Deutsche insights and guidance

Transcription

1 4th quarter 2015 Deutsche insights and guidance A guide to implementing the CIO View

2 A world-class partner to our clients Strength based on a unique global perspective As a major pillar of Deutsche Bank, a global bank founded in 1870 in Berlin, Deutsche Asset & Wealth Management (Deutsche AWM) is a truly global firm with a dedicated U.S. platform. Stockholm Among the TOP 10 bank-owned asset & wealth managers globally 1 Berlin Amsterdam London Frankfurt Luxembourg Munich Paris Zürich Vienna Geneva Milano Madrid Rome Athens San Francisco Chicago New York Boston Exchange-traded products (ETPs) 2 #4 exchange-traded fund (ETF) asset gatherer in United States #5 ETP provider globally Jacksonville Approximately 1,000 investment professionals provide fundamental research and diverse perspectives Sao Paulo Source: Deutsche Asset & Wealth Management as of 9/30/15, unless otherwise footnoted on page Deutsche insights and guidance

3 A diverse global platform with more than more than offices spanning countries One of the world s leading investment organizations St. Petersburg Moscow $1.2 TRILLION of invested assets globally Seoul Tokyo Shanghai Tel Aviv Dubai New Delhi Hong Kong Bangkok Singapore Retail asset manager 3 #4 best-selling in Europe #6 best-selling in United States Johannesburg More than 95 years of U.S. asset management experience, going back to 1919 Sydney Melbourne Deutsche insights and guidance 3

4 The CIO View Our world view The Deutsche AWM CIO View represents our house view, based on the combined expertise of our entire global investment platform. The CIO View is derived from a predefined set of macro signals for which long-term forecasts and short-term recommendations are created within a rigorous and challenging refinement process. Approximately 570 senior research analysts Participate live from regional hubs around the world in the quarterly CIO day Proprietary research system Entire universe of available recommendations Independent and unconstrained As many as 60 investment and asset class heads Challenge and refine research analyst recommendations Selection Relevant recommendations for CIO View generation Refinement Defines signal direction and conviction for CIO View input Source: Deutsche Asset & Wealth Management as of 9/30/15. 4 Deutsche insights and guidance

5 The Chief Investment Office forms the core of the investment platform, combining proprietary market knowledge and views across our network of investment professionals into one global, comprehensive economic and market view, the Deutsche AWM CIO View. Chief Investment Office and CIO Executive Committee Determine strategic and tactical CIO View output Assessment Discussion Challenge Selection Accepts or rejects input recommendations; final decision with CIO executive committee Aggregation Unconstrained macro recommendations are created to describe the view The CIO View is intended to serve as a major input factor for Deutsche AWM investment professionals as well as serve as an unbiased investment resource for our clients. Deutsche insights and guidance 5

6 1 Why global equities? Turning insight into action Though global markets are in constant flux, our CIO View, capital markets expertise and investment research have uncovered four key investment themes that may have a significant impact on portfolio allocation. We believe each of these themes provides distinct opportunities for today s investor. Insight Easy monetary policy supports equity performance Even some tightening by the U.S. Federal Reserve Board (Fed) isn t negative for equities Action Look to equities especially developed-market foreign equities to provide attractive long-term return potential 6 Deutsche insights and guidance

7 2 3 4 Why higherquality bonds? Why does income matter? Why hedge currency exposure? Insight Uncertainty around Fed actions may lead to increased equity volatility Diversification matters as volatility normalizes Insight Central bank policies have created new challenges for fixed-income investors Higher-yielding and short-term bonds historically outperformed when rates rose Insight Currency fluctuations may impact an equity portfolio regardless of the U.S. dollar s direction Currencies may impact U.S. companies as well Action Look to higher-quality bonds, such as municipal bonds and mortgage-backed securities, to potentially help smooth a bumpy ride Action Look to higher-yielding or short-duration bonds to help defend against U.S. interest-rate fluctuations Action Look to currency-hedged international equities and U.S. small- and mid-cap equities to help reduce currency impact See following theme pages for details on individual insights and actions. Diversification cannot protect against a loss. Past performance is historical and does not guarantee future results. Deutsche insights and guidance 7

8 1 Why global equities? Insight Easy monetary policy supports equity performance Historically, global monetary policy has impacted the shape of the yield curve, which has in turn offered unique insights into the possible trajectory of equity performance. A steep curve driven by low short rates and easy monetary policy has led to economic growth and positive equity performance. An inverted curve typically driven by higher short-term rates and tighter monetary policy has generally led to an economic slowdown and an equity market downturn with a swell in volatility. Given today s easy global monetary policy, we believe global economies will see continued positive economic growth, which has historically been supportive of equity performance. Today s yield curve remains steep indicating potential for continued equity outperformance Historical yield curve shape (10-year U.S. Treasury 2-year U.S. Treasury, 6/30/76 9/30/15) Flat 1976 Recessions Steep Inverted Today's yield curve remains steep vs. past periods when it inverted leading up to each of the prior five recessions Equities delivered strong results during steep yield curve periods (6/30/76 9/30/15) Yield curve shape Average three-year return % of three-year periods with negative returns Steep 13.42% 2% Flat 12.89% 18% Inverted 6.45% 33% Source: Morningstar as of 9/30/15. Past performance is historical and does not guarantee future results. Equities represented by the S&P 500 Index. Index returns assume reinvestment of all distributions and do not reflect fees or expenses. It is not possible to invest directly in an index. Recessions occurred from January 1980-July 1980, July 1981-November 1982, July 1990 March 1991, March 2001 November 2001 and December 2007 August 2009, according to the National Bureau of Economic Research. 8 Deutsche insights and guidance

9 Even some Fed tightening isn t negative for equities While U.S. equities perform tend to well during Fed tightening cycles, foreign large-cap and U.S. mid-cap stocks have led the pack during periods when the Fed has increased the federal funds rate. Historically, foreign equities widely outpaced domestic bonds when rates rose (Average cumulative total returns during the last two Fed tightening cycles) 31.29% 24.01% 21.19% 19.40% 12.82% 4.22% Developed-market foreign equities U.S. mid-cap equities Global infrastructure U.S. small-cap equities U.S. large-cap equities U.S. bonds Source: Morningstar as of 9/30/15. Past performance is historical and does not guarantee future results. Asset class representation: Developed-market foreign equities, MSCI EAFE Index; U.S. mid-cap equities, Russell Midcap Index; global infrastructure, MSCI ACWI Infrastructure Index; U.S. small-cap equities, Russell 2000 Index; U.S. large-cap equities, S&P 500 Index; U.S. bonds, Barclays U.S. Aggregate Index. Index returns assume reinvestment of all distributions and do not reflect fees or expenses. It is not possible to invest directly in an index. Fed tightening cycles include: 6/30/04 to 6/29/06 and 6/30/99 to 5/16/00. See page 19 for definitions. Action Look to equities especially developed-market foreign equities to provide attractive long-term return potential Deutsche insights and guidance 9

10 2 Why higher-quality bonds? Insight Uncertainty around Fed actions may lead to increased equity volatility Today s investor may have grown used to the relative market calm we ve experienced since the 2008 financial crisis. After eight years of near-zero levels for the federal funds rate, prospects for subsequent rate increases may mean we re in the midst of a calm before the storm. Historically, Fed tightening cycles have led to increased U.S. equity volatility. A rise in the federal funds rate may cause equity volatility to move higher Total +/ 2% days (Negative days, positive days) 41,31 29,23 28,27 19,18 21,14 9,6 12,12 9,14 6,9 13,13 5,10 11,6 10,12 Average: 22 days 2,7 3,0 0,0 1,0 1,1 0,0 0,0 0,0 0,2 3,3 2,2 4,2 6, Historical federal fund rate changes Source: Morningstar as of 9/30/15. Stock market represented by S&P 500 Index. Past performance is historical and does not guarantee future results. Higher-quality bonds represented by municipal bonds and mortgage-backed securities. See next page for index representation. See page 19 for definitions. 10 Deutsche insights and guidance

11 Diversification matters as volatility normalizes With the potential for overall portfolio volatility to rise as a result of increased equity volatility, fixed-income investments, which show low correlations to equities, can help serve as a diversifier to equity market volatility. High-quality fixed-income delivered strong diversification benefits (Five-year correlations to S&P 500 Index as of 9/30/15) High-quality fixed-income can be a diversifier to equity market volatility Municipal bonds GNMAs Multi-sector bonds U.S. high-yield bonds Equities Average 12-month returns during periods in which the S&P 500 Index total return is negative (1/1/99-9/30/15) 6.29% 8.55% 0.93% 2.97% 17.47% Source: Morningstar as of 9/30/15. Past performance is historical and does not guarantee future results. Asset class representation: municipal bonds, Barclays Municipal Bond Index; GNMAs, Barclays GNMA Index; multi-sector bonds, Morningstar Multisector Bond category; U.S. high-yield bonds, Barclays U.S. Corporate High Yield Index; equities, S&P 500 Index. Equity index and category returns assume reinvestment of all distributions. Index returns do not reflect fees or expenses and it is not possible to invest directly in an index. See page 19 for definitions. Action Look to higher-quality bonds, such as municipal bonds and mortgage-backed securities, to potentially help smooth a bumpy ride Deutsche insights and guidance 11

12 3 Why does income matter? Insight Central bank policies have created new challenges for fixed-income investors Given U.S. quantitative easing and general demand for fixed-income investments over the past six years, we have seen yields on U.S. fixed-income investments fall to record lows, while duration exposure has increased as bond issuers extended maturities to take advantage of low rates. Investors are receiving the lowest-on-record yields per unit of duration risk (Intermediate-term bond duration and yield history) Today, investors are taking on more than a year of additional duration risk and receiving less than one third of the yield on intermediate-term bonds, when compared to yield and duration averages prior to quantitative easing. 12% 10% 5.0 8% Years 4.5 6% 4.0 4% 3.5 2% 3.0 0% Jan 89 Jan 92 Jan 95 Duration (left-hand axis) Jan 98 Jan 01 Jan 04 Jan 07 Jan 10 Jan 13 Sep 15 Yield (right-hand axis) Source: Barclays as of 9/30/15. Yields are not guaranteed. Intermediate-term bonds are represented by the Barclays U.S. Aggregate Index. See page 19 for definitions. 12 Deutsche insights and guidance

13 Higher-yielding and short-term bonds historically outperformed when rates rose While we don t anticipate rates moving dramatically higher, investors should be cautious as to how they are generating income. Rather than over-reaching for yield and simply taking on additional duration exposure, investors should consider higher-yielding and short-duration bonds which can serve as an attractive complement to a high-quality fixed-income portfolio and help defend against rate volatility. Higher-yielding and short-duration bonds have offered strong outperformance when rates rose 12-month periods when interest rates rose by more than 1% (1/1/99 9/30/15) 14.45% 10.29% 1.76% 0.05% Global high-yield Floating-rate loans Short-term bonds Intermediate-term bonds Source: Morningstar as of 9/30/15. Past performance is historical and does not guarantee future results. Asset class representation: global high-yield bonds, Barclays Global High Yield Index; floating-rate loans, Credit Suisse Leveraged Loan Index; short-term bonds, Barclays Corporate 1 3 Year U.S. Aggregate Index; intermediate-term bonds, Barclays U.S. Aggregate Index. Index returns do not reflect fees or expenses, and it is not possible to invest directly in an index. See page 19 for definitions. Action Look to higher-yielding or short-duration bonds to help defend against U.S. interest-rate fluctuations Deutsche insights and guidance 13

14 4 Why hedge currency exposure? Insight Currency fluctuations may impact an international portfolio regardless of the U.S. dollar s direction With Deutsche Bank s Foreign Exchange (FX) team forecasting the U.S. dollar to continue to appreciate against other major currencies through 2017, U.S. investors with international allocations may continue to see their returns eroded by the currency effect. Many investors aren t aware of the potentially damaging effects of currency exposure. Currency fluctuations historically have been sharp and unpredictable and can impact returns of international portfolios or turn them into losses, as well as adding to portfolio volatility. Minimizing currency exposure in a diversified portfolio has historically led to high returns with a measure of downside protection (as of 9/30/15) U.S. bonds 20% U.S. stocks 50% International stocks 30% Sample portfolio (returns in %) 1-year return 3-year return 5-year return 10-year return Hedging out currency risk has historically led to lower volatility and less drawdown in a diversified portfolio. 1-year volatility 3-year volatility 5-year volatility 10-year volatility Max drawdown 1/88 to 1/15 International hedged International unhedged Source: Morningstar as of 9/30/15. Past performance is historical and does not guarantee future results. The example above is hypothetical, for illustrative purposes only and is not intended to represent performance of any Deutsche Asset & Wealth Management product. Hedged portfolio is comprised of 50% S&P 500 Index, 30% MSCI EAFE U.S. Dollar Hedged Index, 20% Barclays U.S. Aggregate Index. Unhedged portfolio is comprised of 50% S&P 500 Index, 30% MSCI EAFE Index, 20% Barclays U.S. Aggregate Index. Index returns assume reinvestment of all distributions and do not reflect fees or expenses. It is not possible to invest directly in an index. See page 19 for definitions. 14 Deutsche insights and guidance

15 Currencies may impact U.S. companies as well Likewise, because U.S. small- and mid-cap companies derive a smaller portion of their total revenues from international sales, they have historically outperformed large-caps stocks, which typically have greater international exposure. U.S. small- and mid-cap stocks earnings are less impacted by the strengthening dollar (as of 9/30/15) U.S. small-cap U.S. mid-cap U.S. large-cap 27% 27% 27% 73% 73% 73% 36% 36% 36% 64% 64% 64% 38% 38% 38% 62% 62% 62% Domestic revenues International revenues U.S. small- and mid-caps outperformed large-caps during periods of dollar strengthening (12/31/87-9/30/15) 10.76% 10.95% 12.86% 8.88% 8.97% 11.43% Periods of U.S. dollar strengthening Small-cap stocks Mid-cap stocks Large-cap stocks Periods of U.S. dollar weakening Source: Morningstar as of 9/30/15. Past performance is historical and does not guarantee future results. Asset class representation: large-cap stocks, Russell 1000 Index; mid-cap stocks, Russell Midcap Index; small-cap stocks, Russell 2000 Index. Index returns assume reinvestment of all distributions and do not reflect fees or expenses. It is not possible to invest directly in an index. See page 19 for definitions. Action Look to currency-hedged international equities and U.S. small- and mid-cap equities to help reduce currency impact Deutsche insights and guidance 15

16 Deutsche product solutions for turning insight into action 1 Why SCDGX Core Equity SCINX CROCI International DURSX European Equity TOLSX Global Infrastructure global equities? MIDTX Mid Cap Value SSLCX Small Cap Core SSDSX Small Cap Growth DBEF MSCI EAFE Hedged Equity ETF DBEZ MSCI Eurozone Hedged Equity ETF DBGR MSCI Germany Hedged Equity ETF DBJP MSCI Japan Hedged Equity ETF 2 Why SGINX GNMA DBPIX Short Duration 3DFRPX Floating Rate DBPIX Short Duration 4 Why Why does income matter? SGHSX Global High Income SHYTX Strategic High-Yield Tax-Free hedge currency exposure? SCINX CROCI International DURSX European Equity SGHSX Global High Income higher-quality bonds? KUSMX Strategic Government Securities SCMTX Intermediate Tax/AMT Free SCMBX Managed Municipal Bond Fund MIDTX Mid Cap Value SSLCX Small Cap Core SSDSX Small Cap Growth IGIH Investment Grade Bond Interest Rate Hedged ETF RVNU Municipal Infrastructure Revenue Bond ETF HYIH High Yield Corporate Bond Interest Rate Hedged ETF IGIH Investment Grade Bond Interest Rate Hedged ETF DBEF MSCI EAFE Hedged Equity ETF DBEZ MSCI Eurozone Hedged Equity ETF DBGR MSCI Germany Hedged Equity ETF DBJP X-Trackers MSCI Japan Hedged Equity ETF 16 Deutsche insights and guidance

17 Deutsche Asset & Wealth Management offers a broad investment platform International and global equity U.S. equity Taxable fixedincome Tax-free income Real assets Liquid alternative and multi-asset Mutual funds SCINX CROCI International DSOSX CROCI Sector Opportunities DURSX European Equity DEFSX Emerging Markets Frontier SEMGX Emerging Markets Equity SCGSX Capital Growth SCDGX Core Equity SMCSX Mid Cap Growth Fund MIDTX Mid Cap Value SSLCX Small Cap Core SSDSX Small Cap Growth DFRPX Floating Rate SGHSX Global High Income DBPIX Short Duration SDUSX Ultrashort Duration KSTSX Unconstrained Income SDCSX California Tax-Free SCMTX Intermediate Tax/AMT Free SCMAX Massachusetts Tax-Free SCMBX Managed Municipal Bond SNWYX New York Tax-Free SKSRX Enhanced Commodity Strategy TOLSX Global Infrastructure RRGTX Global Real Estate Securities RRREX Real Estate Securities DDMSX Diversified Market Neutral KTRSX Global Income Builder DSLSX Strategic Equity Long/Short SGSCX Global Small Cap KDSSX Small Cap Value SRMSX Short-Term Municipal Bond SHYTX Strategic High Yield Tax-Free Exchange-traded funds DBEF MSCI EAFE Hedged Equity ETF DBEZ MSCI Eurozone Hedged Equity ETF DBGR MSCI Germany Hedged Equity ETF HYIH High Yield Corporate Bond Interest Rate Hedged ETF IGIH Investment Grade Bond Interest Rate Hedged ETF RVNU Municipal Infrastructure Revenue Bond ETF DBRE Dow Jones Hedged International Real Estate ETF DBIF S&P Hedged Global Infrastructure ETF DBJP MSCI Japan Hedged Equity ETF Deutsche insights and guidance 17

18 Deutsche funds offer 17 funds with a reduced NAV purchase privilege Reduced NAV purchase privilege for 17 Deutsche funds Class A shares Funds with reduced NAV purchase NAV purchases for $250,000 and greater Cumulative discount and letter of intent applied to NAV purchases Alternative funds Equity funds Purchase amount Sales charge Dealer comp Alternative Asset Allocation Select Alternative Allocation Diversified Market Neutral Large Cap Value Global Growth Under $50, % 5.20% $50,000 $99, % 4.00% NAV purchases/exchanges may be subject to a contingent deferred sales charge (CDSC) of 0.75% if redeemed within 12 months of purchase and 0.50% if redeemed within the following six months. $100,000 $249, % 3.00% $250,000 $2,999, % 0.75% $3,000,000 $49,999, % 0.50% $50,000,000 and over 0.00% 0.25% Fixed income funds Tax-free income funds Purchase amount Sales charge Dealer comp GNMA Short Duration Strategic Government Securities Ultra-Short Duration Intermediate Tax/AMT Free Managed Municipal Bond Strategic High Yield Tax-Free NAV purchases/exchanges may be subject to a CDSC of 0.50% if redeemed within 12 months of purchase. Under $100, % 2.25% $100,000 $249, % 2.00% $250,000 $49,999, % 0.50% $50,000,000 and greater 0.00% 0.25% Tax-free income funds Purchase amount Sales charge Dealer comp Short-Term Municipal Bond NAV purchases/exchanges may be subject to a CDSC of 0.50% if redeemed within 12 months of purchase. Under $100, % 1.50% $100,000 $249, % 1.25% $250,000 $49,999, % 0.50% $50,000,000 and greater 0.00% 0.25% Annual service fee is paid quarterly on all funds, beginning the month after the investment. Service fee 0.25% Fixed income funds Tax-free income funds Purchase amount Sales charge Dealer comp Unconstrained Income California Tax-Free Income Massachusetts Tax-Free New York Tax-Free Income Under $100, % 2.25% $100,000 $249, % 2.00% These funds may be subject to a CDSC of 1% if redeemed within 18 months of purchase. $250,000 $4,999, % 1.00% $5,000,000 $9,999, % 0.55% $10,000,000 $49,999, % 0.50% $50,000,000 and greater 0.00% 0.25% 18 Deutsche insights and guidance

19 1 Top-10 rank based on assets under management from company reports. 2 U.S. ETF asset gatherers ranked by 2015 ETF net flows; source: Morningstar as of 9/30/15. Global ETP providers ranked by assets under management; source: Deutsche Bank, Bloomberg and FactSet. 3 Retail asset managers (U.S. and Europe) ranked by 2015 mutual fund and ETF net flows, excluding money funds; source: Morningstar as of 9/30/15. The opinions and forecasts expressed herein do not necessarily reflect those of Deutsche Asset & Wealth Management, are as of 10/31/15 and may not come to pass. This information is subject to change at any time, based on market and other conditions and should not be construed as a recommendation of any specific security. Index definitions The Barclays 1 3 Year U.S. Aggregate Index tracks the performance of domestic, taxable investment-grade bonds with average maturities of one to three years. The Barclays Global High Yield Index tracks the performance of U.S., European and emerging-market high-yield investments. The Barclays GNMA Index tracks the performance of fixed-rate securities backed by mortgage pools of the Government National Mortgage Association (GNMA). The Barclays Municipal Bond Index tracks the performance of investment-grade, fixed-rate municipal bonds with maturities greater than two years. The Barclays U.S. Aggregate Index tracks the performance of the broad U.S. investment-grade, fixed-rate bond market, including both government and corporate bonds. The Barclays U.S. Corporate High-Yield Index tracks the performance of U.S.-dollar-denominated, non-investment grade, fixed-rate, taxable corporate bonds. The Credit Suisse Leveraged Loan Index measures the balance and current spread over LIBOR for fully funded term loans. The MSCI EAFE Index tracks the performance of stocks in select developed markets outside of the United States. The MSCI EAFE U.S. Dollar hedged Index is the currency-hedged version of the MSCI EAFE Index which tracks the performance of stocks in select developed markets outside of the United States. The MSCI ACWI Infrastructure Index tracks the performance of infrastructure companies. The Russell 1000 Index tracks the performance of the 1,000 largest stocks in the Russell 3000 Index, which consists of the 3,000 largest U.S. companies as measured by market capitalization. The Russell 2000 Index tracks the performance of the 2,000 smallest stocks in the Russell 3000 Index. The Russell Midcap Index tracks the performance of the mid-cap segment of the U.S. equity universe. The S&P 500 Index tracks the performance of 500 leading U.S. stocks and is widely considered representative of the U.S. equity market. Term definitions Correlation is a measure of how closely two variables move together over time. A 1.0 equals perfect correlation. A 1.0 equals total negative correlation. Drawdown is the peak-to-trough decline during a specific record period of an investment. Duration, which is expressed in years, measures the sensitivity of the price of a bond or bond fund to a change in interest rates. The federal funds rate is the interest rate, set by the U.S. Federal Reserve Board, at which banks lend money to each other, usually on an overnight basis. Fed tightening is course of action undertaken by the U.S. Federal Reserve Board to constrict spending in an economy that is seen to be growing too quickly, or to curb inflation when it is rising too fast. The Fed will make money tight by raising short-term interest rates (also known as the federal funds rate), which increases the cost of borrowing and effectively reduces its attractiveness. The yield curve is a graphical representation of how yields on bonds of different maturities compare. Normally, yield curves slant up, as bonds with longer maturities typically offer higher yields than short-term bonds. A steep yield curve occurs when the yield spread between long-term and short-term bonds is greater than the historical average yield spread. An inverted yield curve occurs when long-term debt instruments have a lower yield than short-term debt instruments. Deutsche insights and guidance 19

20 Deutsche X-trackers ETFs important risk information: Investing involves risk, including possible loss of principal. Stocks may decline in value. Bond investments are subject to interest-rate, credit, liquidity and market risks to varying degrees. When interest rates rise, bond prices generally fall. Foreign investing involves greater and different risks than investing in US companies, including currency fluctuations, less liquidity, less developed or less efficient trading markets, lack of comprehensive company information, political instability and differing auditing and legal standards. Emerging markets tend to be more volatile than the markets of more mature economies, and generally have less diverse and less mature economic structures and less stable political systems than those of developed countries. Funds investing in a single industry, country or in a limited geographic region generally are more volatile than more diversified funds. Uncertainties in the Chinese tax rules governing taxation of income and gains from investments in A-shares could result in unexpected tax liabilities for the Fund which may reduce Fund returns. Any reduction or elimination of access to A-shares will have a material adverse effect on the ability of the fund to achieve its investment objective. Special risks associated with investments in Chinese companies include exposure to currency fluctuations, less liquidity, less developed or less efficient trading markets, lack of comprehensive company information, political instability and differing auditing and legal standards the nature and extent of intervention by the Chinese government in the Chinese securities markets, and the potential unavailability of A shares. Performance of a Fund may diverge from that of an Underlying Index due to operating expenses, transaction costs, cash flows, use of sampling strategies or operational inefficiencies. There are additional risks associated with investing in high-yield bonds, aggressive growth stocks, non-diversified/concentrated funds and small- and mid-cap stocks which are more fully explained in the prospectuses, as applicable. An investment in any Fund should be considered only as a supplement to a complete investment program for those investors willing to accept the risks associated with that fund. Please read the prospectus for more information. Deutsche mutual fund important risk information: Investments in mutual funds involve risk. Stocks may decline in value. Bond investments are subject to interest-rate, credit, liquidity and market risks to varying degrees. Credit risk refers to the ability of an issuer to make timely payments of principal and interest. Investing in derivatives entails special risks relating to liquidity, leverage and credit that may reduce returns and/or increase volatility. Investing in foreign securities, particularly those of emerging markets, presents certain risks, such as currency fluctuations, political and economic changes, and market risks. There are additional risks associated with investing in commodities, high-yield bonds, aggressive growth stocks, non-diversified/concentrated funds and small- and mid-cap stocks which are more fully explained in the prospectuses. Please read the prospectus for more information. Shares of the exchange traded funds may be sold throughout the day on the exchange through any brokerage account. However, shares may only be purchased and redeemed directly from the funds by authorized participants in very large creation/redemption units. There is no assurance that an active trading market for shares of an exchange traded fund will develop or be maintained. Indexes are unmanaged and you cannot invest directly in an index. MSCI is a servicemark of MSCI Inc. (MSCI) and has been licensed for use by DBX. 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All investments involve risk, including potential loss of principal. Investment products: No bank guarantee Not FDIC insured May lose value Deutsche X-trackers ETFs ( ETFs ) are managed by DBX Advisors LLC or DBX Strategic Advisors LLC (the Advisors ), and distributed by ALPS Distributors, Inc. ( ALPS ). The Adviser is a subsidiary of Deutsche Bank AG, and is not affiliated with ALPS. Investment products offered through DeAWM Distributors, Inc. Advisory services offered through Deutsche Investment Management Americas, Inc. Deutsche Asset & Wealth Management represents the asset management and wealth management activities conducted by Deutsche Bank AG or any of its subsidiaries. Clients will be provided Deutsche Asset & Wealth Management products or services by one or more legal entities that will be identified to clients pursuant to the contracts, agreements, offering materials or other documentation relevant to such products or services. 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