Robo Advisors Boon or BaneRobo Advisors – Boon or Bane For institutional investors only. Further distribution of this material is strictly prohibited June 2016 Agenda 1 2 3 About

Robo Advisors – Boon or Bane

For institutional investors only. Further distribution of this material is strictly prohibited

June 2016

Agenda

1

2

3

About Deutsche Asset Management

The rise of robo-advisors

Challenges ahead

01 About Deutsche Asset Management

Deutsche Asset Management

Deutsche Bank Corporate Divisions

4

Corporate &

Investment

Banking

(CIB)

Infrastructure

Deutsche

Asset

Management

(Deutsche AM)

Private,

Wealth &

Commercial

Clients

(PW&CC)

Global

Markets

Deutsche Bank

Regional Management

Postbank


With EUR 739 billion of assets under management1, Deutsche Asset Management is one of the world’s leading

investment management organizations. Deutsche Asset Management offers individuals and institutions traditional and alternative investments across all major asset classes.

Innovative products, customized solutions

Our products and solutions provide access to a wide range of investment opportunities across all asset classes.

Products range from pooled funds to highly customized portfolios for a wide range of investors and include:

— active and passive funds,

— alternatives,

— institutional mandates, and

— structured products2.

Our advisers and investment specialists are dedicated to creating asset management solutions for every client need and every risk, return, and liquidity preference.

The Chief Investment Office has overall responsibility for Deutsche AM’s investment platform. It leads equity, fixed income and multi-asset portfolio management teams worldwide, as well as the business’ global research team.

It also generates Deutsche AM’s global investment outlook (CIO View).

Deutsche Asset Management Our profile

Who we are

5

(1) Deutsche Asset Management, as of: March 31, 2016 (2) Not all products offered in all jurisdictions


Deutsche Asset Management Diversified client base

6

— Pension funds

— Corporations

— Insurers

— Sovereign wealth funds

— Central banks

— Endowments

— Foundations

— Not-for-profits

— Financial advisers

— Independent asset managers

— Third-party banks

— PW&CC

Retail investors

Institutional clients

Client segments

Private clients Intermediaries

02 The rise of robo-advisors


What can robo-advisors do for you?

8


Key Characteristics

Portfolio Management based on pre-set algorithms

Low fees

Targeted at mass affluent

Forecasting Asset Allocation Automated

Rebalancing

Risk Profiling &

Monitoring Stress Testing

Event & Trend

Monitoring Portfolio Transitioning

Product Selection

& Recommendation

Capabilities

Source: Fincite (AnlageFinder Developer) 9

https://thenounproject.com/term/technology-patent/339151

https://thenounproject.com/term/loan/82804

https://thenounproject.com/term/group/192875


High Net-Worth Individuals (HNWI)

High Earning, Not Rich Yet (HENRY)

1.0 5.1

250.0

0.00

50.00

100.00

150.00

200.00

250.00

300.00

2012 2014 E2019

Bill

ion

s

Digital Investment Services AUM 70% of HNWIs believe Robo-

Advisors can improve their

managers’ advice and decision-

making process

Increasing flows to Robo-Advisors Increasing HNWI adoption Increasing wealth in APAC(XJ)

62.5

55.2

49.1

15.5

12.6 7.6 7.6

Global Wealth 2019

North America APAC(XJ)Western Europe JapanMiddle East & Africa Eastern EuropeLatAM

Rise of Millennials in APAC

1.7bn

Millennials in APAC in 2020

Hold one-third of wealth in

Asia by 2020

Millennials don’t believe in beating the market

Lived through 1 or 2 financial crises (AFC & GFC)

Experienced failure of regulations & regulators

Tax Efficient and Low-Cost services

to invest their money over the Long Run

Sources: MyPrivateBanking Research, BCG, Merrill Lynch, Credit Suisse, Ernst & Young, as of May 2016. Past performance is not indicative of future returns.

76%

47% 46%

China Hong Kong Singapore

10

https://thenounproject.com/term/money-sack/128680



https://thenounproject.com/term/burning-bank/156936

https://thenounproject.com/term/coins/182220


11

Common robo-advisor approaches

• Client profiling via questionnaires

Age

Family circumstances

Financial standing

Saving goals

Risk averseness

……

• Investment recommendations generated by computer algorithm

Often built on the foundation of Modern Portfolio Theory (“efficient frontier”)

Investment suggestion with a mix of asset classes

Customized solution based on client questionnaire inputs

Focus on diversification

Focus on long-term investment

Use low-cost, index funds including Exchange Traded Funds (ETFs)


Com- modities

ETFs as key investment solution building blocks External challenges impact internal structures

External challenges

— Are equities overvalued in today's market environment?

— How likely will investments be loosing value?

— What impact has volatility on investment performance?

— Are interest rates going to rise again soon?

— How do central bank policies affect investment

strategies?

— Can fixed income still produce

attractive returns?

— How do regulatory regimes (MiFID II)

limit an asset manager’s room for

maneuver?

— Limited resources for the build-up of

know-how.

Internal structures

— Effects of currency

movements on the

portfolio.

— How can currency risks

be cushioned?

— Regulatory rules require cost

transparency.

— Costs absorb returns (especially in a

low interest rate environment).

Equities

Fixed

income

Currencies

Regulatory

regimes

Resources

Costs

— The effect of weak oil prices.

— Is gold still hedging inflation?

The successful distribution of investment solutions means

mastering external challenges, while optimizing internal structures.

12


ETFs as key investment solution building blocks Challenge: Changing landscape in asset class performance

13

Equity Europe: MSCI Europe. Equity Asia: MSCI AC Asia. Equity EM: MSCI Emerging Markets. Equity Global: MSCI World. Equity USA: S&P 500.

Fixed Income Europe: Citigroup WGBI EU All Maturities. Fixed Income EM: JPM EMBI Global Div ersif ied. Fixed Income Global: JPM Global Gov ernment Bond.

Fixed Income USA: JPM GBI US Gov ernment Bond. Conv ertibles: ML Global 300 Conv ertible. Commodities: S&P GSCI Commodity . Real Estate: FUX DE Real Estate Europe

Source: Thomson Reuters Datastream (return indices). FERI

2006

Equity Europe

20.2%

Equity EM

18.6%

Equity Global

7.9%

Convertibles

3.8%

Equity USA

3.6%

Real Estate

3.5%

Equity Asia

2.6%

Fixed Income

Europe

0.0%

Fixed Income EM

-1.7%

Fixed Income

Global

-5.2%

Fixed Income USA

-7.8%

Commodities

-24.0%

2007

Equity EM

26.1%

Commodities

19.7%

Real Estate

5.8%

Equity Europe

3.2%

Equity Asia

1.3%

Fixed Income

Europe

1.1% Fixed Income

Global

-0.1%

Convertibles

-1.0%

Equity Global

-1.2%

Fixed Income USA

-1.5%

Fixed Income EM

-4.3%

Equity USA

-4.9%

2008

Fixed Income USA

20.2%

Fixed Income

Global

17.8% Fixed Income

Europe

5.8%

Real Estate

4.2%

Fixed Income EM

-7.5%

Convertibles

-24.0%

Equity USA

-33.7%

Equity Asia

-37.1%

Equity Global

-37.2%

Equity Europe

-43.3%

Commodities

-43.7%

Equity EM

-50.8%

2009

Equity EM

73.5%

Equity Europe

32.5%

Convertibles

32.5%

Equity Asia

27.9%

Equity Global

26.7%

Fixed Income EM

25.8%

Equity USA

22.5%

Commodities

10.0%

Fixed Income

Europe

4.9%

Real Estate

1.7%

Fixed Income

Global

-1.3%

Fixed Income USA

-6.8%

2010

Equity EM

27.5%

Equity Asia

26.0%

Equity USA

23.1%

Convertibles

20.1%

Equity Global

20.1%

Fixed Income EM

20.0%

Commodities

16.6%

Fixed Income

Global

13.8%

Fixed Income USA

13.5%

Equity Europe

11.7%

Fixed Income

Europe

2.9%

Real Estate

0.0%

2011

Fixed Income USA

12.9%

Fixed Income

Global

10.6%

Fixed Income EM

9.9%

Fixed Income

Europe

6.3%

Equity USA

4.5%

Commodities

2.7%

Real Estate

2.0%

Equity Global

-2.6%

Convertibles

-3.2%

Equity Europe

-7.9%

Equity Asia

-13.3%

Equity EM

-15.9%

2012

Equity Europe

18.1%

Equity EM

16.8%

Fixed Income EM

15.6%

Equity Global

14.7%

Equity Asia

14.3%

Equity USA

14.2%

Convertibles

10.8%

Fixed Income

Europe

9.7%

Real Estate

0.7%

Fixed Income USA

0.6%

Fixed Income

Global

-0.3%

Commodities

-1.5%

2013

Equity USA

26.7%

Equity Global

21.9%

Equity Europe

20.5%

Convertibles

11.8%

Equity Asia

8.7%

Fixed Income

Europe

0.6%

Real Estate

-1.6%

Commodities

-5.5%

Equity EM

-6.5%

Fixed Income USA

-7.6%

Fixed Income

Global

-8.6%

Fixed Income EM

-9.3%

2014

Equity USA

29.5%

Fixed Income EM

22.3%

Fixed Income USA

20.8%

Equity Global

20.1%

Convertibles

18.1%

Equity Asia

14.8%

Fixed Income

Global

14.6% Fixed Income

Europe

14.3%

Equity EM

11.8%

Equity Europe

7.4%

Real Estate

0.7%

Commodities

-23.8%

2015

Equity USA

12.9%

Convertibles

12.7%

Fixed Income EM

12.7%

Fixed Income USA

12.4%

Equity Global

11.0%

Equity Asia

11.0%

Equity Europe

8.8%

Fixed Income

Global

8.5% Fixed Income

Europe

2.3%

Real Estate

0.8%

Equity EM

-4.9%

Commodities

-25.2%

Annual Performance 2006 – 2015, descending order


ETFs as key investment solution building blocks

ETF-based multi-asset strategies may be an efficient solution for external and internal

challenges: — Broad, easy and diversified access to almost all markets, asset classes, sectors and investment themes.

— High transparency and liquidity due to continuous pricing and tradability.

— High flexibility thanks to continuous enter and exit option to the market.

— Cost efficiency.

Equities Fixed

income Currencies

Regulatory

regimes Resources Costs

Com- modities

ETF

Multi-asset strategies require in-depth analysis across countries and asset

classes, systematic interpretation of data as well as consistent translation into

investment recommendations.

14


Simpler and

lower-cost process.

Access to an ETF platform.

Wide range of

strategy implementation.

Experience and know-how

across the entire Deutsche

AM platform (specialists,

analysts, etc.).

Sample model portfolios offer

ETFs as key investment solution building blocks

Expertise

Benefits for

asset managers

Focus on in-house expertise:

Advice on and distribution of

financial products.

Portfolios can be adjusted to

suit your particular

client segments.

Cost benefits

Deutsche AM – a strong partner

at your side.

Focus on solutions

Efficiency

Flexibility

ETF-model portfolios such as the one from Deutsche Asset Management can

provide asset managers with turnkey solutions.

15


16

Advantages vs. traditional advisory models

• Investment threshold

Robos - as low as zero

Human advisors – USD 500k – 1m is very common

• Advisory fees (% of Aum)

Robos - as low as 0.25%

Human advisors – 1~3%

• Transaction cost

Robos - automated trading and portfolio re-balancing is more scalable and reduce average cost as more clients and

assets are added

Human advisors – more expensive to execute trades and maintain ongoing support; maximum number of clients per

advisor needs to be capped to ensure sufficient advisor attention

• Investment tools

Robos – low-cost investment products, often using ETFs

Human advisors – often leaning towards mutual funds and other higher-cost financial products

Human involvement

Robos – makes investment recommendations based on client risk-return preference and product merits

Human advisors – can be biased due to bank & fund provider affiliation and influenced by rebate / trailer fee level


Significant growth ahead

17

AuM Online Investment Management

Worldwide (in bn, US$)

AuM +2,250%

in five years

$452bn

$20bn

Significant growth rates of global AuM of

automated online investing/advisory expected:

― MyPrivateBanking Research, March 2015

Global AuM to grow from $20bn in 2015 to ~$452bn by 2020

― Deloitte Consulting, Dec 2015

Global AuM by 2025: $5 trillion to $7 trillion

― Goldman Sachs, Future of Finance (3), March 2015

Charles Schwab sizes the automated advisory opportunity as $400bn

― Ernest Young, Advice goes virtual, Dec 2014

Estimate the current opportunity for digital advice to be above $10tr in investable assets

Current estimated market share of digital wealth firms is just 0.01% of the $33tr industry

Millennial assets estimated to rise from ~$2tr in aggregate net worth to ~$7tr in five to seven yrs

Only 20% of mass affluent in US have a financial

advisor

This information is intended for informational purposes only and does not constitute investment advice, a

recommendation, an offer or solicitation


18

Source: Ignites Europe, data as at Q4/2015 / Jan 2016

Asia playing fast catch-up…

This information is intended for informational purposes only and does not constitute investment advice, a

recommendation, an offer or solicitation

03 Challenges ahead


20

* Illustration f rom economist.com article. For illustrativ e purpose only .

Just how smart is your robo?


21

* Images are f rom v arious inv estment firms’ websites including Micai.com and f utureadv isor.com

Varying levels of sophistication

VS.

Offering as few as 8 ETFs covering

differing asset classes and allocate client

investments depending on a few questions

answered by clients.

Taking a holistic view of a client’s financial

life by linking all external investment

accounts and managing overall allocation

based on client risk tolerance, investment

goal and family circumstances.


22

* Pure robo-advisor players only, excluding large traditional managers getting into the robo space such as BlackRock or Vanguard

Many other factors influence the success of robos

• Regulatory environment

Licensing requirements

Client on-boarding / KYC rules

Fund registration requirements – onshore products vs. offshore

• Local wealth distribution models

Existing banks / advisors dominance

Selling incentives – mutual funds vs. ETFs, AuM-based fee vs. advice-based fee

• Client demographics

Wealth distribution – levels of wealth often determine the sophistications of advice required

Financial savvy – how much hand-holding is needed to understand client needs?

Internet / technology adoption rate – how comfortable are clients with technology and automated investment?

• Scale matters

Much larger AuM is needed for low-fee robo-advisors to be profitable – combined robo-advisor assets* estimated to be

USD 20 billion, vs. 17 trillion for traditional asset managers.

Robo-advisors were doubleing their assets every few months but how long can they maintain this growth rate?


23

Robo-advisor or robo-terminator?

• Privacy concerns

Are we giving away too much personal information?

Are the servers safe and hacker-free?

• Financial advice soundness

Biased advisors? - Open architecture vs. bank affiliated robos

Who’s teaching the robos? - Garbage in, garbage out

Bugs in the codes?


Deutsche Asset Management (Deutsche AM) represents the asset management activities conducted by Deutsche Bank AG or any of its subsidiaries. Clients will be provided Deutsche Asset 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.

This document has been prepared without consideration of the investment needs, objectives or financial circumstances of any i nvestor. Before making an investment decision,

investors need to consider, with or without the assistance of an investment adviser, whether the investments and strategies d escribed or provided by Deutsche Bank, are appropriate, in light of their particular investment needs, objectives and financial circumstances. Furthermore, this document is for information/discussion purposes only and does not constitute an offer, recommendation or solicitation to conclude a transaction and should not be treated as giving investm ent advice.

Deutsche Bank does not give tax or legal advice. Investors should seek advice from their own tax experts and lawyers, in cons idering investments and strategies suggested by

Deutsche Bank. Investments with Deutsche Bank are not guaranteed, unless specified. Although information in this document has been obtained from sources believed to be reliable, we do not guarantee its accurac y, completeness or fairness, and it should not be

relied upon as such. All opinions and estimates herein, including forecast returns, reflect our judgment on the date of this report and are subject to change without notice and involve a number of assumptions which may not prove valid.

Investments are subject to various risks, including market fluctuations, regulatory change, possible delays in repayment and loss of income and principal invested. The value of investments can fall as well as rise and you may not recover the amount originally invested at any point in time. Furthermore , substantial fluctuations of the value of the

investment are possible even over short periods of time.

This publication contains forward looking statements. Forward looking statements include, but are not limited to assumptions, estimates, projections, opinions, models and hypothetical performance analysis. The forward looking statements expressed constitute the author’s judgment as of the date o f this material. Forward looking statements involve significant elements of subjective judgments and analyses and changes thereto and/or consideration of different or additional factors could have a material impact on the results

indicated. Therefore, actual results may vary, perhaps materially, from the results contained herein. No representation or wa rranty is made by Deutsche Bank as to the reasonableness or completeness of such forward looking statements or to any other financial information contained herein.

The terms of any investment will be exclusively subject to the detailed provisions, including risk considerations, contained in the Offering Documents. When making an investment decision, you should rely on the final documentation relating to the transaction and not the summary contained herein.

This document may not be reproduced or circulated without our written authority. The manner of circulation and distribution o f this document may be restricted by law or regulation

in certain countries, including the United States. This document is not directed to, or intended for distribution to or use b y, any person or entity who is a citizen or resident of or located in any locality, state, country or other jurisdiction, including the United States, where such distribution, publication, availability or use would be contrary to law or regulation or which would subject Deutsche Bank to any registration or licensing requirement within such jurisdiction not currently met within such jurisdiction. Persons into whose

possession this document may come are required to inform themselves of, and to observe, such restrictions.

Past performance is no guarantee of future results; nothing contained herein shall constitute any representation or warranty as to future performance. Further information is available upon investor’s request.

All third party data (such as MSCI, S&P & Bloomberg) are copyrighted by and proprietary to the provider. © 2016 Deutsche Bank AG

Important information

24


• Investors should note that the db X-trackers UCITS ETFs are not capital protected or guaranteed and investors in each db X-trackers UCITS ETF should be prepared and able to sustain losses of the capital invested up to a total loss. • The value of an investment in a db X-trackers UCITS ETF may go down as well as up and past performance is not a guide to the future.

• Investment in db X-trackers UCITS ETFs involve numerous risks including among others, general market risks relating to the relevant index, credit risks on the provider of index swaps utilised in the db X-trackers UCITS ETFs, exchange rate risks, interest rate risks, inflationary risks, liquidity risks and legal and re gulatory risks.

• Not all db X-trackers UCITS ETFs may be suitable for all investors so please consult your financial advisor before you invest in a db X-trackers UCITS ETF. db X-trackers ETFs tracking bond indices provide notional exposure to the value and/or return of certain bonds which may fall si gnificantly in case of default. Markets in the Fixed Income asset classes may at times become volatile or illiquid. This means that ordinary trading activity may occasionally be disrupted or impossible. Such indices may be affected

and your investment may suffer a consequent loss. • db X-trackers UCITS ETFs following a direct replication investment policy, may engage in securities lending. In these instance s the db X-trackers UCITS ETFs face the risk of

the borrower not returning the securities lent by the db X-trackers UCITS ETF due to e.g. a default situation and the risk that collateral received by the db X-trackers UCITS ETFs may be liquidated at a value lower than the value of the securities lent out by the db X-trackers UCITS ETFs. • db X-trackers UCITS ETFs employing an indirect investment policy will use OTC derivative transactions. There are appropriate a rrangements in place to reduce the exposure of

the db X-trackers UCITS ETF to the counterparty, in some cases up to 100%, but there is no guarantee that such arrangements will be perfect and the counterparty may lose up to 100% of its investment if the counterparty defaults.

• db X-trackers UCITS ETFs may be unable to replicate precisely the performance of an index. • An investment in a db X-trackers UCITS ETFs is dependent on the performance of the underlying index less costs, but an investm ent is not expected to match that performance precisely. There may be a tracking difference between the performance of the db X-trackers UCITS ETFs and the underlying index e.g. due to the impact of fund management

fees and administrative costs among other things. The returns on the db X-trackers UCITS ETFs may not be directly comparable to the returns achieved by direct investment in the underlying assets of the db X-trackers UCITS ETFs or the underlying index. Investors' income is not fixed and may fluctuate.

• db X-trackers UCITS ETFs shares may be denominated in a currency different to that of the traded currency on the stock exchange in which case exchange rate fluctuations may have a negative effect on the returns of the fund. • The value of any investment involving exposure to foreign currencies can be affected by exchange rate movements.

An investment in a db X-trackers UCITS ETF tracking a leveraged or short index is intended for financially sophisticated investo rs who wish to take a very short term view on the underlying index, e.g., for day trading purposes. Therefore the db X-trackers UCITS ETFs on leveraged or short indices are appropriate only for financially sophisticated investors

who understand the strategy, characteristics and risks. The db X-trackers UCITS ETFs on leveraged or short indices are not intended to be a buy and hold investment. • Tax treatment of the db X-trackers UCITS ETFs depends on the individual circumstances of each investor. The levels and bases o f, and any applicable relief from, taxation can change.

• Deutsche Bank or its affiliates (“DB”) significant holdings: Investors should be aware that DB may from time to time own in terests in any individual db X-trackers UCITS ETF which may represent a significant amount or proportion of the overall investor holdings in the relevant db X-trackers UCITS ETF. Investors should consider what possible impact

such holdings by DB may have on them. For example, DB may, like any other Shareholder, ask for the redemption of all or part of their shares of any Class of the relevant db X-trackers UCITS ETF in accordance with the provisions of this Prospectus which could result in (a) a reduction in the Net Asse t Value of the relevant db X-trackers UCITS ETF to below the Minimum Net Asset Value which might result in the Board of Directors deciding to close the db X-trackers UCITS ETF and compulsorily redeem all the Shares relating

to the db X-trackers UCITS ETF or (b) an increase in the holding proportion of the other Shareholders in the db X-trackers UCITS ETF beyond those allowed by laws or internal guidelines applicable to such Shareholder.

• db X-trackers shares purchased on the secondary market cannot usually be sold directly back to the db X-trackers ETFs. Investors must buy and sell shares on a secondary market with the assistance of an intermediary (e.g. a stockbroker) and may incur fees for doing so. In addition, investors ma y pay more than the current net asset value when buying shares and may receive less than the current net asset value when selling them.

• Full disclosure on the composition of the db X-trackers UCITS ETF’s portfolio and information on the Index constituents, as we ll as the indicative Net Asset Value, is available free of charge at www.etf.deutscheawm.com.

• For further information regarding risk factors, please refer to the risk factors section of the prospectus, or the Key Inve stor Information Document

Key Risk Factors for ETFs

25