Presentation DWS Floating Rate Fund - DWS Investments
Presentation DWS Floating Rate Fund - DWS Investments
Presentation DWS Floating Rate Fund - DWS Investments
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Deutsche Asset<br />
& Wealth Management<br />
<strong>DWS</strong> floating-rate loan strategy<br />
Investment products: No bank guarantee I Not FDIC insured I May lose value
Agenda<br />
01 Deutsche Asset & Wealth Management overview<br />
02 <strong>Floating</strong>-rate loan overview<br />
03 Investment process<br />
04 Current opportunity in loans<br />
Deutsche Asset & Wealth Management represents the asset management and wealth management activities conducted by Deutsche Bank AG or any of its subsidiaries Clients<br />
Deutsche Asset & Wealth Management represents the asset management and wealth management activities conducted by Deutsche Bank AG or any of its subsidiaries. Clients<br />
will be provided Deutsche Asset & Wealth Management products or services by one or more legal entities that will be identified to clients pursuant to the contracts, agreements,<br />
offering materials or other documentation relevant to such products or services.
Important risk information<br />
Bond and loan investments t are subject to interest-rate t t and credit risks. When<br />
interest rates rise, bond prices generally fall. Credit risk refers to the ability of<br />
an issuer to make timely payments of principal and interest. <strong>Investments</strong> in<br />
lower-quality ("junk bonds“) and non-rated securities present greater risk of<br />
loss than investments in higher-quality securities. <strong>Floating</strong>-rate loans tend to<br />
be rated below investment grade. The fund may use derivatives, including as<br />
part of its Global Tactical Asset Allocation (GTAA) strategy. Investing in<br />
derivatives entails special risks relating to liquidity, leverage and credit that<br />
may reduce returns and/or increase volatility. In certain situations, it may be<br />
difficult or impossible to sell an investment at an acceptable price. This fund is<br />
non-diversified and can take larger positions in fewer issues, increasing its<br />
potential risk. The fund may lend securities to approved institutions. See the<br />
prospectus for details.
01<br />
Deutsche Asset & Wealth Management<br />
overview
Deutsche Asset & Wealth Management<br />
One of Deutsche Bank’s four strategic t pillars and an<br />
integral part of the bank’s long-term growth strategy<br />
Private &<br />
Business<br />
Clients<br />
Corporate<br />
Banking &<br />
Securities<br />
Deutsche Bank<br />
Overview<br />
— Deutsche Asset & Wealth Management<br />
is one of the world's leading investment<br />
organisations with $1.2 trillion of invested<br />
Regional Management assets as of 12/31/12.<br />
1<br />
Asset &<br />
Wealth<br />
Management<br />
Global<br />
Transaction<br />
Banking<br />
Non-Core<br />
Operations<br />
— Deutsche Asset & Wealth Management<br />
offers a comprehensive range of fiduciary<br />
products and solutions for our customers<br />
within a strong governance framework to<br />
ensure that we act in the best interests of<br />
our clients.<br />
— Deutsche Asset & Wealth Management<br />
serves individuals and institutions<br />
worldwide to help protect and grow their<br />
wealth, offering traditional and alternative<br />
investments across all major asset<br />
classes.<br />
Infrastructure<br />
— Deutsche Asset & Wealth Management<br />
also provides customised wealth<br />
management solutions and private<br />
banking services to high-net-worth<br />
individuals and families.<br />
Source: Deutsche Asset & Wealth Management as of 12/31/12<br />
Deutsche Asset<br />
& Wealth Management<br />
Investment products: No bank guarantee I Not FDIC insured I May lose value
Full suite of fixed-income capabilities<br />
Low volatility Core and core plus Sector-based Solutions-based/absolute return<br />
Country — U.S. liquidity<br />
management<br />
— U.S. short duration<br />
— U.S. stable value<br />
— Sterling liquidity<br />
management<br />
Regional — Euro liquidity<br />
management<br />
— Euro short duration<br />
— U.S. core<br />
— U.S. core plus<br />
— U.S. corporate inv grade<br />
— Australia core plus<br />
— Korean fixed income<br />
— Philippines fixed income<br />
— Singapore fixed income<br />
— Switzerland fixed income<br />
— UK fixed income<br />
— Japanese fixed income<br />
— Asian fixed income<br />
— Euro aggregate<br />
— Euro government<br />
— Euro corporate inv grade<br />
— Euro indexed and indexed<br />
enhanced<br />
— Euro collateralized<br />
— U.S. high yield<br />
— U.S. high yield (BB-rated)<br />
— U.S. short duration HY<br />
— U.S. loans<br />
— U.S. loans (BB-rated)<br />
— U.S. MBS<br />
— U.S. municipal<br />
— European high yield<br />
— European convertibles<br />
— European ABS<br />
— European loans<br />
— Emerging market debt<br />
Global — Short duration — Aggregate<br />
—<br />
—<br />
Government<br />
Corporate inv grade<br />
— Credit<br />
— Indexed and indexed<br />
enhanced<br />
— Diversified fixed income<br />
— Global high yield<br />
— LIBOR plus<br />
—<br />
—<br />
Convertibles<br />
Structured t finance<br />
—<br />
—<br />
Absolute return strategies<br />
Asset allocation products<br />
— Currency overlay<br />
— Return based solutions<br />
— Duration based solutions<br />
— Liability driven investing<br />
Credit quality measures a bond issuer’s ability to repay interest and principal in a timely manner. Rating agencies assign letter designations such as AAA, AA and so forth. The<br />
lower the rating, the higher the probability of default. Credit quality does not remove market risk and is subject to change.<br />
Deutsche Asset<br />
& Wealth Management Investment products: No bank guarantee I Not FDIC insured I May lose value 6
02 g<br />
<strong>Floating</strong>-rate loan overview
Key distinctions: experience, research depth, culture<br />
Experienced global team<br />
Deep resources, nimble process<br />
A culture of risk management<br />
— Two dedicated portfolio<br />
managers supported by<br />
17 analysts<br />
— With an average of 17 years of<br />
industry experience, the team<br />
members have managed<br />
through multiple credit cycles<br />
— Extensive network of company<br />
relationships<br />
— Coverage of over 500 global<br />
credits in the sub-investmentgrade<br />
universe<br />
— Combined high yield and loan<br />
team conducts research across<br />
the full capital structure<br />
— Real-time access to a global<br />
network of analysts<br />
— Small teams within the larger<br />
global group facilitate nimble<br />
decision-making<br />
— At the strategy level: risk<br />
management is embedded<br />
throughout the process<br />
— At the firm level: systemic<br />
controls, internal audit,<br />
compliance and legal<br />
— Our approach typically results<br />
in outperformance in bear<br />
markets and slight<br />
underperformance in<br />
bull markets<br />
Source: Deutsche Asset & Wealth Management as of 12/31/12<br />
Deutsche Asset<br />
& Wealth Management Investment products: No bank guarantee I Not FDIC insured I May lose value 8
A global team of high-yield and loan experts<br />
Experienced team has managed portfolios through h<br />
multiple credit cycles<br />
Head of research<br />
High-yield portfolio<br />
management<br />
Loan strategy<br />
portfolio management<br />
Transaction management<br />
(for loans)<br />
— Europe: 8 analysts<br />
— U.S.: 10 analysts<br />
(see next page for detail)<br />
— 3 portfolio managers<br />
(15 years)<br />
— 1 assistant portfolio<br />
manager/trader<br />
— 2 portfolio managers<br />
(32 years)<br />
— 1 trader<br />
— 6 professionals<br />
— 1 portfolio analyst/trader<br />
— 1 portfolio analyst<br />
Source: Deutsche Asset & Wealth Management as of 12/31/12<br />
Note: ( ) years = Average years of industry experience.<br />
Deutsche Asset<br />
& Wealth Management Investment products: No bank guarantee I Not FDIC insured I May lose value 9
Deep issuer coverage by industry experts<br />
Coverage of over 500 credits in the sub-investment-grade t universe<br />
Industry analysts<br />
Healthcare<br />
Experience of<br />
research analyst<br />
18 (group head)<br />
Food service 1<br />
Metals & mining, oil and gas, tourism, hotels & leisure, gaming, business services 26<br />
Tl Telco and cable, healthcare and pharmaceuticals, food and dbeverage, ecological lservices 20<br />
Paper & packaging, metals/mining, steel, technology 20<br />
Energy, oil and gas, utilities 19<br />
Banking, finance, insurance, investments, diversified conglomerate, manufacturing 19<br />
Autos, building products, chemicals 18<br />
Consumer & household products, textile/apparel, home builders, gaming, hotels, leisure, retail 17<br />
Cable, media & broadcasting, telecom 18<br />
Energy, basic industry, services 14<br />
Diversified conglomerate services, printing and publishing, real estate, beverage food and tobacco 14<br />
Airlines & transportation, aerospace and defense, entertainment, agriculture, environmental 12<br />
Media, food 12<br />
Media, retail 2<br />
Media and publishing, chemicals, automotive, healthcare 12<br />
Chemicals, telecom 12<br />
Autos, capital goods, technology, retail 11<br />
Average:<br />
15 years<br />
Based in Frankfurt<br />
Source: Deutsche Asset & Wealth Management as of 12/31/12; credit research analysts listed are responsible for coverage of primarily public syndicated loan and/or high-yield<br />
bond deals.<br />
Deutsche Asset<br />
& Wealth Management Investment products: No bank guarantee I Not FDIC insured I May lose value 10
03 p<br />
Investment process
A distinctive approach<br />
Philosophy<br />
We believe that default avoidance is the most significant driver of returns in the belowinvestment<br />
grade space. Issue selection is therefore the most important investment<br />
decision.<br />
Investment style<br />
Our “best ideas” portfolio<br />
— Our portfolio construction process is index-agnostic 1<br />
Bottom-up portfolio construction<br />
— Issue selection decisions drive sector allocations<br />
Target index-level risk, emphasizing the “belly” of the high-yield ratings spectrum<br />
— We focus on loans in which we have high conviction of repayment at face value<br />
(1) Though not a relevant factor in issue selection, the index is considered for risk management purposes in the portfolio construction phase.<br />
Deutsche Asset<br />
& Wealth Management Investment products: No bank guarantee I Not FDIC insured I May lose value 12
One transparent, global process<br />
Our process is designed to achieve consistent excess returns with risk<br />
management and accountability at every step<br />
Research and decision-making<br />
Alpha specialists<br />
— Conduct research and alpha<br />
decision-making<br />
— Communicate signals in consistent<br />
framework<br />
— Minimize time decay of research<br />
Portfolio design and construction<br />
Portfolio construction ti team<br />
— Creates a model portfolio<br />
based on alpha signals<br />
Implementation<br />
ti<br />
Dedicated portfolio managers<br />
— Implement client portfolio<br />
Process management<br />
Process manager<br />
— Actively and continuously evaluates signal quality and risk exposures<br />
Alpha refers to returns in excess of a benchmark’s return.<br />
Deutsche Asset<br />
& Wealth Management Investment products: No bank guarantee I Not FDIC insured I May lose value 13
Research: generating and conveying alpha ideas<br />
Implementation<br />
ti<br />
Portfolio design and construction<br />
Research and decision-making<br />
Alpha specialists<br />
— Conduct research and alpha<br />
decision-making<br />
— Communicate signals in consistent<br />
framework<br />
— Minimize time decay of research<br />
Process management<br />
Deutsche Asset<br />
& Wealth Management Investment products: No bank guarantee I Not FDIC insured I May lose value 14
Credit research: the foundation for alpha generation<br />
Issuer analysis<br />
Quantitative<br />
— Balance sheet analysis<br />
— Profit and loss<br />
— Cash flow<br />
— Ratios<br />
Qualitative<br />
— Management<br />
— Regulatory environment<br />
— Specific industry and<br />
company risks<br />
Instrument-specific<br />
— Prospectus<br />
— Structure<br />
— Liquidity<br />
— Documentation<br />
Results<br />
Long-term view<br />
Current internal rating<br />
Investment<br />
platform<br />
Short-term view<br />
Relative value + absolute return<br />
Deutsche Asset<br />
& Wealth Management Investment products: No bank guarantee I Not FDIC insured I May lose value 15
<strong>Fund</strong>amental analysis: at industry, issuer and<br />
issue levelsl<br />
Most critical step<br />
Industry Issuer Issue<br />
Competitive landscape<br />
Cash flow analysis<br />
— Structural protection<br />
— Broad access to internal and<br />
external industry expertise<br />
Industry trends<br />
— Cash flow modeling through<br />
financial analysis<br />
— Evaluate issuer’s entire capital<br />
— Collateral, covenant and<br />
capital structure<br />
— Sponsorship<br />
— Focus on medium term<br />
outlook<br />
— Keep abreast of technological<br />
innovations<br />
structure to get complete<br />
picture of<br />
cash flows<br />
Competitive positioning<br />
— Management assessment<br />
— Market position relative<br />
to peers<br />
Risk evaluation<br />
— Assess downside risk through<br />
stress-case modeling<br />
— Restructure risk<br />
— Probability-weighted scenario<br />
analysis<br />
— Pricing and liquidity<br />
— Refinancing and market risk<br />
Outcome:<br />
Assessment of intrinsic value<br />
Deutsche Asset<br />
& Wealth Management Investment products: No bank guarantee I Not FDIC insured I May lose value 16
Research conveyed globally via real-time signalling<br />
Drawing from management discussions and independent research,<br />
analysts develop views on alpha sources<br />
Long-term view<br />
Short-term t view<br />
— Strategic, longer-term assessment of fundamental<br />
credit drivers<br />
— Risk signalling (long, neutral, short)<br />
— Time horizon orientation<br />
— News flow assessment<br />
— Tactical, shorter-term assessment of price within a<br />
longer-term trend<br />
— Risk signaling (scale of +4 to -4)<br />
— Target return orientation<br />
— Profit and loss review levels<br />
— Volatility rating<br />
Analysts disseminate views 24/7 through shared global platform<br />
Source: Deutsche Asset & Wealth Management as of 12/31/12 for illustrative purposes only.<br />
Deutsche Asset<br />
& Wealth Management Investment products: No bank guarantee I Not FDIC insured I May lose value 17
Real-time communication of analysts’ views<br />
Drawing from management discussions and quantitative research,<br />
analysts express long- and short-term views on alpha sources<br />
Tactical, shorter-term<br />
assessment of price<br />
within a longer-term<br />
trend<br />
— Risk signalling<br />
(scale of +4 to -4)<br />
Strategic, longer-term<br />
assessment of<br />
fundamental credit<br />
drivers<br />
Signals on multiple<br />
l<br />
securities of a single<br />
issuer<br />
Source: Deutsche Asset & Wealth Management as of 12/31/12, for illustrative purposes only.<br />
The material does not constitute investment advice and should not be relied upon as a basis for any investment decision.<br />
Deutsche Asset<br />
& Wealth Management Investment products: No bank guarantee I Not FDIC insured I May lose value 18
Construction & design: model portfolio is the starting point<br />
The model portfolio is built by the portfolio construction team and serves as<br />
the basis for risk management, quality control and low dispersion<br />
Implementation<br />
ti<br />
Research and decision-making<br />
Portfolio design and construction<br />
Portfolio construction ti team<br />
— Creates a model portfolio<br />
based on alpha signals<br />
Process management<br />
Deutsche Asset<br />
& Wealth Management Investment products: No bank guarantee I Not FDIC insured I May lose value 19
Model portfolio: shaped by analysts’ views,<br />
market factors<br />
Factors that influence model portfolio:<br />
Analysts’ research<br />
— Macro considerations<br />
Desired risk exposure based on<br />
economic environment, default<br />
expectations, and market<br />
technicals<br />
— Credit research<br />
Long-term and short-term alpha<br />
signals from the credit analysts<br />
— Risk management metrics<br />
Volatility scenario analyses<br />
from the analyst<br />
Position and sector limits<br />
— Limit the maximum exposure of<br />
individual obligors to 3%<br />
— Sector weights are limited by<br />
the greater of 2x the index<br />
or 15%<br />
Market considerations<br />
— Liquidity of the bonds<br />
— Transaction costs<br />
Deutsche Asset<br />
& Wealth Management Investment products: No bank guarantee I Not FDIC insured I May lose value 20
A highly experienced portfolio construction team<br />
Model portfolio construction is the responsibility of the<br />
Portfolio Construction Team (PCT)<br />
<strong>Floating</strong>-rate loans<br />
Name Title Role Years experience<br />
Ty Anderson Managing director Portfolio manager 31<br />
Eric Meyer Managing director Portfolio manager 32<br />
Source: Deutsche Asset & Wealth Management as of 3/31/13<br />
Deutsche Asset<br />
& Wealth Management Investment products: No bank guarantee I Not FDIC insured I May lose value 21
Avoiding distressed issuers to manage asymmetric risk<br />
S&P rating distribution<br />
35%<br />
30%<br />
25%<br />
20%<br />
Our focus on the mid-section<br />
of the high-yield universe<br />
helps limit “tail” risk<br />
15%<br />
10%<br />
5%<br />
0%<br />
A+ A A‐ BBB+ BBB BBB‐ BB+ BB BB‐ B+ B B‐ CCC+ CCC CCC‐ CC C D NR<br />
Loan strategy<br />
LSTA<br />
Source: Deutsche Asset & Wealth Management as of 12/31/12. A form of portfolio risk that arises when the possibility that an investment will move more than three standard<br />
deviations from the mean is greater than what is shown by a normal distribution. Standard deviation is often used to represent the volatility of an investment. It depicts how widely<br />
an investment’s returns vary from the investment’s average return over a certain period.<br />
Deutsche Asset<br />
& Wealth Management Investment products: No bank guarantee I Not FDIC insured I May lose value 22
Implementation: a dedicated manager for every portfolio<br />
Portfolio design and construction<br />
Implementation<br />
ti<br />
Dedicated portfolio managers<br />
— Implement client portfolio<br />
Research and decision-making<br />
Process management<br />
Deutsche Asset<br />
& Wealth Management Investment products: No bank guarantee I Not FDIC insured I May lose value 23
Responsibilities are delineated; accountability is clear<br />
Full accountability promotes alignment of interests with those of clients<br />
Responsibilities of portfolio construction ti team<br />
Responsibilities of dedicated di d portfolio managers<br />
— Creates model portfolios<br />
— Adopts alpha signals after assessment of<br />
risk, liquidity, capital, transaction costs<br />
— Implements client portfolio, reflecting model<br />
portfolio, in accordance with clients’ risk<br />
profile and guidelines<br />
— Seeks to minimize alpha slippage<br />
Deutsche Asset<br />
& Wealth Management Investment products: No bank guarantee I Not FDIC insured I May lose value 24
Process management: a crucial part of risk management<br />
Implementation<br />
ti<br />
Portfolio design and construction<br />
Research and decision-making<br />
Process management<br />
Process manager<br />
— Actively and continuously evaluates signal quality and risk exposures<br />
Deutsche Asset<br />
& Wealth Management Investment products: No bank guarantee I Not FDIC insured I May lose value 25
Process management is essential to decision quality<br />
Process management<br />
Actively and continuously evaluate decision quality and risk exposure<br />
Analysis and decision-making<br />
i Portfolio design and construction<br />
Implementation<br />
Decision-level diagnostics<br />
Portfolio design diagnostics<br />
Client portfolio<br />
— Decision-level controls<br />
— Portfolio-level controls<br />
— Portfolio control and review<br />
Deutsche Asset<br />
& Wealth Management Investment products: No bank guarantee I Not FDIC insured I May lose value 26
Multi-dimensional risk management throughout<br />
the process<br />
Embedded risk management<br />
Implementation tools<br />
Ongoing credit review Asset diversification Firm risk management<br />
— Relative value<br />
discussions with<br />
feedback loop to<br />
portfolio construction<br />
— Best execution<br />
practices<br />
— Active use of<br />
technology<br />
— Scenario analysis — Industry exposure<br />
limits: greater of<br />
— Maintain contact with<br />
15% or 2X the index<br />
issuer<br />
weight<br />
— Daily and monthly<br />
— 3% maximum issue<br />
portfolio monitoring<br />
concentration<br />
and risk reports<br />
— Formal quarterly<br />
strategy review<br />
— Manage portfolio risk<br />
exposures<br />
— Systematic monitoring<br />
— Internal audits<br />
— Compliance<br />
— Legal settlement<br />
Diversification cannot protect against a loss.<br />
Deutsche Asset<br />
& Wealth Management Investment products: No bank guarantee I Not FDIC insured I May lose value 27
Deutsche Asset & Wealth Management fixed income:<br />
experience, depth, culture<br />
Experienced global team<br />
Deep resources, nimble process<br />
A culture of risk management<br />
— Two dedicated portfolio<br />
managers supported by<br />
17 analysts<br />
— With an average of 17 years of<br />
industry experience, the team<br />
members have managed<br />
through multiple credit cycles<br />
— Extensive network of company<br />
relationships<br />
— Coverage of over 500 global<br />
credits in the sub-investmentgrade<br />
universe<br />
— Combined high yield and loan<br />
team conducts research across<br />
the full capital structure<br />
— Real-time access to a global<br />
network of analysts<br />
— Small teams within the larger<br />
global group facilitate nimble<br />
decision-making<br />
— At the strategy level: Risk<br />
management is embedded<br />
throughout the process<br />
— At the firm level: Systemic<br />
controls, internal audit,<br />
compliance and legal<br />
— Our approach typically results<br />
in outperformance in bear<br />
markets and slight<br />
underperformance in<br />
bull markets<br />
Source: Deutsche Asset & Wealth Management as of 12/31/12<br />
Deutsche Asset<br />
& Wealth Management Investment products: No bank guarantee I Not FDIC insured I May lose value 28
04 Current opportunity in loans
What are floating-rate loans<br />
Characteristics<br />
— <strong>Floating</strong>-rate loans, also referred to as bank loans, leveraged loans or syndicated loans, are<br />
loans with floating-rate coupons that are generally senior secured debt of<br />
below-investment-grade corporate issuers<br />
— Coupons or income are tied to a variable rate, most commonly the London Interbank<br />
Offered <strong>Rate</strong> (LIBOR) and generally reset every 30-90 days<br />
— <strong>Floating</strong>-rate loans are most often secured assets that can be transferred to debt holders in case<br />
of default, providing potential downside protection<br />
Benefits of floating-rate loans<br />
— Historically, i floating-rate t loans have experienced lower default rates and higher h recovery rates<br />
than that of traditional non-investment-grade bonds<br />
— More structural protection (collateral and maintenance covenants) than traditional<br />
non-investment-grade bonds<br />
— <strong>Floating</strong>-rate coupon potentially leads to less interest-rate sensitivity than<br />
traditional bonds<br />
LIBOR, or the London Interbank Offered <strong>Rate</strong>, is a widely used benchmark for short-term term taxable interest rates. Coupon is the interest rate, expressed as an annual<br />
percentage of face value, which a bond issuer promises to pay until maturity.<br />
Deutsche Asset<br />
& Wealth Management Investment products: No bank guarantee I Not FDIC insured I May lose value 30
Repayment hierarchy gives preference to loans<br />
Loans are the most senior debt<br />
in the capital structure of<br />
non-investment-grade firms<br />
<strong>Floating</strong>-rate loans<br />
Implication: Interest t and principal<br />
i is paid before bond and<br />
equity holders<br />
<strong>Floating</strong>-rate loans<br />
(Senior secured)<br />
Junior secured capital<br />
Second-lien loans<br />
Mezzanine loans<br />
Unsecured capital<br />
High-yield bonds<br />
First loss capital<br />
Equity<br />
Source: Deutsche Asset & Wealth Management as of 12/31/12.<br />
Deutsche Asset<br />
& Wealth Management Investment products: No bank guarantee I Not FDIC insured I May lose value 31
Loans offer several benefits and distinctions<br />
U.S. loans<br />
U.S. high-yield ield bonds Relative e benefits and implications<br />
Senior<br />
Senior or<br />
subordinated<br />
Loans are the most senior debt in the capital structure of non-investment-grade firms<br />
— Interest and principal is paid before bond and equity holders<br />
Secured Unsecured Loans are usually secured by assets, which support higher recovery rates.<br />
— Historically, recovery rates for defaults have averaged over 80%<br />
Covenants Lighter covenants Loans typically have stronger financial covenants than bonds<br />
— Greater protection for investors<br />
<strong>Floating</strong>-rate Mostly fixed-rate Loans offer floating-rate coupons<br />
— Potentially less interest-rate risk<br />
6-9 year term 7-10 years term Loans are generally slightly shorter term<br />
— Less term risk<br />
Lower liquidity Higher liquidity<br />
Loans generally are less liquid than high-yield bonds<br />
— Selling loan positions quickly could be difficult<br />
Callability Call protection Loans are generally callable with little or no premium<br />
— When capital markets are open, loans trading above par are often refinanced at<br />
tighter spreads<br />
Source: Deutsche Asset & Wealth Management as of 12/31/12<br />
Deutsche Asset<br />
& Wealth Management Investment products: No bank guarantee I Not FDIC insured I May lose value 32
Broad issuer base offers diversified exposure<br />
<strong>Floating</strong>-rate loans are<br />
issued by well-known<br />
companies—such as<br />
Georgia Pacific,<br />
Bausch & Lomb and<br />
Goodyear—across a<br />
wide range of<br />
industries<br />
Healthcare<br />
Business equipment and services<br />
Publishing<br />
Electronics<br />
Utilities<br />
Financial intermediaties<br />
Retailers<br />
Telecommunications<br />
Automotive<br />
Broadcast radio and television<br />
Lodging and casinos<br />
Chemical/plastics<br />
Cable and satellite television<br />
Oil and gas<br />
Food service<br />
Food products<br />
Aerospace and defense<br />
Leisure<br />
Drugs<br />
Insurance<br />
Other<br />
3.90%<br />
3.75%<br />
3.68%<br />
3.64%<br />
3.51%<br />
2.84%<br />
2.46%<br />
2.40%<br />
2.26%<br />
2.18%<br />
1.87%<br />
1.80%<br />
5.97%<br />
5.79%<br />
5.79%<br />
5.52%<br />
5.39%<br />
5.36%<br />
8.02%<br />
10.28%<br />
13.60%<br />
0.00% 2.00% 4.00% 6.00% 8.00% 10.00% 12.00% 14.00% 16.00%<br />
Source: Standard d & Poor‘s as of 12/31/12. Data is for illustrative i purposes and does not represent any <strong>DWS</strong> <strong>Investments</strong> fund. As of 3/31/13, <strong>DWS</strong> <strong>Floating</strong> <strong>Rate</strong> <strong>Fund</strong> held 0% in<br />
Georgia-Pacific, 0.6% in Bausch & Lomb and 0.2% in Goodyear. Securities referenced do not represent all of the securities purchased or sold by the fund, may or may not be<br />
profitable, and should not be construed as a recommendation of any specific security. Current and future portfolio holdings are subject to risk.<br />
Deutsche Asset<br />
& Wealth Management Investment products: No bank guarantee I Not FDIC insured I May lose value 33
Average default and recovery rates<br />
Historically, defaults on loans have been significantly lower<br />
than defaults of traditional high-yield investments<br />
A recovery rate is the percentage of debt repaid to an<br />
investor in the case of default. The higher the recovery rate,<br />
the better<br />
80.6%<br />
5.86%<br />
48.6%<br />
3.00%<br />
28.5%<br />
Average default rate from 2001-2012 Average recovery rate from 1987-2012<br />
<strong>Floating</strong>-rate loans High-yield Senior unsecured Subordinated debt<br />
Source: Moody’s Investor Services as of 12/31/12. Past performance is historical and does not guarantee future results. Default rate is for the trailing 12-month period. Default<br />
rates for 2001, 2002, 2003 and 2004 are by number of issuers. Subsequent to 2004, the default rate is dollar-weighted. Default is defined as missed interest or principal<br />
disbursement, bankruptcy, distressed exchange or an ongoing covenant violation. Average recovery rates over other time periods might not be as favorable.<br />
Deutsche Asset<br />
& Wealth Management Investment products: No bank guarantee I Not FDIC insured I May lose value 34
Important information<br />
OBTAIN A PROSPECTUS<br />
To obtain a summary prospectus, if available, or prospectus, download one from www.dws-<br />
investments.com, talk to your financial representative or call (800) 728-3337. We advise you to carefully<br />
consider the product’s objectives, risks, charges and expenses before investing. The summary prospectus<br />
and prospectus contain this and other important information about the investment product. Please read the<br />
prospectus carefully before you invest.<br />
Investment products offered through <strong>DWS</strong> <strong>Investments</strong> Distributors, Inc. Advisory services offered through<br />
Deutsche Investment Management Americas, Inc.<br />
Deutsche Asset & Wealth Management represents the asset management and wealth management activities<br />
conducted by Deutsche Bank AG or any of its subsidiaries. Clients will be provided Deutsche Asset & Wealth<br />
Management products or services by one or more legal entities that will be identified to clients pursuant to the<br />
contracts, agreements, offering materials or other documentation relevant to such products or services.<br />
<strong>DWS</strong> <strong>Investments</strong> Distributors, Inc.<br />
222 South Riverside Plaza Chicago, IL 60606-5808<br />
www.dws-investments.com t service@dws.com<br />
Tel (800) 728-3337<br />
©2013 Deutsche Asset & Wealth Management. All rights reserved. (5/13) R-20623-4<br />
Deutsche Asset<br />
& Wealth Management Investment products: No bank guarantee I Not FDIC insured I May lose value 35