Roadshow 2012

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Ten Issues for 2012

Deutsche Bank Private Wealth Management

Charity Trustees Investors Association Seminar

April 2012

Roadshow 2012

Private Wealth Management

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Past performance is not indicative of future returns. No assurance can be given that any investment objectives and/or expected returns can be achieved.

Ten Issues for 2012

The Year(s) the Bill Comes Due1

Global Economic Governance in Transition2

Rewriting the “Social Contract”3

The World is Getting Smaller and More Complex4

Reason Should Dominate Emotion5

Safe May Not be Safe6

Walk Before You Run7

Big Will Grow Bigger8

Nimble... and Selective9

Asian Growth Generates Performance At Last10

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Past performance is not indicative of future returns. No assurance can be given that any investment objectives and/or expected returns can be achieved.

Data Source: FactSet

The Year(s) the Bill Comes Due1

— While the total bill is due over the coming decades, it is a deterioration of confidence that could cause the cost of funding this debt to become unmanageable.

— The gross interest expense on national debt was $414 billion in 2010, significantly higher than the amount of money used to fund programs such as the departments of labor, agriculture, veterans affairs and education.

The Interest Rate Challenge

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 20110.0%

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Eurozone (Current) Debt Weighted 10-Year Yield

U.S. 10-Year Treasury Yield

Heavy Redemptions in Europe

- Developed economies’ fiscal problems could come under pressure in early 2012 as the Eurozone has heavy re-financing needs during the first four months of the year.

Data Source: Deutsche Bank, Bloomberg Finance LP

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Source: National Central Banks, DB Research, Deutsche Bank Global Investment Solutions; December 2011

Account balance in bln. Euro

Creditors and Debtors in Euroland

— Euro-Core Countries Germany, Finland, the Netherlands and Luxembourg are creditors

— High debt in the peripheral countries.

— However, France as core country is a major debtor

Global economic governance in transition2

Past performance is not indicative of future returns. No assurance can be given that any investment objectives and/or expected returns can be achieved.

Main creditorCreditorBalancedDebtorMain debtor

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Public Spending at High Levels

5Past performance is not indicative of future returns. No assurance can be given that any investment objectives and/or expected returns can be achieved.

Data Source: Heritage Foundation, Tax Foundation and Internal Revenue Service

Rewriting the “social contract”3

Taxing the Consumer?

U.S. Taxes at Historically Low Levels

— Both income and corporate tax rates continue to be at the lowest levels in history.

— Increasing demands on government “entitlements” will likely necessitate higher taxes.

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Income Tax - Highest Marginal RateCorporate Tax - Highest Marginal Rate

Source: Factset, Deutsche Bank

Pre- changes Post-changes*France 60 62Greece 60 65Italy 65 67Portugal 62.5 65Netherlands 65 66Spain 65 67Ireland 65 68

Retirement age

– Most European countries will face their heaviest demographic burdens between 2025 and 2040, however Greece and Spain will face theirs sooner.

– Labour participation is another risk that further makes the pension system expensive. Greece, Italy and Spain, in particular, have low labour participation rate.

– One sustainable solution according to the International Monetary Fund is to increase the retirement age.

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MSCI Europe ex UK Correlation with S&P 500 (Rolling 90-Day)

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Heightened Rolling Correlation

Past performance is not indicative of future returns. No assurance can be given that any investment objectives and/or expected returns can be achieved.

— The correlation (90-day) between European equities (MSCI Europe ex UK) and U.S. equities (S&P 500) is near record high levels.

Data Source: FactSet Data Source: FactSet

The world is getting smaller and more complex4

Correlations to Remain Heightened

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S&P 500 Index - Number of Trading Days in Year With +/-1% Change

Over 90 trading days with price moves in excess of 1% have occurred eight times

in last 30 years

— Heightened volatility emerged again in 2011 as 95 trading days saw S&P 500 Index gains or losses in excess of 1%. This marked the third in four years in which more than 90 trading days saw swings of that magnitude.

— Over the last 30 years, the S&P 500 Index has seen more than 90 trading days with +/-1% changes only 8 times.

Heightened Volatility Remains

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Average Investor Has Missed a Lot of Alpha

7

Fund Flows to Equities

Past performance is not indicative of future returns. No assurance can be given that any investment objectives and/or expected returns can be achieved.

Reason Should Dominate Emotion

Historically, Emotions have Lead to Subpar Performance

— Fund flows tend to be a contrarian indicator. As inflows peak, the market is often more susceptible to experiencing a pullback.

— Currently, net new equity fund flows remain negative which could be a positive for equity performance.

Data Source: ICI Data Source: FactSet, DALBAR

— DALBAR’s 17th annual Quantitative Analysis of Investor Behavior Guide report shows that over the long term (last 20 years), the average equity and fixed income investor has dramatically lagged the “passive” benchmark indices.

'92 '93 '94 '95 '96 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11$-60,000

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Net New Sales Equity Funds, Millions of USD - U.S. (Left)S&P 500 - Price (Right)

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Average Equity Investor

S&P 500 Index Average Fixed Income Investor

Barclays Aggregate Bond Index

Average investor performance versus

benchmark over last 20 years (as of 2010)

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Interest Rate Sensitivity: A Small Yield Increase Can Have a Huge Negative Effect

Past performance is not indicative of future returns. No assurance can be given that any investment objectives and/or expected returns can be achieved.

Safe May Not Be Safe

Bond’s Could be More Volatile Than You Think

— The high interest rate sensitivity of bonds (e.g. high duration) means it does not take much movement in yields to lead to negative performance.

Data Source: Bloomberg Finance LPFootnote; Data as of 12.20.11 and returns are 12 month returns.

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Forecasted Range of Treasury Yields

6

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France CAC 40

EuroStoxx 50

German DAX UK FTSE MSCI Emerging Markets

S&P 500 Nikkei 225

Dividend Yield 10-Year Treasury Yield

Dividends a Global Theme

9

The Power of Dividend Compounding

Past performance is not indicative of future returns. No assurance can be given that any investment objectives and/or expected returns can be achieved.

Walk Before You Run

Dividend Paying Stocks Remain Attractive

— Since 1988, dividends have accounted for 69% of the total return of the FTALLShare.

Data Source: FactSet, DB Data Source: FactSet,DB

— The dividend theme is a global theme as many major equity indices around the globe have dividend yields in excess of 2%.

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69%

31%

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U.S. Large Caps Trade at Discount

10

European Large Caps Trade at Discount

Past performance is not indicative of future returns. No assurance can be given that any investment objectives and/or expected returns can be achieved.

Fundamentals Globally Favour Large Cap

— UK large cap stocks are trading at a discount relative to UK mid and small caps.

— S&P 500 large cap stocks are trading at a discount relative to the S&P mid and small caps.

Big Will Grow Bigger8

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 201170.0%

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S&P 500 (Large Cap) PE Ratio / S&P Small Cap 600 PE Ratio

S&P 500 (Large Cap) PE Ratio / S&P Mid Cap 400 PE Ratio

Data Source: FactSet, DB Data Source: FactSet, DB

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Relative to 15-Year Average

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Looking for Attractive Valuations

Past performance is not indicative of future returns. No assurance can be given that any investment objectives and/or expected returns can be achieved.

Be Nimble… and Selective

Fundamental Factors

— The three most attractively valued sectors include healthcare, information technology, and energy.

Data Source: FactSet Footnote: Relative to 15 year average P/E, P/BV, P/S, PEG, EV/EBITDA

9

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IMF 2011 Estimates – Debt-to-GDP Ratios by Country (Top 75 Countries)*

Past performance is not indicative of future returns. No assurance can be given that any investment objectives and/or expected returns can be achieved.

Asia has Financial Flexibility

Data Source: International Monetary Fund. Source: Deutsche Bank Investment Strategy Group. Footnote: *Ranked by 2011 estimates of GDP (in USD)

Debt-to-GDP Ratio (%)

Over 100% 80% to 99.9% 60% to 79.9% 40% to 59.9%20% to 39.9% 0% to 19.9%

Not a Top 75 Country in Terms of 2011 GDP (in USD)

Asian Growth Generates Performance At Last10

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13

What Does it Mean for Sterling Investors?

What to Do?

13

Analyse the FactsThere are major headwinds to recovery from excess indebtedness but fiscal contraction is not as severe as feared, yet, and deficits are diminishing.

GrowthSome key indicators around the world, principally ex-Europe are beginning to flash green: PMIs, Sales, Personal Income growth.Growth is not equally divided across the globe, geographic diversification post-crisis is important as de-correlation becomes evident.UK and US are well placed as are EMs

InflationCPI numbers are rolling over suggesting that policy ease in the West can be maintained and policy easing can occur in the EMs supporting local markets

Financial ImbalancesThere is some indication that China recognises and is taking steps to avoid the build-up of further excess reserves.Germany by contrast continues to finance Southern European spending. This is unsustainable.

Entitlement SpendingWealth creation and wealth distribution can conflict. Social expenditures will be constrained and pension ages raised. So far, agreement has been surprisingly easy to find?

Safe May not be SafeSafe assets but “toxic” prices. Investors frequently “tax” their own returns by “buying high and selling low.” Risk assets offer high cash returns at historically low valuation metrics. Safe assets offer low or zero cash yields at unprecedented prices!

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Identifier

Deutsche Bank Global Investment Solutions2011 Q3 Equity Playbook 14

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