Presentation DWS Floating Rate Fund - DWS Investments

Deutsche Asset 

& Wealth Management 

DWS floating-rate loan strategy 

Investment products: No bank guarantee I Not FDIC insured I May lose value

Agenda 

01 Deutsche Asset & Wealth Management overview 

02 Floating-rate loan overview 

03 Investment process 

04 Current opportunity in loans 

Deutsche Asset & Wealth Management represents the asset management and wealth management activities conducted by Deutsche Bank AG or any of its subsidiaries Clients 

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.

Important risk information 

Bond and loan investments t are subject to interest-rate t t and credit risks. When 

interest rates rise, bond prices generally fall. Credit risk refers to the ability of 

an issuer to make timely payments of principal and interest. Investments in 

lower-quality ("junk bonds“) and non-rated securities present greater risk of 

loss than investments in higher-quality securities. Floating-rate loans tend to 

be rated below investment grade. The fund may use derivatives, including as 

part of its Global Tactical Asset Allocation (GTAA) strategy. Investing in 

derivatives entails special risks relating to liquidity, leverage and credit that 

may reduce returns and/or increase volatility. In certain situations, it may be 

difficult or impossible to sell an investment at an acceptable price. This fund is 

non-diversified and can take larger positions in fewer issues, increasing its 

potential risk. The fund may lend securities to approved institutions. See the 

prospectus for details.

01 

Deutsche Asset & Wealth Management 

overview

Deutsche Asset & Wealth Management 

One of Deutsche Bank’s four strategic t pillars and an 

integral part of the bank’s long-term growth strategy 

Private & 

Business 

Clients 

Corporate 

Banking & 

Securities 

Deutsche Bank 

Overview 

— Deutsche Asset & Wealth Management 

is one of the world's leading investment 

organisations with $1.2 trillion of invested 

Regional Management assets as of 12/31/12. 

1 

Asset & 

Wealth 

Management 

Global 

Transaction 

Banking 

Non-Core 

Operations 


offers a comprehensive range of fiduciary 

products and solutions for our customers 

within a strong governance framework to 

ensure that we act in the best interests of 

our clients. 


serves individuals and institutions 

worldwide to help protect and grow their 

wealth, offering traditional and alternative 

investments across all major asset 

classes. 

Infrastructure 


also provides customised wealth 

management solutions and private 

banking services to high-net-worth 

individuals and families. 

Source: Deutsche Asset & Wealth Management as of 12/31/12 


& Wealth Management 

Investment products: No bank guarantee I Not FDIC insured I May lose value

Full suite of fixed-income capabilities 

Low volatility Core and core plus Sector-based Solutions-based/absolute return 

Country — U.S. liquidity 

management 

— U.S. short duration 

— U.S. stable value 

— Sterling liquidity 

management 

Regional — Euro liquidity 

management 

— Euro short duration 

— U.S. core 

— U.S. core plus 

— U.S. corporate inv grade 

— Australia core plus 

— Korean fixed income 

— Philippines fixed income 

— Singapore fixed income 

— Switzerland fixed income 

— UK fixed income 

— Japanese fixed income 

— Asian fixed income 

— Euro aggregate 

— Euro government 

— Euro corporate inv grade 

— Euro indexed and indexed 

enhanced 

— Euro collateralized 

— U.S. high yield 

— U.S. high yield (BB-rated) 

— U.S. short duration HY 

— U.S. loans 

— U.S. loans (BB-rated) 

— U.S. MBS 

— U.S. municipal 

— European high yield 

— European convertibles 

— European ABS 

— European loans 

— Emerging market debt 

Global — Short duration — Aggregate 

— 

— 

Government 

Corporate inv grade 

— Credit 

— Indexed and indexed 

enhanced 

— Diversified fixed income 

— Global high yield 

— LIBOR plus 

— 

— 

Convertibles 

Structured t finance 

— 

— 

Absolute return strategies 

Asset allocation products 

— Currency overlay 

— Return based solutions 

— Duration based solutions 

— Liability driven investing 

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 

lower the rating, the higher the probability of default. Credit quality does not remove market risk and is subject to change. 


& Wealth Management Investment products: No bank guarantee I Not FDIC insured I May lose value 6

02 g 

Floating-rate loan overview

Key distinctions: experience, research depth, culture 

Experienced global team 

Deep resources, nimble process 

A culture of risk management 

— Two dedicated portfolio 

managers supported by 

17 analysts 

— With an average of 17 years of 

industry experience, the team 

members have managed 

through multiple credit cycles 

— Extensive network of company 

relationships 

— Coverage of over 500 global 

credits in the sub-investmentgrade 

universe 

— Combined high yield and loan 

team conducts research across 

the full capital structure 

— Real-time access to a global 

network of analysts 

— Small teams within the larger 

global group facilitate nimble 

decision-making 

— At the strategy level: risk 

management is embedded 

throughout the process 

— At the firm level: systemic 

controls, internal audit, 

compliance and legal 

— Our approach typically results 

in outperformance in bear 

markets and slight 

underperformance in 

bull markets 




A global team of high-yield and loan experts 

Experienced team has managed portfolios through h 

multiple credit cycles 

Head of research 

High-yield portfolio 

management 

Loan strategy 

portfolio management 

Transaction management 

(for loans) 

— Europe: 8 analysts 

— U.S.: 10 analysts 

(see next page for detail) 

— 3 portfolio managers 

(15 years) 

— 1 assistant portfolio 

manager/trader 

— 2 portfolio managers 

(32 years) 

— 1 trader 

— 6 professionals 

— 1 portfolio analyst/trader 

— 1 portfolio analyst 


Note: ( ) years = Average years of industry experience. 



Deep issuer coverage by industry experts 

Coverage of over 500 credits in the sub-investment-grade t universe 

Industry analysts 

Healthcare 

Experience of 

research analyst 

18 (group head) 

Food service 1 

Metals & mining, oil and gas, tourism, hotels & leisure, gaming, business services 26 

Tl Telco and cable, healthcare and pharmaceuticals, food and dbeverage, ecological lservices 20 

Paper & packaging, metals/mining, steel, technology 20 

Energy, oil and gas, utilities 19 

Banking, finance, insurance, investments, diversified conglomerate, manufacturing 19 

Autos, building products, chemicals 18 

Consumer & household products, textile/apparel, home builders, gaming, hotels, leisure, retail 17 

Cable, media & broadcasting, telecom 18 

Energy, basic industry, services 14 

Diversified conglomerate services, printing and publishing, real estate, beverage food and tobacco 14 

Airlines & transportation, aerospace and defense, entertainment, agriculture, environmental 12 

Media, food 12 

Media, retail 2 

Media and publishing, chemicals, automotive, healthcare 12 

Chemicals, telecom 12 

Autos, capital goods, technology, retail 11 

Average: 

15 years 

Based in Frankfurt 

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 

bond deals. 



03 p 

Investment process

A distinctive approach 

Philosophy 

We believe that default avoidance is the most significant driver of returns in the belowinvestment 

grade space. Issue selection is therefore the most important investment 

decision. 

Investment style 

Our “best ideas” portfolio 

— Our portfolio construction process is index-agnostic 1 

Bottom-up portfolio construction 

— Issue selection decisions drive sector allocations 

Target index-level risk, emphasizing the “belly” of the high-yield ratings spectrum 

— We focus on loans in which we have high conviction of repayment at face value 

(1) Though not a relevant factor in issue selection, the index is considered for risk management purposes in the portfolio construction phase. 



One transparent, global process 

Our process is designed to achieve consistent excess returns with risk 

management and accountability at every step 

Research and decision-making 

Alpha specialists 

— Conduct research and alpha 


— Communicate signals in consistent 

framework 

— Minimize time decay of research 

Portfolio design and construction 

Portfolio construction ti team 

— Creates a model portfolio 

based on alpha signals 

Implementation 

ti 

Dedicated portfolio managers 

— Implement client portfolio 

Process management 

Process manager 

— Actively and continuously evaluates signal quality and risk exposures 

Alpha refers to returns in excess of a benchmark’s return. 



Research: generating and conveying alpha ideas 


ti 



Alpha specialists 

— Conduct research and alpha 


— Communicate signals in consistent 

framework 

— Minimize time decay of research 




Credit research: the foundation for alpha generation 

Issuer analysis 

Quantitative 

— Balance sheet analysis 

— Profit and loss 

— Cash flow 

— Ratios 

Qualitative 

— Management 

— Regulatory environment 

— Specific industry and 

company risks 

Instrument-specific 

— Prospectus 

— Structure 

— Liquidity 

— Documentation 

Results 

Long-term view 

Current internal rating 

Investment 

platform 

Short-term view 

Relative value + absolute return 



Fundamental analysis: at industry, issuer and 

issue levelsl 

Most critical step 

Industry Issuer Issue 

Competitive landscape 

Cash flow analysis 

— Structural protection 

— Broad access to internal and 

external industry expertise 

Industry trends 

— Cash flow modeling through 

financial analysis 

— Evaluate issuer’s entire capital 

— Collateral, covenant and 

capital structure 

— Sponsorship 

— Focus on medium term 

outlook 

— Keep abreast of technological 

innovations 

structure to get complete 

picture of 

cash flows 

Competitive positioning 

— Management assessment 

— Market position relative 

to peers 

Risk evaluation 

— Assess downside risk through 

stress-case modeling 

— Restructure risk 

— Probability-weighted scenario 

analysis 

— Pricing and liquidity 

— Refinancing and market risk 

Outcome: 

Assessment of intrinsic value 



Research conveyed globally via real-time signalling 

Drawing from management discussions and independent research, 

analysts develop views on alpha sources 

Long-term view 

Short-term t view 

— Strategic, longer-term assessment of fundamental 

credit drivers 

— Risk signalling (long, neutral, short) 

— Time horizon orientation 

— News flow assessment 

— Tactical, shorter-term assessment of price within a 

longer-term trend 

— Risk signaling (scale of +4 to -4) 

— Target return orientation 

— Profit and loss review levels 

— Volatility rating 

Analysts disseminate views 24/7 through shared global platform 

Source: Deutsche Asset & Wealth Management as of 12/31/12 for illustrative purposes only. 



Real-time communication of analysts’ views 

Drawing from management discussions and quantitative research, 

analysts express long- and short-term views on alpha sources 

Tactical, shorter-term 

assessment of price 

within a longer-term 

trend 

— Risk signalling 

(scale of +4 to -4) 

Strategic, longer-term 

assessment of 

fundamental credit 

drivers 

Signals on multiple 

l 

securities of a single 

issuer 

Source: Deutsche Asset & Wealth Management as of 12/31/12, for illustrative purposes only. 

The material does not constitute investment advice and should not be relied upon as a basis for any investment decision. 



Construction & design: model portfolio is the starting point 

The model portfolio is built by the portfolio construction team and serves as 

the basis for risk management, quality control and low dispersion 


ti 



Portfolio construction ti team 

— Creates a model portfolio 

based on alpha signals 




Model portfolio: shaped by analysts’ views, 

market factors 

Factors that influence model portfolio: 

Analysts’ research 

— Macro considerations 

Desired risk exposure based on 

economic environment, default 

expectations, and market 

technicals 

— Credit research 

Long-term and short-term alpha 

signals from the credit analysts 

— Risk management metrics 

Volatility scenario analyses 

from the analyst 

Position and sector limits 

— Limit the maximum exposure of 

individual obligors to 3% 

— Sector weights are limited by 

the greater of 2x the index 

or 15% 

Market considerations 

— Liquidity of the bonds 

— Transaction costs 



A highly experienced portfolio construction team 

Model portfolio construction is the responsibility of the 

Portfolio Construction Team (PCT) 

Floating-rate loans 

Name Title Role Years experience 

Ty Anderson Managing director Portfolio manager 31 

Eric Meyer Managing director Portfolio manager 32 




Avoiding distressed issuers to manage asymmetric risk 

S&P rating distribution 

35% 

30% 

25% 

20% 

Our focus on the mid-section 

of the high-yield universe 

helps limit “tail” risk 

15% 

10% 

5% 

0% 

A+ A A‐ BBB+ BBB BBB‐ BB+ BB BB‐ B+ B B‐ CCC+ CCC CCC‐ CC C D NR 

Loan strategy 

LSTA 

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 

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 

an investment’s returns vary from the investment’s average return over a certain period. 



Implementation: a dedicated manager for every portfolio 



ti 

Dedicated portfolio managers 

— Implement client portfolio 





Responsibilities are delineated; accountability is clear 

Full accountability promotes alignment of interests with those of clients 

Responsibilities of portfolio construction ti team 

Responsibilities of dedicated di d portfolio managers 

— Creates model portfolios 

— Adopts alpha signals after assessment of 

risk, liquidity, capital, transaction costs 

— Implements client portfolio, reflecting model 

portfolio, in accordance with clients’ risk 

profile and guidelines 

— Seeks to minimize alpha slippage 



Process management: a crucial part of risk management 


ti 




Process manager 

— Actively and continuously evaluates signal quality and risk exposures 



Process management is essential to decision quality 


Actively and continuously evaluate decision quality and risk exposure 

Analysis and decision-making 

i Portfolio design and construction 


Decision-level diagnostics 

Portfolio design diagnostics 

Client portfolio 

— Decision-level controls 

— Portfolio-level controls 

— Portfolio control and review 



Multi-dimensional risk management throughout 

the process 

Embedded risk management 

Implementation tools 

Ongoing credit review Asset diversification Firm risk management 

— Relative value 

discussions with 

feedback loop to 

portfolio construction 

— Best execution 

practices 

— Active use of 

technology 

— Scenario analysis — Industry exposure 

limits: greater of 

— Maintain contact with 

15% or 2X the index 

issuer 

weight 

— Daily and monthly 

— 3% maximum issue 

portfolio monitoring 

concentration 

and risk reports 

— Formal quarterly 

strategy review 

— Manage portfolio risk 

exposures 

— Systematic monitoring 

— Internal audits 

— Compliance 

— Legal settlement 

Diversification cannot protect against a loss. 



Deutsche Asset & Wealth Management fixed income: 

experience, depth, culture 

Experienced global team 

Deep resources, nimble process 

A culture of risk management 

— Two dedicated portfolio 

managers supported by 

17 analysts 

— With an average of 17 years of 

industry experience, the team 

members have managed 

through multiple credit cycles 

— Extensive network of company 

relationships 

— Coverage of over 500 global 

credits in the sub-investmentgrade 

universe 

— Combined high yield and loan 

team conducts research across 

the full capital structure 

— Real-time access to a global 

network of analysts 

— Small teams within the larger 

global group facilitate nimble 


— At the strategy level: Risk 

management is embedded 

throughout the process 

— At the firm level: Systemic 

controls, internal audit, 

compliance and legal 

— Our approach typically results 

in outperformance in bear 

markets and slight 

underperformance in 

bull markets 




04 Current opportunity in loans

What are floating-rate loans 

Characteristics 

— Floating-rate loans, also referred to as bank loans, leveraged loans or syndicated loans, are 

loans with floating-rate coupons that are generally senior secured debt of 

below-investment-grade corporate issuers 

— Coupons or income are tied to a variable rate, most commonly the London Interbank 

Offered Rate (LIBOR) and generally reset every 30-90 days 

— Floating-rate loans are most often secured assets that can be transferred to debt holders in case 

of default, providing potential downside protection 

Benefits of floating-rate loans 

— Historically, i floating-rate t loans have experienced lower default rates and higher h recovery rates 

than that of traditional non-investment-grade bonds 

— More structural protection (collateral and maintenance covenants) than traditional 

non-investment-grade bonds 

— Floating-rate coupon potentially leads to less interest-rate sensitivity than 

traditional bonds 

LIBOR, or the London Interbank Offered Rate, is a widely used benchmark for short-term term taxable interest rates. Coupon is the interest rate, expressed as an annual 

percentage of face value, which a bond issuer promises to pay until maturity. 



Repayment hierarchy gives preference to loans 

Loans are the most senior debt 

in the capital structure of 

non-investment-grade firms 


Implication: Interest t and principal 

i is paid before bond and 

equity holders 


(Senior secured) 

Junior secured capital 

Second-lien loans 

Mezzanine loans 

Unsecured capital 

High-yield bonds 

First loss capital 

Equity 

Source: Deutsche Asset & Wealth Management as of 12/31/12. 



Loans offer several benefits and distinctions 

U.S. loans 

U.S. high-yield ield bonds Relative e benefits and implications 

Senior 

Senior or 

subordinated 

Loans are the most senior debt in the capital structure of non-investment-grade firms 

— Interest and principal is paid before bond and equity holders 

Secured Unsecured Loans are usually secured by assets, which support higher recovery rates. 

— Historically, recovery rates for defaults have averaged over 80% 

Covenants Lighter covenants Loans typically have stronger financial covenants than bonds 

— Greater protection for investors 

Floating-rate Mostly fixed-rate Loans offer floating-rate coupons 

— Potentially less interest-rate risk 

6-9 year term 7-10 years term Loans are generally slightly shorter term 

— Less term risk 

Lower liquidity Higher liquidity 

Loans generally are less liquid than high-yield bonds 

— Selling loan positions quickly could be difficult 

Callability Call protection Loans are generally callable with little or no premium 

— When capital markets are open, loans trading above par are often refinanced at 

tighter spreads 




Broad issuer base offers diversified exposure 

Floating-rate loans are 

issued by well-known 

companies—such as 

Georgia Pacific, 

Bausch & Lomb and 

Goodyear—across a 

wide range of 

industries 

Healthcare 

Business equipment and services 

Publishing 

Electronics 

Utilities 

Financial intermediaties 

Retailers 

Telecommunications 

Automotive 

Broadcast radio and television 

Lodging and casinos 

Chemical/plastics 

Cable and satellite television 

Oil and gas 

Food service 

Food products 

Aerospace and defense 

Leisure 

Drugs 

Insurance 

Other 

3.90% 

3.75% 

3.68% 

3.64% 

3.51% 

2.84% 

2.46% 

2.40% 

2.26% 

2.18% 

1.87% 

1.80% 

5.97% 

5.79% 

5.79% 

5.52% 

5.39% 

5.36% 

8.02% 

10.28% 

13.60% 

0.00% 2.00% 4.00% 6.00% 8.00% 10.00% 12.00% 14.00% 16.00% 

Source: Standard d & Poor‘s as of 12/31/12. Data is for illustrative i purposes and does not represent any DWS Investments fund. As of 3/31/13, DWS Floating Rate Fund held 0% in 

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 

profitable, and should not be construed as a recommendation of any specific security. Current and future portfolio holdings are subject to risk. 



Average default and recovery rates 

Historically, defaults on loans have been significantly lower 

than defaults of traditional high-yield investments 

A recovery rate is the percentage of debt repaid to an 

investor in the case of default. The higher the recovery rate, 

the better 

80.6% 

5.86% 

48.6% 

3.00% 

28.5% 

Average default rate from 2001-2012 Average recovery rate from 1987-2012 

Floating-rate loans High-yield Senior unsecured Subordinated debt 

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 

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 

disbursement, bankruptcy, distressed exchange or an ongoing covenant violation. Average recovery rates over other time periods might not be as favorable. 



Important information 

OBTAIN A PROSPECTUS 

To obtain a summary prospectus, if available, or prospectus, download one from www.dws- 

investments.com, talk to your financial representative or call (800) 728-3337. We advise you to carefully 

consider the product’s objectives, risks, charges and expenses before investing. The summary prospectus 

and prospectus contain this and other important information about the investment product. Please read the 

prospectus carefully before you invest. 

Investment products offered through DWS Investments 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. 

DWS Investments Distributors, Inc. 

222 South Riverside Plaza Chicago, IL 60606-5808 

www.dws-investments.com t service@dws.com 

Tel (800) 728-3337 

©2013 Deutsche Asset & Wealth Management. All rights reserved. (5/13) R-20623-4

Presentation DWS Floating Rate Fund - DWS Investments

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