 117 Board Members and Officers .............................................................. 120 Additional Information .................................................................... 123 Privacy Policy Notice ..................................................................... 124 To our Shareholders: (Unaudited) Dear shareholder, We are pleased to provide this annual report of our six currency hedged equity ETFs for the period ended May 31, 2021. As major economies across the globe begin to reopen in a schemed manner, we are witnessing pent-up demand along with economic normalization. Moreover, affluent households spending their savings that were accumulated during COVID-19 lockdowns is also driving the economic recovery. Additionally, a gradual return of laborers, who had to leave the workforce in the initial stages of the pandemic, is contributing to this recovery. Leading economies worldwide have been successful in their efforts to forestall a major economic setback by administering significant fiscal and monetary policies. The U.S. GDP1 increased at a positive annual rate in Q1 2021, reflecting a continued economic recovery, reopening of establishments, and stable government support amid the pandemic. Moreover, factors such as direct economic impact payments, expanded unemployment benefits, and various other schemes have assisted in the GDP growth of the first in Q1 2021. These coupled with breakthroughs in vaccine drives and assumptions that life will return to normalcy have helped boost the performance of the U.S. equity markets. The U.S. president has proposed two major reforms, the American Jobs Plan and the American Families Plan, both of which would have an optimistic impact on stock prices. The Eurozone economy plunged during the second wave of the pandemic that started towards the end of 2020. A slow-paced vaccination rollout has resulted in prolonged restrictions on economic activities, which include closure of contact intensive services. The European Central Bank has increased its pandemic emergency purchase program by EUR500bn-EUR1.85tn in aggregate to date. Countries dependent on tourism are most vulnerable to the pandemic-related restrictions. In France, for example, travel within the country is forbidden and personal mobility is restricted. Despite the worsening impact of the second wave of the pandemic on economic activities, unemployment rate in the Eurozone has not increased. National Recovery and Resilience Plans under the Next Generation EU program have also been implemented to strengthen the recovery of the economy. In emerging economies, manufacturing and industrial production volumes have rebounded as a response to the recovery in business activities of developed countries. Moreover, vaccine supplies are increasing at a steady pace, resulting in staggered reopening of economies. Overall, these economies have displayed significant resilience to the sharp collapses of early 2020. Various growth-oriented sectors, across emerging economies, significantly outperformed in 2020, but a sharp rise in bond yields during Q1 2021 caused a dip in the equity market. Also, after underperforming through the early phase of the COVID-19 crisis, emerging markets equities are now catching up with global equities. Governments and policymakers need to adapt measures for a fuller recovery from the pandemic outburst. The focus on reducing unemployment rates and low investments would play a significant role in guiding the economic growth to pre-pandemic levels. With vaccination gaining momentum across the globe, major economies have started recovering from the pandemic-led collapse. Although, recent vaccine approvals have raised hopes for global economic recovery in the latter half of this year, new variants and renewed waves of the virus are still posing concerns. With economies around the world continuing to vaccinate their population, it is expected to provide a boost to global GDP. Economic recovery, however, would still remain divergent across countries, depending on the vaccine distribution programs adopted and effectiveness of economic policies 1 Our team appreciates your trust and looks forward to continue serving your investment needs through innovative index-driven strategies. Sincerely, /s/ Freddi Klassen Freddi Klassen President and Chief Executive Officer 1 The gross domestic product (GDP) is the monetary value of all the finished goods and services produced within a country’s borders in a specific time period. Assumptions, estimates and opinions contained in this document constitute our judgment as of the date of the document and are subject to change without notice. Any projections are based on a number of assumptions as to market conditions and there can be no guarantee that any projected results will be achieved. Past performance is not a guarantee of future results. 2 DBX ETF Trust Management’s Discussion of Fund Performance (Unaudited) Xtrackers MSCI All World ex US Hedged Equity ETF (DBAW) The Xtrackers MSCI All World ex US Hedged Equity ETF (DBAW) seeks investment results that correspond generally to the performance, before fees and expenses, of the MSCI ACWI ex USA US Dollar Hedged Index (the DBAW Index). The DBAW Index is designed to provide exposure to equity securities in developed and emerging stock markets (excluding the U.S.), while at the same time mitigating exposure to fluctuation between the value of the U.S. dollar and select non-U.S. currencies. For the 12-month period ended May 31, 2021, DBAW returned 33.30%, compared to the DBAW Index return of 33.83%. All sectors contributed positively to performance during the period with the greatest contributions coming from Financials, Information Technology and Consumer Discretionary. From a geographical perspective, Japan, Hong Kong and France were the major positive contributors, while Turkey and Egypt contributed negatively to performance. The Fund entered into forward foreign currency contracts during the period to hedge against changes in the value of the U.S. dollar against specified non-U.S. currencies. The currency hedging strategy contributed negatively to performance. Xtrackers MSCI Emerging Markets Hedged Equity ETF (DBEM) The Xtrackers MSCI Emerging Markets Hedged Equity ETF (DBEM) seeks investment results that correspond generally to the performance, before fees and expenses, of the MSCI EM US Dollar Hedged Index (the DBEM Index). The DBEM Index is designed to provide exposure to equity securities in the global emerging markets, while at the same time mitigating exposure to fluctuations between the value of the US dollar and the currencies of countries included in the underlying index. For the 12-month period ended May 31, 2021, DBEM returned 40.84%, compared to the DBEM Index return of 41.50%. All sectors contributed positively to performance during the period with the greatest contributions coming from Information Technology, Financials and Consumer Discretionary. From a geographical perspective, Hong Kong, Taiwan and Korea