Too much pain - little gainKlaus Kaldemorgen, 07 June 2011

2

1987 1989 - 1992 1997 - 1998 2000 2008

I. Risk aversion by retail investors remains Retail investors are unnerved by sharp setbacks in equity markets

Market crash October 1987

1989

1989

1990

1990

1991

1991

1992

1992

1992

1993

1993

10000

20000

30000

40000

Nikkei 225 Index

Japan crisis Dec 1989 – Aug 1992

- 35%

- 57%

Source: Bloomberg

06/1

997

07/1

997

08/1

997

09/1

997

10/1

997

12/1

997

01/1

998

02/1

998

03/1

998

05/1

998

0.02

0.09

0.16

0.23

0.3

Jakarta Composite Index

In USDIndex points

In Yen

Asia crisis Sep 1997 – Feb 1998

- 85%

06/1998 06/1999 06/2000 06/2001

100015002000250030003500400045005000

NASDAQ Composite Index

Tech bubble

- 75%

2003 2005 2007 2009 2011

600

800

1000

1200

1400

1600

1800

MSCI World Index

Credit crunch

- 60%

In USDIndex points

In USDIndex points

In USDIndex points

Equity Multi Asset Fixed Income Money Market0

40

80

120

160

200

240

2000 2010

3

I. Risk aversion by retail investors remains Fund flows into various asset classes

+ 239 %

+ 7 %

+ 34 %

+ 45 %

Equity Multi Asset Fixed Income Money Market

-5,200

-3,200

-1,200

800

2,800

4,800

6,800

2010 YTD

Net flows in mutual funds in Germany,in mio EUR

AuM of mutual funds in Germany from 2000 to 2010, in bn EUR

Source: BVIAs of May 2011

4

II. Hedge Funds desperate to create volatilityLow volatility and sudden outbreaks of high volatility remain a problem

…but recently uncertaincies are feeding through (3 months)

Implied volatility* of the US market still quite low… (3 years)

* CBOE OEX Volatility Index

06/2008 10/2008 03/2009 08/2009 12/2009 05/2010 10/2010 02/201110

20

30

40

50

60

70

80

90

1/3/11 15/3/11 29/3/11 12/4/11 26/4/11 10/5/11 24/5/1110

12

14

16

18

20

22

24

26

28

30

Source: BloombergAs of May 2011

5

II. Hedge Funds desperate to create volatilityImportant trends mature (Emerging Markets, Resources)

EM starting to underperformMSCI EM vs. MSCI World, YTD

01/2011 02/2011 03/2011 04/2011 05/2011 06/2011

-12%

-10%

-8%

-6%

-4%

-2%

0%

2%

MSCI Materials vs. MSCI World

Source: Goldman Sachs, Thomson Reuters DatastreamAs of May 2011

2006 2007 2008 2009 2010 2011-10%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

MSCI Materials vs. MSCI World

6

III. Equities remain the superior asset class for performance contribution

Attractive valuation compared to fixed income and own history

Return to shareholders grows (dividends, share buy backs, M&A activity)

Monetary conditions remain favourable

Sovereign debt crisis puts risk positions in perspective (corporates are the ultimative

source of wealth creation)

Profitability may decouple from growth perspective

Inflation potential may help equities’ role as "real assets"

High liquidity in comparison to alternative assets

7

Attractive valuation compared to fixed income and own history

0,0

0,2

0,4

0,6

0,8

1,0

1,2

1,4

1,6

12.79 05.84 10.88 03.93 08.97 01.02 06.06 11.10

DAX P/E to REXP

Bonds cheaper

Equities cheaper

Source: Thomson Reuters DatastreamAs of May 2011

8

IV. Economic growth fueled by emerging markets and monetary stimulus in jeopardy

Emerging market dilemma

Monetary stimulus failed to ignite job- and housing market

Europe burdened by sovereign debt crisis

Stagnating growth and easy money will lead to higher inflation

9

Emerging Market dilemma

Export growth is fading - consumer demand growth is essential

Inflation is biggest threat to political stability and consumer demand

Higher interest rates necessary to fight inflation - currencies will rise further

Infrastructure spending as an additional growth element

Debt markets are growing

10

Monetary stimulus failed to ignite job- and housing market US economy not yet fully recovered

Source: Goldman Sachs, BloombergAs of June 2011

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011-1000-800-600-400-200

0200400600

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 20110

2

4

6

8

10

12

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 20110

200

400

600

800

1000

1200

1400

1600

US non-farm payrolls, mom US unemployment rate

US new home sales Case shiller house price index*

05/2

001

01/2

002

09/2

002

05/2

003

01/2

004

09/2

004

05/2

005

01/2

006

09/2

006

05/2

007

01/2

008

09/2

008

05/2

009

01/2

010

09/2

010

100

120

140

160

180

200

220

in %

in thousands

*indexed Jan 2000 = 100

in thousands

Europe burdened by sovereign debt crisis Is Germany too strong for Europe?

11

EMU-ex GER Germany0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

2011 2012

Real GDP growth estimates for 2011 and 2012in %

Source: Morgan StanleyAs of June 2011

V. Sector rotation indicates an economic slowdown and lower risk appetite

12

Top Performer Flop Performer

Source: Thomson Reuters Datastream (Total Return)As of end of May 2011

2011 YTD

Health Care 7.1%

Energy 3.4%

Consumer Staples 3.0%

Telecommunication 1.9%

Industrials -0.3%

(MSCI World Index) -0.3%

Consumer Discretionary -0.8%

Financials -2.8%

Information Technology -3.8%

Utilities -4.0%

Materials -4.7%

What we make out of it

M&A Opportunities

Stable growth, defensives,

dividends and "late cyclicals”

Energy companies as a hedge against

inflation

European financials as

trade

Emerging Markets closely

monitored

Active beta and volatility

management

Corporate bonds/converti

bles as alternative to

equities

13

14

Disclaimer

The information contained in this document does not constitute investment advice and is merely a brief summary of key aspects of the fund. Full details of the fund can be found in the simplified or full sales prospectus, supplemented in each case by the most recent audited annual report and 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. They are available free of charge in either electronic or printed form from your advisor, from DWS Investment GmbH, Mainzer Landstrasse 178-190, 60327 Frankfurt am Main, Germany, or – where Luxembourg-based funds are involved – from DWS Investment S.A., 2, Boulevard Konrad Adenauer, 1115 Luxembourg.

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