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FUTURE OF PASSIVEFiona BassettManaging Director

Global Co-Head Product and Global Co-Head Passive, DWS


PASSIVE SET TO SURPASS ACTIVE IN NEXT 4 YEARS

For institutional use and registered representative use only. Not for public viewing or distribution. Investment products: No bank guarantee I Not FDIC insured I May lose value. / 3

Source: Morningstar as of 2/28/19. Passive assets exclude leveraged. Projected asset levels use 5yr CAGR as of Feb 2019.

Passive 5yr annualized growth at 16.2% vs. active at 2.9%

U.S. MUTUAL FUND AND ETF ASSETS, USD TN2010 to 2018, projected 2019 to 2023 based on 5yr CAGR

$-

$2

$4

$6

$8

$10

$12

$14

$16

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019E 2020E 2021E 2022E 2023E

Active AUM (USD tn) Passive AUM (USD tn)

UNEQUAL PENETRATION ACROSS ASSET CLASSES


Source: Morningstar as of 2/28/19. Passive assets exclude leveraged. Projected asset levels use 5yr CAGR as of Feb. 2019.

Passive breaching equity majority; slower adoption in fixed income

U.S. MUTUAL FUND AND ETF AUM BY ASSET CLASS, USD TN, PASSIVE MARKET SHARE %Feb 2019

PassiveActive

$4.0

$1.2 $1.3 $0.1 $0.5

$4.3

$2.7 $1.8

$1.2 $0.4 $0.7

$0.1 $0.0 $-

$1

$2

$3

$4

$5

$6

$7

$8

$9

US Equity Taxable Bond International Equity Allocation Sector Equity Municipal Bond Alternative Commodities

49%

32%

6%

41%

68%

55% 5%8%

FIXED INCOME ETF EDUCATION SLOW BUT STEADY


Source: DWS, SSGA, Blackrock, AQR as of 2018. Morningstar, for calendar year 2008. “Multi-sector” index represented by the Bloomberg Barclays U.S. Universal Index. “Term” index represented by the Bloomberg Barclays U.S. Aggregate Index. “Ultra-short” index represented by the ICE U.S. Treasury Short Bond Index. “Short-term” index represented by the Bloomberg Barclays 1-3 Yr Credit Index. Index performance does not reflect any management fees, transaction costs or expenses. Indexes are unmanaged and one cannot invest directly in an index. Past performance does not guarantee future results.

Misconceptions have led to slower adoption rates

MAJOR MYTHS AND REALITIES ABOUT FIXED INCOME ETF INVESTING

Myth 1 Fixed income ETFs do not have enough cash to meet redemptions

Reality: Fixed income ETFs don’t actually need cash to meet redemptions, because they transact in kind, delivering bonds rather than cash. Unlike an open ended mutual fund, an ETF manager does not have to sell bonds to raise cash.

Myth 2 Fixed income ETFs are constrained by the fund’s liquidity

Reality: Fixed income ETFs are at least as liquid as the underlying market. If an ETF develops a secondary market, that liquidity is additive to the underlying cash market.

Myth 3 Index investing doesn’t work for bonds because there are too many bonds to index efficiently

Reality: An index investment manager’s objective is to seek to track an index’s return with minimal tracking error. The objective is to not hold every bond in the index.

Myth 4 Fixed income ETFs underperform active managers when markets are volatile.

Reality: In 2008, the median multi-sector active manager unperformed the index by 18.6%, the median intermediate-term bond active manager underperformed by 6.2%, ultra-short by 5.1%,short-term by 3.3%.

Myth 5 Active fixed income managers consistently outperform by exploiting inefficiencies in the bond market

Reality: Many active funds have relied on investments in higher risk sectors to outperform the Bloomberg Barclays U.S. Aggregate Bond Index, resulting in higher correlations with equities and less diversification benefits.

PASSIVE OWNERSHIP OF THE STOCK MARKET


Source: Wall Street Jourmal, Strategic Insight Simfund. 2018 figure as of September.

How high is too high?

U.S. EQUITIES HELD BY INDEX FUNDS, AS A % OF THE WILSHIRE 5000

0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018

17.2%

LITTLE EVIDENCE OF CAPITAL MARKET IMPACT


Source: Vanguard, FactSet, Morningstar as of 2018. Dispersion is defined as the percentage of stocks in the Russell 3000 Index that have either outperformed or underperformed the index by at least ten percent. Index fund percentage is the percentage of assets in U.S.-domiciled equity funds invested in index funds. Past performance is not a guarantee of future results. Equity index returns include reinvestment of all distributions. Index returns do not reflect fees or expenses, and it is not possible to invest directly in an index.

No connection between indexing and price dispersion

RETURN DISPERSION LACKS CORRELATION TO RAPIDLY GROWING PASSIVE MARKET SHARE

0%

10%

20%

30%

40%

50%

0%

20%

40%

60%

80%

100%

1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Russell 3000 annual return dispersion (LHS) Passive market share (RHS)

PASSIVE FUND INDUSTRY HIGHLY CONCENTRATED


Source: Broadridge as of 2018, Exploring Fund Industry Concentration: The Good, The Bad, and The Uknown. HHI represents quantitative measure of industry concentration.

Passive HHIs among highest in U.S. economy; active more diversified

RELATIVE CONCENTRATION OF MAJOR U.S. INDUSTRIES, HERFINDAHL-HISRCHMAN INDEX (HHI), 2018

Gas utilities Variableannuities

Overall fundindustry

Mutual funds Closed endfunds

US auto Domesticairlines

US railroads ETFs Carbonated softdrinks

Index mutualfunds

Unconcentrated

Moderately concentrated

Highly concentrated

CHANGING REGULATORY LANDSCAPE


The opinions and forecasts expressed are as of 3/31/19, and may not actually come to pass. ALPS Distributors, Inc. is not affiliated with Vanguard or Eaton Vance.

ETF Rule ProposalFinal expected 2019

_ Lower barrier to entry for new issuers and new products_ Standardization of regulations governing ETF exemptive relief, putting issuers on ‘level footing’_ Additional disclaimers required around ETF trading (i.e., bid-ask spreads)_ All issuers will be able to deliver custom in-kind redemptions_ Allows for greater innovation in fixed income ETFs

Department of LaborVacated 2018

_ Proposed expansion of fiduciary requirement for all advisors dealing with retirement accounts_ Inertia caused by proposed rule led to standing changes at some firms_ Response included move to wrap accounts vs. transaction based fee structures_ Broader mindset shift: fees in focus, open architecture models

Non-transparent ETFsExpected 2019

_ Will give active strategies access to tax efficiency of ETFs_ SEC reviewing relief filings for various non- or semi-transparent active ETF structures_ Diminishes advantage of Vanguard’s patented share class model_ First model is live: Eaton Vance ETMFs have not seen much traction_ Will delineate to what degree rise of passive is due to efficiency of vehicle vs. fundamental strategy shift

MARKET INCREASINGLY CROWDED: 144 PLAYERS


Source: Morningstar as of Feb. 2019. Top 2 providers: iShares & Vanguard.

GROWTH IN U.S. ETP ASSETS, USD TN$Trillion

U.S. ETP FIRMS – NET NEW ENTRANTS YOY45 platforms have closed or merged since 2008

Source: Morningstar as of Feb. 2019.

Assets remain concentrated: top 3 providers own 81% market share

$-

$1

$2

$3

$4

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Total ETF market Top 3 providers

123

30

8 25

78

13

199

22

21

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

20.2%

% Compound annualized growth rate (CAGR)

RATE OF FEE COMPRESSION UNSUSTAINABLE


Source: Morningstar as of December 2018. Projections based on 2018 asset-weighted fee levels using 5yr CAGR. The opinions and forecasts expressed are as of 3/31/19, and may not actually come to pass.

Margin squeeze could force consolidation of managers

ASSET WEIGHTED FEES OVER TIME, PROJECTED THROUGH 2025

0.62%

0.13%

0.45%

0.00%

0.20%

0.40%

0.60%

0.80%

1.00%

1.20%

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025

Active Passive All Funds

$0.1 $0.2 $0.3

$0.6 $0.5

$1.0

$1.3

$2.1

$2.5

$3.4 $3.4

1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

ETFS: A TIMELINE OF INNOVATION


Source: Vanguard, Morningstar as of 2019.

Evolution beyond market-cap products as market grows

U.S. ETF ASSET GROWTH, USD TN

First non-market cap ETF

First non-1940 Act ETF

First active ETF

Record 269 US ETFs launched

U.S. ETF assets hit $1 tn

Record 81 U.S. ETFs close

Record $100bn flows into fixed income ETFs

128 ETFs close as assets hit $2.5tn

Record 258 ETFs launch

First U.S. ETF launches First bond ETF

1332 35 32 36 41 34 31 21

456

11169

112

177

112 95

150

210 209 204

50

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

10.5% 31.7% 23.8% 15.3% 24.3% 30.1% 18.5% 12.9% 9.1% 18.1% 10.7%

PRODUCT LAUNCHES REQUIRE MEANS OF SCALE


Source: Morningstar, Bloomberg as of March 2019. Includes only funds with lifespan of 1 year or greater.

ETF LAUNCHES TO REACH $100M AFTER ONE YEAR

Funds require size for major platform onboarding: need for early assets

Over $100m Less than $100m

SELF-SCALE

OR

STRATEGIC PARTNERSHIPS

INSTITUTIONALIZATION OF RETAIL


Source: Citi Research, March 2019. Fuse Research, July 2018. Growth rate 2yr CAGR.

ASSETS INFLUENCED BY HOME OFFICE MODEL, 2018 PRODUCT SHELF RATIONALIZATION, JUL 17 TO DEC 18Number of product cuts announced, % of total product shelf

Source: Cerulli Associates, McKinsey Asset Management Practice as of 2018.

Critical role of home office models and consolidated product approvals

4.7%

0%

10%

20%

30%

40%

50%

Overall Wirehouse IBD RIA

5.6% 6.1% 2.2%

1,500

1,300

900

840

Wealth manager 1

Wealth manager 2

Wealth manager 3

Wealth manager 4

~42%

~37%

~31%

~20%

Annualized growth rate%

DISRUPTION OF ROBO STARTUPS SHORT-LIVED


Source: FUSE research as of April 2019. ALPS Distributors, Inc. is not affiliated with any of the companies listed on this slide.

Robo-Advisor market wallet projected to surpass $1tn by 2023

U.S. ROBO-ADVISOR MARKET SHARE, PROJECTED THROUGH 2021

Startups (Betterment, Wealthfront, Acorns, etc) Incumbents (Vanguard, Edelman, etc)

Incumbent Brokers (Fidelity, Merrill Edge, Schwab, TD Ameritrade, E-trade, etc)

11%20%

37%51%

60% 65% 67%

35%19%

67%58%

49%38%

31% 27% 26%

65%81%

22% 22%14% 11% 9% 8% 7%

2013 2014 2015 2016 2017 2018E 2019E 2020E 2021E

401(K) FLOWS TURN NEGATIVE AS BOOMERS RETIRE


Source: Investment Company Institute, U.S. Federal Reserve Board, U.S. Department of Labor, Morningstar as of Feb 2019. *Vanguard AUM not a subset of 401(k) assets.

Gross inflows increasingly captured by passive: Vanguard target date funds

TOTAL AND NET CONTRIBUTIONS FOR 401(K) PLANS, USD BN, 1994-2016

Total contributions Net contributions Vanguard Target Date AUM*

$(50)

$-

$50

$100

$150

$200

$250

$300

$350

$400

$450

1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016

First Baby Boomers retire

U.S. INSTITUTIONS: ETFS AVERAGE 25% FIRM ASSETS


Source: Greenwich Associates 2019. Respondents: 144 institutions including 44 investment managers, 37 institutional funds, 33 insurance companies/ insurance company asset managers, 56 RIAs, 11 investment consultants, representation from family offices. Greenwich Associates 2018 U.S. Insurance ETF Study based on 52 respondents.

ETF ALLOCATION NON-USERS: REASONS FOR NOT USING ETFS, 2018

U.S. INSURERS AMONG SLOWEST ADOPTERS, 2018 INVESTED IN OR CONSIDERING INVESTMENT TO SMART BETA ETFS

Overall index allocation sits at 39%: possibly increasing adoption of ETF vehicle

18.5%

24.8%

2017 2018

37%44%

75%

2016 2017 2018

(% Total assets, 2018)38%

21%

13%

13%

8%

Not approved vehicle within organization

Portfolio investment guidelines do notpermit ETFs

Prohibited from buying ETFs

Not aware of the benefits of ETFs

Don't understand hoe ETFs work in aportfolioDon’t understand how ETFs work

in a portfolio

62%

12%

8%

19%

Currently Use ETFs

Do not currently use ETFs but have inthe past

Evaluated using ETFs but decidedagainst

Never seriously considered using ETFs

Currently use ETFs

ETFS AS A STRATEGY AGNOSTIC VEHICLE


Source: Greenwich Associates 2019. Morningstar as of 2018.

HOW U.S. INSTITUTIONS USE ETFS, 2018 GROWTH OF SMART BETA, U.S. ETF ASSETS

Still primarily seen as implementation tool for asset allocation

72%

68%

60%

57%

56%

54%

44%

42%

37%

37%

Tactical adjustments

Core allocation

Rebalancing

Portfolio completion

International diversification

Liquidity management

Transition management

Risk/Overlay management

Interim beta

Cash equitization

0%

1%

2%

3%

4%

5%

6%

7%

$-

$100

$200

$300

$400

$500

$600

$700

$800

$900

2001 2003 2005 2007 2009 2011 2013 2015 2017

Multi-Factor Single-Factor Multi-Factor (% Strategic Beta)

ACTIVE ETFS GROW AS CASH EQUITIZATION TOOLS


Source: Morningstar as of December 2018.

Dominated by ultrashort & other difficult to benchmark categories

ACTIVE ETF NNA BY YEAR, USD BN

Ultrashort Bond Total Active ETFs

$- $0 $0 $1 $1 $1 $3 $2 $5 $5

$10

$22

$0 $0 $1 $1 $2 $6 $4 $7

$9 $12

$20

$21

$-

$5

$10

$15

$20

$25

$30

$35

$40

$45

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

DEMOGRAPHIC SHIFT TOWARD ESG INVESTING


Source: MSCI, Accenture, Ernst & Young, Financial Advisor Magazine as of 2018.

$30 trillionWill pass from baby boomers to

millennials over the next 2–3 decades

51%Of personal wealth in the U.S. is now controlled by

women

ESG90%

90% of millennials want to allocate to responsible investments in the next five years

2x

Women are twice as likely to consider sustainability alongside return when investing

GROWTH OF THE U.S. ESG MARKET


¹ McKinsey as of 2017.Source: Morningstar as of 12/31/18. Data represents U.S. domiciled ETFs and Mutual Funds. Other includes Alternatives, Commodities and Allocation funds.

Sustainable investing as the new normal

_ Do well and do good: the market has evolved past the idea of ESG requiring a sacrifice in returns

_ ESG data can potentially help mitigate against both idiosyncratic and systematic risks

_ ESG integration, which is the systematic and explicit inclusion of ESG factors in financial analysis, has been growing at 17% per year.¹

U.S. ESG ASSETS IN USD BN NUMBER OF U.S. ESG FUNDS

-

100

200

300

400

500

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

Equity Fixed Income Other

0

100

200

300

400

500

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

(12/31/99-12/31/18) (12/31/99-12/31/18)

THE RISE OF DIRECT INDEXING


Source: DWS as of March 2019.

IMPROVING TECHNOLOGY

TAX LOSS HARVESTING

RISK CUSTOMIZATION

ESG CUSTOMIZATIONMANAGEMENT COMPLEXITY

TRADING COSTS

HIGH ASSET MINIMUMS

CONSPROS

DWS PASSIVE FRANCHISE


Source: DWS. All data as of 12/31/18 unless marked otherwise.¹ ETFGI Global ETF and ETP industry insights as of 9/30/18, based on AUM.

PASSIVE HIGHLIGHTS ASSET CLASS BREAKDOWN

ASSETS UNDER MANAGEMENTFigures in $bn

31.4

78.8

10.9 5.8

0306090

120150

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Segregated Mandates ETFs (Europe-domiciled) ETFs (U.S.-domiciled) ETCs

$127.0bnTotal

years of experience inphysical index replication 20

tracked benchmarks300+ETF/ETP provider based in Europe1No.2

passive investment professionals100+ Others 0.3%

Equity 68.9%

Fixed Income 25.0%

Commodities 4.9%

Multi-Asset 4.9%

INDEX INVESTING VALUE PROPOSITION


Our value proposition: Thought Leader providing better cost- & risk-adjusted returns for investors

DWS XTRACKERS

_ Implement value-add, systematic investment strategies for markets that are already covered

INNOVATION

Quality Risk Adjusted Exposures

Current examples:_ ESG Equity_ Currency Hedged Equity_ Multifactor Equity

Pipeline:_ ESG Fixed Income_ ESG REITs

_ Open new markets or slice already covered exposures in a new way

ACCESS

New Exposure Coverage

Pipeline:_ Credit Risk Transfers_ Thematic Equity

Current examples:_ China A-shares_ Revenue Muni Bonds_ International Bonds (currency-hedged)

_ Launch more cost effective solutions in selective, targeted areas

VALUE

Quality Value Proposition

Pipeline:_ Bank Loans

Current examples:_ High Yield Fixed Income_ International REITs

XTRACKERS ETFS AVAILABLE AT UBS


Available in AM Discretionary models. +Restrictions: Annual Income $50,000, Net Worth $150,000 and No risk profile requirements or a primary risk profile of aggressive or moderate.++Restrictions: Annual Income of $150,000, Net Worth of $500,000 and Primary or Secondary Aggressive risk profile.

ETF Brokerage Strategic Advisor PMP SWP

Currency-hedged equityXtrackers MSCI All World ex US Hedged Equity ETF + DBAW DBAW DBAWXtrackers MSCI EAFE Hedged Equity ETF + DBEF DBEF DBEF DBEFXtrackers MSCI Emerging Markets Hedged Equity ETF + DBEM DBEM DBEMXtrackers MSCI Europe Hedged Equity ETF + DBEU DBEU DBEU DBEUXtrackers MSCI Eurozone Hedged Equity ETF + DBEZ DBEZ DBEZXtrackers MSCI Japan Hedged Equity ETF + DBJP DBJP DBJP DBJPXtrackers MSCI South Korea Hedged Equity ETF + DBKO DBKO DBKO

EquityXtrackers Harvest CSI 300 China A-Shares ETF ++ ASHR ASHR ASHR

FactorXtrackers FTSE Developed Ex US Comprehensive Factor ETF DEEF DEEF DEEFXtrackers Russell 1000 Comprehensive Factor ETF DEUS DEUS DEUS

IncomeXtrackers MSCI EAFE High Dividend Yield Equity ETF HDEF HDEF HDEFXtrackers USD High Yield Corporate Bond ETF + HYLB HYLB HYLB

IMPORTANT INFORMATION


The material was prepared without regard to the specific objectives, financial situation or needs of any particular person who may receive it. It is intended for informational purposes only and it is not intended that it be relied on to make any investment decision. It is for professional investors only. It does not constitute investment advice or a recommendation or an offer or solicitation and is not the basis for any contract to purchase or sell any security or other instrument, or for DWS Group and its affiliates to enter into or arrange any type of transaction as a consequence of any information contained herein. Investment decisions should always be based on the Sales Prospectus, supplemented in each case by the most recent audited annual report and, in addition, by the most recent half-year report, if this report is more recent than the most recently available annual report. These documents constitute the sole binding basis for the purchase of fund units. The Sales Prospectus contains detailed information on the risks involved.

The views expressed constitute DWS’s or its affiliates’ judgment at the time of issue and are subject to change. Any forecasts provided herein are based upon our opinion of the market as at this date and are subject to change, dependent on future changes in the market. Any prediction, projection or forecast on the economy, stock market, bond market or the economic trends of the markets is not necessarily indicative of the future or likely performance. Investments are subject to risks, including possible loss of principal amount invested. The value of shares/units and their derived income may fall as well as rise. Past performance or any prediction or forecast is not indicative of future results.

Past performance is not indicative of future results. No representation or warranty is made as to the efficacy of any particular strategy or the actual returns that may be achieved. An investment is not a deposit and is not ensured by the Federal Deposit Insurance Corporation or any other government agency or by DWS or any of its affiliates.

Xtrackers ETFs (“ETFs”) are managed by DBX Advisors LLC or DBX Strategic Advisors LLC (the “Advisors”), and distributed by ALPS Distributors, Inc. (“ALPS”). The Advisors are wholly owned subsidiaries of DWS Group, and are not affiliated with ALPS.

CAREFULLY CONSIDER THE FUNDS’ INVESTMENT OBJECTIVES, RISK FACTORS AND CHARGES AND EXPENSES BEFORE INVESTING. THIS AND OTHER IMPORTANT INFORMATION CAN BE FOUND IN THE FUNDS’ PROSPECTUSES, WHICH MAY BE OBTAINED BY DOWNLOADING A PROSPECTUS AT WWW.XTRACKERS.COM. READ THE PROSPECTUS CAREFULLY BEFORE INVESTING.

SHARES ARE NOT INDIVIDUALLY REDEEMABLE, AND OWNERS OF SHARES MAY ACQUIRE THOSE SHARES FROM THE FUND, OR TENDER SUCH SHARES FOR REDEMPTION TO THE FUND, IN CREATION UNITS ONLY.

THE BRAND DWS REPRESENTS DWS GROUP GMBH & CO. KGAA AND ANY OF ITS SUBSIDIARIES, SUCH AS DWS DISTRIBUTORS, INC., WHICH OFFERS INVESTMENT PRODUCTS, OR DWS INVESTMENT MANAGEMENT, AMERICAS INC. AND RREEF AMERICA L.L.C., WHICH OFFER ADVISORY SERVICES.

© 2019 DWS Group GmbH & Co. KGaA. All rights reserved. R-67435-1 (5/19) DBX 3916 (5/20)

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